US Supreme Court overturns $1.6B 340B payment cut

The U.S. Supreme Court sided with hospital groups June 15 in a case challenging HHS' 340B payment cuts. 

The case centered around whether CMS has the authority to make cuts to the program under its  Medicare Outpatient Prospective Payment System. Under the payment rule, HHS cut the reimbursement rate for covered drugs by 28.5 percent in 2018, but it later lowered the reimbursement rate cut to 22.5 percent. 

Under the 340B program, eligible hospitals can buy outpatient drugs at a discount. A hospital typically pays 20 percent to 50 percent below the average sales price for the drugs through the program. 

The Supreme Court reversed a federal appeals court's 2020 ruling that HHS had the authority to make the $1.6 billion annual reimbursement cut.  

Justice Brett Kavanaugh, writing the opinion for the court's unanimous decision, said that absent a survey of hospitals' acquisition costs, HHS may not vary the reimbursement rate for 340B hospitals. 

"HHS's 2018 and 2019 reimbursement rates for 340B hospitals were therefore contrary to the statute and unlawful," he wrote. 
The American Hospital Association, Association of American Medical Colleges and America's Essential Hospitals said in a joint statement emailed to Becker's following the decision that they look forward to working with HHS and the courts to develop a plan to reimburse 340B hospitals affected by the cuts while ensuring other hospitals are not disadvantaged as they also continue to serve their communities.

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