US Supreme Court to hear cases on 340B cuts, DSH payment calculation

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The U.S. Supreme Court will take up two key healthcare cases, one that challenges cuts to the 340B Drug Discount Program and one that challenges the calculation used to determine Medicare payments to providers, the highest court said July 2.

Both cases will be heard in the next term, which begins in October. 

American Hospital Association v. Becerra, the case challenging the 340B payment cuts, centers on 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, 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. 

An appeals court upheld the cuts last year, ruling that HHS has the authority to make them. The AHA petitioned the Supreme Court to hear the case. 

Becerra v. Empire Health Foundation, the case challenging DSH payment calculations, centers on a 2005 rule that changed the way Medicare disproportionate share hospital payments were calculated. 

Empire Health Foundation in Spokane, Wash., challenged the changed formula, arguing it resulted in the company getting lower DSH payments in 2008.

The formula includes all of the hospital's patient days of individuals who satisfy the requirements to be entitled to Medicare Part A benefits, regardless of whether Medicare paid the hospital for those particular days.

An appeals court ruled in favor of Empire Health Foundation last year, but the Justice Department asked the Supreme Court to hear the case.

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