Standard & Poor’s Global Ratings last week said it believes that recent payment cuts to not-for-profit hospitals under the 340B drug savings program “will likely weaken their operating performance at a time of already tightening margins.” The report notes that the cuts “could lead to negative rating actions if hospital-specific funding reductions were material and not offset by other management actions. And despite the possibility of a legal challenge to the cuts, additional proposed program reforms at the federal level could further negatively affect these providers' finances.” A federal appeals court earlier this month heard oral arguments in a case brought by the AHA, Association of American Medical Colleges, America’s Essential Hospitals and three hospital organizations to challenge a nearly 30% reduction to Medicare payments for 340B drugs. The AHA hopes for a ruling from the court sometime this summer.

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