In court filing, AHA says HHS should make 340B hospitals ‘whole’

A federal court should order the Department of Health and Human Services to “make whole” 340B hospitals that received reimbursement reductions resulting from the Centers for Medicare & Medicaid Services’ 2018 outpatient prospective payment system rule, AHA and other hospital plaintiffs said yesterday in a court-ordered brief. 

“Hospitals that have already received payment for 340B claims using the 2018 methodology should receive a supplemental payment for those claims in an amount that equals the difference between the amount they received and the amount they are entitled to (based on the ASP plus 6% methodology) under this Court’s order, plus interest,” the brief notes. “While the claims will be for different total amounts, the percentage of the claim that the hospital was underpaid is identical in each case. Hospitals that have not received payment for 340B claims should receive the full amount to which they are entitled (the amount they would have received under the 2017 OPPS rule).”

A federal judge Dec. 27 ruled in favor of the AHA and hospital plaintiffs that the Department of Health and Human Services "adjustment" by nearly 30 percent of 2018 Medicare payment rates for many hospitals in the 340B Drug Pricing Program was unlawful. The judge granted AHA's motion for a permanent injunction and ordered supplemental briefing on the question of proper remedy. 

In yesterday's filing, the AHA and plaintiffs said that the repayments should not be done in a budget-neutral manner as expenditures need not be budget-neutral when they fix a prior, unlawful underpayment.

“Plaintiffs’ proposal is easy to implement, will not have disruptive consequences for the Medicare program, does not require a new rulemaking for 2018, and is comparable to actions that other courts and HHS have taken in the past to correct previous erroneous payments to Medicare providers,” the brief states. 

HHS’s 2019 OPPS final rule also includes the unlawful methodology for reimbursement for 340B outpatient drugs for 2019, according to the AHA and plaintiffs’ brief. Once plaintiffs have presented a claim for a drug covered by that rule, plaintiffs will amend the complaint and argue that HHS should reimburse 340B hospitals for claims that have been reduced in accordance with the 2019 OPPS final rule.

HHS also filed a brief yesterday with its proposed remedies in the case. The two sides will respond to each other’s briefs by Feb. 14. 
 
The AHA, Association of American Medical Colleges, America's Essential Hospitals, and three hospital plaintiffs in September refiled a lawsuit in federal district court seeking expedited relief from Medicare payment cuts for many hospitals in the 340B program.