HHS issues proposed remedy for its unlawful 340B payment cuts from 2018 to 2022

Following last year’s unanimous Supreme Court decision in favor of the AHA and others, the Department of Health and Human Services today issued its proposed remedy for the unlawful payment cuts to certain hospitals that participate in the 340B Drug Pricing Program.  

HHS’ proposed rule contains two central components. First, HHS would repay 340B hospitals that were unlawfully underpaid from 2018 to 2022 in a single-lump sum payment. The proposed rule contains the calculations of the amounts owed to the approximately 1,600 affected 340B covered entity hospitals. Second, HHS proposes to recoup funds from those hospitals that received increased rates for non-drug services from 2018 to 2022. CMS proposes to recoup these funds by adjusting the outpatient prospective payment system conversion factor by minus 0.5% starting in calendar year 2025, making this adjustment until the full amount is offset, which CMS estimates to be 16 years.

In a statement shared with the media today, AHA President and CEO Rick Pollack said, “After more than five years of litigation and a unanimous Supreme Court victory, the AHA is extremely pleased that 340B hospitals will finally be paid back what they deserve so they can continue providing care to their patients and communities. We are especially gratified that HHS agreed with the AHA’s position that these hospitals must be promptly repaid in full with a single lump-sum. At the same time, the AHA is disappointed that HHS has chosen to recoup funds from other hospitals that cannot afford additional Medicare payment cuts, including rural sole community, cancer and children’s hospitals that were initially exempted from HHS’ illegal policy. We will continue to review the proposal closely and look forward to providing comments.”

Comments on the proposed rule are due by Sept. 5. AHA members will receive a Special Bulletin with more details.