Hospital Groups File Lawsuit to Stop Significant Payment Cuts for 340B Hospitals

Today, the American Hospital Association (AHA), the Association of American Medical Colleges (AAMC) and America’s Essential Hospitals filed a lawsuit against the U.S. Department of Health and Human Services (HHS) in the U.S. District Court for the District of Columbia to prevent significant Medicare payment cuts for hospitals that participate in the 340B Drug Pricing Program. The three hospital associations are joined in the suit by hospital plaintiffs: Eastern Maine Healthcare Systems, in Brewer, Maine; Henry Ford Health System, in Detroit; and Park Ridge Health, in Hendersonville, North Carolina, part of Adventist Health System.

For 25 years, the 340B program has enabled hospitals and other organizations that care for many low-income and uninsured patients to purchase certain outpatient drugs from pharmaceutical manufacturers at discounted prices. The program allows participating hospitals to use the savings from the discounts to provide an expanded range of comprehensive health services to their local communities, such as increased access to care, clinical pharmacy services, community outreach programs, free vaccines and transportation to follow-up appointments. The 340B program constitutes less than 2.8 percent of the $457 billion in annual U.S. drug purchases and achieves savings for hospitals at no cost to taxpayers.

The lawsuit argues that the 340B provisions of the Centers for Medicare & Medicaid Services’ (CMS) outpatient prospective payment system (OPPS) final rule violate the Social Security Act and, therefore, should be set aside under the Administrative Procedure Act as unlawful and in excess of the HHS Secretary’s statutory authority. The requested injunction would prohibit HHS from implementing these provisions of the OPPS final rule pending resolution of this lawsuit. CMS in the final rule reduces by nearly 30 percent, or $1.6 billion, Medicare payments to certain public and non-profit hospitals for outpatient drugs purchased under the 340B program.

“From its beginning, the 340B Drug Pricing Program has been critical in helping hospitals stretch scarce federal resources to enhance comprehensive patient services and access to care,” said Rick Pollack, president and CEO of the AHA. “CMS’s decision to cut Medicare payments for so many hospitals for drugs covered under the 340B program will dramatically threaten access to health care for many patients, including uninsured and other vulnerable populations. This lawsuit will prevent these significant cuts from moving forward.”

“This decision will penalize safety net hospitals that participate in the 340B program, forcing them to curtail critical programs in communities around the country,” said AAMC president and CEO Darrell G. Kirch, MD. “The life-saving services provided to patients as a result of 340B savings have been put in jeopardy by this harmful illegal regulatory change.”

“This lawsuit underscores the serious threat CMS’ policy poses for millions of Americans who depend on affordable drugs and health care services made possible by 340B savings,” said Bruce Siegel, MD, MPH, president and CEO of America’s Essential Hospitals. “The imminent harm these cuts will cause demands a quick and strong response to protect our patients, hospitals, and communities.”

For additional information, a copy of the complaint can be found by visiting HERE.

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Media Contacts:

Colin Milligan
AHA Media Relations Office
(202) 638-5491
cmilligan@aha.org

Stuart Heiser
AAMC
(202) 828-0059 sheiser@aamc.org

Carl Graziano
Director of Communications
America’s Essential Hospitals
(202) 585-0102
cgraziano@essentialhospitals.org

About the AHA

The AHA is a not-for-profit association of health care provider organizations and individuals that are committed to the health improvement of their communities. The AHA is the national advocate for its members, which include nearly 5,000 hospitals, health care systems, networks, other providers of care and 43,000 individual members. Founded in 1898, the AHA provides education for health care leaders and is a source of information on health care issues and trends. For more information, visit the AHA website at www.aha.org.