AHA seal on office wall
The AHA wants to meet with HHS to hear how the government will repay 340B hospitals for five years’ worth of illegal Medicare Part B drug reimbursement cuts.

AHA Seeks Meeting with HHS About Repaying 340B Hospitals for Illegal Medicare Drug Reimbursement Cuts

The American Hospital Association yesterday asked to meet with the team of federal officials that will decide how the government will repay 340B hospitals for five years’ worth of illegal Medicare Part B drug reimbursement cuts. The amount of refunds could total close to $10 billion.

“I write in hope of expediting this administrative process and avoiding further legal
challenges,” AHA General Counsel Melinda Hatton said in the Feb. 1 letter to U.S. Department of Health and Human Services General Counsel Sam Bagentos. “As the AHA has stated before, we are willing to work with HHS to assure a fair and equitable resolution of these issues, which have already taken far too long to resolve, at great cost to the entire hospital field.”

The Centers for Medicare & Medicaid Services reduced Part B drug reimbursement by almost 30 percent for many 340B hospitals beginning in 2018. The U.S. Supreme Court ruled unanimously in June 2022 that the cuts during 2018 and 2019 were illegal. It remanded the case to a federal district judge, who affirmed last month that the cuts during 2020, 2021, and 2022 also were illegal. The judge however declined to order CMS to immediately reimburse hospitals with interest for those underpayments. He sent the matter back to CMS to decide how to remediate its underpayments.

CMS has said it plans to issue a proposed rule in April regarding “potential remedies” for the underpayments, which the district judge said may total “nearly $10 billion.”

In her letter to Bagentos, Hatton said CMS’s timeframe for finalizing a remedy “unnecessarily deprives 340B hospitals of funding at a time when they desperately need it to best serve their vulnerable patients and communities.”

AHA said the remedy should be based on five principles:

  • HHS must repay each 340B hospital the full amount that was unlawfully withheld between January 2018 and September 2022.
  • HHS must repay each 340B hospital promptly.
  • HHS may not impose a prospective remedy.
  • HHS is required to pay hospitals interest on its underpayments until they are fully repaid.
  • HHS has no legal authority to recoup funds from the hospital field to pay for the agency’s own mistakes.