U.S. District Court Washington D.C. building
A federal district court in Washington, D.C., cleared the way for CMS to resume paying hospitals at ASP +6% for 340B drugs in as quickly as two weeks.

Federal Court Clears Way for Medicare to Boost 340B Hospitals’ Part B Drug Payments

A federal district judge on Monday cleared the way for the Centers for Medicare and Medicaid Services (CMS) in as quickly as two weeks to resume paying hospitals at the rate of average sales price (ASP) plus 6% for their 340B-purchased drugs, ending a previous unlawful Medicare Part B payment cut to ASP minus 22.5% that started in 2018. 

Judge Rudolph Contreras of U.S District Court for the District of Columbia clarified in his Oct. 3 order that his Sept. 28 ruling restoring the higher Medicare pay rate for the rest of 2022 was a final judgement. The court was responding to a motion filed late last week by CMS seeking clarification that the court’s judgment was final.

In its motion, CMS said if the judge clarified that his Sept. 28 ruling was indeed final, it “would take approximately two weeks” to readjust the payment rate for 340B. It said it “has begun preparing to adjust the payment rates in the event the court clarifies that it intended the order to have immediate effect.”  

CMS said since there are still other claims pending in the case, it needed an order of final judgment on the Medicare payment issue to adjust the payment rates immediately without having to go through the usual rulemaking process.

There is no guarantee that payments at the higher rate are imminent. CMS could appeal the court’s Sept. 28 decision that struck down the payment cut.  

American Hospital Association spokesperson Colin Milligan told 340B Report Wednesday, “We are confident [CMS] will meet the schedule it proposed to restore proper payments to 340B hospitals.”

Still pending in the lawsuit is a claim filed by AHA and the other hospital groups challenging CMS’s payment cuts for 2020, 2021, and 2022. The U.S. Supreme Court in June struck down the agency’s payment cuts for 2018 and 2019 only.

AHA commented on its pending claim in an Oct. 4 statement. 

“Earlier this year, the U.S. Supreme Court declared HHS’ 340B cuts for 2018 and 2019 were unlawful, but had not ruled on 2020 or afterward,” AHA said in an Oct. 4 statement. “The AHA continues to urge the Administration to promptly reimburse all the hospitals that were affected by these unlawful cuts in previous years and to ensure the remainder of the hospital field is not penalized for the departments’ prior unlawful policy.”