HHS office sign and building
Federal lawyers told a judge that they do not oppose declaring unlawful Part B drug payments cuts for 340B hospital from 2020-2022.

Feds Tell Judge They Accept that Part B Drug Payment Cuts in 2020-22 Were Unlawful

Federal lawyers last week agreed with national groups that represent 340B hospitals that the U.S. Supreme Court’s June decision to declare illegal Medicare Part B payment cuts in 2018 and 2019 for hospitals’ 340B-purchased drugs “effectively resolves” the groups’ claims relating to payment cuts in 2020, 2021, and 2022.

Lawyers for the U.S. Health and Human Services Department (HHS) said in a Sept. 14 brief filed in U.S. District Court for the District of Columbia that HHS does not oppose the hospital groups’ motion for “a declaration that the 2020, 2021, and 2022 [hospital outpatient prospective payment system, or OPPS] rules are unlawful insofar as they vary the reimbursement rate for 340B hospitals from ASP plus six percent absent a survey of hospitals’ acquisition costs.”

“Defendants do, however, oppose plaintiffs’ other remedial requests,” HHS’s lawyers said. They asked a judge for the second time to let HHS decide how to give 340B hospitals relief for the illegal Part B drug payment cuts from 2018 through this year.

340B advocates point out that although the Centers for Medicare and Medicaid Services (CMS) references its controversial 2020 acquisition cost survey in subsquent rules, it did not ultimately base those cuts on the survey.  

The hospital groups on Aug. 3 asked U.S. District Judge Rudolph Contreras to order HHS “to promptly correct [its] past underpayments to plaintiffs and their members for 2018–2022” plus interest “without seeking to recoup funds from other hospitals.” Lawyers for HHS on Aug. 16 asked the court to leave it up to HHS to decide how to respond to the Supreme Court opinion. 

The hospital groups the next day said “HHS has no real plan to stop underpaying 340B claims for the remainder of 2022 and will continue violating the law unless this court orders it to stop,” and that the department “never explains what it plans to do to stop violating the law going forward so that it does not compound its past mistakes with months and months of more unlawful reimbursements.”

HHS’s lawyers told Contreras last week that the hospital groups have not shown that it would be appropriate for the court to order the government to promptly repay 340B hospitals for five years’ worth of underpayments plus interest.

The better option would be to send the matter back to HHS to “afford the agency an opportunity to craft a remedy in the first instance,” the department’s lawyers said.

The U.S. Supreme Court ruled in June that HHS’s decisions in 2018 and 2019 to cut 340B hospitals’ Part B drug reimbursement by almost 30% was illegal. It sent the case back to a federal district court in Washington, D.C., to decide the legality of the cuts in 2020, 2021, and 2022, how best to remedy cuts that have already taken place, and what to do about future drug reimbursement.

Editor at Large | Website | + posts