AHA office sign
CMS should "promptly reimburse" hospitals for unlawfully withheld 340B drug reimbursement from 2018 to 2022, the AHA says.

Hospital Group Blasts CMS for Delaying Redress for Illegal 340B Drug Payments Cuts

The federal government has had “more than adequate time to correct” its unlawful Medicare Part B payment cuts for hospitals’ 340B purchased drugs from 2018 through 2022 and should promptly reimburse the hospitals it harmed, the American Hospital Association said late Tuesday.

AHA was responding to the Center for Medicare and Medicaid Services’ (CMS) outpatient prospective payment system (OPPS) rule for calendar year 2023, published late Tuesday, that reinstates the Medicare payment rate to the historic formula of average sales price (ASP) plus 6% from ASP minus 22.5%. The nearly 30% lower pay rate was declared illegal by the U.S. Supreme Court in June.

CMS said in the OPPS final rule it wouldn’t address compensation to hospitals for the Medicare underpayments in effect from 2018 through most of this year until 2023, in a separate proposed rule.

AHA said its appreciates that CMS “is ending its unlawful cuts to 340B hospitals.”

“This will help 340B hospitals provide important comprehensive health services to their patients and communities,” it said. “However, we continue to urge the administration to promptly reimburse those hospitals that were harmed by their unlawful cuts in previous years. In addition, we continue to call on the agency to ensure the remainder of the hospital field is not penalized for the prior unlawful policy, especially as hospitals and health systems continue to face immense financial pressures and workforce shortages. We do not believe the agency needs more time to put forth a separate rule on a remedy as it has had more than adequate time to correct its mistakes.”

AHA said CMS’ 3.8% overall OPPS payment rate increase under the final rule is insufficient to address hospitals’ current challenges, including the rising costs of drugs, labor, and equipment. It called on Congress to authorize additional support by year-end.

Premier’s comments

Premier, a group purchasing organization (GPO) based in Charlotte, N.C., said it “is pleased that CMS has taken steps to reverse 340B payment cuts in 2022 and that it is finalizing a return to ASP+6 percent in CY 2023.”

It backed the agency’s decision to “address remedies for 340B drug payments from 2018-2022 through rulemaking—ahead of the CY 2024 OPPS proposed rule. Expeditiously arriving at a remedy to transparently address past reimbursement shortfalls is essential to support hospital and patient access to high-quality pharmaceuticals.”

Premier, like AHA, criticized the 3.8% overall OPPS payment rate increase. “The truth remains that a 3.8 percent payment update falls woefully short of reflecting the rising labor costs that hospitals have experienced since the pandemic’s onset,” it said.

Community Oncology Alliance comments

Community Oncology Alliance (COA), whose members include oncologists in private practice and pharmaceutical manufacturers, slammed CMS for restoring the higher Medicare payment rate for 340B-acquired drugs.

“We are all being abused by 340B hospitals whose own data show them marking up pricey cancer drugs five times their costs and continue to be exposed as abusers of a public program meant to help poor patients,” said COA Executive Director Ted Okon. “It is becoming increasingly clear that the current CMS is out to obliterate independent medical practice in favor of large health systems, especially those with 340B that grossly overcharge patients for their drugs.”

As we reported Tuesday, hospital group 340B Health said it was pleased that CMS “restored equity” to OPPS payments for drugs, and said it “look[s] forward to working with CMS on compensation for the hospitals that were financially harmed” from 2018 to 2022.

Other hospital and 340B stakeholder groups did not immediately respond to requests for comment.