AHA and NRHA both urged the Biden administration not to claw back Medicare payments from some hospitals to pay for the remedy for illegal drug payment cuts for 340B hospitals.

Hospital Groups to CMS: Don’t Rob Some Hospitals to Repay 340B Hospitals for Your Illegal Drug Payment Cuts

Two hospital groups separately urged Biden administration officials this month to not divert funding from non-340B hospitals and some 340B hospitals in order to repay other 340B hospitals for almost five years’ worth of illegal Medicare Part B drug payment cuts.

American Hospital Association representatives had a June 16 teleconference with officials from the White House Office of Management and Budget and the Centers for Medicare & Medicaid Services about CMS’s proposed remedy for the reimbursement cuts. AHA was the lead plaintiff in the successful federal lawsuit in which the U.S. Supreme Court declared the cuts illegal and ordered the cuts reversed. A federal district judge said in January that an estimated $10 billion dollars of underpayments are at stake.

The National Rural Health Association had a similar teleconference with OMB and CMS officials last Wednesday.

OMB must give CMS permission to publish its proposed fix in the Federal Register. CMS sent it to OMB for clearance in late May. CMS said in November it would release its plan before its releases its 2024 hospital Outpatient Prospective Payment System proposed rule. CMS normally publishes its OPPS proposed rule for the coming year in July.

OMB released AHA’s Feb. 1 letter requesting its meeting with the White House and CMS. It also released NRHA’s June 21 memo written for its meeting.

AHA’s letter made five points:

  • The U.S. Department of Health and Human Services 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 achieve budget neutrality.

“To this day, HHS has never identified a textual basis for its asserted authority to claw back years of funding that hospitals have long since spent,” AHA said about the latter point. “And it has never grappled with the fact that HHS previously exempted certain 340B hospitals from its reimbursement cuts (e.g., rural sole community hospitals and free-standing children’s and cancer hospitals), but those hospitals would be forced to return funds if the department pursued recoupment to achieve budget neutrality.”

340B critical access hospitals were immune from the cuts because they are not paid through OPPS.

In its memo, NRHA said it would be wrong to take money away from rural hospitals that were exempt from the cuts to pay back 340B hospitals that suffered the cuts. Almost 90% of rural OPPS hospitals “would lose funding in a recoupment scenario,” it said. “An ideal solution would be for CMS to establish a remedy that repays 340B participating hospitals the money they are owed, without recouping money from any hospitals.”

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