CMS announced late today that they are reversing significant Medicare cuts to 340B hospitals.

Breaking News

In Big Win For 340B Hospitals, CMS Will Reverse Massive Drug Reimbursement Cut for 2023 and Seeks Input on Potential Remedies for Prior Years

The U.S. Centers for Medicare and Medicaid Services “fully anticipate[s]” applying a Medicare Part B reimbursement rate next year of average sales price ASP plus 6% to drugs and biologicals purchased through the 340B program, CMS announced late this afternoon.

“We are still evaluating how to apply the Supreme Court’s recent decision to prior calendar years,” CMS said in a fact sheet about its calendar year 2023 hospital Outpatient Prospective Payment System (OPPS) proposed rule, published for public inspection on July 15.

Comments on the proposed rule will be due Sept. 13. The final rule will be issued in early November.

The 2022 OPPS final rule continued the payment rate in place since 2018 of ASP minus 22.5% for separately payable drugs or biologicals acquired through 340B. The old rate was ASP plus 6%. The nearly 30% reduction, which totals around $1.6 billion a year, affects 340B disproportionate share hospitals, rural referral centers, non-rural sole community hospitals, and free-standing cancer hospitals.

Last month, the U.S. Supreme Court ruled unanimously that the cuts during 2018 and 2019 were unlawful. It sent the case back to a federal appeals court for further proceedings.  The original lawsuit was filed by the American Hospital Association (AHA), Association of American Medical Colleges, America’s Essential Hospitals and three hospital systems.

“We are still evaluating how to apply the Supreme Court’s recent decision to prior calendar years,” CMS said in its OPPS proposed rule. “We are interested in public comments on the best way to craft any potential remedies affecting cost years 2018-2022 given that the Court did not resolve that issue.”

AHA in late June asked to meet with U.S. Health and Human Services Secretary Xavier Becerra to discuss how 340B hospitals should be promptly repaid for all five years during which their drug reimbursement was slashed, not just the first two years’ cuts that the Supreme Court declared illegal.

At least seven related lawsuits involving more than 170 hospitals have been filed in federal district court in Washington, D.C. They seek the same relief demanded by the three national hospital groups and three individual health systems that filed the case that the Supreme Court decided. All these cases were stayed pending the Supreme Court’s opinion.

On Wednesday, at the parties’ request, the federal judge who is hearing all the cases kept the stays in place to let the parties to the Supreme Court case “address any dispute about the proper remedy.”

This is a breaking news story. We will have more to report in our next regularly scheduled issue on Tuesday, July 19.

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