340B hospitals’ Medicare Part B payment challenge is not the only Supreme Court case next term that will impact the 340B program.

Medicare Part B Payment Challenge Not Only Supreme Court Case That Will Impact 340B Program

In addition to agreeing to review 340B hospitals’ four-year challenge to deep Medicare Part B cuts, the U.S. Supreme Court said last week that it will take up a case that could impact the calculation used to determine hospital eligibility in the 340B program.

The court said July 2 that it will hear the case during its next term, which begins in October.

The case, Becerra v. Empire Health Foundation, challenges a 2005 rule that changed the way Medicare calculates disproportionate share hospital (DSH) payments. Under the rule, hospitals were unable to receive Medicare reimbursement and receive disproportionate share payments for patients whose hospital stays were no longer covered by Medicare Part A.

Two circuit courts sided with the Department of Health and Human Services finding the law was ambiguous and the HHS secretary’s interpretation of the law was reasonable. However, earlier this year, the 9th Circuit Court ruled in favor of Empire Health Foundation.  While the Supreme Court only agrees to review a select number of cases, its chances improved since the lower courts were split. 

The Supreme Court’s ruling in this case could have an impact on the 340B program as a hospital’s 340B eligibility is based on their Medicare DSH adjustment percentage. Specifically, the case could result in more hospitals qualifying for the 340B program, Barbara Williams, a principal at Powers Law, said.

“If the hospitals win the case, the DSH payment percentage for most hospitals will increase,” Williams said. That “will mean that more hospitals will qualify for the 340B program.”  However, the extent and scope of the increase is unclear, she added.

Williams also pointed out that U.S. Health Resources and Services Administration’s Office of Pharmacy Affairs (OPA) “only reviews eligibility for the 340B program prospectively, so hospitals would not be able to get retroactive 340B eligibility, even if the Supreme Court rules that CMS’ interpretation of the statute has impermissibly made the DSH percentage lower in the past.”