Hospitals file lawsuit to block 340B drug payment cut
- The American Hospitals Association (AHA) and other organizations have made good on their promise to sue the federal government in an effort to halt a major cut planned for the 340B Drug Pricing Program.
- The hospitals are arguing the reimbursement change exceeds the authority of the HHS secretary and is “arbitrary and capricious.” They ask the court to force HHS to delay implementation or strike the cut entirely.
- In addition to AHA, plaintiffs include America’s Essential Hospitals, the Association of American Medical Colleges, Eastern Maine Healthcare Systems (Brewer, Maine), Henry Ford Health System (Detroit) and Adventist Health System’s Park Ridge Health (Henderson, North Carolina).
HHS released a final rule earlier this month that changes the amount 340B hospitals will be paid for most drugs to 22.5% less than the average sales price starting at the beginning of next year. Currently those hospitals are paid the average price plus 6%.
The cut of about 30% would hurt nonprofit hospitals’ margins, according to a recent report from Moody’s. The CMS has argued the change would reduce out-of-pocket costs and improve patient-provider relationships. The agency has calculated the 340B cut would save about $900 million next year.
AHA has been strongly critical of the cut, saying it threatens patient care, particularly for vulnerable populations that are most likely to use safety net hospitals benefiting from the drug payment program. In a press release announcing the lawsuit, AHA President Rick Pollack said the program helps hospitals “stretch scarce federal resources” to improve care quality and access. “CMS’s decision to cut Medicare payments for so many hospitals for drugs covered under the 340B program will dramatically threaten access to healthcare for many patients, including uninsured and other vulnerable populations. This lawsuit will prevent these significant cuts from moving forward.”
The 340B program has come under some scrutiny recently because it is loosely regulated. Lawmakers have said there should be more regulatory oversight of the program as well as a method for tracking how much hospitals save and how they spend those savings.
A recent report found 340B hospitals had a larger decrease in charity care spending than other hospitals, but AHA said the study was misleading and incomplete. Hospital executives testifying before Congress recently said their hospitals do track savings from the program and have systems in place to self-regulate.
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