A federal judge ordered HHS to come up with a remedial measure that would address hospital payment cuts under Medicare’s 340B drug discount program for 2018 and 2019, which the judge previously ruled were unlawful. A status report regarding HHS’ progress remedying the situation must be submitted to U.S. District Court Judge Rudolph Contreras by August 5.
The Decision
U.S. District Court Judge Rudolph Contreras ruled that the 340B drug reimbursement rate that HHS set in the 2019 Outpatient Prospective Payment System rule is unlawful. Several months after first vacating the 22% cut in 340B payments that HHS Secretary Alex Azar proposed late last year, Contreras reiterated that the cuts were implemented “in contravention of the Medicare Act’s plain text.”
Medicare Part B will sell prescription drugs to hospitals participating in the program at the average selling price plus 6%, well above the average selling price minus 22.5% as HHS had proposed.
“The Court also concludes that, despite the fatal flaw in the agency’s rate adjustments, vacating HHS’ 2018 and 2019 rules is not the best course of action, given the havoc vacatur may wreck on Medicare’s administration,” Contreras wrote in the 22-page ruling.
HHS will have “first crack” at crafting appropriate remedies for the two rules, according to the ruling.
340B Groups Pleased
A joint statement from a number of hospital organizations was pleased with the decision: “America’s 340B hospitals are pleased with the District Court’s decision and urge the U.S. Department of Health and Human Services (HHS) to follow the judge’s directive to promptly resolve the harm caused by its unlawful cuts to Medicare reimbursement for certain 340B hospitals. The ruling reaffirmed that the 2018 cuts were unlawful and extended that ruling to the 2019 cuts. Owing to the complexity of the Medicare program, the judge gave HHS first crack at fashioning a remedy for its unlawful actions. He also asked for a report from HHS on its progress on or before August 5, 2019. We urge HHS to promptly comply with the judge’s ruling and restore to 340B hospitals all funds that have been unlawfully withheld.”
Similarly, Maureen Testoni, President and Chief Executive Officer of 340B Health said: “On behalf of the nearly 1,400 hospitals we represent that participate in 340B, we are pleased that the court has, once again, found that HHS exceeded its statutory authority by cutting what Medicare pays for outpatient drugs delivered to their patients. The cuts made in 2018 and again in 2019 have reduced hospitals’ ability to care for those in need. The sooner this policy is reversed, the better hospitals will be able to serve the needs of patients with low incomes and those in rural communities. HHS must act quickly, as any further delay will only harm patients and the hospitals they rely on for care.”