CHA News Article

Appeals Court Upholds Payment Cut for 340B Hospitals
For CFOs, pharmacy managers 

On Friday, the U.S. Court of Appeals for the District of Columbia Circuit overturned a 2018 district court decision that found the Department of Health and Human Services (HHS) exceeded its statutory authority when it reduced 2018 and 2019 Medicare payment rates for many hospitals in the 340B Drug Pricing Program by nearly 30%.  

“We hold that HHS’s decision to lower drug reimbursement rates for 340B hospitals rests on a reasonable interpretation of the Medicare statute,” Chief Justice Sri Srinivasan said in the opinion for the court

The American Hospital Association, Association of American Medical Colleges, America’s Essential Hospitals, and three hospital plaintiffs challenged the $1.6 billion per year payment cut for outpatient drugs purchased under the 340B program, arguing that the 340B provisions in the calendar year 2018 and 2019 outpatient prospective payment system final rule violated the Administrative Procedure Act and exceeded the agency’s statutory authority.  

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