CHA News Article

Federal Judge Rules Against 340B Reimbursement Cuts

Last week, a federal judge ruled that the Department of Health and Human Services (HHS) exceeded its authority in the 2018 outpatient prospective payment system (OPPS) by substantially reducing reimbursements under the 340B Drug Pricing Program.

“While the secretary is permitted to make ‘adjustments’ to those rates for whatever reasons he deems ‘necessary,’ adjustments are all he can make,” Judge Rudolph Contreras wrote. “He cannot fundamentally rework the statutory scheme — by applying a different methodology than the provision requires.”

The 2018 OPPS final rule changed 340B payments from average sales price plus 6 percent to average sales price minus 22.5 percent, for an estimated loss of $1.6 billion to 340B hospitals. The 2019 OPPS final rule includes the same payment methodology. However, the lawsuit did not explicitly challenge the 2019 OPPS rule.

In light of the ruling, the U.S. District Court in Washington, DC, directed the parties to provide a supplemental briefing on the appropriate remedy within 30 days of its decision. Depending on the court’s decision, one or both parties may appeal, which would cause the case to stretch well into 2019 and possibly beyond. Since the decision did not affect the rate reduction in the 2019 OPPS rule, it is possible that the plaintiffs will challenge that rule as well.

CHA will continue to update member hospitals on the progress of the case and other developments related to the 340B program.

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