CHA News Article

Hospital Groups Refile Lawsuit to Reverse 340B Payment Cuts

Earlier this week, hospital representatives — including the American Hospital Association, the Association of American Medical Colleges, America’s Essential Hospitals and three hospital plaintiffs — refiled a lawsuit seeking relief from Medicare payment cuts to hospitals participating in the 340B Drug Pricing Program. The cuts reduced Medicare payments by nearly 30 percent, or $1.6 billion, to certain hospitals for outpatient drugs purchased under the 340B program.

Late last year, a federal district court granted the government’s motion to dismiss an earlier lawsuit that sought to prevent these payment cuts, which consequently became effective Jan. 1, 2018. At the time, the judge who ruled on the case did not address the case’s merits, instead holding that plaintiffs must first present a concrete claim for reimbursement to the Department of Health and Human Services. In July, an appeals court further delayed ruling on the case because no claims had been filed when the lawsuit to prevent the cuts was initially filed. 

After the cuts took effect in January, the hospital plaintiffs filed claims that have since progressed through the appeals process. The new, refiled lawsuit argues that the Centers for Medicare & Medicaid Services’ calendar year 2018 outpatient prospective payment system final rule, which implemented the payment cuts, violates the Administrative Procedure Act and exceeds the agency’s statutory authority.

Previously, CHA and 32 other state and regional hospital associations had submitted an amicus (friend of the court) brief supporting the plaintiffs’ claims.