CMS Not Giving Up on 340B Based Payment Cuts
The Centers for Medicare and Medicaid Services (CMS) has not given up on attempting to take a piece of hospital 340B Program savings via reimbursement cuts. Prior to 2018, the department of Health and Human Services (HHS) determined reimbursement based on the Outpatient Prospective Payment System (OPPS) formula of average sales price plus six percent. But HHS moved to reduce payments to hospitals using 340B pricing in 2018 when it altered the OPPS formula for 340B covered entity reimbursement to average sales price minus 22.5%. This resulted in a very significant 30 percent cut for 340B hospitals.
Several hospital groups elected to sue HHS over the cuts last year. The hospital groups opined that HHS overstepped its authority when it reduced 340B reimbursements and there is no basis in law for paying 340B hospitals less than the full statutory rate. A federal judge last December sided with the hospitals and reversed the cuts because the HHS had based the new rates on agency estimates of 340B hospital drug acquisition costs and not the drugs’ average sales prices. However, hospitals were not eligible to go back and recoup their losses on the cuts to date under that ruling. 340B Health has noted that Medicare officials “can implement a remedy that is easily administered, not disruptive to the Medicare program or its beneficiaries, does not require new rulemaking, and fully compensates 340B hospitals for the amount lost due to the unlawful payment reduction,” and has called on the administration to implement a remedy that recalculates 2018 and 2019 pay rates at the full statutory rate and retroactively pays back affected hospitals with interest.
Despite the December ruling against CMS’s 340B reimbursement cuts, the agency has appealed and has plans to move ahead with the changes if successful on the appeal. If the appeal is successful, the CMS will require data on the actual prices that hospitals pay for drugs under the 340B program to calculate average sales prices and make the cuts. To reinforce this, the CMS issued a notice that it will collect this 340B pricing information. CMS indicated in it’s notice: “This will ensure that the Medicare program uses taxpayer dollars prudently while maintaining beneficiary access to these drugs and allowing beneficiary cost-sharing to be based on the amounts hospitals actually pay to acquire the drugs.”