On Tuesday, a federal judge ordered the Department of Health and Human Services to develop a plan to correct the underpayment of 340B hospitals under rules the Supreme Court found illegal.
In 2018, the Centers for Medicare and Medicaid Services cut 340B reimbursements by almost 30%, saving $1.6 billion. The agency redistributed the money to all hospitals, which caused frustration among the hospitals participating in the 340B program. According to the Health Resources and Services Administration, the 340B program provides these hospitals with drug rebates ranging from 25% to 50%.
In June, the Supreme Court ruled that HHS did not have the legal authority to make changes to the 340B program without determining how much hospitals pay for outpatient drugs. Following this decision, CMS offered to reimburse 340B drugs at the same rate as other drugs, which caused controversy among providers.
The American Hospital Association and Essential Hospitals of America, the plaintiffs in the case, complained about Judge Rudolph Contreras of the U.S. District Court for the District of Columbia for ceding HHS. Hospitals that lost $340 billion due to the 2018 ruling have asked the court to overturn the rules and dictate terms to HHS.
“For more than five years, the Department of Health and Human Services has illegally withheld vital 340B hospital funding that helps them deliver a range of important benefits to their patients and communities. We are disappointed that the District Court has decided to extend this stay, remanding this case back to the department to determine an appropriate remedy,” Melinda Hutton, General Counsel and Secretary of the American Hospital Association, said in a statement.
This is the court’s latest move regarding how HHS should correct payment discrepancies from 2018 to 2022. In September, Judge Contreras ordered HHS to restore $340 billion in payments for the remainder of 2022.