facebook linkedin twitter

Hospitals Push Back Against HHS Slashing of Reimbursement Rates

October 12, 2021 by Alexa Hornbeck
Hospitals Push Back Against HHS Slashing of Reimbursement Rates
(Photo via Pixabay)

WASHINGTON — The Department of Health and Human Services slashed 30% in Medicaid reimbursement rates to eligible hospitals under the 340B drug discount program.

The program, which has existed for 29 years, requires manufacturers of pharmaceutical companies under the Medicaid program to discount the price of prescription drugs and reimburse the savings to facilities and hospitals which primarily serve vulnerable communities, such as low-income and rural populations. 

“Rural hospitals that are impacted by the on-going 340B payment cuts, many of which were already facing significant financial challenges, are deprived of an important source of support for the services that they provide to their communities,” said Emily Cook, a partner at McDermott Will & Emery LLP who previously worked for the Federal Office of Rural Health Policy, in a phone interview with The Well News. 

Now, the American Hospital Association, the Association of Medical Colleges, and other supporters have filed a petition with the Supreme Court, based on, among other reasons, the fact that HHS did not collect adequate hospital acquisition cost survey data prior to slashing the reimbursement rate and that the payment cuts exceed HHS authority to set Medicare payment rates. 

In 2018, the Centers for Medicare and Medicaid Services began reducing the payment rate for drugs purchased through the 340B program based on a report from 2005 that calculated the acquisition costs for 340B drugs.  

CMS claimed it had the authority to make the payment reductions for 340B drugs reimbursed under Hospital Outpatient Prospective Payment System, known as OPPS, and indicated that the reductions would decrease government spending and out-of-pocket costs for Medicare beneficiaries.

However, the U.S. District Court for the District of Columbia found that CMS had exceeded its statutory authority in December 2018. 

According to Cook, whether or not CMS had authority to make these reductions under federal law depended on two provisions, one of which directs HHS to conduct a survey to provide proof that the reimbursement for such drugs is equal to the average acquisition cost for the drug.

“There is a provision in statute that does indicate that if HHS conducts a survey of acquisition costs, they are able to adjust payment rates for drugs paid under OPPS to acquisition costs. The argument that is being made by hospitals is that HHS has not conducted such a survey, and it was reasonably clear they had not conducted such a survey prior to implementing the payment cuts,”  said Cook.

Cook said that HHS did conduct a survey after the fact, as HHS issued a survey last year in the middle of the pandemic to gather information on acquisition costs to further support their ongoing pay cuts.

In July 2020, the DC Court of Appeals for the District of Columbia Circuit reversed the decision and found that CMS had authority to reduce Medicare payment rates for 340B drugs.

CMS later released a 2021 proposed rule for Medicare OPPS in August of the same year and has proposed applying the same cuts for 2022 that applied in prior years. 

On Sept. 24, a letter was filed by five hospital associations, including the Children’s Hospital and Catholic Health Association, to the Senate Committee on Health, Education, Labor, and Pensions, the House Committee on Energy and Commerce, and the House Ways and Means Committee, expressing the value of 340B in improving health outcomes for underserved patients in the country.

In the letter, the hospital associations urge Congress to ensure the legislation under consideration does not harm the program and providers and patients who rely on it. 

“It will be interesting to see where the court comes out on this, and whether they view the implementation of these payment cuts as consistent with the statute, and whether ultimately adjusting the payment rate in this manner based on the data that is available to HHS is consistent with what Congress intended,” said Cook.

Alexa Hornbeck can be reached at [email protected]

A+
a-

In The News

Health

Voting

In The News

January 18, 2022
by Dan McCue
Jan. 6 Committee Subpoenas Giuliani, Other Trump Attorneys

WASHINGTON — The Select Committee to Investigate the Jan. 6 Attack on the United States Capitol issued subpoenas Tuesday evening... Read More

WASHINGTON — The Select Committee to Investigate the Jan. 6 Attack on the United States Capitol issued subpoenas Tuesday evening to Rudolph Giuliani, Jenna Ellis, Sidney Powell and Boris Epshteyn. In a tweet, the committee said simply, “The four individuals advanced unsupported theories about election fraud,... Read More

January 18, 2022
by Dan McCue
Langevin Sees Future in Retirement Rather Than Reelection

WASHINGTON — Rep. Jim Langevin, D-R.I., won’t be seeking reelection to Congress in the fall, bringing the curtain down on... Read More

WASHINGTON — Rep. Jim Langevin, D-R.I., won’t be seeking reelection to Congress in the fall, bringing the curtain down on an 11-term congressional career. “Nearly 40 years ago, a tragic accident left me paralyzed. My dreams of becoming a police officer were crushed, and I was... Read More

January 18, 2022
by Dan McCue
McNerney to Bid House Adieu After 2022

WASHINGTON — Rep. Jerry McNerney, D-Calif., the Northern California Democrat who jumped from energy to public service, announced Tuesday he’s... Read More

WASHINGTON — Rep. Jerry McNerney, D-Calif., the Northern California Democrat who jumped from energy to public service, announced Tuesday he’s retiring at the conclusion of his third term. McNerney joined 26 other Democrats who have announced they plan to leave Congress after the midterm elections. In... Read More

January 18, 2022
by Dan McCue
AT&T, Verizon to Delay 5G Rollout Near Airports

WASHINGTON — AT&T and Verizon on Tuesday agreed to delay their rollout of new 5G services near some unspecified airports... Read More

WASHINGTON — AT&T and Verizon on Tuesday agreed to delay their rollout of new 5G services near some unspecified airports over ongoing concerns that moving those services to a new band could cause flight disruptions. Debate has been raging for months over whether — and if... Read More

January 18, 2022
by Tom Ramstack
FBI Warns of More Threats Against Religious Groups

WASHINGTON — The FBI and Department of Homeland Security sent a letter to faith-based organizations Monday warning them they remain... Read More

WASHINGTON — The FBI and Department of Homeland Security sent a letter to faith-based organizations Monday warning them they remain potential targets of violent extremists. The letter followed an extremist’s attack this weekend on a synagogue in Colleyville, Texas. The gunman was killed by police who... Read More

January 18, 2022
by Dan McCue
‘Eye of Nation Watching’ as Voting Rights Bill Appears Headed for Defeat

WASHINGTON — With the defeat of sweeping voting rights legislation all but certain in the Senate this week, Majority Leader... Read More

WASHINGTON — With the defeat of sweeping voting rights legislation all but certain in the Senate this week, Majority Leader Chuck Schumer stressed a different goal as he opened the chamber’s session on Tuesday, forcing all senators to go on the record about where they stand... Read More

News From The Well
scroll top