Hospitals ask appeals court to overturn 340B program cuts
The American Hospital Association wants a federal appeals court to revisit a July decision upholding HHS’ cuts to the 340B drug discount program, according to a court filing Tuesday.
The U.S. Court of Appeals for the District of Columbia Circuit in July voted 2-1 to uphold HHS’ decision to lower some Medicare outpatient drug payments by 28.5% at 340B hospitals, which the agency first proposed in 2017. Chief Judge Sri Srinivasan wrote in the court’s opinion that HHS had the legal power to cut pay for 340B hospitals “to avoid reimbursing those hospitals at much higher levels than their actual costs to acquire the drugs.”
The industry group asked the full D.C. Circuit to reconsider the case. The Association of American Medical Colleges and America’s Essential Hospitals joined the petition.
“That cut will threaten the ability of 340B hospitals to maintain their services to vulnerable communities — a risk that is especially acute as a pandemic continues to sweep the nation with a disproportionate effect on low-income and minority populations,” AHA wrote in its petition. “Before HHS is able to inflict such a devastating blow to safety-net hospitals and their patients, the full court should review HHS’ authority.”
Hospital groups had argued that CMS inappropriately used information on the large discrepancy between hospitals’ acquisition costs for drugs and their 340B reimbursements to justify the payment formula changes. In a partial dissent, Judge Cornelia Pillard agreed with hospitals’ argument that HHS did not have valid data to justify rate cuts to a specific subset of hospitals and said it would significantly affect hospital funding.
According to the petition, the three-judge panel made a mistake when it ruled that HHS’ ability to adjust the program wasn’t limited to minor changes because it allegedly contradicted earlier court rulings. AHA’s attorneys claim the judges didn’t adequately consider the importance of the changes either.
“HHS’ rate cut, if upheld, would deprive these financially vulnerable hospitals of about $1.6 billion per year—threatening their ability to care for patients who need it most. It is critical that this court enforce the limits that Congress placed on HHS’ authority—limits that prevent HHS from singling out 340B hospitals for abrupt, disfavored treatment,” the petition said.