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  • Washington Highlights

    US Appeals Court Hears Arguments on 340B Cuts

    Ivy Baer, Senior Director and Regulatory Counsel

    The DC Circuit Court of Appeals Nov. 8 heard oral arguments in the appeal of the District Court decision that found that the Centers for Medicare and Medicaid Services (CMS) did not have the authority to cut payments to hospitals that participate in the 340B Drug Pricing Program under the outpatient prospective payment system (OPPS). The government argued that paying 340B hospitals at the OPPS rate is an overpayment. Plaintiffs responded that it was Congress’ intention to allow qualifying hospitals to retain the 340B savings on drugs.

    The suit was originally filed by the AAMC, American Hospital Association, and America’s Essential Hospitals in Sept. 2018 to challenge reductions of nearly 30%for certain separately payable Medicare Part B drugs as being beyond the authority of the Health and Human Services (HHS) Secretary [see Washington Highlights, Sept. 8, 2018]. The District Court agreed with the plaintiffs in a Dec. 2018 ruling [see Washington Highlights, Jan. 11]. HHS appealed the District Court ruling on July 15.

    Despite the District Court decision, CMS included the cuts to calendar year (CY) 2019 OPPS payment rates. The AAMC and other plaintiffs requested that the District Court extend its ruling to the 2019 cuts, which the Court did. Nonetheless, when the final CY 2019 OPPS rule was published, HHS included the payment cuts to 340B hospitals [see Washington Highlights, Nov. 9, 2018]. The cuts were again included in the CY 2020 OPPS final rule [see Washington Highlights, Aug. 2].

    It is not known when the Court of Appeals will issue its decision. The attorney representing the associations and hospitals asked the Court to decide the case before Jan. 1, 2020 to avoid the further unlawful cuts that are scheduled to go into effect on that date.