Hospital groups sue HHS over planned 340B cuts

The nation's leading hospital associations and several health systems on Monday officially sued HHS over a plan to slash 340B drug payments to hospitals.

The American Hospital Association, the Association of American Medical Colleges and America's Essential Hospitals alleged in their complaint that the 340B cut goes beyond the HHS secretary's statutory authority. The groups hope a federal judge in Washington, D.C., will prevent HHS from implementing the planned $1.6 billion in cuts.

The CMS' final rule changes the 340B program's payment calculation. Previously, providers participating in 340B received 6% on top of the average sales price of a drug. Under the new rule, the CMS would pay just over $65,000 for a drug that costs $84,000. It currently would pay $89,000 for that drug. Vaccine payments would not change under the calculation change.

Eastern Maine Healthcare Systems, Henry Ford Health System, and Park Ridge Health, part of Adventist Health System, are also listed as plaintiffs in the suit.

The CMS has argued that the $1.6 billion deduction is not a cut as it is budget-neutral, and the money will be redistributed across all providers paid under the outpatient fee schedule.

The associations say their members rely heavily on 340B payments to fund critical health programs in their communities.