Hospitals sue for third time against 340B cuts

Hospitals led by the American Hospital Association are mounting another legal fight against the CMS outpatient pay rule that starting Jan. 1 will cut Medicare Part B drug reimbursements for hospitals part of the 340B program.

The agency recently proposed extending those cuts to outpatient facilities in order to curb any potential "behavioral changes" by providers.

A federal appellate court in July rejected hospitals' appeal of a previous ruling against their attempt in a U.S. District Court to block the rule from taking effect at all. But the court did not rule on the merits of the case, since at the time of the original lawsuit in late 2017 the rule had not been finalized yet and no claims reflecting the reimbursement cuts had been filed.

The hospital plaintiffs said Wednesday that filed claims have moved through federal appeals process and are now seeking "expedited relief."

Hospitals have estimated that the reimbursement cuts of 22.5% off the drug list price amount to $1.6 billion each year. They argue that the CMS rule was an overreach of the HHS secretary's administrative authority.

The AHA was joined by two additional industry groups, the Association of American Medical Colleges and America's Essential Hospitals. Three hospital plaintiffs—Eastern Maine Healthcare Systems; Henry Ford Health System in Detroit; and Park Ridge Health, Hendersonville, N.C., part of Adventist Health System—have joined the suit, which will return to U.S. District Court for the District of Columbia.

Lawmakers who are negotiating potential reforms to the 340B drug discount program have said that progress on legislation could hinge on the outcome of the lawsuit, since supporters of the 340B program want to block the Part B cuts.