Judge Rules in Favor of 340B Hospitals Again

May 14, 2019

On May 6, federal Judge Rudolph Contreras ruled that the U.S. Department of Health & Human Services (HHS) again exceeded its statutory authority when it decreased payments to 340B hospitals by nearly 30% in the 2019 Outpatient Prospective Payment System (OPPS) rule. The ruling comes on the heels of a similar ruling by Judge Contreras in December 2018 declaring the same cuts under the 2018 OPPS rule were unlawful. In the previous ruling, the court had asked HHS and the plaintiffs to suggest remedies for the court to explore.

In his most recent opinion, Judge Contreras considered the plaintiffs’ suggestions submitted after the December 2018 ruling in which the plaintiffs noted a remedy would not need to be budget neutral. In other words, HHS could repay the losses to hospitals impacted by the 2018 and 2019 rules without having to recoup that money from other outlays paid out in the OPPS system. The judge did not make a determination on that point, and instead asked HHS to take “the first crack at crafting appropriate remedial measures” by August 5. The American Hospital Association has since filed a motion requesting HHS to move up the deadline to June 28 in advance of HHS proposing a 2020 OPPS rule.

The 340B prescription drug program helps hospitals that serve a disproportionate share of Medicaid recipients obtain certain outpatient prescription drugs at a discount. The program was created to stretch scarce federal resources, recognizing that Medicare rates (which pay about 75% of the cost of care in Wisconsin) do not cover the full cost of care.

It is important to note that HHS may still appeal this decision, which makes full resolution of this issue still very uncertain. In the meantime, 340B hospitals impacted by the OPPS rules are encouraged to continue taking steps to preserve their appeal rights. 340B hospitals are also encouraged to sign onto the American Hospital Association’s good stewardship principles to better communicate the program’s value to Congress.

For questions, contact WHA Director of Federal and State Relations Jon Hoelter.

This story originally appeared in the May 14, 2019 edition of WHA Newsletter