Federal Appeals Court Overturns Prior 340B Decision, Allowing 340B Cuts to Hospitals to Proceed

August 06, 2020

The U.S. Court of Appeals for the District of Columbia Circuit on July 31 ruled in favor of the US Department of Health Human Services and against hospital groups in determining reimbursement cuts to certain 340B hospitals were legal. The decision overturned prior district court decisions from 2018 and 2019 which had determined HHS acted unlawfully in issuing the cuts. In Wisconsin, the cuts are estimated to account for about $40 million annually.
The 340B prescription drug discount 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 73% of the cost of care in Wisconsin) do not cover the full cost of care. However, CMS proposed cutting reimbursement for outpatient drugs acquired under the 340B program for most hospitals paid under the OPPS rule by about 30% in its 2018 rule and subsequent OPPS rules (see related article  also in this week’s newsletter). The cuts do not apply to sole community hospitals, children’s hospitals, PPS-exempt cancer hospitals, or critical access hospitals.
The American Hospital Association has vowed to continue fighting these cuts, but has not yet detailed whether it will appeal the ruling. WHA is working closely with the AHA and continuing to advocate for the importance of the 340B program with Wisconsin’s Congressional Delegation. Please contact WHA’s Director of Federal and State Relations, Jon Hoelter with any questions.

This story originally appeared in the August 06, 2020 edition of WHA Newsletter