AHA Calls for Timely Repayment to 340B Hospitals After Unlawful Cuts

The American Hospital Association (AHA) has asked HHS to ensure 340B hospitals receive timely repayment following the Supreme Court’s decision that the department’s 340B Medicare reimbursement cuts were unlawful.

In a letter to HHS Secretary Xavier Becerra, the hospital organization voiced concerns that hospitals would not be appropriately compensated for these withheld funds as facilities face financial challenges. AHA requested to meet with Becerra to discuss the best way to overcome these concerns.

The request comes shortly after the Supreme Court sided with AHA and ruled that HHS violated the Medicare statute when it implemented reimbursement cuts for hospitals participating in the 340B Drug Pricing Program.

The court determined that HHS did not have the authority to vary reimbursement rates by hospital groups because it did not conduct a survey of hospital acquisition costs for prescription drugs.

Following the decision, AHA has stated that 340B hospitals should receive prompt repayment for the funds that were withheld due to the reimbursement cuts. In addition, AHA asserted that hospitals should be paid for all of the years—2018 to 2022—in which CMS unlawfully cut payment rates.

When a federal district court previously deemed the cuts unlawful, the former Administration took steps that would have delayed the repayments to hospitals.

For example, the Administration requested a remand to HHS to determine the appropriate remedy and conducted a notice-and-comment rulemaking on the remedy. Additionally, the Administration opposed AHA’s motion for an expedited remedy and suggested that affected hospitals pursue repayment on a hospital-by-hospital basis.

The letter also noted that the prior Administration falsely determined that HHS was required to maintain budget neutrality when establishing the appropriate repayments.

“As you know, that position would mean that some hospitals will be forced to pay back money spent years ago — including during the COVID-19 pandemic — because the federal government made a legal error,” AHA wrote. “Hospitals should not have to pay for the agency’s mistakes.”

AHA urged HHS not to apply budget neutrality when determining the appropriate remedy as all nine Supreme Court Justices ruled that the department violated the law.

The letter also asked that HHS not rely on a previously cited 2020 survey when proposing future reimbursement costs.

According to AHA, the cited survey was flawed because it was issued during the onset of the COVID-19 pandemic when 340B hospitals were struggling to respond to the public health emergency. Only 7 percent of hospitals that received the survey responded with acquisition cost data—a response rate that does not generate a statistically significant estimate.

In addition, the survey specified that only 340B hospitals had to respond, which does not meet statutory requirements, AHA said.

Relying on data from this survey to establish future reimbursement rates would not be accurate, the letter stressed.

AHA requested a chance to meet with HHS to ensure that hospitals and health systems receive repayment promptly.

“We are confident that we can work together to assure a fair and equitable resolution of these issues, which have already taken far too long to resolve, at great cost to the entire hospital field,” the letter concluded.