Stethoscope and laptop

On December 27, 2018, a federal judge awarded the American Hospital Association (AHA) a permanent injunction and ruled that the secretary of the U.S. Department of Health and Human Services (HHS) “does not have statutory authority” to reduce Medicare Part B drug reimbursement to hospitals participating in the 340B Drug Pricing Program.

As noted in a previous BKD Thoughtware® article, on November 1, 2017, the CMS final Outpatient Prospective Payment System rule reduced Medicare Part B reimbursement for separately payable drugs from average sales price (ASP) plus 6 percent to ASP minus 22.5 percent, effective January 1, 2018. It’s applicable to urban sole community hospitals, rural referral centers and disproportionate share hospitals.

The AHA and America’s Essential Hospitals subsequently sued CMS, claiming CMS overstepped its statutory authority; however, the lawsuit was initially dismissed. An appeal was filed and lost in July 2018 and refiled in September 2018, which led to the ruling on December 27, 2018.

The judge has not reversed the reimbursement reductions that were taken in 2018 and it’s unclear as to how future reimbursement reductions will be handled. The federal judge has requested that both parties present arguments on an appropriate remedy within 30 days.

For more information on these matters, contact Claire or your trusted BKD advisor.

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