The U.S. District Court for the District of Columbia on December 27 issued a permanent injunction to the Centers for Medicare and Medicaid Services (CMS), halting the federal government’s nearly 30% reduction in reimbursements to certain hospital outpatient departments purchasing drugs through the 340B program.
CMS’ 2018 outpatient prospective payment system (OPPS) rule issued in November 2017 contained the 340B reduction. Specifically, it reduced 340B drug payments from the average sales price (ASP) of the drug plus 6%, to ASP minus 22.5%. Affected hospitals – mainly disproportionate share hospitals – estimated the payment policy would cost them more than $1.6 billion annually. The American Hospital Association and other hospital groups then brought suit.
In the recent ruling, the District Court judge essentially ruled that by imposing a nearly 30% payment cut, CMS “fundamentally altered the statutory scheme established by Congress” to set reimbursement rates, and exceeded its authority.
But the judge stopped there. He did not rule in favor of reimbursing hospitals for the money lost during 2018 due to the reimbursement cut, nor did he halt 340B payment reductions that went into effect on January 1, 2019. He did request briefs from the parties on an appropriate remedy. Observers expect CMS to appeal the ruling on the 2018 OPPS, and the hospital groups to bring suit to halt the 2019 OPPS 340B payment reductions.