Supreme Court Rebukes Medicare for Cutting 340B Hospital Rates

The court ruled that the U.S. Department of Health and Human Services failed to conduct a survey of acquisition costs, thus putting in violation of the law when it reduced reimbursement rates.

Yesterday was a big day for 340B Health.

In a bulletin to its hospital members, Maureen Testoni, president and CEO for the healthcare advocacy organization, lauded the decision yesterday by the U.S. Supreme Court that struck down Medicare cuts to 340B hospitals.

“We applaud the U.S. Supreme Court for making the correct decision in striking down these Medicare cuts to payments for 340B drugs,” Testoni said in a statement received by RACmonitor. “Some safety-net hospitals have reported being forced to eliminate or scale back services to patients in need because of the reductions that have been in place since 2018.”

Testoni singled out Associate Justice Brett Kavanaugh, who, in writing for the court, said “340B hospitals perform valuable services for low-income and rural communities, but have to rely on limited federal funding for support.”

“We look forward to the next stage of the process involving remedies for hospitals that have been affected by these unlawful cuts,” Testoni wrote. “We also renew our call for the Centers for Medicare & Medicaid Services (CMS) to abandon its policy of targeting 340B drugs for lower payment rates as it works to propose Medicare rates for 2023.”

Yesterday’s decision was based on that fact that the Department of Health and Human Services (HHS) did not survey participating 340B hospitals’ acquisition costs before imposing the cuts, thereby violating protections in the law against varying payment rates for certain hospitals.

The Court’s action today overturned a lower court decision that was in favor of HHS on this issue, and sent the case back to that court for further proceedings.

The decision, however, did not weigh in on remedies for hospitals that have been impacted by the cuts.