Hospital groups sue HHS over 340B payment cuts

Three hospital groups and several individual hospitals have filed suit against the Department of Health and Human Services to prevent billions in cuts to the 340B drug discount program. 

The American Hospital Association, Association of American Medical Colleges and America's Essential Hospitals filed the suit (PDF) alongside Eastern Maine Healthcare Systems in Brewer, Maine, Henry Ford Health System in Detroit, and Park Ridge Health in Henderson, North Carolina.

The AHA said it would pursue legal action after the Centers for Medicare & Medicaid Services issued a final rule that would cut 340B payments. 

CMS' final Hospital Outpatient Prospective Payment Rule set 340B payment rates at 22.5% less than the average sales price for drugs. Previously, CMS paid up to 6% more than the average sales price. The change will cut $1.6 billion in drug discount payments. 

RELATED: 340B program doesn't cause drug price increases, study finds 

The suit argues that the 340B elements included in the OPPS rule violate the Social Security Act, and seeks an injunction preventing HHS from implementing the new payment rate until the lawsuit is resolved. 

Cutting 340B payments "will dramatically threaten access to healthcare for many patients, including uninsured and other vulnerable populations," AHA President Rick Pollack said in an announcement. “From its beginning, the 340B Drug Pricing Program has been critical in helping hospitals stretch scarce federal resources to enhance comprehensive patient services and access to care." 

RELATED: Hospitals, drug companies and oncology patients are in an uneasy financial dance 

The 340B program accounts for a fraction of the drug purchases in the U.S. and does not come at a cost to taxpayers, the groups said in the announcement. The program accounts for just 2.8% of the $457 billion spent each year on drug payments. 

CMS first revealed the changes in a proposed rule posted in July. Since then, multiple industry groups and the agency's own Advisory Panel on Hospital Outpatient Payment have urged CMS to reconsider the drug payment cuts.  

The groups' lawsuit "underscores the serious threat CMS' policy poses to millions of Americans," Bruce Siegel, M.D., president of America's Essential Hospitals said in the announcement. 

“This decision will penalize safety net hospitals that participate in the 340B program, forcing them to curtail critical programs in communities around the country,” said AAMC President Darrell G. Kirch, M.D. “The life-saving services provided to patients as a result of 340B savings have been put in jeopardy by this harmful illegal regulatory change.”