Hospitals that weren't affected by cuts to the 340B drug discount program shouldn’t be required to repay any of those funds now that the Supreme Court ruled such cuts were unlawful, a key industry group said.
The American Hospital Association (AHA) made several filings in the U.S. District Court for the District of Columbia outlining its requests for how the Department of Health and Human Services (HHS) can repay cuts that started in 2018. The filings underscore the concerns the industry has over how HHS will make hospitals whole.
The AHA said that any repayments to hospitals should not factor in budget neutrality requirements, which would mandate that any new payments to affected 340B hospitals would have to come from somewhere else.
Federal law requires hospital payments under the Outpatient Prospective Payment System (OPPS) be budget neutral, but AHA argues that requirement applies only for future payments and not repayments.
“Nowhere does the OPPS statute speak of budget neutrality in connection with retrospective changes,” the filing said. The federal government has “no authority to recoup past payments to achieve budget neutrality.”
Any changes for a retrospective budget neutrality would also disrupt Congress’ “carefully crafted prospective payment system,” AHA wrote.
The Centers for Medicare & Medicaid Services can instead use data to refine projections for future payments, but it cannot adjust rates for prior years to “achieve budget neutrality simply because it ended up paying more (or less) than it expected to,” according to the motion.
AHA was particularly worried about certain rural and children’s hospitals that were exempt from getting their 340B payments cut. If CMS did apply budget neutrality to its repayment formula, then it could try to recoup payments from such entities, the group argued.
Starting in 2018, CMS imposed a 22.5% cut to payments to covered entities in the 340B program, where drugmakers agree to offer discounts to safety-net providers in exchange for participation in Medicare and Medicaid.
The AHA and other hospital groups sued over the cuts, with the case reaching the Supreme Court this past term. The court unanimously ruled in June that CMS did not have the statutory authority to install the cuts and sent the case back to the lower court to decide how to settle repayments.
How those repayments are done is a major priority for the hospital industry, and it wants the district court to “closely supervise” the process.
“Fairness dictates that the government not penalize other hospitals—which have long spent the funds that the government may seek to recoup—for [CMS’] own mistakes,” the motion said.
AHA also appealed to the lower court to find that payment cuts in 2020, 2021 and 2022 were also unlawful, even though the Supreme Court ruling only touched on 2018 and 2019.
CMS did not propose the cuts in the latest proposed OPPS rule and wrote it is still trying to figure out how to repay hospitals.