HHS issues final remedy for its unlawful 340B payment cuts from 2018 to 2022

Following last year’s unanimous Supreme Court decision in favor of the AHA and others, the Department of Health and Human Services Nov. 2 issued a final rule outlining the agency’s remedy for the unlawful payment cuts to certain hospitals that participate in the 340B Drug Pricing Program. 

HHS’ final rule contains two central components. First, HHS will repay 340B hospitals that were unlawfully underpaid from 2018 to 2022 in a single-lump sum payment. The final rule contains the calculations of the amounts owed to the approximately 1,600 affected 340B covered entity hospitals. Second, HHS finalizes a policy to recoup funds from those hospitals that received increased rates for non-drug services from 2018 to 2022. HHS will recoup these funds by adjusting the outpatient prospective payment system conversion factor by minus 0.5% starting in calendar year 2026 (one year later than HHS had originally proposed and as AHA advocated), making this adjustment until the full amount is offset, which the department estimates to be 16 years.

In a statement shared with the media, AHA President and CEO Rick Pollack said, “Following years of litigation and a unanimous Supreme Court win, the AHA is very pleased that 340B hospitals finally will be reimbursed in full for what HHS unlawfully withheld from them for five years. The one-time, lump-sum repayment hospitals will soon receive will help them to continue providing high-quality care to their patients and communities. However, HHS made a grievous mistake in choosing to claw back billions of dollars from America’s hospitals, especially those that serve rural, low-income and other vulnerable communities. HHS decided to ignore hundreds of comments from hospitals and other providers explaining why this Medicare cut is both illegal and unwise. The AHA will continue to review this rule and consider all available options going forward.”