Appeals court upholds nearly 30% payment cut to 340B hospitals

https://www.fiercehealthcare.com/hospitals/appeals-court-upholds-nearly-30-payment-cut-to-340b-hospitals?mkt_tok=eyJpIjoiWkRReFlqRmpaamRtWVdabSIsInQiOiJFTEp3SjQ3NG01NXcwRTg3Z0hCZkdTRlwvOURSeEVlblwvRlFUWlZcL09ONjZGNVEybzl3ekl3VFd2ZEgxSjY2NGQ0TkFIRFdtQ0ZDWUx0ak96NU15d09qMWcrdm9BMFUxOSszcVI0T21rak5raEN0aE5Kb0VUUGFcL254QnBjMjdCbzkifQ%3D%3D&mrkid=959610

In court filing, AHA says HHS should make 340B hospitals 'whole ...

A federal appeals court has ruled the Trump administration can install nearly 30% cuts to the 340B drug discount program.

The ruling Friday is the latest legal setback for hospitals that have been vociferously fighting cuts the Department of Health and Human Services (HHS) announced back in 2017.

340B requires pharmaceutical manufacturers to deliver discounts to safety net hospitals in exchange for participation in Medicaid. A hospital will pay typically between 20% and 50% below the average sales price for the covered drugs.

HHS sought to address a payment gap between 340B and Medicare Part B, which reimburses providers for drugs administered in a physician’s office such as chemotherapy. There was a 25% and 55% gap between the price for a 340B drug and on Medicare Part B.

So HHS administered a 28.5% cut in the 2018 hospital payment rule. The agency also included the cuts in the 2019 payment rule.

Three hospital groups sued to stop the cut, arguing that HHS exceeded its federal authority to adjust the rates to the program.

A lower court agreed with the hospitals and called for the agency to come up with a remedy for the cuts that already went into effect.

But HHS argued that when it sets 340B payment amounts, it has the authority to adjust the amounts to ensure they don’t reimburse hospitals at higher levels than the actual costs to acquire the drugs.

If the hospital acquisition cost data are not available, HHS could determine the amount of payment equal to the average drug price. HHS argued that hospital cost acquisition data was not available and so HHS needed to determine the payment rates based on the average drug price.

The court agreed with the agency’s interpretation.

“At a minimum, the statute does not clearly preclude HHS from adjusting the [340B] rate in a focused manner to address problems with reimbursement rates applicable only to certain types of hospitals,” the ruling said.

The court added that the $1.6 billion gleaned from the cuts would go to all providers as additional reimbursements for other services.

340B groups were disappointed with the decision.

“These cuts of nearly 30% have caused real and lasting pain to safety-net hospitals and the patients they serve,” said Maureen Testoni, president and CEO of advocacy group 340B Health, which represents more than 1,400 hospitals that participate in the program. “Keeping these cuts in place will only deepen the damage of forced cutbacks in patient services and cancellations of planned care expansions.”

This is the latest legal defeat for the hospital industry. A few weeks ago, the same appeals court ruled that HHS had the legal authority to institute cuts to off-campus clinics to bring Medicare payments in line with physician offices, reversing a lower court’s ruling.

The groups behind the lawsuit — American Hospital Association, American Association of Medical Colleges and America’s Essential Hospitals — slammed the decision as hurtful to hospitals fighting the COVID-19 pandemic. But the groups didn’t say if it would appeal the decision.

“Hospitals that rely on the savings from the 340B drug pricing program are also on the front-lines of the COVID-19 pandemic, and today’s decision will result in the continued loss of resources at the worst possible time,” the groups said in a statement Friday.

 

 

 

Hospitals lose legal challenge to 340B drug payment cut

https://www.healthcaredive.com/news/hospitals-lose-legal-challenge-to-340b-drug-payment-cut/582717/?utm_source=Sailthru&utm_medium=email&utm_campaign=Newsletter%20Weekly%20Roundup:%20Healthcare%20Dive:%20Daily%20Dive%2008-01-2020&utm_term=Healthcare%20Dive%20Weekender

340B Program: Important, but Weaknesses Cited - Pharmacy Practice News

Dive Brief:

  • A significant rate cut for some medications for 340B hospitals was based on a “reasonable interpretation of the Medicare statute” and can stand, the U.S. Court of Appeals for the District of Columbia ruled Friday.
  • The 2-1 ruling overturns a district court decision that HHS overstepped its bounds when it cut the reimbursement rate for a certain category of outpatient drugs by 28.5% for hospitals enrolled in the 340B drug discount program.
  • The American Hospital Association, which challenged the rate cut along with three individual hospitals, did not immediately respond to a request for comment. An advocacy group for 340B hospitals said in a statement it was disappointed in the ruling and that the rate change has “caused real and lasting pain to safety-net hospitals and the patients they serve.”

Dive Insight:

The decision is another major blow for hospitals, coming two weeks after the same court ruled HHS also acted within its authority when it reduced payments to off-campus hospital outpatient departments.

AHA said this week it is seeking to have that ruling overturned.

HHS made the cut to 340B hospital outpatient drug reimbursement in the 2018 Outpatient Prospective Payment System rule, arguing that those hospitals, which primarily serve low-income populations, get the drugs at a deep discount and thus could be incentivized to overuse them.

The cut was from 106% of the average sales price to 22.5% less than ASP. Hospitals immediately sued, but HHS retained the reduction in the 2019 OPPS. The department has said the change would save Medicare $1.6 billion in 2018.

Writing for the court, Chief Judge Sri Srinivasan said the department did indeed have the authority to make the reduction, “so as to avoid reimbursing those hospitals at much higher levels than their actual costs to acquire the drugs.”

He also called the cut “a fair, or even conservative, measure of the reduction needed to bring payments to those hospitals into parity with their costs to obtain the drugs.”

In a partially dissenting opinion, Circuit Judge Cornelia Pillard wrote that she believes the statute only allows HHS to make the change for a specific group of hospitals under a clause that requires the agency to use a certain data set it did not use.

 

 

 

 

Appeals court rules HHS has authority to implement site-neutral payments, dealing blow to hospitals

https://www.fiercehealthcare.com/hospitals/appeals-court-rules-hhs-has-authority-to-implement-site-neutral-payments-dealing-blow-to?mkt_tok=eyJpIjoiWXpGa016azRZekJqTTJZeSIsInQiOiJ6ajZGSWlYUGh1TTZqTFBDMEgwaXk3ZFZZSCtBVkdUWHNhemZ0SDJZWnhJVHlHVUpjRTdFVUlpbVBSdng4dTFXUEhhOGV2S3lRcElVVWNuZWpqakdEZE1DRmhleHRzdlY4RDRxYkxtZUNYNVI3Rmg5Kys5SVd1aGdseUR6Y1hxSCJ9&mrkid=959610

Appeals court rules HHS has authority to implement site-neutral ...

A federal appeals court ruled the Department of Health and Human Services has the authority to cut Medicare payments to off-campus clinics to bring them in line with independent physician practices, reversing a lower court’s decision.

The ruling from the U.S. Court of Appeals for the District of Columbia delivered Friday strikes a major blow to the hospital industry which has been fighting HHS over the controversial rule.

The American Hospital Association (AHA) led a lawsuit against HHS arguing it did not have the statutory authority to cut payments to the off-campus, provider-based departments. HHS made the cuts in its annual hospital payments rule and the hospitals argued they were unlawful because the cuts were not budget-neutral, a requirement of the payment rule.

But the appeals court agreed with HHS that it had the authority to make the change in the payment rule because of how the law is structured.

 

 

 

 

Hospitals lose challenge to 2020 site-neutral pay cuts

https://www.beckershospitalreview.com/finance/hospitals-lose-challenge-to-2020-site-neutral-pay-cuts.html?origin=CFOE&utm_source=CFOE&utm_medium=email

Image result for site-neutral pay cuts

A Washington, D.C., federal judge ruled Dec. 16 that the court cannot stop CMS from enacting site-neutral payments for off-campus providers in 2020.

In its final Outpatient Prospective Payment System rule for 2019, CMS made payments for clinic visits site-neutral by reducing the payment rate for evaluation and management services provided at off-campus provider-based departments.

In an attempt to overturn the rule, the American Hospital Association and dozens of hospitals sued CMS, arguing it exceeded its authority when it finalized the cuts in the rule.  

U.S. District Judge Rosemary Collyer sided with the association and other hospitals in September, ruling CMS overstepped its authority when it expanded the site-neutral pay policy. But CMS moved forward with the site-neutral  cuts in its 2020 OPPS rule, slashing off-campus department payments to a rate of 40 percent of the OPPS rate.

The association asked Ms. Collyer to uphold her September decision in an attempt to stop the 2020 payment cuts from taking effect Jan. 1, but ruled Dec. 16 that the court doesn’t have jurisdiction to stop the continuation of the cuts next year.

“As a technical matter, the government correctly argues that the court’s previous order was limited only to the 2019 final rule,” the judge wrote.

The court loss for the association representing hospitals comes just days after CMS agreed to repay hospitals that were paid at the reduced rate this year.

“The AHA and other plaintiffs remain confident that the courts will find the 2020 cuts to be illegal, just as they found the 2019 cuts,” Melinda Hatton, the AHA’s general counsel, wrote in a statement to Becker’s Hospital Review.

Access the full ruling here.

 

 

 

 

Hospitals win back $800 million from Medicare

https://www.axios.com/hospitals-medicare-trump-administration-regulation-c7161fba-51b8-421b-b1d6-3e4615dd265c.html

Illustration of a statue of Justice wearing a doctor's coat and a stethoscope

The Trump administration is backtracking on a major policy that cut payments to hospitals while the policy is stuck in the courts.

The big picture: The hospital industry is getting back almost $800 million, and the Trump administration has failed to implement another regulation — one that most experts support, too.

Details: Any hospital that was paid a lower amount for a routine clinic visit in 2019 will automatically be paid the difference from the older, higher amount, the Centers for Medicare & Medicaid Services said in a bulletin on Thursday.

  • CMS wanted to create a level playing field, arguing that hospitals should not be paid more for these standard checkups when they could be done for far less in an independent doctor’s office.
  • Hospitals naturally hated the idea, took the government to court, won, and are now fighting to eliminate the policy from future years.

 

 

 

 

CMS retains 340B, site-neutral payment cuts in final hospital payment rule

https://www.fiercehealthcare.com/hospitals-health-systems/cms-retains-340b-site-neutral-payment-cuts-final-hospital-payment-rule?utm_medium=nl&utm_source=internal&mrkid=959610&mkt_tok=eyJpIjoiWTJZd1pqWXpZbVUwWTJKbSIsInQiOiJLV2JJQWM1clQ3OVBiaURjdFVUUUg2K093U21XZm0zVHNPa1hTUjdTWEdxSWZpYklsako0TVMrZFYxazVGZHFkOHJ3M1pWNlwvYW5pVWpPcjM1TEtVRnErOWgxU3NKc1dcLzk3TnZTc1pLZVI0Ymcrb0V1ZEZ2eDh1djFwa1FlaW50In0%3D

billing statement from a doctor's office

The Trump administration finalized a hospital payment rule Friday that retains proposed cuts to off-campus clinics and the 340B drug discount program. 

The changes outlined in the hospital Outpatient Prospective Payment System (OPPS) rule come despite both cuts being struck down in legal challenges and amid major pushback from providers.

Site-neutral payments

The agency decided to move ahead with the two-year phase-in of the cuts to outpatient services for clinic visits furnished in an off-campus hospital outpatient setting. The goal is to bring payments to off-campus clinics in line with standalone physicians’ offices.

“With the completion of the two-year phase-in, the cost sharing will be reduced to $9, saving beneficiaries an average of $14 each time they visit an off-campus department for a clinic visit in [calendar year] 2020,” the Centers for Medicare & Medicaid Services (CMS) said in a fact sheet.

However, the two-year project that was supposed to start in 2019 has been halted because of a federal court ruling.

CMS decided to move forward with the cuts for off-campus clinics.

“The government has appeal rights, and is still evaluating the rulings and considering, at the time of this writing, whether to appeal the final judgment,” the agency said.

The American Hospital Association (AHA) said that the site-neutral payment rule was misguided and that CMS ignored the recent court ruling. 

“There are many real and crucial differences between hospital outpatient departments and the patient populations they serve and other sites of care,” said Tom Nickels, executive vice president of the AHA, in a statement.

CMS also finalized a proposed cut for the 340B program that cuts payments by 22.5% in 2020.

CMS has installed prior cuts in 2018 and 2019 to the program that requires drug companies to provide discounts to safety-net hospitals in exchange for getting their products covered on Medicaid.

However, a court ruling has struck down the cuts, and CMS is currently appealing the decision.

CMS said that it hopes to conduct a 340B hospital survey to collect drug acquisition cost data for 2018 and 2019, and the survey will craft a remedy if the appeal doesn’t go their way.

“In the event the 340B hospital survey data are not used to devise a remedy, we intend to consider the public input to inform the steps we would take to propose a remedy for CYs 2018 and 2019 in the CY 2021 rulemaking,” the agency said.

Hospital groups commented that CMS should drop both the 340B and site-neutral cuts because of the legal challenges.

Several groups weren’t happy that the cuts were still there.

“The agency also prolongs confusion and uncertainty for hospitals by maintaining unlawful policies it has been told to abandon in clear judicial directives,” said Beth Feldpush, senior vice president of policy and advocacy for America’s Essential Hospitals, in a statement Friday.

The hospital-backed group 340B Health added that CMS needs to stop this “unfunny version of ‘Groundhog Day’ and restore Medicare payments for 340B hospitals to their legal, statutory level.”