US Supreme Court overturns $1.6B 340B payment cut

The U.S. Supreme Court sided with hospital groups June 15 in a case challenging HHS’ 340B payment cuts. 

The case centered around whether CMS has the authority to make cuts to the program under its  Medicare Outpatient Prospective Payment System. Under the payment rule, HHS cut the reimbursement rate for covered drugs by 28.5 percent in 2018, but it later lowered the reimbursement rate cut to 22.5 percent. 

Under the 340B program, eligible hospitals can buy outpatient drugs at a discount. A hospital typically pays 20 percent to 50 percent below the average sales price for the drugs through the program. 

The Supreme Court reversed a federal appeals court’s 2020 ruling that HHS had the authority to make the $1.6 billion annual reimbursement cut.  

Justice Brett Kavanaugh, writing the opinion for the court’s unanimous decision, said that absent a survey of hospitals’ acquisition costs, HHS may not vary the reimbursement rate for 340B hospitals. 

“HHS’s 2018 and 2019 reimbursement rates for 340B hospitals were therefore contrary to the statute and unlawful,” he wrote. 
The American Hospital Association, Association of American Medical Colleges and America’s Essential Hospitals said in a joint statement emailed to Becker’s following the decision that they look forward to working with HHS and the courts to develop a plan to reimburse 340B hospitals affected by the cuts while ensuring other hospitals are not disadvantaged as they also continue to serve their communities.

California hospital alleges retaliation after seeking to end affiliation with Providence

Hoag Hospital by in Newport Beach, CA | ProView

After filing a lawsuit in May to end its affiliation with Renton, Wash.-based Providence, Hoag Memorial Hospital in Newport Beach, Calif., is alleging it is now the target of retaliation, according to the Los Angeles Times.  

Hoag Memorial said that Providence removed Hoag Memorial’s three facilities from its website of Southern California locations and terminated Hoag Memorial’s specialists from St. Joseph Heritage Healthcare, a network of medical providers for managed care plans in Southern California. Additionally, Hoag Memorial said that Providence informed Heritage members they would lose access to Hoag’s 13 urgent care centers by Dec. 31. 

According to the report, Providence’s notice to patients that Hoag facilities and physicians would be dropped from its network all came in the fall of 2020, amid the COVID-19 pandemic.

“It was the most inappropriate, inexplicable and harsh thing to do to a lot of patients,” Hoag President and CEO Robert Braithwaite told the Los Angeles Times. “Finding a new physician or new specialist is particularly hard on seniors and any patient who has a chronic condition and has established a long-term relationship with an endocrinologist or rheumatologist or cancer doctor.”

Providence told the Los Angeles Times it disagrees that patients have been disadvantaged.

“We are committed to the well-being of our communities and to serving patients with high quality and compassionate care,” a Providence spokesperson told the Los Angeles Times. 

Hoag Memorial has been affiliated with Providence, a Catholic health system, since 2016.

Hoag Memorial said the changes all came after the hospital sought to end its affiliation with Providence by filing a lawsuit. Hoag Memorial said in its lawsuit it is seeking to end the affiliation because Providence is undermining local decision-making and Catholic Church restrictions are expanding. 

Providence has fought Hoag’s lawsuit to end the affiliation. The health system claims Hoag doesn’t have the right to unilaterally dissolve the affiliation, and its board members don’t have the authority to file the lawsuit. An Orange County Superior Court judge rejected Providence’s argument Feb. 1 and scheduled another court hearing for March.