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340B Hospitals Impacted by Supreme Court Decision

In June, the Supreme Court gave hospitals participating in the 340B Drug Pricing Program a convincing victory ruling unanimously that the U.S. Center for Medicare & Medicaid Services (CMS) should not have reduced reimbursement for covered outpatient prescription drugs purchased by those hospitals.

340B Hospitals Challenge Payment Rates

Hospitals challenged the 2018 and 2019 payment rates for 340B hospitals because CMS lowered the rate for covered drugs from average sales price (ASP) plus 6% to ASP minus 22.5%.

The June Supreme Court ruling remands the case to a lower court for further proceedings. This could benefit 340B hospitals impacted by reimbursement cuts imposed in 2018, 2019, and beyond since the lower reimbursement rate has remained in effect through 2022.

The ruling is positive news for 340B hospitals that continue to face financial pressures related to the 340B Program and contract pharmacies. Now, CMS and potentially the lower court must sort through difficult matters involving payment of damages for 2018 and 2019 underpaid claims.

Changes to the Proposed Rates for CY 2023

A more recent CMS announcement creates even more optimism for 340B hospitals affected by the 2018 and 2019 reimbursement reductions. Even though CMS has proposed for the rates for CY 2023 to remain at ASP minus 22.5%, the agency intends to implement the previous rate of ASP + 6% which will be applied to separately payable drugs and biologics under the OPPS payment system for CY 2023. This change is a result of the recent Supreme Court decision with more detailed information expected to follow.

Contact Our 340B ACE Consultants

We will be monitoring the situation as it continues in the lower courts and how it will impact payment rates for 340B hospitals. If you have questions or concerns about the recent Supreme Court ruling, changes to reimbursement rates for 340B purchased outpatient drugs, or other general 340B topics, please reach out to one of the 340B ACE consultants or your local Blue Advisor.

Kyle Smith, CPA, 340B ACE, Director
Jason Prokopik, PharmD, 340B ACE, Pharmacy Fiscal and Operational Manager
Chad Downing, RPh, EMBA, 340B ACE, Senior Consultant

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