January 12, 2018—Three national hospital groups and three local health systems will appeal a federal district judge’s dismissal of their lawsuit aimed at stopping a nearly 30 percent cut in 340B disproportionate share hospitals’ (DSH) and rural referral centers’ (RRC) Medicare Part B drug reimbursement that took effect on Jan. 1.
On Jan. 9, the groups and systems formally announced their intention to appeal U.S. District Judge Rudolph Contreras’s denial of their motion for a preliminary injunction against the cuts and his granting of the U.S. Justice Department’s motion to dismiss their suit. In late December, Judge Contreras declined on procedural grounds to stop the Centers for Medicare & Medicaid Services (CMS) from implementing a regulation that cut 340B DSH hospitals’ and RRCs’ Medicare Part B drug reimbursement. The same regulation also required all 340B hospitals, also effective Jan. 1, to use modifiers to identify 340B drugs billed under the Hospital Outpatient Prospective Payer System. The cut and the modifier requirements are both in place. The judge did not rule on the merits of the arguments themselves in the hospitals’ lawsuit.
340B Health, which represents more than 1,300 hospitals and health systems in the 340B program, says the payment reduction will force affected 340B hospitals to cut back on services, close service sites, and reduce numbers of clinicians and other caregivers. It will not reduce costs for Medicare or Medicare beneficiaries and won’t arrest skyrocketing drug prices, the group adds.
H.R. 4392, Reps. David McKinley’s (R-W.Va.) and Mike Thompson’s (D-Calif.) bipartisan bill to stop the 340B cuts, continues to draw cosponsors. Forty percent of the U.S. House (175 members) had thrown its support behind the bill as of Jan. 11.