In 2018, the Center for Medicare & Medicaid Services (CMS) implemented a change in reimbursement for DSHs, RRCs, and non-rural SCHs for Medicare Part B drugs obtained through the 340B Program, adjusting reimbursement amounts based on a value of Average Sales Price (ASP) – 22.5% from the previous value of ASP + 6%. This was challenged in court almost immediately by many 340B stakeholders. In December of 2019, a federal district judge ruled the CMS exceeded its statutory authority by implementing this reduction. CMS appealed, and the reductions remained in place as the case progressed.

On August 1, 2020, a divided federal appeals court ruled the cuts to 340B hospitals’ Medicare Part B drug reimbursement under the hospital outpatient prospective payment system (OPPS) “rests on a reasonable interpretation of the Medicare statute.” The 2-1 decision by the U.S. Court of Appeals for the District of Columbia Circuit overturned previous rulings and allows for reduced reimbursements established in 2018. Hospitals will certainly continue the fight and file appeals to the next level.

The ruling is a blow to 340B hospitals, many already struggling during the pandemic. Just a few days later, CMS proposed an additional 6.2% reimbursement reduction for calendar year 2021. Medicare Part B payment for DSHs, RRCs, and non-rural SCHs will be ASP – 28.7%. Comments are due on this proposal by October 5th.

Rural SCHs are not subject to the reduction in reimbursement. However, the proper modifiers must be reported on the UB billing form.

We will continue to monitor developments and provide updates as available. If you have any questions, please reach out to one of our Apexus Certified 340B Experts.