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CMS Proposes Lump Sum Repayments for Unlawful 340B Cuts

The Centers for Medicare & Medicaid Services proposed July 7 to remedy nearly five years of unlawful Part B cuts to hospitals in the 340B Drug Pricing Program with $9 billion in lump-sum Outpatient Prospective Payment System (OPPS) payments. In a statement, America’s Essential Hospitals welcomed the proposal and urged CMS to expedite the repayments

From Jan. 1, 2018, to Sept. 27, 2022, CMS reduced Part B reimbursement for separately payable drugs purchased through the 340B program to 77.5 percent of average sales price instead of the statutory default payment rate of 106 percent. America’s Essential Hospitals and other industry partners challenged the cuts in court and, in June 2022, won a unanimous U.S. Supreme Court ruling that the cuts violated the Medicare statute.  Further federal court rulings ultimately sent the matter back to CMS to devise a remedy.

CMS now proposes to pay 340B hospitals a one-time, lump sum payment equal to the difference between what hospitals would have been paid and what they were paid under the payment reduction — a total difference of $10.5 billion less $1.5 billion CMS says 340B hospitals already have received for 2022 claims the agency reprocessed at the full OPPS payment rate. CMS says it will instruct Medicare Administrative Contractors to repay hospitals within 60 days of a final rule, resulting in repayments being issued in late 2023 or early 2024.

Comments on the proposed rule are due Sept. 5. For more information, see our new Action Update.

Contact Senior Director of Policy Erin O’Malley at or 202.585.0127 with questions.


About the Author

Emily Schweich is a communications manager at America's Essential Hospitals.

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