$9 Billion Recoup for 340B Eligible Hospitals Under Recent Ruling

The Center for Medicare and Medicaid Services (CMS) recently announced it will pay eligible hospitals $9 billion in a lump sum payment under a proposed remedy for the 340B payment rates—a decision hospital groups expressed satisfaction with.

In June 2022, the Supreme Court unanimously ruled against the 340B payment rates, considering them unlawful because the U.S. Department of Health and Human Services (HHS) failed to conduct a survey of hospitals’ acquisition costs. CMS estimated that from 2018 through approximately the third quarter of 2022, certain 340B providers received $10.5 billion less in 340B drug payments than they would have without the policy.

However, CMS stated that affected 340B providers have already received $1.5 billion of the $10.5 billion from Medicare and beneficiaries that would otherwise be owed. The remaining $9 billion for claims will go to 340B hospitals that were paid less due to the policy.

CMS issued a proposed rule outlining the projected remedy for the 340B-acquired drug payment policy for calendar years 2018-2022. The agency is offering a one-time lump sum payment to the roughly 1,600 340B-covered entity hospitals that were paid less due to the now-invalidated policy.

America’s Essential Hospitals voiced their satisfaction with the proposal. Bruce Siegel, President and CEO of America’s Essential Hospitals, said in a statement: “Essential hospitals still face heavy financial pressures from high labor costs and other challenges from the pandemic, and these payments are urgently needed to help these hospitals meet the needs of their patients and communities. We urge the Centers for Medicare & Medicaid Services to expedite the release of the reimbursements”.

Withum’s Healthcare Advisory Services Team assists covered entities to maintain and expand their 340B programs.  Our clients range from single clinic FQHCs to integrated health systems.  Our expertise covers all areas of the program including program compliance, program optimization and 340B organizational strategy. We have internally developed proprietary software packages to identify and implement 340B opportunities more efficiently than other consulting firms.  Our technology-first approach allows us to execute and monitor results in real-time.

Withum can also assist you in determining if you are obligated to back payments related to the recent ruling.  In addition, we can validate and quantify the lump sum payments you are owed. 

Authors: Domenic Segalla, Principal and Market Leader, Healthcare Advisory Services | [email protected] and John Barry | [email protected]

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For more information on this topic, please contact a member of Withum’s Healthcare Advisory Services Team.