Legal Matters

By Kyle A. Vasquez, J.D., LL.M. and Mary H. Canavan, J.D. Polsinelli, PC

The United States Supreme Court recently handed down a highly anticipated, unanimous opinion, AHA v. Becerra, confirming that CMS exceeded its statutory authority when it implemented a discriminatory reimbursement structure in 2018 and 2019 that resulted in certain 340B hospitals receiving lower Part B drug reimbursement than non-340B hospitals. The opinion is welcome 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 given potential Part B budget neutral constraints, but the opinion does confirm that CMS must operate within a specific set of parameters if it intends to setup up a Part B payment structure that varies by hospital group. Namely, CMS may only vary Part B reimbursement by hospital group if it conducts a statistically valid survey pursuant to 42 U.S.C. § 1395l(t)(14) (D). Absent survey data, CMS must reimburse all hospitals at the same rate. The decision does not change reimbursement for 340B drugs in the near term. However, key issues remain including how CMS will fund and pay underpaid claims to 340B hospitals for payment years 2018 and 2019, how will the Supreme Court’s decision impact payments in 2020-2022, and how will CMS change its payment policy on a go-forward basis, if at all.

One key item to watch closely is CMS’s upcoming CY 2023 Outpatient Prospective Payment System proposed rule (Proposed Rule). CMS’s payment policy in the Proposed Rule could shed some light into its approach to not only payment going forward, but also into its approach to remedying past underpayments. For example, it’s possible that the Supreme Court’s unanimous decision influences CMS to revisit its 340B drug payment policy in its upcoming CY 2023 Outpatient Prospective Payment System proposed rule (Proposed Rule) and reinstate its ASP plus 6% payment rate. If CMS took this step, it could shed light into CMS’s approach to payment years 2021 and 2022 where it relied, in part, on its flawed 2020 acquisition cost survey

to continue its ASP minus 22.5% payment policy. Alternatively, CMS may attempt to rely on acquisition cost data obtained in its 2020 acquisition cost survey to continue its ASP minus 22.5%. If it does, there may be litigation challenging the validity of the survey itself and any resulting payment rules that vary reimbursement by hospital group. When CMS conducted its survey, it did not seek acquisition cost data from non-340B hospitals, and the data collection methods presented challenges with reporting consistent data.

SCOTUS’s opinion is a much

At NOVEL River Oaks, elegant traditions marry the modern under canopied live oaks and manicured hedges. You can embody old traditions and embrace your own at this enchanting place.

Distinguished By Design

We believe that elegance should weave through your every day, carrying unexpected moments where you discover what living well means to you.