Insights & Resources

Despite the United States Supreme Court’s finding that the reduction of Medicare reimbursement rates for 340B outpatient drugs was unlawful – and CMS’ subsequent Final Rule to remedy these underpayments – Medicare Advantage organizations (“MAOs”) maintain that they have no similar responsibility to make hospitals whole.  After an extensive analysis, CMS determined that the least disruptive way to resolve these underpayments for dates of service of January 1, 2018 through September 27, 2022 was through the issuance of lump sum payments to affected hospitals.  However, in the Final Rule CMS took the position that it could not require MAOs to use particular pricing structures with their contracted providers, thus leaving any resolution between MAOs and hospitals subject to their individual participation agreements. 
 
Resolution of the 340B drugs underpayments can be critical to hospital finances, as CMS coupled the lump sum payment with future reductions to the outpatient conversion factor, which will go into effect beginning January 1, 2026 through December 31, 2042.  Any MAO reimbursements based off a Medicare fee schedule will subsequently be affected by these reductions.  The result is that hospitals will be subject to a double loss, stemming from both the 340B underpayments as well as the future outpatient services reduction.
 
Garfunkel Wild is available to discuss the impact and steps available to your facility, including taking legal action against MAOs, in order to address these illegal 340B drugs underpayments.

Should you have any questions regarding the above, please contact the authors, the Garfunkel Wild attorney with whom you regularly work, or contact us at info@garfunkelwild.com