Court Orders HHS Remedy for Illegal 340B Rule
On January 10, 2023, the District Court for the District of Columbia sent back to the Department of Health and Human Services (HHS) the question of how to remedy the 340B hospital’s five-year arrears.
Under the federal 340B program, drug manufacturers must sell prescription drugs to qualified suppliers at a lower price than other suppliers pay. Eligible providers include government hospitals and certain nonprofit organizations with a Medicare Disproportionately Shared Hospital (DSH) percentage above a certain threshold. Investor-owned hospitals are not eligible to participate. Despite reduced purchase prices for prescription drugs, 340B hospitals have historically received Medicare reimbursement for prescription drugs at the same rates as non-340B hospitals.
Beginning in 2018, HHS adopted a rule that significantly reduced Medicare reimbursement for prescription drugs in 340B hospitals, citing “overpayments” by 340B hospitals due to lower prescription drug purchase prices (2018 rule). HHS then used the savings from the 2018 rule $1.6 billion to increase outpatient reimbursement rates across all Medicare hospitals. HHS’ 2018 rule is in effect for the five-year period between the 2018 and 2022 federal fiscal years. During those five years, the affected 340B hospitals and HHS were involved in a series of federal court cases and appeals, culminating in a unanimous Supreme Court ruling in 2022 that HHS exceeded its statutory authority in enforcing the 2018 rule. The Supreme Court sent the issue back to the D.C. Circuit to determine how to remedy the five-year arrears.
In a ruling dated January 10, 2023, the District Court for the District of Columbia found that HHS was best placed to determine how to remedy the five-year underpayment, and therefore referred the issue back to the administration. Outstanding issues that HHS must consider include: whether budget neutrality requires non-340B hospital reimbursement to compensate underpaying 340B hospitals; whether HHS has the authority to reimburse non-340B hospitals; Integrate 340B hospitals by increasing payments on anticipated claims. HHS pledged to come up with its remedies before publishing its 2024 Outpatient Expected Payments Rule.
source: American Hospital Association et al. v. BecerraNo. 18-2084 (RC), 2023 WL 14337 (DDC Jan.l 10, 2023) (PDF of case attached)
HHS extends COVID-19 public health emergency through April
On January 11, 2023, the Department of Health and Human Services (HHS) extended the Public Health Emergency (PHE) related to COVID-19 for an additional 90 days to April 11, 2023.
Historically, the HHS expansion of PHE has enabled the expanded use of telehealth in Medicare and Medicaid, expedited the approval of COVID-19 vaccines and drugs, and prevented states from suspending Medicaid coverage for beneficiaries. However, after Congress passes the omnibus spending bill in December 2022, regardless of whether PHE is extended, states may begin removing Medicaid beneficiaries who are no longer eligible for coverage. The spending bill also extends Medicare telehealth flexibility through 2024, so the issue is no longer relevant to PHE. State Medicaid programs will receive increased match rates for Medicaid services as long as PHE remains in effect.
CMS Awards 200 New Medicare Residencies to 100 Teaching Hospitals
On January 9, 2023, the Centers for Medicare and Medicaid Services (CMS) announced the award of 200 new Medicare-funded physician residency spots to 100 teaching hospitals.
Under CMS’s 2022 Inpatient Prospective Payment System (IPPS) final rule, CMS committed to creating 1,000 new physician residency slots for U.S. hospitals over five years. Medicare reimburses hospitals for certain costs associated with training residents, limited to the number of Medicare resident slots allocated to each particular hospital. Many hospitals have far fewer Medicare resident slots than residents, which means the hospital bears the full cost of training many residents.
CMS allocated 200 new residency slots to hospitals in 30 states, Washington, D.C. and Puerto Rico. About 75 percent of new residency positions are for primary care (including obstetrics) and psychiatry residency. The new time slot will take effect on July 1, 2023.
The application period for the second round of 200 new resident places will open this month and close on March 31, 2023.
South Carolina Supreme Court rules fetal heartbeat law unconstitutional
On January 5, 2023, the South Carolina Supreme Court ruled that the South Carolina Legislature’s Fetal Heartbeat and Abortion Protection Act was unconstitutional.
In June 2022, the U.S. Supreme Court in Dobbs v. Jackson Women’s Health “The power to regulate abortion is returned to the people and their elected representatives.” Indeed, Dobbs Decided to make abortion a matter of state law.
After Dobbs, South Carolina’s fetal heartbeat law goes into effect. Abortions are banned after six weeks of pregnancy under fetal heartbeat laws. The Fetal Heartbeat Act came into effect on June 27, 2022; however, the South Carolina Supreme Court prohibited enforcement of the Fetal Heartbeat Act from August 17, 2022 while the court analyzed its constitutionality.
In a decision dated 5 January 2023 Planned Parenthood South Atlantic et al. v. South Carolina et al.South Carolina Supreme Court rules fetal heartbeat law violates women’s constitutional right to privacy Roe v Wade. As a result, South Carolina’s abortion laws reverted to pre-Dobbs. The South Carolina Supreme Court did not test any new limits on a woman’s right to abortion that would be acceptable under the South Carolina Constitution.South Carolina governor and legislature may try to change forecastDobbs South Carolina’s abortion laws during the current legislative session.
source: 28127.pdf (sccourts.org)