Skip to content

Menu

LexBlog, Inc. logo
NetworkSub-MenuBrowse by SubjectBrowse by PublisherJoin the NetworkGet StartedSubscribeSupportContact
Search
Close

340B Underpayment Remedy Remanded to HHS

By Paul L. Croce, John W. Kaveney & James A. Robertson on January 24, 2023
Email this postTweet this postLike this postShare this post on LinkedIn

As discussed in this prior blog post, beginning in 2018 the U.S. Department of Health and Human Services (HHS) reduced reimbursement rates for Medicare prescription drugs to 340B hospitals by nearly thirty percent. The American Hospital Association (AHA) filed suit, and on June 15, 2022 the U.S. Supreme Court ruled that the cuts imposed by HHS, without conducting a survey of the hospitals’ acquisition costs, exceeded the agency’s authority and remanded the matter to the U.S. District Court for further proceedings.

Upon remand, District Court Judge Rudolph Contreras ruled that HHS must reimburse 340B hospitals at the default rate of average sale price plus six percent for the remainder of 2022.  And, when CMS published its Calendar Year 2023 OPPS Final Rule it provided reimbursement to 340B hospitals at a rate of average sale price plus six percent. However, what has remained a question is how the 340B hospitals would be made whole for the past underpayments beginning in 2018. This question has yet to be decided.

This issue was recently before the District Court, where the AHA argued that the only rational result would be for the Court to award the hospitals the difference between what they were paid and the average sale price plus six percent they were entitled to. Unfortunately for providers, Judge Contreras rejected the AHA’s position, finding that the proper course of action was to remand the matter to the agency to determine in the first instance what it believes to be the appropriate remedy. While Judge Contreras noted that the AHA could seek additional judicial review if it was dissatisfied with the agency’s selection of a remedy, this decision means additional delay should the agency fail to propose a reasonable approach to return the money owed to providers in a timely manner.

It is anticipated that HHS will propose a remedy in April 2023. While it is difficult to predict what remedy the agency will propose, the AHA is hoping the proposed remedy does not take budget neutrality into account. If the agency were to take such an approach, non-340B hospitals would almost certainly be negatively impacted by the decision resulting in a classic “rob Peter to pay Paul” scenario and almost guaranteeing to trigger more litigation.

Photo of Paul L. Croce Paul L. Croce

Counsel, Healthcare

Paul is a healthcare attorney and litigator with focused expertise in hospital reimbursement and guardianship matters. He represents hospitals and healthcare systems before the Department of Health and the Division of Medical Assistance and Health Services in Medicaid and Medicare appeals…

Counsel, Healthcare

Paul is a healthcare attorney and litigator with focused expertise in hospital reimbursement and guardianship matters. He represents hospitals and healthcare systems before the Department of Health and the Division of Medical Assistance and Health Services in Medicaid and Medicare appeals, Disproportionate Share Hospital (DSH) subsidy appeals, Graduate Medical Education (GME) subsidy appeals, and other legal challenges.

Paul represents nursing homes, assisted living facilities and other long-term care providers in guardianship applications seeking the appointment of permanent or temporary guardians to make necessary decisions for residents who lack capacity and appropriate surrogate decision-makers.

As a healthcare litigator, Paul has experience with Fifth Amendment Takings cases, matters involving nursing home discharges, and the defense of breach of contract and tortious interference claims. His work also includes the defense of attorneys and other licensed professionals against claims of malpractice and ethics grievances. He provides counsel on issues related to contracting, civil litigation and professional licensing matters, representing a variety of healthcare industry clients including physicians, dentists, hospitals and for-profit and nonprofit healthcare systems.

Results may vary depending on your particular facts and legal circumstances.

Contact information:

pcroce@greenbaumlaw.com | 973.577.1806 | vCard | LinkedIn

For more information visit the Greenbaum, Rowe, Smith & Davis LLP website.

Email
Show more Show less
Photo of John W. Kaveney John W. Kaveney

Partner, Healthcare and Litigation

John provides legal guidance to healthcare sector clients on a broad variety of topics, including Medicare/Medicaid reimbursement issues, corporate compliance, data privacy and cybersecurity concerns, healthcare provider licensure and medical staffing concerns, involuntary commitment laws, and general healthcare regulatory…

Partner, Healthcare and Litigation

John provides legal guidance to healthcare sector clients on a broad variety of topics, including Medicare/Medicaid reimbursement issues, corporate compliance, data privacy and cybersecurity concerns, healthcare provider licensure and medical staffing concerns, involuntary commitment laws, and general healthcare regulatory support. He represents a diverse roster of healthcare entities, including for-profit and nonprofit hospitals and health systems, academic medical centers, individual physicians and physician groups, ambulatory surgery centers, ancillary service providers, medical billing companies, skilled nursing and rehabilitation facilities, behavioral health centers and pharmacies.

John advises on Medicaid reimbursement matters before the New Jersey Division of Medical Assistance and Health Services (DMAHS), which administers the state’s Medicaid programs, and handles Medicare reimbursement disputes, both in New Jersey and in numerous other states, before the federal Provider Reimbursement Review Board (PRRB).

In the area of corporate compliance, John supports clients on matters including the implementation of new, and the assessment and improvement of existing, compliance programs. He assists healthcare clients in navigating compliance audits, internal investigations, and governmental investigations related to compliance issues, including potential violations of the federal Stark Law, Anti-Kickback Statute (AKS), and Civil Monetary Penalties law (CMP). He further provides general guidance concerning compliance and regulatory matters under state and federal healthcare laws.

On issues related to information privacy and cybersecurity at the intersection of healthcare law, John assists providers with issues arising under the Health Insurance Portability and Accountability Act (HIPAA) and the Health Information Technology for Economic and Clinical Health Act (HITECH). This includes the implementation and assessment of privacy and security policies and procedures to ensure the proper protection and utilization of protected health information (PHI) both by healthcare providers and the business associates with which they contract. In addition, he represents healthcare clients in investigating, reporting, and remediating information breaches and the liability such breaches create under various information privacy and security laws.

John also counsels healthcare providers with professional licensure issues and advises hospitals and health systems regarding their medical staff bylaws and corresponding policies and procedures, as well as assisting with internal investigations of medical staff members and the corresponding disciplinary process. He further provides legal guidance related to New Jersey’s involuntary commitment laws, and provides representation in civil litigation.

John serves as Editor-In-Chief of Healthcare Perspectives, Greenbaum’s blog covering issues of interest to the healthcare industry.

Results may vary depending on your particular facts and legal circumstances.

Contact information:

jkaveney@greenbaumlaw.com | 973.577.1796 | vCard | LinkedIn

For more information visit the Greenbaum, Rowe, Smith & Davis LLP website.

Read more about John W. KaveneyEmail
Show more Show less
Photo of James A. Robertson James A. Robertson

Partner and Practice Leader, Healthcare

Jim serves as trusted counsel to the entire healthcare sector. His practice spans the full spectrum of legal, regulatory, and corporate challenges facing healthcare entities.

With a deep technical command of reimbursement and payer strategy, Jim regularly represents…

Partner and Practice Leader, Healthcare

Jim serves as trusted counsel to the entire healthcare sector. His practice spans the full spectrum of legal, regulatory, and corporate challenges facing healthcare entities.

With a deep technical command of reimbursement and payer strategy, Jim regularly represents hospital systems and providers in high-stakes Medicare, Medicaid, and charity care subsidy matters. He possesses particular expertise in navigating disproportionate share hospital (DSH) and graduate medical education (GME) issues before state agencies and the federal Provider Reimbursement Review Board (PRRB). Jim further ensures the long-term sustainability of provider-payer relationships by negotiating complex Medicare Advantage and Managed Medicaid risk-sharing arrangements.

In the transactional arena, Jim provides comprehensive representation for mergers, acquisitions, joint ventures, and divestitures. He serves a diverse array of industry leaders, including for-profit and nonprofit hospital systems, academic medical centers, pharmaceutical companies, integrated delivery networks (IDNs), physician practices, and healthcare private equity funds. Jim is instrumental in the structural development of Clinically Integrated Networks (CINs), Accountable Care Organizations (ACOs), and Multiple Employer Welfare Arrangements (MEWAs), frequently securing necessary certifications from the New Jersey Department of Banking and Insurance (DOBI). His work encompasses the establishment and sale of individual and group practices, ambulatory surgery centers, nursing homes, and assisted living facilities, as well as the negotiation of executive contracts, recruitment initiatives, medical directorships, hospital department management, and office or equipment leases.

To mitigate operational risk, Jim guides clients through the development of robust corporate compliance programs and manages internal audits, government inquiries, and voluntary self-disclosures. His counsel ensures that provider arrangements satisfy the Stark Law, the federal Anti-Kickback Statute (AKS), and New Jersey’s Codey Law. He assists clients in seeking advisory opinions, obtaining Certificates of Need, and securing transaction approvals from the New Jersey Department of Health and the Attorney General under the Community Healthcare Asset Protection Act (CHAPA). His counsel ensures compliance with the Corporate Practice of Medicine (CPOM) doctrine and federal mandates including HIPAA, HITECH, the ACA, and Emergency Medical Treatment and Labor Act (EMTALA)—from drafting Business Associate Agreements (BAAs) to managing medical record retention and the physical or electronic storage of medical records.

Jim’s advocacy extends to medical staff matters, where he designs state-of-the-art bylaws and provides guidance on fair hearing requirements and strategic initiatives. Finally, he represents healthcare entities in business-critical litigation, including provider-payor disputes, restrictive covenant matters, and medical staff privileging hearings. By combining this granular knowledge of reimbursement and regulatory compliance with a veteran litigator’s perspective, Jim provides the strategic foresight necessary to navigate the administrative and operational hurdles of the modern healthcare landscape.

Results may vary depending on your particular facts and legal circumstances.

Contact information:

jrobertson@greenbaumlaw.com | 973.577.1784 | vCard | LinkedIn

For more information visit the Greenbaum, Rowe, Smith & Davis LLP website.

Email
Show more Show less
  • Posted in:
    Health Care and Life Sciences
  • Blog:
    Healthcare Perspectives
  • Organization:
    Greenbaum, Rowe, Smith & Davis LLP
  • Article: View Original Source

Call us at 1-800-913-0988 or email sales@lexblog.com.

Facebook LinkedIn Twitter RSS
The Library at LexBlog
  • About LexBlog
  • The Field We Built
  • Library at LexBlog
  • Our Beliefs
  • Our Team
  • Contact LexBlog
  • Disclaimer
  • Editorial Policy
  • Terms of Service
  • Get Started
  • Publishing Solutions
  • Compass
  • Submit a Request
  • Support Center
  • System Status
Copyright © 2026, LexBlog, Inc. All Rights Reserved.
Law blog design & platform by LexBlog LexBlog Logo