EMHS Joins the American Hospital Association in Lawsuit

EMHS has joined the American Hospital Association, the Association of American Medical Colleges (AAMC), and America’s Essential Hospitals in pursuing legal action to prohibit the federal Department of Health and Human Services (HHS) Center for Medicare and Medicaid Services (CMS) from implementing dramatic payment reductions for medications purchased through the 340B pharmaceutical discount program. Three EMHS member organizations participating with the 340B program are negatively affected by the payment reduction: The Aroostook Medical Center, Eastern Maine Medical Center, and Inland Hospital. 340B is a federal program that requires drug manufacturers to provide outpatient drugs to organizations that care for the nation’s most vulnerable patients at significantly reduced prices to the patient. The savings from the 340B program help support hospitals to care for the uninsured and low income individuals and families.
On November first of this year, CMS published a final rule that reduces federal payments for certain medications purchased through the 340B savings program. Medications targeted for payment reduction to hospitals include: medications for oncology, dialysis, rabies treatment, osteoporosis treatment, lifesaving stroke and heart attack treatment, and medications needed to treat severe infections. For EMHS, payment reduction totals more than $5 million dollars annually. CMS already reimburses EMHS member organizations $101 million below the cost of providing care to Maine Medicare participants annually. 
Maine’s population is the oldest per capita in the country, and Medicare beneficiaries form 23 percent of the state’s population — the largest in the nation. EMHS president and CEO, M. Michelle Hood, FACHE, remarked that, “Maine’s citizens have a high incidence of chronic disease and often rely on medications and healthcare services made possible by 340B savings. The margin between the cost of pharmaceuticals purchased through the 340B savings discount program and Medicare payments helps provide services to Maine’s underserved and uninsured individuals and families. This is necessary both for hospitals and those in need of affordable care. In fiscal year 2016 alone, EMHS member organizations provided more than $29 million in charity care, and while many factors will have to be considered in determining how to address the more than $5 million lost from changes in Medicare payment for certain drugs purchased through the 340B discount program, delivery of EMHS healthcare services could be affected throughout the state.”
Nationally, the CMS proposal impacts safety net hospitals across America implementing a 30% payment reduction totaling $1.6 billion. The lawsuit argues that the 340B provisions of the Centers for Medicare & Medicaid Services’ (CMS) outpatient prospective payment system (OPPS) final rule violate the Social Security Act and, therefore, should be set aside under the Administrative Procedure Act as unlawful and in excess of the HHS Secretary’s statutory authority. The requested injunction would prohibit HHS from implementing these provisions of the OPPS final rule pending resolution of this lawsuit. Without court action the payment reduction becomes effective January 1, 2018.
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