- Alabama health system sues Humana for underpaying for outpatient drugs Offered under the 340B Drug Discount Program For Medicare Advantage patients.
- According to the complaint, Baptist Health said drug reimbursement was determined by a payment model that was later invalidated, and the insurer continued to benefit from a “windfall” of underpayments by the health system.
- The lawsuit comes months after CMS finalized a rule aimed at correcting years of illegal payment cuts in the 340B program. Hospitals have previously argued that the solution does not take into account how MA insurers would benefit financially from the relief package.
The 340B program requires drug companies to offer discounts ranging from 25% to 50% of drug prices to health care providers serving low-income communities.
The program aims to help safety net providers better serve vulnerable groups. grew up a lot Since the 340B was created in 1992.
But in 2018, CMS reduced Medicare payments for certain drugs obtained under the 340B program, sparking a legal challenge that hospitals ultimately won in the Supreme Court four years later.
To fix the shortfall, regulators decided to pay hospitals $340 billion in one-time payments totaling $9 billion. However, the amendments had to be budget-neutral, so CMS would reduce payments to all hospitals for non-drug items and services over 16 years.
In its comments on the proposal, the American Hospital Association argued that: “Significant problem” The plan noted that many MA insurance companies pay hospitals according to traditional Medicare rates.
Payers would benefit by reducing non-pharmaceutical payments to hospitals and avoid having to repay $340 billion to providers with reduced payments between 2018 and 2022, commenters said. argued about this rule as follows: decided in November.
In response, regulators said they were aware of the concerns but that they were outside the scope of the rule and that “CMS cannot intervene with payment rates set by the MAO.” [Medicare Advantage organizations] This is determined by the contract with the provider or facility. ”
In the Baptist case, the health system reported contacting Humana multiple times about making retroactive adjustments and relief payments, but the insurance company’s lawyers disputed its obligation to pay those payments.
“Humana’s refusal to act means that funds provided by CMS for Humana’s Medicare Advantage plan will not be used to reimburse Baptist Health for amounts owed under the contract,” the system said in the lawsuit. “This has been a significant benefit to Humana, as we continue to maintain this position.”
Humana said it does not comment on ongoing litigation.
Editor’s note: This article has been updated with comment from Humana.