AHA urges CMS not to finalize outpatient PPS proposals to accelerate clawback and cut 340B reimbursements

The AHA Aug. 26 urged the Centers for Medicare & Medicaid Services not to finalize two proposals in the calendar year 2027 outpatient prospective payment system proposed rule, warning that the policies suffer from "serious legal defects and substantial policy shortcomings" and would place additional financial strain on hospitals and the patients and communities they serve.

In its letter, the AHA opposed CMS' proposal to accelerate the timeline for recouping funds related to the remedy following American Hospital Association v. Becerra and its proposal to reduce Medicare payment rates for 340B-acquired drugs to average sales price minus 33.4%. The association noted that it will submit separate comments on other provisions in the proposed rule.

The AHA said CMS should not accelerate the existing clawback schedule, arguing that hospitals face significant financial pressures, including rising labor, supply and drug costs, growing uncompensated care, ongoing Medicare underpayments, and the adverse impacts of federal policies like H.R. 1, tariffs and the failure to reenact enhanced premium tax credits. Increasing the annual clawback amount from 0.5% to 3%, the AHA said, would create substantial new burdens for hospitals at a particularly challenging time.

"The AHA strongly urges HHS to abandon this proposal," the AHA wrote. "Because any clawback is illegal, it should rescind subsection 419.32(b)(1)(iv)(B)(12) altogether. But if the agency chooses to proceed with this policy, it should, at a minimum, maintain (or extend) the existing clawback timeline to account for the financial challenges that hospitals will continue to face in the coming years."

The AHA also urged CMS to withdraw its proposal to pay for 340B drugs at ASP minus 33.4%, arguing that the proposed reduction is based on a flawed drug acquisition cost survey that does not satisfy statutory requirements. The association said the agency misinterpreted the governing statute, and that the survey's methodology and response rates do not support the proposed payment cuts. The AHA further warned that the reduction would further strain hospitals that care for large numbers of low-income and vulnerable patients, particularly as the agency is pursuing other policies that will financially harm 340B hospitals.

"CMS should learn from that history - not repeat it," the AHA wrote, referring to the agency's previous 340B reimbursement policy that was ultimately struck down by the Supreme Court. "Before imposing another reimbursement cut, CMS must be certain that it has the statutory authority to act and that the benefits justify the substantial costs it will impose on 340B hospitals and the vulnerable patients they serve. At the very least, CMS must consider the time, effort and resources spent litigating and unwinding its first attempted reimbursement cut - and the prospect that, a decade from now, CMS and hospitals could find themselves doing the same thing all over again."