EMHS joins lawsuit over federal reductions in medication payments

Courtesy / Eastern Maine Healthcare Systems EMHS President and CEO M. Michelle Hood announced Monday that the Brewer-based health care system has joined several other parties in a lawsuit seeking to block federal payment reductions for certain medications, which are scheduled to take effect on Jan. 1. The rule change is expected to cost three EMHS members $5 million annually.

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By Staff

Brewer-based Eastern Maine Healthcare Systems has joined the American Hospital Association, the Association of American Medical Colleges and America’s Essential Hospitals in pursuing legal action to prohibit the federal Department of Health and Human Services’s Center for Medicare and Medicaid Services from implementing dramatic payment reductions for medications purchased through the 340B pharmaceutical discount program.

EMHS stated in a news release that three of its 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.

The federal 340B program 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, EMHS stated.

New rule reduces EMHS annual payments

The lawsuit stems from a final rule published by CMS on Nov. 1 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, the payment reductions total more than $5 million annually.

Nationally, under the CMS proposal, safety net hospitals across America will be hit with a 30% payment reduction totaling $1.6 billion.

CMS already reimburses EMHS member organizations $101 million below the cost of providing care to Maine Medicare participants annually, EMHS stated — adding that Maine’s population is the oldest per capita in the country and Medicare beneficiaries represent 23% of the state’s population, the largest in the nation.

Here's why EMHS joined the lawsuit

EMHS President and CEO M. Michelle Hood issued a statement Monday explaining why EMHS has joined the other parties in seeking to block CMS’s payment reductions, which are scheduled to take effect on Jan. 1.

“Maine’s citizens have a high incidence of chronic disease and often rely on medications and health care services made possible by 340B savings,” she said. “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.”

Hood said In fiscal year 2016 alone, EMHS member organizations provided more than $29 million in charity care. She noted that 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.”

At a glance

The lawsuit being pursued by EMHS and several other health care entities argues that the 340B provisions of the Centers for Medicare & Medicaid Services’ outpatient prospective payment system final rule violate the Social Security Act. The suit asserts that the reductions should therefore 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 the federal Department of Health and Human Services from implementing these provisions of the OPPS final rule pending resolution of this lawsuit. Without court action the payment reduction becomes effective Jan. 1, 2018.