Daryl M. Berke

As regular readers of our blog know, the Centers for Medicare & Medicaid Services (CMS) intensified its push for drug pricing transparency in 2019. In 2020, we see a continuation of those efforts, and their impacts on the 340B program are now starting to reveal themselves. On January 1, 2019, the Health Resources & Services Administration (HRSA) finally implemented the ceiling price and manufacturer civil monetary penalties (CMPs) regulations that the agency proposed in 2017. The regulations implement certain provisions of the Affordable Care Act and were initially scheduled to go into effect on February 28, 2017, but were repeatedly delayed.

On December 16, 2019, a nationwide coalition of hospitals sued HHS to block implementation of the 340B rate cuts contained in the 2020 Hospital Outpatient Prospective Payment System (“OPPS”) Final Rule. As detailed in our prior blog post, the 2020 OPPS Final Rule reduces by nearly 30% the Medicare Part B reimbursement for certain drugs provided by hospitals to outpatient beneficiaries that are acquired through the 340B Program. The final rule purports to continue the reimbursement cuts for 340B drugs first implemented in 2018, despite the fact that those cuts (and the 2019 OPPS rule continuing those cuts) are the subject of ongoing litigation in which the cuts were determined to be unlawful. For a detailed walk-through of the 2020 OPPS Final Rule and litigation up to this point, please see our prior three blog posts here, here, and here. 

The Centers for Medicare and Medicaid Services (CMS) recently published the 2020 Hospital Outpatient Prospective Payment System (OPPS) rule, which finalizes a proposed reduction in Medicare Part B reimbursement for certain drugs provided by hospitals to outpatient beneficiaries that are acquired through the 340B drug discount program. Through the final rule, CMS purports to continue Medicare reimbursement cuts for 340B drugs first implemented in 2018, despite the fact that those cuts (and the 2019 OPPS rule continuing those cuts) are the subject of ongoing litigation in which the cuts were determined to be unlawful. That ruling, and a Court-imposed stay of the cuts, are the subject of a just-argued appeal.  For a detailed walk-through of the litigation up to this point, please see our prior blog post.

The Centers for Medicare & Medicare Services (CMS) recently published a final rule with comment period (the “Final Rule”) that is designed to increase CMS’s ability to identify and prevent bad actors from participating in Medicare, Medicaid, and CHIP. Providers and suppliers should take note because implementation will be costly and burdensome. Among other things, the Final Rule requires the disclosure of certain provider and supplier affiliations and permits CMS to revoke or deny enrollment where those affiliations pose an undue risk of fraud and abuse. The Final Rule also grants CMS several additional authorities to revoke or deny a provider’s Medicare enrollment and increases the duration of such revocations and denials. The Final Rule takes effect on November 4, 2019. Comments on the Final Rule are due by 5:00 p.m. on that same day.

On July 11, 2019, the Centers for Medicare and Medicaid Services (CMS) issued its Home Health Prospective Payment System proposed rule for 2020. The proposed rule implements a previously finalized reimbursement methodology for Home Health Agencies (HHAs) called the Patient-Driven Groupings Model (PDGM). The proposal reflects CMS’s continued efforts to shift towards value-based payment models in the Medicare program.

On June 3, 2019, the U.S. Supreme Court issued a decision in Azar v. Allina Health Services. The case involved a challenge by hospitals over whether the Department of Health and Human Services (“HHS”) was required to proceed through notice-and-comment rulemaking before promulgating a retroactive Medicare rate calculation methodology for Disproportionate Share (DSH) payments to hospitals. In a 7-1 decision by Justice Gorsuch, the Court ruled in favor of the hospitals, holding that the new rate calculation established a substantive legal standard, and therefore notice-and-comment was required under the Medicare Act.

Earlier this month, CMS issued a final rule aimed at lowering drug prices and reducing out-of-pocket expenses in Medicare Advantage and Medicare Part D. This rule is the Administration’s latest effort to address prescription drug prices and builds off the Administration’s Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs and arrive on the heels of CMS publishing a rule requiring the disclosure of drug prices in TV ads. Below we’ve provided a brief overview of the major provisions in the final rule, noting changes from the proposed rule that was issued in November 2018.

In recent months, we’ve highlighted several changes that CMS is implementing to combat opioid misuse. In this post, we focus on CMS’s new Medicare Part D Opioid Overutilization Policies.


Last year, CMS published a road map outlining the agency’s approach to addressing the nation’s opioid epidemic. CMS’s strategy has three prongs: (1) prevent new cases of opioid use disorder (OUD); (2) expand treatment for individuals with OUDs; and (3) leverage data to improve the agency’s prevention and treatment options.


In line with that strategy, the agency published an article detailing its Medicare Part D Opioid Overutilization Policies for 2019. The policies focus on improving communication between and among Part D plans (PDPs) and providers to better coordinate efforts to prevent opioid misuse. As CMS points out, “Providers are in the best position to identify and manage potential opioid overutilization in the Medicare Part D population. Medicare prescription drug plans can assist providers by alerting them about unusual utilization patterns in prescription claims.”

On January 15, 2019, the Supreme Court heard oral arguments in Azar v. Allina Health Services, a prominent case involving a challenge by hospitals over when Medicare’s instructions to its contractors impact a “substantive legal standard” and thus must be issued through formal rulemaking. As discussed in our prior post, the Court is reviewing the U.S. Court of Appeals for the D.C. Circuit’s decision that threw out a Medicare rate calculation methodology for Disproportionate Share Payments (DSH) to hospitals adopted by the U.S. Department of Health and Human Services (HHS) for its failure to undergo notice and comment rulemaking. During oral arguments, the Court grappled with a broader question: what is the legal standard for when HHS must use formal rulemaking and not “interpretative” instructions to its contractors in the administration of the Medicare program?

On January 15, 2019, the U.S. Supreme Court will hear arguments in a hotly-contested case involving a challenge by hospitals over when Medicare’s instructions to its contractors impact a “substantive legal standard” and thus must be issued through formal rulemaking.  In Azar v. Allina Health Services, the Court will review the U.S. Court of Appeals for the D.C. Circuit’s decision that threw out a new Medicare rate calculation methodology for Disproportionate Share Payments (DSH) to hospitals adopted by the U.S. Department of Health and Human Services (HHS) because the agency promulgated it through “interpretative guidance” but failed to undergo notice-and-comment rulemaking. The Supreme Court is now tasked with answering a broader question: what is the legal standard for when HHS must use formal rulemaking and not “interpretative” instructions to its contractors in the administration of the Medicare program?