On November 13, 2017, the American Hospital Association (AHS) and associated entities filed a lawsuit in the U.S. District Court for the District of Columbia challenging certain provisions of a final rule issued on November 1, 2017 by the Department of Health and Human Services (DHHS), which would reduce by nearly 30% Medicare outpatient reimbursements to certain public and not-for-profit hospitals and clinics for prescription drugs purchased on a discounted basis under section 340B of the Public Health Service (PHS) Act.   

Section 340B of the PHS Act was designed to provide discounts for drug purchases on behalf of low-income individuals.  The deduction imposed by the DHHS regulation (82 Fed. Reg. 52,356 and others), published on November 13, 2017, is part of the Medicare outpatient prospective payment system (OPPS) and would take effect on January 1, 2018.  

The lawsuit is American Hospital Association v. Horgan, U.S. District Court, District of Columbia (Washington).