340bemployed.org

Your Free Source for 340B News and Commentary

  • Home
  • About Us
  • Employers
  • Job Seekers
  • Advertise
  • 340B Health

CMS OK’s California’s 340B Medicaid Carve-Out Ban and AAC Billing Requirement

Lawsuit over the policy is now before a federal appeals court
 

Print Article

February 28, 2014—The federal Centers for Medicare and Medicaid Services (CMS) has approved California Medicaid’s 2009 policy requiring 340B covered entities to “carve in” their Medicaid purchases and to pass their 340B discounts on to Medicaid by billing such drugs at no more than actual acquisition cost (AAC) plus a dispensing fee. [ms-protect-content id=”2799″]

The state and the AIDS Healthcare Foundation (AHF) are now sparring in a federal appeals court over what CMS’s Jan. 30 action means for a lower court’s permanent injunction last year barring the policy’s enforcement.

California lawmakers passed the 340B Medicaid carve-in and AAC billing mandates in August 2009 and the state Medicaid program, Medi-Cal, submitted a related Medicaid state plan amendment (SPA) to CMS that October. CMS approved the SPA last month, retroactive to Oct. 1, 2009.

After a lawsuit that AHF filed over the policy, a federal district judge in May 2013 permanently enjoined California from enforcing the carve-in mandate and AAC billing requirement. The court found that the state had acted without first obtaining approval from CMS for its SPA; that it did not consider factors of efficiency, economy, and quality of care and Medi-Cal beneficiary access to health care services; and that it did not consider the costs that 340B safety net providers would incur in dispensing drugs to Medi-Cal beneficiaries. However, the judge dismissed AHF’s claim that the policy violated both the federal and state constitutions’ equal protection clauses because, under it, for-profit pharmacies receive a higher reimbursement rate, and therefore higher revenues, than 340B providers. The state appealed the decision to the Ninth U.S. Circuit Court of Appeals and AHF filed a cross-appeal.

Last October, state and national groups representing 340B providers sent a letter to CMS urging it to disapprove the SPA and to encourage Medi-Cal to develop a 340B shared savings arrangement. In its January letter of approval, however, CMS concluded that the state’s SPA “complies with all applicable requirements.”

In a Feb. 7 motion, the state asked the Ninth Circuit Court to vacate the injunction in light of CMS’s decision and to send the case back to the lower court for reconsideration. In the alternative, California asked the appeals court to temporarily suspend the injunction pending the resolution of the appeal. AHF opposed those motions in a Feb. 18 filing. [/ms-protect-content]

Follow us on X

340B Health Verified account Follow

340B Health is the leading advocate & resource for hospitals that serve their communities by participating in the 340B drug pricing program. #Protect340B

340BHealth
340bhealth

340B Health

Verified account @340bhealth ·
20h

Pharma argues that back-end rebates would reduce health care costs and encourage transparency, but the reality is that rebates would only keep more money in the pockets of drugmakers while harming safety-net hospitals and patients.

Nine out of 10 hospitals in #340B report that

Reply on Twitter 2115820451934920976 Retweet on Twitter 2115820451934920976 Like on Twitter 2115820451934920976 Twitter 2115820451934920976
340bhealth

340B Health

Verified account @340bhealth ·
28 Oct

Almost three-quarters of #340B hospitals report 340B cuts would have the biggest impact on oncology care. With the cost of health care rising, cancer patients can’t afford to lose this resource. #Protect340B

Reply on Twitter 2115463097032860028 Retweet on Twitter 2115463097032860028 Like on Twitter 2115463097032860028 Twitter 2115463097032860028
340bhealth

340B Health

Verified account @340bhealth ·
27 Oct

Social determinants of health such as housing, employment, and income account for as much as 80-90% of health outcomes. #340B hospitals support more patients facing housing and employment insecurity than non-340B hospitals, helping more vulnerable populations access critical

Reply on Twitter 2115143742189379744 Retweet on Twitter 2115143742189379744 Like on Twitter 2115143742189379744 Twitter 2115143742189379744
340bhealth

340B Health

Verified account @340bhealth ·
26 Oct

#340B hospitals aren’t just using their savings to make drugs cheaper for patients, they’re connecting their communities to the care they need. Research shows West Virginia hospitals provided more than $1 billion in community benefits, including expanding health-focused programs,

Reply on Twitter 2114725486379094153 Retweet on Twitter 2114725486379094153 Like on Twitter 2114725486379094153 Twitter 2114725486379094153
340bhealth

340B Health

Verified account @340bhealth ·
25 Oct

#340B savings put critical health care access within reach for millions of Americans. It’s not just a resource for hospitals, it’s part of the backbone of the nation’s health care safety net. #Protect340B

Reply on Twitter 2114458979837362625 Retweet on Twitter 2114458979837362625 Like on Twitter 2114458979837362625 Twitter 2114458979837362625

RSS 340B Informed

  • An In-Depth Look at Total 340B Purchases
  • Ideas for 340B Changes Could Lead to Legislation
  • Help From 340B After a Rare Diagnosis and an Unaffordable Bill

Copyright © 2026 · 340B Health