Montgomery, Ala.-based Baptist Health is suing Humana, alleging the insurer's Medicare Advantage plan underpaid the hospital for drugs purchased through the 340B program.
In a lawsuit filed in the Circuit Court of Montgomery County, Ala., Jan. 9, and transferred to the U.S. District Court for the Middle District of Alabama Feb. 9, the health system alleged Humana has refused to pay the system higher rates for outpatient drugs purchased through the 340B program.
In 2022, the Supreme Court ruled CMS illegally cut reimbursement rates for outpatient drugs purchased by safety net hospitals. CMS said it would pay a lump sum of $9 billion to reimburse 340B hospitals to remedy the underpayments. Baptist Medical Center South in Montgomery is set to receive over $36 million in repayments from the agency.
In its lawsuit, Baptist Health argued Humana owes it money that matches CMS' rectified rates.
According to the court documents, Baptist Health is in-network with Humana's Medicare Advantage offerings. The system argued in the court filing that from 2018 to 2022, Humana based its payment rates for 340B drugs on the CMS rates, later deemed illegal by the Supreme Court. Baptist Health asked the payer to commit to reimburse the health system for the drugs at the higher payment rates CMS established after the Supreme Court ruled its cuts were illegal.
In the filing, Baptist Health alleged lawyers for Humana informed the system it "disputes any obligation to make such payments."
"Humana's refusal to act has worked a substantial windfall to Humana as it continues to hold funds provided by CMS for Humana's Medicare Advantage plans without reimbursing Baptist Health for the amounts owed to it under the agreement," lawyers for Baptist Health wrote.
A Humana spokesperson told Becker's the payer does not comment on pending litigation.