backAmerican Hospital Association Sues HHS and HRSA Over 340B Rebate Model
The American Hospital Association (AHA), the Maine Hospital Association and four non-profit health systems (the Plaintiffs) have filed a lawsuit in the U.S. District Court for the District of Maine challenging the Health Resources and Services Administration’s (HRSA) 340B Rebate Model Pilot Program (the Pilot Program). The Pilot Program is set to go into effect on January 1, 2026.
Historically, the 340B program required drug manufacturers to provide discounted medications directly to covered entities at the time of sale. In the summer of 2025, HRSA, an agency of HHS, proposed the Pilot Program, which would replace upfront discounts with a rebate system. Under the Pilot Program, covered entities must pay the full market price for medications and later seek rebates. The Plaintiffs argue that this sudden change imposes significant financial burdens on covered entities already operating with limited resources. The Plaintiffs also state that the rebate model will force covered entities to advance hundreds of millions of dollars for drug purchases, threatening their ability to provide comprehensive care.
The complaint further asserts that HRSA and HHS:
- Did not provide advance notice or clear justification for the policy change and announced the Pilot Program abruptly and unexplainedly;
- Ignored internal documents defending the upfront discount model;
- Conceded that the Pilot Program will cost covered entities hundreds of millions of dollars; and
- Disregarded over 1,100 public comments highlighting concerns about administrative costs, costs due to delayed payment, alternatives to the rebate model, the software platforms that drug manufacturers will use to implement that Pilot Program and the January 1, 2026 start date of the Pilot Program.
The complaint alleges that the Pilot Program is “arbitrary and capricious” under the Administrative Procedure Act by failing to consider costs and benefits and less burdensome alternatives to a rebate system, failing to provide a reasonable explanation for the agency action, as well as being "substantively unreasonable" and seeking a predetermined result.
Plaintiffs seek declaratory and injunctive relief to block implementation of the Pilot Program and an order for the government to rescind related guidance. The Plaintiffs also filed a motion for a temporary restraining order to stop the Pilot Program from going into effect.
The case is titled The American Hospital Association et al. v. Robert F. Kennedy Jr. et al., case number 2:25-cv-00600, in the U.S. District Court for the District of Maine. A link to the complaint can be found here. The motion for a temporary restraining order can be found here. King & Spalding released a prior article exploring the Pilot Program further, which can be found here.
Reporter, Priya Sinha, Atlanta, GA, +1 404 572 3548, psinha@kslaw.com.
CMS to Open Applications in 2026 for the Advancing Chronic Care with Effective, Scalable Solutions (ACCESS) Model, a New Payment Model Aimed at Increasing Access to Technology-Supported Care for People with Original Medicare who are Managing Chronic Conditions
CMS announced plans to launch the ACCESS Model, a new payment model that tests an outcome-aligned payment approach in Original Medicare with an aim to expand access to new technology-supported healthcare options that help improve patient health and prevent and manage chronic disease. For organizations that desire to participate in the ACCESS Model, applications are due on April 1, 2026. CMS plans to launch the ACCESS Model on July 1, 2026, which it plans to run for 10 years.
According to CMS, ACCESS will test whether the use of technology in chronic disease management can be expanded by tying payments to clinical outcomes. CMS states that the model focuses on conditions that affect over two-thirds of individuals with Medicare, including high blood pressure, diabetes, chronic musculoskeletal pain, and depression. CMS noted that Original Medicare has historically lacked a payment option to support the use of novel technology-supported care, such as wearable devices and digital applications, to help patients manage such chronic diseases and that traditional fee-for-service methodology pays for a defined set of activities that do not typically align with technology-supported care.
CMS aims to close this gap by providing participating organizations with recurring payments for managing patients’ qualifying conditions, with full payment tied to achieving measurable health outcomes. CMS stated that, through the ACCESS Model, it hopes to enable clinicians to provide patients with more innovative technology-supported care options that improve the health of patients.
According to CMS, the ACCESS Model will focus on four clinical tracks addressing the most common chronic conditions:
- Early cardio-kidney-metabolic conditions, such as high blood pressure, high cholesterol, obesity, and prediabetes.
- Cardio-kidney-metabolic conditions, such as diabetes, chronic kidney disease, and heart disease.
- Musculoskeletal pain.
- Behavioral health conditions, such as depression and anxiety.
Participating organizations must be enrolled in Medicare Part B. According to CMS, applications for the ACCESS Model will be available soon, and organizations can complete an interest form, available here, to receive updates once application materials are released. More information regarding the ACCESS Model can be found on CMS’s website.
Reporter, Brittany Tandy, Austin, TX, +1 512 457 2071, btandy@kslaw.com.
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