Supreme Court, HRSA, and ESP: The 340B Decisions That Could Reshape Rural Healthcare

The Legal Landscape of 340B: What’s Changing in 2025?

For rural hospitals relying on 340B savings, policy changes, legal battles, and shifting enforcement rules are making compliance more complex than ever. With key court cases pending, new federal legislation in the works, and significant financial implications at stake, hospital leaders must stay ahead of regulatory updates to protect their funding and patient care programs.

Here’s what’s happening in 2025 and what rural hospitals need to know to navigate ESP and 340B compliance.

The Supreme Court’s Potential Role in the 340B Contract Pharmacy Debate

One of the most high-stakes legal battles in 340B is the ongoing dispute over contract pharmacy restrictions imposed by drug manufacturers. Since 2020, at least 21 drug companies have implemented policies requiring hospitals to submit data via ESP to access 340B discounts at contract pharmacies, with some limiting discounts altogether.

Where does the law stand?

• Conflicting lower court rulings: Some courts have ruled that manufacturers must honor 340B pricing at contract pharmacies, while others have sided with drug companies, arguing that the law does not explicitly require this access.
• The Supreme Court may weigh in: With split appellate court decisions, many legal experts anticipate that the Supreme Court could take up the case to establish a national precedent. If it does, the decision could either reaffirm contract pharmacy access under 340B or grant drugmakers greater control over pricing and distribution.
• What this means for rural hospitals: If the Court rules in favor of hospitals, ESP restrictions may be overturned, restoring full contract pharmacy access. If manufacturers win, expect tighter controls and a permanent shift in how 340B discounts are managed.

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HRSA’s Evolving Enforcement Stance on ESP

HRSA, which oversees 340B, has had an inconsistent enforcement stance on ESP requirements. While HRSA initially ruled that manufacturer-imposed restrictions violated 340B law, legal challenges have weakened its ability to enforce penalties.

Key updates for 2025:

• HRSA is taking a “wait-and-see” approach: The agency has not issued strong enforcement actions while courts continue to rule on 340B disputes.
• Covered entities must be prepared for audits: HRSA has increased its focus on ensuring hospitals maintain compliance with patient eligibility rules and duplicate discount prevention.
• What this means for rural hospitals: Rural providers should maintain meticulous documentation of 340B transactions to remain audit-ready while monitoring policy shifts that could affect ESP compliance.

The Rural 340B Access Act: Expanding Eligibility?

One of the most promising legislative efforts in 2025 is the Rural 340B Access Act, a bipartisan bill aimed at expanding 340B eligibility to newly designated Rural Emergency Hospitals (REHs).

What’s in the bill?

• Allows REHs to qualify for 340B discounts, closing a gap that has left some rural hospitals without access to crucial drug pricing benefits.
• Protects contract pharmacy arrangements, potentially rolling back ESP restrictions.
• Could increase 340B participation among rural providers, providing much-needed financial relief.

What this means for rural hospitals: If passed, rural facilities previously ineligible for 340B could see significant cost savings. Hospitals should track legislative developments and advocate for passage of this law to ensure continued program benefits.

The CMS $9 Billion Repayment: What Rural Hospitals Need to Know

A major financial windfall is on the horizon for hospitals impacted by past Medicare reimbursement cuts to 340B-covered entities. In 2023, CMS announced a $9 billion repayment plan to compensate hospitals that faced reduced payments under a now-overturned policy.

Who qualifies?

• Hospitals that received lower Medicare Part B reimbursements from 2018-2022.
• CAHs, DSHs, and other 340B-covered entities.

What this means for rural hospitals:

• Financial relief is coming: Hospitals should check their eligibility and prepare for reimbursement payments.
• Funds can be reinvested into programs affected by 340B losses, helping stabilize rural healthcare services.
• CMS guidelines must be followed carefully to ensure compliance with reimbursement requirements.

Action Steps for Rural Hospitals in 2025

With so much uncertainty surrounding 340B and ESP, rural hospitals must take a proactive approach to compliance and advocacy. Here’s what hospital leaders should focus on:

✅ Stay updated on legal developments – Follow court rulings and Supreme Court decisions that may impact contract pharmacy access. 

✅ Monitor HRSA guidance – Ensure compliance with 340B program requirements to avoid penalties and audits. 

✅ Engage in advocacy efforts – Support the Rural 340B Access Act and push for legislative protections. 

✅ Plan for the CMS repayment funds – Ensure proper budgeting and compliance for Medicare reimbursement funds. 

✅ Optimize ESP participation – If required to submit claims via ESP, develop a streamlined process to minimize financial losses and administrative burden.

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The future of 340B remains uncertain, but one thing is clear: rural hospitals must remain engaged, informed, and prepared for potential changes in ESP policy, legal rulings, and new legislation. Staying ahead of compliance risks and advocating for hospital-friendly policies will be essential for protecting 340B savings and maintaining high-quality care for rural communities.

To stay updated on policy changes and expert guidance, connect with RxTrail Consulting for the latest insights on 340B compliance, ESP navigation, and hospital financial strategies.

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