Hospitals are telling government officials it would be illegal to claw back $7.8 billion as part of a remedy that is making hospitals whole over underpaid drug discounts — and they may sue if that plan goes into effect.

The industry is walking a tightrope by trying to maximize the amount of money hospitals can keep. Lobbyists are praising federal officials for agreeing to dole out billions of dollars in future, lump-sum payments, but they are also pressuring Medicare not to offset a penny of those funds.

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For several years during the Trump administration, Medicare cut payments for hospitals’ drugs under the federal 340B drug discount program, but the Supreme Court invalidated that policy in 2018. In July, Medicare proposed a solution: Hospitals would get $9 billion to cover what they are owed under the 340B program, but to offset those costs, the government would recoup $7.8 billion.

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