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AAMC, Hospital Groups Submit Merits Brief in 340B Case

September 17, 2021

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The AAMC and other plaintiffs submitted a merits brief to the U.S. Supreme Court in American Hospital Association v. Becerra, the case that challenges an estimated annual $1.6 billion reduction made by the Centers for Medicare & Medicaid Services (CMS) to payments for certain outpatient drugs to 340B hospitals under the Outpatient Prospective Payment System. The U.S. District Court for the District of Columbia found that the CMS had exceeded its statutory authority, but that decision was overturned by a 2-1 decision of the U.S. Court of Appeals for the District of Columbia Circuit. The decision of the appeals court relied on Chevron, which is a principle established by the Supreme Court that gives deference to actions of federal agencies when a statute is ambiguous and an agency’s action is not unreasonable. In July, the U.S. Supreme Court agreed to hear the case. 

The 28.5% reduction to reimbursement began in 2018 and was aimed only at 340B hospitals, thereby, according to the brief, “imperiling their vital mission.” The brief laid out the case as to why the agency’s cuts exceeded statutory authority and why Chevron should not apply. The brief also noted that these cuts affect “large numbers of 340B hospitals, including major academic medical centers, public and not-for-profit hospitals, and small community hospitals, as well as the communities those hospitals serve.”

Arguments before the Supreme Court will occur in late November, though an exact date has not yet been set. Donald Verrilli Jr., former Solicitor General of the United States, will present arguments on behalf of the AAMC and the other plaintiffs.

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