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Supreme Court Rules in Favor of Hospitals in 340B Decision

June 17, 2022

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On June 15, the Supreme Court released an opinion in the case of AHA v. Becerra, which involved the Department of Health and Human Services’ (HHS) reduction of Medicare reimbursement rates for outpatient drugs purchased by 340B hospitals. The AAMC had joined several associations and hospitals in filing a lawsuit in 2017 to challenge the HHS action [refer to Washington Highlights, Sept. 7, 2018 and Washington Highlights, July 20, 2018].

In a unanimous decision authored by Justice Brett Kavanaugh, the court reversed the decision by the U.S. Court of Appeals for the District of Columbia Circuit. The court determined that because the HHS did not conduct a survey of hospitals’ acquisition costs for outpatient prescription drugs, the department acted unlawfully by reducing reimbursement rates for 340B hospitals. The court noted the $1.6 billion impact of the HHS reduction and acknowledged the role of 340B hospitals in providing essential health care services to low-income populations, citing amicus briefs filed by 340B hospitals stating that the Medicare payments they receive help to “offset the considerable costs of providing healthcare to the uninsured and underinsured in low-income and rural communities.” The court further remanded the case to a lower court to determine an appropriate remedy.

In response to the decision, the AAMC released a joint statement with the American Hospital Association and America’s Essential Hospitals, noting “we look forward to working with the Administration and the courts to develop a plan to reimburse 340B hospitals affected by these unlawful cuts while ensuring the remainder of the hospital field is not disadvantaged as they continue to serve their communities.”

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