U.S. Supreme Court Will Take Up AHA 340B Lawsuit

July 08, 2021

On July 2, the U.S. Supreme Court announced it would be taking up a lawsuit filed by the American Hospital Association (AHA) challenging cuts made to 340B hospitals by the U.S. Department of Health and Human Services (HHS) under the Trump administration.

The cuts originated in the Center for Medicare and Medicaid Services' (CMS’s) 2018 Outpatient Prospective Payment (OPPS) rule, when CMS proposed cutting reimbursement for outpatient drugs acquired under the 340B program by about 30%. The cuts do not apply to sole community hospitals, children’s hospitals, Prospective Payment System (PPS)-exempt cancer hospitals or critical access hospitals.

The 340B prescription drug discount program helps hospitals that serve a disproportionate share of Medicaid recipients obtain certain outpatient prescription drugs at a discount. The program was created to stretch scarce federal resources, recognizing that Medicare rates (which pay about 73% of the cost of care in Wisconsin) do not cover the full cost of care. WHA has long advocated for HHS to reverse these cuts and received bipartisan support from Wisconsin's congressional delegation for federal legislation that would likewise repeal the cuts, which amount to a loss of about $40 million annually for 340B hospitals and health systems in Wisconsin.

As covered in a prior edition of The Valued Voice, the AHA had initially prevailed in two separate court cases when federal Judge Rudolph Contreras ruled HHS exceeded its statutory authority in issuing these cuts. However, HHS appealed the decision and the U.S. Court of Appeals for the District of Columbia Circuit later ruled in favor of HHS, citing the Chevron deference doctrine, in which the courts give wide deference to federal agencies in administrative rulemaking so long as the court finds they are rational or reasonable.

The decision to hear this case is all the more notable given that the Supreme Court announced just last week it would not be hearing a case that similarly relied on Chevron related to site-neutral payments.

Contact WHA Vice President of Federal and State Relations Jon Hoelter with questions.

This story originally appeared in the July 08, 2021 edition of WHA Newsletter