The U.S. Supreme Court this morning agreed to review a federal appeals court’s July 2020 ruling upholding a nearly 30% reduction in Medicare Part B drug reimbursement for hospitals’ 340B-purchased drugs.
The court’s decision to hear American Hospital Association (AHA) v. Becerra was a surprise. The court rejects the vast majority of petitions for review it receives, especially if the petitions do not involve disagreements among federal appeals courts. In addition to AHA, America’s Essential Hospitals, and the American Association of Medical Colleges (AAMC) are the lead plaintiffs along with Henry Ford Health System in Michigan, Northern Light Health in Maine and AdventHealth Hendersonville in North Carolina.
In addition to taking up the question of whether the U.S. Centers for Medicare & Medicaid Services (CMS) had the authority to make the payment cuts under the under Medicare’s outpatient prospective payment system (OPPS), the court has asked the parties to brief and argue whether AHA’s challenge is precluded by a provision in the OPPS statute that limits judicial review of certain agency determinations. It is one of four health care cases on next year’s docket.
The Trump administration imposed the cuts beginning in 2018 and hospital organizations have been challenging them in court ever since. The hospital groups are hoping that Biden administration will reverse or mitigate the cuts in the upcoming proposed OPPS rule, but nonetheless, the fact the Supreme Court is taking up the case underscores its importance.
This will be the second time that 340B program is a central element of a Supreme Court case. In 2011, in Astra vs. Santa Clara, the court ruled that 340B covered entities cannot sue drug manufacturers over pricing disputes. Instead, they must make their case to the federal government, largely through the Administrative Dispute Resolution process and other avenues.
“We are pleased that the U.S. Supreme Court has agreed to hear the compelling arguments in our case on payments cuts to the 340B drug pricing program that are adversely impacting care to patients. We are hopeful that the Court will reject the appellate court decision deferring to the government’s interpretation of the law that clearly imperils the important services that the 340B program helps allow eligible hospitals and health systems to provide to vulnerable communities, many of which would otherwise be unavailable”, said Melinda Hatton, AHA’s General Counsel.
AAMC’s President and CEO David Skorton, M.D., added : “The current reimbursement rates reduce the 340B drug discounts granted to safety-net providers, many of which are teaching hospitals. These hospitals use the current savings to deliver critical health care services to low-income and vulnerable patients, which includes providing free or substantially discounted drugs to low-income patients, establishing neighborhood clinics, and improving access to specialized care previously unavailable in some areas. A reversal of the cuts will ensure that low-income, rural, and other underserved patients and communities are able to access the vital services they need.”
340B President and CEO Maureen Testoni said: “We are pleased that the Supreme Court has agreed to review the appellate court decision, which we believe was legally flawed. We are hopeful that the justices will reverse the lower court decision that upheld these damaging cuts to many 340B hospitals treating patients with low incomes. In the meantime, we continue to urge the Biden administration to change this harmful policy by abandoning the payment cuts for 2022 and beyond.”