Nine friend-of-the-court briefs have been filed urging the U.S. Supreme Court to strike down the CMS rule that imposed a huge cut in 340B hospitals’ Medicare reimbursement for physician administered drugs.

U.S. Supreme Court Gets Several Briefs Urging Rejection of CMS’s Drug Payment Cuts for 340B Hospitals

Nine friend-of-the-court briefs have been filed in the nation’s highest court urging rejection of an appeals court’s decision last year that upheld a huge cut in 340B hospitals’ Medicare reimbursement for physician administered drugs.

Thirty-seven state and regional hospital associations last Friday asked the U.S. Supreme Court to reverse the U.S. Court of Appeals for the District of Columbia Circuit’s July 2020 decision upholding the Centers for Medicare & Medicaid Services (CMS’s) nearly 30 percent reduction in Medicare Part B reimbursement for hospitals’ 340B-purchased drugs.

Six leading academic medical centers—Yale New Haven Health System, BJC HealthCare, Cedars-Sinai Medical Center, Geisinger, UPMC (University of Pittsburg Medical Center), and Vanderbilt University Medical Center—filed their own brief urging the court to overturn the decision.

340B hospitals also are getting support from business, conservative, and libertarian groups concerned about what they perceive as unwarranted and heavy-handed federal regulation.

The high court agreed to consider the case in July. The plaintiffs—American Hospital Association, America’s Essential Hospitals, the Association of American Medical Colleges, and three 340B hospitals—filed their brief early this month. The Biden administration, which has proposed to continue the cuts that began under ex-President Trump, is expected to file its brief in early to mid-November. 340B hospital groups were deeply disappointed that the new administration, which has generally been very supportive of the 340B program, proposed to retain the cuts in July in its hospital outpatient prospective payment proposed rule for calendar year 2022. They and their members are urging CMS to reverse its decision when it publishes its final reimbursement rule later this fall. Comments on the proposed rule are due this Friday.

The 37 state and regional hospital associations told the court in their brief that the 2017 CMS final rule that imposed the drug reimbursement cut will stretch their member hospitals “beyond the breaking point.”

“If CMS’s final rule is allowed to stand, 340B providers will be forced to eliminate or dramatically curtail some crucial programs that treat a wide range of medical conditions—from cancer to mental health disorders to diabetes to opioid addiction,” the associations said. “America’s 340B hospitals and patients cannot afford the massive cuts imposed by CMS’s rule.”

The six academic medical centers likewise said in their brief that CMS’s drug reimbursement cut already has affected BJC HealthCare’s “ability to pass on 340B savings to uninsured patients” and Yale New Haven Health System’s “expansion of retail pharmacy services, as well as services related to home infusion, home care and integrated/affiliated health efforts.”

“HHS’s near 30 percent reduction in the reimbursement rate, which translates to a loss of approximately $1.6 billion for 340B hospitals annually, will inevitably lead these financially strapped hospitals to cut back or eliminate essential programs that serve financially
vulnerable patients,” the academic medical centers said. “Unfortunately, if permitted to
remain in effect, the CMS rule will cause the greatest harm to the populations that the 340B program was intended to benefit.”

The business, conservative, and libertarian groups that filed briefs either supporting the plaintiffs or supporting neither side urged the high court to reverse the CMS final rule on the grounds that the appeals court was too deferential to CMS’s interpretation of the Medicare statute.

The libertarian group Pacific Legal Foundation, for example, argued in its brief that the appeals court’s “cursory analysis” of the Medicare statute and “rush” to defer to CMS’s interpretation of the law “goes well beyond this Court’s precedents.”

The National Association of Home Builders, American Farm Bureau Federation, American Fuel & Petrochemical Manufacturers, National Cattlemen’s Beef Association, and National Mining Association said in their brief that, too often, lower federal courts reflexively deem federal laws to be ambiguous and defer to federal agencies’ interpretations of such laws. “Reflexive deference undermines the rule of law” and the ability of businesses “to order their affairs,” they said.

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