American Hospital Association, et al. v. Becerra
American Hospital Association, et al. v. Becerra (U.S. Supreme Court, June 15, 2022): In a unanimous decision, the Supreme Court invalidated the Department of Health and Human Services’ (HHS) recent cuts in payments for prescriptions to hospitals serving communities with low incomes (340B hospitals). Under the Medicare statute, HHS must reimburse hospitals for outpatient prescriptions based on either a survey of hospitals’ costs in acquiring the prescriptions or the average sale price of the prescriptions. The first approach offers some flexibility which the second, according to the Court, does not: if HHS bases reimbursements off a cost survey, it may vary reimbursement rates between groups of hospitals. However, HHS did not collect data or conduct a survey before cutting reimbursement rates by $1.6 billion in 2018 and 2019. The Court found HHS did not have discretion under the statute to vary reimbursement rates for certain hospitals without such a survey, and thus found the cuts impermissible. The Court did not dictate remedies, or explicitly state how the decision would affect cuts in the years following 2019. Read the full decision here.