Supreme Court Agrees to Hear Hospital Lawsuit Challenging HHS’ 340B Cuts

Fierce Healthcare

The Supreme Court agreed to hear a major dispute between the hospital industry and the federal government over cuts to 340B hospitals.

The court agreed to hear the case during its next term that begins in October, according to an order list released on Friday. A decision could be rendered sometime next year.

The case called American Hospital Association v. Becerra centers on the Medicare reimbursement rate paid for outpatient drugs and whether the Department of Health and Human Services singled out 340B-covered entities.

HHS traditionally set reimbursement rates for drugs based on the average sales price and applied it across all hospital groups. But the lawsuit said that practice changed in 2018 when HHS singled out 340B hospitals, the lawsuit argues.

HHS argued that the cuts were to ensure that Medicare payments were more aligned with the costs expended by the hospital to acquire the drug, which would be lower for a 340B hospital.

The agency has argued it had broad statutory authority to adjust drug payments. A legal challenge from hospital groups followed, but an appellate court found that HHS had the authority to make the cuts.

AHA cheered the Supreme Court’s decision, arguing that the cuts have had an adverse impact on patients.

“We are hopeful 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,” said Melinda Hatton, general counsel for the AHA, in a statement.