Supreme Court To Hear Case Impacting Medicare Reimbursement for 340B Drugs | Arent Fox

A link to the court record is here. Interestingly, some media reports that the court initially rejected the petitioners’ request for a certificate, only to change course a few days later on July 2nd. Arent Fox analyzed the case while he was still going through the lower courts, here.

The case, American Hospital Association, et al. v. Becerra, asks the immediate question “whether Chevron Forbearance allows HHS to set reimbursement rates based on acquisition costs and vary those rates by hospital group if it has not collected adequate survey data on hospital acquisition costs,” but the court also requested that the Parties will inform and argue whether contesting HHS reimbursement adjustment is precluded by the legal provision that limits the ability to conduct an administrative or judicial review of “periodic adjustments” to reimbursement amounts (42 USC 1395l

The focus of the case is whether the Department of Health (HHS) acted within its powers to single out hospitals participating in the 340B program and drastically cut reimbursement for 340B-covered outpatient medication under the 2018 outpatient prospective payment system ( OPPS) Last rule. Instead of keeping drug reimbursement for 340 billion hospitals at ASP + 6% (which is specifically the reimbursement formula for all other hospital groups), HHS put reimbursement for covered outpatient medicines issued by 340 billion hospitals at ASP minus 22 , 5% fixed. HHS argued that it was permissible to vary reimbursement by hospital group because the agency did not collect specific acquisition cost data for hospitals and therefore it was legally allowed to make certain adjustments to reimbursement at its own discretion.

The case was followed closely by drug supply chain participants, with an amicus briefing filed with the court by around 36 state and regional hospital associations. Arent Fox will pursue this case further and provide our findings as soon as the court hears any oral arguments.