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American Hospital Assn. v. Becerra
596 U.S. 724
SCOTUS
2022
Read the full case

Background

  • Medicare statute (42 U.S.C. §1395l(t)(14)) provides two ways to set hospital outpatient drug reimbursement: (1) if HHS conducts a hospital acquisition-cost survey, reimburse at hospitals' average acquisition cost and may vary rates by hospital group; (2) if no survey, reimburse at the drug's average sales price (with adjustments) and may not vary rates by hospital group.
  • From 2006 through 2017 HHS used option 2 (no survey), setting uniform rates ~106% of average sales price for all hospitals.
  • For 2018 (and again for 2019) HHS did not conduct a survey but created separate, lower reimbursement rates for 340B hospitals (77.5% of ASP) while leaving others at ~106%, citing estimated 340B discounts and potential "overpayments."
  • American Hospital Association and others sued, arguing HHS lacked statutory authority to single out 340B hospitals without a survey; district court ruled for hospitals; D.C. Circuit reversed and upheld HHS's rule; Supreme Court granted certiorari.
  • Supreme Court held (1) the Medicare statute does not preclude judicial review of HHS's 2018–2019 rates, and (2) HHS acted unlawfully by varying rates for 340B hospitals when it had not conducted the required acquisition-cost survey.

Issues

Issue Plaintiff's Argument Defendant's Argument Held
Whether statute precludes judicial review of HHS's 2018–2019 reimbursement rules Statute does not preclude review; courts can review final agency action Statute (and program budget-neutrality) precludes review of these payment-rate decisions Statute does not preclude judicial review; traditional presumption in favor of review applies
Whether HHS may vary reimbursement rates for 340B hospitals absent a hospital acquisition-cost survey HHS cannot vary rates by hospital group unless it first conducts the statutorily required survey HHS can "adjust" average price under option 2 and thereby vary rates by hospital group without a survey HHS may not vary rates by hospital group under option 2; setting lower rates for 340B hospitals without a survey was unlawful

Key Cases Cited

  • Mach Mining, LLC v. EEOC, 575 U.S. 480 (presumption of judicial review unless statute precludes it)
  • Weyerhaeuser Co. v. United States Fish & Wildlife Serv., 586 U.S. 000 (strong presumption in favor of judicial review; agency discretion limited by statutory text)
  • Russello v. United States, 464 U.S. 16 (interpretation driven by express statutory distinctions)
  • Whitman v. American Trucking Assns., Inc., 531 U.S. 457 (hesitation to adopt interpretations that would eviscerate statutory text)
  • Babb v. Wilkie, 589 U.S. 000 (canon on reading statutory provisions in context)
  • Sandoz Inc. v. Amgen Inc., 582 U.S. 000 (use of contextual tools in statutory interpretation)
  • Chicago v. Fulton, 592 U.S. 000 (declining interpretations that render statutory provisions meaningless)
  • Maine Community Health Options v. United States, 590 U.S. 000 (same)
Read the full case

Case Details

Case Name: American Hospital Assn. v. Becerra
Court Name: Supreme Court of the United States
Date Published: Jun 15, 2022
Citation: 596 U.S. 724
Docket Number: 20-1114
Court Abbreviation: SCOTUS