AHA Joined by Others Ask U.S. Supreme Court to Hear Cases on 340B, Hospital Outpatient Payment Cuts

WASHINGTON, DC (February 10, 2021) — Today, the American Hospital Association, joined by member hospitals and health systems and other national organizations representing hospitals, filed petitions asking the U.S. Supreme Court to reverse appeals court decisions in two important cases for patients and providers. Both decisions conflict with Congress’ clear intent and defer to the government’s inaccurate interpretation of the law.

The two cases being appealed to the U.S. Supreme Court today are:

• A lawsuit challenging the U.S. Department of Health and Human Services’ (HHS) nearly 30% cut to 2018 and 2019 Medicare outpatient prospective payment system drug payments for certain hospitals participating in the 340B Drug Pricing Program. A district court sided with the AHA and found that the payment reductions were unlawful. However, last July, two members of the three-judge panel of the U.S. Court of Appeals agreed to overturn that ruling, despite a spirited dissent questioning the majority’s deference to the government’s position. Today’s petition can be found HERE.
• A lawsuit challenging HHS’ payment reductions in the 2019 outpatient payment rule for certain hospital outpatient off-campus provider-based departments. A lower court twice found that HHS exceeded its statutory authority when it reduced these payments. But, in July, a three-judge appeals panel reversed this decision. Today’s petition can be found HERE.

“In an era of skyrocketing drug prices, the 340B program has been critical in helping hospitals expand access to comprehensive health services to vulnerable communities, including lifesaving prescription drugs. Many of the important programs and services that the 340B program allows eligible hospitals to provide would otherwise be unavailable. These cuts have resulted in the continued loss of resources during this pandemic, which comes at the worst possible time for patients and communities,” said Rick Pollack, president and CEO of the American Hospital Association. “The unlawful cuts to hospital outpatient departments directly undercut the clear intent of Congress to protect them because of the many real and crucial differences between them and other sites of care. These hospital outpatient departments are held to higher regulatory standards and are often the only point of access for patients with the most severe chronic conditions, all of whom receive treatment regardless of ability to pay.”

“We will continue to fight for our patients and communities and have put forward compelling arguments that these cases should be taken up by the Supreme Court. We are hopeful that these unlawful cuts will be overturned so that hospitals and health systems can continue to provide the services people need the most,” Pollack continued.

The two petitions ask the U.S. Supreme Court to review these cases on the basis of the excessive deference the appeals court gave to the government’s misbegotten interpretation of the respective governing statutes. It is known as “Chevron” deference, in reference to the line of cases on which it is based. Such deference appears misplaced in these cases, particularly considering the solid opinions in favor of the hospital field in the district courts which first heard the cases. The two petitions are complementary and persuasive. 

The AHA is joined in the 340B litigation by the Association of American Medical Colleges (AAMC), America’s Essential Hospitals, and hospital plaintiffs: Northern Light Health, in Brewer, Maine; Henry Ford Health System, in Detroit; and AdventHealth Hendersonville, in Hendersonville, North Carolina.

The AHA is joined in the outpatient cuts litigation by the AAMC and hospital plaintiffs: Olympic Medical Center in Port Angeles, Wash., Mercy Health in Muskegon, Mich., and York Hospital in York, Maine.

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Contact:        Colin Milligan, (202) 638-5491, cmilligan@aha.org
                      Marie Johnson, (202) 626-2351, mjohnson@aha.org