American Hospital Association v. Becerra

On June 15, 2022, the U.S. Supreme Court decided American Hospital Association v. Becerra, a challenge by hospital groups against the Department of Health and Human Services. The dispute centered on Medicare reimbursement for outpatient drugs purchased under the 340B program. In 2018, HHS slashed payment rates for 340B hospitals by nearly 30% without conducting the statutorily required survey of hospitals' actual drug acquisition costs. The American Hospital Association and other plaintiffs argued this unilateral cut violated the Medicare statute. The Supreme Court unanimously ruled that HHS lacked the authority to vary reimbursement rates without first gathering cost data, reversing the lower court and remanding the case.

The Supreme Court issued a unanimous 9-0 decision vacating the D.C. Circuit's ruling. It held that HHS's 2018 and 2019 reimbursement cuts were unlawful because the agency failed to collect hospital cost survey data before adjusting payment rates, and remanded the case for further proceedings.

Whether the Department of Health and Human Services may reduce Medicare Part B drug reimbursement rates for 340B hospitals without conducting a survey of the hospitals' actual acquisition costs, as required by the Medicare statute.

The ruling safeguarded billions of dollars in funding for safety-net hospitals that rely on 340B savings to provide care for uninsured and underserved populations. It reinforced the principle that federal agencies must adhere to explicit statutory procedures when setting reimbursement rates, offering greater financial predictability for hospitals and preserving access to essential healthcare services in vulnerable communities.