Supreme Court overturns 340B pay cut to hospitals

By Paige Minemyer – Jun 15, 2022

The Supreme Court on Wednesday unanimously rejected massive payment cuts to hospitals under the contentious 340B drug discount program.

In the ruling (PDF), the justices noted that the Department of Health and Human Services did not survey hospital costs before adjusting payments for 340B in a 2018 rule, which cut payments to hospitals in the program by nearly 30%.

The agency repeated that approach in 2019 rulemaking, and attorneys for HHS argued before the court that the surveys were not required. SCOTUS disagreed.

“The text and structure of the statute make this a straightforward case,” the opinion says. “Because HHS did not conduct a survey of hospitals’ acquisition costs, HHS acted unlawfully by reducing the reimbursement rates for 340B hospitals.”

The American Hospital Association sued to challenge the payment cuts, and a federal district court sided with them and struck down the rule. However, an appeals court later reversed the decision, leading to the SCOTUS showdown.


Chris J. Stewart

Chris currently serves as President and CEO of Surgio Health. Chris has close to 20 years of healthcare management experience, with an infinity to improve healthcare delivery through the development and implementation of innovative solutions that result in improved efficiencies, reduction of unnecessary financial & clinical variation, and help achieve better patient outcomes. Previously, Chris was assistant vice president and business unit leader for HPG/HCA. He has presented at numerous healthcare forums on topics that include disruptive innovation, physician engagement, shifting reimbursement models, cost per clinical episode and the future of supply chain delivery.

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