U.S. Supreme Court decision impacting 340B hospitals

June 23, 2022

WSHA would like to alert hospitals and health systems about a significant unanimous United States Supreme Court decision regarding the federal 340B program. Last year, the American Hospital Association (AHA) sued the Department of Health and Human Services (HHS), arguing that the HHS cannot vary Medicare reimbursement rates in the 340B program for one group of hospitals when it has not conducted the required survey of hospital acquisition costs. WSHA joined more than 30 other state hospital associations in describing the HHS policy position’s impact on hospitals to the court.

The Supreme Court found in favor of the AHA, reversing a prior ruling by the U.S. Court of Appeals for the D.C. Circuit and holding that, absent a survey of hospital acquisition costs, HHS may not vary the reimbursement rates only for 340B hospitals. The policy and ruling apply to hospitals paid under the outpatient prospective payment system (OPPS) and does not affect critical access hospitals.

Looking ahead, it is worth noting that, while the Supreme Court’s decision pertains to past HHS actions, the decision does not preclude HHS from future reimbursement rate adjustments. Rather, it clarified that HHS must conduct the survey of hospitals’ acquisition costs to reduced reimbursement rates.

The court has also not addressed the appropriate remedy for HHS’s unlawful imposition of lower rates. The AHA, America’s Essential Hospitals and the Association of American Medical Colleges are committed to working with the courts to develop a plan for reimbursing the 340B hospitals subject to the unlawful cuts.

While WSHA supported the AHA lawsuit, we understand this change has implications and challenges in implementation for both 340B and non-340B hospitals. WSHA will work with the American Hospital Association on the next steps. If you would like more information about how hospitals can move forward, please reach out to WSHA directly.


Zosia Stanley, JD, MHA
Vice President & Associate General Counsel


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