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United States District Court for the District of Columbia
September 28, 2022, Decided; September 28, 2022, Filed
Civil Action No.: 18-2084 (RC)
Re Document No.: 67
Granting Plaintiffs' [*2] Motion to Vacate
As part of its duty to administer the Medicare statute, the Department of Health and Human Services ("HHS") establishes annual rates reimbursing hospitals for outpatient services and drugs through the Outpatient Prospective Payment System ("OPPS"). In American Hospital Association v. Becerra, 142 S. Ct. 1896, 213 L. Ed. 2d 251 (2022), the Supreme Court unanimously held that HHS exceeded its statutory authority by varying its 2018 and 2019 OPPS reimbursement rates for a particular group of hospitals—"340B hospitals"—without having first conducted a statutorily mandated survey of hospitals' acquisition costs. Id. at 1899. The case has returned to this Court to decide the issue of remedies. Plaintiffs, a group of hospital associations and non-profit hospitals, now ask the Court to vacate the prospective portion of the 340B reimbursement rate in the 2022 OPPS Rule—in other words, to "forbid Defendants from underpaying 340B claims for the remainder of 2022." Pls.' Mot. to Vacate ("Mot.") at 2, ECF No. 67.1 For the reasons stated below, the prospective portion of the 2022 reimbursement rate shall be vacated because it is defective and because vacating this portion of the 2022 OPPS Rule will not cause substantial disruption. Moreover, the Court finds [*3] that injunctive relief is not necessary because vacatur will immediately revert the 340B reimbursement rate to the default rate.
This is the Court's fourth opinion in this case, so it will assume familiarity with the facts and provide only an overview of the litigation's posture. This Court previously held that HHS exceeded its statutory authority by reducing the 2018 Medicare reimbursement rate for 340B hospitals without having first conducted a statutorily mandated survey. See Am. Hosp. Assoc. v. Azar ("AHA I"), 348 F. Supp. 3d 62, 67-72 (D.D.C. 2018). After considering supplemental briefing on the issue of remedies, the Court decided to remand the 2018 and 2019 OPPS Rules to HHS without vacatur for the agency to take a "first crack at crafting appropriate remedial measures." Am. Hosp. Ass'n v. Azar ("AHA II"), 385 F. Supp. 3d 1, 3-4 (D.D.C. 2019). The Court reasoned that although vacatur was a possibility, remand was the better option given the "potentially serious administrative problems" and disruption that could result from vacatur. Id. at 13.
The Court then entered final judgment to facilitate expeditious review of the case on the merits in the D.C. Circuit. Am. Hosp. Ass'n v. Azar ("AHA III"), No. 18-cv-2084, 2019 U.S. Dist. LEXIS 114658, 2019 WL 3037306, at *1 (D.D.C. July 10, 2019). The D.C. Circuit reversed. Am. Hosp. Ass'n v. Azar, 967 F.3d 818, 820, 448 U.S. App. D.C. 425 (D.C. Cir. 2020). In a divided opinion, it held that "HHS's decision to lower drug reimbursement [*4] rates for 340B hospitals rests on a reasonable interpretation of the Medicare statute." Id. The D.C. Circuit first found that HHS was entitled to Chevron deference on its interpretation of the Medicare provision. Id. at 828. It then held that the Secretary was authorized to vary the 340B reimbursement rate under his "general adjustment authority." Id. at 834. Unsatisfied with this result, Plaintiffs sought review by the Supreme Court, which granted certiorari. Am. Hosp. Ass'n v. Becerra, 141 S. Ct. 2883, 210 L. Ed. 2d 990 (2021).
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2022 U.S. Dist. LEXIS 175449 *; 2022 WL 4534617
AMERICAN HOSPITAL ASSOCIATION, et al., Plaintiffs, v. XAVIER BECERRA, in his official capacity as the secretary of Health and Human Services, et al., Defendants.
Prior History: AHA v. Azar, 348 F. Supp. 3d 62, 2018 U.S. Dist. LEXIS 216647, 2018 WL 6807219 (D.D.C., Dec. 27, 2018)
reimbursement rate, vacatur, vacate, disruption, OPPS Rule, injunction, remainder, default, budget, drugs, remedies, percent