Document ID: ./input/supremecourt_opinions/opinions/21pdf/20-1114_09m1.pdf
Page Number: 12.0

Cite as:  596 U. S. ____ (2022) 

9 

Opinion of the Court 

III 
We turn next to the merits.  The question is this:  If HHS 
has not conducted a survey of hospitals’ acquisition costs,
may HHS still vary the reimbursement rates for outpatient 
prescription  drugs  by  hospital  group?    The  answer  is  no. 
The 2003 Medicare Act authorizes HHS to set reimburse-
ment  rates  for  covered  outpatient  prescription  drugs  pro-
vided by hospitals.  The Act also specifies how HHS must 
set 
42  U. S. C. 
§1395l(t)(14)(A).  The  statute  therefore  reflects  a  careful 
congressional  focus  not  only  on  the  goal  of  proper  reim-
bursement rates, but also on the appropriate means to that 
end. 

reimbursement 

rates. 

those 

To reiterate, the statute affords HHS two options for set-
ting  reimbursement  rates  for  outpatient  drugs.    Option  1
applies  if  HHS  collects  “hospital  acquisition  cost  survey
data” from hospitals.  §1395l(t)(14)(A)(iii)(I).  If the agency
has conducted a survey and collected that data, then HHS
may use the data to set reimbursement rates equal to “the 
average acquisition cost for the drug.”  Ibid.  Importantly,
in  that  circumstance,  HHS  may  “vary”  reimbursement
rates “by hospital group.”  Ibid. 

By contrast, if HHS does not conduct a survey of hospi-
tals’ acquisition costs and if acquisition cost data are there-
fore “not available,” HHS must instead proceed under op-
tion  2  and  obtain  price  data  from  drug  manufacturers. 
§1395l(t)(14)(A)(iii)(II).  And  in  that  circumstance,  HHS 
must set reimbursement rates based on “the average price 
for the drug” as “calculated and adjusted by the Secretary
as necessary for purposes of ” this statutory provision.  Ibid. 
Critically,  that  second  option  does  not  authorize  HHS  to 
vary reimbursement rates by hospital group.  Instead, HHS 
must set uniform reimbursement rates for all hospitals for
each covered drug, and the rates must be equal to the aver-
age price for that drug for that year. 

HHS’s  authority  to  proceed  under  option  1  and  to  vary