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(Slip Opinion) 

OCTOBER  TERM,  2021 

1 

Syllabus 

NOTE:  Where  it  is  feasible,  a  syllabus  (headnote)  will  be  released,  as  is 
being  done  in  connection  with  this  case,  at  the  time  the  opinion  is  issued. 
The  syllabus  constitutes  no  part  of  the  opinion  of  the  Court  but  has  been 
prepared  by  the  Reporter  of  Decisions  for  the  convenience  of  the  reader. 
See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337. 

SUPREME COURT OF THE UNITED STATES 

Syllabus 

AMERICAN HOSPITAL ASSOCIATION ET AL. v. 
BECERRA, SECRETARY OF HEALTH AND HUMAN 
SERVICES, ET AL. 

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR 
THE DISTRICT OF COLUMBIA CIRCUIT 

No. 20–1114.  Argued November 30, 2021—Decided June 15, 2022 

The Medicare statute lays out a formula that the Department of Health
and  Human  Services  must  employ  annually  to  set  reimbursement
rates for certain outpatient prescription drugs provided by hospitals to
Medicare patients.  42 U. S. C. §1395l(t)(14)(A)(iii).  That formula af-
fords HHS two options.  Option 1 applies if HHS has conducted a sur-
vey  of  hospitals’  acquisition  costs  for  each  covered  outpatient  drug. 
Under this option, the agency may set reimbursement rates based on 
the hospitals’ “average acquisition cost” for each drug, and may “vary”
the reimbursement rates “by hospital group.”  §1395l(t)(14)(A)(iii)(I).  
Absent a survey, option 2 applies, and HHS must set reimbursement 
rates based on “the average price” charged by manufacturers for the 
the  Secretary.” 
drug 
§1395l(t)(14)(A)(iii)(II).  Option 2 does not authorize HHS to vary re-
imbursement rates for different hospital groups.  From the time these 
provisions took effect in 2006 until 2018, HHS did not conduct surveys
of  hospitals’  acquisition  costs,  relied  on  option  2,  set  the  reimburse-
ment rates at about 106 percent, and did not vary those rates by hos-
pital group.  For 2018, HHS again did not conduct a survey.  But this 
time it issued a final rule establishing separate reimbursement rates
for hospitals that serve low-income or rural populations through the 
340B program and all other hospitals.  For 2019, HHS set reimburse-
ment rates the same way.

“calculated 

adjusted 

and 

by 

as 

The  American  Hospital  Association  and  other  interested  parties 
challenged the 2018 and 2019 reimbursement rates in federal court. 
In  response,  HHS  first  contended  that  various  statutory  provisions 
precluded judicial review of those rates.  The agency also argued that