An appellate court decision dealt a major setback to hospitals unhappy with planned cuts to the Medicare drug reimbursement program.
The American Hospital Association's attempt to block $1.6 billion in cuts to the 340 Drug Pricing Program suffered a major setback Tuesday, when the D.C. Circuit Court sided with Health and Human Services.
The three-judge panel ruled that the lower court had properly dismissed AHA's case because the association failed to fulfill the legal prerequisites to judicial review.
More specifically, AHA failed to adequately present the matter to HHS Secretary Alex Azar. This "presentment" threshold is the obstacle that tripped up the AHA challenge at the district court level, a decision Tuesday's appellate ruling affirmed.
"When the plaintiffs filed this lawsuit, neither the hospital plaintiffs, nor any members of the hospital-association plaintiffs, had challenged the new reimbursement regulation in the context of a specific administrative claim for payment. Nor could they have done so, for the new regulation had not yet even become effective," the appellate judges wrote. "Therefore, they had neither presented their claim nor obtained any administrative decision at all, much less the 'final decision' required under [the relevant law]."
The AHA, along with fellow plaintiffs the Association of American Medical Colleges and America's Essential Hospitals, had argued that it met the presentment requirement by opposing the policy in writing during the rulemaking process.
Because the decision was based on a lack of subject-matter jurisdiction, it did not address the merits of AHA's claims.
"We are deeply disappointed that the courts have once again failed to rule on the merits of our case," the hospital groups said Tuesday in a statement.
The groups emphasized that the decision does not address whether they can obtain judicial review. It simply addresses when and how that review can be obtained.
"We will continue our fight to reverse these unwarranted cuts and protect access for patients, and we expect to refile promptly in district court," the groups added.
Editor's note: This story has been updated to include a statement from the American Hospital Association, the Association of American Medical Colleges, and America's Essential Hospitals.
Steven Porter is an associate content manager and Strategy editor for HealthLeaders, a Simplify Compliance brand.
The appellate judges affirmed the district court's dismissal for lack of subject-matter jurisdiction.
The AHA failed to fulfill the legal prerequisites to judicial review, according to the ruling.
The plaintiff has seven days to file a petition for the appellate court to rehear the matter en banc.