Skip to main content

Analysis

Trump Administration Healthcare Agenda Notches Key Wins in DC Appeals Court

By John Commins  
   August 05, 2020

The administration in July won three cases that are critical components of its sweeping healthcare reforms.

July was a good month for President Donald J. Trump's healthcare agenda, with the administration stringing together three favorable rulings in a federal appellate court.

On July 17, The U.S. Court of Appeals for the District of Columbia Circuit upheld the Trump administration's expansion of short-term, limited-duration health plans.

Judge Thomas B. Griffith, an appointee of President George W. Bush, wrote that the Trump administration "exercised the policymaking authority" granted to it and therefore the STLDI rule remains in place.

Also on July 17, the D.C. Appeals Court overturned a district court's ruling that the Centers for Medicare & Medicaid Services overstepped its legal authority finalizing site-neutral payments in the Outpatient Prospective Payment System final rule for 2019.

In AHA v. Azar, the court ruled unanimously in favor of the Department of Health and Human Services, reversing a district court's ruling last September that CMS acted in a way that was "manifestly inconsistent with the statutory scheme" when it finalized the site-neutral payment as part of the OPPS final rule for 2019.

Chief Judge Sri Srinivasan, an appointee of President Barack Obama, wrote that the district court decision would be reversed since "we conclude that the regulation rests on a reasonable interpretation of HHS's statutory authority to adopt volume-control methods."

On July 31, yet another ruling from the D.C. Appeals Court reversed a district court ruling from 2018, which had sided with the plaintiff hospitals who had argued that HHS had overstepped its authority with the 28.5% cuts to the 340B program.

"In our view, HHS reasonably interpreted (Medicare law) adjustment authority to enable reducing (Specifically Covered Outpatient Drug) payments to 340B hospitals, so as to avoid reimbursing those hospitals at much higher levels than their actual costs to acquire the drugs," Srinivasan wrote for the majority in a 30-page ruling.

Tom Barker, former general counsel at CMS, says the favorable rulings for the Trump administration cannot be credited to deferential judges.  

"These are not Trump judges," says Barker, now a partner and co-chair of Foley Hoag's healthcare practice. "These are judges believe in the administrative state and the administration just happens to be benefiting from that fact."  

Barker spoke with HealthLeaders about this recent string of successes for the Trump administration. This transcript has been edited for clarity and brevity.

HL: The Trump administration's healthcare agenda is on a winning streak in federal courts. What's going on?

Barker: In my own personal view, to put somewhat of a political spin on this, these judges believe in the administrative state and they believe in the ability and the power of executive branch agencies to interpret a law and that is what is happening here. It just so happens that it is benefiting the Trump administration.

HL: Two of the most recent reversals were led by the same judge at the D.C. Appeals Court. What should we make of this?

Barker: The judge (Srinivasan)  was appointed by President Obama. Two of the three judges were the same in the site neutrality and the 340B case. Four judges were appointed by President Obama. So, you can't say that it's Trump judges supporting a Trump administration policy because those were not Trump nominees. They were Obama nominees.

The judge who wrote the 340B and the site neutrality decision (Srinivasan) believed in the power of the federal executive branch to expansively and robustly interpret the law, and that's exactly what's happening. And again, it just so happens to be benefiting the Trump administration.

HL: What does this say about future lawsuits that stakeholders may consider against the Trump administration?

Barker: Will the full D.C. Circuit take up the site neutrality case, en banc, which I think the American Hospital Association has already asked for? Maybe they will in the 340B case too. If my theory is correct, then the full D.C. Circuit will uphold what the three-judge panel did because there are now a majority of Democratic-appointed judges on the D.C. circuit, and they presumably have a similar view of Chevron deference and the administrative state.

Another question, though, is if President Trump loses in November, would a Biden administration continue both of these policies? Maybe they continue the site neutrality policy, but I'd be surprised if they continued the 340B policy. The Obama administration had a similar view of site neutrality.

HL: What should these plaintiff hospitals do?

Barker: With 340B, I'd wait to see if there's a Biden administration and then that would be a high priority for me to get a new CMS administrator or new HHS secretary to reverse the policy.

And with site neutrality, I would think that the Biden administration would support that policy, so I'd go to Congress.

“These are not Trump judges. These are judges of leaving the administrative state and the administration just happens to be benefiting from that fact." ”

John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.


KEY TAKEAWAYS

On July 17, D.C. Appeals Court upheld the Trump administration's expansion of short-term, limited-duration health plans.

Also on July 17, the D.C. Appeals Court overturned a district court ruling that the Centers for Medicare & Medicaid Services overstepped its legal authority finalizing site-neutral payments in the Outpatient Prospective Payment System final rule for 2019.

On July 31, yet another ruling from the D.C. Appeals Court reversed a district court ruling from 2018, which had sided with the plaintiff hospitals who had argued that HHS had overstepped its authority with the 28.5% cuts to the 340B program.


Get the latest on healthcare leadership in your inbox.