The courts continue to play an important role in health policy. 2020 saw several notable lawsuits related to the Affordable Care Act (ACA). Several other Trump administration policies were challenged, including Medicare payment policies, price transparency, how the Medicaid program can change and whether Medicaid beneficiaries can sue over curtailed benefits, and immigration changes affecting access to programs like Medicaid. By June 2021, the Supreme Court had ruled in the risk corridors case and the case of Texas v. United States.

The courts will play an important role going forward, and the Supreme Court has agreed to take up several cases related to healthcare in the next term.

2022 Cases

340B Reimbursement. On July 2, 2021, the Supreme Court stated that it would hear American Hospital Association v. Becerra, a lawsuit by hospitals over cuts to Medicare reimbursement for 340B drugs and will also hear arguments on whether a review is precluded by statute.

The Centers for Medicare and Medicaid Services (CMS) cut Medicare pay for 340B drugs by approximately 30 percent in 2018, and the district court ruled that CMS did not have the authority to make this change. CMS appealed the decision, and an appeals court upheld the pay cuts.

Medicare Disproportionate Share Payments. On July 2, 2021, the U.S. Supreme Court accepted the Department of Health and Human Services’ (HHS) request to review HHS Secretary Xavier Becerra v. Empire Health Foundation since the courts’ decisions are split. The case involves the question of whether or not the Centers for Medicare and Medicaid Services (CMS) must include patients who have exhausted their Medicare Part A benefits when calculating disproportionate share hospital (DSH) payments.

The issue stems from a 2005 rule in which HHS stated that although patients are entitled to benefits under Medicare if they have used all of their Part A benefits, Medicare will no longer pay providers for their care. As a result, hospitals sued HHS, accusing the Department of incorrectly equating the statutory language of “entitled” to with “eligible” for benefits. Two circuit courts sided with HHS, finding the law was ambiguous and the secretary’s interpretation of the law was reasonable. However, the 9th Circuit Court ruled earlier this year in favor of the hospitals, stating that “entitled” and “eligible” cannot be considered interchangeable if the statute includes both words.

States’ Ability to Recover Medicaid Beneficiaries’ Settlement Costs. On July 2, 2021, the Supreme Court agreed to hear Gallardo v. Marstiller, a case on whether state Medicaid agencies can recover costs for Medicaid beneficiaries’ past medical expenses from settlements that are aimed at compensating them for their future medical costs.

The case revolves around a Florida woman, Gianinna Gallardo, who was hit by a truck while getting off a school bus at 13 years of age in 2008, and has been in a vegetative state since. She received an $800,000 settlement for her medical expenses and other damages, but the amount only covered a fraction of the expenses. The Florida Agency for Health Care Administration wanted to recover $300,000 from the settlement after its state Medicaid program paid over $860,000 for Gallardo’s care, but only $35,000 of Gallardo’s settlement was earmarked for past medical expenses. Florida statute allows Medicaid to recoup costs from payments earmarked for future expenses. Lawyers argued that Florida’s law violates federal Medicaid statute. The District Court for the Northern District of Florida agreed that the Medicaid statute preempted Florida’s statute. However, the 11th Circuit Court reversed the decision three years later.

States laws vary on whether costs can be recouped from settlements designated for future medical costs, and state supreme court decisions have been similarly varied.

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