American Hospital Assn. v. Becerra

P R E L I M I N A R Y P R I N T
Volume 596 U. S. Part 2
Pages 724–739
OFFICIAL REPORTS
OF
T H E S U P R E M E C O U R T
June 15, 2022
REBECCA A. WOMELDORF
reporter of decisions
Page Proof Pending Publication
N O T I C E : This preliminary print is subject to formal revision before
the bound volume is published. Users are requested to notify the Reporter
of Decisions, Supreme Court of the United States, Washington, D.C. 20543,
pio@supremecourt.gov, of any typographical or other formal errors.

724 OCTOBER
TERM, 2021
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 Medi-
care patients. 42 U. S. C. § 1395l(t)(14)(A)(iii). That formula affords
HHS two options. Option 1 applies if HHS has conducted a survey of
hospitals' acquisition costs for each covered outpatient drug. Under
this option, the agency may set reimbursement rates based on the hospi-
tals' “average acquisition cost” for each drug, and may “vary” the reim-
bursement 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 drug as “calcu-
lated and adjusted by the Secretary.” § 1395l(t)(14)(A)(iii)(II). Option
2 does not authorize HHS to vary reimbursement 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 reimbursement rates at about 106 percent,
and did not vary those rates by hospital group. For 2018, HHS again
did not conduct a survey. But this time it issued a fnal rule establish-
ing separate reimbursement rates for hospitals that serve low-income
or rural populations through the 340B program and all other hospitals.
For 2019, HHS set reimbursement rates the same way.
The American Hospital Association and other interested parties chal-
lenged the 2018 and 2019 reimbursement rates in federal court. In re-
sponse, HHS frst contended that various statutory provisions precluded
judicial review of those rates. The agency also argued that it could
vary the reimbursement rates by hospital group under its option 2 au-
thority to “adjust” the price-based reimbursement rates. The District
Court rejected HHS's argument that the statute precluded judicial re-
view, concluded that HHS had acted outside its statutory authority, and
remanded the case to HHS to consider an appropriate remedy. The
D. C. Circuit, however, reversed. The court ruled that the statute did
not preclude judicial review, and upheld HHS's reduced reimbursement
rates for 340B hospitals.
Page Proof Pending Publication

Page Proof Pending Publication
Cite
as: 596 U. S. 724 (2022)
725
Syllabus
Held:
1.
The statute does not preclude judicial review of HHS's reimburse-
ment rates. Judicial review of fnal agency action is traditionally avail-
able unless “a statute's language or structure” precludes it, Mach Min-
ing, LLC v. EEOC, 575 U. S. 480, 486, and this Court has long recognized
a “strong presumption” in its favor, Weyerhaeuser Co. v. United States
Fish and Wildlife Serv., 586 U. S. –––, –––. Here, no provision in the
Medicare statute precludes judicial review of the 2018 and 2019 reim-
bursement rates. HHS cites two nearby provisions that preclude re-
view of the general payment methodology that HHS employs to set
rates for other Medicare outpatient services. See §§ 1395l(t)(12)(A),
(C). But HHS sets rates for outpatient prescription drugs using a dif-
ferent payment methodology. HHS also argues that other statutory
requirements would make allowing judicial review of the 2018 and 2019
reimbursement rates impractical. Regardless, such arguments cannot
override the text of the statute and the traditional presumption in favor
of judicial review of administrative action. Pp. 732–734.
2. Absent a survey of hospitals' acquisition costs, HHS may not vary
the reimbursement rates only for 340B hospitals; HHS's 2018 and 2019
reimbursement rates for 340B hospitals were therefore unlawful. The
text and structure of the statute make this a straightforward case. Be-
cause HHS did not conduct a survey of hospitals' acquisition costs, HHS
acted unlawfully by reducing the reimbursement rates for 340B hospi-
tals. HHS maintains that even when it does not conduct a survey,
the agency sti l l may “adjus[t] ” the average pr ice “as necessary. ”
§ 1395l(t)(14)(A)(iii)(II). But HHS's power to increase or decrease the
price is distinct from its power to set different rates for different groups
of hospitals. Moreover, HHS's interpretation would make little sense
given the statute's overall structure. Under HHS's interpretation, the
agency would never need to conduct a survey of acquisition costs if it
could proceed under option 2 and then do everything under option 2
that it could do under option 1. That not only would render irrelevant
the survey prerequisite for varying reimbursement rates by hospital
group, but also would render largely irrelevant the provision of the stat-
ute that precisely details the requirements for surveys of hospitals' ac-
quisition costs. See § 1395l(t)(14)(D). Finally, HHS's argument that
Congress could not have intended for the agency to “overpay” 340B
hospitals for prescription drugs ignores the fact that Congress, when
enacting the statute, was well aware that 340B hospitals paid less for
covered prescription drugs. It may be that the reimbursement pay-
ments were intended to offset the considerable costs of providing health-
care to the uninsured and underinsured in low-income and rural commu-

Page Proof Pending Publication
726 AMERICAN
HOSPITAL ASSN. v. BECERRA
Opinion of the Court
nities. Regardless, this Court is not the forum to resolve that policy
debate
. Pp. 734–739.
967 F. 3d 818, reversed and remanded.
Kavanaugh, J., delivered the opinion for a unanimous Court.
Donald B. Verrilli, Jr., argued the cause for petitioners.
With him on the briefs were Elaine J. Goldenberg and Ra-
chel G. Miller-Ziegler.
Christopher G. Michel argued the cause for respondents.
With him on the brief were Acting Solicitor General Flet-
cher, Acting Assistant Attorney General Boynton, Deputy
Solicitor General Kneedler, and Alisa B. Klein.*
Justice Kavanaugh delivered the opinion of the Court.
Under the Medicare statute, the Department of Health and
Human Services must reimburse hospitals for certain outpa-
*Briefs of amici curiae urging reversal were fled for the Americans for
Prosperity Foundation by Michael Pepson and Cynthia Fleming Craw-
ford; for the National Association of Home Builders et al. by Evan A.
Young, Amy Chai, Thomas J. Ward, Ellen Steen, Travis Cushman, Scott
Yager, and Richard Moskowitz; for the National Right to Work Legal
Defense Foundation, Inc., by Raymond J. LaJeunesse, Jr., and Frank D.
Garrison; for the New Civil Liberties Alliance by Richard A. Samp and
Kara Rollins; for the Pacifc Legal Foundation by Daniel M. Ortner and
Glenn E. Roper; for the Yale New Haven Health System et al. by William
B. Schultz and Margaret Dotzel; and for 37 State and Regional Hospital
Associations by Chad Golder.
Briefs of amici curiae urging affrmance were fled for the Federation
of American Hospitals by Thomas Barker; and for the Rural Hospital Co-
alition by Andrew S. M. Tsui.
Briefs of amici curiae were fled for the State of Indiana et al. by Theo-
dore E. Rokita, Attorney General of Indiana, Thomas M. Fisher, Solicitor
General, Kian J. Hudson, Deputy Solicitor General, and Julia C. Payne
and Melinda R. Holmes, Deputy Attorneys General, and by the Attorneys
General for their respective States as follows: Christopher M. Carr of
Georgia, Jeff Landry of Louisiana, Lynn Fitch of Mississippi, Doug Pe-
terson of Nebraska, John O'Connor of Oklahoma, Ken Paxton of Texas,
and Sean Reyes of Utah; and for the Chamber of Commerce of the United
States of America by Paul D. Clement, Erin E. Murphy, Daryl L. Josef-
fer, and Andrew R. Varcoe.

Page Proof Pending Publication
Cite
as: 596 U. S. 724 (2022)
727
Opinion of the Court
tient prescription drugs that the hospitals provide to Medi-
care
patients. HHS's total reimbursements to hospitals for
prescr ipti on dr ugs add up to tens of bil li ons of dol lars
every year.
To set the reimbursement rates for the prescription drugs,
HHS has two options under the statute. First, if HHS has
conducted a survey of hospitals' acquisition costs for the
drugs, HHS may set the reimbursement rates based on the
hospitals' average acquisition costs—that is, the amount that
hospitals pay to acquire the prescription drugs—and may
vary the reimbursement rates for different groups of hospi-
tals. Second and alternatively, if HHS has not conducted
such a survey, HHS must instead set the reimbursement
rates based on the average sales price charged by manufac-
turers for the drugs (with certain adjustments), and HHS
may not vary the reimbursement rates for different groups
of hospitals.
For 2018 and 2019, HHS did not conduct a survey of hospi-
tals' acquisition costs for outpatient prescription drugs. But
HHS nonetheless substantially reduced the reimbursement
rates for one group of hospitals—Section 340B hospitals,
which generally serve low-income or rural communities.
For those 340B hospitals, this case has immense economic
consequences, about $1.6 billion annually.
The question is whether the statute affords HHS discre-
tion to vary the reimbursement rates for that one group of
hospitals when, as here, HHS has not conducted the required
survey of hospitals' acquisition costs. The answer is no.
We therefore reverse the judgment of the U. S. Court of Ap-
peals for the D. C. Circuit.
I
A
In 2003, Congress passed and President George W. Bush
signed landmark legislation expanding Medicare to cover
prescription drugs. See Medicare Prescription Drug, Im-

728 AMERICAN
HOSPITAL ASSN. v. BECERRA
Opinion of the Court
provement, and Modernization Act of 2003, 117 Stat. 2066,
42
U. S. C. § 1395. Under that 2003 law, HHS must annually
set reimbursement rates for certain outpatient prescription
drugs provided by hospitals. § 1395l(t)(14).
The Medicare statute meticulously lays out the formula
that HHS must employ to set those reimbursement rates.
As relevant here, the agency's reimbursement rate for each
covered outpatient prescription drug “shall be equal” to one
of two measures:
“(I) to the average acquisition cost for the drug for that
year (which, at the option of the Secretary, may vary
by hospital group (as defned by the Secretary based
on volume of covered OPD services or other relevant
characteristics)), as determined by the Secretary taking
into account the hospital acquisition cost survey data
under subparagraph (D); or
“(II) if hospital acquisition cost data are not available,
the average price for the drug in the year established
under section 1395u(o) of this title, section 1395w–3a of
this title, or section 1395w–3b of this title, as the case
may be, as calculated and adjusted by the Secretary
as necessary for purposes of this paragraph.” § 1395l(t)
(14)(A)(iii) (emphasis added).
To simplify a bit: Congress afforded HHS two options to
set the reimbursement rates for hospitals. Option 1 applies
if the agency has conducted a survey of hospitals' acquisition
costs—that is, the amount that hospitals pay to acquire the
prescription drugs. If the agency has conducted a survey
and collected that data, HHS may set reimbursement rates
based on the hospitals' “average acquisition cost” for each
drug. See § 1395l(t)(14)(A)(iii)(I); see also § 1395l(t)(14)(D)
(requirements for conducting surveys of hospitals' drug ac-
quisition costs). Importantly for present purposes, if HHS
has conducted a survey of hospitals' acquisition costs, option
1 authorizes HHS to vary those reimbursement rates for dif-
ferent groups of hospitals.
Page Proof Pending Publication

Page Proof Pending Publication
Cite
as: 596 U. S. 724 (2022)
729
Opinion of the Court
Option 2 applies if HHS has not conducted a survey of
h
ospita ls' acquisiti on costs. In that circumstance, the
agency must set reimbursement rates based on “the average
price” charged by manufacturers for the drug, as “calculated
and adjusted by the Secretary as necessary for purposes
of ” this statutory provision. § 1395l(t)(14)(A)(iii)(II). The
statute in turn sets “the average price” as 106 percent of the
drug 's average sales price. See ibid. (citing § 1395w–3a).
Critically, option 2 does not authorize HHS to vary reim-
bursement rates for different groups of hospitals.
For more than a decade after those provisions took effect
in 2006, HHS did not conduct a survey of hospitals' acquisi-
tion costs. Indeed, HHS has only once attempted to conduct
such a survey—in 2020, after this litigation commenced. At
oral argument in this Court, the Government explained that
HHS had not previously attempted to conduct such surveys
because the surveys are “very burdensome on the study tak-
ers,” are “very burdensome on the hospitals,” and do not
“produce results that are all that accurate.” Tr. of Oral Arg.
41–42.
As a result, until 2018, HHS consistently relied on option
2 and set reimbursement rates for each drug based on the
average-sales-price data provided by manufacturers. Every
year, HHS set the reimbursement rates at about 106 percent
of each covered drug 's average sales price, and HHS used
the same reimbursement rates for all hospitals. In other
words, until 2018, HHS never varied the reimbursement
rates by hospital group. See Medicare Program: Hospital
Outpatient Prospective Payment and Ambulatory Surgical
Center Payment Systems and Quality Reporting Programs,
82 Fed. Reg. 52490, 52494–52495 (2017).
During its rulemaking for 2018, HHS proposed a change
to reduce the reimbursement rates only for 340B hospitals.
Importantly, HHS did not conduct a survey of hospital acqui-
sition costs. As a policy matter, HHS said that its existing
reimbursement rates resulted in what the agency viewed as

730 AMERICAN
HOSPITAL ASSN. v. BECERRA
Opinion of the Court
overpayments to hospitals that serve low-income or rural
popu
lations through the federal 340B program. Federal law
requires drug manufacturers to sell prescription drugs to
those 340B hospitals at prices below those paid by other hos-
pitals. See 42 U. S. C. § 256b(a)(1) (setting a “ceiling price”
that manufacturers can charge to 340B hospitals). Consist-
ent with the Medicare statute, however, HHS historically
had reimbursed 340B hospitals for covered outpatient pre-
scription drugs at the same reimbursement rates that were
set for all other hospitals. For 2018, HHS said that the uni-
form reimbursement rates combined with the discounted
prices paid by 340B hospitals for prescription drugs meant
that 340B hospitals were able to “generate signifcant prof-
its” when they provided the prescription drugs to Medicare
patients. 82 Fed. Reg. 52494.
In response to HHS's proposed change, the 340B hospitals
countered that, under the Medicare statute, HHS could not
single out 340B hospitals without conducting a survey of hos-
pitals' acquisition costs. With respect to HHS's policy argu-
ments, the 340B hospitals explained that the reimbursement
payments for prescription drugs helped those hospitals offset
the considerable costs of providing healthcare to the unin-
sured and underinsured in low-income and rural communi-
ties. The 340B hospitals pointed out, moreover, that Con-
gress had long been aware of the situation. Indeed, the
hospitals claimed that Members of Congress not only were
aware, but actually intended for the 340B program's drug
reimbursements to subsidize other services provided by
340B hospitals. The hospitals noted that Congress had
never singled out 340B hospitals for lower Medicare reim-
bursements for outpatient prescription drugs. Nor, until
2018, had HHS ever done so. Furthermore, the 340B hospi-
tals asserted that reducing their reimbursement rates for
prescription drugs would force those hospitals to eliminate
or dramatically curtail other crucial programs that provide
a wide range of medical services in low-income and rural
Page Proof Pending Publication

Cite
as: 596 U. S. 724 (2022)
731
Opinion of the Court
communities—such as treatments for cancer, mental health
issues,
opioid addiction, and diabetes.
In the fnal rule for 2018, HHS decided to establish two
separate reimbursement rates: one rate for non-340B hospi-
tals and another rate for 340B hospitals. The reimburse-
ment rate for non-340B hospitals remained at the historical
rate of approximately 106 percent of the average sales price
for each drug. But HHS established a substantially reduced
rate for 340B hospitals—a rate equal to 77.5 percent of the
average sales price for each drug. In setting that rate, HHS
relied on an estimate from the Medicare Payment Advisory
Commission that 340B hospitals obtained prescription drugs
at an average discount of at least 22.5 percent below the av-
erage sales price charged by manufacturers. Id., at 52496,
52499. HHS estimated that the reduction in the reimburse-
ment rates for 340B hospitals would save Medicare (and de-
prive 340B hospitals of ) about $1.6 billion annually, which by
law would be re-allocated for other Medicare services. Id.,
at 52509–52510. For 2019, HHS set reimbursement rates
for 340B hospitals in the same way.
When setting the 2018 and 2019 reimbursement rates,
HHS acknowledged that it had not conducted a survey of
hospitals' acquisition costs—the statutory prerequisite for
varying the reimbursement rates by hospital group. Id., at
52496. Nonetheless, HHS pointed to its statutory authority
under option 2 to “adjust” the average price “ `as necessary
for purposes of ' ” this statutory provision. Id., at 52499.
HHS claimed that its authority to “adjust” the average price
for each drug also implicitly encompassed the authority to
vary the reimbursement rates by hospital group. Ibid.
B
The American Hospital Association, along with two other
hospital industry groups and several hospitals, sued in U. S.
District Court to challenge HHS's 2018 and 2019 reimburse-
ment rates for 340B hospitals. Among other things, the
Page Proof Pending Publication

732 AMERICAN
HOSPITAL ASSN. v. BECERRA
Opinion of the Court
Hospitals asserted that HHS did not conduct a survey of
hospit
als' acquisition costs and therefore could not impose
di fferent rei mbursement rates on di fferent groups of
hospitals.
In response, HHS frst contended that various statutory
provisions precluded judicial review of the 2018 and 2019 re-
imbursement rates. As relevant here, HHS further argued
that it could vary the reimbursement rates by hospital group
under its authority to “adjust” the price-based reimburse-
ment rates, even though HHS had not conducted a survey of
hospitals' acquisition costs.
The District Court ruled for the Hospitals. The court re-
jected HHS's argument that the statute precluded judicial
review. On the merits, the court concluded that HHS had
acted outside its statutory authority, and the court remanded
to HHS for the agency to consider an appropriate remedy.
See American Hospital Assn. v. Azar, 385 F. Supp. 3d 1 (DC
2019) (remedy); American Hospital Assn. v. Azar, 348
F. Supp. 3d 62 (DC 2018) (merits).
A divided panel of the U. S. Court of Appeals for the D. C.
Circuit reversed. On the question of judicial review, the
court unanimously ruled that the statute did not preclude
judicial review. See American Hospital Assn. v. Azar, 967
F. 3d 818, 824 (2020). On the merits, however, the court
upheld HHS's reduced reimbursement rates for 340B hospi-
tals. Id., at 828.
In dissent, Judge Pillard contended that HHS's reduced
reimbursement rates for 340B hospitals contravened the text
and structure of the statute. Id., at 835. In her view,
“HHS may institute its large reductions, tailored for a dis-
tinct hospital group,” only if the agency has conducted the
required survey of hospitals' acquisition costs. Ibid.
This Court granted certiorari. 594 U. S. ––– (2021).
II
HHS frst argues that the Medicare statute precludes judi-
cial review of the 2018 and 2019 reimbursement rates. See
Page Proof Pending Publication

Cite
as: 596 U. S. 724 (2022)
733
Opinion of the Court
42 U. S. C. § 1395l(t)(12). The Court of Appeals rejected
HHS'
s preclusion argument, as did the District Court. We
likewise conclude that the statute does not preclude judicial
review of HHS's reimbursement rates.
This Court has long recognized a “strong presumption”
in favor of judicial review of fnal agency action. Weyer-
haeuser Co. v. United States Fish and Wildlife Serv., 586
U. S. –––, ––– (2018) (quoting Mach Mining, LLC v. EEOC,
575 U. S. 480, 489 (2015)). Judicial review of fnal agency
action in an otherwise justiciable case is traditionally avail-
able unless “a statute's language or structure” precludes
judicial review. Mach Mining, 575 U. S., at 486.
No provision in the Medicare statute precludes judicial re-
view of the 2018 and 2019 reimbursement rates. More-over,
the detailed statutory formula for the reimbursement rates
under mines HHS's suggesti on that Congress implicitly
granted the agency judicially unreviewable discretion to set
the reimbursement rates. Cf. Weyerhaeuser Co., 586 U. S.,
at ––– – –––.
HHS cites two provisions—§§ 1395l(t)(12)(A) and (C)—
that preclude judicial review of HHS's “development of the
classifcation system under paragraph (2)” and “periodic ad-
justments made under paragraph [(9)].” But both of those
provisions refer to the general payment methodology that
HHS employs to set rates for other Medicare outpatient
services. By contrast, when HHS sets rates for outpatient
prescription drugs, it uses a different payment methodol-
ogy—namely, the methodology specifed by paragraph (14)
of § 1395l(t). And nothing in the statute precludes judicial
review of reimbursement rates set under paragraph (14).
HHS further argues that allowing judicial review of the
2018 and 2019 reimbursement rates would be impractical be-
cause the agency is required to operate the program on a
budget-neutral basis. Due to that budget-neutrality re-
quirement, HHS says that a judicial ruling invalidating the
2018 and 2019 reimbursement rates for certain hospitals
would require offsets elsewhere in the program. The Hospi-
Page Proof Pending Publication

734 AMERICAN
HOSPITAL ASSN. v. BECERRA
Opinion of the Court
tals respond that various potential remedies could make
340B
hospitals whole for the past shortfalls without running
afoul of the budget-neutrality provision. At this stage, we
need not address potential remedies. Regardless, HHS's ar-
guments against judicial review cannot override the text of
the statute and the traditional presumption in favor of judi-
cial review of administrative action.
In sum, HHS's preclusion argument lacks any textual
basis. We agree with the District Court and the Court of
Appeals that the Medicare statute does not preclude judicial
review of the 2018 and 2019 reimbursement rates.
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 specifes how HHS must
set those reimbursement rates. 42 U. S. C. § 1395l(t)(14)(A).
The statute therefore refects a careful congressional focus
not only on the goal of proper reimbursement rates, but also
on the appropriate means to that end.
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 hospitals'
acquisition costs and if acquisition cost data are therefore
“not available,” HHS must instead proceed under option 2
Page Proof Pending Publication

Cite
as: 596 U. S. 724 (2022)
735
Opinion of the Court
and obtain price data from drug manufacturers. § 1395l(t)
(14)(A)(
iii)(II). And in that circumstance, HHS must set re-
imbursement 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 reim-
bursement rates by hospital group. Instead, HHS must set
uniform reimbursement rates for all hospitals for each cov-
ered drug, and the rates must be equal to the average price
for that drug for that year.
HHS's authority to proceed under option 1 and to vary
reimbursement rates by hospital group thus depends on
whether HHS has obtained acquisition cost survey data from
hospitals. The statute expressly authorizes HHS to vary
rates by hospital group if HHS has conducted such a survey.
But the statute does not authorize such a variance in rates
if HHS has not conducted a survey. Cf. Babb v. Wilkie, 589
U. S. –––, ––– (2020); Sandoz Inc. v. Amgen Inc., 582 U. S.
1, 19–20 (2017); Russello v. United States, 464 U. S. 16, 23
(1983).
The statute thus protects all hospitals by imposing an im-
portant procedural prerequisite—namely, a survey of hospi-
tals' acquisition costs for prescription drugs—before HHS
may target particular groups of hospitals for lower reim-
bursement rates. The survey allows the agency to deter-
mine whether there is in fact meaningful, statistically sig-
nifcant variation among hospitals' acquisition costs. The
data regarding variation in hospitals' acquisition costs in
turn help HHS determine whether and how much it should
vary the reimbursement rate among hospital groups. See
§§ 1395l(t)(14)(D)(iii)–(iv). But absent that survey data, as
Congress determined, HHS may not make “billion-dollar de-
cisions differentiating among particular hospital groups.”
967 F. 3d, at 837 (Pillard, J., dissenting).
In this case, all agree that HHS did not conduct a survey
of hospitals' acquisition costs. See, e. g., 82 Fed. Reg. 52501.
Page Proof Pending Publication

736 AMERICAN
HOSPITAL ASSN. v. BECERRA
Opinion of the Court
HHS nonetheless varied the rates by hospital group, fxing
a
substantially lower reimbursement rate for 340B hospitals
than for non-340B hospitals.
Under the text and structure of the statute, this case is
therefore straightforward: Because HHS did not conduct a
survey of hospitals' acquisition costs, HHS acted unlawfully
by reducing the reimbursement rates for 340B hospitals.
HHS maintains that there is more to the case than that
straightforward analysis would suggest. HHS emphasizes
that even when it does not conduct a survey of acquisition
costs and thus is required to employ option 2 (based on
price), the agency still may “adjus[t]” the average price “as
necessary for pur poses of ” th is st atutory prov isi on.
§ 1395l(t)(14)(A)(iii)(II).
It is true that the statutory text of option 2 affords HHS
discretion to adjust the average price. The parties here vig-
orously debate how much HHS may adjust the price. To
resolve this case, however, we need not determine the scope
of HHS's authority to adjust the price up or down.
Regardless of the scope of HHS's authority to “adjust” the
average price up or down under the statute, the statute does
not grant HHS authority to vary the reimbursement rates
by hospital group unless HHS has conducted the required
survey of hospitals' acquisition costs. Under the statute,
varying a rate by hospital group is not a lesser-included
power of adjusting price. Otherwise stated, HHS's power
to increase or decrease the price is distinct from its power
to set different rates for different groups of hospitals.
The text of option 2 confrms the point. It requires reim-
bursement in an “amount” that is equal to “the average price
for the drug in the year.” Ibid. The text thus requires the
reimbursement rate to be set drug by drug, not hospital by
hospital or hospital group by hospital group. The only item
that the agency is allowed to adjust is the “average price for
the drug in the year.” Ibid. Such an adjustment can con-
sist of moving the average-price number up or down, but it
Page Proof Pending Publication

Cite
as: 596 U. S. 724 (2022)
737
Opinion of the Court
cannot consist of giving a single drug two different average
pr
ices for two different groups of hospitals. (Tellingly, be-
fore 2018, the agency never used its adjustment authority to
vary reimbursement rates by hospital group.)
Moreover, HHS's contrary interpretation of the statute—
and its broad understanding of its adjustment authority—
would make little sense given the statute's overall structure.
To proceed under option 1 (based on cost) and vary the rate
by hospital group, HHS must conduct a survey. In HHS's
view, the agency can decline to conduct a survey and can
proceed under option 2, and then can still do everything
under option 2 that it could do under option 1—including
varying the reimbursement rates by hospital group. So
under HHS's interpretation, the agency would never need to
conduct a survey of hospitals' acquisition costs. But why,
then, would Congress have constructed this elaborate stat-
ute premised on HHS's surveys of hospitals' acquisition
costs, including specifying when HHS could vary reimburse-
ment rates by hospital group? HHS has no good answer to
that question.
HHS's interpretation not only would render irrelevant the
survey prerequisite for varying reimbursement rates by hos-
pital group, but also would render largely irrelevant the pro-
vision of the statute that precisely details the requirements
for surveys of hospitals' acquisition costs. See § 1395l(t)
(14)(D). We must hesitate to adopt an interpretation that
would eviscerate such signifcant aspects of the statutory
text. See, e. g., Chicago v. Fulton, 592 U. S. –––, ––– (2021);
Maine Community Health Options v. United States, 590
U. S. –––, ––– (2020); W h i tm an v. Ame r i can Tr uck ing
Assns., Inc., 531 U. S. 457, 484−485 (2001).
In short, the statute allows HHS to set reimbursement
rates based on average price and affords the agency discre-
tion to “adjust” the price up or down. But unless HHS con-
ducts a survey of hospitals' acquisition costs, HHS may not
vary the reimbursement rates by hospital group.
Page Proof Pending Publication

738 AMERICAN
HOSPITAL ASSN. v. BECERRA
Opinion of the Court
As a fnal argument, HHS insists that Congress could not
have
intended for the agency to “overpay” 340B hospitals for
prescription drugs. But when enacting this statute in 2003,
Congress was well aware that 340B hospitals paid less for
covered prescription drugs. After all, that had been the law
for the duration of the 340B program, which began in 1992.
In 2003, Congress nonetheless did not see ft to differentiate
340B hospitals from other hospitals when requiring that the
reimbursement rates be uniform under option 2. And for
more than a decade after this statute took effect, HHS em-
ployed option 2 but did not differentiate 340B hospitals from
other hospitals—an agency practice that was known in the
wider hospital industry and in Congress.
If HHS believes that this Medicare reimbursement pro-
gram overpays 340B hospitals, it may conduct a survey of
hospitals' acquisition costs to determine whether and how
much the data justify varying the reimbursement rates by
hospital group—for example, reducing reimbursement rates
paid to 340B hospitals as compared to other hospitals. Or if
the statute's requirement of an acquisition cost survey is bad
policy or is working in unintended ways, HHS can ask Con-
gress to change the law.
Of course, if HHS went to Congress, the agency would
presumably have to confront the other side of the policy
story here: 340B hospitals perform valuable services for low-
income and rural communities but have to rely on limited
federal funding for support. As amici before this Court,
many 340B hospitals contend that the Medicare reimburse-
ment payments at issue here “help offset the considerable
costs” that 340B providers “incur by providing health care
to the uninsured, underinsured, and those who live far from
hospitals and clinics.” Brief for 37 State and Regional Hos-
pital Associations as Amici Curiae 7. As the 340B hospitals
see it, the “net effect” of HHS's 2018 and 2019 rules is “to
redistribute funds from fnancially strapped, public and non-
proft safety-net hospitals serving vulnerable populations—
Page Proof Pending Publication

Cite
as: 596 U. S. 724 (2022)
739
Opinion of the Court
including patients without any insurance at all—to facilities
and
individuals who are relatively better off.” 967 F. 3d, at
840 (Pillard, J., dissenting). In other words, in the view of
those hospitals, HHS's new rates eliminate the federal sub-
sidy that has helped keep 340B hospitals afoat. All of which
is to say that the 340B story may be more complicated than
HHS portrays it. In all events, this Court is not the forum
to resolve that policy debate.
In sum, after employing the traditional tools of statutory
interpretation, we do not agree with HHS's interpretation of
the statute. We conclude that, absent a survey of hospitals'
acquisition costs, HHS may not vary the reimbursement
rates for 340B hospitals. HHS's 2018 and 2019 reimburse-
ment rates for 340B hospitals were therefore contrary to the
statute and unlawful.
***
We reverse the judgment of the U. S. Court of Appeals for
the D. C. Circuit and remand the case for further proceedings
consistent with this opinion.
It is so ordered.
Page Proof Pending Publication

Page Proof Pending Publication
Reporter’s Note
The attached opinion has been revised to refect the usual publication
and citation style of the United States Reports. The revised pagination
makes available the offcial United States Reports citation in advance of
publication. The syllabus has been prepared by the Reporter of Decisions
for the convenience of the reader and constitutes no part of the opinion of
the Court. A list of counsel who argued or fled briefs in this case, and
who were members of the bar of this Court at the time this case was
argued, has been inserted following the syllabus. Other revisions may
include adjustments to formatting, captions, citation form, and any errant
punctuation. The following additional edits were made:
None