A federal judge has ruled that the Trump administration overstepped its authority in slashing $1.6 billion a year in payments to hospitals through a Medicare drug discount program.

U.S. District Court Judge Rudolph Contreras in Washington ruled Thursday that the Department of Health and Human Services illegally reduced the payments by 30 percent through Medicare’s 340B Drug Pricing Program, The Hill reports.

The Centers for Medicare & Medicaid Services, a DHS agency, made the cuts through a program that took effect in January. The 340B program requires drug makers to discount some outpatient drugs to participating hospitals.

Medicare then reimburses the hospitals at a higher rate than what they paid for drugs, the Hill reports, allowing them to reinvest the savings to help patients.

But the agency reduced the reimbursement rate, arguing the changes would have lowered out-of-pocket costs for the drugs to Medicare patients.

Judge Contreras ruled that the change was not what Congress intended when it approved the program in 1992.

The American Hospital Association, Association of American Medical Colleges and America's Essential Hospitals sued, contending the changes threatened "critical services" to the various communities their members served.

"The court’s carefully reasoned decision will allow hospitals and health systems in the 340B Drug Pricing Program to serve their vulnerable patients and communities without being hampered by deep cuts to the program," the groups said in a statement.

• Medicare Expands Access to In-Home Support
• CBO Won't Score 'Medicare for All' Bill Despite GOP Request