137 Hospitals Seek Injunction Against HHS' Change to Hospital-Specific Payment Rates

A group of 137 hospitals have jointly filed an injunction against the U.S. Department of Health & Human Services' changes to hospital-specific payment rates, according to court filings.

In the complaint, the hospitals, almost all of which are either sole community hospitals or Medicare-dependent rural hospitals, are also seeking more than $86.5 million to make up for that amount lost in lowered Medicare payments under the applied changes to the hospital-specific payment rates in fiscal year 2011.

Under the Inpatient Prospective Payment System, sole community hospitals and Medicare-dependent small rural hospitals are paid a special hospital-specific payment rate. In 2007, HHS began using a new classification system for diagnoses known today as Medicare Severity Diagnosis Related Groups, or MS-DRGs.

In conjunction with the new system, HHS had intended to lower all payment rates to hospitals starting in fiscal year 2008, including hospital-specific payment rates. However, the agency eventually only adjusted average standardized payment amounts, not hospital-specific payments, due to language under the Social Security Act.

In 2010, Secretary Sebelius had proposed another coding adjustment for the hospital-specific payment rate in the proposed changes to the hospital IPPS for fiscal year 2011. Those changes were finalized in the IPPS final rule, and the payment changes went into effect.

In court filings, the hospital plaintiffs argue Secretary Sebelius and CMS go beyond their authority in enacting the "arbitrary" and "capricious" hospital-specific payment changes and cannot legally do so under the Social Security Act.

Related Articles on Hospital Medicare Payments:

Obama's Plan to Cut Medicare, Medicaid to Close Deficit Draws Criticism From Democrats, Reform Supporters
Report: Private Medicare Plans Continue to Grow Despite Cuts, Frozen Rates
American Academy of Family Physicians Demands Higher Medicare Payments

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