55 hospitals sue HHS over changes to Medicare reimbursements

Fifty-five hospitals from across the nation have filed a lawsuit against HHS over its decision to reduce Medicare payments for inpatient treatment to account for the adoption of the controversial two-midnight rule.

Under the two-midnight rule, which was introduced in the 2014 Inpatient Prospective Payment System rule, CMS generally considers hospital stays of less than two midnights to be outpatient cases, while hospital admissions for stays spanning two midnights or longer are deemed appropriate.

Expecting a decline in the number of long observation stays and an increase in the number of inpatient admissions, CMS proposed offsetting the cost through a 0.2 percent reduction in inpatient payments.

In their lawsuit, the hospitals argue the 2014 IPPS rule did not provide adequate explanation of the basis for CMS' estimate that the proposed two-midnight rule would result in additional inpatient admissions each year. The hospitals also claim the final rule is arbitrary and capricious because its assumptions — that approximately 400,000 encounters will shift from outpatient to inpatient and about 360,000 encounters will shift from inpatient to outpatient, causing a net gain of 40,000 inpatient stays — are speculations based on CMS' "faulty assumptions" about how hospitals and Medicare contractors will react to the two-midnight rule.

Like other hospitals that have filed suit against HHS over the two-midnight rule, the hospitals allege HHS violated the Administrative Procedure Act by not providing adequate notice or a meaningful opportunity to comment on the payment reduction.

The 55 hospitals are seeking an order to set aside the final 2014 IPPS rule's 0.2 percent payment reduction.

Here is a list of the hospitals that filed suit against HHS.

John C. Lincoln Hospital-Deer Valley (Phoenix)
John C. Lincoln Hospital-North Mountain (Phoenix)
Scottsdale (Ariz.) Healthcare Osborne Medical Center
Scottsdale (Ariz.) Healthcare Shea Medical Center
Scottsdale Healthcare Thompson Peak (Phoenix)

Denver Health
Longmont (Colo.) United Hospital

Lawrence and Memorial Hospital (New London)

Indian River Memorial Hospital (Vero Beach)

Hamilton Medical Center (Dalton)

Blessing Hospital (Quincy)

Covenant Medical Center (Waterloo)
Saritori Memorial Hospital (Cedar Falls)

Abbeville (La.) General Hospital
Avoyelles Hospital (Marksville)
Dauterive Hospital (New Iberia)
Iberia (La.) Medical Center
Heart Hospital of Lafayette (La.)
Lake Charles (La.) Memorial Hospital
Oakdale (La.) Community Hospital
Thibodaux (La.) Regional Medical Center
Winn Parish Medical Center (Winnfield)

Lakeland Hospital Medical Center-Saint Joseph (Mich.)
Oaklawn Hospital (Marshall)

Pemiscot Memorial Health Center (Hayti)

The Nebraska Medical Center (Omaha)

North Carolina
Brunswick Medical Center (Bolivia)
Charlotte (N.C.) Orthopedic Hospital
Forsyth Medical Center (Louisburg)
Franklin Medical Center (Louisburg)
Huntersville (N.C.) Medical Center
Matthews (N.C.) Medical Center
Medical Park Hospital (Winston-Salem)
Presbyterian Medical Center (Charlotte)
Rowan Medical Center (Salisbury)
Thomasville (N.C.) Medical Center

Asante Ashland (Ore.) Community Hospital
Asante Rouge Valley Medical Center (Medford)
Asante Three Rivers Medical Center (Grants Pass)
Salem (Ore.) Hospital

Rhode Island
The Westerly (R.I.) Hospital

South Carolina
Gaffney (S.C.) Medical Center

South Dakota
Avera McKennan Hospital (Sioux Falls)
Avera Heart Hospital of South Dakota (Sioux Falls)
Avera Queen of Peace Hospital (Mitchell)
Avera Sacred Heart Hospital (Yankton)
Avera St. Luke's Hospital (Aberdeen)
Avera St. Mary's Hospital (Pierre)

United Regional Health Care (Wichita Falls)

Midwest Orthopedic Specialty Hospital (Franklin)
St. Francis Hospital (Milwaukee)
Wheaton Franciscan (Milwaukee)
Wheaton Franciscan Health Care All Saints (Racine)
Wheaton Healthcare Franklin (Wis.)

Cheyenne (Wyo.) Regional Medical Center

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