622 hospitals sue HHS, accused of illegally allowing reimbursement cut

More than 600 hospitals are suing HHS, challenging the department's decision to allow a 0.7 percent reduction in Medicare inpatient hospital reimbursement to continue into federal fiscal years 2018 and 2019. 

The lawsuit, filed Nov. 19 in Washington, D.C., on behalf of 622 hospitals, claims that the decision to allow the payment cut violated a directive from Congress to not recoup more than $11 billion in overpayments by use of these payment cuts and to complete reimbursement by fiscal 2017. 

"There are three congressional acts at play, each concerning the application of fractions of percentages to the standardized reimbursement rate" for the hospitals, the lawsuit states.

The federal government "has conflated these acts to justify its unlawful conduct, which resulted in massive savings for CMS and significant financial detriment to the" hospitals, according to the suit. 

The lawsuit contends the 0.7 percent payment cut should have ended in fiscal 2017 by law, and that HHS exceeded its statutory authority when it did not reverse the 0.7 percent reduction by fiscal 2018 and allowed the reduction into fiscal 2019.

The hospitals said the 0.7 percent reduction totals about $840 million per year, or about $200,000 per year on average for each hospital, effective at the beginning of fiscal 2018. They estimate the plaintiff hospitals lost about $124.4 million annually. 

They want HHS to make the payments due to the hospitals with interest. 

HHS declined to comment, citing pending litigation.


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