Hospitals barred from suing over $840M pay cut

A group of more than 680 hospitals can't revive a lawsuit saying they lost $840 million in payments because of adjustments made by federal regulators to make up for a Medicare shortfall, according to Bloomberg Law

On Feb. 9, the U.S. Court of Appeals for the District of Columbia held that federal law bars the hospitals' lawsuit. At issue was whether HHS unlawfully extended a program to make up an $11 billion Medicare shortfall. 

Medicare was facing an $11 billion shortfall in 2013, and Congress gave HHS a mission to recoup the funds by the end of fiscal year 2017. To recoup the payments, HHS said it would gradually reduce the base rate paid for inpatient care. Though hospitals initially expected to face a net reduction of 3.2 percent in 2017, HHS announced a 3.9 percent reduction — 0.7 percent more than planned — after reviewing the 2017 budget. 

HHS allowed the 0.7 percent reduction in Medicare reimbursement to continue into fiscal year 2018. By carrying over the cut into 2018, HHS exceeded its statutory authority and cost hospitals $840 million in lost payments, the hospitals argued. 

The district court dismissed the case for a lack of jurisdiction, and the hospitals filed an appeal. 

The appellate court held Feb. 9 that a section of the TMA, Abstinence Education, and QI Programs Extension Act expressly prohibits judicial review of adjustments to Medicare pay to hospitals. 

"We do not doubt that the hospitals felt a 'significant financial impact' from the -0.7% adjustment," the appellate court said. "But such matters are not ours to resolve. Instead our limited role is to read and apply the law th[at] policymakers have ordained, and here our task is clear." 

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