Hospitals challenge 'arbitrary and capricious' Medicare cut

The American Hospital Association, four other hospital associations and several hospitals and health systems are challenging a reduction in Medicare payment rates for inpatient services provided in federal fiscal year 2015.

The complaint, which was filed in District of Columbia federal court, alleges CMS built past errors into the fiscal 2015 reimbursement rates. The lawsuit claims a 0.2 percent cut taken to offset CMS-projected effects of its two-midnight policy was invalid and should not have been built into the fiscal 2015 reimbursement rates.

"It was arbitrary and capricious for CMS to impose the 0.2 percent cut on hospitals in FFY 2014, and it was just as arbitrary and capricious for CMS to use those flawed amounts as the basis for this year's calculations," the complaint states.

The following organizations joined the AHA as plaintiffs in the lawsuit: the Greater New York, New York State, New Jersey and Pennsylvania hospital associations; Phoenix-based Banner Health; Philadelphia-based Einstein Healthcare Network; Winston-Salem, N.C-based Wake Forest University Baptist Medical Center; and The Mount Sinai Hospital in New York City.

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