Hospitals not entitled to additional payments after 'two-midnight' rate cut

A federal appeals court said a group of hospitals that received lower Medicare reimbursement because of a rate reduction implemented by HHS aren't entitled to additional payments, according to court documents.

For fiscal year 2014, HHS implemented a 0.2 percent rate reduction in an effort to reduce costs associated with its "two-midnight" rule. The rule says costs for hospital stays of a least two midnights are presumptively appropriate for reimbursement at inpatient rates. After revisiting the actuarial processes behind the cuts, HHS eliminated the 0.2 percent rate reduction for fiscal year 2017 and implemented a one-time 0.6 percent reimbursement rate increase to account for the three years of cuts. 

In a May 26 opinion, the U.S. Court of Appeals for the District of Columbia Circuit affirmed a district court decision handing HHS summary judgment that rejects arguments from hospitals that HHS should vacate the rate reduction rule. HHS also doesn't need to recalculate each individual claim paid under the reduced rate between 2014-16, the D.C. Circuit affirmed.

"Not only would this create a significant administrative burden from the Secretary's perspective, but several years could pass before [Inpatient Prospective Payment System] payments become final," the circuit said. 

The case was brought against HHS by UF Health Jacksonville (Fla.) and Trinity Medical Center in Birmingham, Ala. 

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