115 hospitals sue HHS over Medicare payment calculation

A group of 115 hospitals sued HHS in an attempt to prevent the department from retroactively changing how it calculates Medicare Part A disproportionate share hospital payments for patients who were enrolled in Medicare Advantage plans under Part C of the Medicare Act.

The federal lawsuit was filed Jan. 4 by a coalition of Nashville, Tenn.-based HCA Healthcare and Irving, Texas-based Christus Health hospitals. The hospitals are states including California, Colorado, Utah and Florida. 

The hospitals' lawsuit concerns a 2004 Medicare policy change that included a new methodology for allocating Medicare Part C days in the disproportionate share hospital calculation formula. 

The U.S. Court of Appeals has ruled against HHS in several different actions brought by hospitals challenging the 2004 policy. The U.S. Supreme Court also recently upheld the appeals court decision, according to the complaint. 

Despite those court rulings, HHS proposed in August 2020 to readopt the calculation policy and apply it retroactively.  

In the lawsuit, the hospitals argue that HHS is disregarding the court decisions.

"The agency’s continued attempts to apply the 2004 policy should be rejected because they are procedurally invalid, as the Court of Appeals has now twice ruled, fail any test of reasoned decision-making, and are inconsistent with congressional intent in adopting the Medicare DSH statute," the complaint states. 

The hospitals argue that the HHS attempts to apply the policy should be rejected and are asking the court to declare any payment determinations reflecting the policy change invalid. 

"The agency has never acknowledged the enormous adverse financial impact on hospitals of the 2004 policy change, nor has the agency ever explained why the policy change is appropriate despite that adverse impact on the nation's safety-net hospitals," the complaint states.

Several other hospitals from Danville, Pa.-based Geisinger and Durham, N.C.-based Duke Health also sued HHS over the policy change. The hospitals were Duke Raleigh (N.C.) Hospital, Durham Regional Hospital, Geisinger Medical Center in Danville, Geisinger Wyoming Valley Medical Center in Wilkes-Barre, Pa., and The Washington (Pa.) Hospital. Their federal lawsuit was filed Dec. 21.   

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