Sequestration cuts — a 2 percent across-the-board cut in Medicare provider payments — took effect in April 2013 under the Budget Control Act of 2011. In October of last year, Highmark informed hospitals it was going to cut payments by 2 percent as part of sequestration.
The issue in the lawsuit is whether Highmark is permitted to pass along the 2 percent reduction.
In their lawsuit, the hospitals allege Highmark has been improperly under-reimbursing them by 2 percent for Medicare Advantage patients since the beginning of 2014, which is a breach of contract, as none of Highmark’s contracts with the hospital permit the reduction, according to the report
However, Highmark has defended its action and said insurers across the country are passing along the sequestration cuts to healthcare organizations, according to the report.
The lawsuit was filed in the Allegheny County Court of Common Pleas by the following hospitals: Butler (Pa.) Memorial; Conemaugh Memorial Medical Center in Johnstown, Pa.; Greensburg, Pa.-based Excela Health; New Castle, Pa.-based Jameson Health; St. Clair Hospital in Pittsburgh; Windber (Pa.) Hospital; Washington (Pa.) Hospital; and Indiana (Pa.) Regional Medical Center.
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