HHS must recalculate hospitals' Medicare pay for training physicians, court rules

Hundreds of hospitals across the U.S. will see a boost in Medicare reimbursements for training physicians in their residency programs after a federal court ruling. 

The U.S. District Court for the District of Columbia ruled May 17 that HHS unlawfully changed the Medicare reimbursement calculation for physician training.

This case centered on a change adopted by HHS that altered one of the three elements factored into a hospital's Direct Graduate Medical Education payment. The element in question was each hospital's weighted number of full-time-equivalent residents. 

HHS adopted a change to reduce the weighted number of FTEs a hospital may claim for reimbursement if its unweighted FTE count exceeds a cap that was set in 1996. If a hospital exceeds the cap, its weighted FTE count is reduced. 

The plaintiff hospitals sued HHS, challenging their DGME reimbursements for various fiscal years dating back as far as 2005. The plaintiffs allege that their reimbursements were unlawfully reduced.

The federal court sided with the hospitals, ruling that HHS acted arbitrarily and capriciously when it changed the weighting factors statutorily assigned to residents.

"The Court will grant Plaintiffs' motions, deny Defendant's, and remand to the agency so that it may recalculate Plaintiffs' reimbursement payments consistent with this opinion," the written opinion reads. 

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