Mount Nittany Medical Center has filed a lawsuit challenging the federal government’s decision to cancel its Medicare designation as a sole community hospital, according to court documents reviewed by Becker’s.
The lawsuit, filed June 12 in the U.S. District Court for the Middle District of Pennsylvania, names HHS, HHS Secretary Robert F. Kennedy Jr., CMS and CMS Administrator Mehmet Oz, MD, as defendants. The 260-bed hospital in College Township, Pa., adjacent to State College, Pa., argues CMS improperly canceled its sole community hospital designation after determining that Penn Highlands State College qualified as a comparable nearby hospital.
CMS grants sole community hospital status to hospitals that serve as the primary source of inpatient care in an isolated geographic area, making them eligible for certain Medicare payment protections. Mount Nittany Medical Center has held the designation since 2017.
According to the complaint, CMS notified the hospital April 14 that it would lose the designation after Penn Highlands State College opened as a campus of Penn Highlands Huntingdon. Mount Nittany argues CMS improperly combined inpatient utilization data from Penn Highlands State College and Penn Highlands Huntingdon when determining whether the State College facility qualified as a “like hospital.”
The lawsuit argues that the policy CMS used is not contained in federal statute or regulation and resulted in the hospital losing millions of dollars in Medicare funding.
In a statement shared with Becker’s, Mount Nittany said the designation’s cancellation would have significant financial consequences.
“The loss of this designation eliminates millions of dollars in critical Medicare funding that has supported Mount Nittany Medical Center’s role as the community’s indispensable provider of inpatient and outpatient care,” the health system said.
CMS declined to comment on the litigation. Becker’s has reached out to HHS for comment and will update this story if a response is received.
Mount Nittany said the reduction in Medicare funding will make it more difficult to maintain existing services, invest in new capabilities and pursue planned service expansions.
“Protecting access to the healthcare services our community relies on remains our highest priority,” the statement said.
According to the complaint, the designation change will reduce Medicare reimbursement by approximately $9 million annually, in addition to several million dollars in reduced Medicare Advantage and Medicaid-related payments.
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