Hundreds of hospitals sue HHS over payment cuts

By | November 24, 2019

Dive Brief:

  • Hundreds of hospitals are suing HHS over issues related to reimbursement. In one lawsuit filed Tuesday, more than 600 hospitals are alleging the agency has unlawfully continued what were supposed to be temporary rate reductions for inpatient stays that should have stopped in 2017. The continued cuts have resulted in a loss of $ 840 million per year across the country’s hospitals. The plaintiffs, which include Ascension and Mayo Clinic hospitals, allege they lost about $ 124 million per year during federal fiscal years 2018 and 2019.
  • Two other lawsuits filed against HHS this week center on Disproportionate Share Hospital payments, or reimbursement given to hospitals for caring for a large share of low-income patients.
  • Combined, about 20 hospitals want their DSH payments recalculated as they allege the complicated formula is not being applied correctly.

Dive Insight:

The courts continue to be a battleground area for key policy issues for health systems. Hospitals have not been shy to turn to the legal system for reimbursement issues, including filing suit over a controversial site neutral proposal and threatening suit over the Trump Administration price transparency plan. A federal appeals court decision in the landscape-shifting Affordable Care Act itself is also still pending.

And it’s not the first time the complicated formula issue concerning Medicare DSH reimbursement has played out in that setting.

In fact, a similar case went all the way to the U.S. Supreme Court. At issue was whether HHS had to follow the notice and comment rulemaking procedures before changing payment calculations. The Supreme Court ruled in favor of the hospital providers in June, ruling against HHS’ decision to change its calculation that it estimated would reduce payments to hospitals by as much as $ 4 billion.

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“Because the government has not identified a lawful excuse for neglecting its statutory notice-and-comment obligations, its policy must be vacated,” the court ruled.

A continuing resolution signed by President Donald Trump on Thursday to fund the government through Dec. 20 puts off planned Medicaid DSH cuts for another month. Hospitals applauded the move, but are asking for a longer-term fix.

CMS finalized those payment reductions in a rule in September. They would reach $ 4 billion next year and $ 8 billion through 2025.

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