HHS Receives Another Medicare Part C Complaint from Florida Hospitals

Four hospitals, all related entities operating under the South Broward Hospital District corporate umbrella, have challenged the United States Department of Health and Human Services’ calculation of the disproportionate share hospital (DSH) adjustment relating to inpatients enrolled in a Medicare Advantage plan under Part C of the Medicare Act (Part C). Monday’s lawsuit is one of many brought by hospitals against the agency over a decision allegedly seeking to prevent hospitals’ appeals of the Medicare Part C issue.

The District of Columbia complaint is set in a procedurally complex backdrop. First, the filing explains that federal courts of appeal and the Supreme Court in a case called Allina, invalidated the government’s Medicare Part C policy in a string of decisions dated 2011, 2014, and 2019. The plaintiff states that in August 2020, the Centers for Medicare & Medicaid Services (CMS) issued a ruling depriving the Provider Reimbursement Review Board (PRRB) of jurisdiction over certain Part C reimbursement appeals.

Instead, Medicare Administrative Contractors were directed to apply the retroactive rulemaking to those pending appeals once a new rule is in place. However, the new rule is not yet in place, but has the supposed effect of “‘eliminat[ing] any actual case or controversy regarding the hospital’s previously calculated SSI and Medicaid fractions and its DSH payment adjustment and thereby renders moot each properly pending claim in a DSH appeal involving the issue resolved by the Supreme Court in Allina.’”

South Broward claims that the agency’s actions violate its rights under the Medicare Act and the Administrative Procedure Act “by throwing out the Hospitals’ rightful appeals of a final Medicare payment determination and implementing substantive payment policy changes without notice-and-comment rulemaking.” The plaintiff also argues that the decision violated the U.S. Constitution by ending its properly-filed appeals of Medicare Part C issue and providing no means of review of the CMS ruling or adjudication of that issue in its appeals.

South Broward seeks a ruling vacating the August 2020 decision and related rulings, reinstating its Medicare Part C appeals, or in the alternative, requiring the agency to recalculate its member hospitals’ DSH payments as directed by the Allina decision and pay the balance due plus interest. 

South Broward is represented by King & Spalding LLP.