Hospital Sues HHS for Rescinding Medicare Payments

On Monday, EJ Noble Hospital filed a complaint in the District of Columbia against Secretary Xavier Becerra of the Department of Health and Human Services (HHS) for requiring the hospital to repay a Medicare payment while they were experiencing a decrease in inpatient cases.

In 2011, EJ Noble Hospital said it experienced a “substantial” decrease in inpatient cases which required the Secretary to adjust their Medicare inpatient payments. This adjustment is known as a Medicare Volume Decrease Adjustment (VDA) payment, which was determined to be $478,324 in 2013. In July 2016, the Medicare Administrative Contractor (MAC) revised their findings and determined that the plaintiff had to pay that money back even though “the Secretary has conceded that the Hospital experienced a decrease in inpatient volume greater than 5% and is therefore entitled to a VDA payment for FY 2011.” 

The calculations used to calculate the VDA payment were subtracting total diagnosis-related group (DRG) payments from total inpatient operating costs before 2016; this changed by only accounting for “fixed” inpatient operating costs which allegedly would unilaterally lower VDA payments made by Medicare. For the plaintiff, this reduced the total inpatient costs by 8.9% which lowered the VDA calculation to $0, thus requiring the Hospital to pay back the $478,324. Thus, the plaintiff is suing for violations of the Medicare Statute and Administrative Procedure Act.  

The plaintiff is seeking an order declaring Secretary Becerra’s decision finding that the MAC properly reopened the Original VDA Approval and that his decision to modify the PRRB’s decision were arbitrary and capricious and that EJ Noble is repaid, vacating the Secretary’s decision and remanding the appeal to the agency with instructions to recalculate and pay a VDA payment, attorney’s fees and costs, and other relief.

EJ Noble Hospital is represented by Verrill Dana LLP.