Hospitals Appeal Medicare Reimbursement Figures in Lawsuit Against HHS

Three Indiana hospitals have filed suit in the District of Columbia District Court against the Secretary of the United States Department of Health and Human Services (HHS), seeking to undo decisions made by the Centers for Medicare and Medicaid Services’ (CMS) Provider Reimbursement Review Board (PRRB). In their Dec. 1 complaint, the hospitals claim that the government agency failed several of its statutory obligations and miscalculated reimbursement for certain care expenses.

The hospitals first contend that CMS improperly concluded that they had no right to appeal the PRRB decisions. They argue to the contrary, that they are indeed able to challenge whether CMS lawfully implements changes under the laws. The plaintiffs next allege that CMS violated the Medicare Act when it failed to submit the policy change impacting their reimbursement through audits to notice-and-comment rulemaking.

CMS also violated the Administrative Procedure Act in two ways, the hospitals aver. First, they claim that “CMS implemented audits applying the changed policy in an arbitrary and capricious manner, harming the Hospitals.”

Specifically, the filing explains that the HHS secretary implemented a new reimbursement policy using an audit system. However, the plaintiffs argue, the new policy “lacked standard auditing principles to calculate the Hospitals’ Uncompensated Care Disproportionate Share Hospital (UC DSH) adjustments.” The plaintiffs contend that “[t]he lack of standard principles resulted in disparities, inconsistencies, and errors that negatively impacted many hospitals’ UC DSH payments.”

Second, the hospitals claim that CMS’ “reliance on a procedurally improper policy to change  hospital reimbursement was contrary to the law.” In support of their contention, the plaintiffs claim that the HHS secretary shirked his duty to act consistently with the law when “CMS used the improper audits as the foundation for adjustments to the Hospitals’ UC DSH payments for Federal Fiscal Year 2020.”

For their grievances, the hospitals seek an order declaring the PRRB’s final decisions and the audit protocol invalid, requiring the HHS secretary to recalculate the plaintiffs’ UC DSH payments and to “comply with the duty to promulgate all statements of policy that govern the payment for services through Notice-and-Comment Rulemaking.”

The plaintiffs are represented by Hall, Render, Killian, Heath & Lyman, P.C.