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Hospitals Sue HHS Over Medicare Rule SCOTUS Allegedly Axed (1)

Nov. 21, 2019, 7:31 PM; Updated: Nov. 21, 2019, 11:21 PM

Capital Health System Inc. and other hospitals allege in a Nov. 21 suit that the U.S. Health and Human Services Department has continued to pursue a Medicare reimbursement policy that was struck down by the U.S. Supreme Court.

The suit stems from a 2014 change in the way the HHS calculated payments to providers that care for a large number of patients who can’t pay. Under the rule that the hospitals challenged, days spent serving low-income patients were calculated differently, which plaintiffs say unlawfully changed reimbursement rates.

The suit comes less than seven months after the nation’s highest court, in Allina Health Servs. v. Price, upheld a lower court ruling that the HHS had improperly changed Medicare rates without notice.

“Although the D.C. Circuit has twice ruled against the Secretary’s 2004 policy, and the Supreme Court has upheld the Allina II decision, the Secretary nonetheless has not acquiesced in those decisions,” the complaint says.

The hospitals say they each received notices of reimbursement that still were still based on the renewed 2004 policy, under which patient care days were inappropriately calculated and the hospitals received fewer reimbursement dollars. They appealed to the Provider Reimbursement Review Board, which granted expedited judicial review, the complaint says.

Cause of Action: Administrative Procedure Act.

Relief: Declaration that the HHS decision is invalid; order of new recalculation and repayment; attorneys’ fees and costs.

Response: Centers for Medicare & Medicaid Services said it does not comment on pending litigation.

Attorneys: The plaintiff hospitals are represented by the Law Office of Joseph D. Glazer PC.

The case is Capital Health System Inc. et al v. Azar, D.D.C., No. 1:19-cv-03504, complaint filed 11/21/19.

(Updated to include no comment from Centers for Medicare & Medicaid Services )

To contact the reporter on this story: David McAfee in Los Angeles at dmcAfee@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Nicholas Datlowe at ndatlowe@bloomberglaw.com

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