The U.S. Supreme Court has agreed to hear a complex hospital Medicare reimbursement case that could determine the fate of at least $100 million in Medicare payments to hospitals.
The high court last week also agreed to hear a second hospital case that could affect the ability of Department of Veterans Affairs hospitals to compete with private-sector facilities.
In Guernsey Memorial Hospital vs. HHS, the court will decide whether the federal government must reimburse hospitals for Medicare's share of any debt-refinancing costs in a lump sum or in payments spread out over the course of hospitals' debt.
The plaintiff in the case, 150-bed Guernsey Memorial in Cambridge, Ohio, says HHS should pay its share of refinancing costs all at once. The hospital says Medicare owes it $314,000 for a debt the hospital refinanced in 1985. HHS says the money it owes should be amortized over the life of the debt.
In asking the high court to take the case, HHS said an adverse decision would force the government to come up with at least $100 million in principal and interest payments to immediately pay hospitals that have refinanced.
In the case, a federal district court sided with HHS, but that decision was reversed by the 6th U.S. Circuit Court of Appeals in Cincinnati last year. In a similar case earlier this year, the 5th U.S. Circuit Court of Appeals in New Orleans also rejected HHS' position.
Dozens of similar cases are pending in federal district courts across the country, said Scott Taebel, an attorney with the Columbus, Ohio-based firm of Bricker & Eckler who represents Guernsey Memorial. He said HHS has asked the courts in all the cases to postpone their proceedings pending the outcome of the Guernsey case.
"The government is putting all its eggs in one basket," Mr. Taebel said.
Meanwhile, the Veterans Affairs case involves Korean War veteran Fred Gardner, who experienced severe atrophying of his leg after a 1986 back surgery at a VA hospital in Temple, Texas.
Mr. Gardner claimed his condition resulted from the operation, but he was denied disability benefits by the VA because it said he couldn't prove the VA was at fault. The VA based the ruling on its interpretation of a 1924 law, saying the statute requires it to pay only for service-connected disabilities.
But last September, the U.S. Court of Appeals for the District of Columbia Circuit said the law requires the VA to provide disability benefits regardless of who is at fault.
Medical malpractice liability on the part of the VA isn't an issue in the case now before the Supreme Court.
The VA contends that if the Supreme Court allows the ruling to stand, as many as 129,000 patients could be entitled to benefits costing the VA more than $1 billion over five years.
Veterans advocates say that regardless of the outcome of the Supreme Court case, the law should be reviewed to ensure that the VA is on an equal footing with private providers, who wouldn't have to make disability payments.
"We certainly wouldn't want veterans to get anything less than they deserve," said John Hanson, director of national veterans affairs for the American Legion. "But this is one thing that the VA needs to look at if they are going to compete."
Rulings in both Supreme Court cases aren't expected until next year.
