A chain of long-term hospitals suffered a legal setback last week in its effort to force HHS to speed up Medicare payments to those facilities.
A three-judge panel of the U.S. Court of Appeals for the District of Columbia ruled unanimously that HHS is well within its rights to delay payments to long-term hospitals until it has sufficient historic cost data on which to base those payments.
The case centers on whether Medicare is obligated to begin paying long-term-care hospitals beginning on their first day of operation or whether regulations require hospitals to be in the long-term-care business for at least six months before qualifying for Medicare reimbursements.
Transitional Hospitals Corp., a Las Vegas-based company now owned by Louisville, Ky.-based Vencor, sued HHS in 1997, after Medicare denied two THC hospitals approval as Medicare providers because they didn't have the required six months' experience.
The hospitals want a total of $2.5 million in extra Medicare reimbursement.
Under federal regulations, long-term-care hospitals are exempt from Medicare's DRG-based payment system for most acute-care hospitals and are paid according to their costs, up to certain caps. Long-term hospitals treat ventilator-dependent and other patients with complex, long-term medical needs.
However, the DRG exemption does not take effect until average lengths of stay have exceeded 25 days over a six-month period.
Last year, the U.S. District Court in Washington sided with THC, which argued that the six-month requirement was not what Congress intended (April 26, 1999, p. 16).
But in its Aug. 22 ruling overturning the district court, the appeals court agreed with HHS, which argued that HCFA was required by law to collect data to ensure that the hospitals are in fact long-term-care facilities.
"We do not find the statute as clear as either side suggests, but rather conclude that Congress intended the (HHS) secretary to exercise discretion in determining the manner in which a hospital qualifies as a long-term-care facility," wrote U.S. Appeals Judge Merrick Garland in the court's opinion. "We therefore reverse the decision of the lower court."
Garland sent the case back to the lower court for further action. It is unclear whether THC will appeal.