Hospitals in Alabama, Louisiana and Mississippi filed a federal lawsuit against HHS, accusing the agency of short-changing them by about $261 million in Medicare payments in the 2003 and 2004 fiscal years. At fault is a flawed formula for calculating and adjusting payments for hospitals' labor costs, the suit contended. Filed in U.S. District Court in Washington, the suit said 97 hospitals -- 78 of which are in Alabama, where the state hospital association is coordinating the legal case -- have been affected by the flawed formula over the past two years. Rosemary Blackmon, spokeswoman for the Alabama Hospital Association, said the federal government has used "arbitrary methods that haven't been backed up with evidence" to calculate wages at hospitals in the three states and elsewhere in the country. While the 2003 Medicare reform law addressed part of the problem, it was a "partial fix," Blackmon said. -- by Michael Romano
Hospitals jointly sue HHS over Medicare labor costs
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