A group of 137 hospitals, mainly ones in rural areas, sued HHS to recoup about $86.6 million in Medicare payments and change future small-hospital reimbursement formulas. Medicare pays many small and rural hospitals under a special reimbursement policy called the hospital-specific payment rate, which provides higher rates than standard community hospitals receive. The HSP applies to sole community hospitals and Medicare-dependent small rural hospitals. In 2010, the HSP was adjusted downward as part of a larger effort to slow apparent growth in medical spending caused by changes in billing codes—the CMS' “documentation and coding adjustment” process.
Late News: 137 hospitals sue HHS over HSP rate adjustment
Ankur Goel, an attorney with the hospitals' law firm, McDermott Will & Emery in Washington, said the CMS in the past decided that it was legally not allowed to apply such coding adjustments to the rural hospitals' HSP rate. Yet in 2010, the agency changed its mind and applied the change, he said. “We don't think CMS has the authority to adjust the rates in the way that they did under the Medicare statute,” Goel said. CMS officials declined to comment on the lawsuit, which was filed in U.S. District Court in Washington.
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