(Updated at 3:15 p.m. ET.)
In a federal lawsuit, the American Hospital Association and four healthcare providers accuse HHS of illegally denying hospitals Medicare payments for audited outpatient procedures.
The Chicago-based interest group for nearly 5,000 hospitals says in the complaint (PDF) that HHS maintains an illegal policy of refusing to pay hospitals for Medicare outpatient services in cases where auditors retroactively conclude that inpatient care should have been delivered outside the hospital.
“It's not acceptable that we have to go through a long, laborious and costly appeal process for payments for medically necessary services and especially when that payment is denied,” Richard Umbdenstock, president and CEO of the AHA, said in an interview.
Four plaintiffs joined the AHA on the lawsuit: 56-bed Missouri Baptist Sullivan (Mo.) Hospital; 391-bed Munson Medical Center, Traverse City, Mich.; 640-bed Lancaster (Pa.) General Hospital; and 36-hospital Trinity Health, Livonia, Mich. The AHA asked members with bad RAC experiences to volunteer to be named on the lawsuit, and those four were the first to come forward.
The common thread between the four is that they've all been second-guessed by a RAC auditor and spent a large amount of money on appealing the decision, Umbdenstock said.
“They were all following, unfortunately, a very familiar kind of storyline,” he said.
The lawsuit followed the failure of year-long discussions on the care settings issue by the AHA and the CMS to reach a resolution, Umbdenstock said. He would not provide details of those talks and added that the CMS knew the lawsuit was coming as the logical “next step.”