A federal appeals court ordered a group of Maine hospitals to fork over $17 million in Medicare overpayments to HHS on Friday, ruling the agency had the right to reclaim the funds.
In a reversal of a lower federal court, the 1st U.S. Circuit Court of Appeals determined that HHS appropriately reopened several years' worth of disproportionate-share hospital payments for the affected hospitals and were entitled to claw back millions in overpayments.
HHS alleged that the hospitals inappropriately included stays for patients that were eligible for Medicare Part A and Medicaid but not supplemental security income in their DSH calculations, leading to $22 million in overpayments dating as far back as 1993.
But the hospitals claimed it was absurd for HHS to exclude some low-income patients from a calculation meant to reimburse them for increased charity-care costs. Ultimately, the appeals court wasn't swayed by that argument.
“Absurdity, like beauty, sometimes lies in the eye of the beholder,” the panel said.
Although the 1st Circuit criticized the federal government's charity-care reimbursement system as “among the most arcane known to man,” that didn't negate HHS' ability to investigate and reclaim alleged overpayments to hospitals.
The eight hospitals in the suit used a series of administrative arguments to justify their win in the lower court, which allowed them to escape $17 million of the overall $22 million overpayment charge. They claimed that they weren't appropriately informed that HHS was reopening their DSH payment determinations, and that they shouldn't be forced to repay the funds even if the notifications were adequate.
But the 1st Circuit rejected the hospitals' technical arguments, saying the federal government complied with the law, even if the decision excluded some low-income patients from being eligible for DSH reimbursements.
“While the rules for Medicare reimbursement may seem inscrutable at times, Congress' intent with regard to this provision is transparently clear,” the ruling said.
The eight hospitals involved in the suit are Maine Medical Center, Central Maine Medical Center, Mid Coast Hospital, Eastern Maine Medical Center, Mercy Hospital, Northern Maine Medical Center, Southern Maine Medical Center and Maine General Medical Center.