HHS and providers have taken their fight over billions of dollars in Medicare payments to the U.S. Supreme Court, as the agency tries to protect its calculation of disproportionate-share hospital payments.
In a petition filed last week, HHS maintained that it followed proper procedure in 2014 when it started factoring Medicare Advantage beneficiaries' inpatient stays into disproportionate-share hospital payments for fiscal 2012. The agency said it didn't need to hold a public comment period to allow hospitals to weigh in.
Rather than follow a traditional rulemaking, HHS made the change in a spreadsheet calculating the total Medicare payments due to each hospital, known as the "Medicare fraction," which Medicare administrative contractors use to set hospitals' DSH payments.
These third-party contractors don't have all the information necessary to determine what each hospital is owed by Medicare every year, so the CMS makes that calculation.
HHS estimates about $3 billion to $4 billion in DSH payments are at stake in this case from fiscal 2005 to fiscal 2013.
Allina Health Services sued HHS in 2014 over the calculation change and the agency's failure to undertake a public comment period, with the lawsuit focusing on the government's agreements with Medicare administrative contractors. MACs pay out the traditional Medicare reimbursements based on estimated costs, which are then adjusted to match the actual annual cost reports. They also calculate the DSH payments for each hospital.
The U.S. Court of Appeals for the District of Columbia Circuit sided with Allina and several other health systems in July 2017.
But HHS claimed the appellate decision would "significantly impair" its current Medicare payment structure and how it uses MACs.
"The court of appeals' decision threatens to undermine HHS' ability to administer the Medicare program in a workable manner," the petition said. "(The) provisions setting the substantive legal standards for reimbursement and other matters in this extraordinarily complex area of law contain myriad ambiguities that must be resolved, at least as an initial matter, by CMS in its administration of the Medicare program."
Several health systems have joined Allina on the lawsuit, including Florida Health Sciences Center, Montefiore Medical Center, Mount Sinai Medical Center of Florida, New York Hospital Medical Center of Queens, New York Methodist Hospital and Presbyterian Hospital.
