More than two dozen hospitals sued the Health and Human Services Department, as well as HHS Secretary Xavier Becerra, over alleged Medicare inpatient hospital underpayments stemming from a decades-old error.
HHS miscalculated the Inpatient Prospective Payment System base payment rate used in fiscal 1984, skewing years of subsequent Medicare payments to hospitals, alleges the lawsuit filed last week in the U.S. District Court for the District of Columbia. Federal agencies use the base payment rate — calculated each year based on treatment costs, hospital worker wages and other market-based factors — to update annual IPPS rates.
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Minneapolis-based Allina Health, New Orleans-based Ochsner Health and Tampa General Hospital in Florida, among other health systems listed as plaintiffs in the lawsuit, are seeking higher Medicare payments from fiscal 2019 to 2023 and an unspecified amount of damages.
“Despite having specific knowledge of his error in fiscal year 1984 and later acknowledging in fiscal year 1992 that his calculation methodology was ‘problematic,’ [Becerra] has yet to adjust the IPPS standard amount to correct for his inclusion of transfer cases in the costs per discharge calculation,” the complaint states.
An HHS spokesperson said the agency cannot comment on ongoing litigation.
Several health systems listed in the lawsuit did not immediately return requests for comment.
According to the lawsuit, hospitals began filing appeals in 2002 with the Provider Reimbursement Review Board to amend the Medicare inpatient hospital base pay rate. The board denied the appeals, claiming that the budget neutrality framework of the statute precluded HHS from making any adjustments, the lawsuit says.
