A group of 115 HCA Healthcare and Christus Health hospitals sued HHS on Monday to stop the agency from retroactively changing how it calculates Medicare disproportionate share hospital payment adjustments.
Although several courts, including the U.S. Supreme Court, have struck down HHS' proposals to include Medicare Advantage patient days in the Medicare fraction for DSH payments, the agency put forward the policy again in August 2020. HHS also instructed its administrative board not to consider any DSH reimbursement appeals while it moved forward with the rulemaking. All of the plaintiff hospitals, which sued in the U.S. District Court for the District of Columbia, had pending administrative appeals to recoup their DSH payments.
"The agency has never acknowledged the enormous adverse financial impact on hospitals of the 2004 policy change, nor has the agency ever explained why the policy change is appropriate despite that adverse impact on the nation's safety-net hospitals, like the plaintiff's, that shoulder the financial burden of treating a disproportionate share of low-income patients," the complaint said.
The changes could affect billions of dollars in Medicare funding. The formula has been challenged successfully several times since they were first put forward in the 2005 inpatient prospective payment system rule. The Supreme Court in 2019 reversed the policy in a 7-1 decision and said the agency had to follow a notice-and-comment rulemaking to make the changes.
