Becerra Sued Again Over Disproportionate Share Adjustments

Xavier Becerra, Acting Secretary for the United States Department of Health and Human Services (HHS), received a lawsuit from hospitals across the country who are challenging the HHS’s “computation of the Medicare disproportionate share hospital adjustment relating to inpatients enrolled in a Medicare Advantage plan under Part C of the Medicare Act.”

The complaint explained that on August 6, 2020, the Center for Medicare & Medicaid Services, an agency within HHS, announced a proposal where it would retroactively create a rule allowing the HHS to “calculate and confirm proper DSH payments for the time periods before (fiscal year) 2014.” They announced just 11 days later, on August 17, that they would allow contractors to employ the new retroactive rulemaking policy when looking at pending appeals regarding the Part C Medicare Advantage plans, stripping jurisdiction away altogether from the Provider Reimbursement Review Board.

The DSH payments are being challenged by the plaintiffs who claimed the payments were determined using a policy that has been invalidated. The complaint said the DSH Part C policy has been struck down by both the Court of Appeals as well as the Supreme Court. Despite these decisions, the plaintiffs alleged that Becerra continues to apply the policy. They further explained that “the Court should find that the application of the DSH Part C Policy unlawful because it is procedurally invalid,” given the inconsistencies of the policy within the judiciary.

The hospitals claimed that the HHS is trying to retroactively alter Medicare policy and create a new formula for allocating funds. In an effort to prevent this, the plaintiffs have filed an appeal of the decision by CMS to engage in retroactive rulemaking, but CMS has denied their appeal in its entirety.

The hospitals have filed suit against the HHS secretary, Becerra, in response to this denial. They are seeking “an order directing the Secretary to recalculate the hospital’s DSH payments for the fiscal periods at issue,” or to have jurisdiction over the appeals handed back to the Provider Reimbursement Review Board. They are also seeking for the CMS policies at issue to be officially declared invalid and to prevent Becerra from applying the policies in the future. The plaintiffs are represented by Honigman LLP.

There have been other suits recently brought by hospitals against HHS over the same policy.