Dozens of Hospitals Sue HHS Over Medicare Billing

On Wednesday a case was filed in the Central District of California by the Cleveland Clinic, Paradise Valley Hospital, and over 125 other hospitals against Xavier Becerra as Secretary of Health and Human Services. The case is regarding the calculation of payments owed under Medicare Part A bills and the Disproportionate Share Hospital (DSH) payment adjustment.

The complaint explained that one of the factors included in the DSH payment adjustment calculation is the number of “days entitled to benefits under part A.”

This particular factor comes into play on the “denominator” side of the calculation and on the “numerator” side of the calculation of the disproportionate patient percentage . However, the plaintiffs in the case accuse HHS and Medicare of using different definitions for “entitled” depending on which side of the fraction is being reviewed, resulting in a lower payment to the hospital than would otherwise be calculated.

Specifically, the hospitals argue that if “zero payment” days for days that are automatically included in the base payment rate for that patients Diagnosis Related Group payment  under 42 U.S.C. §1395ww(d)(5)(F)(vi), the plaintiffs argue that the same “zero payment” days should also be included as “days “entitled   to   supplemental   security   income   benefits” under   42   U.S.C.   § 1395ww(d)(5)(F)(vi)(I).”

The hospitals argue that having different interpretations of the word “entitled” results in a calculation of the payment amount that is “the epitome of arbitrary and capricious agency action and must be reversed,” citing a concurring opinion from then-Judge Brett Kavanugh in Northeast Hosp. Corp. v. Sebelius.

“HHS thus interprets the word “entitled” differently within the same sentence of the statute.  The only thing that unifies the Government’s inconsistent definitions of this term is its apparent policy of paying out as little money as possible,” the cited concurrence said..

Plaintiffs are requesting declaratory judgment, an injunction directing HHS to properly calculate the DSH fraction, and attorney fees. Plaintiffs are represented by the Alan Sedley Law Corporation.