HHS Sued Over Misinterpretation and Miscalculation of Medicare DSH Adjustment

37 hospitals across the country filed suit against the Secretary of the Department of Health and Human Services, Xavier Becerra, on Thursday in District of Columbia District Court. The complaint for judicial review, declaratory judgment, and mandamus relief comes after Becerra’s agency allegedly incorrectly calculated the plaintiff’s Medicare disproportionate share hospital adjustments due to his flawed interpretation of the disproportionate share hospital (DSH) statute.

The secretary recently found that the Provider Reimbursement Review Board, or PRRB, did not have the authority to review the plaintiff’s challenges regarding “the calculation of their Medicare disproportionate share hospital adjustments for the services they furnished to low-income patients in fiscal years 2009 through 2017,” which prompted the plaintiffs to take legal action regarding their Medicare DSH adjustments.

The aforementioned DSH statute is intended to compensate hospitals that take on additional financial burdens by providing a greater amount of services to low-income patients than others.

The plaintiffs argue that their disproportionate share hospital adjustment reimbursement rates were understated because the Centers for Medicare and Medicaid Services (CMS) as well as relevant Medicare Administrative Contractors (MAC) failed to include “all patient days for patients who were eligible for and enrolled in the SSI program but may not have received an SSI payment for the month in which they received services” in their calculations, despite being required to do so by DSH rules.

According to the complaint, the secretary construes the DSH statute to mean that a patient’s enrollment in Medicare Part A entitles them to supplemental security income (SSI) benefits only if they received a tangible SSI payment from the Social Security Administration during the month of their hospitalization. In other words, their SSI benefits were calculated using this method, where SSI benefits were only applied if there was an explicit SSI payment during the month of treatment.

The plaintiffs argue that this interpretation of the statute is in violation of the Medicare Act since it “contravenes the statute’s plain meaning and intent.” The plaintiffs also contend that the interpretation is arbitrary, capricious, not in accordance with law, and in excess of statutory authority.

When the plaintiffs initially raised their concern with the calculation to the PRRB, they asserted that the calculation had been made using a legally flawed method to “count the patient days included in the numerator of the Providers’ respective Medicare fractions” (SSI Days). The error made in the calculation of SSI days resulted in the plaintiffs being “denied Medicare DSH payments to which they are lawfully entitled.”

The complaint includes counts regarding the secretary’s wrongful interpretation of the DSH statute, the interpretation being in violation of the Medicare Act and the Administrative Procedure Act, a mandamus to recalculate the reimbursement rates, and more. The plaintiffs are seeking for the secretary’s construction of the statute to be declared invalid and for the reimbursement rates to be corrected, interest rates, and any other relief deemed proper by the Court.The plaintiffs are represented by Hall Render Killian Heath & Lyman.