West Virginia Medical Center is Latest to Sue HHS Over DSH Payments

St. Mary’s Medical Center, a Medicare program participant, has challenged the Secretary of Health and Human Services’ (HHS) calculation of the disproportionate share hospital “DSH” adjustment relating to in-patients enrolled in a Medicare Advantage plan under Part C of the Medicare Act. 

The complaint, filed late last week in federal court in Washington, D.C., closely tracks those submitted by other hospitals, including a coalition of seven from Ohio, a collection of 15 from the Midwest and the eastern seaboard, and eight from Illinois and Wisconsin.

St. Mary’s reportedly took issue with the payment determination made by the HHS in its cost reporting period ending Sept. 30, 2006. The complaint explained that the plaintiff filed an appeal of the decision with the proper tribunal, the HHS’ Provider Reimbursement Review Board (PRRB).

In August 2020, the HHS secretary purportedly published a ruling depriving the PRRB of jurisdiction over such payment appeals, and requiring it to remand the challenges to the Medicare Administrative Contractors (MACs) that issued the payment determinations initially. The filing claimed that the August 2020 ruling was made without the administratively required notice-and-comment period, and effectively “throw(s) out the Hospital’s rightful appeal.” St. Mary’s asserts that last year’s ruling and the remand of its case violates the Medicare Act and the Administrative Procedure Act because of its failure to abide by the required protocols.

In addition, the complaint argued that the August 2020 ruling violated the U.S. Constitution by “ending the properly filed appeals and providing no means of review of the Secretary’s ruling—or adjudication of the issues in the Hospital’s appeals.” 

St. Mary’s seeks vacatur of the ruling, an order reinstating the appeal before the PRRB, requiring the HHS secretary to recalculate and pay its 2006 Part C DSH amount with interest, and for the defendant to pay its legal fees associated with the litigation.

St. Mary’s is represented by King & Spalding LLP.