U.S. District Judge Colleen Kollar-Kotelly has dismissed the lawsuit brought by the American Hospital Association against CMS over rejected inpatient payments, finding judicial review is not permitted.
The lawsuit, which was filed in November 2012, challenged CMS's policy of denying inpatient claims after a Medicare recovery audit contractor decides the claims should have been done on an outpatient basis, which is less expensive. In many cases, the denied inpatient claims are determined to be medically necessary keeping the
m from being paid as outpatient claims, which the AHA claims unfairly cost hospitals hundreds of millions of dollars.
In March, CMS tried to address the problem by issuing a proposed rule that would allow inpatient claims that had been rejected to be resubmitted as outpatient claims. However, the AHA decided to continue with its lawsuit. The group claimed the proposed rule did not fully resolve the issue, as it only applied to new claims and claims being appealed.
Subsequently, CMS filed a motion to dismiss the lawsuit, claiming the federal court did not have jurisdiction to review the case, as a final administrative decision had not been made.
The court agreed with CMS and dismissed the AHA's lawsuit for lack of subject matter jurisdiction. Because the AHA and the hospitals that joined the group as plaintiffs in the case are still appealing previously denied inpatient claims and are still challenging the policy denying the resubmission of those alleged wrongly denied claims, a final administrative decision has not been issued, and the federal court is not permitted to review the case.
The plaintiffs are considering appealing the dismissal.
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