Forty-six hospitals sued HHS Secretary Alex Azar for the allegedly unlawful reversal of hospital debt policy, which they say has raised their debt payments by nearly $1.4 million.
In 2006, HHS reversed a policy that allowed hospitals to claim bad debt for debts that were pending at outside agencies. The hospitals' lawsuit, filed Dec. 28 in U.S. District Court in the District of Columbia, seeks the reversal of that decision. The decision was upheld in August by a Medicare appeals panel, but the hospitals allege the decision violates a moratorium that restricted the HHS secretary from amending bad debt policies before 2012.
The disallowal of bad debts from fiscal years 2006 to 2009 means hospitals will need to pay nearly $1.4 million in debt accumulated during those years, according to the lawsuit.
"The final decision upholding the disallowance of the Medicare bad debts at issue on the ground that they were still pending at an outside collection agency at the time they were written off is arbitrary and capricious, an abuse of discretion or unsupported by substantial evidence,” the lawsuit reads.
In addition to seeking the reversal of the 2006 decision, the hospitals are also asking HHS to reimburse them with interest for the debt payments.