The American Hospital Association and five hospitals are opposing the government's attempt to dismiss their lawsuit against CMS, which challenges the agency's payment denial policy.
The plaintiffs filed suit in November 2012, challenging CMS' payment denial policy. CMS uses Recovery Auditors, or RACs, to determine if a hospital admitted patients to the hospital for inpatient care when those patients should have received care on an outpatient basis.
When CMS only objects to the setting in which the care was provided, the agency is required by law to pay those hospitals under Medicare Part B, which provides coverage for outpatient services. But for years, the plaintiffs allege, CMS has "categorically refused to pay," meaning hospitals received no reimbursement for hundreds of millions dollars' worth of necessary services to Medicare beneficiaries.
CMS withdrew its payment denial policy after the lawsuit was filed and agreed to pay Medicare Part B rates, but it made this applicable for only RAC denials that are live on appeal or for which the time for appeal has not expired. This means many hospitals are unable to obtain the Part B payment since their RAC denials are no longer active.
The plaintiffs amended their lawsuit to challenge these new policies and also presented their requests for Part B payment from CMS.
HHS Secretary Kathleen Sebelius has requested the lawsuit be dismissed, claiming the case is not appropriate for court jurisdiction. This argument is grounded, according to the suit, on the basis of the plaintiffs wanting to reopen Part A claims. The plaintiffs, rather, argue they are challenging a CMS policy.
"The Secretary cannot ward off judicial review by arbitrarily trying to shoehorn hospitals' attempts to adjust their bills into the 'reopening box,'" the plaintiffs wrote. "Her motion should be denied."
AHA's five co-plaintiffs are Missouri Baptist Sullivan (Mo.) Hospital, Munson Medical Center in Traverse City, Mich., Lancaster (Pa.) General Hospital, Trinity Health in Livonia, Mich., and Dignity Health in San Francisco.
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