CMS to pay out $3B to settle hospital underpayments

The U.S. Department of Health & Human Services and the Centers for Medicare & Medicaid Services have agreed to pay out as much as $3 billion to some 2,200 hospitals nationwide to settle underpayments that stretch back a decade, reported the Los Angeles Times.

The settlement is over a dispute in the inpatient prospective payment system and the Medicare rural floor budget neutrality agreement, which were first set as part of the Balanced Budget Act of 1997, according to an AHA News Now brief. Although both were meant to be budget neutral, lawyers representing the hospitals successfully argued in federal court that the formula progressively cut payments to hospitals, noted the brief.

Some hospitals, such as Cedars-Sinai Medical Center, one of the largest inpatient facilities in California, is receiving more than $14 million, according to the LA Times. Tenet Healthcare expects to receive as much as $84 million for its hospitals, although only $77 million would be applied to continuing operations, it said in a statement Friday. Tenet expects to realize proceeds from the settlement by June 30.

For more information:
- read the Los Angeles Times article
- read the AHA News Now brief
- here's the Tenet statement (.pdf)