Feds settle litigation with hospitals over uncompensated care

hospital sign

The federal government has settled with hundreds of hospitals over payments for uncompensated care but the terms are confidential, Law360 reported.

The suits included Allina Health Services v. Burwell and Allina Health System v. Burwell. Altogether, more than 400 hospitals were involved in the litigation, which dates back to 2010 and involved cost years prior to 2004. The sums in dispute totaled tens of millions of dollars. Each hospital will receive payments that cover about four years apiece, according to Law360. However, the publication reported that the specific monetary terms of the settlement were not disclosed.

The hospitals had accused the federal government of undercounting the number of Medicare beneficiaries who received additional financial help because they were poor or disabled, leaving the organizations underpaid.

The hospitals had claimed that the Medicare program was also overcounting enrollees that had exhausted their benefits, whose treatment was covered by a secondary payer or should not be covered by the program, diluting the number of eligible low-income patients that would trigger additional payments to the hospitals.

It is unknown if the settlement includes any changes in the counting formula for Medicare beneficiaries at the hospitals.

Uncompensated care is a sore spot for hospitals, primarily because the lack of revenues for such patients hurts the bottom line. Altogether, uncompensated care cost hospitals nearly $43 billion in 2014.

However, the passage of the Affordable Care Act in 2010 has helped address the issue to some extent for some hospitals, primarily those in states that chose to expand Medicaid eligibility under the ACA. Altogether, the healthcare reform law helped hospitals save nearly $6 billion in 2014. Many hospitals that are in non-Medicaid expansion states have had a tougher time with their finances.

- read the Law360 article (subscription required)