Hospitals can't recoup taxes from CMS

The U.S. Seventh Circuit Court has ruled that hospitals in Illinois cannot seek state tax reimbursements through the Medicare program, reported the Courthouse News Service.

The case touches on special taxes levied on hospitals to provide care to indigent populations. Such taxes have been levied in recent years to better leverage federal matching payments from the Medicaid program.

The Illinois case involved hospitals assessed a per-bed tax during 2004 and 2005 to provide more funding to pay for indigent care, according to Courthouse News. However, 19 hospitals applied to the Centers for Medicare & Medicaid Services to receive reimbursements as part of the care they provide to Medicare beneficiaries.

A state court concluded the access payments had already reimbursed the hospitals for the tax. The federal court agreed.

"A plain reading of the legislation evidences that the access payments clearly served to reduce related expenses, i.e., the tax assessments, and therefore were appropriately offset against the tax assessments," according to the opinion, which was written by U.S. District Judge Ruben Castillo. 

"To simply ignore the access payments, while recognizing the tax assessments in full in determining the hospitals' reimbursable costs, as the hospitals essentially request, would violate the statutory and regulatory directives that health care providers should be reimbursed only for the costs they have actually incurred, i.e., their net costs."

It is unknown whether the hospitals plan to appeal.

For more information:
- read the Courthouse News Service article
- check out the opinion (.pdf)