Dozens of hospitals filed a lawsuit last week against the Department of Health and Human Services (HHS) alleging that the Medicare program has “unreasonably delayed and unlawfully withheld” disproportionate share hospital payments for care delivered 17 or more years ago totaling “tens of millions of dollars.”
The complaint was filed March 14 in the U.S. District Court for the District of Columbia by 45 safety-net facilities—26 of which are owned by Dignity Health—against HHS Secretary Xavier Becerra. The plaintiff hospitals are located in California, Arizona, Nevada, Hawaii and Minnesota.
The lawsuit centers on a 2008 court decision and resulting 2010 binding acquiescence ruling from HHS in which the agency agreed to recalculate the formula for DSH payments to hospitals during fiscal year 2005 and earlier. For some of the plaintiff hospitals, the recalculation and repayment would affect fiscal years as far back as 1988, according to the complaint.
The hospitals allege that HHS has not yet repaid them in the roughly 12 years since the acquiescence. Additionally, their legal counsel wrote that HHS has used a 2020 pause on payment determinations issued in compliance with a 2019 Supreme Court case regarding DSH payment calculations as justification for the ongoing delay.
“That hold is invalid,” they wrote in the complaint. “Among other reasons, it should have no bearing on the pre-2004 cost years at issue here … and the agency’s prior acquiescence in that decision for periods prior to 2004. Accordingly, this court should enter an order compelling the payment actions that have been unreasonably delayed and unlawfully withheld.”
The hospitals’ legal counsel wrote that they reached out to HHS’ Office of General Counsel in February to address their complaints without turning to litigation. According to the lawsuit, the office replied that HHS’ contractors were instructed not to issue the requested revised payment determinations.
Specifically, those revisions include additional DSH amounts resulting from recalculated Supplemental Security Income (SSI) fractions addressed in the 2008 lawsuit and 2010 acquiescence.
The hospitals are seeking prompt payment determinations with these SSI fractions for various cost reporting periods listed by each plaintiff in the complaint, interest on the additional sums due to the SSI fraction revisions and legal fees.
“The agency’s unreasonable delay has cost the plaintiff hospitals tens of millions of dollars in funds that should have been paid to them many years ago for the higher costs that they incurred to treat low-income patients more than a decade ago,” their counsel wrote in the complaint.
Fierce Healthcare has reached out to HHS for comment on the lawsuit.