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HHS Asks Supreme Court to Hear $4B DSH Payments Case

News  |  By Steven Porter  
   May 02, 2018

An appellate court had sided with Allina Health Services and other hospitals that challenged a 2014 calculation change for disproportionate share hospital payments.

The U.S. Supreme Court could decide a case affecting up to $4 billion in reimbursements to hospitals for uncompensated care.

In a filing last week, Health and Human Services asked the justices to review an appellate court's decision last year to void the way Medicare payments for disproportionate share hospitals (DSH) were being calculated.

The department had interpreted the Medicare Act in mid-2014 as authorizing it to include Medicare Part C claims submissions in its calculation of the so-called "Medicare fraction," which affects DSH payments, for fiscal year 2012, according to the HHS petition.

Minneapolis-based nonprofit Allina Health Services and other health systems challenged HHS in federal district court in 2014, alleging that the department had failed to go through the proper notice-and-comment processes. The district court granted summary judgment to HHS, but the plaintiffs won on appeal last year.

In siding with Allina, the U.S. Court of Appeals for the District of Columbia Circuit departed from decisions reached by other federal appellate courts on this issue, and its decision "threatens to undermine HHS's ability to administer the Medicare Program in a workable manner," the HHS petition argues.

The appellate decision would "significantly impair" the way HHS currently uses Medicare administrative contractors (MACs) to carry out Medicare payments, the department argues.

The total amount of money at issue in this case is $3-4 billion in reimbursements for fiscal years 2005 through 2013, the filing states.

Beyond the specifics of this case, a Supreme Court decision could have broader implications, especially considering how HHS has framed the question at hand: whether it must conduct notice-and-comment rulemaking in situations such as this one.

Hospitals joining Allina in the suit include Florida Health Sciences Center, Mount Sinai Medical Center of Florida, New York Hospital Medical Center of Queens, New York Methodist Hospital, and New York and Presbyterian Hospital.

This case is among several lawsuits in recent years challenging DSH payments.

Steven Porter is an associate content manager and Strategy editor for HealthLeaders, a Simplify Compliance brand.

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