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From Health Law Daily, April 3, 2015

First impression: courts may not review DSH adjustment estimates by CMS

By Harold M. Bishop, J.D.

A suit by Tampa General Hospital, challenging CMS’ calculation of the amount it would receive under the Medicare program for uncompensated care for fiscal year 2014 was dismissed due to the court’s lack of subject matter jurisdiction. Tampa General claimed that CMS inappropriately used hospital cost data from March 2013, instead of data from April 2013, in calculating its disproportionate share hospital (DSH) payments. In what appears to be a case of first impression, the court found that the Medicare statute precluded judicial review of both CMS’ DSH adjustment estimate and the period it used to calculate the estimate (Florida Health Sciences Center, Inc. v. HHS, March 31, 2015, Jackson, A.).

DSH adjustments. Section 3133 of the Patient Protection and Affordable Care Act (P.L. 111-148) (ACA) revised the DSH adjustment as of fiscal year (FY) 2014. The calculation is now based on a combination of the traditional DSH adjustment and a prospective estimate of each hospital’s amount of uncompensated care. To calculate the adjustment, CMS first provides an empirically justified DSH payment, pursuant to 42 U.S.C. §1395ww(r)(1), which is 25 percent of the traditional DSH payment. Then it provides an additional payment pursuant to section 1395ww(r)(2), which is each hospital’s share of 75 percent of what otherwise would have been paid as Medicare DSH payments, after the amount is reduced for changes in the percentage of individuals that are uninsured.

The additional payment is calculated by multiplying: (1) an estimate of the remaining 75 percent of the DSH payments nationwide; (2) an estimate of the decline in the national uninsured rate for the fiscal year as compared to the prior fiscal year; and (3) each qualifying hospital’s share of the total amount of uncompensated care (42 U.S.C. §§1395ww(d)(5)(F)(i), 1395ww(r)(2)).

Preclusion provision. The Medicare statute also states that there shall be no administrative or judicial review of the DSH adjustment estimate or any period selected by CMS for such purposes (42 U.S.C. §1395ww(r)(3)).

Final rule. Ultimately, CMS published a Final rule that used the March 2013 update of each hospital’s 2010/2011 cost report as the source for the data that made up the DSH adjustment estimate (78 FR 50496, August 19, 2013). In the Final rule, CMS stated that it did not agree that providing hospitals additional time to submit data will improve the accuracy of its estimate used to calculate each qualifying hospital’s share of the total amount of uncompensated care because such data could not be audited in a meaningful timeframe and still allow payments to be made in FY 2014.

Complaint. In September 2013, Florida Health Sciences Center, Inc., also known as Tampa General Hospital (Tampa General) asked HHS to use the most recently available Medicaid days data contained in the amended cost report submitted in April 2014 when calculating its uncompensated care payment. When CMS did not alter its approach, Tampa General sued, challenging the Final rule and CMS’ calculation of its additional payment.

Tampa General complained that CMS used obsolete data instead of the most recent data available in determining it uncompensated share. It asked the court to declare the Final rule’s methodology to be invalid, to declare its DSH payment for FY 2014 to be invalid, and to direct CMS to correct its calculation and pay the additional amount due.

HHS moved to dismiss the case on the grounds that the statute precluded judicial review of Tampa General’s claims.

Analysis. In what appears to be a case of first impression, the court found that the preclusion provision contains specific language expressing Congress’s intent to prevent judicial review of Tampa General’s claims.

Tampa General argued that it was not challenging either an “estimate” or a “period” but rather CMS’ choice of appropriate data. Specifically, Tampa General claimed that CMS’ choice to use March 2013 data rather than April 2013 data is not the selection of a “period” for purposes of the judicial review preclusion provision, but the selection of data upon which to base an estimate. The court, however, labeled this argument an exercise in semantics that did not alter the essence of the hospital’s claims.

The court found that even if CMS’ decision to use March 2013 data instead of the April 2013 data did not involve the selection of a “period” within the meaning of the preclusion provision, Tampa General’s complaint directly challenged an “estimate” of CMS, which Congress has insulated from judicial review.

The court concluded that the complaint was, at its essence, a challenge to both an estimate and a period used by CMS to make the estimate and, as such, was not subject to judicial review.

The case is Civil Action No. 14-0791 (ABJ).

Attorneys: Stephanie Ann Webster (Akin Gump Strauss Hauer & Feld LLP) for Florida Health Sciences Center, Inc. Daniel Schwei, United States Department of Justice, for Secretary United States Department of Health and Human Services.

Companies: Florida Health Sciences Center, Inc.; Tampa General Hospital; United States Department of Health and Human Services.

MainStory: TopStory DSHNews IPPSNews CMSNews AuditNews CostReportNews HealthReformNews PaymentNews PartANews DistrictofColumbiaNews

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