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More than 200 hospitals have sued the Department of Health and Human Services (HHS) in recent months, saying the HHS has unfairly withheld tens of millions in hospitals payment for safety net hospitals.
According to media reports, one lawsuit was filed in March by 45 safety-net hospitals, and another lawsuit was heard at a federal court of appeals, with 200 hospitals suing over disproportionate share hospitals (DSH) payments. The hospitals and health systems suing HHS say changes to formulas for making payments have resulted in tens of millions of dollars withheld.
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Both lawsuits involved rulings from HHS on how payments are calculated. The first lawsuit, filed in the U.S. District Court of District of Columbia, challenged a 2008 court decision and follow-up regulations from HHS, which the hospitals say affect payments going back to 1998.
According to the article in Fierce Healthcare, the hospitals' legal team for that case wrote that an HHS pause on payment determinations linked to a 2019 Supreme Court case has unfairly limited payments. "That hold is invalid," [the hospitals] 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."
An appeal against a court ruling
The other case involving around 200 hospitals was argued in April at the U.S. Court of Appeals for the District of Columbia Circuit. This concerned Supplemental Security Income (SSI) benefits, which involve care for low-income patients. That court ruled in 2022 that HHS's rules were consistent with Medicare law.
"Hospitals are fighting the rule because reducing the amount of care provided to people deemed to be low income also led to a reduction in reimbursements for them," wrote Nisha Shetty, in an article for Bloomberg Law.
The article noted that a Washington-based health system, Empire Health Foundation had challenged HHS on Medicare rules in a case that went to the Supreme Court in 2022. Although the hospitals lost that case, the language of the ruling suggests that HHS is not calculating SSI payments accurately.
"The hospitals will argue that because the Supreme Court said entitlement to Medicare Part A includes all individuals qualifying to the program, regardless of whether they receive Medicare payments during their hospitalization, this court should apply the same logic to SSI payments," the article in Bloomberg Law said. "Meanwhile, the HHS will argue that the reasoning in Empire is statute-specific, applies only to Medicare Part A, and doesn't extend to SSI payments."
The result is that the appeals court will have to use the Supreme Court's earlier ruling and decide whether it applies broadly to other laws — or whether it is limited to the previous case.
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