About 100 Hospitals in Three States File Suit Against HHS for $200 Million in Past Medicare Reimbursements
Almost 100 hospitals in three southern states have filed suit against HHS over allegations that the federal government owes them more than $200 million in past Medicare reimbursements that were denied because of improper revisions to the reimbursement formula, the Baton Rouge Advocate reports (Gautreau, Baton Rouge Advocate, 7/8). The lawsuit -- organized by the Alabama Hospital Association and filed on Tuesday in U.S. District Court in Washington, D.C. -- names as plaintiffs 13 hospitals in Louisiana, six in Mississippi and 78 in Alabama (Moller, New Orleans Times-Picayune, 7/8).
The lawsuit involves revisions made to the Medicare reimbursement formula in 2002 that adjusted wage indices based on geographic area. Congress later overturned the revisions, but the lawsuit seeks the reimbursements that the plaintiffs would have received in fiscal years 2003 and 2004 without the revisions. Labor costs, which vary by geographic area, account for about 70% of the amount that Medicare reimburses hospitals (Baton Rouge Advocate, 7/8). In the lawsuit, the plaintiffs allege that the revisions "illegally overstate the portion of the average cost per case that is attributable to the labor component" and that "the labor component illegally includes costs that are not wage or wage-related." As a result, the lawsuit alleges, hospitals in low-wage rural areas were not completely reimbursed for their labor costs. Gregg Everett, general counsel for the association, said, "We found that hospitals in some areas of the country were getting paid twice as much as Alabama hospitals for the exact same procedure" (Reuters, 7/7). He added, "Our hospitals tried for the last two years to get the formula changed through the regulatory process but were unsuccessful" (Baton Rouge Advocate, 7/8).