TEACHING HOSPITALS: Supreme Court Rules HHS Can Recalculate Payments
The U.S. Supreme Court yesterday said federal regulators can "recalculate" Medicare payments owed to teaching hospitals since 1984. The AP/Boston Globe reports that the decision will likely "raise medical training costs for teaching hospitals nationwide." According to government lawyers, more than $100 million in reimbursements for graduate medical education were at stake "in just some of the pending legal cases" affected by the decision. The AP/Globe notes that federal appeals courts had split on the issue, at the heart of which was the government's contention that it had been overcharged for the costs of graduate medical education (GME) by St. Paul-Ramsey Medical Center, a large academic medical center in Minnesota.
Medicare reimburses the nation's teaching hospitals for the costs of providing graduate training and continuing medical education to physicians. Teaching hospitals rely heavily on these reimbursements to underwrite the costs of expensive medical training. Between 1966 and 1985, the government reimbursed teaching hospitals for graduate training programs on a "reasonable cost" basis. But in 1985 Congress instituted new accounting requirements that based reimbursements on training costs incurred for the fiscal year October 1, 1983, through September 30, 1984. In 1989, the Department of Health and Human Services decided to re-audit the reimbursement costs for the baseline fiscal year "to determine if any were 'unreasonably high.'" A re-audit of St. Paul-Ramsey Medical Center determined that the hospital "should have had allowable GME costs of $5.49 million, not the $9.8 million originally allowed."
Not Unfairly Retroactive
St. Paul-Ramsey Medical Center "challenged the government's authority to re-audit" a final payment determination "when no suggestion of fraud exists." The government asserted its intention was not to recoup payments from 1984, but to "prevent future overpayments" for ensuing years "in which reimbursements are not final." The Supreme Court's 6-3 ruling yesterday found that the HHS re-audit was "authorized by the Medicare Act" and determined it is "not unfairly retroactive." Justice Ruth Bader Ginsburg wrote in the decision that the re-audit "brings the base-year calculation in line with Congress' pervasive instruction for reasonable cost reimbursement." Justices Antonio Scalia, Sandra Day O'Connor and Clarence Thomas dissented from the majority ruling (2/25).