The U.S. Supreme Court solidified the federal government's authority to limit Medicare reimbursement appeals with a unanimous ruling to deny the claims of a group of hospitals seeking compensation for miscalculated payments going back to the late 1980s.
The dispute stems from the Centers for Medicare & Medicaid Services' practice of compensating hospitals that care for a large share of low-income patients by upwardly adjusting their Medicare reimbursement rates. Basing the rate in part on the percentage of hospital patients eligible for supplemental security income, CMS submits the number to a contractor, the hospital's fiscal intermediary, which calculates the payments, with hospitals given six months to appeal.
Between 1993 and 1996, the Baystate Medical Center in Springfield, Mass., appealed its so-called SSI-fraction calculations, and the Provider Reimbursement Review Board found that CMS' methodology indeed underestimated the rate of care for SSI-eligible patients.
The reimbursement review board, created by Congress in 1972, eventually made its decision public in 2006, triggering a small wave of hospitals filing appeals for reimbursements going back to 1987. Citing the legal principle of equitable tolling, the hospitals argued that CMS' failure in the calculation errors was grounds for nullifying the 180 day statute of limitations for appeals.
The review board said the question was beyond its authority, and so Auburn Regional Medical Center, in western Washington state, and 17 other hospitals sued Health and Human Services. The district court of Washington D.C. dismissed the hospitals' claims, while the D.C. appeals court sided with them, ruling that the doctrine of equitable tolling applied.
The Supreme Court heard oral arguments in the case last December, and on January 22 released a unanimous opinion ruling that the statute governing the appeals does not imply any exceptions for equitable tolling, and that the 180 day appeal limit (with a three year extension in extraordinary circumstances, at HHS' discretion) is strictly what Congress intended.
The American Hospital Association filed an amicus brief in the case, criticizing the Medicare payment system more broadly, writing that hospitals collectively lost some $150 billion in undercompensated Medicare care between 2000 and 2010. On the issue of appeals, the AHA argued that "Congress intended there to be, at the end of Medicare's administrative labyrinth, an opportunity for judicial review," as "a meaningful check on CMS's otherwise complete control of the Medicare system."
Addressing the fairness issue somewhat in the unanimous opinion, Justice Ruth Bader Ginsburg wrote that "similar alleged inequities" are "justified by the 'administrative realities' of the provider reimbursement appeal system," citing a case from 1999 involving a nursing company's failed bid to have a fiscal intermediary reopen a reimbursement decision.
Ginsburg also suggested that hospitals could have spotted the calculation errors on their own, rather than relying solely on the reimbursement contractor's notice of program reimbursements (NPRs). "There are only a few dozen fiscal intermediaries and they are charged with issuing tens of thousands of NPRs, while each provider can concentrate on a single NPR, its own."