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AHA files suit against HHS over Medicare reimbursements

On Thursday, the American Hospital Association (AHA) and four other hospital systems filed a suit against the U.S. Department of Health and Human Services (HHS) for refusing to meet its financial obligations for hospital care services provided to certain Medicare patients.

The other hospitals involved in the suit include Missouri Baptist Sullivan Hospital in Sullivan, Mo.; Lancaster General Hospital in Lancaster, Penn.; Munson Medical Center in Traverse City, Mich.; and Trinity Health Corporation in Livonia, Mich.

[See also: RAC program causing concern]

According to the complaint, HHS refuses to reimburse hospitals for reasonable and necessary care when the government in hindsight says that particular care could have been provided in an outpatient facility department instead of having those patients admitted into the hospital as inpatients. The complaint said the dollar amount the Medicare program has been refusing to pay hospitals could be "hundreds of millions."

Increasing numbers of hospitals and doctors are routinely inspected by recovery audit contractors (RACs), and the RACs decide if the care could have been provided in an outpatient facility or department, often years after the care has been provided without any contact with the patients in question, according to the complaint. Hospitals are then asked to return the funding they received from Medicare years earlier and often get little or no reimbursement for what HHS believes should have been outpatient care, said the complaint.

When a patient needs treatment at a hospital, a doctor has to first decide whether to admit that person for inpatient care or provide care in an outpatient setting. According to the complaint, the decision is often complicated because many Medicare patients are of advanced age or have other ailments, such as diabetes or high blood pressure.

"What the federal government is doing is wrong, unfair and a clear violation of federal law," said Rich Umbdenstock, president and CEO of the AHA, in a press release. "Doctors and nurses provide the best care possible using their medical judgment and training. Allowing government auditors to second-guess these difficult medical decisions about where to best treat a patient years later based on a cold record and then refuse to pay for that care is indefensible."

[See also: AHA and other health groups urge Congressional action on Medicare policies]

According to an AHA spokesperson, the AHA is asking the court to overrule the nonpayment policy and reimburse hospitals that have been denied payment in the past.

"We hope the court agrees that this policy is inappropriate," said the spokesperson. "We support a bill in Congress that would improve the RAC and other audit programs."

[See also: RAC compliance: Bundled Payments coming, RACs in hot pursuit]

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