HHS owes hospitals millions in Medicare DHS Adjusted Benefits: Lawsuit

The federal government owes tens of millions of dollars to dozens of insurance hospitals for alleged delays in fixing a disproportionate share of Medicare hospital payments, the hospitals allege in a new lawsuit.

Nearly four dozen hospitals in California, Arizona, Nevada, Hawaii and Minnesota filed a lawsuit Tuesday against Department of Health and Human Services Secretary Xavier Becerra in federal court in Washington, DC. While regulators acknowledged that DSH’s payment calculations were incorrect in 2010, HHS has delayed corrected payments, hospitals say.

“The agency’s unreasonable delay cost Plaintiff’s hospitals tens of millions of dollars in funds that should have been paid to them years ago for the higher costs they incurred to treat underprivileged patients more than a decade ago,” the complaint alleges. .

HHS did not immediately respond to a request for comment.

DSH payments are intended to offset costs incurred by hospitals that primarily serve low-income patients. Following a 2008 federal court ruling in Washington, D.C. that upheld the Massachusetts hospital’s challenge to DSH payment methodology, HHS needed to file DSH payment appeals with agency contractors tasked with restoring hospitals to service.

But the agency’s contractors did not make those recalculations and did not pay any of the hospitals, the complaint alleges.

The hospital lawsuit alleges that HHS unfairly used the related lawsuit as an excuse for delaying payment adjustments. In 2010, Minneapolis-based Allina Health Services filed a lawsuit against HHS regarding the use of Medicare Advantage patients in calculating DSH payments and related rulemaking efforts. In 2019, the Supreme Court ruled in favor of hospitalsordering HHS to repeal the law and conduct a more thorough rulemaking process with notice and comment.

According to the complaint, the Centers for Medicare and Medicaid Services stated that they did not complete the relevant public notice process and thus were forced to defer the changed payments.

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