Becker's Hospital Review

11 CFO / FINANCE Supreme Court sides with hospitals in multibillion- dollar payment dispute By Ayla Ellison I n an opinion issued early June, the U.S. Su- preme Court ruled that HHS improperly failed to undergo formal notice-and-com- ment rulemaking before announcing a new Medicare rate calculation for disproportion- ate share payments to hospitals. At issue in the case, Azar v. Allina Health Ser- vices, is the federal government's decision to include Medicare Part C enrollees with Medi- care Part A enrollees when calculating dis- proportionate share hospital payments. In 2004, CMS issued a final rule that includ- ed a new methodology for DSH payments that counted Medicare Part C inpatient days, in ad- dition to Part A days in its calculation. is dif- fered from the proposed rule CMS issued in 2003 that excluded Part C days from the calculation. e 2004 rule was vacated aer hospitals filed legal action. e U.S. District Court held that the final rule violated the Administrative Pro- cedures Act because it was not a "logical out- growth" of the proposed rule. e U.S. Court of Appeals for D.C. affirmed the decision. CMS issued a new rule in 2013 prospectively readopting the policy of counting Part C pa- tients. In 2014, unable to rely on the prospec- tive 2013 rule or the vacated 2004 rule, CMS posted on its website the Medicare fractions for fiscal year 2012, noting that they included Part C patients. Hospitals sued over the change, arguing that the government violated the Medicare Act's requirement to provide public notice and a 60-day comment period for any rule that es- tablishes or changes a "substantive legal stan- dard governing … the payment for services." e government argued it had no statutory obligation to provide notice and comment before adopting the policy because the APA's requirements are incorporated into the Medi- care Act, and the policy of counting Part C patients in the Medicare fractions would be treated as interpretive rather than substantive under the APA. Counting Part C enrollees would reduce hospitals' payments by between $3 billion and $4 billion over a nine-year pe- riod, according to the government. e appellate court ultimately sided with the group of hospitals, led by Allina Health Services. e Supreme Court heard arguments in the case in January, and the high court sided with the hospitals in a 7-1 decision issued June 3. "In 2014, the government revealed a new policy on its website that dramatically — and retroactively — reduced payments to hos- pitals serving low-income patients," Justice Neil Gorsuch wrote in the majority's opinion. "Because affected members of the public re- ceived no advance warning and no chance to comment first, and because the government has not identified a lawful excuse for neglect- ing its statutory notice-and-comment obliga- tions, we agree with the court of appeals that the new policy cannot stand." n Patients sue HCA over emergency room 'cover charge' By Ayla Ellison T hree patients who received emergency care at hos- pitals operated by HCA Healthcare are suing the Nashville, Tenn.-based company for allegedly billing them and other emergency room patients a "cover charge." In their lawsuit filed in May, the patients allege they were hit with an emergency room fee after receiving care at HCA hospitals in Florida. They claim the surcharge is not disclosed to patients before care is provided. "Knowledge of this undisclosed surcharge, which is essen- tially a 'cover charge' or 'surcharge' for being seen in one of defendants' emergency rooms, would be a substantial factor in an emergency care patient's decision to remain at the hospital and proceed with treatment or seek less costly treatment elsewhere," states the complaint. According to the complaint, one of the plaintiffs received emergency care at Poinciana Medical Center in Kissimmee, Fla., and was later billed for an undisclosed surcharge of $3,935. Another plaintiff was hit with a $1,642 surcharge after receiving emergency care at Palms West Hospital in Loxahatchee, Fla. A third plaintiff claims a surcharge was sprung on him after his minor dependent received emer- gency care at Fort Walton Beach (Fla.) Hospital, but the complaint doesn't state the amount of the alleged surcharge. The plaintiffs filed the proposed class-action lawsuit in U.S. District Court for the Southern District of Florida on be- half of themselves and others who were provided care at emergency rooms operated by HCA Florida or its affiliates during the last four years. The plaintiffs allege HCA violated Florida's Deceptive and Unfair Trade Practices Act by bill- ing patients for the emergency room surcharge. In an emailed statement to Becker's Hospital Review, a spokesperson for Poinciana Medical Center said the hos- pital will defend itself against the allegations. "Similar claims were filed by these plaintiffs and previous- ly dismissed by the Federal District Court in Orlando," the spokesperson said. "We believe we have appropriately disclosed our charges and complied with the law. We will continue to defend ourselves against these allegations." n

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