Becker's Hospital Review

12 CFO / FINANCE 115 hospitals sue HHS over Medicare payment calculation By Alia Paavola A group of 115 hospitals sued HHS to prevent the department from retroactively changing how it calculates Medicare Part A dispropor- tionate share hospital payments for patients who were enrolled in Medicare Advantage plans under Part C of the Medicare Act. e federal lawsuit was filed Jan. 4 by a coalition of Nashville, Tenn.-based HCA Healthcare and Irving, Texas-based Christus Health hospitals. e hospitals are in states including California, Colorado, Utah and Florida. e hospitals' lawsuit concerns a 2004 Medicare policy change that included a new methodology for allocat- ing Medicare Part C days in the disproportionate share hospital calculation formula. e U.S. Court of Appeals has ruled against HHS in several different actions brought by hospitals chal- lenging the 2004 policy. e U.S. Supreme Court also upheld the appeals court decision, according to the complaint. Despite those court rulings, HHS proposed in August 2020 to readopt the calculation policy and apply it ret- roactively. In the lawsuit, the hospitals argue that HHS is disre- garding the court decisions. "e agency's continued attempts to apply the 2004 policy should be rejected because they are procedural- ly invalid, as the Court of Appeals has now twice ruled, fail any test of reasoned decision-making, and are in- consistent with congressional intent in adopting the Medicare DSH statute," the complaint stated. e hospitals argue that HHS' attempts to apply the pol- icy should be rejected and are asking the court to de- clare any payment determinations reflecting the policy change invalid. "e agency has never acknowledged the enormous adverse financial impact on hospitals of the 2004 policy change, nor has the agency ever explained why the policy change is appropriate despite that adverse impact on the nation's safety-net hospitals," the complaint stated. Several other hospitals from Danville, Pa.-based Geising- er and Durham, N.C.-based Duke Health also sued HHS over the policy change. e hospitals were Duke Raleigh (N.C.) Hospital, Durham Regional Hospital, Geisinger Medical Center in Danville, Geisinger Wyoming Valley Medical Center in Wilkes-Barre, Pa., and e Wash- ington (Pa.) Hospital. eir federal lawsuit was filed Dec. 21. n Colorado health system pauses bonuses for its executive team By Kelly Gooch D enver Health in December suspended the system under which executives received 2019 performance bonuses, ac- cording to CBS4. A message to employees in December said the board overseeing the health system "has decided to suspend the at-risk management incentive program," the news station reported. It added, "The board will take up consideration as to an appropriate structure for our senior management compensation program at a later point in time. We remain fully committed to competitive and equitable compensation of all Denver Health employees." In the message to employees, Denver Health also said eligible work- ers will receive a 2 percent merit increase this year, which now is not tied to their annual performance reviews, according to CBS4. Denver Health's executive bonus program was scrutinized in 2020 after a CBS4 investigation in April revealed management incentive bonuses ranging from $50,000 to $230,000 were paid to executives in 2020. Overall, about 140 hospital executives received more than $3 million in bonuses for their 2019 performance, the news station reported. After news of the bonuses surfaced, workers criticized Denver Health's decision to make the payments, which were paid one week after front-line workers were asked to take unpaid leave or cut their hours amid the COVID-19 pandemic. Denver Health CEO Robin Wittenstein apologized to the health sys- tem's 7,000 employees for the timing of incentive bonuses, and the board overseeing the health system said last May that it planned to review the bonus system. n Hospitals mark up drug prices by 250% on average, analysis finds By Maia Anderson H ospitals mark up drug prices by 250 percent on average, according to an analysis from Ronny Gal, a senior research analyst at Bernstein. Mr. Gal analyzed prices hospitals charge for drugs, with data dis- closed as of Jan. 1. He found that hospitals mark up some drugs, such as Epogen, an anemia treatment, by as much as 533 percent compared to the average sales price. This incentivizes hospitals to use expensive branded products instead of biosimilars, he said. Remicade, a rheumatoid arthritis drug, was marked up 464 percent on average, and Neulasta, a drug given to chemotherapy patients, was marked up by 364 percent on average. Hospitals also charge a range of prices for the same drug, Mr. Gal said. The average variation is about 36 percent. For example, some hospitals charge as little as $5,000 per treatment of Neulasta, while others charge nearly $20,000. n

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