Dive Brief:
- On Friday, the DC Circuit ruled in favor of the US Department of Health and Human Services in a lawsuit brought by 60 rural hospitals.
- The suit challenged calculations performed by HHS that were designed to keep Medicare payments neutral.
- In a unanimous decision, the circuit upheld a district court decision that said that the calculations used by HHS to pay rural hospitals were within its rights.
Dive Insight:
One of the arguments the hospitals made was that HHS improperly included budget neutrality adjustments from periods before their base year. Their argument was that there is a statutory provision that says HHS must calculate "applicable percentage increases... for cost reporting periods after the base cost reporting period." The Circuit said those provisions apply to an inflation adjustment and are "irrelevant with respect to the application of budget neutrality adjustments."
The hospitals also argued that budget neutrality should have been applied to group weights, rather than overall reimbursement rates, to which the DC Circuit responded, "There is little doubt here that the [department's] chosen method of achieving budget neutrality lies within [its] broad discretion."