Dive Brief:
- A federal appeals court has sided with 186 hospitals seeking a better explanation of how Medicare calculated hospital payments for outliers—patients whose cost of treatment exceeded the standard Medicare payment by a designated amount—for 2004.
- However, the court did not support the hospitals' challenge over payments in 2005 and 2006.
- In the case, District Hospital Partners v. Burwell, the hospitals argue that Medicare underpaid them for outliers by more than $3 billion.
Dive Insight:
The case presented by the hospitals alleges that HHS was unreasonable in how it set thresholds for outlier payments from 2004-2006, calling the thresholds "arbitrary and capricious." Meanwhile, the government has argued that its methods were reasonable.
The decision by the D.C. Circuit Court of Appeals on Tuesday followed that of a lower court's ruling regarding 2005 and 2006, but disagreed regarding 2004. It said the HHS needs to better explain its methods for that year.
If HHS decides to recalculate for 2004 and lower the thresholds, hospitals could be eligible to receive additional payments.