- A 2nd U.S. Circuit Court of Appeals decision last week invalidates a Medicare ruling that prevented hospitals from being classified as "rural" and "urban" at the same time.
- The lawyer for Lawrence & Memorial Hospital, the plaintiff, said dual classification could help hospitals could save millions every year, Reuters reported.
- Although the invalidation of the ruling only applies for the states within the 2nd circuit - New York, Vermont and Connecticut - some are hoping that the HHS will change the regulation for hospitals across the nation, Modern Healthcare reported.
The plaintiff argued HHS' "reclassification rule" was forcing it to overpay for drugs. Appeals court Judge Jed Rakoff said not only did the regulation, issued in 2000, conflict with the meaning of the federal Medicare statute but HHS also lacked the authority to implement it.
"It's not good to have the Medicare program inconsistent across the country,” Joseph Glazer, the attorney for the plaintiff, said. "We're talking about millions of dollars a year,” he said.
Medicare allows some hospitals to be classified as "rural" for lower drug pricing with access to the 340B drug discount program, and "urban" so that they can get higher reimbursements for wages paid. According to Rakoff, however, the HHS rule prevents urban hospitals classified as "rural" from receiving an additional reclassification of "urban" through the Medicare Geographic Classification Review Board without first canceling their rural status.
"The Justice Department and HHS are reviewing the decision to determine how best to proceed," a spokeswoman for the U.S. Attorney's Office in Connecticut, which represented the government in the case, said.