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Over the years, the Medicare disproportionate share hospital adjustment (DSH), has produced significant litigation between providers and the Secretary of Health and Human Services (HHS). Amidst mixed results, providers are continuing to litigate old cases and file new ones pursuing their efforts to enhance DSH payments for hospitals by arguing that various types of eligible days should be included in the Medicaid fraction of the DSH calculation. Currently, litigation is focused on Medicare+Choice or Part C days.
In recent developments, providers have filed for further relief in Allina Health Services v. Sebelius, 904 F. Supp.2nd 75 (D.D.C. 2012), disputing the failure of HHS to place Medicare+Choice in the Medicaid fraction. In addition, providers have filed a new action, Allina II alleging that any interpretation that continues to place Medicare+Choice in the Medicare fraction is invalid due to the invalidity of the 2004 Rule that has been vacated. In addition, providers challenge the 2012 Part A/SSI percentages promulgated by HHS are inconsistent with the D.C Circuit’s decision in Allina I, 746 F.3d. 1102 (2014), and violate the administrative law process because they are based on a vacated rule that has not been preplaced by a lawful one.
The Circuit affirmed the district court’s decision that HHS’s 2004 regulation placing Part C in the Medicare fraction was promulgated without adequate notice and opportunity for comment. These cases now focus on the Circuit’s reversal of so much of the district court’s decision directing HHS to place Medicare+Choice in the Medicaid fraction. The Circuit ruled that under long-standing administrative law principles, the court should have only identified the violation and not directed a specific remedy. The parties are continuing to litigate the appropriate placement of Part C days in light of the nullity of the 2004 rule.
The motion for further relief in Allina I has been transferred to the new action to be treated as a motion for summary judgment. HHS has moved to dismiss the new case, Allina II, and opposed any effort to seek further relief in the old one. Appropriate briefs have been filed but, to date, no decision has been rendered.
• Provide an overview into the significant litigation between providers and the Secretary of Health and Human Services
• Discuss the background of Medicare disproportionate share hospital adjustment
• Examine the controversy surrounding Allina Health Services v. Sebelius, 904 F. Supp.2nd 75 (D.D.C. 2012) and Allina I, 746 F.3d. 1102 (2014)
Who would benefit most from attending this program?
Health care providers, heath law practitioners and those interested in Medicare disproportionate share hospital adjustment and health care services.
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Arthur E. Peabody, Jr is Assistant General Counsel for Medicare for the Blue Cross Blue Shield Association. Previously, he served as a career attorney with the Department of Justice for over 30 years. As a member of the Senior Executive Service he held high level management positions in the Civil Rights Division; thereafter he was an Assistant U.S. Attorney for the Eastern District of Virginia where he specialized in health care. He is the author of a chapter in the Bloomberg BNA treatise E-Health, Privacy, and Security Law. Arthur is a graduate of Northeastern University, cum laude; he earned his Juris Doctor degree from the Cornell Law School. He is a member of the Virginia bar.
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