Supreme Court Rules Against Hospitals on Medicare Reimbursement Appeals

The U.S. Supreme Court Tuesday delivered a unanimous opinion in favor of the government in a case in which a group of 18 hospitals was seeking to reopen Medicare reimbursement claims that dated from 1987 to 1994.

The case — Sebelius v. Auburn Regional Medical Center, U.S. Supreme Court, No. 11-1231 — stemmed from a separate 2006 court case that exposed calculation errors on the part of the Centers for Medicare & Medicaid Services when determining reimbursement rates for the treatment of low-income patients over that time period.

When the hospitals learned of the flawed formula, they appealed to CMS for proper payment.

But CMS argued that the time for appeals had passed, which is explicitly stated as six months or three years for good cause. The hospitals then banded together to sue the government.

The group lost the first round in district court. But a federal appeals court in 2011 sided with the hospitals, after which the U.S. appealed to the Supreme Court. Arguments were heard in December 2012 and the opinion was officially released Tuesday.

The government’s position all along had been that the time for appeal had lapsed. The hospitals said it was unfair to impose the appeals deadline under the circumstances, saying the agency knew about and failed to disclose its calculation errors.

The nine Supreme Court justices sided with the government in a unanimous opinion written by Justice Ginsburg. The Court felt that opening up CMS to appeals liabilities that old would be a huge threat to the program.

Robert Roth, an attorney for the hospitals, told Reuters there was a “big problem” with the decision. “It leaves providers without a remedy where they could not have known there was a problem with their Medicare payment until after their time for appeal had passed,” he said.

Roth and others, like the American Hospital Association in an amicus brief, noted that the only solution to the issue would be legislative.