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Supreme Court reverses Medicare DSH ruling

January 25, 2013
 In a unanimous Jan. 22 decision, the U.S. Supreme Court reversed a federal appeals court ruling that hospitals could appeal Provider Reimbursement Review Board (PRRB) decisions beyond the usual time limit. Hospitals had urged the court to uphold the appeals court’s decision that the time period should be “tolled” in extraordinary circumstances.

The high court ruled that the 180-day limit, extended for up to three years for “good cause” under regulations issued by the Department of Health and Human Services, was not subject to further extension based on equitable or “fairness” concerns. The court reasoned that the “good cause” regulations were reasonable and found that the department and fiscal intermediaries that determine Medicare reimbursement amounts need a measure of finality concerning reimbursement determinations that would be compromised by recognizing a right to equitable tolling.

The ruling reversed the decision by the U.S. Court of Appeals for the D.C. Circuit to allow a group of hospitals to make use of equitable tolling to appeal Notices of Program Reimbursements more than 10 years after the hospitals received them. The appeals court reasoned that equitable tolling was potentially available in the case because the government used faulty information to calculate their Medicare disproportionate share hospital (DSH) payments.

Delivering the Supreme Court’s opinion, Justice Ruth Bader Ginsburg said “that the presumption in favor of equitable tolling does not apply to administrative appeals of the kind here at issue.”

In a separate concurring opinion, Justice Sonia Sotomayor said the court’s opinion “does not establish that equitable tolling principles are irrelevant to internal administrative deadlines in all, or even most, contexts.” Noting that the decision addressed the 1974 version of the regulation and not the 2008 version that placed limits on good cause, Sotomayor wrote, “We would face a different case if the … regulation did not recognize an exception for good cause or defined good cause so narrowly as to exclude cases of fraudulent concealment and equitable estoppels” – the legal doctrine that prevents a party from denying facts in subsequent legal actions which have already been established in court.

Hospitals in the case challenged their Medicare disproportionate share adjustments for 1987 through 1994 after the PRRB found in 2006 that errors in CMS’ methodology resulted in a systematic under-calculation of the DSH adjustment and corresponding underpayments to providers. In a friend-of-the-court brief, the AHA said that hospitals should be able to appeal PRRB decisions beyond the usual time limit in extraordinary circumstances. For more on the AHA’s brief, click on: http://tinyurl.com/ahgtmdx.
For more on this week’s opinion, click on: http://tinyurl.com/ag5cqlh.