Hospital Groups Sue HHS Over Graduate Medical Education Pay


July 27, 2021 9:03 am

A coalition of hospitals sued HHS Secretary Xavier Becerra in federal court to force him to recalculate their Medicare reimbursements for doctor training programs.

The plaintiffs—including New York’s Hospital for Special Surgery and Yale New Haven Hospital—say in a complaint filed in the U.S. District Court for the District of Columbia that they have been underpaid for the past several years due to the secretary’s application of an arbitrary and capricious regulation.

The regulation effectively changed the weights assigned to full-time equivalent residents and fellows by the Medicare Act, the hospitals say. As a result, they have been prevented from claiming direct graduate medical education reimbursement in the amount authorized by the Medicare Act, they say.

Under the Medicare Act, hospitals are reimbursed for costs associated with training residents and fellows, such as stipends, salaries, and administrative costs. The amount is calculated in part by multiplying a per resident amount by the weighted average of a hospital’s full-time equivalent residents.

By law, residents in their first through fifth years of residency receive a weighted average of 1.0, while residents in their sixth year and beyond receive a weighted average of .5. A hospital’s reimbursements are capped at the number of residents and fellows it had in 1996.

The 1997 regulation calls for calculating the weighted average using a weighted FTE cap instead of an unweighted FTE cap, the hospitals say. This results in a reduction of more than .5 for residents beyond their initial residency period, which in turn prevents the hospital from claiming direct graduate medical education reimbursements up to the full amount authorized, they say in Monday’s complaint. 

Causes of Action: Medicare Act, Administrative Procedure Act.

Relief: Declare regulation invalid, order secretary to recalculate hospitals’ payments, award interest, costs and attorneys’ fees.

Response: HHS doesn’t comment on pending litigation as a matter of policy.

Attorneys: Powers Pyles Sutter & Verville PC represents the hospitals.