Loper Ruling May Boost Hospitals’ Chances In Latest DSH Case

Inside Health Policy

September 26, 2024 5:27 pm

 

The Supreme Court’s overturn of Chevron deference in June is expected to boost hospitals’ latest effort to get the federal D.C. district court to overturn CMS’ cuts to disproportionate share hospital payments, after the same court rejected similar arguments in a previous case when the Chevron doctrine was still in place.

Daniel Hettich, a health care partner at King & Spalding specializing in Medicare reimbursement litigation, told Inside Health Policy that “the answer is pretty clearly yes” when it comes to the hospitals having a greater chance of succeeding in this litigation.

However, how much of an increased chance the hospitals have is still unclear, according to Hettich, who says he’s unsure if the SCOTUS decision is a complete “gamechanger,” or instead simply moves the needle a bit in the hospitals’ direction.

Shannon Medical Center, along with 79 other hospitals across the country, filed a complaint against HHS in the D.C. district court earlier this month. The hospitals claim retroactive rulemaking under the Part C Days Final Rule, which allowed the government to reduce DSH payments retroactively through a change to the Medicare fraction, is unlawful.

“The Part C Days Final Rule is arbitrary and capricious, an abuse of discretion, and otherwise contrary to the Medicare Act and Supreme Court law,” the complaint says.

The plaintiffs also argue against multiple rulings by the Provider Reimbursement Review Board (PRRB), and they are asking the court to reverse PRRB’s dismissal of their appeals. PRRB argues the plaintiffs filed their appeals with the Board prematurely, resulting in dismissal. The court must decide whether the plaintiffs were in the right to appeal to PRRB before it decides whether CMS was acting within its authority.

According to Hettich, current Medicare statute allows for retroactive rulemaking only under certain limited circumstances. When the Chevron doctrine of courts deferring to agencies’ interpretations of vague statute was still in place, CMS would just have to prove that its actions fit under its own interpretation of the statute. Now it’s up to the court to decide whether CMS’ actions were reasonable.

Hettich believes SCOTUS could potentially be interested in this case, as it explores questions about the “hygiene” of the administrative state. However, if HHS loses this suit and appeals, the case might not get SCOTUS review as this doesn’t typically happen unless there is a circuit split, Hettich told IHP.

Another health care attorney told IHP that this case, Shannon Medical Center v. Becerra, does not exist in a vacuum, as other recent cases have dealt with the same hotbed issues, such as Lake Region Healthcare Corporation v. Becerra and the latest Allina Health System v. Becerra litigation.