Court rejects HHS argument for payment cut

Finding in favor of hospitals, U.S. District Court Judge Randolph Moss Sept. 21 rejected the Department of Health and Human Services’ (HHS) arguments for imposing a 0.2% Medicare payment cut on hospitals as part of its “two-midnight” policy. The judge did not order HHS to return the withheld funds to hospitals, but gave the department the opportunity to further explain its rationale within a specified timetable. If HHS cannot do so, the payment cut may be set aside. The judge directed all parties involved in the consolidated challenge – which includes a case brought by the AHA, four hospital associations and four hospital organizations – to propose by Oct. 1, a timetable for reissuing the rule. “Although the deficiencies in the rule are serious, the court is not convinced that they are so grave that [HHS] should be precluded from taking corrective steps with respect to the 2014 inpatient prospective payment system,” Moss wrote. The case is Shands Jacksonville Medical Center, et. al., v. Sylvia Burwell.