Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Select Specialty Hospital of Atlanta v. Thompson

November 18, 2003

SELECT SPECIALTY HOSPITAL OF ATLANTA, PLAINTIFF,
v.
TOMMY G. THOMPSON, SECRETARY, UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES, DEFENDANT,
SELECT SPECIALTY HOSPITAL OF KNOXVILLE, PLAINTIFF,
v.
TOMMY G. THOMPSON, SECRETARY, UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES, DEFENDANT,
INTENSIVA HOSPITAL OF KNOXVILLE, PLAINTIFF,
v.
TOMMY G. THOMPSON, SECRETARY, UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES, DEFENDANT,
SELECT SPECIALTY HOSPITAL OF LITTLE ROCK, PLAINTIFF,
v.
TOMMY G. THOMPSON, SECRETARY, UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES, DEFENDANT,
SELECT SPECIALTY HOSPITAL OF WILMINGTON, PLAINTIFF,
v.
TOMMY G. THOMPSON, SECRETARY, UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES, DEFENDANT,
SELECT SPECIALTY HOSPITAL OF JOHNSTOWN, PLAINTIFF,
v.
TOMMY G. THOMPSON, SECRETARY, UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES, DEFENDANT,
SELECT SPECIALTY HOSPITAL OF ANN ARBOR, PLAINTIFF,
v.
TOMMY G. THOMPSON, SECRETARY, UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES, DEFENDANT,
SELECT SPECIALTY HOSPITAL OF AUGUSTA, PLAINTIFF,
v.
TOMMY G. THOMPSON, SECRETARY, UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES, DEFENDANT,
SELECT SPECIALTY HOSPITAL OF ST. LOUIS, PLAINTIFF,
v.
TOMMY G. THOMPSON, SECRETARY, UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES, DEFENDANT,
SELECT SPECIALTY HOSPITAL-RENO, PLAINTIFF,
v.
TOMMY G. THOMPSON, SECRETARY, UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES, DEFENDANT,
SELECT SPECIALTY HOSPITAL-BATTLE CREEK, PLAINTIFF,
v.
TOMMY G. THOMPSON, SECRETARY, UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES, DEFENDANT,
SELECT SPECIALTY HOSPITAL-DENVER, PLAINTIFF,
v.
TOMMY G. THOMPSON, SECRETARY, UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES, DEFENDANT,
SELECT SPECIALTY HOSPITAL-MESA, PLAINTIFF,
v.
TOMMY G. THOMPSON, SECRETARY, UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES, DEFENDANT,
SELECT SPECIALTY HOSPITAL-TRICITIES, PLAINTIFF,
v.
TOMMY G. THOMPSON, SECRETARY, UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES, DEFENDANT,
SELECT SPECIALTY HOSPITAL-WEST COLUMBUS, PLAINTIFF,
v.
TOMMY G. THOMPSON, SECRETARY, UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES, DEFENDANT,
SELECT SPECIALTY HOSPITAL-YOUNGSTOWN, PLAINTIFF,
v.
TOMMY G. THOMPSON, SECRETARY, UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES, DEFENDANT.



MEMORANDUM OPINION

Plaintiffs, several long-term care hospitals participating in the Medicare program, bring this action against defendant, Tommy G. Thompson, Secretary, United States Department of Health and Human Services ("Secretary" or"HHS"). Plaintiffs allege that HHS has interpreted its regulations and applied them in a way that improperly limits Medicare reimbursement for inpatient hospital services furnished by plaintiffs. Presently before this court are cross-motions for summary judgment brought by plaintiffs Select Specialty Hospital of Atlanta, Select Specialty Hospital of Knoxville, Intensiva Hospital of Knoxville d/b/a Select Specialty Hospital of North Knoxville, Select Specialty Hospital of Little Rock, and Select Specialty Hospital of Wilmington (collectively,"Select")*fn1 [#18], and by defendant HHS [#19]. Upon consideration of the cross-motions for summary judgment, the oppositions thereto, and the record of this case, the court concludes that plaintiffs' motion for summary judgment must be denied and that defendant's motion for summary judgment must be granted.

I. BACKGROUND INFORMATION

Select operates specialty hospitals that provide long-term acute care services for patients with complex medical needs. Select's patients primarily consist of individuals with conditions such as ventilator dependency, respiratory failure, tracheotomy with respiratory needs, spinal cord and head injuries, dysphasia management, chest trauma, neurovascular and neuromuscular disease, hemodialysis, long-term intravenous therapy, pain control, wound care, and chemotherapy.

A. Statutory Framework

The Medicare program is a federal health insurance program for people 65 years of age and older, certain younger disabled people, and people with kidney failure. 42 U.S.C. § 1395 et seq. HHS is responsible for administering the Medicare program and has charged the Centers for Medicare and Medicaid Services ("CMS") with administering the Medicare program. The Medicare program is divided into two parts. Part A authorizes payment primarily for care in health care institutions, including hospitals; Part B authorizes payment for physicians' services and other medical services. Only Part A is at issue in this case.

Medicare Part A provides coverage of, among other things, inpatient hospital services. In 1965, at the start of the Medicare program, hospitals received reimbursement for the"reasonable cost" of providing inpatient services, subject to certain limits. 42 U.S.C. §§ 1395f(b)(1), 1395x(v) (1982). As part of the Social Security Amendments of 1983, Pub. L. No. 98-21, 97 Stat. 65, Congress established the prospective payment system ("PPS") for the operating costs of acute care hospital inpatient stays, which took effect with cost reporting periods beginning on or after October 1, 1983. 42 U.S.C. § 1395ww(d). Under PPS, hospitals receive a fixed, prospectively determined, per discharge payment amount based on the diagnosis-related group ("DRG") in which an individual patient is classified. PPS applies to"subsection (d) hospital[s]."

42 U.S.C. § 1395ww(d)(1)(A). Congress excluded certain types of hospitals from the definition of a"subsection (d) hospital" and thus from PPS:

(i) a psychiatric hospital...,

(ii) a rehabilitation hospital (as defined by the Secretary),

(iii) a hospital whose inpatients are predominantly individuals under 18 years of age,

(iv) (I) a hospital which has an average inpatient length of stay (as determined by the Secretary) of greater than 25 days....

42 U.S.C. § 1395ww(d)(1)(B)(i)-(iv) (emphasis added). Congress established these PPS exclusions because certain types of institutions care for patients whose cost of care is not adequately accounted for through the DRG system. See S. REP. NO. 98-23, at 54 (1983), reprinted in 1983 U.S.C.C.A.N. 143, 194; H.R. REP. NO. 98-25, at 141 (1983), reprinted in 1983 U.S.C.C.A.N. 219, 360.

In 1983, HHS promulgated regulations governing the exclusion of hospitals from PPS. Under these regulations, a long-term care hospital seeking an exclusion must have a provider agreement to participate as a hospital and have an average inpatient length of stay greater than 25 days. 42 C.F.R. § 412.23(e)(1), (2). The average length of stay is calculated by"dividing the number of covered and non-covered days of stay of Medicare inpatient days (less leave or pass days) by the number of total Medicare discharges for the hospital's most recent complete cost reporting period." 42 C.F.R. § 412.23(e)(3)(i)."If a change in the hospital's Medicare average length of stay is indicated, the calculation is made by the same method for the period of at least five months of the immediately preceding six-month period." 42 C.F.R. § 412.23(e)(3)(ii). HHS regulations implement the PPS system in a prospective manner. The regulations provide that"the status of each currently participating hospital (excluded or not excluded) is determined at the beginning of each cost reporting period and is effective for the entire cost reporting period. Any changes in the status of the hospital are made only at the start of a cost reporting period." 42 C.F.R. § 412.22(d).

In 1998, the relevant time period in this action, hospitals excluded from PPS received reimbursement under the"reasonable cost" payment system, subject to certain limits. 42 U.S.C. §§ 1395f(b)(1), 1395x(v)(1)(A); 42 C.F.R. § 412.22(b). These limits include both reasonable cost limits, and"rate of increase" limits established by the Tax Equity and Fiscal Responsibility Act of 1982, Pub. L. No. 97-248, 96 Stat. 324.*fn2 See 42 U.S.C. § 1395ww(a), (b); 42 C.F.R. § 413.30 et seq.
B. Factual Background
The first cost reporting period as a long-term care provider under the Medicare program for each of the hospitals that filed the motion for summary judgment ended in calendar year 1998. During that time, the average length of stay, as computed under the regulations, exceeded 25 days for each hospital. During 2000, Mutual of Omaha Insurance Company issued a Fiscal Year ("FY") 1998 notice of program reimbursement to each of these hospitals. Pursuant to that notice of program reimbursement, Select received reimbursement for FY 1998 inpatient hospital operating costs under PPS. The alleged difference between Select's FY 1998 PPS reimbursement for inpatient hospital services and its reasonable cost of such services was a combined total of $1,529,913.*fn3 Pls.' Statement of Material Facts, ¶¶ 4-10.
Select requested a hearing before the Provider Reimbursement Review Board ("PRRB"), which makes the final determinations regarding Select's Medicare reimbursements. Select filed a request for expedited judicial review pursuant to 42 U.S.C. § 1395oo(f)(1), which the PRRB granted. Based on their FY 1998 length-of-stay data, each hospital was excluded as a long-term care hospital from the prospective payment system for the 1999 fiscal year and was accordingly reimbursed based on the reasonable costs of inpatient hospital services rendered. Select brought this action as an appeal of the PRRB decision. Select alleges that HHS's Medicare reimbursement for inpatient operating costs based on PPS rather than based on the reasonable costs of providing inpatient services was an improper interpretation of HHS's regulations. Select contends that the HHS regulations, as interpreted by HHS and applied to Select, are invalid under the Administrative Procedure Act ("APA"), 5 U.S.C. § 701 et seq., and the Medicare statute, 42 U.S.C. § 1395 et seq. Select seeks reimbursement for inpatient operating costs on the basis of its reasonable costs during FY 1998.

The legal issue in this action is whether HHS properly reimbursed the long-term care hospitals under PPS, rather than excluding them from PPS and reimbursing them based on the reasonable costs of inpatient hospital services rendered during their initial cost reporting periods. This court faced the same issue in Transitional Hospitals Corp. of Louisiana, Inc. v. Shalala, 40 F. Supp. 2d 6 (D.D.C. 1999), and held that HHS's determination violated the Medicare statute. The D.C. Circuit reversed on appeal. Transitional Hospitals Corp. of Louisiana, Inc. ("THC") v. Shalala, 222 F.3d 1019 (D.C. Cir. 2000). The Court of Appeals determined that at the time the Secretary promulgated the rules, she did not understand that she had discretion to consider alternative permissible constructions of the statute. Id. at 1028-29. As a result, the Court of Appeals concluded that the matter should be remanded to the Secretary for consideration of whether she wanted to alter her policy regarding payment of new long-term care hospitals in ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.