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Upmc Mercy v. Kathleen Sebelius

June 10, 2011

UPMC MERCY, PLAINTIFF,
v.
KATHLEEN SEBELIUS, SECRETARY, UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES, DEFENDANT.



The opinion of the court was delivered by: Henry H. Kennedy, Jr. United States District Judge

MEMORANDUM OPINION

Plaintiff UPMC Mercy ("UPMC"), a hospital located in Pittsburgh, Pennsylvania, brings this action against Kathleen Sebelius ("the Secretary") in her official capacity as Secretary of the Department of Health and Human Services ("DHHS"), seeking review of a DHHS decision regarding the accrual of interest on underpayments by the government to Medicare providers. Specifically, UPMC challenges a determination that interest does not begin to accrue on amounts owed to providers by the government until certain steps are taken by the fiscal intermediaries who are responsible for dispensing payments to providers. Before the Court are the parties' cross-motions for summary judgment [## 22, 25]. Upon consideration of the motions, the oppositions thereto, and the record of this case, the Court concludes that UPMC's motion must be granted and the Secretary's motion must be denied.

I. BACKGROUND

A. The Hurry-Up-and-Pay Statute and the Implementing Regulations

Under the Medicare Act, 42 U.S.C. § 1395 et seq., hospitals that provide certain inpatient services to Medicare patients are reimbursed for their costs by the government via fiscal intermediaries, usually insurance companies that serve as the Secretary's agents for this purpose. See In re Medicare Reimbursement Litig., 414 F.3d 7, 8 (D.C. Cir. 2005). Hospitals seeking reimbursement file "cost reports" with the intermediaries, which then audit those reports and issue "notices of program reimbursement" ("NPRs") that state the amount owed to the hospitals by the government. If a hospital disagrees with the contents of an NPR, it may appeal to the Provider Reimbursement Review Board ("PRRB" or "the Board"). PRRB determinations are in turn subject to review by the Administrator of the Centers for Medicare and Medicaid ("CMS"). Hospitals may seek judicial review of decisions by either the Administrator or the PRRB under 42 U.S.C. § 1395oo(f).

In 1983, Congress amended the Medicare Act to incentivize prompt correction of underpayments and overpayments under this scheme. Congress added a provision, 42 U.S.C. § 1395g(d), referred to as the Hurry-Up-and-Pay Statute, that provides for the accrual of interest - at a high rate - on "the balance of [any] excess or deficit not paid or offset" within 30 days of a "final determination" of an underpayment or overpayment. Significantly, the statute does not define "final determination."

In order to implement the Hurry-Up-and-Pay Statute, CMS issued a regulation, which took effect concurrently with the statute, defining "final determination." During the events at issue in this case, the regulation provided that:

[A]ny of the following constitutes a final determination:

(i) A Notice of Amount of Program Reimbursement (NPR) is issued . . . and either:

(A) A written demand for payment is made; or

(B) A written determination of an underpayment is made by the intermediary after a cost report is filed.

(ii) In cases in which an NPR is not used as a notice of determination (that is, primarily under part B), one of the following determinations is issued:

(A) A written determination that an overpayment exists and a written ...


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