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Empire Health Foundation v. Burwell

United States District Court, District of Columbia

September 19, 2016

SYLVIA M. BURWELL, in her capacity as Secretary of Health and Human Services, Defendant.


          JAMES E. BOASBERG United States District Judge

         Are we there? Is Godot coming? Is this agency decision final? Needing to ask typically signals the answer: Not yet. This case involves Medicare reimbursements for hospital services provided over ten years ago. In that decade, Plaintiffs Empire Health Foundation and hospitals it owns have sought reimbursement through successive stages of Medicare's administrative-review process. Just when they thought that the process was culminating, the Provider Reimbursement Review Board then reviewing their claim remanded it, directing them to start over. Empire Health had enough and sued to challenge that remand order.

         Defendant Sylvia Burwell, the Secretary of Health and Human Services, now moves to dismiss the Complaint for want of subject-matter jurisdiction. She argues that it is not yet time to hear this case, as the remand does not constitute a final agency decision for the Court to review. Because the Court agrees, it will grant the Motion and let the administrative gears keep grinding.

         I. Background

         Plaintiff Empire Health is a charitable organization based in Spokane, Washington, which owns Valley Hospital and Deaconess Medical Center (also Plaintiffs here). See Second Am. Compl. (SAC), ¶ 5. Some time ago, those hospitals provided services and are now in the midst of a process to obtain Medicare reimbursement. (For ease of reference, the Court will refer to all Plaintiffs collectively as “Empire Health.”) Before exploring Plaintiffs' quest, the Court will lay out how Medicare reimbursement works generally.

         A. Medicare Reimbursement Process

         Title XVIII of the Social Security Act, commonly known as the Medicare Act, establishes the federal Medicare program. See 42 U.S.C. § 1395 et seq. Medicare funds medical care for elderly or disabled persons by reimbursing hospitals and other entities for services that they provide those patients. See Ne. Hosp. Corp. v. Sebelius, 657 F.3d 1, 2 (D.C. Cir. 2011). The Center for Medicare and Medicaid Services (CMS), a component of the Department of Health and Human Services, administers the reimbursement process. See Ark. Dep't of Health & Human Servs. v. Ahlborn, 547 U.S. 268, 275 (2006).

         Reimbursement, apparently, is far from swift. At the start of the Medicare process, CMS enlists private companies - known as “fiscal intermediaries” - to tabulate who is owed what. To that end, at year's close, providers participating in Medicare submit cost reports to their fiscal intermediaries. See Sebelius v. Auburn Reg'l Med. Ctr., 133 S.Ct. 817, 822 (2013); see also 42 C.F.R. §§ 413.20, 413.24. These intermediaries then audit each cost report and inform the provider of the total amount of Medicare reimbursement to which it is entitled, in a document known as a Notice of Program Reimbursement (NPR). See Emanuel Med. Ctr., Inc. v. Sebelius, 37 F.Supp.3d 348, 350 (D.D.C. 2014) (citing 42 C.F.R. § 405.1803).

         A hospital or other provider believing that it is not being reimbursed its fair share in the NPR may bring a challenge with the Provider Reimbursement Review Board (PRRB) and, if still unsatisfied, obtain further review by the Secretary (which occurs at her discretion). See 42 U.S.C. § 1395oo(a), (f). “The Board can affirm, modify, or reverse the fiscal intermediary's award; the Secretary in turn may affirm, modify, or reverse the PRRB's decision.” Emanuel, 37 F.Supp.3d at 350 (citing 42 U.S.C. § 1395oo(d)-(f)). If, at the end of these appeals, the provider still feels shortchanged, it has “the right to obtain judicial review of any final decision.” 42 U.S.C. § 1395oo(f)(1); 42 C.F.R. § 405.1877.

         B. Medicare Reimbursement Amount

         Beyond this intricate procedural setup, brewing the actual reimbursement amount itself requires a master class in molecular gastronomy. Although this Opinion will provide only an overview of how the NPR is concocted, past Opinions of this Court detail the reimbursement recipe. E.g., Cooper Hosp./Univ. Med. Ctr. v. Burwell, No. 14-1991, 2016 WL 1436646, at *2-3 (D.D.C. Apr. 11, 2016).

         To begin, even though Medicare purportedly reimburses hospitals for providing services, the actual reimbursement sum is roughly pegged to the number of patients discharged. See 42 U.S.C. § 1395ww(d). Certain adjustments are then tossed into the cauldron. One such adjustment is a bump-up for hospitals that “serve[] a significantly disproportionate number of low-income patients” - the so-called “disproportionate share hospital” or “DSH” adjustment. See 42 U.S.C. § 1395ww(d)(5)(F)(i)(I).

         This DSH adjustment relies on another formula, which churns out a percentage representing the number of low-income patients that the hospital serves. See Id. § 1395ww(d)(5)(F); see also Allina Health Servs. v. Sebelius, 746 F.3d 1102, 1105 (D.C. Cir. 2014). One ingredient in this percentage is a fraction that takes into consideration the number of hospital-inpatient days spent by patients who were covered by Medicare and received Supplemental Security Income. See 42 U.S.C. § 1395ww(d)(5)(F)(vi)(I). CMS determines this Medicare-SSI fraction by matching Medicare-patient billing records with individual SSI records maintained by the Social Security Administration; the Agency then provides that fraction to the fiscal intermediary calculating the DSH adjustment and reimbursement entitlement. See 75 Fed Reg. 50, 276 (Aug. 16, 2010).

         C. CMS Ruling 1498-R

         So what could possibly go wrong? A few years back, this convoluted scheme came under attack, resulting in a decision by a fellow judge in this district that required HHS to tweak its Medicare-SSI fraction. See Baystate Med. Ctr. v. Leavitt, 587 F.Supp.2d 37 (D.D.C. 2008), as amended, 587 F.Supp.2d 44 (D.D.C. 2008). In response, in 2010, CMS published a ruling that attempted to fix some of the issues raised, by making three alterations to how the fraction was calculated. See CMS Ruling 1498-R, 2010 WL 3492477 (Apr. 28, 2010). That Ruling in part rejiggered the process for matching Medicare and SSI records. See id. at *2.

         Central for our purposes, CMS Ruling 1498-R also provided that any pending reimbursement appeals related to the data-matching issue would automatically be sent back to the fiscal intermediaries for recalculation. Specifically, the Ruling stated that the PRRB “lack[s] jurisdiction over each properly pending claim on the SSI fraction data matching process issue.” Id. at *3. Only after further number-crunching by the fiscal intermediary would the revised NPR be “subject to administrative and judicial review in accordance with the applicable jurisdictional and procedural requirements of section 1878 of the Act, the Medicare regulations, and other agency rules and guidelines.” Id. at *14.

         D. Empire Health's Reimbursement Challenges

         This brings the Court to the present case. In 2009, Empire Health lodged a challenge with the PRRB to its fiscal intermediary's reimbursement sum for several fiscal years beginning in 2005. See ECF No. 21, Exh. 2 (PRRB Remand Order). Because Empire Health objected to, inter alia, the Medicare-SSI data-matching process that was used, in October 2015 the PRRB remanded the dispute to the fiscal intermediary for recalculation pursuant to CMS Ruling 1498-R. See id. at 2 (“[T]he Ruling requires that Board remand each qualifying appeal of this issue to the appropriate Medicare contractor to recalculate each provider's DSH payment.”).

         Displeased with this instruction to start over again, Plaintiffs sent a letter to the PRRB informing it that the Medicare-SSI-fraction challenge “WAS NOT our only claim - nor was it our primary claim.” ECF No. 21, Exh. 3 (Nov. 4, 2015, Letter to PRRB). Empire Health, in effect, objected to the Board's remanding its whole reimbursement appeal when only part of that appeal fell within the ambit of CMS Ruling 1498-R.

         Before the PRRB could respond, Plaintiffs in December 2015 filed this suit to challenge issues relating to reimbursement. See ECF No. 1 (Complaint), 8 (First Amended Complaint). In February 2016, the PRRB denied Empire Health's request to undo the remand. See ECF No. 21, Exh. 4 (Feb. 29, 2016, Letter from PRRB). Following Defendant's first motion to dismiss for lack of subject-matter jurisdiction, Plaintiffs again narrowed their Complaint so that it sought judicial review only of the remand order. Specifically, Empire Health now brings five counts: three challenging CMS Ruling ...

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