Medicare Cuts Threaten|29 Rural Hospitals

COVINGTON, Ky. (CN) – Federal cuts in Medicare and Medicaid payments to small hospitals throughout Kentucky will deprive poor people in rural areas of health care, the Kentucky Hospital Association claims in Federal Court. The group represents 29 rural hospitals.




     The KHA says the reimbursement reductions, issued in a final rule on Aug. 16, will cut Medicare and Medicaid payments to facilities with 25 or fewer beds in rural areas called critical access hospitals (CAHs).
     The policy changes “will have a seriously negative economic impact” on the small hospitals, and “deprive the low-income, mostly rural populations they serve of access to the healthcare services currently provided by these KHA members,” according to the complaint.
     “If CAHs in Kentucky do not receive reimbursement based upon the full cost of their provider tax payments from the Medicare and Medicaid programs, as required by the Medicare statutory provisions, regulations and payment principles … their Medicare and Medicaid eligible patients will lose access to much needed healthcare services,” the complaint states.
     The KHA says the cuts violate Congress’ intent for the Medicare and Medicaid programs: including guaranteeing that people in rural areas have access to inpatient hospital care.
     The KHA sued Secretary of Health and Human Services Kathleen Sebelius, Administrator of the Center for Medicare and Medicaid Services Dr. Donald Berwick, and National Government Services Inc.
     It wants the cuts enjoined.
     The Kentucky Hospital Association is represented by Richard Meyer and Matthew Klein with Dressman Benzinger LaVelle of Crestview Hills, Ky.
     Here are the technical changes to which the association objects:
     “Plaintiff contends that the longstanding policy of the Department of Health and Human Services (hereinafter ‘HHS’), whereby CAHs in Kentucky have been permitted to include the full amount of Kentucky provider taxes paid by the CAHs as reasonable and necessary costs on their Medicare cost reports, without any offsets, and whereby they have for years received Medicare payments for these costs without offset, conforms in all material respects to the governing Medicare statutes, regulations and payment principles.
     “On August 16, 2010, the Secretary effectuated a change in this policy by issuing a Final Rule, attached hereto as Exhibit A, by which HHS is seeking to offset the cost of state provider taxes paid by CAHs by the amount of payments received by CAHs from Medicaid, including payments from a Medicaid indigent care program (for uninsured persons with incomes below the federal poverty guideline) known as the Disproportionate Share Hospital program (hereinafter ‘DSH’).
     “This recent departure by HHS from its prior policy is contrary to the relevant provisions of the Medicare statutes, Title XIX of the Social Security Act, 42 U.S.C. §§ 1395 et seq., and is contrary to the clear intent of Congress to promote CAHs and to allow states to use their provider tax revenues for the purposes now being jeopardized by HHS’ change in policy, i.e., enhancing Medicaid and Medicaid DSH distributions to small hospitals in isolated rural areas.
     “In implementing this new policy, HHS has recently begun to demand that CAHs in Kentucky repay a portion of Medicare payments paid to CAHs, now deemed to be overpayments, that were calculated in conformity with its traditional policy of recognizing the full amount of state provider taxes paid by CAHs to be reasonable and necessary costs.
     “This change in policy, which HHS erroneously describes as a ‘clarification’ in the Final Rule at issue herein, will have a seriously negative economic impact on each of the CAH members of the KHA, and will deprive the low-income, mostly rural populations they serve of access to the healthcare services currently provided by these KHA members.”

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