WASHINGTON -- Hundreds of hospitals lost a Supreme Court fight
to force the federal government to make up more than $340 million in
America's highest court Tuesday rejected the hospitals' appeal
seeking review of a lower-court ruling that threw out lawsuits
demanding bigger Medicare payments.
An appeals court ruled that federal law doesn't let the hospitals
file lawsuit claims about Medicare payment disputes unless they
go through an administrative Medicare appeals process. The hospitals
said they couldn't pursue an administrative channel because the
Department of Health and Human Services didn't release important
spending figures until years after the appeals deadline had passed.
In their unsuccessful high court appeal, the hospitals said the
lower-court ruling violated their constitutional rights by
effectively taking away any possible way to challenge Medicare
payment decisions worth hundreds of millions of dollars.
The dispute at the high court involved a collection of separate
claims filed by 305 different hospitals that treat patients under
federal Medicare health insurance program for the elderly. The group
includes dozens of hospitals owned by Columbia/HCA Healthcare Co.,
Tenet Healthcare Corp., Universal Health Services Inc., and OrNda
Health Corp., along with a large number of independent facilities.
The hospitals claimed that about 5,500 hospitals were short-
changed on Medicare reimbursements for at least two years during the
The fight centers on a Medicare policy known as "outlier payments"
-- which are designed to provide extra money to make up for the
fact that some patients require care that's more extensive and more
expensive than the average cost that Medicare will pay for a
Federal law requires HHS to set each fiscal year's nationwide
outlier payments at no less than 5 percent, and no more than 6
percent, of total Medicare spending on covered hospital procedures.
Before the start of each fiscal year, HHS designs its budget using
estimates of what total spending will be. The agency sets each
year's outlier payments at between 5 percent and 6 percent of the
year's estimated spending. HHS, however, does not adjust that
outlier figure if actual payments don't wind up matching the
The hospital lawsuits grew from charges that, in fiscal 1985 and
1986, nationwide year-end outlier spending actually came in at less
than the legal minimum of 5 percent. Total federal underpayments
during those two years were at least $341 million, they said.
The hospitals said they only learned about the nationwide
underpayments in 1992, when HHS for the first time released details
about real outlier spending in some earlier years. …