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Healthcare
D.C. Circuit Clears the Way for
Hospitals to Challenge Base-Year
Factual Determinations
The United States Court of Appeals f or the District of Columbia Circuit
recently held in Saint Francis Medica l Center v. Azar that Medicare’s
reopening regulation, which prohibits providers from seeking to revise
payment determinations after three years, including the “predicate facts”
that support those determinations, do es not apply to cost report appeals .1
The Saint Francis decision has broad im plications. Many categories of
Medicare reimbursement rely upon f actual determinations that are made in
so-called base-years. F or example, the number of reimbursabl e full-time
equivalent (“FTE”) residents claimed by teaching hosp itals cannot exceed
the number claimed on their 1996 cost r eports—the base year. If these
years-old fact det erminations were made in error, th ey can now be
revisited on appeal and, potentiall y, increase future year reimbursem ents.
In addition, the providers in the Sain t Francis case allege that t he original
IPPS standardized rate, which was determ ined in 1983, was improperly
calculated. The D.C. Circuit’s decision no w paves the way for all providers
to file such appeals for current and f uture cost report years. King &
Spalding recommends that its clients consider filing such “standardi zed
amount” appeals, but just as impor tant, we recommend that clients begin
to inventory whether there may be cost r eporting errors in past years that
affect base-year determinations that no w can be challenged on appeal.
THE SAINT FRANCIS DECISION
It has long been the policy of the Center s for Medicare & Medicaid
Services (“CMS”) that it will not revis it final payment determinations after
three years.2 The agency has argued that th is policy not only applies to the
aggregate payment in Notices of Reim bursement (“NPRs”), but also to an y
underlying or “predicate fact” that su pported the payment determination.
So, for example, teaching hospitals by statute cannot claim graduate
medical education reimbursement for more resident FTEs than the hospit al
claimed on its 1996 cost report or t he cost report for the first year it
became a teaching hospital if later t han 1996.3 This is commonly referred
to as the FTE cap. But if there was a f actual error in reporting or calculati ng
JULY 30, 2018
For more information,
contact:
Mark D. Polston
+1 202 626 5540
mpolston@kslaw.com
Daniel J. Hettich
+1 202 626 9128
dhettich@kslaw.com
Chris Kenny
+1 202 626 9253
ckenny@kslaw.com
Juliet M. McBride
+1 713 276 7448
jmcbride@kslaw.com
Alek W. Pivec
+1 202 626 2914
apivec@kslaw.com
King & Spalding
Washington, D.C.
1700 Pennsylvania Avenue, NW
Washington, D.C. 20006-4707
Tel: +1 202 737 0500
Houston
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Houston, Texas 77002-5213
Tel: +1 713 751 3200
