A federal judge, Judge Rosemary Collyer, in the District of Columbia Court, ruled in the case Allina Health Servs. v. Sebelius, U.S. Dep’t of Health and Human Servs., 10-cv-1463 (RMC).
In his option, Judge Collyer rebuked the government for arbitrarily changing the Medicare reimbursement formula for hospitals serving low-income patients.
Generally, the DSH (Dep’t of Health and Human Services) calculates payments by using the Medicare Disproportionate Share Hospital Fraction. The basis of this lawsuit arose out of the interpretation of the program “Medicate + Choice.” Judge Collyer found that by relying on the complex nature of the program, the government executed a “fancy two-step” process whereby the government did not engage in proper rulemaking or even an explanation of the benefits.
In the opinion, Judge Collyer stated:
“The secretary’s pretense in briefing the instant matter – that her current interpretation is entirely consistent with the past – is, as the court explains below, clearly forestalled by Northeast Hospital.”
“[P]atients enrolled in an M+C Plan should be counted in the Medicare fraction or the Medicaid fraction of the DSH patient percentage calculation.”
Consequently, Judge Collyer ruled:
“The court concludes that the secretary’s interpretation of the fractions in the DSH calculation, announced in 2004 and not added to the Code of Federal Regulations until the summer of 2007, was not a ‘logical outgrowth’ of the 2003 NPRM”…. “The rulemaking procedure was flawed due to both the single-minded way the NPRM presented the issue and the fact that the secretary adopted the polar opposite of the original proposal. Contrary to the secretary’s argument, the comments do not remedy these deficiencies.”