444 F.Supp. 125 (E.D.N.C. 1978), 77-31-CIV-8, Cleveland Memorial Hospital, Inc. v. Califano

Docket Nº:77-31-CIV-8.
Citation:444 F.Supp. 125
Party Name:CLEVELAND MEMORIAL HOSPITAL, INC., Grace Hospital, Inc., Rutherford Hospital, Inc., and Nash General Hospital, Inc., Plaintiffs, v. Joseph A. CALIFANO, Jr., Secretary of Health, Education and Welfare, Blue Cross and Blue Shield of North Carolina, Blue Cross Association, Provider Reimbursement Review Board, and Arthur P. Owens, Chairman of the Provi
Case Date:January 18, 1978
Court:United States District Courts, 4th Circuit, Eastern District of North Carolina
 
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Page 125

444 F.Supp. 125 (E.D.N.C. 1978)

CLEVELAND MEMORIAL HOSPITAL, INC., Grace Hospital, Inc., Rutherford Hospital, Inc., and Nash General Hospital, Inc., Plaintiffs,

v.

Joseph A. CALIFANO, Jr., Secretary of Health, Education and Welfare, Blue Cross and Blue Shield of North Carolina, Blue Cross Association, Provider Reimbursement Review Board, and Arthur P. Owens, Chairman of the Provider Reimbursement Review Board, Defendants.

No. 77-31-CIV-8.

United States District Court, E.D. North Carolina

Jan. 18, 1978

Page 126

John Turner Williamson, Maupin, Taylor & Ellis, Raleigh, N. C., for plaintiffs.

Bruce H. Johnson, Asst. U. S. Atty., Raleigh, N. C., for defendants.

MEMORANDUM OF DECISION and ORDER

DUPREE, District Judge.

Plaintiffs, North Carolina hospitals that have provided services to Medicare beneficiaries pursuant to agreements with the defendant Secretary of Health, Education and Welfare, seek judicial review of a refusal by the Provider Reimbursement Review Board to consider their reimbursement claims as a "group appeal" under 42 U.S.C. s 1395oo (b). The Provider Reimbursement Review Board held that the jurisdictional amount requirement of the statute had not been satisfied.

Plaintiffs are medical care providers (hereinafter providers) as defined in Title XVIII of the Social Security Act (42 U.S.C.

Page 127

ss 1395 , et seq.). Under that statute providers are reimbursed on the basis of the "reasonable cost" of their services rendered to Medicare beneficiaries. "Reasonable costs" are obtained from a cost report that must be filed within three months from the end of the provider's fiscal year. The cost report is filed with a fiscal intermediary, in this case Blue Cross/Blue Shield. These fiscal intermediaries are private companies that represent the Secretary of Health, Education and Welfare in making necessary reimbursement payments and monitoring the cost reports to determine exactly what is reimbursable. Due to various cash flow considerations the fiscal intermediaries typically make temporary payments to the providers that are subject to later adjustment when final audits of the cost reports are completed. 42 U.S.C. s 1395g, s 1395x(v)(1)(A). In the present case Blue Cross/Blue Shield, after completing its final audit of cost reports filed by the plaintiffs, disallowed certain costs claimed by plaintiffs in connection with their nursing education programs.

There are basically two methods of obtaining review of a decision by the fiscal intermediary to disallow reimbursement payments: (1) one method is to appeal through the intermediary's hearing procedures, or (2) if the requirements of 42 U.S.C. s 1395oo are met, review can be obtained before an independent reviewing panel, the Provider Reimbursement Review Board (PRRB).

In the present action plaintiffs sought a group hearing before the PRRB pursuant to 42 U.S.C. s 1395oo (b). That section provides:

(b) The provisions of subsection (a) of this section shall apply to any group of providers of services if each provider of services in such group would, upon the filing of an appeal (but without regard to the $10,000 limitation), be entitled to such a hearing, but only if the matters in controversy involve a common question of fact or interpretation of law or regulations and the amount in controversy is, in the aggregate, $50,000 or more.

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