LOMA LINDA UNIVERSITY MEDICAL CENTER v. Sebelius
Citation | 684 F. Supp.2d 42 |
Decision Date | 16 February 2010 |
Docket Number | Civil Action No. 08-01520(HHK). |
Parties | LOMA LINDA UNIVERSITY MEDICAL CENTER, Plaintiff, v. Kathleen SEBELIUS, Secretary, United States Department of Health and Human Services, Defendant. |
Court | U.S. District Court — District of Columbia |
Andrew C. Bernasconi, Andrew Lawrence Hurst, Reed Smith, LLP, Washington, DC, Carrie A. Ramage, Frank P. Fedor, River J. Sung, Murphy Austin Adams Schoenfeld LLP, Sacramento, CA, for Plaintiff.
Andrew Brady Spalding, Linda L. Keyser, U.S. Department of Health & Human Services, Mitchell P. Zeff, U.S. Attorney's Office, Washington, DC, for Defendant.
HENRY H. KENNEDY, JR. District Court.
Loma Linda University Medical Center ("Loma Linda"), a teaching hospital, brings this action against Kathleen Sebelius1 in her official capacity as Secretary of the U.S. Department of Health and Human Services ("Secretary"). Loma Linda seeks judicial review of the Secretary's decision to deny it certain payments, authorized by the Balanced Budget Act of 1997 ("BBA `97"), Pub.L. No. 105-33, 111 Stat. 251, for graduate medical education costs associated with providing services to Medicare beneficiaries who are members of health maintenance organizations. Before the Court are the parties' cross-motions for summary judgment ##14, 15. Upon consideration of the motions, the oppositions thereto, and the record of this case, the Court concludes that Loma Linda's motion should be granted in part and denied in part, the Secretary's motion should be denied, and the case must be remanded to the Secretary for further proceedings consistent with this opinion.
The Secretary, through the Centers for Medicare and Medicaid Services ("CMS"), administers the Medicare statute, Title XVIII of the Social Security Act, 42 U.S.C. § 1395 et seq. The Medicare statute consists of several parts, two of which are relevant to this action.
Part A provides health insurance to Medicare beneficiaries. Id. §§ 1395c, 1395d. The Secretary contracts with private entities, referred to as "fiscal intermediaries," to oversee billing by and payment to hospitals for the provision of health care services under Part A. Id. § 1395h. Regulations governing claims for payment under Part A are set forth at 42 C.F.R. § 424.30 et seq. These regulations begin by describing their scope, providing that "claims must be filed in all cases except when services are furnished on a prepaid capitation basis by a health maintenance organization (HMO), a competitive medical plan (CMP), or a health care prepayment plan (HCPP)." Id. § 424.30. For claims that do not fall under the exceptions described, the regulations go on to set forth billing requirements.
Two provisions of the Part A regulations are particularly relevant here: 42 C.F.R. § 424.32 and 42 C.F.R. § 424.44. 42 C.F.R. § 424.32 requires hospitals to submit claims for payment via a specific form, the Uniform Institutional Provider Bill, also called CMS-1450 or UB-92. Id. § 424.32. UB-92 requires, among other information, the Health Insurance Claim ("HIC") number of each patient for whom a claim is submitted. These numbers appear on the Medicare cards held by all Medicare beneficiaries enrolled in Part A.
42 C.F.R. § 424.44 sets time limits for filing claims with the fiscal intermediary. According to this section of the regulations, a hospital must submit bills by "December 31 of the following year for services that were furnished during the first 9 months of the calendar year" or by "December 31 of the second following year for services that were furnished during the last 3 months of the calendar year." Id. § 424.44(a). A hospital may receive a six-month extension of these deadlines if the failure to timely file claims "was caused by error or misrepresentation of an employee or intermediary" acting on behalf of the Secretary. Id. § 424.44(b).
At the end of each fiscal year, a hospital submits a report to its fiscal intermediary listing all costs for which it seeks reimbursement and the intermediary determines which of those costs are actually due to the hospital. 42 C.F.R. §§ 405.1801(b)(1), 405.1803. The hospital may contest the intermediary's determination at a hearing before the Provider Reimbursement Review Board ("PRRB" or "Board"). 42 U.S.C. § 1395oo(a). The Secretary may review the Board's decision, id. § 1395oo(f); in practice, the Administrator of CMS conducts this review on the Secretary's behalf. A hospital may seek review of the final agency decision in federal district court. Id.
Medicare Part C, also called Medicare + Choice, allows Medicare beneficiaries to receive benefits through health maintenance organizations ("HMOs"). 42 U.S.C. § 1395w-21 et seq. Under Part C, when hospitals provide services to Medicare + Choice enrollees, they send bills to, and receive payments from, HMOs. Id. §§ 1395w-23, 1395mm(a). Hospitals do not receive payment from fiscal intermediaries for the provision of Part C services. CMS implemented a requirement shortly after the creation of Part C, however, that hospitals submit to intermediaries "encounter data," or "no-pay bills," regarding services provided to Medicare + Choice enrollees. Administrative Record ("AR") 148-49. These no-pay bills are UB-92 forms; hospitals submit them with a specific code to distinguish them from bills for Part A services. AR 149. In order to submit UB-92 forms for this, or any, purpose, hospitals must enter each patient's HIC number.
In addition to paying for health care services directly, Medicare reimburses teaching hospitals for the cost of training graduate medical students, including interns and residents, in the course of providing services to Medicare beneficiaries. There are two types of such payments: direct graduate medical education ("DGME") costs and indirect medical education ("IME") costs. 42 U.S.C. §§ 1395ww(h), 1395ww(d)(5)(B). DGME costs include "residents' salaries and fringe benefits (including travel and lodging where applicable) and the portion of the cost of teaching physicians' salaries and fringe benefits attributable to direct graduate medical education." 42 C.F.R. § 413.75(b)(1). Reimbursements for these costs are calculated based on the number of days Medicare patients spend in a hospital, the amount of work interns and residents perform in that hospital, and a hospital-specific rate per resident. See 42 U.S.C. § 1395ww(h); AR 47. Indirect graduate medical education (IME) expenses include "the additional tests and procedures ordered by residents as well as the extra demands placed on other staff as they participate in the educational processes." St. Mary's Hosp. of Rochester, Minn. v. Leavitt, 416 F.3d 906, 909 (8th Cir.2005) (quoting H.R.Rep. No. 98-25(I), at 140 (1983), U.S.Code Cong. & Admin.News 1983, at 219, 359) (internal quotation marks omitted). Reimbursements for IME costs are calculated based on the ratio of residents to hospital beds. 42 C.F.R. § 412.105; AR 47.
Before Congress passed BBA '97, hospitals received reimbursement from the Secretary for DGME and IME costs associated only with services provided under Medicare Part A. Fiscal intermediaries pay these costs along with other Part A payments. Under BBA '97, as of January 1, 1998 the Secretary was to begin paying for medical education costs associated with services provided under Part C as well. BBA '97 §§ 4622, 4624 (codified at 42 U.S.C. § 1395ww(d)(11), (h)(3)(D)). The statute did not explain how or from what entity hospitals should request, or how or from whom they would receive, these new payments.
The Secretary issued a "final rule with comment period" on August 29, 1997 that addressed the new payments. Changes to the Hospital Inpatient Prospective Payment Systems & Fiscal Year 1998 Rates, 62 Fed.Reg. 45,966 (proposed Aug. 29, 1997). The proposed rule stated that the Secretary "must make payments to teaching hospitals" for DGME and IME costs and described the basic formulas by which such costs are calculated. Id. at 45,968-69. The proposed rule did not explain how the Secretary would collect pertinent information from teaching hospitals such that those hospitals could receive payment.
On May 12, 1998, after receiving comments regarding the August 29, 1997 proposal, the Secretary issued a final rule ("May 12, 1998 rule"). Changes to the Hospital Inpatient Prospective Payment Systems & Fiscal Year 1998 Rates, 63 Fed.Reg. 26,318 (May 12, 1998). In a section discussing medical education costs associated with Part C services, the rule described comments that contained suggestions of possible sources of the data necessary to calculate payments. Id. at 26,341-42. In response, the rule stated:
On July 1, 1998, CMS issued a Program Memorandum, numbered A-98-21 and titled "Direct Costs of Graduate and Operating Indirect Medical Education" ("PM A-98-21"). AR 1737. CMS sent PM A-98-21 to fiscal intermediaries. This document explained that hospitals would begin to receive DGME and IME payments for Medicare Part C beneficiaries and stated that "hospitals must submit...
To continue reading
Request your trial-
Cooper Hosp. / Univ. Med. Ctr. v. Burwell
...an agency action is supported by the administrative record and consistent with the APA standard of review.” Loma Linda Univ. Med. Ctr. v. Sebelius, 684 F.Supp.2d 42, 52 (D.D.C.2010) (citation omitted), aff'd, 408 Fed.Appx. 383 (D.C.Cir.2010). Judicial review of the Secretary's decision in t......
-
Grossmont Hosp. Corp. v. Sebelius
...that issues not raised before an agency are waived and will not be considered by a court on review.”); Loma Linda Univ. Med. Ctr. v. Sebelius, 684 F.Supp.2d 42, 56 n. 13 (D.D.C.2010) (refusing to consider new arguments not raised before the Board or CMS Administrator).4 Nor will the Court c......
-
Stewart v. Azar
...by the administrative record and consistent with the [Administrative Procedure Act] standard of review." Loma Linda Univ. Med. Ctr. v. Sebelius, 684 F.Supp.2d 42, 52 (D.D.C. 2010) (citation omitted), aff'd, 408 Fed. App'x 383 (D.C. Cir. 2010). The Administrative Procedure Act "sets forth th......
-
Am. Forest Res. Council v. Ashe
...56(a) does not apply because of the limited role of a court in reviewing the administrative record. See Loma Linda Univ. Med. Ctr. v. Sebelius, 684 F.Supp.2d 42, 52 (D.D.C.2010) (citing Sierra Club v. Mainella, 459 F.Supp.2d 76, 89 (D.D.C.2006)), aff'd, 408 Fed.Appx. 383 (D.C.Cir.2010); see......