Select Specialty Hosp. of Atlanta v. Thompson, s. CIV.A.01-02344(HHK), CIV.A.01-02346(HHK), CIV.A.01-02348(HHK), CIV.A.02-00245(HHK), CIV.A.02-00686(HHK), CIV.A.02-00687(HHK), CIV.A.03-00067(HHK), CIV.A.03-00068(HHK), CIV.A.03-00119(HHK), CIV.A.03-00977(HHK), CIV.A.03-01143(HHK), CIV.A.03-01144(HHK), CIV.A.03-01145(HHK), CIV.A.03-01146(HHK), CIV.A.03-01147(HHK).
| Decision Date | 18 November 2003 |
| Docket Number | Nos. CIV.A.01-02344(HHK), CIV.A.01-02346(HHK), CIV.A.01-02348(HHK), CIV.A.02-00245(HHK), CIV.A.02-00686(HHK), CIV.A.02-00687(HHK), CIV.A.03-00067(HHK), CIV.A.03-00068(HHK), CIV.A.03-00119(HHK), CIV.A.03-00977(HHK), CIV.A.03-01143(HHK), CIV.A.03-01144(HHK), CIV.A.03-01145(HHK), CIV.A.03-01146(HHK), CIV.A.03-01147(HHK).,s. CIV.A.01-02344(HHK), CIV.A.01-02346(HHK), CIV.A.01-02348(HHK), CIV.A.02-00245(HHK), CIV.A.02-00686(HHK), CIV.A.02-00687(HHK), CIV.A.03-00067(HHK), CIV.A.03-00068(HHK), CIV.A.03-00119(HHK), CIV.A.03-00977(HHK), CIV.A.03-01143(HHK), CIV.A.03-01144(HHK), CIV.A.03-01145(HHK), CIV.A.03-01146(HHK), CIV.A.03-01147(HHK). |
| Citation | 292 F.Supp.2d 57 |
| Parties | SELECT SPECIALTY HOSPITAL OF ATLANTA, Plaintiff, v. Tommy G. THOMPSON, Secretary, United States Department of Health and Human Services, Defendant, Select Specialty Hospital of Knoxville, Plaintiff, v. Tommy G. Thompson, Secretary, United States Department of Health and Human Services, Defendant, Intensiva Hospital of Knoxville, Plaintiff, v. Tommy G. Thompson, Secretary, United States Department of Health and Human Services, Defendant, Select Specialty Hospital of Little Rock, Plaintiff, v. Tommy G. Thompson, Secretary, United States Department of Health and Human Services, Defendant, Select Specialty Hospital of Wilmington, Plaintiff, v. Tommy G. Thompson, Secretary, United States Department of Health and Human Services, Defendant, Select Specialty Hospital of Johnstown, Plaintiff, v. Tommy G. Thompson, Secretary, United States Department of Health and Human Services, Defendant, Select Specialty Hospital of Ann Arbor, Plaintiff, v. Tommy G. Thompson, Secretary, United States Department of Health and Human Services, Defendant, Select Specialty Hospital of Augusta, Plaintiff, v. Tommy G. Thompson, Secretary, United States Department of Health and Human Services, Defendant, Select Specialty Hospital of St. Louis, Plaintiff, v. Tommy G. Thompson, Secretary, United States Department of Health and Human Services, Defendant, Select Specialty Hospital-Reno, Plaintiff, v. Tommy G. Thompson, Secretary, United States Department of Health and Human Services, Defendant, Select Specialty Hospital-Battle Creek, Plaintiff, v. Tommy G. Thompson, Secretary, United States Department of Health and Human Services, Defendant, Select Specialty Hospital-Denver, Plaintiff, v. Tommy G. Thompson, Secretary, United States Department of Health and Human Services, Defendant, Select Specialty Hospital-Mesa, Plaintiff, v. Tommy G. Thompson, Secretary, United States Department of Health and Human Services, Defendant, Select Specialty Hospital-Tricities, Plaintiff, v. Tommy G. Thompson, Secretary, United States Department of Health and Human Services, Defendant, Select Specialty Hospital-West Columbus, Plaintiff, v. Tommy G. Thompson, Secretary, United States Department of Health and Human Services, Defendant, |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
E. Carrie Nixon, Tamara Van Antwerp Scoville, Jennifer G. Ruggiero, Reed Smith LLP, Washington, DC, for Plaintiff.
Robert E. Leidenheimer, Jr., Charlotte Bradley, Peter Blumberg, United States Attorneys Office, Elizabeth Margaret Kelly, Sonia M. Orfield, Carole Faith Kagan, U.S. Department of Health & Human Services, Washington, DC, Frances Pergericht Kuperman, Office of the General Counsel, Lawrence J. Harder, Frances Pergericht Kuperman, U.S. Department of Health & Human Services, Baltimore, MD, for Defendant.
Plaintiffs, several long-term care hospitals participating in the Medicare program, bring this action against defendant, Tommy G. Thompson, Secretary, United States Department of Health and Human Services ("Secretary" or "HHS"). Plaintiffs allege that HHS has interpreted its regulations and applied them in a way that improperly limits Medicare reimbursement for inpatient hospital services furnished by plaintiffs. Presently before this court are cross-motions for summary judgment brought by plaintiffs Select Specialty Hospital of Atlanta, Select Specialty Hospital of Knoxville, Intensiva Hospital of Knoxville d/b/a Select Specialty Hospital of North Knoxville, Select Specialty Hospital of Little Rock, and Select Specialty Hospital of Wilmington (collectively, "Select")1 [# 18], and by defendant HHS [# 19]. Upon consideration of the cross-motions for summary judgment, the oppositions thereto, and the record of this case, the court concludes that plaintiffs' motion for summary judgment must be denied and that defendant's motion for summary judgment must be granted.
Select operates specialty hospitals that provide long-term acute care services for patients with complex medical needs. Select's patients primarily consist of individuals with conditions such as ventilator dependency, respiratory failure, tracheotomy with respiratory needs, spinal cord and head injuries, dysphasia management, chest trauma, neurovascular and neuromuscular disease, hemodialysis, long-term intravenous therapy, pain control, wound care, and chemotherapy.
The Medicare program is a federal health insurance program for people 65 years of age and older, certain younger disabled people, and people with kidney failure. 42 U.S.C. § 1395 et seq. HHS is responsible for administering the Medicare program and has charged the Centers for Medicare and Medicaid Services ("CMS") with administering the Medicare program. The Medicare program is divided into two parts. Part A authorizes payment primarily for care in health care institutions, including hospitals; Part B authorizes payment for physicians' services and other medical services. Only Part A is at issue in this case.
Medicare Part A provides coverage of, among other things, inpatient hospital services. In 1965, at the start of the Medicare program, hospitals received reimbursement for the "reasonable cost" of providing inpatient services, subject to certain limits. 42 U.S.C. §§ 1395f(b)(1), 1395x(v) (1982). As part of the Social Security Amendments of 1983, Pub.L. No. 98-21, 97 Stat. 65, Congress established the prospective payment system ("PPS") for the operating costs of acute care hospital inpatient stays, which took effect with cost reporting periods beginning on or after October 1, 1983. 42 U.S.C. § 1395ww(d). Under PPS, hospitals receive a fixed, prospectively determined, per discharge payment amount based on the diagnosis-related group ("DRG") in which an individual patient is classified. PPS applies to "subsection (d) hospital[s]." 42 U.S.C. § 1395ww(d)(1)(A). Congress excluded certain types of hospitals from the definition of a "subsection (d) hospital" and thus from PPS:
(iv) (I) a hospital which has an average inpatient length of stay (as determined by the Secretary) of greater than 25 days ....
42 U.S.C. § 1395ww(d)(1)(B)(i)-(iv) (emphasis added). Congress established these PPS exclusions because certain types of institutions care for patients whose cost of care is not adequately accounted for through the DRG system. See S. REP. NO. 98-23, at 54 (1983), reprinted in 1983 U.S.C.C.A.N. 143, 194; H.R. REP. NO. 98-25, at 141 (1983), reprinted in 1983 U.S.C.C.A.N. 219, 360.
In 1983, HHS promulgated regulations governing the exclusion of hospitals from PPS. Under these regulations, a long-term care hospital seeking an exclusion must have a provider agreement to participate as a hospital and have an average inpatient length of stay greater than 25 days. 42 C.F.R. § 412.23(e)(1), (2). The average length of stay is calculated by "dividing the number of covered and noncovered days of stay of Medicare inpatient days (less leave or pass days) by the number of total Medicare discharges for the hospital's most recent complete cost reporting period." 42 C.F.R. § 412.23(e)(3)(i). "If a change in the hospital's Medicare average length of stay is indicated, the calculation is made by the same method for the period of at least five months of the immediately preceding six-month period." 42 C.F.R. § 412.23(e)(3)(ii). HHS regulations implement the PPS system in a prospective manner. The regulations provide that 42 C.F.R. § 412.22(d).
In 1998, the relevant time period in this action, hospitals excluded from PPS received reimbursement under the "reasonable cost" payment system, subject to certain limits. 42 U.S.C. §§ 1395f(b)(1), 1395x(v)(1)(A); 42 C.F.R. § 412.22(b). These limits include both reasonable cost limits, and "rate of increase" limits established by the Tax Equity and Fiscal Responsibility Act of 1982, Pub.L. No. 97-248, 96 Stat. 324.2 See 42 U.S.C. § 1395ww(a), (b); 42 C.F.R. § 413.30 et seq.
The first cost reporting period as a long-term care provider under the Medicare program for each of the hospitals that filed the motion for summary judgment ended in calendar year 1998. During that time, the average length of stay, as computed under the regulations, exceeded 25 days for each hospital. During 2000, Mutual of Omaha Insurance Company issued a Fiscal Year ("FY") 1998 notice of program reimbursement to each of these hospitals. Pursuant to that notice of program reimbursement, Select received reimbursement for FY 1998 inpatient hospital operating costs under PPS. The alleged difference between Select's FY 1998 PPS reimbursement for inpatient hospital services and its reasonable cost of such services was a combined total of $1,529,913.3 Pls.' Statement of Material Facts, ¶¶ 4-10.
Select requested a hearing before the Provider Reimbursement Review Board ("PRRB"), which makes the final determinations regarding Select's Medicare reimbursements. Select filed a request for expedited judicial review pursuant to 42 U.S.C. § 1395oo(f)(1), which the PRRB granted. Based on their FY 19...
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