Kaiser Foundation Hospitals v. Sebelius

Plaintiffs, teaching hospitals, received Medicare payments to offset the costs associated with training "full-time equivalent" residents and intern physicians (FTEs). In 1997, Congress capped those payments in such a way that the number of FTEs the hospitals trained in 1996 would dictate the maximum reimbursement in all future years. Although the parties agreed that the 1996 data was not accurate, the Secretary believed that this predicate fact could not be corrected outside the three-year reopening window. The court held that the reopening regulation allowed for modification of predicate facts in closed years provided the change would only impact the total reimbursement determination in open years. Alternatively, the court agreed with the district court that the Secretary had acted arbitrarily in treating similarly situated parties differently. The court rejected the Secretary's claim that the Medicare Act, 42 U.S.C. 1395 et seq., would not allow the intermediary to change the 1996 GME resident count without changing the corresponding reimbursement amount, which all parties conceded would constitute a reopening of an "Intermediary determination." Accordingly, the court affirmed the judgment. View "Kaiser Foundation Hospitals v. Sebelius" on Justia Law