Hospital Parties Argue CMS APA Violation, 0.2% Rate Cut Void
By - According to a statement from various hospital parties delivered during a court brief this week, the United States District Court for the District of Columbia (the Court) cannot adequately settle hospitals’ legal challenge to the Centers for Medicare & Medicaid Services’ (CMS) 0.2 percent rate cut by allowing an additional opportunity to manifest the cut within fiscal year 2014.
The Court posed the issue of fairness regarding CMS’s “deficient fiscal-year payment cut to be vacated without giving the agency an opportunity to correct that rulemaking on remand.” The AHA, the hospital associations, and the hospital organizations challenged the 0.2 percent cut imposed last year on inpatient payments regarding CMS’s two-midnight requirement.
“The [Administrative Procedure Act] APA [is] a regime designed to introduce fairness into what might otherwise be a fundamentally lopsided process. It requires an agency forthrightly to disclose the basis for its proposal; it requires an agency to engage with commenters when challenged; and it requires an agency to explain itself adequately in its final rule,” state the hospital parties. “CMS violated the APA six ways to Sunday here. The remedy the statute and this Circuit imposes for those violations is vacatur. Fair is as fair does.”
“If CMS wishes to impose a payment cut on the hospitals for a future fiscal year, it can promulgate a proposed rule that would do that for a future year; and if it can both explain why an across-the-board rate cut is consistent with the statute and adequately supported by evidence, then it can impose that cut,” they maintain. “But CMS does not get another opportunity now to impose a rate cut for 2014. To hold otherwise would permit CMS to flout the APA with total impunity, to the detriment of every hospital, knowing that if it is called out for its violations on appeal, the agency will get a costless and leisurely do-over. That would be unfair.”
The Court asked for additional briefing regarding the remedy inquiry at an August 3 hearing of consolidated cases where the American Hospital Association (AHA), four hospital associations, and four hospital organizations challenged CMS’s imposition that the 0.2 percent reduction infringes upon the legal requirements of rulemaking under the Administrative Procedure Act.
Brought to attention was the fact that CMS allegedly failed to disclose and clarify various critical assumptions from actuaries in determining reduction need. The government counsel replied by advocating hospitals were indeed informed about high-level assumptions considered by CMS in regard to the offset. Therefore, said the government counsel, legal requirements were met and a final reduction was “self-evident.”
As RevCycleIntelligence.com recently reported, CMS was also questioned recently for its alleged violation of APA rulemaking provisions via the Center for Regulatory Effectiveness (CRE) regarding its five-star hospital ratings system.
