Stephanie Kennan Comments on Supreme Court Ruling in Medicare Reimbursement Case

June 5, 2019

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This week, the U.S. Supreme Court ruled that the Department of Health and Human Services (HHS) neglected its statutory notice and comment obligations when it implemented a change to the Medicare disproportionate share hospital (DSH) payment formula. 

The case centered on whether HHS has to provide a 60-day notice and comment period before making substantial legal changes in policy. The policy in question added Medicare Part C patients in the formula, which would have substantially decreased DSH payments to hospitals.  Because HHS did not follow the notice and comment obligation, the policy was vacated.    

The court stated that the government violated the Medicare Act when it changed the Medicare reimbursement formula without providing share hospitals with notice and an opportunity to comment.

In a June 3 article for Healthcare Dive, McGuireWoods Consulting senior vice president, Stephanie Kennan, explored the impact of the case.

“I think it’s an interesting case because it will impact anything relating to payments, benefits and who provides care within Medicare,” she said.

The government will not be able to be as nimble as they want to be, she added. “I view this as providing stakeholders a better opportunity to shape policy and it provides some transparency.”

The ruling won’t mean every policy change will have to go through notice and comment rulemaking, but it will affect policy changes that are considered “substantial,” Kennan said.

And changing who was counted in terms of calculating DSH payments, which was at issue in this case, was a substantial policy change, she noted.

As of now, the ruling is a win for hospitals pushing back against the cuts. The status quo remains in place and planned cuts will not go into effect.