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SCOTUS Rejects HHS Rulemaking Shortcut on Hospital DHS Payments Policy Change

Posted in Hospitals and Institutions, Medicare and Medicaid, Reimbursement Matters

In a 7-1 decision, the United States Supreme Court ruled on June 3 that the Department of Health and Human Services (HHS) failed to go through the required notice and comment rulemaking process before announcing a policy that significantly reduced payments to hospitals serving low-income patients. In 2014, HHS changed the reimbursement formula for disproportionate share hospital (DSH) payments, sidestepping the formal rulemaking process. The court found that HHS did not provide a sufficient exception for avoiding the formal  rule making process. The implications of this ruling include up to $4 billion in payments to hospitals. The full opinion can be found here.

Susan Huntington, chair of the firm’s Healthcare and Life Sciences practice group, was quoted in an article, “Attorneys React To High Court’s HHS Rulemaking Decision,” published by Law360. In response to the U.S. Supreme Court’s decision rejecting efforts by U.S. the Department of Health and Human Services (HHS) to avoid seeking public comment on a multibillion-dollar Medicare policy, the article focuses on healthcare attorney’s reactions to how the ruling could affect the department and the Centers for Medicare & Medicaid Services (CMS). Huntington told Law360, “The impact of this case goes well beyond hospital payments. The ruling makes it clear that CMS’ expanding reliance on its ‘interpretive’ authority to make substantive changes in Medicare without notice-and-comment rulemaking is not acceptable. It will be interesting to see what other past interpretive rulings will be revisited — either through formal rulemaking or litigation challenges.”

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