AHA, hospital groups sue over two-midnight rule

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The American Hospital Association (AHA) and several individual healthcare delivery systems and hospital associations have filed two lawsuits challenging the Centers for Medicare & Medicaid Services' two-midnight rule and associated Medicare payment cuts.

Under the rule, Medicare will not reimburse hospitals at inpatient rates for treatment that does not span two midnights. In February, CMS delayed the rule's implementation, and the recent deal to delay the sustainable growth rate formula delayed it again. Moody's Investors Service projects the rule may cost hospitals up to $4,000 in revenue per case.

Now four systems--Banner Health, Einstein Healthcare Network, Wake Forest and Mount Sinai--and four state hospital groups (Pennsylvania, New Jersey, New York State and Greater New York) filed two federal lawsuits against outgoing Health and Human Services Secretary Kathleen Sebelius.

The first suit argues that the rule, and Medicare's requirement that providers rebill denied claims within a year of service, are unlawful. The rule "undoes decades of Medicare policy. It unwisely permits the government to supplant treating physicians' judgment. And most important, it defies common sense," the suit states. "The word 'inpatient' simply doesn't mean 'a person who stays in the hospital until Day 3,' and CMS is not at liberty to change the meaning of words to save money. The rule cannot withstand scrutiny under the Administrative Procedure Act."

The second suit challenges the legality of forthcoming 0.2 percent cuts in Medicare reimbursements based on CMS' projection of more two-midnight admissions. "Medicare has cut the reimbursement rate it pays to the nation's hospitals without any reasoned basis for doing so," according to the suit. "That unlawful payment reduction already is harming the Plaintiff hospitals. And all told, it will cost the nation's hospitals more than $200 million this year alone."

The AHA and the providers first announced their intention to challenge the rule in January, FierceHealthFinance previously reported.

To learn more:
- read the first lawsuit (.pdf)
- read the second lawsuit (.pdf)

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