Ahead in 2013: Providers Take Healthcare Reform to the Courts

As healthcare reform kicks into high gear and rubs against shrinking federal and state budgets, expect to see more healthcare providers seek relief in the courts in 2013.

In recent years, providers have had some success overturning laws and regulations after appealing to the courts. Several suits have sought to curb the authority of the U.S. Department of Health and Human Services in creating policies that negatively affect providers.

The courts have also protected, for the most part, the interests of providers. The biggest win of last summer was the Patient Protection and Affordable Care Act, upheld by the U.S. Supreme Court. While the court did make Medicaid expansion voluntary by the states, thereby putting at risk expanded coverage to millions of Americans of which a percentage now accounts for provider bad debt, it upheld mandatory health insurance provisions.

Other challenges to the ACA are ahead, most notably the more than three dozen lawsuits by religious-based organizations seeking exemption from healthcare reform’s so-called “contraceptives mandate.” On Tuesday the U.S. District Court in Washington, DC, overturned a lower court decision  to throw out lawsuits by two Christian colleges seeking relief from the mandate.

Next year the U.S. Supreme Court will hear a much broader lawsuit from Liberty University which seeks to throw out the mandate of health insurance by employers as unconstitutional because it violates the separation of church and state. The impact of these lawsuits on providers should be minimal.

Curbing HHS Authority

When it comes to the big issues that affect providers, the courts for the most part have been on their side. Beginning next year the Centers for Medicare and Medicaid can no longer penalize providers for failing to use the least costly alternative (LCA) in their respective local coverage determinations (LCDs). This was the result of Hays v. Sebilius (HHS), which U.S. Circuit Court in Washington, DC, declared that the ACA did not give the U.S. Secretary of Health and Human Service Kathleen Sebelius the authority to limit Medicare reimbursement to LCAs. Earlier this month CMS issued an update  to its program integrity manual revoking that policy, effective Jan. 15.

In the coming weeks the Supreme Court will rule  on whether providers can get extended deadlines for filing appeals with CMS. Several California disproportionate share hospitals (DSHs) filed suit against CMS after it rejected claims seeking to recover reimbursements the hospitals claimed it was owed as the result of an earlier lawsuit. In 2008 a court ruled that CMS had shortchanged DSHs and ordered it to use a new formula when calculating reimbursements. The hospitals then filed claims for underpaid reimbursements before the 2008 court case, but CMS rejected them because the 180-day deadline for filing appeals had expired. Depending on the outcome, providers may be in for a windfall from CMS in coming years.

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