On April 15, 2022, the D.C. Circuit affirmed the denial of a California hospital’s request to obtain critical access hospital cost reimbursement from Medicare for the costs incurred to keep non-emergency specialty physicians on-call. St. Helena Clear Lake Hospital (St. Helena), a California critical access hospital, argued that its on-call costs for inpatient care, just like those for emergency room care, are “necessary and proper” and therefore should be reimbursed under state and federal regulations. However, the D.C. Circuit, affirming the district court and Provider Reimbursement Review Board (Board), disagreed and concluded that the relevant statutes and regulations only address on-call costs for emergency room physicians.

St. Helena sought Medicare cost reimbursement under Medicare’s critical access hospital 101% of reasonable cost reimbursement framework for the costs it incurred for payments made to non-emergency room specialists for providing on-call coverage. St. Helena’s Medicare contractor denied the request for reimbursement on the basis that non-emergency room on-call costs were not reimbursable. St. Helena appealed the Contractor’s denial to the Board.
Before the Board, St. Helena argued that it was required by the federal Emergency Medical Treatment and Active Labor Act (EMTALA) and California law to incur the specialty on-call costs given its obligation to, among other things, treat patients after emergency room treatment. EMTALA requires hospitals providing emergency room service to, among other things, stabilize patients before releasing them or transferring them to a large hospital. Accordingly, St. Helena argued that its on-call costs for inpatient care are necessary to stabilize its patients and should therefore be reimbursed. The Board rejected this argument and explained that reimbursement is only allowed pursuant to 42 U.S.C. § 1395m(g)(5) and 42 C.F.R. § 413.70(b)(4) for on-call costs for the emergency room physicians.

After the CMS Administrator declined to review the Board’s decision, St. Helena appealed to the district court, which affirmed the Board’s decision. The D.C. Circuit agreed with the district court and Board’s decisions, concluding that “it is at least reasonable to read the key regulation as precluding a policy change extending [critical access hospital cost reimbursement] beyond on-call emergency room physicians.”

The D.C. Circuit’s opinion is available here.