D.C. Circuit Says CMS Doesn’t Know What’s New

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On Tuesday of last week the D.C. Circuit Court ruled that the Provider Review Reimbursement Board doesn’t know what’s new.  It reversed the PRRB’s decision, along with the District Court’s decision that upheld it.  In doing so, it threw up its hands (figuratively speaking), repeatedly complaining that it simply could not comprehend the Board’s reasoning.

Under Medicare rules, a “new” hospital can receive 85% reimbursement for capital costs associated with patient care for the first two years.  New hospitals qualify; other hospitals don’t.  An easy distinction, right?  Wrong, as this case demonstrates.

A group of hospitals in the Select Specialty Hospitals system applied for the new hospital classification.  Each of the facilities is in leased space that had once been operated as a hospital by some other entity, but required substantial capital costs for renovation and repurposing.

CMS, upheld by the PRRB, ruled that the facilities weren’t new, because other entities had previously operated hospitals in the same spaces.  The district court upheld the PRRB.

The Circuit Court, in Select v. Burwell, July 8, said that it couldn’t grasp the PRRB’s reasoning—even whether the Board defined a hospital as a physical plant or a legal entity—and had no choice but to declare the Board’s decision arbitrary and capricious.  It reversed the Board and the lower court.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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