On February 16, 2023, the U.S. District Court for the Northern District of Indiana rejected certain hospitals’ challenge to CMS’s calculation of uncompensated care (UCC) payments eligible to hospitals that treat low-income patients for fiscal year (FY) 2021. The court held that the statute’s preclusion of review provision encompassed challenges to the procedure under which those estimates were established.

For FY 2021, CMS decided that it would calculate each hospital’s UCC payment based on the uncompensated care reported in Worksheet S-10 from FY 2017 cost reports. Despite repeated requests, CMS refused to make its audit protocols public or subject those audit protocols to notice and comment rulemaking. Certain hospitals challenged this for violation of the notice-and-comment rulemaking requirements arguing that “insufficient rulemaking took place because the review protocols implemented changes in policy regarding what was included under uncompensated care costs.” The court held that this challenge was barred by the preclusion of review provision since “[t]o challenge the audit protocols is to challenge the validity of the ‘underlying data’ that the Secretary selected to determine Factor 3.” The court endorsed the view that “when a party seeks the invalidation of a policy as relief for a procedural violation, then the challenge is a substantive challenge and not a procedural one.”

This decision joins a series of decisions from other courts denying review of various challenges to CMS’s UCC calculations based on the statute’s preclusion of review language.

The Northern District of Indiana opinion is available here.