King & Spalding Files Court Challenge to 0.2 Percent IPPS Rate Reduction


On March 25, 2014, King & Spalding filed a complaint in the United States District Court for the District of Columbia challenging CMS’s 0.2 percent reduction to FY 2014 IPPS payment rates associated with the two-midnight rule.  When proposing and finalizing the two-midnight rule, CMS maintained that the new rule would lead to a net increase of 40,000 inpatient admissions each year, which in turn required a 0.2 percent reduction in IPPS payment rates to ensure budget neutrality.  This appeal challenges CMS’s rate reduction, asserting that CMS relied on inaccurate and incomplete data that was not fully disclosed to stakeholders during the comment period.  Indeed, King & Spalding submitted comments to this effect during the rulemaking arguing that CMS’s publicly available claims files showed that the new standards would result in a net decrease in inpatient admissions, and thus a payment rate increase was required to ensure budget neutrality. 

This appeal, involving 24 IPPS hospitals from all regions of the country, was originally filed before the Provider Reimbursement Review Board in January.  The Board determined in a March 12, 2014 decision that the appeal was jurisdictionally proper but that the Board was without the legal authority to overturn the rate reduction, and thus granted expedited judicial review. 

The case is Athens Reg. Med. Ctr. v. Sebelius, Case No. 1-14-cv-503 (RBW) (D.D.C.).

Reporters, Mark Polston, Washington, D.C., + 1 202 626 5540,, and Christopher Kenny, Washington, D.C., + 1 202 626 9253,

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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