On September 1, 2023, the D.C. Circuit affirmed the D.C. District Court’s decision in Pomona Valley Hosp. Med. Ctr. v. Azar, 2020 WL 5816486, at *1 (D.D.C. Sept. 30, 2020) requiring CMS to produce affirmative evidence as to the accuracy of its SSI data matching process. Pomona Valley Hospital Medical Center (Pomona) argued that HHS undercounted the number of its Medicare patients who were entitled to SSI benefits, thereby deflating its Medicare disproportionate share hospital (DSH) payment. Pomona produced evidence demonstrating that its SSI data was understated while HHS offered no countervailing evidence. The Provider Reimbursement Review Board (PRRB) held that Pomona failed to prove its case, but the D.C. District Court (the District Court) set aside the Board’s decision and ordered CMS to provide countervailing evidence or a reason for rejecting the hospitals’ case. The D.C. Circuit Court affirmed the District Court.
The DSH adjustment increases payments to hospitals who serve a disproportionate number of low-income patients. The sum of the DSH adjustment totals the Medicare fraction and Medicaid fraction. The Medicare fraction represents the percentage of a hospital’s Medicare patients who are entitled to SSI benefits. The Social Security Administration (SSA) administers the SSI program and CMS relies on the SSA for SSI data. CMS cross-checks the SSI eligibility data with its MedPAR file but does not provide hospitals the SSI data.
Pomona suspected that CMS’s determination of its Medicare fractions for fiscal years 2006-08 was too low and sought to recalculate the fractions by matching MedPAR data from CMS and Medi-Cal data from the California Department of Healthcare Services. CMS’s Medicare fraction calculations were about 20 percent lower than the fractions calculated by Pomona. The reimbursement difference exceeded $3 million.
Pomona appealed to the PRRB and presented testimony evidence supporting its undercount calculation and explained that the undercount likely indicated a systemic program with CMS data. The Medicare Contractor put forward no countervailing evidence before the Board and offered no explanation to support its data accuracy. The PRRB concluded that Pomona failed to prove an undercount because there were other potential explanations for the disparity results that Pomona had failed to rule out. Pomona appealed the PRRB’s ruling to D.C. District Court.
The District Court determined that the PRRB’s decision was unsupported by substantial evidence and ordered that the case be remanded to the agency for further proceedings. The District Court imposed on CMS what it characterized as a shift in the burden of producing evidence on remand—specifically, CMS would have to produce either countervailing
evidence, or it would have to provide a reason for rejecting Pomona’s affirmative case that was not based on the insufficiency of Pomona’s showing.
On review, the D.C. Circuit decided that Pomona showed that the evidence was so one-sided that, absent countervailing evidence from the agency, the Board would be compelled to resolve the disputed factual issues in Pomona’s favor. The Circuit Court held that “Pomona went about as far as it could, in attempting to reverse-engineer the SSI-eligibility data from publicly available data ….” The court rejected the Board’s criticism of Pomona’s use of Medi-Cal data using patient days for those receiving supplementary payments (SSP) but not SSI because Pomona eliminated any SSP-only days which likely produced an overcorrection. Next, the Circuit Court rejected the Board’s criticism of Pomona’s case for failing to estimate the size of the long-term nursing home populations and first-time applicants for SSI and Medi-Cal benefits. The Court credited Pomona’s expert testimony that such discrepancies would be immaterial and certainly would not account for the large disparity in results. Finally, the Court found that the Board erred in faulting Pomona for not providing a “crosswalk” between Medi-Cal and SSI codes because Pomona explained how Medi-Cal codes have served reliably to establish SSI or SSP eligibility and that Pomona adjusted to eliminate any SSP-only patient days.
The D.C. Circuit Court concluded that “[g]iven the strength of the hospital’s showing, and the absence of any countervailing evidence, the Board’s conclusion that Pomona had failed to prove an undercount was unreasonable.” Pomona Valley Hosp. Med. Ctr. v. Becerra, 2023 WL 5654315, at *7 (D.C. Cir. Sept. 1, 2023). The Court, therefore, affirmed the District Court’s order to set aside the PRRB’s decision and remand back to the PRRB for further proceedings so that the agency can provide countervailing evidence or reason for why the SSI numerator was accurate. The court, however, declined to draw an adverse inference to conclude that CMS’s evidence would be unfavorable.
The full text of Pomona Valley Hosp. Med. Ctr. v. Becerra is available here.
