On March 21, 2017, the U.S. District Court for the District of Columbia ruled that a hospital lacked standing to challenge a decision of the Provider Reimbursement Review Board (the “PRRB”), since the hospital failed to challenge one of the two grounds on which the decision was based. The plaintiff hospital challenged the accuracy of the wage data CMS relied on in formulating the wage index, after a neighboring hospital failed to provide wage documentation to CMS. The court held that it could not redress the plaintiff hospital’s injury, because the hospital failed to challenge the PRRB’s finding that, under CMS’s guidance, the PRRB lacked authority to afford a remedy.
HHS has the statutory authority to adjust the proportion of payment to hospitals attributable to wages and wage-related costs for area differences in hospital wage levels. In most cases, the geographic area for which a wage index is calculated corresponds to one of the metropolitan statistical areas (MSAs), such that a change in one hospital’s wage data affects the wage index for all hospitals in the area.
In the case, the plaintiff hospital challenged CMS’s calculation of the Medicare wage index for the hospital’s MSA. Another hospital in the plaintiff hospital’s MSA failed to provide documentation to CMS in support of its reported increase in wages. As a result, CMS adjusted the neighboring hospital’s reported wages to a lower amount. Because the wage index for an MSA is based on the reported hospital wages, CMS’s adjustment of the neighboring hospital’s reported wages figure resulted in a lower payment to the hospitals in the MSA, including to the plaintiff hospital.
The plaintiff hospital – along with two other hospitals in the MSA – requested a hearing before the PRRB. Upon reviewing the arguments and evidence, the PRRB ruled that CMS’s determinations must stand, citing two bases: (1) the PRRB lacked authority to afford relief, because CMS (in the pertinent 2004 rulemaking) did not provide a remedy for other hospitals in the same MSA which are harmed by the hospital that failed to furnish correct wage index data, and (2) the challenging hospitals “ha[d] not met their burden of proof,” because they did not produce any provider-specific information or documentation in support of their arguments.
The plaintiff hospital then sought a judicial review of the PRRB’s decision. In its complaint, the hospital asserted a single count, challenging the accuracy of the wage data CMS relied on in formulating the wage index. The hospital did not challenge the PRRB’s holding that the PRRB lacked authority to grant a remedy. The hospital’s failure to challenge one of the two grounds on which the PRRB ruled proved fatal for its complaint. The court noted that where an agency’s finding is based on two alternative grounds, and the plaintiff fails to challenge one of the grounds, the court must assume, for the purposes of standing analysis, that the challenged finding was valid. Overturning only one of the two grounds would not redress the plaintiff hospital’s harm; and redressability is required for standing.
The court also noted another, less significant, redressability challenge: even if the court were to order CMS to permit the neighboring hospital to submit missing documentation, “it is far from clear that the [neighboring hospital] would do so.”
While the court did not reach the merits of the case, it did provide some commentary on the plaintiff hospital’s arguments. The court found “not surprising” the PRRB’s finding that, under the 2004 Rule, CMS did not provide a remedy for other hospitals in the same MSA which are harmed by the hospital that failed to furnish correct wage index data. The court also stated that it was “not convinced” that the plaintiff hospital was not challenging another provider’s data, as opposed to simply challenging the wage-index calculated for the MSA as the hospital asserted, or that the hospital is entitled to bring the challenge.
The case is Dignity Health v. Burwell, Civil Action No. 2015-0804. The Court’s opinion is available here.
