Monday, April 18, 2016

CMS gives up on two midnight rule financial cut; But there's a bigger lesson

CMS undertakes annual hospital rulemaking.  It proposes a budget cut, with a bit of handwaving and a few sketchy numbers.  The AHA sues: on the grounds that federal rulemaking must be rationale and explicit.  A court ordered CMS to cough up its rationale in terms a CPA could understand.  CMS threw in the towel and gave up on the cut.  Full article online at Modern Healthcare, here.

A couple years ago, in implementing the hospital "two midnight rule," CMS also calculated, or estimated, or guessed, that it would entail a 0.2% payment cut to hospitals for budget neutrality rules.
The American Hospital Association took CMS to court, arguing the cut was improperly promulgated through vague rulemaking and guesswork.  Trying to have the matter thrown out, CMS made several arguments that its reasoning had been rationale enough.   A court sided with the AHA, and demanded that CMS produce a proper public accounting of its 0.2% cut.  In March, CMS asked for an extension of its obligation to clarify its thinking.  Today, April 18, CMS threw in the towel.  It sidestepped a bit, saying that it still felt the original cut was rationale (in its own mind) but that further use of the cut was unwarranted.

This case has much larger implications, because it provides a fresh case for litigants offended by vague CMS rulemaking.  They can sue, and CMS can lose.

For an earlier blog on the topic, here.

For an example of how loose CMS use of accounting and policy rules can get, here.