Corporate Compliance

Hospitals to receive $666M in back Medicare benefits

Compliance Monitor, March 19, 2008

The hospitals will split $666 million in back payments which stem from shifts in Medicare reimbursement policies dating back to the 1980s, according to a Wall Street Journal article.

In 1986, the Reagan administration changed reimbursement rules to exclude some low-income patients from disproportionate-share payment calculations. A group of hospitals successfully sued to have the rule changed in 1997.

In 2002, Baystate Medical Center in Springfield, MA, became the first hospital to sue CMS and the Department of Health and Human Services for back payment for treatments it provided to patients starting in the early 1990s. More hospitals followed and the number of plaintiffs grew to 667.

U.S. District Judge Paul Friedman ruled in favor of the hospitals in 2004. The government lost an appeal in 2005 and the Supreme Court declined to hear the case in 2006. Settlement talks began in 2006.

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