​A recent decision from the U.S. Court of Appeals for the District of Columbia Circuit has thrown open the possibility of a group appeal to address an error in the first standardized amount computed for Inpatient PPS in 1983, which has understated Inpatient PPS reimbursement. In short, hospital-to-hospital transfers were included in the calculation for the 1983 standardized amount because they were coded as discharges in the 1981 cost report data used to compute the 1983 standardized amount, and because transfers are paid differently under PPS, the transfers should have been omitted from this calculation. 

There had been a GME case a few years ago in which a federal court held that you could fix a "predicate fact" in an old cost report beyond the reopening window and use that corrected fact/number going forward. That case fixed an error in the hospital's 1997 FTE cap to be used going forward.  Following that case, CMS quickly published a regulation preventing the correction of "predicate facts" unless the cost report with the fact to be corrected was still within its three-year reopening window.  ​

The recent decision invalidated that regulation, opening up ​the opportunity to correct the predicate fact here: the number of discharges in the 1983 standardized amount calculation. Hall, Render, Killian, Heath and Lyman is planning to form a group appeal for IHA members and is working on quantifying the impact to IHA members. Group appeals could be formed prospectively, based upon the FFY 2019 IPPS Final Rule, as well as for whichever hospital cost reports have eligible Notice of Program Reimbursements (NPRs) or still unsettled cost report.  

CMS's reaction to this decision is not yet known. Since this decision is very recent, information on how it would be implemented and w​hether CMS might ask the Supreme Court to review this decision is still to be determined. As of now, the case has been remanded back to the District Court, and it is possible the hospitals would then be sent back to the Provider Reimbursement Review Bo​ard if CMS does not elect to settle this issue. Hospitals should protect their appeal rights in the meantime; as we know from past IHA group appeal initiatives, a substantial number of hospitals participating in a group appeal does get CMS's attention.​

Further information will be forthcoming.  If you have any questions, please contact Terry Cole at tcole@IHAconnect.org or 317-432-7741, Liz Elias at eelias@hallrender.com or 317-977-1468, Maureen O'Brien Griffin at mgriffin@hallrender.com or 317-977-1429, or your regular Hall Render attorney. ​​