February 1998 Bulletin

Supreme court
Laura Pelehach

Medical center sues HHS

Challenges reaudit of GME costs

Attorneys for Regions Medical Center (formerly St. Paul-Ramsey Medical Center, Inc.), St. Paul, Minn. expect a U.S. Supreme Court ruling next month on litigation that challenges the Department of Health and Human Servicesí reaudit of the hospitalís graduate medical education (GME) costs.

In 1986, Congress enacted a statute that set the rate for future GME, based on costs reported during 1984. The regulations were not issued until 1989. By this time, the reopening period for determining 1984 GME costs under the prior methodology had expired for most hospitals. The regulations authorized a reaudit of hospitalsí 1984 base year GME costs.

As a result of the reaudit, the hospitalís GME costs were reduced to $5,494,955 from $9,892,644. According to Ronald Sutter, an attorney for Regions Medical Center, the hospital has been adversely affected and could be affected for years to come by having its base-year GME costs reduced by the new reimbursement methodology.

Attorneys for the hospital told the Supreme Court in December that the results of the reaudit contradicted language of the statute, which charged the Secretary of Health and Human Services to "determine, for the hospitalís cost reporting period that began during fiscal year 1984, the average amount recognized as reasonable under this subchapter." They said the reimbursement amount after the reaudit was not reasonable. Furthermore, attorneys argued that it was unreasonable to conduct a reaudit after expiration of the record-retention period because the results were not accurate. Finally, they argued that the regulations were improperly retroactive, because there was no clear language in the statute dealing with retroactivity.


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