Federal court says HHS must recalculate years of Medicare payments to teaching hospitals

by Dave Muoio | May 21, 2021

A federal court has ruled in favor of dozens of teaching hospitals in a case seeking greater Medicare reimbursement payments for training physicians as part of their residency programs.

This week’s decision not only requires the Department of Health and Human Services (HHS) to recalculate years of reimbursement payments to the plaintiffs, but also paves the way for other teaching hospitals to contest their own training payments from the agency, according to a firm representing the plaintiffs.

Addressing five consolidated suits filed in the U.S. District Court for the District of Columbia in 2019 and 2020 against then-Secretary Alex Azar, the decision concerns calculations used by HHS to determine a hospital’s direct graduate medical education (DGME) payments.

Plaintiffs argued that HHS limited reimbursement by unlawfully issuing a regulation that reduces weighting factors outlined by Congress in a 1997 amendment to the Medicare Act. The regulation reduced the weighted number of full-time equivalents (FTEs) hospitals could claim for reimbursement should they exceed the number of FTEs reported by the hospital in 1996 or prior.

By doing so, the plaintiff teaching hospitals said they were under reimbursed by millions of dollars for fiscal years dating as far back as 2005. One plaintiff, Milton S. Hershey Medical Center, said that its reimbursements were collectively reduced by more than $12.8 million due to the regulation.


Josh Sandberg

Josh Sandberg is the President and CEO of Ortho Spine Partners and sits on several company and industry related Boards. He also is the Creator and Editor of OrthoSpineNews.

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