Fifth Circuit Reverses U.S. Medicare Agency, Orders Reimbursement for Mississippi Hospitals

On June 10, 2019, the U.S. Court of Appeals for the Fifth Circuit handed down its decision in Forrest General Hospital v. Azar, reversing the decision of the U.S. Department of Health and Human Services (“HHS”) to deny certain Hurricane Katrina-related reimbursement to two south Mississippi hospitals, Forrest General and Southwest Mississippi Regional Medical Center.

These two hospitals were overwhelmed with refugees in the wake of the devastating Hurricane Katrina in 2005. HHS promised the state’s Medicaid program that HHS would waive normal rules for Medicaid qualification so that caregivers could be compensated for health care provided to those fleeing from Hurricane Katrina, many of whom had no insurance, no proof of income, and in some cases, nothing more than the clothes on their backs.

However, when the hospitals applied to include these “uncompensated care pool” patients in their request for Disproportionate-Share Hospital (“DSH”) reimbursement, HHS refused to do so, despite its own rule that patients treated under a waiver program were to be included in the DSH reimbursement formula. 

Balch & Bingham partners in the  Health Law Practice, appealed this ruling to the Provider Reimbursement Review Board, which conducted a hearing and ruled in favor of the hospitals. Later, the Secretary of HHS reversed that decision, and on further appeal to the U. S. District Court for the Southern District of Mississippi, the district court affirmed the HHS ruling. The hospitals then sought relief from the Fifth Circuit Court of Appeals. That court granted oral argument on the appeal,  Andy Lowry, partner in the Health Law and Appellate Practices, argued the case before the appeals court.

In a unanimous opinion penned by Circuit Judge Don R. Willett, the Fifth Circuit disagreed with the district court and with HHS. It held that the district court erred in giving “substantial deference” to HHS’s ruling, because “HHS’s position is foreclosed by the text and structure of the relevant provisions” of federal law. The court’s 22-page opinion held that HHS had misread both the statute and the regulation governing Medicaid waivers and DSH payments. The Fifth Circuit therefore ordered HHS to include the “uncompensated care pool” patient days in the DSH computations, giving the hospitals the relief they had sought.

The Healthcare Practice Group at Balch routinely assists hospitals and other health-care providers with issues arising from Medicare and Medicaid reimbursement, appearing often before the Provider Reimbursement Review Board and pursuing litigation where necessary to protect our clients’ rights.