46 Hospitals Sue HHS Secretary to Reverse Bad Debt Policy

A group of 46 hospitals have filed suit against Alex Azar, the Secretary for the Department of Health and Human Services, seeking the reversal of a policy that has kept hospitals from receiving $1.4 million in bad debt payments.

A copy of the complaint, filed in the District Court for the District of Columbia, can be accessed by clicking here.

HHS reversed a policy that had previously allowed hospitals to be reimbursed for Medicare-related bad debts that had been placed with an outside collection agency. The Department determined that they could not be properly claimed as uncollectible because the accounts were still being worked by the outside agencies. The hospitals are seeking to be reimbursed for accounts that were placed with collection agencies between 2006 and 2009 as well as be paid interest on that amount. That ruling was upheld last August by a Medicare appeals panel.

Individuals who have Medicare are responsible for paying any coinsurance or deductible amounts.

More than half of the hospitals participating in this lawsuit were plaintiffs in another suit dealing with the same issue. In that case, the plaintiffs won a motion for summary judgment and were repaid what they were owed with interest.

“Bad debts are explicitly allowable under applicable law,” the hospitals claim in their complaint. “The Secretary’s determination that the bad debts cannot be claimed as uncollectible on the ground that they were still pending at an outside collection agency was based on a policy that cannot be applied to the bad debts at issue because, as this Court has previously held in an action involving many of the same hospital-plaintiffs that are plaintiffs here, applying the policy would violate the Medicare Bad Debt Moratorium.”

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