Hospitals gain reprieve in Medicaid lawsuit

[May 24, 2008]  WASHINGTON (AP) -- Hospitals won a reprieve Friday from a change in Medicaid regulations that would trim hospital payments by an estimated $5 billion over the next five years.

Hospitals filed a federal lawsuit in March to void the regulations. On Friday, U.S. District Court Judge James Robertson voiced exception to procedures that federal health officials used to put the regulations into effect. His ruling set aside the regulations.

Robertson said Congress passed a law May 24, 2007, prohibiting "any action" to implement the regulation limiting hospital reimbursements.

Nevertheless, Health and Human Services Secretary Mike Leavitt "rushed a typo-ridden final rule" to the Office of the Federal Register, which allowed the rule to be issued just before Congress's prohibition could be signed into law.

"In this case, the court is asked to decide whether a maneuver by the executive branch deliberately designed to outfox a clear directive of Congress was successful. The answer is no," Robertson wrote.

Hospitals officials who filed the lawsuit said it's now up to the Bush administration to decide whether to republish the rule. If it goes ahead, the rule would go into effect 60 days after publication.

Jeff Nelligan, a spokesman for the Centers for Medicare and Medicaid Services, said the administration has agreed voluntarily to refrain from making the rule effective until Aug. 1, and he noted that Leavitt offered to work with Congress and governors to discuss their concerns.

"We remain convinced that the rule will ultimately be upheld on its merits by the judge," Nelligan said.

Hospital groups said they would ask Congress to intervene.

"We are gratified at the overwhelming bipartisan opposition to this regulation, which would virtually dismantle our nation's health safety net," said Larry S. Gage, president of the National Association of Public Hospitals and Health Systems. "We urge Congress to continue to move ahead swiftly to extend the moratorium."

[Associated Press]

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