St. Vincent's Medical Center v. United States

29 Fed. Cl. 165, 1993 U.S. Claims LEXIS 138, 1993 WL 331566
CourtUnited States Court of Federal Claims
DecidedAugust 30, 1993
DocketNo. 92-816C
StatusPublished
Cited by1 cases

This text of 29 Fed. Cl. 165 (St. Vincent's Medical Center v. United States) is published on Counsel Stack Legal Research, covering United States Court of Federal Claims primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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St. Vincent's Medical Center v. United States, 29 Fed. Cl. 165, 1993 U.S. Claims LEXIS 138, 1993 WL 331566 (uscfc 1993).

Opinion

OPINION

BRUGGINK, Judge.

Defendant has moved to dismiss this action for lack of jurisdiction. It contends that plaintiff, a provider of Medicare services, is in the wrong forum. After consideration of the motion materials, the applicable law, and in light of oral argument, the court concludes that defendant is correct, and that the action should be dismissed.

[166]*166FACTUAL AND STATUTORY BACKGROUND 1

St. Vincent’s Medical Center, a Florida hospital, entered into an agreement with the Department of Health and Human Services (“HHS”) to provide hospital services to Medicare beneficiaries pursuant to Title XVIII of the Social Security Act. 42 U.S.C. §§ 1395 et seq. (1988) (“Act” or “Medicare Act”). A sample of the agreement, which consists of only one page, is attached to the complaint. It incorporates by reference the statutory and regulatory provisions applicable to obtaining reimbursement for such services. The attached agreement was executed in April 1987. Comparable agreements were executed for periods before and after 1987.

St. Vincent’s claim arises under Part A of the Medicare program, which authorizes payment, among other things, for hospital care. 42 U.S.C. §§ 1395c-1395i-2. Congress has delegated certain administrative responsibilities under the Medicare program to the Health Care Financing Administration (“HCFA”). In addition, Blue Cross and Blue Shield of Florida, Inc. (“Blue Cross”) serves as fiscal intermediary for certain acute care hospitals, including St. Vincent’s. The applicable regulations require providers to submit to the fiscal intermediary reports that reflect costs incurred during the preceding fiscal year, and that break out costs attributable to Medicare services. 42 C.F.R. § 405.-1803. Providers may receive reimbursement for the reasonable cost of certain medical services provided to recipients. 42 U.S.C. § 1395f(b). The fiscal intermediary analyzes and audits the cost report and furnishes the provider with a Notice of Program Reimbursement (“NPR”), which reflects the amount to which it believes the provider is entitled. 42 C.F.R. § 405.1803. Providers that are dissatisfied with the intermediary’s final determination of the amount of reimbursement may, within 180 days, request a hearing before the Provider Reimbursement Review Board (“PRRB”). 42 U.S.C. § 1395oo(a).

With respect to cost reporting periods ending before October 1, 1983, 42 U.S.C. § 1395f controls reimbursement. This section, insofar as relevant here, permits payment either for the reasonable cost of the service, or for the customary charge, whichever is less. Reasonable costs, in turn, are defined in § 1395x(v) as “the cost actually incurred, excluding therefrom any part of incurred cost unnecessary ...” 42 U.S.C. § 1395x(v) (1988). Plaintiff alleges that the pre-1983 “reasonable cost system” reimbursed providers for the cost of operating the hospital physical plant, including the cost of electricity.

After October 1, 1983, acute care hospitals became subject to the Prospective Payment System (“PPS”). Social Security Act Amendments of 1983, Pub.L. No. 98-21, 97 Stat. 165 (1983), codified at 42 U.S.C. § 1395ww(d) (1988). Reimbursement under this system, which became fully effective in 1987, was not directly tied to actual or reasonable costs. Instead, hospitals were to be paid based on predetermined rates for particular treatments. HHS was to classify hospital discharges into diagnosis-related groups (“DRG”). Id. § 1395ww(d)(4)(A). Each DRG was to be assigned an appropriate weighting factor to reflect the relative degree of utilization of hospital resources. Id. § 1395ww(d)(4)(B).

During the four-year transition period to full implementation of PPS, reimbursement was based on a sliding scale, reflecting a combination of hospital-specific costs and PPS determined costs, with the latter costs taking on a larger proportion of reimbursement over time. The hospital-specific costs were to be based on allowable operating costs in a base year. 42 U.S.C. § 1395ww(d)(l)-(3); 42 C.F.R. §§ 412.62(a), 412.63(a) (1989). With respect to St. Vincent’s, the base year was calendar 1982.

The claim at issue involves the cost to St. Vincent’s of electricity consumed between 1977 and 1986. Because of a malfunction of the electrical metering system, the power company did not bill the hospital for certain power charges until 1986. The hos[167]*167pital’s cost report for 1985, submitted in 1986, estimated electrical expenses at $1.5 million. On December 6, 1986 St. Vincent’s paid the power company $2,569,435. The hospital used that amount to calculate its claimed reimbursement on its 1986 cost report. It did not claim the cost under the transitional PPS methodology, but rather, as a “below the line expense” on the theory that if the meter had been properly installed, HCFA would have reimbursed the hospital for its reasonable costs for electricity, at least prior to October 1, 1983. Such reimbursement would have been approximately $332,655.2

One additional effect of assigning the electricity costs nunc pro tunc back to the relevant consumption years is that some part of those costs would have been assigned to 1982. The substance of plaintiff’s complaint is that the cost reports submitted for the years 1983 through 1987, prepared before discovery of the error, do not reflect what would otherwise have been a higher base year cost for 1982. According to the hospital, if the transitional years were correctly recalculated in light of the electricity charges prior to 1983, it would result in additional reimbursement of approximately $169,903.

Plaintiffs brief recites that the reason given by the intermediary, Blue Cross, for rejecting electricity costs in the 1985 report was that the actual amounts due had not yet been determined.3 When plaintiff asserted the actual payment as a “below the line” expense for 1986, Blue Cross rejected it as a non-reimbursable operating expense. In the NPR of December 15, 1989, Blue Cross reclassified the electricity expense as a 1986 operating cost. Because 1986 costs were subject to the PPS methodology, which did not contemplate separate repayment of utility costs, Blue Cross denied reimbursement. Plaintiff appealed the denial to the PRRB, apparently requesting that the 1985, 1986, and 1987 cost years be calculated using pre-PRS methodology with respect to the electrical costs, or that they be treated as a below the line expense in 1986.4

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29 Fed. Cl. 165, 1993 U.S. Claims LEXIS 138, 1993 WL 331566, Counsel Stack Legal Research, https://law.counselstack.com/opinion/st-vincents-medical-center-v-united-states-uscfc-1993.