On September 27, 2023, Judge Royce Lamberth of the United States District Court for the District of Columbia dismissed a lawsuit challenging HHS’s calculation of the standardized amount used in calculating Medicare Inpatient Prospective Payment System (IPPS) payments. The Court ruled that the hospitals failed to exhaust administrative remedies under the Medicare Act and declined to exercise mandamus powers to order the Provider Review Reimbursement Board (PRRB) to rule on its jurisdiction within a particular time.

More than twenty hospitals alleged that the HHS Secretary used invalidly low standardized amounts in calculating IPPS payments for hospital inpatient services for fiscal years 2019, 2020, and 2021.

The hospitals initiated a challenge to the standardized amounts before the PRRB, where they filed a request for an expedited judicial review (EJR). The EJR process permits parties to bypass the PRRB hearing process when the PRRB has jurisdiction but lacks authority to decide a question of law regarding the matters in controversy. The Medicare statute requires the PRRB to decide EJR requests within thirty days and states that if the PRRB fails to do so, the party requesting EJR may bypass the PRRB and file a civil action in a federal district court. CMS’s regulation states that the 30-day clock only starts after the PRRB has determined it has jurisdiction and places no time limit on the PRRB’s jurisdictional determination.

The PRRB dismissed the hospitals’ initial EJR request, but it simultaneously requested additional briefing and allowed the hospitals to refile at a later date. The hospitals filed a second EJR request and, after the PRRB declined to rule on its jurisdiction within 30 days, the hospitals filed their civil action in the Federal District Court for the District of Columbia. The hospitals argued that the 30-day limit should apply to both the PRRB’s determination of jurisdiction and authority.

The HHS Secretary moved to dismiss the hospitals’ lawsuit. The District Court ruled that it lacked jurisdiction over the hospitals’ lawsuit because the hospitals failed to exhaust administrative remedies when they filed their civil action in federal court before the PRRB had determined whether it had jurisdiction. The Court accepted CMS’s position that the 30-day clock for the PRRB to rule on its authority to address a legal issue only starts after the PRRB accepts jurisdiction. In addition, the Court declined to exercise its mandamus power to order the PRRB to rule on its jurisdiction within 30 days.

The case is Saint Francis Medical Center et al. v. Becerra, No. 1:22-cv-01960-RCL (D.D.C., Sep. 27, 2023). A copy of the Court’s order is available here.