Bethesda Hospital Assn. v. Bowen

Background

A group of Ohio hospitals, including Bethesda Hospital and Deaconess Hospital, followed a 1979 Medicare rule that limited malpractice insurance cost claims. In their 1980 cost reports they applied the rule and thereby "self-disallowed" amounts above the limit. The hospitals then asked the Provider Reimbursement Review Board to hear a challenge to the rule and to allow reimbursement under the old method. The Board said it had no jurisdiction because the hospitals had not shown they were "dissatisfied" with their fiscal intermediary when they filed the reports. Lower courts split on whether the Board was required to refuse jurisdiction in that situation.

Reasoning

The Court examined the statute that creates Board hearings and found its plain language controls. The Justices said being "dissatisfied" with the amount of reimbursement is a condition for Board review, but following a regulation in a cost report does not, by itself, prevent a provider from later claiming dissatisfaction. The Court noted that fiscal intermediaries are bound to apply the Secretary’s rules and cannot declare those rules invalid, while the Board has a different role and can revise cost reports on matters covered by them. Because the statute allows the Board to decide whether it has authority to address legal questions about regulations, the Court held the Board had jurisdiction to hear the hospitals’ challenge.

Real world impact

As a result, hospitals and other Medicare providers can bring challenges to regulations to the Board even when they complied with those regulations in filings. This decision makes it easier to obtain administrative and then judicial review of disputed reimbursement rules. The Court reversed the appeals court and sent the case back for further proceedings consistent with the opinion.