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Medicare Pays Up

New York, NY: (Mar-12-08) Hospitals nationwide have brought a lawsuit against the federal government, alleging that they were owed money, due to changes made to the Medicare reimbursement policy more than 20 years ago. Sources stated that in the mid-1980s, the Reagan administration reinterpreted Medicare reimbursement rules, which excluded certain types of low-income patients from the calculation and significantly reduced payments for the hospitals, forcing several hospitals to file suit to amend the rules, a move that they won in 1997.

Records show that Baystate Medical Center in Springfield, MA, was the first hospital to sue the Centers for Medicare and Medicaid and the Department of Health and Human Services in federal court in 2002, for back payments regarding treatments it gave patients starting in the early 1990s. The numbers of plaintiffs grew to more than 660 hospitals, mostly nonprofits. The plaintiffs included University of Chicago Hospitals, Duke University Health System, Stanford Health Services and San Francisco General Hospital.

As part of a settlement in the case, the federal government has agreed to pay $666 million to more than 660 hospitals that sued for Medicare back payments. The negotiated settlement, that resolved the two-year-old suit, avoided the costs and risks that are part of protracted litigation. [BUSINESS WEEK: GOV'T TO PAY $666 MILLION TO HOSPITALS]

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