Verrill Dana Client Prevails in $1,123,462 Appeal to the Medicare Provider Reimbursement Review Board

A Vermont sole community hospital experienced a sudden, but unexplained, decrease in the number of Medicare inpatients admitted during its fiscal year 2004. It applied for a Medicare Low Volume Adjustment Payment, citing a 9.35% drop in inpatient volume from 2003 to 2004, and requested approximately $1.2 million of additional Medicare reimbursement. The Medicare program denied the hospital’s request in full because the hospital could not explain exactly why inpatient volume had decreased. Will Stiles represented the hospital in an appeal to the Medicare Provider Reimbursement Review Board (PRRB) in Baltimore, Maryland.

The primary argument was that the applicable statute does not require a hospital to explain the cause, but only demonstrate that inpatient volume dropped by more than 5 percent for reasons beyond the hospitals control. Will worked with the hospital’s long time CEO and expert witness to provide testimony and evidence that the contributing factors to the decline were (1) the departure of an area physician and (2) a general decrease in demand for inpatient services (an outbreak of good health). We were able to convince the PRRB that the hospital did nothing to cause the decrease through evidence that (1) the hospital did not change its operations or policies: (2) patient satisfaction remained high (survey results); (3) admitting physician satisfaction remained high (no staff turnover, CEO interviews); and (4) patient admissions to hospitals had decreased during this time period, not only in the hospital’s service area, but also in the greater region and the State of Vermont as a whole. Accordingly, the PRRB reversed the Medicare program’s denial of the application, and remanded the case back for a calculation of the amount due under the regulatory calculation. The CMS Administrator declined to review the PRRB’s decision, and the MAC subsequently awarded the hospital $1,123,462.