3rd Circuit Issues First-of-Its-Kind Decision Rejecting HHS Urban-Rural Hospital Rule

On July 23, 2015, the United States Court of Appeals for the Third Circuit declared unlawful a Medicare regulation that prevented certain hospitals from reclassifying to a more advantageous area for Medicare wage index purposes. Glazer Law PLLC, represented the successful hospital. At issue in the case was a statutory provision often referred to as “Section 401.” Section 401 is a little known part of the Medicare Act that can have considerable advantages for certain urban hospitals. Section 401 creates a mechanism by which some hospitals located in urban areas can be treated as rural for some aspects of Medicare reimbursement. For eligible hospitals, the difference can result in millions of dollars in additional reimbursement each year. As a result of the court’s decision, eligible Section 401 hospitals in Pennsylvania may now be able to apply to the MGCRB for wage index reclassification under the less stringent standards applicable to rural hospitals. Click here to read the court’s decision.