The American Hospital Association (AHA) and four hospital systems are suing the U.S. Department of Health and Human Services (HHS) over rescinded Medicare reimbursement for services such as cardiac catheterizations.

The lawsuit revolves around decisions by HHS to require hospitals to return Medicare funding for patients who received care in inpatient settings that a recovery audit contractor (RAC) later determined should have been provided as an outpatient service. The dispute does not involve the necessity of the procedures, but rather whether they should have been provided in an outpatient facility.

The suit was filed in the U.S. District Court of the District of Columbia by the AHA; Missouri Baptist Sullivan Hospital in Sullivan, Mo.; Munson Medical Center in Traverse City, Mich.; Lancaster General Hospital in Lancaster, Pa.; and Trinity Health in Livonia, Mich.     

“The Medicare program has been refusing to pay hospitals for hundreds of millions of dollars’ worth of care provided to patients, even though all agree that the care provided was reasonable and medically necessary as the Medicare Act requires,” according to the filing. “The government’s refusal to pay for this care is harming hospitals and patients.”

Among examples given under “Harms to Plaintiffs,” the lawsuit described a case at Munson Medical Center in which a 68-year-old Medicare beneficiary was admitted and treated for a cardiac catheterization and remained overnight.  The Centers for Medicare & Medicaid Services reimbursed the hospital $11,629 through a Part A claim.

A RAC determined later that the patient should have been treated as an outpatient and requested repayment. “At no point before, during, or after the RAC review has anyone disputed that the patient needed the cardiac catheterization or that the hospital had provided only medically necessary items and services,” according to the filing.

Munson claimed that the RAC has asked for more than 1,500 patient records between 2007 and 2012, and has required Munson to repay Medicare almost $6.5 million. AHA data show that hospitals have had to repay $236 million in 2012 “for medically necessary items and services that RACs deemed should have been provided on an outpatient, rather than an inpatient, basis. And this amount does not include the millions of dollars recovered from hospitals that did not report data to the AHA,” according to the complaint.

The complete complaint is available here.