Rush Univ. Med. Ctr. v. Burwell (Summary)

MEDICARE REIMBURSEMENT

Rush Univ. Med. Ctr. v. Burwell, No. 13-3285 (7th Cir. Aug. 18, 2014)

The United States Court of Appeals for the Seventh Circuit reversed a lower court decision, holding that teaching hospitals cannot bill Medicare for “indirect medical education” (“IME”) costs when a medical resident is researching activities wholly unrelated to the diagnosis or treatment of patients. Plaintiff, a teaching hospital, sought Medicare reimbursement for such IME costs (referred to in the opinion as “pure research”) from 1983 to 2001. The Affordable Care Act clearly excludes such costs for FY 2001 onward but did not address the period from 1983 to 2001. The teaching hospital filed suit after its fiscal intermediary denied the request. The district court granted summary judgment in favor of the teaching hospital based on a 2010 Seventh Circuit decision holding that pure research is part of compensable IME costs for the 1983 to 2001 period.

Here, the Seventh Circuit ruled that pure research can no longer be included in IME costs. The court explained that when it made its earlier decision, the Affordable Care Act’s provision regarding whether pure research could be included in IME costs was “less than clear,” and there were no regulations to help interpret it. However, since that decision, the Department of Health and Human Services promulgated a regulation excluding pure research from IME costs. The court reasoned that because its previous interpretation of the Affordable Care Act was from an ambiguous provision, and the agency’s definition is reasonable, the subsequent administrative regulation excluding pure research from IME costs is controlling.