February 11, 2008
A federal district court January 10 waived the "usual remedy exhaustion" requirement, preventing the Health & Human Services Secretary from canceling a California hospital’s approval to receive Medicare and Medicaid payment for clinical laboratory services (Victor Valley Community Hospital v. Leavitt).
More than 60% of the patients at Victor Valley, one of four hospitals in the High Desert region of California with a population of about 500,000, receive Medicare or Medicaid (Medi-Cal) services.
In July 2007, the Centers for Medicare & Medicaid Services determined that Victor Valley was not in compliance with the CLIA proficiency testing condition because it improperly referred proficiency testing samples to an outside laboratory. CMS informed the hospital it would postpone the proposed revocation of CLIA certification if Victor Valley requested an administrative hearing. However, CMS warned, cancellation of all Medicare and Medi-Cal payments would go into effect, regardless of whether a hearing was requested.
The district court found that if Victor Valley lost Medicare and Medi-Cal payment for laboratory services, it would have to struggle to provide basic services and maintain necessary equipment and would likely have to trim its operations or shut down. If the hospital ceased operating, the court found, it would be difficult or impossible for the other three hospitals in the area to meet the community need for birthing and emergency services.
The court’s decision effectively stops the federal government from cutting off payments while the issue is resolved. The case is now at the administrative hearing level to determine whether the revocation of the CLIA certificate was justified.
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February 11, 2008 - Table of Contents
