The Iowa Supreme Court has upheld a lower court ruling that determines how the Iowa Department of Humans Services figures reimbursement rates for nursing homes. Nursing homes make an annual report to DHS on their costs of operation and then DHS uses that report to figure out how much the Medicaid program should pay the facilities for services provided to patients using Medicaid.
Nine nursing homes challenged DHS in 2008 when the department said the homes could no longer include the costs of prescription drugs, x-rays, and lab work provided to Medicaid patients by outside providers in the calculation of the reimbursement. The DHS director said since the costs were paid by Medicaid, they would artificially inflate the costs incurred by the nursing homes.
The district court ruled in favor of the DHS director, but the Iowa Court of Appeals overturned that ruling. The Iowa Supreme Court upheld the appeals court ruling, saying the court understood the need of DHS to contain costs, but said the director’s abrupt change in the interpretation of the rules was akin to creating whole new rule.
The high court says the appropriate action for the department is to go through a new rulemaking process so that everyone involved has a chance to give their input.
The nursing homes involved in the lawsuit are: Sunrise Retirement Community, Friendship Haven, Presbyterian Village, Rose Vista Home, Longview Home, United Presbyterian Home, Riceville Community Rest Home, Hubbard Care Center, and Happy Siesta Care Center.
See the full ruling here: Medicaid DHS ruling PDF