AHA files amicus in Aetna case

The U.S. District Court for the Eastern District of Pennsylvania on Aug. 5 allowed the American Hospital Association and the Hospital and Healthsystem Association of Pennsylvania to file an amicus brief in support of Jefferson Health’s challenge to Aetna Health’s “level of severity” inpatient payment policy. Judge John M. Gallagher said the hospital groups could participate as friends of the court while Aetna presses a motion to compel arbitration and stay the case. The underlying lawsuit was filed April 6 by Thomas Jefferson University, doing business as Jefferson Health, and Lehigh Valley Physician Hospital Organization, or LVPHO. The dispute centers on how Aetna pays for certain Medicare Advantage inpatient admissions. ### Why were hospital groups asking to weigh in at this stage? The AHA and HAP filed their motion on June 5, saying the case raises “significant legal and operational questions for hospitals and health systems in Pennsylvania and nationwide,” according to Gallagher’s opinion. Aetna opposed the request on June 18, arguing the groups did not meet the standard for amicus participation. Gallagher granted the motion and wrote that amicus participation would be permitted. (sponsors.aha.org) The AHA said in a June 8 notice that its brief supported a provider seeking declaratory or injunctive relief from Aetna’s reimbursement policy. The hospital group said abrupt insurer policy changes affect hospital finances and add administrative burden because billing teams already manage insurer-specific requirements. ### What is Aetna’s “level of severity” policy? (sponsors.aha.org) Aetna’s policy document says it applies to Medicare Advantage products, including Special Needs Plans, for urgent or emergent inpatient admissions of one midnight or more at participating facilities paid under DRG or Medicare-allowable methodologies. The document describes a “Lower Level of Severity Rate” and a “Higher Level of Severity Rate,” and says the policy discusses how Aetna reimburses those admissions. (aha.org) The AHA said the policy has been effective since January and creates a new type of reimbursement for “low severity” inpatient stays that Aetna said would be “comparable” to observation rates. That distinction matters because hospitals generally receive different payment depending on whether an admission is treated as inpatient care or observation care. (aetnabetterhealth.com) ### What do Jefferson Health and LVPHO say Aetna did wrong? Jefferson Health and LVPHO allege in the complaint that Aetna violated federal law and the parties’ written agreements by implementing the policy. Gallagher’s opinion says the plaintiffs claim Aetna engaged in “improper denials and/or underpayments for inpatient hospital care” provided to members of Aetna Medicare Advantage plans. The opinion also says the plaintiffs contend the policy conflicts with Centers for Medicare & Medicaid Services rules. (aha.org) Trade publication reports on the April filing said Jefferson argued the policy reduced reimbursement for some inpatient hospital stays and asked the court to stop Aetna from implementing it. Aetna told Healthcare Dive at the time that its policy complies with federal law and that it disagreed with Jefferson’s allegations. ### Why is the fight tied to arbitration instead of the payment rule alone? (sponsors.aha.org) The Aug. 5 ruling does not decide whether Aetna’s policy is lawful. Gallagher’s opinion says the amicus brief was submitted in opposition to Aetna’s motion to compel arbitration and to stay the proceedings pending arbitration. That means the immediate question before the court is whether the dispute will stay in federal court or move into private arbitration under the parties’ contracts. (healthcaredive.com) The AHA and HAP said in their motion that the case has implications beyond the named plaintiffs because Aetna’s policy represents a nationwide change in how the insurer reimburses hospitals treating Medicare Advantage members. Gallagher’s opinion summarized that position in recounting why the groups said they should be heard. ### What happens next in the case? (sponsors.aha.org) Civil case No. 5:26-cv-02215-JMG remains pending in the Eastern District of Pennsylvania, where Aetna is seeking to compel arbitration and stay the litigation. The amicus brief from the AHA and HAP is now part of the court record in that fight. Jefferson Health, LVPHO and Aetna remain the named parties in the underlying contract and federal-law dispute. (sponsors.aha.org)