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Overland Park Weight-Loss Hospital Loses Bid To Regain Its Medicare Funding

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Blue Valley Hospital, at 129th Street and Metcalf Avenue, mainly performs bariatric surgery.

Blue Valley Hospital, an Overland Park facility specializing in bariatric surgery, has lost its bid to retain its Medicare certification, throwing its future in doubt.

A federal judge last week ruled she did not have jurisdiction to hear the hospital’s legal challenge and dismissed Blue Valley’s lawsuit.

The hospital promptly appealed her decision to the 10th U.S. Circuit Court of Appeals, which it hopes will take up the case on an expedited basis.

“We’re still hoping for some rather quick relief,” said Curtis Tideman, an attorney for the hospital.

Tideman said the hospital was “obviously disappointed” with the judge’s ruling, which has the effect of cutting off not just the hospital’s Medicare reimbursements but its Medicaid reimbursements as well.

Blue Valley, located at 129th Street and Metcalf Avenue, says it performs more than a third of all bariatric surgeries for Medicaid patients in Missouri. The state pays it a higher, out-of-state rate for performing those surgeries than it does for hospitals paid in-state rates.

“The hospital serves its patients very well and also serves a lot of underserved people,” Tideman said. “So I think it’s not only an unfortunate ruling for the hospital but for the patients that it serves.”

The hospital remains open and is accepting patients. But it has warned that without Medicare funding, it may be forced to close its doors.

In order to be covered by Medicare, hospitals must “primarily engage” in providing inpatient services. Last September, the Centers for Medicare & Medicaid Services issued guidance on what that means and said hospitals must average at least two inpatients a day, and at least two nights average length of stay, to be eligible for Medicare reimbursement.

State health officials conducted an unannounced inspection of Blue Valley Hospital last November and found that it did not meet those criteria. In April, CMS notified the hospital that it would terminate its Medicare certification and provider contracts in May.

Blue Valley said it was being penalized for being efficient and sued CMS, claiming the agency’s decision was arbitrary and capricious. It further asserted that CMS violated its right to due process because it relied on invalid rules and did not grant Blue Valley a pre-termination hearing.

But on Friday, U.S. District Judge Julie Robinson ruled that she did not have jurisdiction to hear the case because Blue Valley had failed to fully pursue its remedies at the agency level.

Blue Valley Hospital is owned by private shareholders. The hospital opened in 2010 and mainly provides weight loss surgery, along with some other other specialized services.

According to the American Hospital Directory, Blue Valley has four staffed beds and reported $165 million in patient revenue in its most recent Medicare cost filing.

Dan Margolies is a senior reporter and editor at KCUR. You can reach him on Twitter @DanMargolies

Dan Margolies has been a reporter for the Kansas City Business Journal, The Kansas City Star, and KCUR Public Radio. He retired as a reporter in December 2022 after a 37-year journalism career.
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