On January 6, the US District Court for the District of Columbia granted summary judgment to the Department of Health and Human Services (“HHS”), upholding the agency’s method of calculating Medicare outpatient payments for hospitals. District Hospital Partners, L.P., d/b/a The George Washington University Hospital v. Sebelius. One hundred eighty six hospitals filed suit against HHS challenging the agency’s methodology effective 2004-2006 for setting fixed loss thresholds for Medicare outlier payments under the inpatient prospective payment system rules. The plaintiff hospitals alleged that HHS’s methodology was arbitrary and capricious in violation of the Administrative Procedure Act because such methodology did not include more accurate means of calculation. The court granted the government’s motion for summary judgment, finding that HHS’s methodology for calculating Medicare outlier payments was reasonable at the time considering the hospital cost data available.