Guest Lonnie Tomlin Posted June 19, 2000 Share Posted June 19, 2000 Recently we have heard tales of Medicaid or Medicare going after non-profit entities, particularly hospitals, who terminate over-funded defined benefit plans. Supposedly they have gone after any excess assets that facilities proposed to revert. In one case, we heard that they got a court injunction to prevent the reversion. Our understanding is their reasoning is that when rates are set they include consideration for benefit costs and therefore the reversion is not allowed. First, has anyone actually encountered this situation and what info can you share? Secondly, do you believe that using the reverted assets could be used as an argument that the assets are still being used for benefits purposes? Any information would be greatly appreciated. THANK YOU!! Link to comment Share on other sites More sharing options...
david rigby Posted June 20, 2000 Share Posted June 20, 2000 I have not encountered this. My observation is that the reverted assets should not be attached but might be used in determining future costs, at least for the next year. Any "excess assets" might be entirely from higher than expected asset yield, rather than excessive contributions. Therefore, it seems to me perfectly reasonable for the hospital to take the full amount as a reversion. It may also be reasonable to take that into account next year in determining the financial status of the hospital, if that is relevant in determining Medicare/Medicaid payments. (Of course, "reasonable" may not be relevant in any case. Just my opinion.) I would be interested in hearing more. [This message has been edited by pax (edited 06-19-2000).] I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice. Link to comment Share on other sites More sharing options...
IRC401 Posted June 20, 2000 Share Posted June 20, 2000 I haven't heard of any actual litigation. I'm under the impression that there is something in the Medicare regs that supports the position that the government is entitled to part of the reversion. You need to find someone who is familiar with the Medicare rules. I have also heard that Defense contractors have a similar issue with the Department of Defense. Link to comment Share on other sites More sharing options...
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