Health Industry Washington Watch : Washington DC Healthcare Industry Law Firm : Reed Smith : Health Industry Washington Watch : Regulations, Medicare/Medicaid, Governmental Organizations

A recent OIG report analyzes the relationship between Medicaid disproportionate share hospital (DSH) payments and uncompensated care costs in seven states (Kansas, Louisiana, Missouri, New Jersey, New York, North Carolina, and Texas) during fiscal years 2003 through 2007. The OIG reports that, in the aggregate, state-owned institutions for mental disease received DSH payments averaging 92% of their uncompensated care costs and other state-owned hospitals received DSH payments averaging 95% of uncompensated care costs. On the other hand, local public hospital DSH payments averaged 69% of uncompensated care costs and private hospital DSH payments averaged only 38% of uncompensated care costs. The OIG recommends that CMS assess DSH payment distribution and consider requesting legislation to ensure a more even distribution of payments based on uncompensated care costs. CMS concurred with the recommendation.

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CMS is requiring non-teaching hospitals to submit informational only bills for Medicare Advantage (MA) beneficiaries they treated in FY 2007 and FY 2008 on or before August 31, 2010 and submit a related attestation or before September 15, 2010. This requirement is a follow-up to a 2007 transmittal requiring all hospitals paid under the inpatient prospective payment system (PPS), inpatient rehabilitation facility PPS, and long term care hospital PPS to submit such data in order to determine the Supplemental Security Income ratio and accurately determine a variety of Medicare payment amounts. CMS has determined that many hospitals have not reported any MA days. CMS therefore is giving applicable hospitals one final opportunity to comply with the requirement to submit FY 2007 and 2008 informational only claims. In addition, these hospitals must attest in writing to their Medicare contractor that they have either submitted all of their MA claims for FY 2007 and 2008 or that they have no MA claims for that fiscal year. If a provider does not comply, CMS may instruct the contractor to use an SSI ratio of 0% to calculate Medicare disproportionate share hospital payments or take other action that may affect payments for the non-compliant providers. 

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CMS published a notice April 23, 2010 announcing the final FY 2008 and the preliminary FY 2010 federal share disproportionate share hospital (DSH) allotments and limitations on aggregate DSH payments that states may make to institutions for mental disease and other mental health facilities. In addition, the notice includes the revised preliminary federal share DSH allotments for FY 2009 and the revised preliminary FY limitations on aggregate state DSH payments to institutions for mental disease and other mental health facilities to reflect the American Reinvestment and Recovery Act of 2009. Separately, CMS has published the final allotments available to states to pay the Medicare Part B premiums for Qualifying Individuals (QIs) for FY 2009 and the preliminary QI allotments for FY 2010. 

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The GAO has issued a report entitled "Medicaid: Ongoing Federal Oversight of Payments to Offset Uncompensated Hospital Care Costs Is Warranted." The GAO’s review found that, among other things, certain states with large supplemental payments for uncompensated care costs did not calculate correctly the hospital-specific disproportionate share hospital (DSH) payment limits. In the report, the GAO recommends that CMS ensure that states account for all Medicaid payments, including non-DSH supplemental payments, when calculating payment limits.

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This post was written by Karl A. Thallner, Jr., Carol C. Loepere, Debra A. McCurdy, Brad M. Rostolsky, Jacqueline B. Penrod, and Amie E. Schaadt.

On February 17, 2009, President Obama signed into law H.R. 1, the American Recovery and Reinvestment Act (the “ARRA”). The sweeping $790 billion economic stimulus package includes a number of health care policy provisions. Reed Smith's Health Care Memorandum summarizes the major health policy provisions of the Act.

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