Disproportionate Share Hospital (DSH) Payments

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Earlier this month and with little fanfare, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule that would invoke CMS’s rarely used retroactive-rulemaking authority to essentially ensure that, despite the Supreme Court’s adverse rulemaking decision in Azar v. Allina Health Services, 139 S. Ct. 1804 (2019), CMS will apply the same Medicare payment methodology found procedurally improper in Allina. CMS’s invocation of its retroactive-rulemaking authority to effectively circumvent Allina sets a potentially dangerous precedent that should not go unnoticed by all Medicare stakeholders.
Continue Reading “Contrary to the Public Interest”: CMS invokes retroactive-rulemaking authority to escape consequences of Allina

On September 26, 2019 the Senate approved H.R. 4378, the Continuing Appropriations Act, 2020, and Health Extenders Act of 2019, which would fund the federal government through November 21, 2019.  The House has already approved the legislation, and President Trump is expected to sign the bill.  The legislation includes a number of health program…

The Centers for Medicare & Medicaid Services (CMS) has issued a final rule implementing the agency’s methodology for making statutory reductions to Medicaid disproportionate share hospital (DSH) allotments.  The DSH allotment reductions apply to fiscal years (FY) 2020 through 2025, with a $4 billion reduction applicable in FY 2020 and an $8 billion reduction applicable …

The Medicaid and CHIP Payment and Access Commission’s (MACPAC) March 2018 Report to Congress examines three aspects of Medicaid policy:  managed care, telehealth, and disproportionate share hospital (DSH) payments.  First, MACPAC proposes statutory changes to allow states to require all beneficiaries to enroll in Medicaid managed care programs, along with changes to Section 1915(b) waiver…

CMS has issued a proposed rule establishing a methodology to reduce state Medicaid disproportionate share hospital (DSH) allotments annually beginning with fiscal year (FY) 2018, as mandated by the Affordable Care Act (and modified in subsequent legislation). CMS estimates that the rule would reduce state DSH allotments/payments by $43 billion for the period of FY…

CMS has published a final rule intended to codify its existing interpretation of how third-party payments are considered in the calculation of Medicaid uncompensated care costs for the purpose of making Medicaid disproportionate share hospital (DSH) payments. Under the final rule, CMS specifies that uncompensated care costs for purposes of calculating hospital-specific DSH limits are…

CMS has proposed regulatory changes to specify that the hospital-specific limitation on Medicaid disproportionate share hospital (DSH) payments is based on uncompensated care costs net of third-party payments received. Under the proposed rule – which is intended to align with CMS’s existing interpretation – a hospital’s uncompensated care costs would not include care provided to Medicaid-eligible individuals for which the hospital received third party payments, such as payments from Medicare or private insurance. Therefore the hospital-specific limit calculation would reflect only the costs for Medicaid eligible individuals for which the hospital has not received payment from any source (other than state or local governmental payments for indigent patients).
Continue Reading CMS Proposes Clarification of Treatment of Third Party Payments in Calculating Uncompensated Care Costs under Medicaid DSH Payments Rules

On February 9, 2016, the Obama Administration released its proposed fiscal year (FY) 2017 budget, which contains significant Medicare and Medicaid reimbursement and program integrity legislative proposals – including $419 billion in Medicare savings over 10 years. These proposed policy changes would require action by Congress, and Republican Congressional leaders have already voiced general…

On July 31, 2015, the Centers for Medicare & Medicaid Services (CMS) released a major final rule to update the Medicare acute hospital inpatient prospective payment system (IPPS) and the long-term care hospital prospective payment system (LTCH PPS) for fiscal year (FY) 2016. The official version of the rule will be published in the Federal Register on August 17, 2015, and generally applies to discharges occurring on or after October 1, 2015. With regard to the IPPS, CMS projects that the rate and policy changes in the final rule will increase IPPS operating payments by approximately 0.4%, or about $378 million in FY 2016. The rule provide a 0.9% operating payment rate update for hospitals that submit quality data and are meaningful users of Electronic Health Records (EHR). This update reflects a 2.4% market basket update, adjusted by a -0.5 percentage point multi-factor productivity (MFP) cut and an additional -0.2 percentage point cut (as mandated by the Affordable Care Act, or ACA), with an additional -0.8 percentage point documentation and coding recoupment adjustment required by the American Taxpayer Relief Act of 2012.
Continue Reading CMS Issues Final FY 2016 Medicare IPPS/LTCH Rule

The Government Accountability Office (GAO) has issued a report examining financial and other characteristics of hospitals that participate in the 340B Drug Pricing Program, focusing on disproportionate share hospitals (DSH) that account for the majority of 340B Program discount drug purchases.  Based on a review of Health Resources and Services Administration (HRSA) data for 2008…

On April 30, 2015, the Centers for Medicare & Medicaid Services (CMS) is publishing its proposed rule to update the Medicare acute hospital inpatient prospective payment system (IPPS) and long-term care hospital (LTCH) prospective payment system (PPS) for fiscal year (FY) 2016.  CMS will accept comments on the proposed rule until June 16, 2015. The final rule will be published by August 1, 2015, and generally will apply to discharges occurring on or after October 1, 2015.

With regard to the IPPS, CMS projects that the rate and policy changes in the proposed rule would increase IPPS operating payments by approximately 0.3%, or about $120 million in FY 2016. The proposed rule would provide for a 1.1% operating payment rate update for hospitals that submit quality data and are meaningful users of Electronic Health Records (EHR). This update reflects a 2.7% market basket update, adjusted by a -0.6 percentage point multi-factor productivity (MFP) cut and an additional -0.2 percentage point cut (as mandated by the Affordable Care Act, or ACA), with an additional -0.8 percentage point documentation and coding recoupment adjustment required by the American Taxpayer Relief Act of 2012.Continue Reading CMS Issues Proposed Rule to Update FY 2016 IPPS, LTCH PPS Rates, Policies

Today President Obama signed into law H.R. 2, the “Medicare Access and CHIP Reauthorization Act of 2015” (MACRA), which reforms Medicare payment policy for physician services and adopts a series of policy changes affecting a wide range of providers and suppliers. Most notably, MACRA permanently repeals the statutory Sustainable Growth Rate (SGR) formula, achieving a goal that has eluded Congress for years. Now, after a period of stable payment updates, MACRA will link physician payment updates to quality, value measurements, and participation in alternative payment models.
Continue Reading President Obama Signs MACRA: Permanently Reforms Medicare Physician Reimbursement Framework, Includes Other Health Policy Provisions

On February 2, 2015, the Obama Administration released its proposed federal budget for fiscal year (FY) 2016. The budget would impact all types of health care providers, health plans, and drug manufacturers if adopted as proposed – which is unlikely given Republican control of the House and Senate. Nevertheless, Congress can be expected to consider the Medicare and Medicaid savings proposals (many of which are carry-overs from prior budgets) during expected debate in the coming months on Medicare physician fee schedule (MPFS) reform legislation or during future budget negotiations. The following is a summary of the major Medicare, Medicaid, and related policy proposals contained in the FY 2016 budget proposal.
Continue Reading Obama Administration Releases FY 2016 Budget Proposal with Medicare/Medicaid Provisions

On December 3, 2014, CMS published a final rule that defines “uninsured” for purposes of calculating the Medicaid hospital-specific disproportionate share hospital (DSH) payment limit. Under the Social Security Act, DSH payments to a hospital cannot exceed the uncompensated costs of furnishing hospital services by the hospital to individuals who are Medicaid-eligible or “have…

On August 22, 2014, CMS is publishing a final rule to update the Medicare acute hospital inpatient prospective payment system (IPPS) and long-term care hospital (LTCH) prospective payment system (PPS) for fiscal year (FY) 2015, which begins October 1, 2014.  The following are highlights of the sweeping regulations.Continue Reading CMS Finalizes Medicare IPPS/LTCH PPS Update for FY 2015

CMS has released guidance in preparation for State Plan Rate Year 2011 (SPRY) Medicaid disproportionate share hospital (DSH) audits and reports due at the end of 2014. By way of background, on December 19, 2008, CMS published a final rule implementing federal DSH reporting and auditing requirements. CMS provided a transition period to allow adequate…

On April 1, 2014, President Obama signed into law H.R. 4302, the “Protecting Access to Medicare Act of 2014” (“the Act”). The Act includes a one-year Medicare physician fee schedule fix that averts a nearly 24 percent payment cut set for April 1, 2014, but which falls far short of earlier hopes for full repeal of the current sustainable growth rate (SGR) formula. The Act also includes numerous other Medicare payment and policy changes, including skilled nursing facility value-based purchasing provisions, reforms to the physician fee schedule relative valuation process, a new framework for clinical laboratory payments, a variety of changes impacting imaging services, changes in the exceptions for long term care hospitals, and extension of certain expiring provisions. In other areas, the bill includes a one-year delay in the transition to ICD-10, changes to the timetable for Medicaid disproportionate share hospital cuts, and “front-loading” of the 2024 Medicare sequestration reduction.
Continue Reading President Signs Medicare Physician Fee Schedule/SGR Patch with Numerous Health Policy Provisions

On March 4, 2014, the Obama Administration released its proposed federal budget for fiscal year (FY) 2015. Virtually all types of health care providers, health plans, and drug manufacturers would be impacted by the budget provisions if adopted as proposed – an unlikely scenario given the Republican House leadership’s reaction to the document. Nevertheless, the Medicare and Medicaid savings proposals (many of which are carry-overs from prior budgets) could resurface as spending offsets in the pending negotiations on Medicare physician fee schedule reform legislation or in future budget negotiations. Highlights of the Administration’s Medicare and Medicaid legislative proposals include the following (all savings estimates are for the 10-year period of FYs 2015-2024):
Continue Reading Obama Administration Proposes FY 2015 Budget with Medicare, Medicaid Savings Provisions

CMS has published a notice announcing the preliminary federal share disproportionate share hospital (DSH) allotments for fiscal year (FY) 2014, along with the preliminary federal share FY 2014 limits on aggregate DSH payments that states may make to institutions for mental diseases (IMD) and other mental health facilities. The CMS notice also includes additional information…