Are you wondering about the status of your Medicare Disproportionate Share Hospital (DSH) payments in light of the recent Allina DSH court ruling? You’re not alone. An April 2014 ruling from a U.S. Court of Appeals for the District of Columbia Circuit upheld a previous ruling that a Health and Human Services (HHS) rule change in 2004 (codified in 2007) was procedurally defective. The lawsuit had to do with a rule change the HHS made to determine DSH payments in 2007. The hospitals claimed there was not proper notification. Although the court ruled favorably for the hospitals, what happens next is still unknown.
The appeals court included instructions in the ruling that gave the HHS room to reach the same policy decision through administrative adjudication. The bad news for providers is that adjudicatory findings can be applied retroactively. The Centers for Medicare and Medicaid Services (CMS) has not yet issued a definitive guideline on how to retrofit the reimbursement fractions for the years in question.
Another question on the minds of hospital CFOs and accountants is whether all hospitals will benefit from the Allina DSH ruling or just the ones that protected their appeal rights, in addition to the 27 hospitals that were part of the initial lawsuit.
As we wait for details from the CMS, there is a key lesson to be learned from the Allina DSH case:
Protect your appeal rights
We protected the rights of our clients to reopen DSH reports in light of a favorable ruling. Some hospitals missed that opportunity because they did not protect their appeal rights. Will the CMS go back and redo the fractions as a blanket to all the providers? Maybe. But there is no guarantee. Protecting your appeal rights mitigates risk.
The story is not yet finished when it comes to the Allina DSH case. And there is much at stake. DSH payments help hospitals that treat a higher proportion of low income Medicare patients. A beneficial cost year recalculation could bring in much needed revenue.
Interested in reading more details about the Allina DSH case? See an earlier article here.
Also on the DSH horizon
There is also looming complexity for providers when it comes to DSH payments. The Affordable Care Act (ACA) is mandating changes in DSH payments beginning FY 2014 that could have a negative impact for some providers. This is especially true for states that have not expanded coverage for Medicaid beneficiaries under the ACA. We will revisit this topic in a future HORNE blog and continue to keep you informed about important developments.
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