CMS Proposed Rule to amend Medicare DSH Reimbursement Regulation

Today, CMS proposed a rule to amend the Medicare Disproportionate Share Hospital reimbursement program regulation 42 CFR 412.106. This proposal seeks to further restrict and reverse the court mandated treatment of 1115 Waiver days in the numerator of the Medicaid Fraction of the DPP calculation. This proposal is a follow-up to recent litigation and prior proposals from CMS in the FFY 2022 IPPS Final Rule and FFY 2023 IPPS Final Rule. Comments to their most recent proposal are due by May 1, 2023. If finalized, the revised regulation would be effective for discharges occurring on or after October 1, 2023. #hospital

Here is the critical part of the latest proposal, CMS-1788-P.

Therefore, we propose for purposes of the Medicare DSH calculation in section 1886(d)(5)(F)(vi) of the Act to “regard as” “eligible for medical assistance under a State plan approved under title XIX” patients who (1) receive health insurance authorized by a section 1115 demonstration or (2) buy health insurance with premium assistance provided to them under a section 1115 demonstration, where State expenditures to provide the health insurance or premium assistance is matched with funds from title XIX. Furthermore, of these expansion groups we are proposing to regard as eligible for Medicaid, we propose to include in the DPP Medicaid fraction numerator only the days of those patients who receive from the demonstration (1) health insurance that covers inpatient hospital services or (2) premium assistance that covers 100 percent of the premium cost to the patient, which the patient uses to buy health insurance that covers inpatient hospital services, provided in either case that the patient is not also entitled to Medicare Part A. Finally, we propose stating specifically that patients whose inpatient hospital costs are paid for with funds from an uncompensated / undercompensated care pool authorized by a section 1115 demonstration are not patients “regarded as” eligible for Medicaid, and the days of such patients may not be included in the DPP Medicaid fraction numerator.