CMS issues final rule on Medicaid DSH calculation

The Centers for Medicare & Medicaid Services today issued a final rule addressing how third-party payments are treated when calculating the hospital-specific limitation on Medicaid disproportionate share hospital payments. According to CMS, the final rule clarifies current policy that uncompensated care costs for Medicaid-eligible individuals include only those that remain after accounting for payments hospitals receive by or on behalf of Medicaid-eligible individuals, including Medicare and other third-party payments that compensate the hospitals for care furnished to such individuals. The agency issued its original policy in sub-regulatory guidance. In a comment letter last year on the proposed rule, the AHA called for CMS to withdraw the proposed rule, which it said was “substantive and establishes new policy, specifically with the intent of avoiding potentially unfavorable federal district court rulings.” The final rule comes on the heels of a federal court decision that permanently barred CMS from using sub-regulatory guidance to calculate Medicaid DSH payments for New Hampshire hospitals. AHA supported the plaintiff’s arguments in that case. AHA members will receive more information on the final rule.