Tennessee federal court rejects CMS FAQs

A U.S. District Court in Tennessee last week permanently barred the Centers for Medicare & Medicaid Services from using FAQs 33 and 34 in calculating Medicaid Disproportionate Share Hospital payments for Tennessee hospitals. The Tennessee Hospital Association and several Tennessee hospitals challenged the CMS policy, which reduced the amount of payment they were entitled to under the Medicaid Act and violated the Administrative Procedure Act. In his decision, U.S. District Judge Waverly Crenshaw said the FAQs conflict with the unambiguous language of the Medicaid Act and regulation. “If Defendants wanted to add those payments to the statutory calculation, Congress would have to amend the statute through the proper processes,” he wrote. “Posting responses to FAQs on Defendants’ website is not legally sufficient.” THA President and CEO Craig Becker said, “Judge Crenshaw’s ruling is a huge victory for Tennessee’s hospitals and many other states, as another court reinforces our position that CMS’s action was an overreach of authority.” In March, a New Hampshire federal court permanently barred CMS from using the FAQs in calculating Medicaid DSH payments for New Hampshire hospitals. CMS then issued a final rule incorporating the policy into regulation; it is not affected by these decisions.