Appeals court reverses decision voiding CMS rule on Medicaid DSH audits

The U.S. Court of Appeals for the District of Columbia Circuit yesterday reversed a district court decision that voided a 2017 Centers for Medicare & Medicaid Services rule that included Medicare and private insurance payments when calculating the hospital-specific limit on Medicaid disproportionate share hospital payments. In a case brought by 12 not-for-profit children’s hospitals in Texas, Minnesota, Virginia and Washington, D.C., the district court last year ruled the regulation contrary to the plain language of the Medicaid Act and “arbitrary and capricious” under the Administrative Procedures Act. The appeals court disagreed, reinstating the 2017 rule. The AHA had urged CMS and Congress to withdraw the rule, voicing support for the hospitals’ arguments and significant concerns about the rule’s impact on Medicaid DSH hospitals.