Appeals court ruling may reduce federal reimbursements for hospitals that treat a disproportionate share of the poor - Entrepreneur Generations

"Hospitals that care for a large share of Medicaid, low-income and uninsured patients stand to receive less funding from the federal government after the D.C. Circuit reconsidered how Medicaid disproportionate-share hospital reimbursement is calculated," Alex Kacik reports for Modern Healthcare. "A three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit reversed a lower court and reinstated a 2017 rule establishing that payments by Medicare and private insurers are to be included in calculating a hospital's DSH limit, ultimately lowering its maximum reimbursement.

At the heart of the issue: disproportionate-share hospitals receive a significant portion of funding from government reimbursement for Medicaid patients. But hospitals often spend more on such patients than the government reimburses them for and therefore operate at a loss. Some Medicaid patients have additional coverage from Medicare or private insurance, but that's not generally enough to zero out the overall shortfall from treating Medicaid patients, Kacik reports.

A 2017 rule mandated that Medicare and private insurance payments must be included when calculating the maximum amount disproportionate-share hospitals can be reimbursed. "Part of the motivation behind that stipulation was to prevent hospitals from double dipping by collecting DSH payments to cover costs that had already been reimbursed," Kacik reports. "Previous cases also revealed that some states have made DSH payments to state psychiatric or university hospitals that exceed the net costs, or even total costs, of operating the facilities."

Four children's hospitals in Minnesota, Virginia and Washington, along with eight children's hospitals in Texas filed suit to challenge the rule, saying that the Centers for Medicare and Medicaid Services had overstepped its authority in establishing the rule. A federal judge sided with the hospitals, but Tuesday's ruling overturned that decision. 

The case is the latest in a string of legal battles for disproportionate-share hospitals. In June the Supreme Court ruled that HHS improperly changed the Medicare reimbursement formula for disproportionate-share hospitals. In the majority opinion, Justice Neil Gorsuch said HHS needed a notice-and-comment period because, since Medicare is such a big program, even small changes can make a big difference and need to be carefully considered.

from The Rural Blog https://ift.tt/2TJuFDm Appeals court ruling may reduce federal reimbursements for hospitals that treat a disproportionate share of the poor - Entrepreneur Generations

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