An attorney says much of the litigation could have been avoided if hospitals had access to patients’ Supplemental Security Income eligibility status.


July 21—A settlement between the Centers for Medicare & Medicaid Services (CMS) and more than 400 hospitals may have far-reaching repercussions for determining disproportionate-share hospital (DSH) payments, but one attorney involved with the lawsuit said the case is far from over.

The settlement covers 11 separate but similar suits that date back to 2010 and involve charges that CMS erred in calculating DSH payments between 1991 and 2007, with different hospitals disputing payments during different time periods, Wolters Kluwer reported.

CMS was not releasing any details of the settlement, though court documents noted, “Each party bears its own costs, expenses, and attorney’s fees.” The hospitals were represented by the Akin Gump law firm, which declined to comment and released few details beyond the names of the attorneys.

Hospitals and systems involved include the Alegent Health-Bergan Mercy Health System hospitals in Nebraska, Banner Health hospitals in Arizona, Catholic Health Initiatives hospitals in Colorado, and dozens more.

The Common Complaint Denominator

One argument listed in the Catholic Health Initiatives case was that for patients admitted for plastic surgery, the procedure would not be covered by Medicare, but the days the patient spent in the hospital would be included in the DSH payment formula as days for which the patient was entitled to benefits. The complaint stated that the result would be a further reduction in a hospital’s DSH reimbursement, given that a patient who could afford plastic surgery was not likely to receive Supplemental Security Income (SSI), which is used to calculate DSH payments.

“The common denominator of the Secretary’s inconsistent position is that the agency counts the same days as ‘not entitled’ for purposes of payment of benefits on the individual’s behalf and as ‘entitled’ for the purposes of making DSH payments to the hospital, thereby avoiding payments in both respects,” the lawsuit stated.

Appeal Limited

Jeff Lovitky, an attorney involved in the litigation, said generalizing the elements of the disputes is difficult because so many different cases were involved. But he said the issue hinged on hospitals’ lack of access to their patients’ SSI eligibility status and on CMS-1498-R, an April 2010 administrative ruling that set limits on hospitals’ avenues of appeals.

The ruling specifically noted that the Provider Reimbursement Review Board “and other Medicare administrative appeals tribunals” lacked jurisdiction on three types of common disputes involving DSH payments.

These included appeals of the data-matching process used in calculating the SSI fraction; appeals of the exclusion from the disproportionate patient percentage (DPP) of non-covered inpatient hospital days for patients entitled to Medicare Part A and the days for which the patient’s Part A inpatient hospital benefits were exhausted; and appeals of the exclusion from the DPP of labor/delivery room inpatient days.

Lovitky added that many disputes could be avoided if the government gave hospitals a password to access its SSI database so they could determine patient SSI eligibility on their own.

“Not all of these cases have been settled,” Lovitky said. “The litigation remains ongoing.”

Size and Scope

Charlie Mills, a principal and consulting actuary with the Milliman consulting firm, said he thought the settlement would have lasting significance due to its size and retroactive elements.

“It will have an impact going forward because of the magnitude,” Mills said. “My understanding is that CMS is going to go back and recalculate fee-for-service payments to the extent they can.”

He also noted that there may be some “winners and losers going forward,” but for the most part DSH payments are not budget-neutral—meaning if payments go up, one hospital’s increased funding won’t come at another institution’s expense.

Andis Robeznieks is a freelance writer based in Chicago. Follow Andis on Twitter at @AndisRobeznieks.

Publication Date: Thursday, July 21, 2016