D.C. Court Reject HHS’ Attempt to Narrow DSH Payment Calculations

Tuesday, November 24, 2020

On November 13, 2020, the D.C. Courtroom of Appeals upheld a key ruling concerning disproportionate share hospital (“DSH”) funds, in Bethesda Well being Inc. v. Azar, a major victory for hospitals.

Hospitals that deal with a disproportionate variety of sufferers below Medicaid obtain a better price of reimbursement below Medicare to offset these prices incurred – within the type of DSH funds. In calculating the proportion of remedy a hospital offered to Medicaid sufferers (the Medicaid fraction), the statute and related laws allow the hospital to incorporate not simply sufferers lined below conventional Medicaid plans, but additionally sufferers eligible for remedy below experimental Medicaid “demonstration initiatives” accredited by the Division of Well being and Human Providers (“HHS”) and eligible for matching funds, as long as the providers offered below the demonstration venture embrace “inpatient hospital providers.”

In Bethesda Well being, the plaintiff hospitals calculated their Medicaid fractions together with days of care funded by Florida’s Low Revenue Pool (the “Pool”), an accredited Medicaid demonstration venture. HHS rejected this strategy, arguing that the sufferers had been handled out of charity, relatively than as designated beneficiaries of an indication venture, and due to this fact shouldn’t be thought-about of their calculations.

The district court docket sided with the hospitals, holding that it was “apparent to the [c]ourt that uninsured and underinsured sufferers obtained inpatient hospital providers” by means of the Pool, as a result of (1) the HHS Secretary approved federal matching funds to reimburse hospitals for these providers, and (2) the hospitals rigorously documented the providers offered utilizing funds from the Pool. It was undisputed that sufferers did, in truth, obtain inpatient hospital providers funded by the Pool. Whereas HHS tried to argue that the laws allowed this calculation provided that the venture entitled particular sufferers to particular profit packages, the court docket disagreed, as a substitute discovering that the demonstration venture solely must allow the affected person to obtain inpatient providers, no matter whether or not the venture gave the affected person a proper to those providers or allowed the affected person to enroll in an insurance coverage plan that offered the providers.

Discovering “no flaw” within the district court docket’s evaluation, the D.C. Courtroom of Appeals upheld the decrease court docket’s choice.