A federal appeals court upheld a CMS rule that Disproportionate Share Hospital payment calculations do include Medicare and private insurer payments, according to an April 20 order.
DSH payments are supplemental payments made to hospitals that serve a disproportionate share of indigent patients. The payments are limited to the cost incurred for taking care of these patients. In 2017, CMS issued a rule that incurred costs should include net payments from third parties like Medicare and private health plans.
In the April 20 order, the U.S. Court of Appeals for the Fifth Circuit overturned a lower court decision that sided with a challenge of the rule led by eight Mississippi hospitals. The hospitals argued that including Medicare and private health plan payments in the calculation conflicts with the Medicaid Act, which established DSH payments.
A district court enjoined enforcement of the 2017 rule and granted a summary judgement for the eight hospitals. HHS appealed. The Fifth Circuit ultimately reversed the lower court's decision, concluding the rule was consistent with the Medicaid Act.
To read the full order, click here.