Judge rules 2 children's hospitals don't have to return Medicaid funds

U.S. District Judge Emmet G. Sullivan in Washington, D.C. has ruled two children's hospitals — one in Texas and one in Washington — will not have to return Medicaid reimbursement monies that CMS claims were overpaid, according to the Houston Chronicle.

The hospitals, Houston-based Texas Children's Hospital and Seattle Children's Hospital, are considered disproportionate share hospitals.

Judge Sullivan ordered CMS stop using a Medicaid reimbursement method whereby private insurance and other payments for Medicaid-eligible children are counted against children's hospitals' reimbursement amounts, "even when Medicaid doesn't pay for the care of those children," according to the report.

If Judge Sullivan had ruled in favor of CMS, Texas Children's would have had to pay $21.7 million at the end of December, according to the report.

CMS could still appeal the decision.

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