The U.S. District Court for the District of Columbia recently ruled (pdf) that a 2004 HHS rule change in how Medicare disproportionate share hospital payments were calculated must be vacated due to the department's "gravely flawed" rulemaking process.
HHS disperses Medicare DSH payments to hospitals on top of regular Medicare fee-for-service payments to help cover the costs associated with caring for the very poor. Twenty-seven hospitals — including Allina Health in Minneapolis, NewYork-Presbyterian Hospital in New York City and Henry Ford Health System in Detroit — sued HHS over a rule change it made in 2004 regarding Medicare DSH payments.
HHS' 2004 policy ruling involved Medicare DSH payments regarding Medicare Advantage, or Medicare Part C, patients. Between 1999 and 2004, after Congress implemented Medicare Part C, HHS excluded Part C inpatient hospital days from the DSH calculation. HHS said patient days for Part C beneficiaries "should not be included in the Medicare fraction of the DSH patient percentage," according to the Federal Register.
However, the district court judge said the "[HHS] Secretary's interpretation of the fractions in the DSH calculation, announced in 2004 and not added to the Code of Federal Regulations until the summer of 2007, was not a 'logical outgrowth' of the 2003 [notice of proposed rulemaking]," according to the opinion.
As such, the 2004 final rule on Medicare DSH payments will be vacated, and the "case will be remanded to the [HHS] Secretary for further action," according to the opinion.
HHS disperses Medicare DSH payments to hospitals on top of regular Medicare fee-for-service payments to help cover the costs associated with caring for the very poor. Twenty-seven hospitals — including Allina Health in Minneapolis, NewYork-Presbyterian Hospital in New York City and Henry Ford Health System in Detroit — sued HHS over a rule change it made in 2004 regarding Medicare DSH payments.
HHS' 2004 policy ruling involved Medicare DSH payments regarding Medicare Advantage, or Medicare Part C, patients. Between 1999 and 2004, after Congress implemented Medicare Part C, HHS excluded Part C inpatient hospital days from the DSH calculation. HHS said patient days for Part C beneficiaries "should not be included in the Medicare fraction of the DSH patient percentage," according to the Federal Register.
However, the district court judge said the "[HHS] Secretary's interpretation of the fractions in the DSH calculation, announced in 2004 and not added to the Code of Federal Regulations until the summer of 2007, was not a 'logical outgrowth' of the 2003 [notice of proposed rulemaking]," according to the opinion.
As such, the 2004 final rule on Medicare DSH payments will be vacated, and the "case will be remanded to the [HHS] Secretary for further action," according to the opinion.
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