A federal court has rejected the manner in which the Centers for Medicare & Medicaid Services collects certain Medicaid data from states in a ruling that has potential implications for eligible hospitals’ Medicaid disproportionate share hospital payments (Medicaid DSH).

In a case that challenged how CMS told hospitals to report third-party payments for Medicaid patients, the court ruled against CMS in two different ways:  first, it found that CMS had not interpreted a 2003 law in a manner consistent with congressional intent; and second, it ruled that CMS could not clarify its interpretation through a published FAQ rather than through regulations.

As a result of the ruling, some hospitals may get extra room under their hospital-specific Medicaid DSH limit.  For hospitals at, near, or above those caps, this could make it possible for them to receive additional Medicaid DSH payments from their state government.

This ruling could have positive implications for private safety-net hospitals that care for especially large numbers of Medicaid patients.

Learn more about the court ruling and its Medicaid DSH implications for hospitals in this RevCycle Intelligence article.