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CMS Provides Guidance on Medicaid DSH Calculations

State Medicaid program accounting for hospital uncompensated care when calculating hospital-specific Medicaid disproportionate share limits is the subject of new guidance from the Centers for Medicare & Medicaid Services.

In the guidance, the Centers for Medicare & Medicaid Services explains that because of several court rulings, states can decide for themselves whether to offset third-party payer payments from costs in their Medicaid DSH calculations for periods prior to June 2, 2017 but that beginning with that date,  CMS will enforce its own interpretation of the policy.

In new guidance, CMS presents two methodologies for accounting for its mid-year policy change and reminds stakeholders about its new methodology for calculations after June 2, 2017.  Learn more from this Medicaid notice and from its accompanying CMS informational bulletin “Treatment of Third Party Payers (TPP) in Calculating Uncompensated Care Costs (UCC).”

CMS Clarifies Medicaid DSH Rule

Last week the Centers for Medicare & Medicaid Services announced a final rule addressing the treatment of third-party payers in calculating Medicaid uncompensated care costs.  This calculation affects individual hospitals’ Medicaid disproportionate share (Medicaid DSH) limit.

According to CMS,

This rule clarifies federal requirements regarding the treatment of third party payers in determining the hospital-specific Medicaid DSH payment limit, which is set by statute as a hospital’s “uncompensated costs” incurred in providing hospital services to Medicaid and uninsured patients.

The final rule makes clearer our existing policy that uncompensated costs include only those costs for Medicaid eligible individuals that remain after accounting for all payments received by or on behalf of Medicaid eligible individuals, including Medicare and other third party payments. This is consistent with the statutory requirements governing Medicaid DSH and applicable limits.

All private safety-net hospitals receive Medicaid DSH payments.

See the full rule here.

CMS Proposes Medicaid DSH Rule

The Centers for Medicare & Medicaid Services has proposed a new rule that would clarify the basis for eligible hospitals’ Medicaid disproportionate share hospital payments (Medicaid DSH).

Individual hospitals’ Medicaid DSH payments are based on their uncompensated care costs and the rule clarifies that only uncompensated costs for Medicaid patients for whom hospitals receive no other payments, such as from Medicare, state or local governments, or third-party payers, would count toward their hospital-specific Medicaid DSH limit.

federal registerSee the rule here. Interested parties have until September 15, 2016 to submit formal comments to CMS about its proposal.

Representatives of private safety-net hospitals who would like to know more about how this proposal might affect their hospital can use the “contact us” link on this screen to seek further information.