Medicare DSH Update and Recent
Developments
Texas Association for Healthcare
Financial Administration
* 2014 Seminar Series *
June 19, 2014
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Presented by:
Manie Campbell
Todd Prine
CampbellWilson, LLP.
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The New DSH Frontier
Manie Campbell, Partner
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10 Rules of Medicare
1. Just because it has a code doesn’t mean it’s covered.
2. Just because it’s covered doesn’t mean you can bill
for it.
3. Just because you can bill for it doesn’t mean you’ll
get paid for it.
4. Just because you’ve been paid for it doesn’t mean you
can keep the money.
5. Just because you’ve been paid once doesn’t mean
you’ll get paid again.
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10 Rules for Medicare
6. Just because you got paid for it in one state
doesn’t mean you’ll get paid in another state.
7. You’ll never know all the rules.
8. Not knowing the rules can land you in the
slammer.
9. There’s always somebody who doesn’t get the
message.
10. There’s always somebody who gets the message
and ignores it.
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DSH Rule For FFY 2014
Effective Federal Fiscal Year 2014
• New DSH formula
– 25% based on current formula
– 75% based on uncompensated care
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CMS’s Definition Of
Uncompensated Care
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DSH Uncompensated Care
Factor 1
75% of amount which would have been paid under old
DSH formula
• CMS estimates this to be $9.25 billion
DSH Payment under old rule = $12.34B x 75% = $9.25B
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DSH Uncompensated Care
Factor 2
1 minus percent change in uninsured population
• CMS estimates this to be 88.8%
Uninsured percentages based on CBO estimates
– Uninsured in 2013 (based on 2010 report) = 18%
– Estimate for 2014 published in Feb 2013 = 16%
1 – [(.16-.18)/.18] = 1 - .111 = .889 less statutory reduction .001 = .888
$9.2535B x .888 = $8.217B
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Medicare DSH Reimbursement
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Source: CMS, Office of the Actuary.
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DSH Uncompensated Care
Factor 3
• Percent of individual hospital uncompensated care costs to total
uncompensated care costs
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This represents each hospital’s “piece of the pie”
CMS discusses the use of S-10 data
• CMS indicates S-10 data is not yet appropriate to use
CMS proxy for uncompensated care is to count low income patients
CMS to use Medicaid eligible days and SSI days as a proxy for uncompensated care
Hospitals in States which have accepted Medicaid expansion will benefit compared to hospitals
States without Medicaid expansion
Cannot be appealed
• If at audit your % goes down, payback
• If it goes up, nothing
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Issuance Of The NPRs
NPR’s:
Being issued or have been issued for fiscal years 2007, 2008, and 2009
Various issues that may need to be appealed or reopened in the future:
• Disproportionate Share Hospital (DSH) Calculation
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SSI percentage Ratios (SSI%) – Medicare Proxy
Medicare Part C Days
Dual Eligible Days – Exhausted Days and Medicare Secondary/No Pay Days
Systemic Errors
DSH Eligible Days – Medicaid Proxy
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Issuance Of The NPRs:
Recommendations
Schedule deadlines for Reopenings
• Three (3) years from the NPR date
Schedule deadlines for Appeals
• 180 days from the NPR date
– Board must receive Provider’s request no later than 180 days after the Provider received
the determination being appealed
– Provider is presumed to have received the determination 5 days after issuance, unless
established to the contrary by a preponderance of the evidence. (42 C.F.R. §
405.1801(a)(1))
– Date of receipt by the Board is date of delivery if delivered by a nationally-recognized
courier, or the date stamped “received” if delivered otherwise, unless established to the
contrary by a preponderance of the evidence
– Determination of date of receipt is not subject to appeal
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Issuance Of The NPRs:
Recommendations
Order MEDPAR Data through the Centers for Medicare and Medicaid Services
(CMS)
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Data Usage Agreement (DUA) process
Appeal your NPRs for self-disallowed items or items adjusted during audit
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Whether through an Individual Appeal or Group Appeal
Join Group Appeals
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Strength in numbers
May not have a choice
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The Appeals Game
There are four (4) players in the Medicare cost report appeals arena
• The Provider
– Appeals adjustments
• The MAC
– Defends adjustments
• The PRRB
– Strong interest in docket management
– If a case can be dismissed, it will be dismissed
• The Courts
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Jurisdictional Challenges
The PRRB is currently questioning jurisdiction when a provider
appeals an issue not adjusted or protested for all cost reporting
periods ending on or after December 31, 2008
The PRRB is generally denying jurisdiction (more discussion to
follow)
Need to amend cost reports that have not had an NPR issued
– MAC reluctant to amend cost reports for protest item only
Protest – It may be your only avenue to appeal an issue
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CMS Uninsured Proposed Rule 2012
• Expands “Uninsured” definition from person
without coverage to service without coverage
• Examples: limited coverage, or limited coverage programs
(Indian Health), exhausted benefits, lifetime benefit
expiration, etc.
• Does not cover deductible/patient responsibility bad debt,
non-medically necessary, prisoners
• More consistent with pre-MMA definition
• Must be an inpatient/outpatient health care service
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Recent Legal Update – Trouble’s Brewing
Todd Prine, Director
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Topics for Today’s Discussion
• Allina and Beyond: Who’s On First
• Danbury: Tightening the Screws
• Protest, Protest, Protest
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Allina v. Sebelius
Who’s On First
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Allina
Procedural History
• Issue:
Whether enrollees in Part C are entitled to benefits under Part A, such
that they should be counted in Medicare fraction, or, if not
entitled to Part A, should they be included in Medicaid fraction.
– Argued February 7, 2014 before United States Court of Appeals
– Decided April 1, 2014
– Affirmed in-part, reversed in-part lower court decision
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Allina
Procedural History
Pre-2003 – Part C patients not entitled to benefits under Part A
– include in Medicaid fraction
2003 – Proposed rule “clarifying that once beneficiary elects … Part C … should be included in the
count of total patient days in the Medicaid fraction …”
2004 – Secretary mandated that Part C beneficiaries to be counted in Medicare fraction
– proposed effective 2005, CMS issued correction adopting for 2007
Court decision:
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CMS pulled a “switcheroo”
Clarify as used in 2004 would be clarifying “then-existing policy excluding Part C days from Medicare
fraction”
– 2003 notice of proposed rulemaking inadequate, not a logical outgrowth
− No opportunity for public comment
− No disclosure of critical information (“financial impact”)
Held:
Notice of rulemaking deficient – VACATE RULE
− Reversed order to recalculate
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Allina
Medicaid Fraction
Medicare Fraction
Eligible Medicaid Days
Entitled Part A + Entitled to SSI
Total Patient Days
Total Patient Days Entitled to Part A
CMS options:
1)
Recalculate DSH <2013
– New regulation adopting 2004 “clarification”
2) Continue to litigate 2004 position
3) Appeal Allina to Supreme Court
Provider options:
1) Continue protesting Part C on Cost Report
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Medicare Protest
Medicaid Protest
2) Continue PRRB Appeals
3) Continue Litigation
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Danbury v. Sebelius
Tightening The Screws
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Danbury Arguments
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Decided by PRRB – May 23, 2014
PRRB ruled in favor of MAC (surprise!!!!)
Issue: Whether the PRRB has jurisdiction over Medicaid days when there was no
adjustment?
Provider Contention
MAC Contention
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Claimed tantamount to Bethesda “selfdisallowance”
− futile, no support data
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No adjustment or protest item on cost report
− i.e., no adjustment
NO JURISDICTION
no protest
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Data not available from State to validate at
cost report filing
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cited PRRB rule 7.2A
− Requires concise statement
Provider has responsibility of submitting
complete and accurate data on cost report
− Not CMS responsibility to collect
Medicaid data – It’s yours!!
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Danbury
PRRB Decision
• Obligation to submit eligible day information when filing cost report
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Congress did not intend additional reporting mechanism (state eligibility)
• Provider has obligation as part of year end settlement to prove to MAC
Medicaid days wrong
• Provider has obligation to claim dissatisfaction
HOWEVER…
• PRRB acknowledges State verification might not be available for years
– Practical impediment
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Danbury
HOWEVER…
• Administrator historically held CMS did not adjust/acknowledge for
impediment
HOWEVER…
• Akin to Bethesda: legal impediment standard, thus no adjustment required
to meet jurisdiction
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Danbury
THUS…
• No State data available => dissatisfaction!!!
• Bethesda invoked, aligns with PRRB Rule 7
– Administrator does not concede Bethesda
• Provider could have used own data (no state verification necessary)
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Use estimates
• PRRB discussion (problems with including unverified Medicaid days in
cost report filing)
– Raise false claims issue
– How do you accurately estimate
– Reopening’s are discretionary
• Futility determine at time of filing
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Danbury
HOWEVER…
• Provider failed to establish practical impediment
JURISDICTION DENIED!!
Danbury Lessons:
Include protest item on cost report filing
Amend cost report if possible to include protest
File appeal/reopening of adjustment
IF YOU HAVE MEDICAID DAYS APPEAL PENDING SEE ALERT
10 – DEADLINE FOR RESPONSE JULY 22, 2014.
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Summary of Lessons Learned
Allina
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CMS unsure what to do with Part C Days for prior years
Protest to remove from Medicare Proxy / include in Medicaid Proxy
2013 forward appears to fall in Medicare Proxy
Courts did not strike legitimacy of Part C days
– Violation of APA
– Court did not order recalculation
Danbury
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Protest Medicaid days on cost report
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If appeal pending without adjustment perfect jurisdiction
– See Alert 10
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Bethesda losing steam
– Standards to invoke very high
• “‘cause” will not suffice
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For more information please contact:
Manie Campbell – manie.campbell@campbellwilson.com
Todd Prine – todd.prine@campbellwilson.com
CampbellWilson, LLP
15770 Dallas, Parkway, Suite 500
Dallas, TX 75248
(214)373-7077
*****
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