Court Rejects Long-Running Medicare DSH Challenge

In a case that challenged a 2005 change in how the federal Centers for Medicare & Medicaid Services calculates Medicare disproportionate share (Medicare DSH) payments, the Supreme Court has, in a 5-4 decision, reversed a lower court ruling and upheld CMS’s policy of counting days of care for which Medicare does not pay in the Medicare fraction of the Medicare DSH percentage – a policy change widely viewed as disadvantageous to hospitals that care for larger numbers of low-income patients.

This means that Medicare exhausted days and days of care provided to Medicare enrollees with another source of third-party coverage count in the numerator and denominator of the Medicare fraction.  In most cases this results in a lower percentage of a hospital’s Medicare patients also being eligible for SSI and the lowering of that ratio, thereby reducing the amount of Medicare DSH payments a hospital receives.

For most hospitals this ruling has the effect of closing the door on a potential payment increase rather than reducing expected payments.

Learn more from the Fierce Healthcare article “Supreme Court sides with HHS over Medicare DSH rule dispute in blow to hospitals,” the SCOTUS blog analysis “Divided court sides with government, cutting Medicare payments to safety-net hospitals,” and the Supreme Court’s majority decision.

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