Appeals Court Reinstates DSH Reductions
- A three-judge panel of the D.C. Court of Appeals issued a ruling that reversed a lower-court decision and reinstated a 2017 rule requiring payments by Medicare and private insurers to be included in calculating the limit for payments to a disproportionate share hospital (“DSH”), ultimately lowering maximum DSH reimbursement.
- A DSH-designated facility is one that serves a large number of Medicaid, low-income, and uninsured patients. The case concerned the calculation of the uncompensated costs of treating Medicaid beneficiaries known as the “Medicaid shortfall,” which is the difference between the facility’s cost to provide care and the amount paid by Medicaid for that care. The 2017 rule required the calculation to include payments to the facility from Medicare and commercial insurers.
- “By requiring the inclusion of payments by Medicare and private insurance, the 2017 rule ensures that DSH payments will go to hospitals that have been compensated least and are thus in most need,” wrote the court in its opinion.
- It is unclear whether the plaintiffs, a group of children’s hospitals, will further appeal the case to the U.S. Supreme Court.
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Thomas D. Anthony is the former chair of FBT's Health Care Industry Team. He focuses on counseling health care entities on corporate transactions, regulatory compliance and joint ventures.