The December 19, 2008 DSH audit rule (73 Fed. Reg. 77904) indicated that all Medicare payments must be included in the DSH audits for Medicaid/Medicare dual-eligible patients. CMS issued “Additional Information on the DSH Reporting and Audit Requirements” in January of 2010 (commonly referred to as the “FAQ”). In that document, FAQ #33 requires DSH audits to include private insurance payments on dual-eligible Medicaid patients and FAQ #34 requires the DSH audits to include Medicare payments on Medicaid dual-eligible patients.
In recent years, several hospitals and hospital associations filed legal actions challenging the CMS guidance on including the Medicare and private insurance payments in the DSH audits. Several court decisions have been issued affecting CMS’ regulatory treatment of DSH overpayments for those hospitals.
Following court decisions, CMS issued a Final Rule on April 3, 2017, clarifying that, effective with services furnished on or after June 2, 2017, Medicare payments and private insurance payments must be included in the DSH audits for Medicaid dual-eligible patients (82 Fed. Reg. 16114-02, 16117).
The December 31, 2018 bulletin issued by CMS encourages states to “review any applicable district court or appellate court decision,” and cites the following cases as examples:
- Tenn. Hosp. Ass’n v. Azar, 908 F.3d 1029 (6th Cir. Nov. 14, 2018).
- Children’s Health Care v. CMS, 900 F.3d 1022 (8th Cir. Aug. 20, 2018).
- Children’s Hosp. of the King’s Daughters, Inc. v. Azar, 896 F.3d 615 (4th Cir. July 23, 2018).
- New Hampshire Hosp. Ass’n v. Azar, 887 F.3d 62 (1st Cir. Apr. 4, 2018).