CMS Hospital Medicaid Reimbursement Rule Annulled
March 2018 ~
A CMS rule change regarding how third-party payments are treated for purposes of calculating the hospital-specific limitation on Medicaid disproportionate share hospital payments, often referred to as “double dipping,” has been annulled by the U.S. District Court for the District of Columbia.
Twelve not-for-profit children’s hospitals in Texas, Minnesota, Virginia and Washington, D.C., serving a disproportionate share of Medicaid and uninsured patients, had previously asked the court to remove the 2017 final rule as contrary to the plain language of the Medicaid Act and “arbitrary and capricious” under the Administrative Procedures Act.
Texas Children’s Hospital was the first hospital to contest the double dipping practice. In 2014, Sullivan granted an injunction in favor of hospitals that were affected, but CMS codified that reimbursement change into a rule and denied funding to hospitals.
The change, voided by U.S. District Judge Emmet Sullivan, would have allowed the agency to count private insurance or Medicare payments against hospitals’ Medicaid reimbursement amounts, even when Medicaid does not cover the cost of care. In his ruling, Judge Sullivan found that CMS acted outside the scope of its statutory authority under the Medicaid Act and vacated the rule; as a result it no longer applies nationally.
Hospital officials expect CMS to appeal the ruling.