Over 500 hospitals reach DSH payment settlement with CMS

Resolving 11 pieces of litigation stretching back to 2010, over 500 hospitals on July 14, 2016, entered into confidential settlement agreements with CMS regarding Medicare disproportionate share hospital (DSH) payments. Details of the settlements were not available at press time, although they involve disputed DSH payments for cost reporting periods from 1991 through 2007, depending on the hospital. Neither CMS nor the attorneys at Akin Gump, lead counsel for the hospitals involved in the settlements, would comment on the settlements.

Background

Medicare makes DSH payments as a percentage add-on to the standard payment amount per discharge under the prospective payment system for the operating costs of inpatient hospital services. The fact situations for the hospitals involved in the settlement were similar – the hospitals challenged CMS’ payment determinations on the grounds that errors and omissions in the calculation of the DSH payment formula wrongfully reduced the resulting DSH payments. The hospitals also challenged a subsequent ruling by CMS – CMS-1498-R – that the Provider Reimbursement Review Board and the other Medicare administrative appeals tribunals lack jurisdiction over provider appeals of specific DSH payment adjustment issues.

Treatment of Part C days

The hospital parties in four cases also filed a motion to stay further proceedings pending a final, non-appealable merits decision in either Allina Health Services, et al. v. Burwell, 1:14-cv-01415-GK (D.D.C.) (see Court has jurisdiction to hear health system’s challenge to DSH calculation, Health Law Daily, November 2, 2015) or Allina Health System, et al. v. Burwell, 1:16-cv-00150-GK (D.D.C.). The substantive issue in dispute in those cases concerns the treatment of Medicare Part C days in the Medicare DSH payment calculation for periods after October 1, 2004.

Original complaints and stipulations

Listed below are the complaints for the 11 cases that were settled, along with the number of hospitals involved in each complaint and the cost years involved on the original complaints, followed by a link to the July 14, 2016 stipulation.