Another District Court Rejects Hospitals' DSH Claims

October 29, 2009

By: Thomas W. Coons and Joshua J. Freemire

The United States District Court for the Western District of Washington has joined the list of courts to reject provider's claims that patients provided services under state medical assistance plans should be counted as a part of Medicare's Disproportionate Share Hospital (DSH) calculation. University of Washington Medical Center, et al. v. Sebelius No. C07-0394RAJ, slip op. (W.D. Wash. Sept. 30, 2009) [PDF]. This court joins the courts in Adena, Cooper, and Phoenix Memorial in holding that patients who receive services as a part of "state-only" charity care programs do not receive "medical assistance" as that term is used in the relevant Medicare statutory language. (For a more detailed analysis of these cases, please see our articles on Adena and Cooper.)

Washington hospitals provided services to two groups (certain low-income and unemployed patients) who were not eligible for the traditional fee-for-service medical assistance program commonly called "Medicaid." Those hospitals were reimbursed for these services, under Washington's state plan, through the state's Medicaid DSH program. The hospitals contended that these patients should also be included in the numerator of the Medicaid Fraction of the Medicare DSH calculation — a contention that placed approximately $31 million dollars at issue. The providers appealed their position first to the Provider Reimbursement Review Board (PRRB) where they succeeded. That decision, however, was reversed by the acting Administrator. The providers, accordingly, appealed to the district court.

The district court, in deciding the parties cross motions for summary judgment, first determined that the Medicare statute's use of the term "medical assistance" was "unambiguous" in that it was intended to only count patients eligible for traditional, fee-for-service Medicaid. Second, the court determined that the Administrator's factual finding, that the patients at issue did not receive federal medical assistance was supported by substantial evidence.

Ober|Kaler's Comments

The decision of the district court is likely not the end of this dispute in Washington State; the providers will likely appeal. Nevertheless, this decision, hewing as closely as it does to the analysis of the other courts to address this issue, does not bode well for future actions. There appears to be an increasing consensus that the definition of "medical assistance" found in the Medicaid statute can be used to interpret the term as used in the Medicare statute. This consensus would limit the definition of "medical assistance" to the services provided to the patient populations required under Medicaid (medically and categorically needy populations).