Two Major DSH Decisions

Fall 2006

Two important decisions addressing disproportionate share hospital (DSH) adjustments were recently issued.

DSH Medicaid Eligible Days Used in the Medicaid Proxy

On April 23, 2006, the United States Supreme Court denied certiorari, i.e., declined to review the decision of the United States Court of Appeals for the District of Columbia in Leavitt v. Baystate Health Systems, 414 F.3d 7 (D.C. Cir. 2005). As a result, the Court of Appeals' decision stands as controlling law. That court held that intermediaries had a nondiscretionary duty to reopen certain hospitals' Medicare cost reports and recalculate their DSH payments to include Medicaid eligible but unpaid days even if the providers did not request the reopening. At the time of this writing, counsel for providers with similar pending cases and CMS counsel are discussing potential settlement of this issue for these providers.

DSH Supplemental Security Income (SSI)

Data Used in the Medicare Proxy

In a long-awaited decision, the Provider Reimbursement Review Board (Board) ruled in favor of the same provider, Baystate Medical Center, in finding that the data and match process used by CMS to calculate the provider's Medicare proxy or fraction was flawed. Baystate Medical Center v. Mutual of Omaha, PRRB Hearing Dec. No. 206-D20, March 17, 2006. The Board further found CMS could resolve these issues with minimal administrative burden. The Board reversed the intermediary's determination and ordered the intermediary to recalculate the Medicare proxy. Not surprisingly, the CMS Administrator ruled that the intermediary's calculation was proper and affirmed that calculation. Baystate Medical Center v. Mutual of Omaha, CMS Admin. Dec. (May 11, 2006). The provider has appealed the CMS Administrator's decision to U.S. district court. Docket No. 06-1263 (D.D.C. July 14, 2006).