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  • Washington Highlights

    AAMC Comments on Medicaid Third-Party Payer Proposed Rule


    Mary Mullaney, Director, Hospital Payment Policies
    For Media Inquiries

    The AAMC on April 13 submitted comments in response to the Centers for Medicare & Medicaid Services’ proposed rule entitled “Medicaid Program; Disproportionate Share Hospital Third-Party Payer Rule.” The proposed rule implements Section 203 of the Consolidated Appropriations Act, 2021 (CAA, P.L. 116-260) related to the treatment of third-party payments in the calculation of the hospital-specific disproportionate share hospital (DSH) limits.  

    Beginning Oct. 1, 2021, the calculation of the Medicaid portion of the hospital-specific DSH limit can only include costs and payments for services furnished to beneficiaries for whom Medicaid is the primary payer, except for hospitals in the 97th percentile of all hospitals with respect to inpatient days made up of patients who, for such days, were entitled to Medicare Part A benefits and to supplemental security income benefits. As a result, cost and payments for services provided to Medicaid beneficiaries with other sources of coverage are excluded. 

    The letter noted the AAMC’s understanding that the Section 203 legislation is detailed, affording the CMS little flexibility upon implementation. However, it goes on to say that AAMC members report that the impact of the changes will dramatically reduce their Medicaid DSH reimbursements, impacting their ability to furnish services to all patients. 

    The letter asked the CMS to annually release both the data and rankings for all hospitals, not just those that qualify for the exemption in a timely manner. Finally, the letter noted that the consequences of the changes enacted by Section 203 will be significant and cannot be overstated. The association asked the agency to monitor the impact on hospitals and, if necessary, work with Congress and invested parties to ensure these cuts will not force hospitals to cut back on vital services they provide to their communities.