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  • Washington Highlights

    CMS Proposes Change to Counting Days in Medicaid Fraction for DSH Calculations


    Katherine Gaynor, Hospital Policy and Regulatory Analyst
    For Media Inquiries

    On Feb. 28, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule entitled “Disproportionate Share Hospital (DSH) Payments: Counting Certain Days Associated with Section 1115 Demonstrations in the Medicaid Fraction,” aimed at revising the calculation of the Medicaid fraction of a hospital’s disproportionate patient percentage. 

    This proposed rule is a follow-up to the agency’s unfinalized Medicaid fraction proposal included in previous years’ Inpatient Prospective Payment System proposed rule and contains three main parts to the proposal [refer to Washington Highlights, Aug. 5]. First, the CMS proposed to modify the definition of “‘regard as’ ‘eligible for medical assistance under a state plan approved under title XIX.’” The agency is proposing that for the purpose of Medicare DSH calculations to only include in the fraction patients who receive health insurance or buy health insurance with premium assistance provided to them under a Section 1115 demonstration, where states receive matching funds.  

    Second, the CMS proposed to include in the Medicaid fraction numerator only the days of patients covered under a Section 1115 demonstration who receive health insurance that covers inpatient hospital services or receive premium assistance that covers 100% of the patient’s premium cost that includes coverage for inpatient services — provided in either case that the patient is not also entitled to Medicare Part A. This new proposal differs from the CMS’ original proposal to count the days of patients who receive premium assistance at 90% of the patient’s premium cost. The agency cited commenters’ concerns that verifying which patients had 90% premium assistance would cause additional administrative burden. To alleviate these concerns, the agency changed the proposal to 100% premium assistance, which they believe to be less burdensome to verify.  

    Lastly, the CMS proposed to exclude patients whose inpatient hospital costs are paid for with funds from an uncompensated or undercompensated care pool authorized by a Section 1115 demonstration from being included in the Medicaid fraction numerator. 

    The AAMC plans to submit a comment letter response to the proposed rule. Comments from the public are due by May 1.