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AAMC Comments on Medicaid DSH Payment Proposed Rule

September 16, 2016—The AAMC Sept. 14 submitted  a comment letter on the Centers for Medicare and Medicaid Services’ (CMS) Treatment of Third Party Payers in Calculating Uncompensated Care Costs in Medicaid Disproportionate Share Hospital (DSH) Payments proposed rule. CMS asserts that the proposed rule clarifies an existing interpretation that all costs and payments associated with dual eligible and individuals with a source of third party coverage must be included in the calculation of the hospital-specific DSH limit.

CMS proposes to pay providers only the costs for Medicaid eligible individuals for which the provider has not received payment from any other source, regardless of the Medicaid costs incurred for treating a Medicaid eligible individual. The AAMC urges CMS to apply this proposed rule prospectively, as treatment of third party payments has only been addressed through ambiguous subregulatory and informal guidance. 

The letter also urges CMS to exclude from calculations of hospital-specific DSH limits those patients with sufficient commercial coverage to cover all hospital expenses without reliance on Medicaid, and to also consider factors other than third party payments that affect a hospital’s uncompensated care losses. 

As significant cuts to Medicaid DSH payments are anticipated, the AAMC recommends that CMS also allow hospitals to include the economic burdens of Medicaid provider fees and other provisions of non-federal share in their calculations of uncompensated care costs for the purposes of Medicaid DSH hospital-level caps.


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Washington Highlights, a weekly electronic newsletter, features brief updates on the latest legislative and regulatory activities affecting medical schools and teaching hospitals.

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Jason Kleinman
Sr. Legislative Analyst, Govt. Relations
Telephone: 202-903-0806