Missouri sues feds over disproportionate share hospitals spat

The state of Missouri is suing the federal government to block it from recouping $162 million in disproportionate share hospital (DSH) payments, the St. Louis Post-Dispatch reported.

As part of the lawsuit filed in the District of Columbia, Missouri wants an injunction to stop the federal government from using a calculation that shows excess DSH payments were made to cover hospital costs of poor patients. About 60 hospitals in the Show Me State were overpaid by approximately $162 million, while 55 others were overpaid by about $55 million, according to the U.S. Department of Health and Human Services' calculation. Payments have expanded in recent years as a result of hospital taxes used to draw down additional payments. 

Truman Medical Center Hospital Hill in Kansas City may have been overpaid by as much as $27 million in 2011, while St. John's Regional Health Center in Springfield may have received overpayments of as much as $21 million, the article noted. 

Missouri hospitals receive about $500 million a year in DSH payments. State officials claim that if the state followed audit guidelines issued in 2010 by the Centers for Medicare & Medicaid Services, it risked lawsuits from the hospitals if it attempted to recoup overpayments. However if the state disregarded the guidelines created at the federal level, it risked losing its DSH funding altogether, the Post-Dispatch reported.

Missouri is one of 19 states that have yet to expand Medicaid eligibility as part of the Affordable Care Act, making available DSH funding crucial for safety-net hospitals. However, the government is paring back DSH spending, with cuts to the program topping $1 billion in 2013.

In some other non-expansion states, such as Florida, the federal government has tried to withdraw some supplemental funding for indigent care in order to make Medicaid expansion more attractive. Florida's supplemental payment program is set to expire later this year, depriving the Sunshine State of as much as $1.3 billion in additional Medicaid funds.

To learn more:
- read the St. Louis Post-Dispatch article