CMS issues Medicare DSH interim final rule

The Centers for Medicare & Medicaid Services last night issued an interim final rule that modifies the process for uncompensated care payments for hospitals eligible for Medicare disproportionate share hospital (DSH) payments for cost-reporting periods that span more than one federal fiscal year.

The interim final rule clarifies operational concerns raised in the final rule released last month and also changes the data used in the uncompensated care payment calculation to ensure Indian Health Service hospitals are included in certain factors of the calculation.

The changes are welcome news to the American Hospital Association, which urged CMS in a Sept. 26 letter to modify the process for how payments will be made for the 81 percent of DSH-eligible hospitals with cost-reporting periods that don't coincide with the Sept. 30 end to the federal fiscal year.

"We strongly urge CMS to clarify that UC DSH payments made during a hospital's FY 2013 cost reporting period and overlapping with federal FY 2014 will be settled on the hospital's FY 2013 cost report," Joanne M. Conway, M.D., chief healthcare officer for the Association of American Medical Colleges, and Linda E. Fishman, senior vice president, public policy, analysis & development for the AHA, wrote in the letter.

"We do not believe it is appropriate to delay settlement of such payments until the reconciliation of the hospital's FY 2014 cost report, which, for some hospitals, will not occur until calendar year 2016. Doing so would likely necessitate large recoupments on hospitals' FY 2013 cost reports and large repayments to providers on their FY 2014 cost reports," they wrote.

CMS agreed and in the interim final rule aligned final payments for uncompensated care with each individual hospital's cost-reporting periods. It also will reconcile interim uncompensated care payment amounts with the proportion of the cost-reporting period that overlaps a federal fiscal year and in which the interim payments were made.

CMS will accept comments on the interim final rule through Nov. 29.

Meanwhile, FierceHealthFinance reported this week that the AHA is pushing for a two-year delay in the long-dreaded cuts to Medicare and Medicaid disproportionate share payments.The AHA supports companion legislation to a current bill that would soften the cuts but not delay them. The companion bill would delay the enactment of DSH payment cuts by two years.

For more:
- here's the interim final rule (.pdf)
- read the AHA letter to CMS (.pdf)