Resources

Client Alerts, News Articles, Blog Posts, & Multimedia

Everything you need to know about BMD and the industry.

Supreme Court Backs HHS in DSH Payment Battle

Client Alert

What are DSH Payments?

DSH payments are statutorily required payments intended to offset hospitals’ uncompensated care costs to improve patient access to Medicare and Medicaid. The payments also serve to help the financial stability of safety-net hospitals that oftentimes treat uninsured or underinsured patients. The U.S. Department of Health and Human Services’ (HHS) specifically makes DSH payments to hospitals that serve a high number of low-income patients. The Medicare DSH adjustment is calculated based on two factors: the hospital’s Medicare patients with low incomes and those with low incomes, but not on Medicare. 

HHS issued a rule in 2004 that said if patients meet the basic criteria for Medicare—for example, they meet age or disability thresholds—then they count in calculating the Medicare DSH payment, regardless of whether Medicare is the primary payer for hospital care. Because the rule includes all patients entitled to Medicare benefits, hospitals argue that it dilutes the Medicare DSH adjustment.

A Breakdown of the Ruling

In a 5-4 decision, the Supreme Court of the United States recently upheld the HHS interpretation of a formula that decides how to calculate the Medicare and Medicaid fractions of a hospital’s Disproportionate Share Hospital (DSH) adjustment. The case, Becerra v. Empire Health Foundation, validates the current procedure HHS uses to calculate Medicare DSH payments.

Medicare’s DSH adjustment is an additional payment made to hospitals that treat a significant share of low-income patients. The specific question at issue in the case was how to count patients who qualify for Medicare Part A when Medicare is not paying for their hospital treatment. In 2004, HHS issued a regulation interpreting the Medicare statute to count these patients, resulting in lower DSH payments for most hospitals. 

In this case, Empire Health Foundation challenged the calculation of its 2008 Medicare DSH payments based on HHS’ longstanding procedure. Empire argued that the methodology results in lower payments than the hospitals should receive.

Previously, the Ninth Circuit Court of Appeals voided the HHS rule and sided with Empire. However, the Supreme Court reversed course and sided with HHS. According to Justice Kagan, tasked with drafting the opinion:

Text, context, and structure all support calculating the Medicare fraction HHS’s way. In that fraction, individuals ‘entitled to [Medicare Part A] benefits’ are all those qualifying for the program, regardless of whether they are receiving Medicare payments for part or all of a hospital stay. That reading gives the ‘entitled’ phrase the same meaning it has throughout the Medicare statute. And it best implements the statute’s bifurcated framework by capturing low-income individuals in each of two distinct populations a hospital serves.

Justice Kagan also clarified the statute’s purpose: to compensate safety-net hospitals for serving a disproportionate share of low-income patients; not to pay hospitals the most money possible.

What this Ruling Means for Safety-Net Hospitals

Going forward, safety-net hospitals are still required to follow HHS' interpretation of the formula for the Medicare DSH adjustments hospitals receive in exchange for serving low-income patients. According to hospitals like Empire Health, the practical impact of this ruling is reduced Medicare DSH payments to safety-net hospitals.

For more information, please reach out to your local BMD Healthcare AttorneyDaphne L. Kackloudis at dlkackloudis@bmdllc.com or Ashley Watson at abwatson@bmdllc.com.


The Current State of Assignment of Benefits Litigation in Florida

On May 25, 2022, Florida lawmakers approved property insurance reforms that remove attorney’s fees, with respect to assignment of benefits (“AOB”) property insurance litigation. One-way attorney’s fees are a longstanding problem in Florida and the reforms come at a time when AOB litigation increasingly affects homeowners in a negative way.

Proposed Community Revitalization Grants for Ohio Projects

Jason A. Butterworth client alert ohio tax credits historic preservation tax credits community revitalization grants

Ohio Senate Bill 225 Paves the Way for Greater Investment in Opportunity Zones and Historic Districts

Ohio Senate Bill 225 is poised to make dramatic enhancements to certain tax credit programs in Ohio, specifically those surrounding investments in “Opportunity Funds” and historic buildings. Signed into law by Governor Mike DeWine in June 2022, the Bill is positive news for real estate developers working to revitalize Ohio communities with investment and rehabilitation projects.

Ohio Board of Pharmacy COVID-19 Waiver Update

The State of Ohio Board of Pharmacy has issued waivers throughout the COVID-19 pandemic to aid licensed practitioners in their day-to-day operations. As the pandemic has continued over the years, the State of Ohio Board of Pharmacy has intermittently reviewed the various waivers. Effective August 10, 2022, some of those waivers that were once granted have been rescinded.

Ohio Chiropractors Can Now Provide Evaluation and Management Services to Medicaid Patients

The Department of Medicaid released a statement that Medicaid will cover low-and moderate level E&M services represented by CPT codes 99202, 99203, 99212, and 99213 when performed by a chiropractor. The Department of Medicaid will cover up to three E&M services per benefit year. The Department of Medicaid plans to make these changes effective by October 1, 2022.