Missouri court bans CMS from using Medicaid DSH rule, FAQs to calculate payments: 5 things to know

A Missouri judge banned CMS from enforcing a final rule and two Frequently Asked Questions documents related to calculating Medicaid Disproportionate Share Hospital payments.

Here are five things to know about the ruling.

1. Federal law requires state Medicaid programs to make DSH payments to hospitals that serve large Medicaid and uninsured populations. Under the hospital-specific DSH limit, federal financial participation is limited to a hospital's uncompensated care costs.

2. Under the final rule, uncompensated care costs include only those costs for Medicaid-eligible individuals that remain after accounting for payments made to hospitals by or on behalf of Medicaid-eligible individuals, including Medicare and other third-party payments. "As a result, the hospital-specific limit calculation will reflect only the costs for Medicaid eligible individuals for which the hospital has not received payment from any source," according to the final rule.

3. On Feb. 9, a U.S. District Court in Missouri barred CMS from enforcing the rule and Frequently Asked Questions 33 and 34 documents, which included private insurance and Medicare payment when calculating Medicaid DSH payments, according to the American Hospital Association. The case was brought by the Missouri Hospital Association.

4. Judge Brian Wimes said in a 23-page opinion the Medicaid Act "is unambiguous that the calculation of a DSH hospital's [hospital-specific limit] does not involve consideration of private insurance or Medicare payments, and a DSH hospital's total uncompensated costs of care for calculating the HSL is reduced only by the total of other Medicaid program payments."

5. The opinion follows similar decisions in Tennessee and New Hampshire last year to bar CMS from using the FAQs in Medicaid DSH payment calculations.

Ayla Ellison contributed to this article.

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