Illinois sues to reverse $145M in federal Medicaid repayments

The Illinois Department of Healthcare and Family Services sued the federal government over its attempt to recoup about $145 million in Medicaid payments from two hospitals, according to court filings.

In 2016, CMS required Medicaid repayment from two Chicago-based safety-net hospitals: $140.3 million from the University of Illinois Hospital and $4.5 million from Mount Sinai Hospital.

The federal government paid the two hospitals $377.3 million in Disproportionate Share Hospital allotments — given to hospitals that treat a disproportionate share of low-income patients — from July 1996 through June 2000.

Central to Illinois' argument is that the payments should have been calculated through a prospective method. CMS has disagreed with Illinois, using a retrospective method.

In April 2018, HHS' Departmental Appeals Board sustained CMS' 2016 repayment requirement. "We conclude that the process that Illinois used to calculate and apply the hospital-specific DSH limits did not follow the standards and methodologies in Illinois' Medicaid State plan," the board said.

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