AHA Asks CMS to Withdraw DSH Proposal

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The American Hospital Association penned a letter to the Centers for Medicare & Medicare urging the agency to withdraw the new rule on Medicaid disproportionate share hospital (DSH) payments due to concerns about its impact on Medicaid DSH hospitals.

In the letter, Thomas P. Nickels, executive vice president, AHA, wrote:

On behalf of our nearly 5,000 member hospitals, health systems and other health care organizations, and our 43,000 individual members, the American Hospital Association (AHA) appreciates the opportunity to comment on the Centers for Medicare & Medicaid Services’ (CMS) proposed rule addressing how third-party payments are treated for purposes of calculating the hospital-specific limitation on Medicaid disproportionate share hospital (DSH) payments. The Medicaid DSH program provides essential financial assistance to hospitals that care for our nation’s most vulnerable populations – the poor, the children, the disabled and the elderly. They also provide critical community services such as trauma and burn care, high-risk neonatal care, and adult and pediatric disaster preparedness resources.

The AHA requests that CMS withdraw this rule due to our significant concerns about its impact on Medicaid DSH hospitals. CMS has characterized that this rule is interpretive and a clarification of existing policy. But, in reality, the rule is substantive and establishes new policy, specifically with the intent of avoiding potentially unfavorable federal district court rulings. There are legal challenges, in two different federal district courts, that are in the final stages of deliberations. These challenges focus on CMS’s use of sub-regulatory guidance to advance its interpretation of the Medicaid statute pertaining to the treatment of third-party payment for purposes of calculating a hospital’s Medicaid DSH limit. The AHA supports the plaintiffs’ arguments in these cases and believes that CMS’s proposed rule, with a mere 30-day comment period, only creates more chaos and uncertainty for Medicaid DSH hospitals in the face of these pending court decisions.

In addition, we are concerned about:

  • CMS’s application of sub-regulatory guidance that is not supported by the
    underlying statute or regulation;
  • CMS’s argument that the rule better “…ensures that the DSH payment reflects the
    real economic burden of hospitals that treat a disproportionate share of lowincome
    patients….”
  • CMS’s failure to apply the proposed policy change in a prospective manner.
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