CMS to Explain ‘Improvement’ to Slashed Disproportionate Share Hospital (DSH) Reimbursements

When the Patient Protection and Affordable Care Act slashed Medicare and Medicaid reimbursements to Disproportionate Share Hospitals (DSHs), the new law included provisions to return some of that money based on a series of formulas based on the number of uninsured and amount of uncompensated care (see the actual language from the Act reproduced below).

The sources of data behind those formulas, which take effect in 2014, were not defined. On Tuesday consultants working for the Centers for Medicare and Medicaid Services (CMS) will explain those formulas and “present findings of their analyses identifying possible data sources and definitions for measuring the change in uninsured and uncompensated care,” according to a CMS press release.

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More than any other area of healthcare, DSHs are the most negatively affected by ACA. These providers, who mainly serve the poor, got a double whammy last summer when the U.S. Supreme Court ruled that the federal government could not force states to expand Medicaid — a provision in the ACA that would have made up some of what DSH’s would lose as part of the reimbursement cuts.

Reimbursements to DSH providers received an additional $4.2 billion in cuts as part of the recent American Taxpayer Relief Act of 2012 passed New Years Day. Providers can learn more during a CMS National Provider Call on Tuesday from 1:30 p.m. to 3:30 EST titled “Implementation of Section 3133 of the Affordable Care Act: Improvement to Medicare Disproportionate Share Hospital (DSH) Payments.” However it is unknown if the call will cover the methodology behind the newest round of cuts.

CMS commissioned Dobson DaVanzo & Associates, LLC and KNG Health Consulting, LLC to provide technical assistance, and representatives from those firms will present their findings. At the end of the call, participants will have an opportunity to provide comments.

Agenda

The agenda for the call is as follows:

  • Review of Section 3133, the portion of the ACA that covers DSH formulas;
  • Analytic methods;
  • Uninsured definitions and data sources;
  • Uncompensated care definitions and data sources;
  • Conclusions;
  • Next steps;
  • Discussion: Public comments.

Registration for the call will close at noon EST on Tuesday “or when available space has been filled,” according to the press release For more information and to register visit the CMS web page.

ACA Section 3133

The Affordable Care Act amended Section e133 is as follows:

SEC. 3133. IMPROVEMENT TO MEDICARE DISPROPORTIONATE SHARE HOSPITAL (DSH) PAYMENTS.

Section 1886 of the Social Security Act (42 U.S.C. 1395ww), as amended by sections 3001, 3008, and 3025, is amended–

(1) in subsection (d)(5)(F)(i), by striking `For’ and inserting `Subject to subsection (r), for’; and
(2) by adding at the end the following new subsection:
(r) Adjustments to Medicare DSH Payments-
(1) EMPIRICALLY JUSTIFIED DSH PAYMENTS- For fiscal year 2015 and each subsequent fiscal year, instead of the amount of disproportionate share hospital payment that would otherwise be made under subsection (d)(5)(F) to a subsection (d) hospital for the fiscal year, the Secretary shall pay to the subsection (d) hospital 25 percent of such amount (which represents the empirically justified amount for such payment, as determined by the Medicare Payment Advisory Commission in its March 2007 Report to the Congress).
(2) ADDITIONAL PAYMENT- In addition to the payment made to a subsection (d) hospital under paragraph (1), for fiscal year 2015 and each subsequent fiscal year, the Secretary shall pay to such subsection (d) hospitals an additional amount equal to the product of the following factors:
(A) FACTOR ONE- A factor equal to the difference between–
(i) the aggregate amount of payments that would be made to subsection (d) hospitals under subsection (d)(5)(F) if this subsection did not apply for such fiscal year (as estimated by the Secretary); and
(ii) the aggregate amount of payments that are made to subsection (d) hospitals under paragraph (1) for such fiscal year (as so estimated).
(B) FACTOR TWO-
(i) FISCAL YEARS 2015, 2016, AND 2017- For each of fiscal years 2015, 2016, and 2017, a factor equal to 1 minus the percent change (divided by 100) in the percent of individuals under the age of 65 who are uninsured, as determined by comparing the percent of such individuals–
(I) who are uninsured in 2012, the last year before coverage expansion under the Patient Protection and Affordable Care Act (as calculated by the Secretary based on the most recent estimates available from the Director of the Congressional Budget Office before a vote in either House on such Act that, if determined in the affirmative, would clear such Act for enrollment); and
`(II) who are uninsured in the most recent period for which data is available (as so calculated).
(ii) 2018 AND SUBSEQUENT YEARS- For fiscal year 2018 and each subsequent fiscal year, a factor equal to 1 minus the percent change (divided by 100) in the percent of individuals who are uninsured, as determined by comparing the percent of individuals–
(I) who are uninsured in 2012 (as estimated by the Secretary, based on data from the Census Bureau or other sources the Secretary determines appropriate, and certified by the Chief Actuary of the Centers for Medicare & Medicaid Services); and
(II) who are uninsured in the most recent period for which data is available (as so estimated and certified).
(C) FACTOR THREE- A factor equal to the percent, for each subsection (d) hospital, that represents the quotient of–
(i) the amount of uncompensated care for such hospital for a period selected by the Secretary (as estimated by the Secretary, based on appropriate data (including, in the case where the Secretary determines that alternative data is available which is a better proxy for the costs of subsection (d) hospitals for treating the uninsured, the use of such alternative data)); and
(ii) the aggregate amount of uncompensated care for all subsection (d) hospitals that receive a payment under this subsection for such period (as so estimated, based on such data).
(3) LIMITATIONS ON REVIEW- There shall be no administrative or judicial review under section 1869, section 1878, or otherwise of the following:
(A) Any estimate of the Secretary for purposes of determining the factors described in paragraph (2).
(B) Any period selected by the Secretary for such purposes.