DSH IMPROVEMENT? ACA § 3133

Report
DSH IMPROVEMENT?
ACA § 3133
By
John R. Hellow
[email protected]
310-551-8155
Hooper, Lundy & Bookman, Inc.©
Summary of ACA § 3133
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Purpose - Reduce DSH payments and repurpose residual
to reflect relative hospital uncompensated care.
Commencing October 1, 2013, traditional DSH paid at
25%, and remainder subject to Three Factors:
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Factor One – 75% of estimated DSH payments set aside in pool,
Factor Two – Reduce pool by improvement in insured rates
compared to 2010
Factor Three – Distribute pool based on proportion of an
individual hospital’s cost of uncompensated care to all hospitals’
cost of uncompensated care
Statute appears as new 42 U.S.C. § 1395ww(r)
Hooper, Lundy & Bookman, Inc.©
FACTOR ONE – ESTIMATE DSH
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The aggregate amount of DSH payments that
would be made to all hospitals, minus
The amount paid on account of subsection
1395ww(r)(1), 25% of empirically justified DSH
payments per MedPAC’s March 2007 Report to
Congress at p. 77, equals
An amount to be disbursed to DSH hospitals after
adjustment in Factor Two and allocation in Factor
Three.
Hooper, Lundy & Bookman, Inc.©
FACTOR TWO – REDUCTION OF POOL TO
ACCOUNT FOR GROWTH OF INSURED
POPULATION
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For FFYs 2014 – 17, the pool of funds is
multiplied by 1 minus
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The percentage change in the uninsured under age 65,
between 2013 (as determined by Secretary based on
March 2010 estimates from OMB), and
The current year uninsured rate (also from OMB ?)

Minus .1 percent for 2014 and .2 percent for 2015-17.
Hooper, Lundy & Bookman, Inc.©
FACTOR TWO Cont’d
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2018 and After the pool of funds is multiplied by 1
minus
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The percentage change in the uninsured between 2013
(as determined by Secretary and certified by the
actuary) and
The current year uninsured rate (as determined above)

Minus .2 percent for 2018 and thereafter.
Hooper, Lundy & Bookman, Inc.©
FACTOR TWO Cont’d
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Issues With the Calculation
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2014-17
How locked is CMS to OMB’s estimate for 2013?
 Does the statute require the use of OMB data for the current
periods?
 CBO estimates that coverage expansion in 2014 and 2015 will
lag prior estimates by 25%.

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2018 and thereafter
Estimates now include all age groups including 65+
 Do not rely on OMB data
 What data sources will CMS use to capture this information?
 Need to insure undocumented aliens are covered in the data.

Hooper, Lundy & Bookman, Inc.©
FACTOR THREE – DISTRUBUTING
UNCOMPENSATED CARE FUNDS TO
PROVIDERS
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Distribution of the fund each year is made by
establishing a quotient for each DSH hospital that
equals
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An estimate of the amount of uncompensated care for a
period selected by the Secretary for each hospital and
The aggregate uncompensated care for all DSH
hospitals for the period as above, and
Secretary may use alternate data this is a better proxy
for the cost of treating the uninsured.
Hooper, Lundy & Bookman, Inc.©
FACTOR THREE, Cont’d
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CMS January 8, 2013 National Call
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Solicit Provider Input on Factors Two and Three
Strong Suggestion W/S S-10 data will be used
First new W/S S-10s used in FY 2011 and have not been
audited per 12/31/2012 HCRIS Data
 Many errors obvious in filed S-10 data that strongly suggests
data is unreliable as a basis to determine relative share of
uncompensated costs
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Many hospitals did not report S-10 data at all, about 5%
 14% had no bad debt data, but 90% of that group reported Medicare
bad debt data
 Some had a CCR of 1, many had CCRs above .6, a few had more gross
charges on S-10 than on C.
Hooper, Lundy & Bookman, Inc.©
FACTOR THREE, Cont’d
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Unlikely S-10 data will be audited within 2 years of a year
subject to the adjustment
CMS is unlikely to allow appeals or audits to impact
payment once it has occurred – each change to a single
hospitals impacts all hospitals payments.
Will CMS use lagging data, like wage index for this
purpose, e.g., audited FFY 2011 W/S S-10 for FFY
2014 payments? Or will it rely on unaudited S-10
data?
Hooper, Lundy & Bookman, Inc.©
FACTOR THREE, Cont’d
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Problems with W/S S-10
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Definitional problems
Uninsured vs. Charity – Non means tested uninsured
discounts likely not included in charity
 Charity must be determined during the cost reporting period
 Medicaid and other indigent program non-covered charges –
must be addressed in charity policy or excluded
 Non-Medicaid gov’t indigent care program patients likely
should be excluded, but unclear.
 Bad debt timing - written off or expected to be written off on
balances owed by patients delivered during the cost reporting
period. Accrual based account for bad debt should govern.

Hooper, Lundy & Bookman, Inc.©
FACTOR THREE, Cont’d
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Converting Charges to Costs
Problem particularly acute with bad debt
 Hospitals may be grossing up charges to address copayment
shortfalls – should a hospital be allowed to claim a cost for a
copayment that exceeds the copayment.

Hooper, Lundy & Bookman, Inc.©
Status of DSH Litigation
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Allina Health Sys. v. Sebelius (D.D.C. 11/15/12)
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The Allina decision invalidated the CMS regulation adding
Medicare Advantage days to the Medicare Fraction of the DSH
computation.
Allina may yield additional DSH reimbursement, as well as cost
savings on outpatient drugs through 340B Program eligibility
when those Medicare Advantage days are removed from the DSH
calculation.
Implication from Allina is that Part C dual-eligibles should be
included in the Medicaid fraction.
Hospitals must act to preserve their rights to additional DSH
reimbursement and with respect to 340B eligibility as CMS
appeals the Allina decision.
Hooper, Lundy & Bookman, Inc.©
Status of DSH Litigation, Cont’d
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Sebelius v. Auburn Regional Medical Center, (S.
Ct. 1/22/13)
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Supreme Court decides 9-0 no equitable tolling beyond
3 year good cause for late appeal regulation for
government fraud in DSH/SSI cases.
Recognizes federal courts can review PRRB refusal to
grant good cause for late appeals.
Sotomayor concurring opinion suggests good cause
must include government misfeasance which leads to
appeal delay.
Hooper, Lundy & Bookman, Inc.©
Here Come the NPRs!
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After a freeze on the issuance of NPRs for DSH
hospitals since 2006, even after the Allina
decision, CMS has instructed MACs to issue
NPRs with Part C days in the Medicare Fraction.
These new NPRs are accompanied by a reopening
notice on DSH.

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