Bolstered By Favorable District Court Decision, King & Spalding Now Forming Group Appeals Contesting Inclusion of Part C Days in SSI Fraction for FYs 2006 and Later


In a recent decision for which King & Spalding organized the appealing group of hospitals and was co-counsel, the D.C. district court ruled that CMS’s regulation requiring the inclusion of Medicare Part C patient days in the SSI fraction of the Medicare DSH formula starting in 2006 was invalid.  In light of this decision, which is available here, and in response to interest expressed by several clients, King & Spalding is now forming group appeals of this issue to the Provider Reimbursement Review Board (Board) for 2006 and later cost reporting periods. Under the Board's rules, if a hospital is the only related hospital appealing a particular issue for a particular fiscal year, that hospital may join with other unrelated hospitals in bringing an appeal of an issue.  Related hospitals appealing the same issue for the same fiscal year must be grouped together.   

CMS has until January 14, 2013 to appeal the district court decision to the D.C. Circuit Court of Appeals.  If CMS does appeal, the appellate decision probably would not be issued until mid-2014.  In the meantime, however, it is essential for providers to protect their appeal rights by filing timely Board appeals (i.e., appeals within 180 days of the issuance of the Notice of Program Reimbursement (NPR)).  Although CMS had instructed fiscal intermediaries not to settle cost reports for DSH hospitals for 2006 forward pending the calculation of “final” SSI numbers, this bar has recently been lifted and DSH hospitals should be beginning to receive NPRs for these cost reporting periods.

While we strongly urge DSH hospitals to include this item as a “protested item” on cost reports filed in the future, a hospital’s failure to do so in prior years is by no means fatal to the provider’s appeal rights.   For one thing, the change in regulation requiring providers, in the absence of an audit adjustment, to have a protest item for a particular issue only applies to cost reporting periods ending on or after December 31, 2008.  This rule, therefore, does not apply to 2006,  2007, or 2008 cost reporting periods.  In addition, in most cases the intermediary will have made an adjustment to the SSI fraction based on CMS’s recomputation of SSI percentages, which itself should be sufficient for Board jurisdiction.  There may be good arguments in support of jurisdiction in other cases as well. 

Similar legal arguments exist for contesting CMS's inclusion of "no Part A payment" days (i.e. non-covered days) in the SSI Ratio and its exclusion of dual eligible no Part A payment days from the Medicaid fraction.  King & Spalding will be forming similar group appeals contesting this CMS DSH policy as well. 

If you are interested in participating in a group appeal of these  issues, or would like further information, please contact Dan Hettich at +1 202 626 9128, or Greg Etzel at +1 713 751 3280,

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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