CMS Issues Medicaid EHR Incentive Program FAQ on Zero-Pay Days

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CMS has posted a new frequently asked question (FAQ) stating CMS’s policy to exclude zero-pay Medicaid days—those inpatient days for which payment is not made on a patient’s behalf by a State Medicaid program—from the numerator of the Medicaid Share of the Medicaid EHR Incentives Program payment methodology. Pursuant to section 4201 of the HITECH Act, the Medicaid Share is intended to capture a hospital’s Medicaid utilization by including, among other data points, the “number of inpatient-bed-days (as established by the Secretary) which are attributable to individuals who are receiving medical assistance under [Title XIX of the Social Security Act].” This policy arguably conflicts with CMS policy on the treatment of Medicaid inpatient bed days in the numerator of the Medicaid fraction of the Medicare DSH calculation, which includes both paid and unpaid inpatient bed days attributable to Medicaid patients. 

CMS’s FAQ, however, distinguishes between the two policies by focusing on the discretion afforded the Secretary by the HITECH Act in determining “the number of inpatient bed days.” The FAQ states that “the Secretary has ‘established’ how she counts the number of inpatient bed days” by excluding zero-pay days from the Medicaid Share. Moreover, the FAQ reiterates language in the preamble to the Stage 1 Meaningful Use Rule in which CMS distinguishes the Medicare DSH calculation from the Medicaid EHR Incentives Program as distinct programs subject to different rules. See 75 Fed. Reg. 44,314, 44,500 (July 28, 2010). Section 4102 of the HITECH Act precludes judicial review of CMS’s “methodology and standards” for counting inpatient bed days for purposes of determining incentive amounts. The FAQ is available by clicking here.

Providers should note, however, that this policy applies solely to the calculation of the Medicaid Share. The policy does not affect CMS’s recent change in the Stage 2 Meaningful Use rule to begin counting all encounters with a Medicaid patient toward an eligible hospital’s Medicaid patient volume calculation, regardless of whether Medicaid made payment for the encounter. See 77 Fed. Reg. 53,968, 54,121 (Sept. 4, 2012). An eligible hospital that meets or exceeds the threshold is eligible for Medicaid EHR incentives; the Medicaid Share is simply part of the calculation used to determine the eligible hospital’s incentive amount.

Reporter, Christopher Kenny, Washington, D.C., +1 202 626 9253, ckenny@kslaw.com.