On March 11, 2008, the federal government and hundreds of hospitals throughout the United States entered into a settlement agreement under which the hospitals will receive $666,125,000 in additional Medicare reimbursement.
The settlement took years to achieve, involved hospitals nationwide, and stemmed from a Medicare reimbursement policy applied from the mid-1980s until the late 1990s.
In the mid-1980s, the Medicare program adopted a policy applicable to Medicare disproportionate share hospital (DSH) payments. That policy excluded from the payment calculation days attributable to patients who were eligible for Medicaid but for which no Medicaid payment was made (eligible but not paid days). After several hospitals successfully challenged this policy, the government amended its rule in HCFA Ruling 97-2. In amending the rule,
however, the government refused to apply the changes to past periods, which led to a new round of litigation.
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