Change in Reporting Procedures for DSH Uncompensated Care Payments

by King & Spalding

On October 3, 2013, CMS published an interim final rule related to certain changes to the disproportionate share hospital (DSH) uncompensated care payment methodology that CMS set forth in the FY 2014 Inpatient Prospective Payment Systems (IPPS)/long-term care hospital (LTCH) PPS final rule.  The changes affect how CMS will reconcile interim to final uncompensated care payments to hospitals with cost report years that span more than one federal fiscal year.  The rule also provides for inclusion of the consideration of Indian Health Service (IHS) hospitals in Factors 1 and 3 of the uncompensated care formula.  To learn more background regarding the IPPS final rule to the DSH payments, please see the August 5, 2013 Health Headline on CMS Releases FY 2014 Hospital IPPS Final Rule prior to reading the changes set forth in the interim final rule.

CMS clarifies in its interim final rule that with respect to the reconciliation process for uncompensated care payments for hospitals with cost reporting periods that begin after October 1, 2013, it intends:

to align final payments for the uncompensated care payment with each individual hospital’s cost reporting periods and to reconcile interim uncompensated care payment amounts on the hospital’s cost report for the proportion of the cost reporting period that overlaps a Federal fiscal year and in which the interim payments were made or should have been made.

78 Fed. Reg. 61191, 61193 (Oct. 3, 2013).  In order to accomplish this alignment, a hospital with cost reporting periods that span the Federal fiscal year will be eligible for the respective pro rata shares of its uncompensated care payment if it were eligible for DSH in that cost reporting period.  If the hospital were to be ineligible for DSH in that cost reporting period, it would be ineligible to receive the respective pro rata share of the uncompensated care payment for the respective Federal fiscal year.

As for the treatment of IHS hospitals, CMS revises its original policy for the data that will be considered in calculating Factor 1 and Factor 3 for FY 2014 and subsequent years.  In particular, for purposes of Factor 1, with respect to the March 2013 update of Medicare Hospital Cost Report Information System (HCRIS), CMS will also consider supplemental cost report data provided by IHS hospitals to CMS as of March 2013.  CMS will also recalculate Factor 1, to incorporate the Office of the Actuary’s estimate of Medicare DSH payments to IHS hospitals, based on this supplemental data.  CMS also changes its policy with respect to calculating Factor 3 and now will also allow the Medicaid days for IHS hospitals to be included in determining Factor 3 of the new uncompensated care payment as opposed to only considering the SSI days.  CMS concluded that the omission of the Medicaid days significantly understated the actual amount of uncompensated care furnished by these hospitals.

Comments must be submitted no later than 5:00 p.m. on November 29, 2013, to CMS for consideration, and the regulations are effective October 1, 2013.  The interim final rule is available here.

Reporter, Juliet M. McBride, Houston, +1 713 276 7448,

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.

© King & Spalding | Attorney Advertising

Written by:

King & Spalding

King & Spalding on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.