On September 28, 2018, the United States District Court for the District of Columbia issued a favorable decision for hospitals appealing the CMS Administrator’s disallowance of certain Medicaid section 1115 waiver days from their Medicare DSH payment calculations. See HealthAlliance Hosps. v. Azar, No. 17-cv-917 (KBJ) (D.D.C. Sept. 28, 2018).
The state of Massachusetts operates a Medicaid managed care program known as MassHealth. Under a section 1115 waiver demonstration program known as the Commonwealth Care Health Insurance Program, Medicaid managed care recipients were provided premium assistance for their coverage. That assistance was funded through federal Medicaid matching funds and Massachusetts Safety Net Care Pool funds. The terms of the section 1115 waiver also allowed the state to provide coverage to a low-income, expansion population that would otherwise not be eligible for Medicaid (and the associated federal matching payments).
Certain Massachusetts hospitals claimed the inpatient days associated with individuals eligible for and receiving assistance under the Commonwealth Care program. The Medicare Administrative Contractor (MAC) disallowed the days, and the hospitals appealed to the Provider Reimbursement Review Board (the Board). Following hearing, the Board overruled the MAC and concluded that the days attributable to patients receiving Commonwealth Care assistance, a CMS-approved section 1115 waiver demonstration program, should be included in the numerator of the Medicaid fraction of the Medicare DSH calculation. See Southwest Consulting UMass Mem’l Health Care & Steward Health 2009 DSH CCHIP Sec. 1115 Waiver Days Grps. v. Nat’l Gov’t Servs, Inc., PRRB Dec. No. 2017-D4, at 6 (Jan. 27, 2017). The Board’s decision is available here.
The CMS Administrator then reversed the Board’s determination, finding that the statutory definition of “medical assistance” did not include premium payment, and that the Commonwealth Care recipients should not be counted for the purposes of DSH. See Southwest Consulting UMass Mem’l Health Care & Steward Health 2009 DSH CCHIP Sec. 1115 Waiver Days Grps. v. Nat’l Gov’t Servs, Inc., PRRB Dec. No. 2017-D4, Adm’r Dec. at 18 (Mar. 21, 2017). The Administrator’s decision is available here.
The hospitals filed an appeal to federal court following the Administrator’s unfavorable determination. Plaintiffs argued that the Secretary’s actions (through his Administrator) constituted a violation of the Administrative Procedure Act and were contrary to the plain language of the Secretary’s DSH regulation at 42 C.F.R. § 412.106 and the Secretary’s intent at the time of approving the section 1115 waiver demonstration project.
Following briefing on cross-motions for summary judgment, the court issued an order stating “HHS erred when it refused to count the patient days associated with Massachusetts’ Commonwealth Care program in the numerator of the Medicaid fraction when determining a hospital’s entitlement to a [DSH] adjustment under the Medicare program.” It then remanded the issue back to the Secretary for reconsideration of the CMS Administrator’s decision “in accordance with th[e] Court’s reasoning in its forthcoming Memorandum Opinion.” As of the time of this writing, the court has yet to issue that opinion. The court’s order is available here.
