Edward S. Kornreich Partner 1
Legal Update-New York State Issues 2
N.Y. State Revised Rate Appeal Challenge Process 1. Challenging a DOH Rate Determination 2. New Administrative Rate Appeal Regulation 3. Challenging a DOH Determination-Timing Issues 4. Challenging a DOH Determination-Deference Issues 5. Medicaid Claims Recoupment & Withholding from N.Y. OMIG 3 3
Challenging a DOH Rate Determination Challenging a rate determination by DOH is a complex and time-sensitive process: - Administrative Review Stage: - Controlled by DOH regulations; 10 N.Y.C.R.R. 86-1.32. - Judicial Stage: Article 78 proceeding in New York State Supreme Court: - Controlled by the New York Civil Practice Law Rules (N.Y. C.P.L.R.); - Must be filed within a 4-month statute of limitations; - The Plaintiff is called the Petitioner; - The statute of limitations runs from the date of receipt of a Final Determination by DOH to the Facility. What is a Final Determination : - Judicially defined: - "First, the agency must have reached a definitive position on the issue that inflicts actual, concrete injury Matter of County of Niagara v. Daines, 79 A.D.3d 1702, 1704 (4th Dep t 2010). - [S]econd, the injury inflicted may not be prevented or significantly ameliorated by further administrative action or by steps available to the complaining party Id. 4
Challenging a DOH Rate Determination (Cont d) What is a Final Determination (Cont d) - Supplementing a claim or rate appeal denial has no effect on the finality of DOH s disposition. Matter of County of Niagara v. Daines, 79 A.D.3d at 1704. - A request to reconsider DOH s position does not toll the 4-month statute of limitations. Matter of Sprain Brook Manor Nursing Home, LLC v. New York Dep t of Health, 2010 NY Slip Op 33413U, 1 (N.Y. Sup. Ct. December 14, 2010); ( [T]he mere reconsideration of an otherwise final agency determination will not extend the period of limitations within which to seek review of the determination." Id. (citing Chase v. Board of Educ. Of Roxbury Cent. School Dist., 188 A.D.2d 192 (3d Dep t 1993)). - Exception: a court may find that the 4-month statute of limitations runs from a new review in the case of a fresh and complete examination of the matter based upon newly presented evidence. Matter of County of Niagara v. Daines, 79 A.D.3d at 1704 (citing Boston Culinary Group, Nic. V. New York State Olympic Regional Development Authority, 18 A.D.3d 1103, 1004 (3d Dep t 2005)). 5
New Administrative Rate Appeal Process New DOH Regulation, 10 N.Y.C.R.R. 86-1.32, controlling the Administrative Rate Appeal process - Regulation adopted December 4, 2009 as an emergency measure. - Renewed March 4, 2010, June 2, 2010, August 31, 2010 as an emergency measure. - Provides for a more restrictive rate appeal review process: - The facility must: - submit its Administrative Rate Appeal within 120 days of rate issuance to the facility; - provide in detail the basis for the appeal; - attach relevant documentation; - respond to any DOH s request for additional information within 30 days, or lose the appeal, except for good cause shown. 10 N.Y.C.R.R. 86-1.32(a). - The facility may submit a written request for further consideration of the rate appeal within 30 days of DOH s issuance of the initial determination. The second response becomes the final determination. - But the additional request for further consideration is not allowed if the facility challenges DOH s rate-setting methodology. 10 N.Y.C.R.R. 86-1.32(b). 6
New Administrative Rate Appeal Process (Cont d) What are the appropriate bases for an Administrative Rate Appeal? - Appropriate bases: - Mathematical or clerical errors in the financial and/or statistical data originally submitted by the facility; - Errors in the facility s capital cost reimbursement. 10 N.Y.C.R.R. 86-1.32(d) - Inappropriate base: - DOH s rate-setting methodology. DOH may refuse to consider an Administrative Rate Appeal submitted by a facility which: - provides an unacceptable level of care (as determined by the SHR&PC); - is run by the same management that operates a facility providing an unacceptable level of care ; - Is operated by unlicensed persons; - Is delinquent in fines or penalty payments due under N.Y. Pub. Health Law. 10 N.Y.C.R.R. 86-1.32(e) 7
Challenging a Department Determination-Timing Issues The new regulation has a significant impact on the statute of limitations analysis governing the challenge to a DOH determination: - If the facility challenges DOH s rate-setting methodology, the 4-month statute of limitations starts running from the date of the of the rate issuance to the facility. - Timeline: rate issuance date + 120 days. - If the facility challenges mathematical or clerical errors, the 4-month statute of limitations starts running from the date of the final administrative determination by DOH. - Timeline: rate issuance date + 120 days + first administrative determination + 30 days + second administrative determination + 120 days. Courts have upheld the regulation and its impact on the statute of limitations by dismissing Petitioners challenges: - A challenge relating to any computational errors or errors in the submission of fiscal or statistical data [ ] warrant[s] a review pursuant to the administrative rate appeals process, while a challenge to the methodology is properly considered by way of CPLR article 78 review. Matter of Amsterdam Nursing Home Corp. (1992) v. Daines, 68 A.D.3d 1591, 1592 (3d Dep t 2009); Matter of St. Ann s Home for Aged v. Daines, 67 A.D.3d 1326 (4th Dep t 2009); Matter of Pinegrove Manor II, LLC v. Daines, 60 A.D.3d 767, 768 (2d Dep t 2009). 8
Challenging a Department Determination-Deference Issues Challenging a rate determination by the Department of Health must overcome a certain deference standard: - The Petitioner must show that the Department s determination was made in violation of lawful procedure, was affected by an error of law or was arbitrary and capricious or an abuse of discretion. N.Y. C.P.L.R. 7803(3). - New York Courts will assume a certain deference to governmental decisions. - Deference varies according to the specific conditions surrounding the Department s decision. - E.g. where an agency's determination is based on a detailed methodology derived from a legislative enactment, deference to that agency is warranted where the determination had a rational basis in the record, and was neither arbitrary and capricious nor affected by an error of law. Matter of City of New York v. Novello, 77 A.D.3d 514, 515 (1st Dept 2010). - Judicial rationale: the Department of Health is assumed to have a special knowledge and expertise. Id. See also Kurcsics v. Merchants Mut. Ins. Co., 49 N.Y.2d 451 (1980). 9
Medicaid Claims Recoupment and Withholding from NY OMIG New York OMIG may be required to make a prompt determination of the status of a withheld Medicaid Claim - Upon an audit of Medicaid claims by the New York State Office of the Medicaid Inspector General (OMIG), Medicaid payments may be deferred and the public must be assured that Medicaid funds will not be paid to an untrustworthy provider. Matter of Signature Health Ctr., LLC v. New York State Dep t of Health, 29 Misc.3d 769, 775 (N.Y. Sup. Ct. 2010). - Judicial discretion may impose a reasonable time to resolve the status of withheld claims when the pursuit of administrative remedies is futile, and the danger of losing any future award of treble damages to the fraud unit does not exist. Id. (finding that NY OMIG should conclude its investigation in 120 days under these circumstances.) 10
Medicaid Claims Recoupment and Withholding from NY OMIG (Cont d) The Res Judicata Doctrine does not protect a provider from overlapping recoupment from New York OMIG - Upon an audit of Medicaid claims by the New York State Office of the Medicaid Inspector General (OMIG), the res judicata doctrine is applicable to quasi-judicial administrative determinations, and precludes a party from litigating a claim where there was a prior judgment on the merits between the same parties involving the same subject matter. Matter of Josey v. Goord, 9 N.Y.3d 386 (2007). The doctrine bars all claims arising out of the same transaction or series of transactions, even if based upon different theories or seeking a different remedy. - In New York Administrative Law, res judicata will be applied only if it is consistent with the function of the administrative agency involved, the peculiar necessities of the particular case, and the nature of the precise power being exercised. Id. at 390. - In New York, audits and recoupment in overlapping periods for the same claims has been held to be consistent with the function of OMIG and the nature of the [ ] power being exercised. Matter of Community Related Servs., Inc. v. New York Department of Health, 2010 NY Slip Op 32926U, 14 (N.Y. Sup. Ct. September 29, 2010). 11
RECENT GOVERNMENT ENFORCEMENT ACTIVITY RELATED TO COST REPORTING 12
RECENT GOVERNMENT ENFORCEMENT ACTIVITY RELATED TO COST REPORTING Recent matters include investigations relating to: Treatment of physician compensation for Medicare Part B services Allocation of cost of physician office space and other services not related to inpatient care (i.e., lab) Separate billing for physician services and ancillary services under Medicaid Medicare outlier reimbursement 13
Treatment of Physician Compensation for Medicare Part B Services The government maintains that the portion of physician Part B salaries associated with private practice services should be allocated to a non-reimbursable cost center and cannot be eliminated through worksheet A-8-2. The government contends that eliminating all costs associated with Part B salaries through A-8-2 results in the over-reimbursement of overhead since the portion of Part B salaries associated with services rendered outside the hospital setting would not be drawing down overhead to a non-reimbursable cost center. 14
Treatment of Physician Compensation for Medicare Part B Services There is authority on both sides of the issue: - Pro - Section 2328(E) of the Provider Reimbursement Manual : Amount Applicable to Part B for Hospital-Based Physicians. Since this amount is generally based upon the direct salary and fringe benefits of the physicians, no general service costs would normally apply and the adjustment would be made on the Adjustments to Expenses worksheet. If, however, the contractual agreement with hospital-based physicians requires the physicians to reimburse the hospital for costs incurred by the hospital related to physician services, these costs should bear an appropriate portion of general service costs. 15
Treatment of Physician Compensation for Medicare Part B Services - Con - Several Provider Reimbursement Review Board decisions hold that compensation to hospital-based physicians must be eliminated from the cost-finding process through an adjustment to expenses on Schedule A-8. See Concourse Nursing Home v. Travelers Insurance Company, PRRB Dec. No. 83-D152 (1983); Franklin Nursing Home v. The Travelers Insurance Company, PRRB Dec. No. 83-D80 (1983); Hyde Park Nursing Home v. Blue Cross Assoc./Blue Cross and Blue Shield of Greater New York, PRRB Dec. No. 82-D114 (1982). 16
Allocation of Cost of Physician Office Space Where the same space is used by physicians for administration and teaching as well as private practice, the government will scrutinize the allocation of the costs for the space. 17
Separate Billing for Physician Services and Ancillary Services In recent MFCU investigation, MFCU alleged it was improper to bill separately for physician services furnished in an outpatient mental health clinic. MFCU relied on 18 N.Y.C.R.R. 505.25: - The cost of routine physicians services are included in facilities rate or fee and shall not be billed separately. (emphasis added.) 18
Separate Billing for Physician Services and Ancillary Services There is considerable authority providing that separate billing is permissible if the physician s salary for patient care (as opposed to teaching and administration) is excluded from the provider s cost report: MMIS Provider Manual, Version 2008-2, p. 17 Physician Procedure Codes Manual, Version 2008-1, p. 9 New York State Department of Health, Policy and Billing Guidance Ambulatory Patient Groups (APGs) Provider Manual, p. 22. 19
Separate Billing for Physician Services and Ancillary Services MFCU appears to have dropped case, but OMIG has sought audit recoveries in similar cases involving reimbursement for ancillary physician services furnished by to medically supervised withdrawal and outpatient rehabilitation patients in OASAS-certified facilities. OMIG claims ancillary services are routine and are included in facility s rate. 20
Separate Billing for Physician Services and Ancillary Services Crucial question in context of separate billing for physician services and ancillary services is whether the services at issue are included in the facility rate or not. DOH recently provided guidance in March 2010 Medicaid Update on separate billing for physician service: - Effective for dates of services on or after 2/10, physicians may bill the physician fee schedule for services provided in any Article 28 hospital outpatient clinic or inpatient setting for Medicaid fee-for-service patients. - Physician services continue to be carved out of ambulatory surgery payments - Physician services carved out of ED payments effective 1/1/10 21
Separate Billing for Physician Services and Ancillary Services Ancillary services - Prior to implementation of APGs - operating component of rate included certain ancillary services including lab and x-ray services performed on the same day as the clinic visit. - OMIG had commenced audit of reimbursement for ancillary services at hospital clinics. Investigation was suspended after comment by NYSBA Health Law Section challenging OMIG s claim that a broad array of ancillary services provided within 20 days of clinic visit were not separately billable. - Under APGs - Routine ancillary services such as x-ray, lab services, and drugs are included in APG payment 22
Medicare Outlier Reimbursement DOJ investigating outlier reimbursement from late 1990s to 2003 at hospitals around the country (including several in New York City) Allegation is that hospitals wrongfully took advantage of fact that outlier payment methodology determined costs by multiplying current charges by RCC from last settled cost report. 23
Medicare Outlier Reimbursement Although charges are not regulated or limited under federal laws or regulations, there have been almost 20 settlements, including two major settlements: - 2006, Tenet and St. Barnabas settled cases relating to their Medicare outlier reimbursement for $789 million and $265 million respectively. - Approximately 15 other hospitals or systems have settled since, all for under $10 million per hospital. 24
Medicare Outlier Reimbursement Lesson: - Although there is no limit on charges under federal law, the government has had success in prosecuting these cases on the theory that the abuse of the methodology was fraudulent. - Providers should consider the use of a similar theory in other reimbursement settings. 25
Expansion of Liability for Retention of Overpayments The Affordable Care Act creates a specific requirement to report and return overpayments within the later of 60 days after the overpayment is identified or the date any corresponding cost report is due. H.R. 3590, 111th Cong. 6402(a) (2010). 26
Expansion of Liability for Retention of Overpayments overpayment defined in statute as: - any funds that a person receives or retains under [Medicare and Medicaid] to which the person, after applicable reconciliation, is not entitled under such title. identified not defined in the Affordable Care Act. 27
Expansion of Liability for Retention of Overpayments Providers may be subject to CMP for failure to return overpayment within 60 days Also may be subject to liability under FCA (including through whistleblower action): overpayment retained after the deadline for repayment is an obligation under the FCA. FERA amended reverse false claim provision of the FCA making it a violation of the FCA to (i) knowingly make a false statement material to an obligation to pay money to the government, or (ii) knowingly conceal or improperly decrease an obligation to pay or transmit money or property to the Government. 28
Medicare Graduate Medical Education (GME) 29
GME Changes Enacted By The Patient Protection & Affordable Care Act (PPACA) PPACA changes seek to promote availability of primary care throughout the country - Resident Redistribution (Section 5503) - Nonhospital Settings Standards (Section 5504) - Non-Patient Care Activities (Section 5505) - Resident Cap Positions from Closed Hospitals (Section 5506) - Teaching Health Centers (Section 5508) 30
PPACA GME Changes: Resident Redistribution (Section 5503) and Resident Cap Positions from Closed Hospitals (Section 5506) SECTION 5503: Resident Redistribution Residency caps at hospitals with unused residency slots will be reduced by 65% of difference between cap and resident number Slots will go into a pool for redistribution starting July 1, 2011-70% to hospitals in states with low resident-to-population ratio - 30% to hospitals in top ten states with health professional shortages or rural areas - Note: 75% of redistributed slots must be primary care or general surgery SECTION 5506: Resident Cap Positions from Closed Hospitals Process will be developed to preserve resident cap positions at closed hospitals (up to 2 years prior to PPACA enactment) and redistribute to hospitals located in same area 31
PPACA GME Changes: Nonhospital Settings (Section 5504) and Non- Patient Care Activities (Section 5505) SECTION 5504: Nonhospital Settings Elimination of requirement that hospital incur teaching physician costs at nonhospital setting As long as hospital incurs cost of resident s salary and fringe benefits, hospital eligible to claim resident time spent at non-hospital setting Effective July 1, 2010 SECTION 5505: Non-Patient Care Activities Educational activities in hospital can be included for direct GME and IME purposes (effective January 1, 1983) Educational activities in clinical nonhospital settings can be counted for direct GME purposes (effective July 1, 2009) Research activities not associated with treatment or diagnosis of particular patient are not eligible to be counted for direct GME in nonhospital setting or IME in any setting (effective October 1, 2001) 32
PPACA GME Changes: Teaching Health Centers (Section 5508) $125 million authorized in teaching health center development grants - $25 million for 2010 - $50 million for 2011 - $50 million for 2012 Grants available to establish or expand primary care training programs at community-based ambulatory care centers $230 million appropriated for direct GME and IME payments to teaching health centers that operate GME programs in 2011-2015 - Direct GME payments will be calculated similarly to children s hospital GME payment methods - IME payments will be determined by the HHS Secretary 33
GME: Provider Reimbursement Review Board Major issues raised in recent PRRB decisions: - Program accreditation for FTE purposes - Reimbursement for research and scholarly activities - Written agreement requirements 34
GME Provider Reimbursement Review Board Program accreditation for FTE purposes - Training under an unapproved program that later obtains accreditation can be counted towards a provider s FTE count prior to accreditation when the accrediting body created a grandfathering provision applicable to prior cost reporting periods - Henry Ford Health System (Michigan), PRRB Decision 2010-D53 Reimbursement for research and scholarly activities - 2001 IME rule excluding non-patient care research time from FTE count cannot be applied retroactively to prior cost reporting periods - University Medical Center (Arizona), PRRB Decision 2010-D45 - Time spent by residents in didactic activities count for IME - Greenville Hospital Center (South Carolina), PRRB Decision 2010-D6 35
GME Provider Reimbursement Review Board Written agreement requirements - Agreements that do not state hospital responsible for resident salaries and fringe benefits are insufficient to meet CMS requirement for nonhospital GME even when hospital did in fact pay resident salaries and fringe benefits - Benedictine Hospital (New York), PRRB Decision 2010-D28 - Kingston Hospital (New York), PRRB Decision 2009-D41 - Contract between hospital and nonhospital site with retroactive effective date sufficient to meet CMS requirement for nonhospital GME even though agreement not executed until the end of the cost reporting period. - University of Louisville Hospital (Kentucky), PRRB Decision 2010-D51 36
GME: In The Courts Supreme Court: - Mayo Foundation v. United States Circuit Courts: - Medcenter One v. Sebelius - Univ. of Chicago v. Sebelius - Hackensack Univ. v. Sebelius 37
GME in the Courts: Mayo Foundation v. United States Supreme Court decision no. 09-837 slip opinion. Argued November 8, 2010. Decided January 11, 2011. Mayo Foundation (representing a view long held by many hospitals nationwide) sought a decision that medical residents fall within the payroll tax exemption for students enrolled and regularly attending classes after Social Security demanded payment of back taxes in 1990 IRS decided in 2004 to issue new regulation declaring blanket exclusion of medical residents from payroll tax exemption; any worker employed full-time (40 hours/week) cannot be exempt Supreme Court ruled unanimously (J. Kagan not taking part) for IRS - Student exemption is ambiguous and IRS regulation is reasonable construction of federal law IRS announced payroll tax effective on resident stipends paid after April 1, 2005 Payroll taxes for medical residents estimated in range of $700 million/year 38
GME in the Circuit Courts 7 th Circuit: Univ. of Chicago v. Sebelius (2010) - IME regulation, interpreted in conjunction with congressional intent as expressed in PPACA, allowed research activities to be included in IME FTE pre-2001 - Resident time includes non-patient care activities when assigned to portion of the hospital subject to the prospective payment system - Contradicts 2008 1 st Circuit decision R.I. Hospital v. Leavitt 39
GME in the Circuit Courts 3 rd Circuit: Hackensack University Medical Center v. Sebelius (2010) - After neighboring hospital closed, Hackensack took in displaced residents and applied for temporary and permanent increase in FTEs - Court rejected permanent reallocation of FTEs - No written affiliation agreement between the hospitals (insufficient that both hospitals trained residents from the Univ. of Medicine & Dentistry of NJ) - Decision did not consider newly enacted PPACA provision that would allow FTE reallocation from closed hospitals to neighboring hospitals (with preference given to those with prior affiliations) 40
GME in the Circuit Courts 8 th Circuit: Medcenter One Health Systems v. Sebelius (2011) - Medcenter One and St. Alexius Med. Center sought resident reimbursement for training time at jointly-operated nonhospital family practice facility - Court denied reimbursement - Documentation did not meet HHS regulation requirement of written agreement between hospital and non-hospital site - Medicare fiscal intermediary s conclusion that written agreement requirement was met not binding on HHS 41
Medicare Disproportionate Share (DSH) Payments 42
Overview of Disproportionate Share Hospital Disproportionate Share Hospital (DSH) adjustments payments provide additional help to those hospitals that serve a significantly disproportionate number of low-income patients. The DSH adjustment is an add-on to the Diagnosis Related Group (DRG) based payments of the inpatient acute care hospital prospective payment system (PPS). - Authorized by Congress in 1983. See Social Security Amendments of 1983, Pub. L. No. 98-21, 601(e), 42 U.S.C. 1395ww(d)(5)(C)(i) (1983); 42 U.S.C. 1395ww(d)(5)(F). - In the COBRA of 1986, Congress amended the Medicare Act and defined DSH. 1886(d)(5)(F) of the Social Security Act - In 1986, the Secretary promulgated the DSH rule. 42 C.F.R. 412.106 43
Two Methods for Calculating DSH The DSH statute and regulation establish two methods for determining a hospital s qualification for the DSH adjustment and the amount of the payment add-on for qualifying hospitals - Most cases DSH calculation based on a hospital s disproportionate patient percentage. SSA 1886(d)(5)(F)(i)(I) - Alternative calculation PICKLE DSH Applies only to urban hospitals with at least 100 beds and 30% of its net inpatient care revenues from state and local government payments for care to indigent patients. SSA 1886(d)(5)(F)(i)(II) - Defined as: Net inpatient revenue = gross inpatient revenue minus revenue deductions where revenues received are less than full charges such as bad debts, contractual allowances, and charity care. The threshold percentage is derived by dividing state and local government payments for care furnished to inpatients (excluding Medicare and Medicaid revenues and revenues that are unrelated to indigent care) by net inpatient revenues (including Medicare and Medicaid revenues). 44
DSH Payments BEFORE Health Care Reform Hospital s DSH payment determined by its Disproportionate Patient Percentage (DPP). The DPP is the sum of two fractions expressed as a percentage: All acute care inpatient hospitals under the PPS qualify for DSH reimbursement, if the DPP is at least 15%. 45
DSH Payments AFTER Health Care Reform Does not altered the DPP formula. However, does allow uncompensated care costs to factor into the DSH payment calculation. 46
DSH Changes Enacted By The Patient Protection & Affordable Care Act (PPACA) Beginning 2014 and each year thereafter PPACA requires the HHS Secretary to reduce Medicare DSH payments to hospitals to 25% of the amount each hospital would otherwise receive that year (Sections 3133 and 10316 of PPACA, as amended by Section 1104 of the Health Care and Education Reconciliation Act of 2010 (HCERA)) 47
PPACA DSH Payment Changes (Medicare) A portion of the remaining 75% will be distributed to hospitals based on each hospital s proportion of national uncompensated care. - The definition and reporting of uncompensated care for this purpose have not been defined yet and are likely to be the subject of future rulemaking. - The portion distributed for uncompensated care is the remaining 75% of funds offset by the percentage decrease in the uninsured share of the non-elderly population from fiscal year 2013 to the payment year minus an additional 0.1 percentage point in fiscal year 2014 (minus 0.2 percentage points for fiscal years 2015 2019). 48
PPACA DSH Payment Changes (Medicaid) PPACA requires specific savings targets from reductions in state Medicaid DSH allotments. The reductions would be allocated to states based on a methodology, to be determined by the Secretary, that: - (1) imposes the largest reductions on states that have the lowest percentages of uninsured individuals during the most recent year for which data is available; and - (2) those that do not target their DSH payments to hospitals with high volumes of Medicaid patients and uncompensated care, excluding bad debt. - In addition, smaller reductions shall be placed on low-dsh states. (Section 2551 of PPACA, as amended by Section 1203 of HCERA) 49
PPACA DSH Payment Changes (Medicaid) The specific savings targets are as follows: - $500 million in fiscal year 2014, - $600 million in fiscal years 2015 and 2016, - $1.8 billion in fiscal year 2017, - $5 billion in fiscal year 2018, - $5.6 billion in fiscal year 2019, and - $4 billion in fiscal year 2020. 50
DSH: Centers for Medicare and Medicaid Services (CMS) Rulings On April 28, 2010, CMS published CMS-1498-R which impacts three DSH appeal issues. The Ruling provides that PRRB and other Medicare administrative appeals tribunals lack jurisdiction over provider appeals on the issues of: 1. Medicare non-covered days (such as exhausted benefit days and Medicare secondary payer days), 2. Data matching process for Supplemental Security Income SSI fractions, 3. Labor and delivery days for cost reports beginning before 10/1/2009 The Ruling became effective immediately. 51
CMS-1498-R Impact on Provider Reimbursement Review Board SSI Fraction Data Matching Cases SSI Fraction Data Matching Cases: - CMS revised its data matching process by, for example, making appropriate use of updated and refined SSI eligibility data and Medicare records, and by matching individuals records with reference to Social Security numbers (SSNs) as well as HICANs and Title II numbers - This Ruling effectively renders moot each properly pending claim in a DSH appeal involving the hospital s previously calculated SSI fraction and the process by which CMS matches Medicare and SSI eligibility data. - It is expected that the PRRB will remand appeals to the Intermediary or Medicare Administrative Contractor (MAC) for implementation of the Ruling. - CMS and Medicare contractors will apply a suitably revised data matching process in determining the SSI fraction, and recalculating the DSH payment adjustment, for each properly pending claim on the SSI fraction data matching process issue that is remanded by an administrative appeals tribunal and is found to qualify for relief. 52
CMS-1498-R Impact on PRRB Dual-Eligible Days Dual-Eligible (Part A Exhausted and Noncovered Part A) Days: - Dual-Eligible Days will be included in the SSI ratio of the Medicare DSH calculation. - CMS and the Medicare contractors will recalculate the DSH payment adjustment, for each properly pending claim (on the non-covered or exhausted benefit inpatient hospital day issue) for a cost report with pre-october 1, 2004 discharges that is remanded by an administrative appeals tribunal and is found to qualify for relief under this Ruling. 53
CMS-1498-R Impact on PRRB Labor and Delivery Days Under CMS-1498-R, labor and delivery days will be included in the Medicaid fraction for cost reporting period beginning before October 1, 2009. - Most hospitals will benefit from the inclusion of labor days - Teaching hospitals could suffer from the inclusion of labor room days, as the increase in total patient days will reduce graduate medical education reimbursement and capital payments related to indirect medical education reimbursement. 54
DSH: Provider Reimbursement Review Board DSH issues raised in recent PRRB decisions: - Eligibility for medical assistance - Connecticut s (SAGA) - Eligibility for medical assistance Indiana s HCI program - Medicare+Choice (M+C) days 55
DSH Provider Reimbursement Review Board Eligibility for medical assistance - Two non-profit acute care hospitals (Bridgeport Hospital and Yale-New Haven Hospital) participated in Connecticut s General Assistance Programs or State Administered General Assistance program (SAGA), which provided medical assistance to uninsured low-income patients not eligible for other medical assistance programs, including Medicaid. - The Board concluded that SAGA s program is funded by state and local governments and thus is included in the low income utilization rate, not the Medicaid inpatient utilization rate. Therefore, SAGA patient days do not fall within the Medicaid statute definition of eligible for medical assistance under a State plan at 42 U.S.C. 1396r-4(b)(2)(i) - Yale New Haven Health Services 2001 2004 DSH SAGE Days Group, PRRB Decision 2011-D14 56
DSH Provider Reimbursement Review Board Eligibility for medical assistance - Five hospital providers groups located in Indiana participated in Indiana s Medicaid program and Indiana s Hospital Care for the Indigent (HCI) program. - The purpose of HCI was to provide cost-free emergency medical care to indigent patients who did not qualify for Medicaid. The providers contended that the HCI days should be counted in the numerator of the Medicaid fraction because HCI Medicaid add-on program is an integral part of the IN State Medicaid plan, which was reviewed and approved by CMS. - PRRB disagreed and found that since patients under the HCI program are not eligible for medical assistance they are not Medicaid enrollees. - Therefore, HCI program days must be excluded from the numerator of the Providers Medicaid proxy for the Medicare DSH calculations. - Indiana DSH-HCI Days Group I-V, PRRB Decision 2011-D10 57
DSH Provider Reimbursement Review Board Medicare+Choice (M+C) Days - This case involved 35 group appeals. All of the Providers were acute care facilities that received payment under Medicare Part A for services to Medicare beneficiaries for cost reporting periods from 1999 through 2004. - PRRB agreed with Providers and two district courts that had recently addressed the precise issue (Northeast Hosp. Corp. v. Sebelius, 699 F. Supp. 2d 81 (D.D.C 2010) and Metropolitan Hosp. Inc. v. U.S. Dept. of Health and Human Services, 702 F. Supp. 2d 808 (W.D. Mich. 2010) and concluded that M+C days should be included in the numerator of the Medicaid fraction used to determine eligibility for DSH adjustments. - Southwest Consulting DSH Medicare+Choice Days Groups, PRRB Decision 2010-D52 - This Decision was reversed by a CMS Administrative Decision on 11.22.10. The Administrator agreed with CMS that providers documentation based on other providers data was not sufficient to order the inclusion of the providers M+C days in the DSH calculations. 58
DSH: In The Courts Supreme Court: - None Federal Courts: - University of Wash. Med. Ctr. V. Sebelius, No. 09-36044 (9 th Cir. Feb. 11, 2011). - Ashtabula Cty. Med. Ctr. V. Sebelius, No. 05-cv02365 (D.D.C. Jan. 21, 2011) - Northeast Hosp. Corp. v. Sebelius, 699 F. Supp. 2d 81 (D.D.C 2010) - Metropolitan Hosp. Inc. v. U.S. Dept. of Health and Human Services, 702 F. Supp. 2d 808 (W.D. Mich. 2010) 59
DSH in the Federal Courts Northeast Hosp. Corp. v. Sebelius, 699 F. Supp. 2d 81 (D.D.C 2010) Issue: A number of DSH issues were involved in this case. - Medicaid Fraction issue alleged same serious errors and flaws in the calculation that were alleged in Baystate. Holding: - Court decided to wait and see if CMS would apply the corrections decided in the Baystate Medical Center v. Leavitt, 545 F. Supp. 2d 20 (D.D.C. 2008). Issue: Whether charity care days should be included in the Medicaid Fraction of its DSH calculation based on the fact that such charity care days were incorporated into payments made for Medicaid DSH under the state s Title XIX plan. Holding: - Court relied on Adena Reg l Med. Ctr. V. Leavitt, 527 F.3d 176, 178 (D.C. Cir. 2008) and refused to include charity chare days in Medicaid fraction of the DSH calculation because the patients were not themselves eligible for assistance under a state plan. 60
DSH in the Federal Courts Northeast Hosp. Corp. v. Sebelius, 699 F. Supp. 2d 81 (D.D.C 2010) (continued) Issue: - Whether charity care days should be included in the Medicaid Fraction of its DSH calculation based on the fact that such charity care days were incorporated into payments made for Medicaid DSH under the state s Title XIX plan. Holding: - Court relied on Adena Reg l Med. Ctr. V. Leavitt, 527 F.3d 176, 178 (D.C. Cir. 2008) and refused to include charity chare days in Medicaid fraction of the DSH calculation because the patients were not themselves eligible for assistance under a state plan. 61
DSH in the Federal Courts Metropolitan Hosp. Inc. v. U.S. Dept. of Health and Human Services, 702 F. Supp. 2d 808 (W.D. Mich. 2010) Issue: Whether days for dual-eligible patients who have exhausted their Medicare Part A coverage ( non-covered dual-eligible days ) should be included in the Medicaid fraction of the DSH calculation. Holding: - Court agreed with the provider hospital and invalidated CMS s regulation (42 C.F.R. 412.106(b)), which excluded such dual-eligible days from the Medicaid fraction (and included them in the Medicare fraction if the patients also were entitled to SSI). - The court concluded that the patients belong in the Medicaid fraction because they are eligible for Medicaid and at the time they have exhausted benefits, they no longer are entitled to Medicare Part A as the statute provides. 62
DSH in the Federal Courts University of Wash. Med. Ctr. V. Sebelius, No. 09-36044 (9 th Cir. Feb. 11, 2011) Issue: Whether two groups of low-income patients served by Washington State hospitals could not be included in calculating the hospitals Medicare reimbursement payments. - The Ninth Circuit concluded that the patients did not meet the statutory definition of medical assistance - Under Washington s Medicaid plan, hospitals used its Medicaid DSH allocation to indirectly fund two groups of low-income individuals: general assistance-unemployable (GAU) and medically indigent (MI) patients - Washington s GAU and MI patients were not includable in the Medicare DSH calculation. GAU and MI Patients were not aged, blind or disabled, and did not have dependent children. Holding: Eligible for medical assistance is unambiguously limited to those low-income individuals who were eligible for traditional Medicaid. - The Ninth Circuit held that medical assistance has four key elements: (1) federal funds; (2) to be spent in payment of part or all of the cost ; (3) of certain services; (4) for or to [p]atients meeting the statutory requirements for Medicaid. 63
DSH in the Federal Courts Ashtabula Cty. Med. Ctr. V. Sebelius, No. 05-cv02365 (D.D.C. Jan. 21, 2011) U.S. District Court for the District of Columbia granted summary judgment for the Department of Health and Human Services holding that the Secretary s interpretation of the DSH provision is in accord with the Medicare Statute - Here five Medicare-participating hospitals located in Ohio challenged the Secretary s interpretation that Ohio Hospital Care Assurance Program (HCAP) patients should not be included when calculating their DSH reimbursements under the Medicare statute. - Secretary argued that because HCAP patients are not eligible for benefits under the Medicaid statute or the Ohio Medicaid plan, HCAP patients can not be included in the DSH calculations. - The court agreed. 64
Edward Kornreich Office: (212) 969 3395 Email: ekornreich@proskauer.com 65