CMS Fixes DSH Uncompensated Care Payment Miscalculation

From: HFMA News – 5/7/15

Medicare recently changed its projection of per claim payments to hospitals with large shares of low-income elderly patients.

After concerns were raised by hospitals about the accuracy of the projections, the Centers for Medicare & Medicaid Services (CMS) recalculated the FY16 Medicare disproportionate share hospital (DSH) uncompensated care (UC) payments that were included in a supplemental file for the proposed rule for the inpatient prospective payment system.

The three-year claims average used to calculate the per claim Medicare DSH payments that individual hospitals will receive was considerably lower in the initial FY16 proposed rule than it was in the FY15 final rule, said Chad Mulvany, director of healthcare finance policy, strategy and development, for HFMA.

Most hospitals using the initially published UC per claim payment to model anticipated revenue for budgeting or planning would have overstated revenue considerably, he said. Although CMS did not disclose the cause of the initial miscalculation, it could have stemmed from not including one of the three years of claims data.

“If you’re using the proposed rule for revenue modeling, it’s important to make sure you are using the updated figures in the proposed rule,” Mulvany said.

Hospitals are closely watching Medicare DSH payments, which the Affordable Care Act (ACA) required CMS to cut by $22.1 billion from FY14 through FY19 to help pay for the law’s insurance coverage expansions. CMS proposed $6.4 billion in UC payments in FY16, which was $1.3 billion less than the estimated FY15 total.

“This decrease is primarily attributable to continued declines in the number of uninsured individuals since the passage of the Affordable Care Act,” according to a CMS fact sheet on the proposed rule.

However, those cuts have raised concerns among hospitals because 21 states have yet to undertake the ACA’s Medicaid expansion, and Medicare pays only 88 percent of what it costs to provide care, according to the American Hospital Association.

CMS Fixes DSH Uncompensated Care Payment Miscalculation



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