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Category: Mcare DSH

Good News from the Supreme Court

Here’s what happened: A major victory was won today for Providers who have appealed the inclusion of Medicare Part C days in the SSI ratio/exclusion of dual-eligible Medicare Part C days in the Medicaid ratio for years ending 2004-2012.

The Supreme Court of the United States has affirmed Allina Health Services, et al. v. Price, 863 F.3d 937 (CADC 2017), wherein the United States Court of Appeals supported Providers and held that HHS violated the Medicare Act when it changed its reimbursement formula without providing notice and opportunity for comment

HHS arbitrarily began including Part C days in the Medicare fraction through its 2004 Final Rule, and Toyon has been helping Providers in appealing the agency’s actions. The Providers’ position has consistently been that only Medicare Part A days should be included in the SSI ratio and that dual-eligible Part C days instead belong in the numerator of the Medicaid ratio calculation. Providers argued CMS’ actions were tantamount to retroactive rulemaking, which the D.C. Circuit agreed was impermissible in Northeast Hospital Corp. v. Sebelius, 657 F.3d 1 (CADC 2011). Providers also disputed the fact that HHS violated statutory notice-and-comment obligations in establishing its practice of including Medicare Part C days in the SSI ratio, a position both the DC Circuit Court and U.S. Court of Appeals upheld through the prior Allina decisions. 

What it means to you
Today the Supreme Court settled the issue once and for all by agreeing with Providers and holding that HHS did indeed violate its rulemaking obligations in including Part C days in the SSI ratio. This decision should effectively invalidate the agency’s actions andProviders should expect to be offered settlement amounts from CMS for any negative reimbursement impacts caused by its inclusion of Part C days.

What Now?
No details are yet available on how or when the amounts will be calculated nordispensed to affected Providers, but Toyon Associates, Inc. will be contacting affected hospitals in the coming weeks as more details become available.

Please contact Karen Kim at (925) 685-9312 or if you have any questions or concerns. 

The following is the link to the ruling.

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CMS Ruling 1498-R2 – Revised SSI Issuances 1988-2005

From: CMS DSH Website – 4/23/15

CMS posted several new data files on their DSH SSI website location.  Most significant of these postings is an issuance of a revised ruling regarding the handling of SSI for DSH purposes titled 1498-R2.  This issuance was precipitated by the “Catholic Health” decision in the D.C Circuit court related to the exclusion of Medicare non-covered days in the SSI ratio.

This revised ruling can be found by clicking the link above and scrolling to the end of the download section.  The application of this revised ruling is only for providers that either have not had a finalized cost report issued or have properly pending appeals between 1988 – 2005 (ending on or before October 1, 2014).  Included as part of this revised ruling are revised SSI files all titled “R2” covering 1988-2005.

CMS states in the application of this revised ruling:

“This modification and amendment of CMS Ruling 1498-R allows providers to elect whether to receive Medicare-SSI fractions on the basis of “total days,” or “covered days,” but it does not alter any other provisions of CMS Ruling 1498-R, including the mechanism for implementation by the administrative tribunals; applicability to cost reports not yet finally settled by an initial notice of program reimbursement (NPR); the Ruling’s general provision for unitary relief on all three DSH issues; and the determination that CMS Ruling 1498-R is not an appropriate basis for reopening of any final determination of the Secretary or a contractor or an decision by a reviewing entity.”

We have been expecting this issuance by CMS and will be evaluating the revised issuance for all of our clients with appeals properly established for the timeframes described above.  The revised SSI issuances are not necessarily an improvement over the original issuances.

CMS Ruling 1498-R2 – Revised SSI Issuances 1988-2005

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DSH SSI – Revised Ruling 1498-R2 – Toyon Client Memo

To:        Medicare DSH Appeal Clients

From:   Thomas P. Knight, President

Re:       Medicare DSH Appeal Update


We are pleased to report there has been a breakthrough on the Medicare SSI Ratio appeals for cost reports containing services prior to 10/1/04.  See the attached new ruling CMS-1498-R2 dated April 22, 2015.  This ruling has come about due to multiple court decisions related to Medicare DSH appeals.

Specifically, CMS has now published corrected SSI ratios on both a total patient day and covered patient day basis, and will allow Providers to choose which method they want to use.  Further, it appears that CMS will also allow Providers to realign their SSI ratios to their cost reporting period from the federal fiscal year basis normally used.  Further instructions regarding this are supposed to be released.

We are in the process of analyzing the new SSI ratios for all of our clients and will be identifying the best option for each facility.  We will also be requesting the supporting MedPar data for each applicable year to determine if there are any further discrepancies in the data as well as to determine whether realignment from federal fiscal year to hospital fiscal year is beneficial.

Please note that these corrected SSI ratios only apply to those fiscal years where an open Medicare appeal on the SSI issue exists or where the SSI Ratio appeal had been remanded to the Intermediary for action.

Upon completion of our initial review, we will notify each client of the potential reimbursement impact.  Due to the large number of clients, this will take a little while, but we will get it accomplished as soon as possible.

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