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Category: Medicaid

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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PRRB Appeal Changes

In an effort to address the large number of cases before the PRRB, CMS is considering actions to assist in the reduction of the current PRRB case backlog:
* Develop standard formats and more structured data for submitting cost reports and supporting documentation.
* Create more clear standards for documentation to be used in auditing of cost reports.
* Enhance the MCReF portal by creating more automation for letter notifications and increased provider transparency during the cost report submission and audits.
* Utilize artificial intelligence (AI) protocols based on historical audit data to drive audit processes.
* Triage the current PRRB case inventory and expand the provider’s options for resolving issues through the reopening process.

Procedural Changes Specific to Appealing Empirical DSH Updates
CMS has determined that a significant number of appeals are related to hospitals’ disproportionate patient percentage (DPP), specifically concerning updating the Medicaid fraction. To address this, CMS is proposing that regulations be developed to govern the timing of the data for determining Medicaid eligibility. These routine updates would be handled via reopening, with CMS issuing directives to the MACs requiring them to reopen cost reports for this issue at a specific time and realistic period during which the provider could submit updated data.

CMS is also considering allowing hospitals a one-time option to resubmit cost reports with updated Medicaid eligibility information, similar to SSI realignments. CMS would need to undertake rulemaking in order to determine the timeframe for exercising this option.

CMS is soliciting public comments on these procedural changes, as well as the optimal time for such a review to occur.

For additional information, please contact Karen Kim at
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Medicaid and Children’s Health Insurance Program (CHIP) Programs – Proposed Rules

From: Federal Register – CMS-2390-P; Filed 5/26/15; Publication 6/1/15

CMS Press Release

Today, the Centers for Medicare & Medicaid Services (CMS) proposed to modernize Medicaid and Children’s Health Insurance Program (CHIP) managed care regulations to update the programs’ rules and strengthen the delivery of quality care for beneficiaries. This proposed rule is the first major update to Medicaid and CHIP managed care regulations in more than a decade. It would improve beneficiary communications and access, provide new program integrity tools, support state efforts to deliver higher quality care in a cost-effective way, and better align Medicaid and CHIP managed care rules and practices with other sources of health insurance coverage. Overall, this proposed rule supports the agency’s mission of better care, smarter spending, and healthier people.

“A lot has changed in terms of best practices and the delivery of important health services in the managed care field over the last decade. This proposal will better align regulations and best practices to other health insurance programs, including the private market and Medicare Advantage plans, to strengthen federal and state efforts at providing quality, coordinated care to millions of Americans with Medicaid or CHIP insurance coverage,” said Andy Slavitt, Acting Administrator of CMS.

Since CMS last issued managed care regulations in 2002 and 2003, the health care delivery landscape has changed and grown substantially. States have expanded managed care to several new populations including seniors and persons with disabilities. The growth of managed care in the Marketplace and Medicare Advantage further highlights the importance of policy alignment when appropriate across programs in order to ease the transition for consumers whose circumstances change during the year.

CMS proposes to modernize Medicaid managed care regulations in the following ways:

  •  Supporting states’ efforts to encourage delivery system reform initiatives within managed care programs that aim to improve health care outcomes and beneficiary experience while controlling costs; and
  •  Strengthening the quality of care provided to beneficiaries by strengthening transparency and measurement, establishing a quality rating system, and broadening state quality strategies and consumer and stakeholder engagement;
  •  Improving consumer experience in the areas of enrollment, communications, care coordination, and the availability and accessibility of covered services;
  •  Implementing best practices identified in existing managed long term services and supports programs;
  •  Aligning Medicaid managed care policies to a much greater extent with those of Medicare Advantage and the private market;
  •  Strengthening the fiscal and programmatic integrity of Medicaid managed care programs and rate setting;
  •  Aligning the CHIP managed care regulations with many of the proposed revisions to the Medicaid managed care rules strengthen quality and access in CHIP managed care programs.

The proposed rule is available at or and can be viewed at

starting June 1. The deadline to submit comments is July 27, 2015.

Medicaid and Children’s Health Insurance Program (CHIP) Programs – Proposed Rules


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