FFY 2024 IPPS Proposed Rule – Empirical DSH

On April 10, the Centers for Medicare & Medicaid Services (CMS) published the FFY 2024 IPPS Proposed Rule (effective for discharges on or after October 1, 2023).” Toyon is pleased to provide our summary of:  Topic 4 – FFY 2024 IPPS Proposed Rule – Empirical DSH
Section 1115 Demonstration Days 
Although not in the FFY 2024 IPPS Proposed Rule, earlier this year CMS proposed4 changes to regulations on the inclusion of certain Section 1115 demonstration days in the Medicaid fraction of the empirical DSH calculation. If adopted, CMS’s changes would be effective for discharges occurring on or after October 1, 2023 (FFY 2024).   
CMS proposes allowable 1115 demonstration days include patient days from:  
  • Patients who receive health insurance authorized by a section 1115 demonstration, or 
  • Patients who buy health insurance with premium assistance provided to them under a section 1115 demonstration, where State expenditures to provide the health insurance or premium assistance is matched with funds from title XIX.  
Section 1115 demonstration days are allowable whereby a patient is not entitled to Medicare Part A benefits and 1) their health insurance covers inpatient hospital services; or (2) premium assistance covers 100 percent of the premium cost to the patient, which the patient uses to buy health insurance that covers inpatient hospital services.  
CMS also proposes that days are to be excluded for patients whose inpatient hospital costs are paid for with funds from an uncompensated/undercompensated care pool authorized by a Section 1115 demonstration. CMS states these patients are not regarded as “eligible for Medicaid.” 
Capital DSH for Rural Reclassified Providers  
Due to recent court decisions (Toledo Hospital v. Becerra, the U.S. District Court), CMS proposes DSH hospitals reclassified as rural under 42 CFR § 412.103 will be eligible to receive capital DSH payments. This proposal is effective for discharges on or after October 1, 2023 (FFY 2024). 
Toyon’s Take 
Providers are encouraged to review their respective State’s section 1115 demonstration program to determine if any cohort of beneficiaries meet CMS’s new proposed criteria for inclusion in the Medicaid fraction of the empirical DSH calculation. CMS notes the following seven states whereby patient days would qualify in the DSH calculation (as these states provide benefits that are 100% of the premium cost to the patients): 
  1. Arkansas 
  2. Massachusetts 
  3. Oklahoma 
  4. Rhode Island 
  5. Tennessee 
  6. Utah 
  7. Vermont 
For more information, please contact Dylan Chinea at dylan.chinea@toyonassociates.com
4 Federal Register /Vol. 88, No. 39 /Tuesday, February 28, 2023 / Proposed Rules Medicare Program; Medicare Disproportionate Share Hospital (DSH) Payments: Counting Certain Days Associated With Section 1115 Demonstrations in the Medicaid Fraction (42 CFR Part 412).
Comments are due to CMS by Friday, June 9 via https://www.regulations.gov/ (see instructions under the “submit a comment” tab and reference file code “CMS-1785-P”). Toyon will share our comment letter in the coming weeks. 
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