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Tag: SSI Ratio

CMS Publishes Rule in apparent response to Allina II Ruling

Last week, CMS published a proposed rule on the treatment of Medicare Advantage (MA) Part C days for discharges prior to October 1, 2013, related to the Medicare DSH calculation.

This proposed rule is purportedly CMS’s long awaited response to the United States Supreme Court’s ruling in Azar v. Allina Health Services, 139 S. Ct. 1804 (2019) (“Allina II”), wherein the Supreme Court upheld a lower court ruling that HHS violated the Medicare Act when it changed its DSH reimbursement formula without providing notice and opportunity for comment. 
 
As you know, 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 on the basis that only Medicare Part A days should be included in the SSI ratio and that dual eligible Part C days belong in the numerator of the Medicaid ratio. While the Supreme Court in Allina II did not rule on the merits of Providers’ position, it did rule that HHS violated its rulemaking obligations by including Part C days in the Medicare fraction between 2004 and 2012. This court ruling should have resulted in CMS restoring the status quo and reinstating HHS’ prior-to-2004 policy (wherein Part C days were NOT included in the Medicare fraction). Such actional would have resulted in substantial additional DSH reimbursement to Providers. 
 
What it Means to You
Instead, CMS’s proposed rule, published August 6, 2020, states that CMS proposes to “adopt the same policy of including MA patient days in the Medicare fraction that was prospectively adopted in the FY 2014 IPPS/LTCH PPS final rule and to apply this policy retroactively to any cost reports that remain open for cost reporting periods starting before October 1, 2013.” This proposed rule is tantamount to CMS simply disregarding the Supreme Court Allina II ruling in favor of Providers, as the 2014 Final Rule applies CMS’s same flawed policy of including Part C days in the SSI ratio for FYEs 2004-2012. CMS alleges it has the authority to apply this rule retroactively under the guise that it is in the ”public interest.” 85 Fed. Reg. 47,723; 47,725-56 (Aug. 6, 2020).
 
What now?
Our attorneys (Ropes & Gray) filed a response in the US District Court for the District of Columbia on Friday, objecting to HHS’s proposed rule and requesting the Court entertain further briefing and hearings on HHS’s motion requesting remand of the cases to the agency. A copy of the response is linked here. We will provide you with additional updates as this matter unfolds.
 
Please contact Karen S. Kim at (925) 685-9312 or karen.kim@toyonassociates.com if you have any questions or concerns. 
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Good News from the Ninth Circuit Court of Appeals

Last week, providers won a major victory at the Ninth Circuit Court of Appeals relating to the government’s inclusion of non-covered Medicare Part A days (such as exhausted benefit days and Medicare Secondary Payer days) in the SSI Ratio of the Medicare DSH payment calculation. The Court held in favor of providers that the 2005 Rule promulgated by the Secretary of Health and Human Services be vacated on the grounds that the rule is “substantively invalid.” (Empire Health Foundation v. Azar, Case 18-35845).

Ninth Circuit Holds ‘Entitled’ Does Not Mean ‘Eligible’
The Empire Court found HHS’s implementation of the 2005 Rule, wherein HHS arbitrarily included non-covered Medicare Part A days in its calculation of the SSI Fraction, to directly conflict with the Ninth Circuit’s longstanding interpretation of the meaning of “entitled to [Medicare].” The Ninth Circuit in 1996 interpreted the meaning of the words “entitled” and “eligible” in another appeal. (Legacy Emmanuel Hospital and Health Center v. Shalala, 97 F. 3d 1261, 1265-66 (9th Cir. 1996)). According to the Legacy Emmanuel Court, “entitled” means the patient has an “absolute right . . . to payment,” whereas the word “eligible” means the patient “simply meets the Medicaid statutory criteria.” Because the Ninth Circuit’s interpretation of the word “entitled” is unambiguous, HHS’s decision to treat the words “entitled” and “eligible” as having the same meaning directly contravenes the Ninth Circuit’s interpretation of the statute and “cannot stand,” according to the Empire court.
 
What It Means To You
Toyon Associates, Inc. has been helping Providers in appealing the agency’s implementation of the 2005 Rule relating to non-covered Part A days. Toyon’s position has consistently been that non-covered Part A days should be excluded from the SSI Fraction and the portion of those days that are dual eligible be included in the numerator of the Medicaid fraction. 
 
While the Ninth Circuit decision is a great win for providers who have this issue under appeal, the decision is not yet final. HHS has 45 days from the date of the decision to request en banc review or appeal to the Supreme Court, and there is no reason to believe HHS would decline to fight this appeal further. However, in anticipation of this positive ruling, Toyon has engaged the same attorney who prevailed in the Empire Health Foundation case and is actively working to move all its pending Medicare Part A appeals into court so as to position providers in the best situation to benefit from this positive ruling.

What Now?
Providers will need to wait to see how HHS responds to the Ninth Circuit’s ruling but be prepared to move their appeals forward. Toyon will be contacting affected hospitals in the coming weeks as necessary, as more details become available on this issue.

Please contact Karen S. Kim at (888) 514-9312 or karen.kim@toyonassociates.com if you have any questions or concerns.

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