July 12, 2017

Favorable Rulings Continue in Ongoing DSH Litigation

In recent weeks, three more courts have issued favorable rulings in litigation challenging the Centers for Medicare & Medicaid Services’ (CMS’) policy requiring the inclusion of Medicare and commercial payments in the calculation of the Medicaid disproportionate share hospital (DSH) limit. In total, five courts have now sided with hospitals, permanently preventing CMS from applying its policy in Minnesota, New Hampshire, and Tennessee, and temporarily preventing CMS from applying its policy in Texas, Virginia, and Washington as those cases proceed to a full trial. Similar cases are pending in Missouri and the D.C. Circuit.

To date, the focus of the courts’ attention has been CMS’ policy as issued in 2010 through a set of Frequently Asked Questions (FAQs), applicable to DSH payment years dating back to 2011. Hospitals have argued that one or both of FAQs 33 (commercial) and 34 (Medicare) are unlawful because they were not issued through notice and comment rulemaking (a procedural argument), and because they conflict with the Medicaid DSH statute (a substantive argument). CMS more recently adopted the same policies in a Final Rule issued in April 2017, which will begin to impact DSH payments for 2017 and beyond unless successfully challenged. While hospitals in several pending cases are seeking to overturn the Final Rule, the Final Rule will receive greater deference from courts as it is subject only to a substantive challenge.

Details of the cases vary and are summarized in the graphic that follows, which will be updated as new decisions are issued. For a printer friendly version, click here.


If you have questions regarding the ongoing DSH litigation, or Medicaid DSH more generally, contact Eyman Associates attorneys.