The hospitals want DSH calculations changed back to a pre-2004 standard and payment of additional amounts, plus interest.
Over 120 hospitals nationwide are suing Health and Human Services Secretary Robert F. Kennedy Jr. over changes made in the calculation of Disproportionate Hospital Share payments they say have cost them billions of dollars.
The hospitals want the calculations changed back to a pre-2004 standard and want payment of additional amounts they say they are due, plus interest.
The Court of Appeals has now ruled three times against the agency in its attempt to reduce Medicare DSH payments to hospitals, according to the lawsuit filed in federal court in Washington, D.C.
The case arises from HHS’ attempted 2004 change in the calculation of the Medicare Part A Disproportionate Share Hospital (DSH) payments, over inpatient days for patients who opted to enroll in Medicare Advantage plans.
A hospital that serves a disproportionate share of low-income patients is entitled to an upward percentage adjustment to the standard prospective payment system rates per discharge.
The case is over how these DSH payments are calculated, using a percentage based on the sum of two fractions. HHS included Part C days in the Medicare Part A/Supplemental Security Income (SSI) fraction and excluded Medicaid-eligible Part C patient days from the numerator of the Medicaid fraction used to calculate DSH payments.
That 2004 calculation was vacated, but in 2023 HHS issued a final rule seeking to retroactively readopt the change, according to the lawsuit.
“Now, a full two decades later, the plaintiff hospitals seek, and the law demands, an end to the agency’s unlawful actions,” the hospitals said. “The HHS action results in thousands of safety-net hospitals losing billions in funding that has been ‘illegally withheld for years.’”
The plaintiff hospitals want the court to declare invalid and set aside the agency’s final 2023 action and to declare invalid and set aside the final payment determinations.
They also want the court to direct HHS to recalculate the hospitals’ DSH payments by applying the pre-2004 standard that excluded Part C days from the SSI fraction and include Medicaid-eligible Part C patient days in the numerator of the Medicaid fraction.
They want prompt payment of any additional amounts due to the plaintiff hospitals, plus interest.