On November 13, 2020, the United States Court of Appeals for the District of Columbia Circuit affirmed a grant of summary judgment to the Florida Hospital Association and ten Florida hospitals represented by King & Spalding in their challenge to the calculation of their Medicare Disproportionate Share Hospital (DSH) payments, directing CMS to include in the hospitals’ Medicaid fraction inpatient days attributable to uninsured and underinsured patients covered by the Florida Low-Income Pool. See Bethesda Health, Inc. v. Azar, No. 19-5260 (D.C. Cir. 2020).
The appeal concerned a single issue: whether the government’s calculation of the hospitals’ Medicare DSH adjustment should treat as “Medicaid eligible” those patients who received inpatient care funded by Florida’s Low-Income Pool (LIP). The Medicare program pays higher reimbursement rates to hospitals that treat a “disproportionate share” of needy patients. To determine the proportion of needy patients a hospital serves, the Medicare statute includes a formula that counts two groups of patients among the needy. First, the formula necessarily counts as needy all patients who were eligible for traditional Medicaid at the time they received care. Second, the formula allows CMS to regard a patient as needy if he or she receives medical assistance under a section 1115 waiver project. In exercise of this “regarding” power, CMS promulgated regulations that call for a patient to be counted as needy if he or she receives inpatient hospitals...
