CMS Proposes Changes to Medicaid DSH Third-Party Payer Rule
District Court Holds that Preclusion of Review Provision Applies to Hospitals’ Procedural Challenge to Uncompensated Care Payment Calculations
On February 16, 2023, the U.S. District Court for the Northern District of Indiana rejected certain hospitals’ challenge to CMS’s calculation of uncompensated care (UCC) payments eligible to hospitals that treat low-income patients for fiscal year (FY) 2021. The court held that the statute’s preclusion of review provision encompassed challenges to the procedure under which those estimates were established.
For FY 2021, CMS decided that it would calculate each hospital’s UCC payment based on the uncompensated care reported in Worksheet S-10 from FY 2017 cost reports. Despite repeated requests, CMS refused to make its audit protocols public or subject those audit protocols to notice and comment rulemaking. Certain hospitals challenged this for violation of the notice-and-comment rulemaking requirements arguing that “insufficient rulemaking took place because the review protocols implemented changes in policy regarding what was included under uncompensated care costs.” The court held that this challenge was barred by the preclusion of review provision since “[t]o challenge the audit protocols is to challenge the validity of the ‘underlying data’ that the Secretary selected to determine Factor 3.” The court endorsed the view that “when a party seeks the invalidation of a policy as relief for a procedural violation, then the challenge is a substantive challenge and not a procedural one.”
This decision joins a series of decisions from other courts denying review of various challenges to CMS’s UCC calculations based on the statute’s preclusion of review language.
The Northern District of Indiana opinion is available here.
Reporter, Christopher C. Jew, Los Angeles, + 1 213 443 4336, email@example.com.
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North Carolina Bill Would Increase Hospital Merger Scrutiny
North Carolina Senate Bill S.B. 16, the Preserving Competition in Health Care Act, contains multiple provisions that would increase the review of proposed hospital mergers in North Carolina. If enacted into law, the bill would require North Carolina Attorney General notice and approval for transactions involving control of hospital entities, as well as public hearings that must address the impact on healthcare services and provide information regarding the process for reaching a sales price. Additional information is available on the North Carolina General Assembly website here.
32nd Annual Health Law & Policy Forum
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