News & Insights


March 18, 2024

Health Headlines – March 18, 2024


CMS Issues Ruling 1498-R3 Revoking 1498-R2 Regarding Disproportionate Share Medicare/SSI Fractions

On March 4, 2024, CMS issued Ruling 1498-R3 which revokes CMS Ruling 1498-R2.  CMS Ruling 1498-R2 gave providers the option of using either “total” days or “covered” days in calculating their disproportionate share (DSH) Medicare/SSI fractions for periods prior to 2004.  CMS alleges the revocation of 1498-R2 is necessary to comply with the Supreme Court’s ruling in Becerra v. Empire Health Foundation, for Valley Hospital Medical Center, 597 U.S. 424 (2022) (Empire Health).

The DSH Medicare fraction looks at the number of patient days of patients who were entitled to both Medicare Part A and SSI benefits divided by the total number of days associated with discharges of patients who were entitled to Medicare Part A.  42 U.S.C. § 1395ww(d)(5)(F)(vi)(I). 

In Empire Health, the Supreme Court held that hospital patient days for Medicare beneficiaries for which Medicare does not pay, such as days on which a beneficiary has exhausted their benefits for a spell of illness, are still days on which beneficiaries are “entitled to benefits under part A.”  As a result, those days belong in the Medicare fraction portion of the disproportionate patient percentage used to calculate providers’ Medicare DSH adjustment.

The now-revoked CMS Ruling 1498-R2 allowed providers to choose whether to receive Medicare fractions calculated based on “total days” or on “covered days” (i.e., days actually paid under Part A) for cost reporting periods with discharges pre-dating October 1, 2004.  The Supreme Court in Empire Health held that the Medicare statute provided “surprisingly clear” support for CMS’s position that the Medicare fractions should be based on total days.  Although the Supreme Court in Empire did not say that the Medicare statute compelled this outcome, that is the way CMS is interpreting it.  According to CMS, therefore, the previous choice that existed under CMS Ruling 1498-R2 to pick “total days” or “covered days” is invalid and had to be revoked. 

This CMS Ruling requires the agency and Medicare Administrative Contractors to calculate or recalculate the provider’s Medicare fraction in accordance with the Medicare statute as construed in Empire Health – that is, based on total days, not covered days for each properly pending claim in a DSH appeal or open cost report, including those involving patient discharges pre-dating October 1, 2004.  Administrative appeals tribunals and Medicare Administrative Contractors may not, however, reopen any determination or decision with respect to the “total” versus “covered” benefit days Medicare-SSI fraction issue.

The full text of CMS Ruling 1498-R3 is available here.

Reporter, Kasey Ashford, Washington D.C., +1 202 626 2906,


Federal Judiciary Issues New Policy to Combat Judge-Shopping

On March 12, 2024, the Judicial Conference of the United States, the advisory body for the federal judiciary, announced a new policy to discourage “judge-shopping.” This new policy will require random judicial assignment among all judges in the federal district for cases with nationwide or statewide implications.

Federal trial level courts are divided into districts, and some of those districts are further split into geographic divisions. Many divisions are staffed by a small number of judges, often only one or two. Each district has the discretion to develop its own rules for case assignment. Prior to Tuesday’s policy announcement, many districts allowed litigation filed in federal district court to be assigned to a judge in the geographic division in which it was filed. If a division only has one judge, then that judge may be assigned all cases filed in that division. This policy allows plaintiffs to effectively hand-pick their preferred judge to decide their case by filing in a single-judge division.

In recent years, an increasing volume of cases have been filed in single-judge judicial divisions seeking nation-wide injunctions of federal policies. These challenges include many high-profile challenges related to abortion, healthcare policy, and immigration.  Many of these cases were brough in federal court in Texas, and the plaintiffs in those cases requested the judge in that division enjoin the federal government from implanting the challenged policy.  

 In response to this growing practice, the Judicial Conference has issued this new policy requiring any civil actions seeking to bar or mandate state or federal actions by declaratory judgment or injunctive relief to be randomly assigned between all judges in the federal district in which the case was filed, meaning that plaintiffs could no longer hand pick a judge in a single-judge division. In support of this policy, the Conference noted that the value of trying a civil case in the nearest geographic division becomes less important when the impact of the ruling might be felt statewide or nationwide. Chief Judge Sutton of the Sixth Circuit, explained, “The idea behind this most recent amendment is to say we get the idea of having local cases resolved locally, but when the case is a declaratory judgment action, national injunction action, obviously, the stakes of the case go beyond that small town or that division.” District courts may continue to assign cases to a single-judge division when the cases do not seek state- or nation-wide injunctive or declaratory relief.

On March 14, 2024, Sen. Mitch McConnell (R-Ky.), Sen. John Cornyn (R-Texas), and Sen. Thom Tillis (R-N.C.), sent a letter to chief judges encouraging them to ignore the conferences’ directive, arguing it is Congress’s authority to determine how cases should be assigned in lower courts. The Judicial Conference responded with its own letter to chief judges clarifying that the policy is guidance setting out various ways for courts to align their case assignment practices with the long-standing Judicial Conference policy of random case assignment, not a mandate. The clarification stated that the new policy should not be viewed as impairing the courts’ authority or discretion.

The Judicial Conference policy is available here

Reporter, Alana Broe, Atlanta, +1 404 572 2720,


King & Spalding Client Alert: The Department of Justice Announces a New Program to Pay Financial Rewards to Whistleblowers for Information About Corporate Crimes

On March 7, 2024, Deputy Attorney General Lisa Monaco announced that the Justice Department intends to offer new financial incentives for whistleblowers to report allegations about white collar crimes that result in asset forfeitures. Although Monaco provided few details, she was explicit about the Department’s goals: to “drive companies to invest further in their own internal compliance and reporting systems” and to prosecute more individual company officers for corporate misconduct. The following day, Criminal Division Acting Assistant Attorney General Nicole Argentieri explained that over the next 90 days, DOJ will “gather information, consult with stakeholders, and design a thoughtful, well-informed program.”  For additional insight, read the full King & Spalding Client Alert here.