News & Insights


November 16, 2020

Health Headlines – November 16, 2020

Florida Hospitals Prevail in D.C. Circuit Appeal Regarding the Exclusion of Low-Income Pool Days from the Medicare Disproportionate Share Hospital Payment Calculation – 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 services under a section 1115 waiver. 

The Florida LIP program was part of a section 1115 waiver that CMS had approved and helped fund in 2006.  Despite the fact that hospitals received reimbursement under the waiver based on the inpatient care they provided to uninsured or underinsured LIP patients, CMS refused to count those individuals in the DSH formula.  The hospitals sued, alleging that the statute and CMS’s implementing regulation did not allow CMS to exclude these patients from the calculation.

Judge Collyer of the United States District Court for the District of Columbia sided with the hospitals, reasoning that patients did, in fact, receive inpatient hospital services funded by a section 1115 waiver and must be counted in the DSH formula under CMS’s regulation.  Judge Collyer rejected the government’s argument that these days could not be counted because the patients were not made eligible under the section 1115 waiver for traditional Medicaid – and that the LIP program did not function like traditional Medicaid or commercial health insurance. 

In reaching this conclusion, Judge Collyer relied in part on the Fifth Circuit’s decision in Forrest General Hospital v. Azar, 926 F.3d 221 (5th Cir. 2019), which had reached a similar ruling with respect to a 1115 waiver approved for Mississippi.  Importantly, both courts distinguished the D.C. Circuit’s earlier decision in Adena Regional Medical Center v. Leavitt, 527 F.3d 176 (D.C. Cir. 2008), and similar cases in which patients had received inpatient hospital services funded not by 1115 waiver authority but by state-law mandates or Medicaid DSH grants.

Writing for the D.C. Circuit, Judge Ginsburg — who authored Adena — saw “no flaw in Judge Collyer’s analysis and therefore embrace[d] the district court’s opinion as the law” of the D.C. Circuit.  This is an enormous development, as hospitals whose states operate similar uncompensated care pools established under section 1115 waivers may challenge similar patient-day exclusions in the District of Columbia.

Ashley C. Parrish argued the appeal for the hospitals.  He was joined on the briefs by Mark D. Polston and Christopher P. Kenny, who represented the hospitals throughout this litigation, as well as Gabriel Krimm, an associate with the firm’s appellate, constitutional, and administrative law team.

Reporter, Gabriel Krimm, Washington D.C., +1 202 626 5589,

CMS Establishes Medicare Payment Policy for COVID-19 Antibody Treatment – Medicare beneficiaries will not have to pay out-of-pocket costs for coverage of monoclonal antibodies to treat COVID-19 during the public health emergency, CMS announced on November 10, 2020.  The agency’s coverage will apply to bamlanivimab, Eli Lilly’s monoclonal antibody infusion, which received an FDA emergency use authorization on November 9, 2020. Antibodies are proteins produced by the immune system that protect the body by binding to specific targets.  COVID-19 monoclonal antibodies are synthetic versions of antibodies that target the virus and are administered intravenously by infusion to treat mild to moderate COVID-19.

CMS anticipates that bamlanivimab and similar antibody products will initially be given to health care providers for free.  CMS will not pay for monoclonal antibody products that providers receive at no charge.  However, CMS will reimburse providers for the infusion of products provided for free.  CMS anticipates that its announcement will allow home health agencies, freestanding and hospital-based infusion centers, and nursing homes and related entities to begin administering bamlanivimab and billing Medicare for these infusions. 

In a Program Instruction released with the announcement of the CMS payment policy, CMS indicated that the initial Medicare payment rate for the infusion of the bamlanivimab product will be $309.60. The rate is based on one hour of infusion and post-administration monitoring in the hospital outpatient setting.  The rate will be adjusted for geography.  As additional monoclonal antibody products are approved, CMS may use a similar methodology to set the payment rate, based on the expected infusion time.

When health care providers begin to purchase monoclonal antibody products, CMS anticipates setting the payment rate in the same manner it set the payment rates for COVID-19 vaccines.  In many provider settings, for example, reimbursement for COVID-19 vaccines is based on 95% of the average wholesale price.  CMS has indicated that cases that include the use of monoclonal antibody COVID-19 products will not be eligible for the enhanced payment established under the Medicare Inpatient Prospective Payment System (IPPS) in CMS-9912-IFC.  CMS plans to issue billing and coding instructions in the coming days.  King & Spalding will continue to monitor this issue.

The CMS press release is available here. The FDA’s EUA for bamlanivimab is available here.  The Medicare Monoclonal Antibody COVID-19 Infusion Program Instruction is available here.

Reporter, Rebecca Gittelson, Atlanta, +1 404 572 4679,


CMS Issues Medicaid and CHIP Managed Care 2020 Final Rule – On November 13, 2020, CMS published its Medicaid and Children’s Health Insurance Program (CHIP) managed care final rule for 2020 (the Final Rule).  The Final Rule follows the notice of proposed rulemaking from November 2018.  The majority of the provisions in the Final Rule will become effective on December 14, 2020.  CMS announced last week that the Final Rule effectuates a better balance between “federal oversight and state flexibility” for Medicaid and CHIP programs.  The Final Rule revises the managed care regulatory framework in several key areas, including:

  • Setting actuarially sound capitation rates (Medicaid);
  • Pass-through payments (Medicaid);
  • State-directed payments (Medicaid);
  • Network adequacy standards (Medicaid and CHIP);
  • Risk sharing mechanisms (Medicaid);
  • Quality Rating System (Medicaid and CHIP);
  • Appeals and grievances (Medicaid and CHIP); and
  • Requirements for beneficiary information (Medicaid and CHIP)

The Final Rule is available here.  CMS’s Fact Sheet is available here.

King & Spalding Webinar–COVID-19’s Impact on the Senior Care Industry: A Discussion on Crisis Management in the Face of Litigation and Enforcement Activity – On November 18, 2020, from 12:00 – 1:00 p.m. ET, King & Spalding partners Sally Yates (former Acting Attorney General and Deputy Attorney General), Jim Boswell (Team Leader of the national Healthcare Team) and Geoffrey Drake (a leader of the Mass Torts Litigation practice) will lead a discussion on crisis management in the face of the COVID-related compliance, liability and enforcement landscape for senior care and other long-term-care facilities.

Topics of discussion will include:

  • Public relations, community outreach and external communications;
  • Interface with government agencies, regulators and Congress;
  • Coordinating and developing strategies for wrongful death litigation targeting post-acute providers;
  • Immunity protections on the state and federal levels for COVID-related care;
  • Insurance limitations and challenges;
  • Congressional inquiries into post-acute providers and their handling of the COVID-19 pandemic; and
  • Increased oversight of post-acute providers by the OIG, CMS, and State Survey Agencies.

Registration for the event is free. Click here to sign up.