Hospitals should evaluate how CMS Ruling 1498-R3 affects Medicare SSI percentages

A new ruling from the Centers for Medicare & Medicaid Services (CMS) changes the way a provider’s Medicare fraction is calculated for periods prior to Oct. 1, 2004 — it’s now solely based on total days, without the option of covered days.

CMS Ruling 1498-R3, issued March 4, 2024, revokes Ruling 1498-R2 and applies to each properly pending claim in a disproportionate share hospital (DSH) appeal or open cost report, including those involving patient discharges pre-dating Oct. 1, 2004.

Inpatient hospitals will need to evaluate open and pending appeals prior to Oct. 1, 2004, and look at how SSI realignments are impacted.

Who is affected by Ruling 1498-R3

The ruling affects inpatient hospital cost reports two ways:

• Medicare DSH payments with open or properly pending appeals for Cost Reports starting prior to Oct. 1, 2004
• Pending or new SSI Realignments for Cost Reports starting prior to Oct. 1, 2004

Background on Ruling 1498-R3

The ruling, issued March 4, 2024, deals with the Medicare SSI percentage as it pertains to the Medicare disproportionate share hospital (DSH) calculation. The Medicare SSI percentage is calculated and published annually by CMS and has been the subject of litigation for decades.

CMS notes Ruling 1498-R3 is needed to comply with the Supreme Court ruling in Becerra v. Empire Health Foundation, for Valley Hospital Medical Center that evaluated the Medicare statute as it relates to the Medicare SSI percentage.

What changes with Ruling 1498-R3

CMS Ruling 1498-R2 is revoked, which means SSI percentages are now calculated on total days, not covered days.

CMS Ruling 1498-R2 is revoked

CMS previously issued