A substantive reimbursement requirement for Medicare DSH calculations

According to the Centers for Medicare & Medicaid Services’ (CMS) 2016 Outpatient Prospective Payment System (OPPS) Final Rule, for hospitals to potentially qualify for Medicare reimbursement related to any given issue, they must first make a cost report claim for the reimbursement.

Alternatively, if the provider feels the reimbursement associated with a specific item doesn’t adhere to current Medicare policy, they must file the cost report under protest. This regulation applies to cost reports starting on and after Jan. 1, 2016.

Additionally, CMS has instructed its Medicare Administrative Contractors (MACs) to accept one amended cost report for the purpose of reporting disproportionate share hospital (DSH) days within 12 months of the initial cost report filing.

While the regulations aren’t new, many organizations struggle to complete them correctly. Certain conditions apply, as discussed below, but hospitals have an avenue to help verify days that couldn’t have been identified at initial cost report filing will be addressed at a later date.

Background

Introduced in the fiscal year (FY) 2015 Inpatient Prospective Payment System (IPPS) Proposed Rule, and then adopted in the 2016 OPPS Final Rule, CMS incorporated a concept into the regulations that was initially introduced by the Provider Reimbursement Review Board (PRRB) Rules in 2008.

The PRRB, from a jurisdiction perspective, had been requiring this same treatment for cost reports going back to those starting on and after Dec. 1, 2008. Then, the 2016 OPPS rule provided a shift from board rules surrounding jurisdiction over an issue to regulations governing cost report payment to highlight the importance of this matter.

CMS cited several reasons surrounding this adoption, including advancing the “interests of administrative finality and efficiency,” claiming that MACs would have “an opportunity to correct any misconceptions that the provider may have had” concerning items filed under protest. In addition, CMS asserted this adoption would “enhance CMS’ ability to accurately estimate the program’s potential liabilities.”

Medicare DSH and Medicaid eligible days

One item of good news is CMS has clearly acknowledged one area where it may not be possible for providers to claim the appropriate cost at the time of the initial cost report filing.