Favorable Rulings Continue in Ongoing DSH...
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Eyman Associates, 1120 G St. NW, Suite 770, Washington, DC 20005 www.eymanlaw.com b Favorable Rulings Continue in Ongoing DSH Litigation January 31, 2018 Courts in vairous jurisdictions have issued favorable rulings in litigation challenging the Centers for Medicare & Medicaid Services’ (CMS’) policy requiring the inclusion of Medicare and commercial payments in the calculation of the Medicaid disproportionate share hospital (DSH) limit. In total, five courts have now sided with hospitals, permanently preventing CMS from applying its policy in Minnesota, New Hampshire, Virginia and Tennessee, and temporarily preventing CMS from applying its policy in Texas, and Washington as those cases proceed to a full trial. Similar cases are pending in Missouri and the D.C. Circuit. To date, the focus of the courts’ attention has been CMS’ policy as issued in 2010 through a set of Frequently Asked Questions (FAQs), applicable to DSH payment years dating back to 2011. Hospitals have argued that one or both of FAQs 33 (commercial) and 34 (Medicare) are unlawful because they were not issued through notice and comment rulemaking (a procedural argument), and because they conflict with the Medicaid DSH statute (a substantive argument). CMS more recently adopted the same policies in a Final Rule issued in April 2017, which will begin to impact DSH payments for 2017 and beyond unless successfully challenged. While hospitals in several pending cases are seeking to overturn the Final Rule, the Final Rule will receive greater deference from courts as it is subject only to a substantive challenge. Details of the cases vary and are summarized in the graphic that follows, which will be updated as new decisions are issued. If you have questions regarding the ongoing DSH litigation, or Medicaid DSH more generally, contact Eyman Associates attorneys. Barbara Eyman [email protected] 202-567-6203 “[T]he Court finds that Defendants’ policies set forth in the responses to FAQs 33 and 34 violate the [Administrative Procedures Act] because they conflict with the unambiguous language of the Medicaid Act . . . . In addition, the FAQ policies represent agency action that is arbitrary, capricious, an abuse of discretion, otherwise not in accordance with law, and without observance of procedure required by law because they were not promulgated pursuant to the required notice-and-comment rule- making procedures.” -United States District Court, Middle District of Tennessee Sarah Mutinsky [email protected] 202-567-6202 Eva Johnson [email protected] 202-567-6205
Transcript of Favorable Rulings Continue in Ongoing DSH...
EymanAssociates,1120GSt.NW,Suite770,Washington,DC20005www.eymanlaw.com
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FavorableRulingsContinueinOngoingDSHLitigation January31,2018
Courts in vairous jurisdictions have issued favorable rulings in litigation challenging the Centers for Medicare & Medicaid Services’ (CMS’) policy requiring the inclusion of Medicare and commercial payments in the calculation of the Medicaid disproportionate share hospital (DSH) limit. In total, five courts have now sided with hospitals, permanently preventing CMS from applying its policy in Minnesota, New Hampshire, Virginia and Tennessee, and temporarily preventing CMS from applying its policy in Texas, and Washington as those cases proceed to a full trial. Similar cases are pending in Missouri and the D.C. Circuit.
To date, the focus of the courts’ attention has been CMS’ policy as issued in 2010 through a set of Frequently Asked Questions (FAQs), applicable to DSH payment years dating back to 2011. Hospitals have argued that one or both of FAQs 33 (commercial) and 34 (Medicare) are unlawful because they were not issued through notice and comment rulemaking (a procedural argument), and because they conflict with the Medicaid DSH statute (a substantive argument). CMS more recently adopted the same policies in a Final Rule issued in April 2017, which will begin to impact DSH payments for 2017 and beyond unless successfully challenged. While hospitals in several pending cases are seeking to overturn the Final Rule, the Final Rule will receive greater deference from courts as it is subject only to a substantive challenge.
Details of the cases vary and are summarized in the graphic that follows, which will be updated as new decisions are issued.
If you have questions regarding the ongoing DSH litigation, or Medicaid DSH more generally, contact Eyman Associates attorneys.
“[T]he Court finds that Defendants’ policies set forth in the responses to FAQs 33 and 34 violate the [Administrative Procedures Act] because they conflict with the unambiguous language of the Medicaid Act . . . . In addition, the FAQ policies represent agency action that is arbitrary, capricious, an abuse of discretion, otherwise not in accordance with law, and without observance of procedure required by law because they were not promulgated pursuant to the required notice-and-comment rule-making procedures.”
-United States District Court, Middle District of Tennessee
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Eyman Associates Summary of Rulings in Ongoing Medicaid DSH Litigation (updated January 31, 2018)
State DateofDecision
PolicyChallenged
StatusofRelief
Rationale
MN June26,2017 FAQ33(commercial)
Permanent,butCMShasappealedto8thCircuit
CourtconcludedthatFAQ33wasprocedurallydefectiveanddeclinedtoruleonthehospitals’substantiveargument
TN June21,2017 FAQs33and34(commercialandMedicare)andProposedRule(FinalRulehadnotyetbeenissuedwhenTNhospitalsfiledsuit)
PermanentwithrespecttoFAQs;reliefrelatedtoProposedRuledenied;THAhasappealedto6thCircuit
CourtconcludedthatFAQs33and34wereprocedurallydefectivebecausetheywerenotissuedthroughnoticeandcommentrulemaking,andsubstantivelydefectivebecausetheyconflictwiththeMedicaidDSHstatuteCourtdeclinedreliefrelatedtoProposedRulebecauseproposedrulesarenotsubjecttojudicialreview;didnotconsiderFinalRulebecauseitwasnotincludedinhospitals’complaint
NH Mar.2,2017 FAQs33and34(commercialandMedicare)
Permanent,butCMShasappealedtoFirstCircuit
CourtconcludedthatFAQs33and34werebothprocedurallyandsubstantivelydefectivebecausetheywerenotissuedthroughnoticeandcommentrulemaking
VA June20,2017 FAQ33(commercial)
Permanent,butCMShasappealedto4thCircuit
CourtconcludedFAQ33likelyunlawfulbecauseitwasnotissuedthroughnoticeandcommentrulemaking(procedurallydefective),andbecauseitconflictswiththeMedicaidDSHstatute(substantivelydefective)
D.C.Cir.(TX/WA)
Dec.29,2014 FAQ33(commercial)
Preliminary;finaldecisionstillpending
CourtconcludedFAQ33likelytoviolatelawbecausenotissuedthroughnoticeandcommentrulemaking;didnotruleonsubstantiveargument
DCCir.(MN,TX,VA,WA)
FiledMay8,2017
FinalRule Decisionpending HospitalsarearguingthattheFinalRuleisunlawfulbecauseitconflictswiththeMedicaidDSHStatute,andbecauseCMS’justificationsfortheruleareinadequate
MO FiledMar.22,2017
FAQs33and34(commercialandMedicare)andFinalRule
Decisionpending MissouriHospitalAssociationisarguingthatFAQs33and34areunlawfulbecausetheyfailedtogothroughrequirednoticeandcommentrulemaking,andthattheFAQsandtheFinalRuleareunlawfulbecausetheyconflictwiththeMedicaidDSHStatute
DCCir.(MO)
FiledAugust17,2015
FAQ33(commercial)
Decisionpending StateofMissouriisarguingthatthepreliminaryinjunctionfromTX/WAcaseshouldbeappliedinMOtopreventCMSfromenforcingFAQ33
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