QRS

Write Your Senator and Congressperson – Today!

Whether your hospital is represented in the Allina v. Azar appeal or not, we urge you to write your government representative(s) immediately, because the actions of CMS will have repercussions on hospitals for years to come.


Background

On June 3, 2019, the United States Supreme Court decision in Allina v. Azar, held that the Centers for Medicare and Medicaid Services (CMS) violated law by skipping its statutory notice-and-comment obligations, before applying a Final Rule that misplaced Medicare Part C days in the DSH calculation, thus lowering hospital DSH reimbursements. Since the Supreme Court ruling, CMS has said that it intends to correct the situation by enacting a new Final Rule RETROACTIVE to FY2004, and thus, avoiding reimbursements to hospitals for lost revenue. If retroactive rulemaking becomes established precedent, hospitals will have severely limited recourse to correct mistakes made by CMS that damage providers. While under the Medicare Act, retroactive rulemaking is sometimes permitted if required by statute or in the public interest, but this is a slippery slope. And if CMS is allowed this “back door” option, it could have damaging effects on hospitals going forward, that have been hurt by CMS rulemaking.


Recommendation

As congress currently works through a multi-billion-dollar second economic stimulus package to follow-up the CARES Act, doesn’t it make sense to simultaneously order CMS to comply with the Allina Supreme Court decision, and pay all those the DSH hospitals that were harmed in Allina? If not now…when? QRS strongly recommends that hospitals write their senators and congresspersons, requesting a bill that orders CMS to pay the hundreds of hospitals named in this appeal. To help facilitate this action, we have prepared below (1) a memo to your Executive Management, that briefly explains the nature of the issues at hand; (2) draft of a possible letter from your hospital/network to your government representative; and if desired; (3) draft language for a legislative bill.


  • 1.Message to Executive Management

Hundreds of DSH hospitals are participating in litigation in the U.S. District Court for the District of Columbia, seeking the Medicare disproportionate share (DSH) adjustment to which they are entitled as a result of the favorable June 3, 2019 decision of the United States Supreme Court in the case of Allina v. Azar.


The Supreme Court decision held that the Centers for Medicare and Medicaid Services (CMS) violated law by failing to properly issue the underlying regulation in dispute. Rather than pay our Hospitals, and the many other hospitals participating in this litigation, however, CMS has stated that it intends to publish a regulation with retroactive effect to the year 2004, thus seeking a “do over” in order to now, years after the fact, comply with the law. The position of CMS is inconsistent with the Supreme Court’s decision and flies in the face of the financial challenge hospitals are facing in today's circumstances.


Our legal and consulting counsel have recommended that, by contacting Senators and members of the House of Representatives for the states in which our Hospitals are located, our Hospitals can help in the effort to obtain the DSH payment to which our Hospitals are entitled. As you are aware, legislation is pending in Congress to provide a financial relief package to hospitals nationwide who have been engulfed by COVID 19. Hospitals can benefit from the favorable Allina decision without the time and cost of further litigation if the legislation includes a provision that instructs CMS to pay the hospitals that are subject to, and should benefit from, the Allina decision. But time is of the essence.


Below is a possible letter to Senators and Members of the House of Representative.


  • 2.Possible Letter to Senators/Congresspersons

Dear [Senator ______] [Senator _________] [Congressperson _______]:


Despite the June 3, 2019 United States Supreme Court decision in Allina v. Azar that the Centers for Medicare and Medicaid Services violated federal law, the Medicare program continues to withhold payment to hundreds of hospitals nationwide who provide a disproportionate amount of inpatient services to the elderly, indigent and minority populations. The payment in question, which is estimated to be upwards of $3 Billion, is referred to as “disproportionate share hospital” or “DSH” payment for short.


The Supreme Court ruled that the Medicare program’s DSH payment policy violated federal law by failing to comply with fundamental procedural requirements. Nearly a year later, however, the Medicare program has not released the additional Medicare payment to which these hospitals are entitled, and which is sorely needed during the COVID-19 crisis. Instead, claiming that it is entitled to a “do over,” the Medicare program has stated that it intends to republish its policy retroactively to 2004. To have a chance to receive the DSH payment in dispute without further litigation, Congress needs to order CMS to pay the hospitals the amount to which they are entitled.


Hospitals are imperiled by the tsunami wave of COVID-19 patients. As you are aware, legislation is pending in Congress to provide financial relief to hospitals. To assure that the Medicare program complies with the Supreme Court’s decision, we urge you to introduce and/ or support upcoming emergency pandemic legislation which requires CMS to pay hospitals the amount to which they are entitled under the Supreme Court’s decision. The Medicare program already authorizes the DSH payment. All that is needed is a provision requiring CMS to make the proper payment. Further delay is a disservice to the hospitals and the American public they serve. To save lives and jobs, I urge you to support appropriate legislation.


  • 3.Proposed Bill For Inclusion in CARES II Act

Settlement of Medicare disproportionate share adjustment claims for hospitals subject to the decision of the United States Supreme Court in Azar v. Allina.


  • Preamble
  • Background

The Medicare Program consists of Part A, which is inpatient hospital coverage, Part B, which is outpatient hospital, physician and supplier coverage, Part C which is managed care coverage as an alternative to Part A, and Part D which is prescription drug coverage.


Medicare payment to hospitals includes an additional payment for treating indigent individuals. This additional payment is called the “Disproportionate Share Hospital Adjustment,” or DSH adjustment for short.


The DSH Adjustment is the sum of two fractions. One fraction is the number of patient days of patients entitled to Medicare Part A and SSI divided by the total number of Medicare Part A patient days of patients discharged in a year.\ (the Medicare Fraction). The other is the number of patient days of patients who were eligible for Medicaid divided by the total number of patient days of patients discharged in a year (the Medicaid Fraction). Generally, the sum of these two fractions must be at least 15% for a hospital to qualify for the DSH Adjustment. The greater the percentage over 15%, the greater the DSH Adjustment.


A major issue nationwide is how patients with Medicare Part C (those patients enrolled in a managed care plan) should be accounted for purposes of computing the DSH Adjustment. Hospitals contend that patients enrolled in Medicare Part C are not “entitled” to Medicare Part A. Thus, Hospitals argue that patients enrolled in Medicare Part C should not be counted in the Medicare Fraction. And the Hospitals argue that those patients with Medicare Part C who are also eligible for Medicaid should be included in the Medicaid Fraction. This distinction has a material impact on a hospital’s DSH adjustment, which depending on the size of the hospital can be in the hundreds of thousands, or greater, each year.


This issue reached the United States Supreme Court in Allina v Azar, No. 17-1984 (June 3, 2019). The issue before the Supreme Court was whether the Medicare program’s policy regarding the treatment of Part C days for purposes of the DSH Adjustment was required to be issued in compliance with notice and comment rule making requirements. In a 7-1 decision issued June 3, 2019 the Supreme Court held that the Medicare program’s policy was unlawful because if should have been, but failed to be, issued in compliance with notice and comment rule making.


Before the Supreme Court, the lawyers for the Medicare program estimated that approximately $3 Billion was at stake.


The Allina decision was remanded to the district court, which in turn ordered a remand to the Medicare program for further action consistent with the Supreme Court’s decision. No specific action or timetable was included in the order. And the court did not retain supervisory jurisdiction. CMS has stated that upon remand it will engage in rule making with retroactive effect. In fact, under the Medicare Act retroactive rule making is permitted if required by statute or in the public interest. Another set of “Allina” type hospitals’ cases have also been remanded.


In anticipation of the Supreme Court decision in Allina, approximately 100 other cases, representing several times that number of hospitals and fiscal years, were filed in the District of Columbia District Court. On motion of the government, all of these cases have been or will be consolidated with District Judge Berman Jackson. In Re Allina II- Type DSH Adjustment Cases, No. 19-0109. CMS has filed a motion to remand, which the hospitals have opposed. CMS has stated in its pleadings that upon remand it intends to promulgate a regulation with retroactive effect. The remand motion has been fully briefed, no further pleadings are scheduled and the remand motion awaits Judge Jackson’s decision.


  • Purpose Of Bill

The proposed bill would instruct the Secretary of Health and Human Services to order the Administrator of the Centers for Medicare and Medicaid Services to enter into settlement agreements with the Hospitals with judicial appeals pending in federal court that are governed by the Allina decision.


  • Bill

The Secretary of Health and Human Services shall order the Administrator of the Centers for Medicare and Medicaid Services (“CMS”) to enter into settlement agreements with Hospitals with judicial appeals pending in federal court as of the date hereof that come within the scope of the decision of the Supreme Court in the case of Allina v Azar, No. 17-1984 (June 3, 2019). The Administrator of CMS shall assure that the payment to which such hospitals are entitled is paid in full no later than August 31, 2020.