Analysis and opinion by Robert F. Gricius – President DSH Mgmt Solutions, LLC

A multi-year battle spanning nine years from the seminal HCFA Ruling 97-2 ruling to this final disposition between Baystate Medical Center and CMS on the issue of whether the Provider (and by proxy all Providers) needed to have a jurisdictional appeal outstanding in order to re-open previously closed cost reports for the three years prior to 1997 ruling in order to include Medicaid eligible days in the Medicaid component of the DSH payment calculation has finally come to an end.

• CMS had a clear duty to require intermediaries to reopen hospitals’ notices of program reimbursement (NPRs) and to recalculate disproportionate share adjustments because HCFA Ruling 97-2 amounted to a notice of inconsistency and because 42 C.F.R. §405.1885(b) mandates reopening when CMS issues such a notice.
• The hospitals' request for relief in the form of a writ of mandamus, which arose after a number of appellate courts ruled that CMS incorrectly calculated Medicaid eligibility days when it reimbursed the hospitals, was appropriate because:
1. the hospitals had a clear right to relief due to CMS' incorrect calculation
2. CMS had a mandatory duty to take action to reopen the NPRs,
3. no alternative avenue of relief was available to the hospitals after CMS determined that it would not reopen past NPRs

• CMS' arguments that the hospitals should be denied relief on equitable grounds because
1. they waited five years to file suit
2. (reopening records would prejudice the public's interest in the finality of NPRs
3. that the writ would impose an administrative burden on CMS

1. If your hospital has not previously collected the Medicaid eligibility data files, open discussions with your State’s Title XIX eligibility contractor to determine how likely, and at what cost said data can be obtained.
1. Even if your hospital is among those who have filed an action to protect their rights under this action, if you haven’t already obtained this Title XIX eligibility data, that is now 9-12 years old, obtaining it at this date will be a non-trivial, although not insurmountable task.
2. Recognize that some of these data will be easily available in the historical eligibility segments of those Medicaid eligible members who have maintained more or less continuous Title XIX eligibility since 1994 (i.e. primarily the disabled population).
3. However, if your Title XIX population, during that time period, was primary TANF (or then AFDC) obtaining that archival data will involve more effort and resources.
2. If your hospital has already collected a reasonably comprehensive set of Medicaid eligibility data for the 1994-1997 time period, then:
• Perform and rigorous and comprehensive data "scrubbing" and quality assurance processes on this "raw" Medicaid eligibility data. Use of these data "as-is" is a recipe for disaster. There are multiple data integrity issues at the hospital, Medicaid and data feeds into Medicaid eligibility data that must be understood and addressed before you can rely on the integrity of these data for an appeal or restatement of any component of the DSH calculation"
• Work with the Medicaid contracted claims processing vendor to address data anomalies and correct them if available. Remember that this does not have to be a win/lose proposition between the client and Medicaid. Medicaid can gain substantive financial value from improved data quality in the form of higher federal matching funds for DSH funding purposes.
3. Based on step 1 or 2, determine the nominal potential recoverable Federal DSH monies recoverable as a result of the identification of additional Title XIX Medicaid eligible days that were improperly excluded by the fiscal intermediary or missed by the hospital in its own compilation of this component of DSH reimbursement.
1. If the hospital had previously identified Title XIX eligible days that were specifically excluded by the FI in its audit, then a strong argument can be made that the nominal damages can be increased by the published Medicare underpayment/overpayment interest rate for the subsequent periods in question.
2. If, as is more likely, the hospital did not include the Title XIX eligible but unpaid days in their own calculation of this component, a case can still be made that CMS (then HCFA) guidance on the issue precluded the hospital from even considering this category of days, and, as a result thereof, should entitle the hospital to additional damages based on the time value of money.
1. This subset of total damages needs to be diluted by a substantive percentage as the case for them is simply not as strong as the initial scenario.
4. If, based on steps 1 – 3, the potential recoverable is material and offers a ROI (and make sure you understand that the “I” will be non-trivial, even for approximately 600 hospitals behind curtain number 1) then an internal decision needs to be made on the risk-reward analysis.
1. It is at this point that the issue of whether your hospital is among those who have filed a timely action to protect their rights and don’t need to surmount the six year statue of limitations barrier begins to become relevant.
1. Clearly, if your hospital is one of those 600, the hurdle rate for ROI will be considerably lower than if your hospital falls outside that group.
2. However, even if your hospital has not filed a timely notice within the six year statute of limitations, if the ROI is compelling enough, it may be worth consideration of a defined level of resources to investigate the options available to recover these monies.

Please contact Bob Gricius at robertgricius@dshmgmtsys.com with any questions or comments on this analysis and recommended process.