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

In a stunning and precedent setting ruling by the PRRB, CMS’s process for calculating the SSI portion of the Medicare disproportionate share payment was found to be “systemically flawed” in several material areas. They were subsequently ordered to recalculate the SSI ratio for the plaintiffs in this case (Baystate Medical Center) for the years in question. Game over?… hardly.

A careful reading of the decision, the transcripts of the testimony proffered by CMS and their agents, and their prior actions in a similar case (the Baystate Medicaid case ) provides compelling evidence that this is but the first step in a multi-year process before any hospital will realize substantive financial benefit as a result of this ruling. CMS has made it clear that it will avail itself of all legal appellate venues, before it concedes defeat in this multi-billion dollar financial liability. If your hospital is a member of a class-action that seeks to obtain relief as a result of this decision, congratulations… just don’t expect to see any near term (i.e. 5-7 years) financial consideration.

This decision is certainly not without value, as it documents, in great detail, all the material deficiencies in the data exchange process between CMS and SSA, and CMS’s own internal processes that are virtually guaranteed to produce a deflated SSI ratio number. Accordingly, the real question here is what you can do, now, to generate short-term value for your organization and bypass the arduous judicial process and associated cost inherent in the standard approach to this type of issue.

Step 1: Immediately request all of the Limited Medpar Data Set files that contain the detail behind the “black box” number published by CMS for all cost reports with a fiscal year ending after 12/8/2004 and amend all open cost reports to include this issue for fiscal years ending prior to 12/8/2004 and request those data sets as well.

• Although you will find that these detail claims files merely serve to corroborate the summary number published by CMS, it will serve as an invaluable baseline from which you can springboard into identifying SSI days and admits that were dropped by CMS as a result of its flawed process.
• The timeliness of this step cannot be over emphasized. Although it is true that CMS is now making these data available, under certain circumstances and timeframes, there is no guarantee that future access will be granted. Further, as cost reports move to NPR status, your ability to obtain these data, absent a jurisdictionally proper appeal outstanding, will be severely compromised.

Step 2: Obtain the maximum amount of Medicaid eligibility and Third party liability data that is available from the Title XIX programs in your state(s), regardless of whether the cost report is closed or not.

• Perform and rigorous and comprehensive data "scrubbing" and quality assurance process 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.

Step 3: Integrate the “scrubbed” Medicaid eligibility data with the CMS Limited Medpar data sets and the hospital database to identify those claims potentially missed or dropped by CMS in its compilation of the SSI subset of the MedPar file.

• Work collaboratively with the Fiscal Intermediary by providing irrefutable evidence that your analysis has been thorough, is backed up by verifiable data audit trails, and regulatory fiat to reach agreement on days that need to be added to the SSI ratio.
• Taking this collaborative approach to working with the fiscal intermediary can help expedite the process, preserve your working relationship with the FI and bypass the cost associated with a formal PRRB appeal and potentially, further judicial venues that could result no matter what ruling is issued by the PRRB.

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