CMS Issues Change Request 13294 – Impacts Cost Reports with Disproportionate Share Hospital Reimbursement

CMS issued CR 13294,“Change Request (CR) to Implement the Medicare Program Final Action: Treatment of Medicare Part C Days in the Calculation of a Hospital’s Medicare Disproportionate Patient Percentage” on 2/21/2024. This purpose of this CR is to provide guidance for the treatment of Medicare Part C days in the calculation of a provider's DSH adjustment.

The CR provides guidance to the MACs A&R Department on how to address Medicare cost reports on hold as a result of court challenges to the FY 2004 IPPS Proposed Rule (68 FR 27208) about whether patient days associated with patients enrolled in a MA plan (then called a Medicare+Choice (M+C) plan) should be counted in the Medicare fraction or the Medicaid fraction of the DPP calculation.

We have three main categories of these impacted cost reports for J6 and JK hospitals:

1. Cost reports with an open NPR, which means we have never issued an NPR. CR 13294, in BR 13294.4, instructs MACs to issue an NPR within six months of the effective date of the CR, 3/25/2024, for all impacted cost reports. For hospitals with multiple fiscal years open, we expect to issue the NPRs in chronological order, beginning with the oldest years first. Unless the CMS revises the CR’s effective date, we will issue the NPRs on/before 9/25/2024.
2. Cost reports with a reopening on hold.
   1. We issued NOR to providers pending the result of the Allina II decision. These cost reports are addressed under BR 13294.5.
   2. We had placed all pending DSH reopenings on hold pending rule making for the treatment of Part C days in DSH payments. These cost reports are addressed under BR 13294.5.1
   3. All reopenings identified in BRs 13294.5 and 13294.5.1 shall have a RNPR issued within six months of the effective date of this CR, 3/25/2024. Unless the CMS revises the CR’s effective date, we will issue the NPRs on/before 9/25/2024.
3. Cost reports with pending PRRB appeals and/or remands impacting the DSH.
   1. BR 13294.6 addresses pending PRRB appeals and remands for DSH-related issues for cost reporting periods starting before 10/1/2004.
   2. BR 13294.7 addresses pending PRRB appeals and remands for DSH-related issues for cost reporting periods beginning on/after 10/1/2004 and before 10/1/2013.
   3. All pending PRRB appeals and remands under BRs 13294.6 and 13294.7 shall have RNPRs issued within the later of 12 months from the date of this CR (due 2/21/2025) if the remand has already been issued or six months from the date of the remand for remands received after the issuance of this CR.

After issuing CR 13294, the CMS issued CMS Ruling 1498-R3 on 3/4/2024. It provides notice the CMS is revoking CMS Ruling 1498-R2, which allowed hospitals to elect their SSI ratios based on either “total days” or “covered days” for cost reporting periods with discharges that pre-dated 10/1/2004. Since CMS Ruling 1498-R2 was revoked, all SSI ratios will be based on “total days” for all NPRs and RNPRs issued under CR 13294.

Because of the significant number of NPRs and RNPRs we will be issuing, our A&R Department cannot provide any estimate on when we will issue a specific NPR/RNPR. We appreciate your patience and understanding as we are completing these cost reports as quickly as possible.

Posted 3/19/2024