Becker's Hospital Review

22 CFO / FINANCE Missouri Court Bans CMS From Using Medicaid DSH Rule, FAQs to Calculate Payments By Morgan Haefner A Missouri judge banned CMS from en- forcing a final rule and two Frequently Asked Questions documents related to calculating Medicaid Disproportionate Share Hospital payments. Here are five things to know about the ruling. 1. Federal law requires state Medicaid programs to make DSH payments to hospitals that serve large Medicaid and uninsured populations. Under the hospital-specific DSH limit, federal financial participation is limited to a hospital's uncompensated care costs. 2. Under the final rule, uncompensated care costs include only those costs for Medicaid-el- igible individuals that remain aer accounting for payments made to hospitals by or on be- half of Medicaid-eligible individuals, including Medicare and other third-party payments. "As a result, the hospital-specific limit calculation will reflect only the costs for Medicaid eligible indi- viduals for which the hospital has not received payment from any source," according to the fi- nal rule. 3. On Feb. 9, a U.S. District Court in Missouri barred CMS from enforcing the rule and Fre- quently Asked Questions 33 and 34 documents, which included private insurance and Medi- care payment when calculating Medicaid DSH payments, according to the American Hospital Association. e Missouri Hospital Association filed the case. 4. Judge Brian Wimes said in a 23-page opinion the Medicaid Act "is unambiguous that the cal- culation of a DSH hospital's [hospital-specific limit] does not involve consideration of private insurance or Medicare payments, and a DSH hospital's total uncompensated costs of care for calculating the HSL is reduced only by the total of other Medicaid program payments." 5. e opinion follows similar decisions in Ten- nessee and New Hampshire last year to bar CMS from using the FAQs in Medicaid DSH payment calculations. Ayla Ellison contributed to this article.n Why a Seattle TV Station Bought $1M Worth of Medical Debt By Ayla Ellison K IRO-TV, a CBS-affiliated TV station in Seattle, in Feb- ruary paid $12,000 for $1 million worth of medical debt that belonged to more than 1,000 people in the station's viewing area, according to Poynter. When healthcare providers are unable to collect pay- ment on medical bills, they sometimes sell the debt to collection agencies, often for as little 1 cent for each dol- lar owed. Although KIRO followed the same procedures as many collection agencies and purchased the medical debt at a discounted rate, the TV station did not intend to collect payment. KIRO was inspired to buy then forgive the medical debt after reporting about a woman who was diagnosed with cancer and having trouble paying her medical bills. To avoid prying into viewers' medical histories, KIRO con- tracted with RIP Medical Debt, a charity that buys and for- gives medical debt for needy patients. RIP sent letters to the more than 1,000 viewers in the Seattle area, informing them KIRO had helped pay their medical bills. RIP Medical Debt is the same organization comedian John Oliver partnered with when he formed a debt col- lection business in 2016 and bought then forgave nearly $15 million in medical debt, according to Poynter. n Moody's: HCA and UHS Are Big Winners Under Tax Law Changes By Ayla Ellison M ost for-profit hospital operators are poised to benefit from changes to U.S. tax laws, according to Moody's Investors Service. The majority of for-profit hospital operators will see a cash flow boost from an increased ability to deduct capi- tal expenditures and a lower corporate tax rate under the Tax Cuts and Jobs Act. On an absolute basis, Nashville, Tenn.-based HCA Health- care and King of Prussia, Pa.-based Universal Health Ser- vices will be the biggest beneficiaries from changes to the tax code, according to Jessica Gladstone, senior vice president of Moody's. HCA, UHS and Brentwood, Tenn.- based LifePoint Health could all see operating cash flow jump 10 percent or more in 2018 under the tax code changes. Highly leveraged for-profit hospital operators, such as Franklin, Tenn.-based Community Health Systems and Brentwood-based Quorum Health, may have to pay more in taxes. "However, these companies will likely be able to utilize net-operating loss carryforwards in 2018, mitigat- ing the cash impact," Ms. Gladstone said. n

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