CMS Pub. 100-04, ch. 3, § 20.3.1.1

January 1, 2000

(Rev. 1, 10-01-03)

PM A-01-03

Under §1886(d)(5)(F) of the Social Security Act (the Act), the Medicare disproportionate

share patient percentage is made up of two computations. The first computation includes

patient days that were furnished to patients who, during a given month, were entitled to both

Medicare Part A and Supplemental Security Income (SSI) (excluding State

supplementation). This number is divided by the number of covered patient days utilized by

patients under Medicare Part A for that same period. The second computation includes

patient days associated with beneficiaries who were eligible for medical assistance

(Medicaid) under a State plan approved under Title XIX but who were not entitled to

Medicare Part A. (See 42 CFR 412.106(b)(4).) This number is divided by the total number

of patient days for that same period.

Included Days

In calculating the number of Medicaid days, the hospital must determine whether the patient

was eligible for Medicaid under a State plan approved under Title XIX on the day of service.

If the patient was so eligible, the day counts in the Medicare disproportionate share

adjustment calculation. The statutory formula for "Medicaid days" reflects several key

concepts. First, the focus is on the patient's eligibility for Medicaid benefits as determined

by the State, not the hospital's "eligibility" for some form of Medicaid payment. Second, the

focus is on the patient's eligibility for medical assistance under an approved Title XIX State

plan, not the patient's eligibility for general assistance under a State-only program. Third,

the focus is on eligibility for medical assistance under an approved Title XIX State plan, not

medical assistance under a State-only program or other program. Thus, for a day to be

counted, the patient must be eligible on that day for medical assistance benefits under the

Federal-State cooperative program known as Medicaid (under an approved Title XIX State

plan). In other words, for purposes of the Medicare disproportionate share adjustment

calculation, the term "Medicaid days" refers to days on which the patient is eligible for

medical assistance benefits under an approved Title XIX State plan. The term "Medicaid

days" does not refer to all days that have some relation to the Medicaid program, through a

matching payment or otherwise; if a patient is not eligible for medical assistance benefits

under an approved Title XIX State plan, the patient day cannot become a "Medicaid day"

simply by virtue of some other association with the Medicaid program.

Medicaid days, for purposes of the Medicare disproportionate share adjustment calculation,

include all days during which a patient is eligible, under a State plan approved under Title

XIX, for Medicaid benefits, even if Medicaid did not make payment for any services. Thus,

Medicaid days include, but are not limited to, days that are determined to be medically

necessary but for which payment is denied by Medicaid because the provider did not bill

timely, days that are beyond the number of days for which a State will pay, days that are

utilized by a Medicaid beneficiary prior to an admission approval but for which a valid

enrollment is determined within the prescribed period, and days for which payment is made

by a third party. In addition, we recognize in the calculation days that are utilized by a

Medicaid beneficiary who is eligible for Medicaid under a State plan approved under Title

XIX through a managed care organization (MCO) or health maintenance organization

(HMO). However, in accordance with 42 CFR 412.106(b)(4), a day does not count in the

Medicare disproportionate share adjustment calculation if the patient was entitled to both

Medicare Part A and Medicaid on that day. Therefore, once the eligibility of the patient for

Medicaid under a State plan approved under Title XIX has been verified, the A/B MAC (A)

must determine whether any of the days are dual entitlement days and, to the extent that they

are, subtract them from the other days in the calculation.

Excluded Days

Many States operate programs that include both State-only and Federal-State eligibility

groups in an integrated program. For example, some States provide medical assistance to

beneficiaries of State-funded income support programs. These beneficiaries, however, are

not eligible for Medicaid under a State plan approved under Title XIX, and, therefore, days

utilized by these beneficiaries do not count in the Medicare disproportionate share

adjustment calculation. If a hospital is unable to distinguish between Medicaid beneficiaries

and other medical assistance beneficiaries, then it must contact the State for assistance in

doing so.

In addition, if a given patient day affects the level of Medicaid DSH payments to the hospital

but the patient is not eligible for Medicaid under a State plan approved under Title XIX on

that day, the day is not included in the Medicare DSH calculation.

It should be noted that the types of days discussed above are not necessarily the only types of

excluded days. Please see the chart in 140.2.4.1, which summarizes some, but not

necessarily all, of the types of days to be excluded from (or included in) the Medicare DSH

adjustment calculation.

To provide consistency in both components of the calculation, any days that are added to the

Medicaid day count must also be added to the total day count, to the extent that they have not

been previously so added.

Regardless of the type of allowable Medicaid day, the hospital bears the burden of proof and

must verify with the State that the patient was eligible under one of the allowable categories

during each day of the patient's stay. The hospital is responsible for and must provide

adequate documentation to substantiate the number of Medicaid days claimed. Days for

patients that cannot be verified by State records to have fallen within a period wherein the

patient was eligible for Medicaid as described in this memorandum cannot be counted.