CMS Pub. 100-04, ch. 3, § 20.3.1.2

January 1, 2000

(Rev. 1, 10-01-03)

In accordance with the hold harmless position communicated by CMS on October 15, 1999,

for cost reporting periods beginning before January 1, 2000, hospitals are not to disallow,

within the parameters discussed below, the portion of Medicare DSH adjustment payments

previously made to hospitals attributable to the erroneous inclusion of general assistance or

other State-only health program, charity care, Medicaid DSH, and/or ineligible waiver or

demonstration population days in the Medicaid days factor used in the Medicare DSH

formula. This is consistent with CMS' determination that hospitals and A/B MACs (A)

relied, for the most part, on Medicaid days data obtained from State Medicaid agencies to

compute Medicare DSH payments and that some of those agencies commingled the types of

otherwise ineligible days listed above with Medicaid Title XIX days in the data transmitted

to hospitals and/or A/B MACs (A). Although CMS has decided to allow the hospitals to be

held harmless for receiving additional payments resulting from the erroneous inclusion of

these types of otherwise ineligible days, this decision is not intended to hold hospitals

harmless for any other aspect of the calculation of Medicare DSH payments or any other

Medicare payments.

Hospitals That Received Payments Reflecting the Erroneous Inclusion of Days at Issue

In practical terms this means that the A/B MAC (A) is not to reopen any cost reports for cost

reporting periods beginning before January 1, 2000, to disallow the portions of Medicare

DSH payments attributable to the erroneous inclusion of general assistance or other State-only health program charity care, Medicaid DSH, and/or ineligible waiver or demonstration

population days if the hospital received payments for those days based on those cost reports.

If, prior to the issuance of this Program Memorandum, a hospital reopened a settled cost

report to disallow the portion of Medicare DSH payment attributable to the inclusion of these

types of days, reopen that cost report again and refund the amounts (including interest)

collected. Do not, however, pay the hospitals interest on the amounts previously recouped as

result of the disallowance. Furthermore, on or after October 15, 1999, the A/B MAC (A) is

not to accept reopening requests for previously settled cost reports or amendments to

previously submitted cost reports pertaining to the inclusion of these types of days in the

Medicare DSH formula.

For cost reporting periods beginning before January 1, 2000, hospitals are to continue to

allow these types of days in the Medicare DSH calculation for all open cost reports only in

accordance with the practice followed for the hospital at issue before October 15, 1999, (i.e.,

for open cost reports, the A/B MAC (A) allows only those types of otherwise ineligible days

that the hospital received payment for in previous cost reporting periods settled before

October 15, 1999). For example, if, for a given hospital, a portion of Medicare DSH

payment was attributable to the erroneous inclusion of general assistance days for only the

out-of-State or HMO population in cost reports settled before October 15, 1999, the A/B

MAC (A) is to include the ineligible waiver days for only that population when settling open

cost reports for cost reporting periods beginning before January 1, 2000. However, the

actual number of general assistance and other State-only health program, charity care,

Medicaid DSH, and/or ineligible waiver or demonstration days, as well as Medicaid Title

XIX days that the A/B MAC (A) allows for the open cost reports must be supported by

auditable documentation provided by the hospital.

Hospitals That Did Not Receive Payments Reflecting the Erroneous Inclusion of Days

at Issue

If a hospital did not receive any payment based on the erroneous inclusion of general

assistance or other State-only health program, charity care, Medicaid DSH, and/or waiver or

demonstration population days for cost reports that were settled before October 15, 1999, and

the hospital never filed a jurisdictionally proper appeal to the Provider Reimbursement

Review Board (PRRB) on this issue, the A/B MAC (A) is not to pay the hospital based on

the inclusion of these types of days for any open cost reports for cost reporting periods

beginning before January 1, 2000. Furthermore, on or after October 15, 1999, the A/B MAC

(A) is not to accept reopening requests for previously settled cost reports or amendments to

previously submitted cost reports pertaining to the inclusion of these types of days in the

Medicare DSH formula.

If, for cost reporting periods beginning before January 1, 2000, a hospital that did not receive

payments reflecting the erroneous inclusion of otherwise ineligible days filed a

jurisdictionally proper appeal to the PRRB on the issue of the exclusion of these types of

days from the Medicare DSH formula before October 15, 1999, the A/B MAC (A) will

reopen the cost report at issue and revise the Medicare DSH payment to reflect the inclusion

of these types of days as Medicaid days. If there are any questions or concerns regarding the

qualifications for a "jurisdictionally proper appeal," the A/B MAC (A) submits them in

writing before rendering a decision in a specific case to:

Centers for Medicare & Medicaid Services

7500 Security Boulevard

Office of Financial Management

Financial Services Group

Location C3-14-16

Baltimore, Maryland 21244-1850.

Where, for cost reporting periods beginning before January 1, 2000, a hospital filed a

jurisdictionally proper appeal to the PRRB on the issue of the exclusion of these types of

days from the Medicare DSH formula on or after October 15, 1999, reopen the settled cost

report at issue and revise the Medicare DSH payment to reflect the inclusion of these types

of days as Medicaid days, but only if the hospital appealed, before October 15, 1999, the

denial of payment for the days in question in previous cost reporting periods. The actual

number of these types of days that are used in this revision must be properly supported by

adequate documentation provided by the hospital. Do not reopen a cost report and revise the

Medicare DSH payment to reflect the inclusion of these types of days as Medicaid days if, on

or after October 15, 1999, a hospital added the issue of the exclusion of these types of days

to a jurisdictionally proper appeal already pending before PRRB on other Medicare DSH

issues or other unrelated issues.

Continue to pay the Medicare DSH adjustment reflecting the inclusion of general assistance

or other State-only health program, charity care, Medicaid DSH, and/or waiver or

demonstration population days for all open cost reports for cost reporting periods beginning

before January 1, 2000, to any hospital that, before October 15, 1999, filed a jurisdictionally

proper appeal to the PRRB specifically for this issue on previously settled cost reports.

Finally, if a hospital has filed a jurisdictionally proper appeal with respect to the CMS 97-2

ruling and the hospital has otherwise received payment for the portion of Medicare DSH

adjustment attributable to the inclusion of general assistance or other State-only health

programs, charity care, Medicaid DSH, and/or ineligible waiver or demonstration population

days based on its paid Medicaid days, include these types of unpaid days in the Medicare

DSH formula when revising the cost reports affected by the CMS 97-2 appeal.

TYPE OF DAY DESCRIPTION ELIGIBLE

TITLE XIX

DAY

General Assistance

Patient Days

Days for patients covered under a State-only (or county-only) general assistance program (whether or not any

payment is available for health care services under the

program). These patients are not Medicaid-eligible

under the State plan.

No.

Other State-Only Health

Program Patient Days

Days for patients covered under a State-only health

program. These patients are not Medicaid-eligible

under the State plan.

No.

Charity Care Patient

Days

Days for patients not eligible for Medicaid or any other

third-party payer, and claimed as uncompensated care

by a hospital. These patients are not Medicaid-eligible

under the State plan.

No.

Actual 1902(r)(2) and

1931(b) Days

Days for patients eligible under a State plan based on a

1902(r)(2) or 1931(b) election. These patients are

Medicaid-eligible under the Title XIX State plan under

the authority of these provisions, which is exercised by

the State in the context of the approved State plan.

Yes.

Medicaid Optional

Targeted Low-Income

Children (CHIP-related)

Days

Days for patients who are Title XIX-eligible and who

meet the definition of "optional targeted low-income

children" under §1905(u)(2). The difference between

these children and other Title XIX children is the

enhanced FMAP rate available to the State. These

children are fully Medicaid-eligible under the State

plan.

Yes.

Separate CHIP Days Days for patients who are eligible for benefits under a

non-Medicaid State program furnishing child health

assistance to targeted low-income children. These

children are, by definition, not Medicaid-eligible under

a State plan.

No.

TYPE OF DAY DESCRIPTION ELIGIBLE

TITLE XIX

DAY

§1915(c) Eligible Patient

(the "217" group) Days

Days for patients in the eligibility group under the State

plan for individuals under a Home and Community

Based Services waiver. This group includes individuals

who would be Medicaid-eligible if they were in a

medical institution. Under this special eligibility group,

they are Medicaid-eligible under the State plan.

Yes.

Retroactive Eligible Days Days for patients not enrolled in the Medicaid program

at the time of service, but found retroactively eligible

for Medicaid benefits for the days at issue. These

patients are Medicaid-eligible under the State plan.

Yes.

Medicaid Managed Care

Organization Days

Days for patients who are eligible for Medicaid under a

State plan when the payment to the hospital is made by

an MCO for the service. An MCO is the financing

mechanism for Medicaid benefits, and payment for the

service through the MCO does not affect eligibility.

Yes.

Medicaid DSH Days Days for patients who are not eligible for Medicaid

benefits, but are considered in the calculation of

Medicaid DSH payments by the State. These patients

are not Medicaid-eligible.

Sometimes Medicaid State plans specify that Medicaid

DSH payments are based upon a hospital's amount of

charity care or general assistance days. This, however,

is not "payment" for those days, and does not mean that

the patient is eligible for Medicaid benefits or can be

counted as such in the Medicare formula.

No.