On May 23, 2014, the CMS Office of Hearings released Alert 10, notifying providers with pending appeals before the Provider Reimbursement Review Board (PRRB) of a new sixty-day submission requirement for the Medicaid eligible days issue.  Providers with pending appeals must submit documentation to the PRRB by Tuesday, July 22, 2014, establishing the PRRB’s jurisdiction over the Medicaid eligible days issue. The documentation must describe the process the provider used to identify Medicaid eligible days, list the number of additional Medicaid eligible days for inclusion in its disproportionate share hospital (DSH) adjustment, and explain why the provider could not verify these additional days at the time its cost report was filed. 

The Medicaid eligible days issue relates to the calculation of the DSH adjustment used in determining payment under the Prospective Payment System (PPS).  When a patient is eligible for Medicaid, days that the patient stays in the hospital are included in the numerator of the Medicaid fraction of the DSH adjustment irrespective of whether Medicaid actually pays for items or services.  However, providers can only claim days as Medicaid eligible if the state verifies that the patient was eligible for Medicaid at the time of the patient’s hospital stay.  Because states are often not able to provide such verification by the time a provider’s cost report is due, providers either self-disallow or leave unclaimed their Medicaid eligible days, resulting in an understatement of the provider’s DSH adjustment.  This practice has been in place for several years.  In recent cases, fiscal intermediaries have challenged whether the PRRB has jurisdiction over such appeals, claiming that because the Medicaid eligible days were not claimed on the initial cost report, there was no adjustment to the provider’s cost report for such days, and, therefore, no final, appealable determination.

This was the issue before the PRRB in Danbury Hospital v. BlueCross BlueShield Association, PRRB Dec. No. 2014-D3, Feb. 11, 2014.  In Danbury, the provider claimed additional Medicaid eligible days that it could not identify at the filing of its initial cost report.  The fiscal intermediary challenged that no adjustment was made to Medicaid eligible days on the provider’s NPR, so the PRRB did not have jurisdiction.  Noting the futility of attempting to appeal data they did not have or could not verify, the PRRB concluded that under the Supreme Court decision Bethesda Hospital Association v. Bowen, 485 U.S. 399 (1988), the PRRB had jurisdiction over the appeal, but only if the provider could demonstrate that the data used to verify the Medicaid eligible days was not available at the time of the cost report filing.  Because the provider inDanbury could not make such a demonstration, the PRRB held that it had no jurisdiction over the case.

It is the PRRB’s decision in Danbury, combined with the plethora of open appeals on the Medicaid eligible days issue before the PRRB, that resulted in the issuance of Alert 10.  The PRRB has determined that is has jurisdiction over the Medicaid eligible days issue only if providers can demonstrate that they could not verify the additional days now claimed at the time the cost report was filed.  Specifically, the PRRB has requested the following information in all such pending appeals: 

  • A detailed description of the process that the provider used to identify and accumulate the actual Medicaid paid and unpaid eligible days that were reported and filed on the Medicare cost report at issue.
  • The number of additional Medicaid paid and unpaid eligible days that the provider is requesting to be included in the DSH calculation.
  • A detailed explanation of why the additional Medicaid paid and unpaid eligible days at issue could not be verified by the state at the time the cost report was filed.  If there is more than one explanation/reason, identify how many of these days are associated with each explanation/reason.

Alert 10 applies to appeals currently pending before the PRRB, including individual appeals and those subject to Proposed Joint Scheduling Orders.  Providers who have already submitted final position papers or who are awaiting a PRRB decision should also consider submitting the requested documentation.  Providers should continue to meet all deadlines docketed by the PRRB while they gather this information.  The PRRB will use the supplemental information submitted by providers to make jurisdictional determinations over the pending appeals.  While the Danbury decision has been appealed to the federal district court in the District of Connecticut, providers should make every effort to meet the July 22 sixty-day deadline in order to preserve their appeal rights.  The PRRB’s Danbury decision is available here, and Alert 10 is available here.