The proposals address concerns about the agency’s notice-and-comment rulemaking regarding treatment days for MA beneficiaries.
CMS proposed to establish a policy concerning the treatment of patient days associated with Medicare Advantage (MA) enrollees for the purposes of calculating a hospital’s disproportionate patient percentage (DPP) for cost reporting periods starting before fiscal year (FY) 2014. The proposal comes in response to the ruling in Azar v. Allina Health Services (Proposed rule, 85 FR 47723, August 6, 2020).
In Azar v. Allina Health Services, the Supreme Court considered a challenge to the inclusion of MA patient days in the Medicare fractions published for FY 2012 (see Supreme Court sides with hospitals, ending interpretive battle, June 3, 2019). Over the years, the policy of including Part C beneficiaries in the Medicare fraction has been changed by the government agency overseeing the program. Medicare Part C allows beneficiaries to choose to have the government pay their private insurance premiums rather than pay for their hospital care directly. As a result, the question became whether Part C patients should be counted as "entitled to benefits under" Part A when calculating a hospital’s Medicare fraction. The government agency’s policy shifted as follows:
- 2004: a final rule is issued declaring that agency would count Part C patients, but that rule was later vacated after hospitals filed legal challenges.
- 2013: a new rule is issued prospectively readopting the policy of counting Part C patients.
- 2014: unable to rely on the vacated 2004 rule or the prospective 2013 rule, the agency posted on its website the Medicare fractions for fiscal year 2012, noting that they included Part C patients.
The Supreme Court held that section 1871(a)(2) of the Act required CMS to engage in notice-and-comment rulemaking before adopting its policy regarding the treatment of inpatient days for MA beneficiaries for purposes of calculating the DPP.
For the purposes of calculating Medicare and Medicaid fractions for cost reporting periods including discharges before October 1, 2013, CMS proposed to adopt the policy of including MA patient days in the Medicare fraction, which was prospectively adopted in the 2014 final rule. CMS proposes to apply the policy retroactively to any cost reports that remain open for cost reporting periods starting before October 1, 2013. CMS does not expect the proposal to have an effect on payments, as any payments previously made already reflect the proposed policy. Further, CMS did not propose any change to regulation, as the current text already reflects the policy being proposed.
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