The CMS issued a proposed rule that would redefine which hospital patients are uninsured for the purpose of calculating Medicaid disproportionate-share payments.

The CMS would determine whether the patients were covered for the specific services provided by a hospital rather than, as now, deeming a patient as insured if they have any active insurance coverage. The proposed change also would add to the DSH calculation any service provided that is not covered by an insurance policy because it exceeds a policy’s annual or lifetime limits. The existing eligibility definitions drew objections from hospitals and state officials when they were finalized in 2008, the CMS noted in the rule, because in practical application, so much uncompensated care was excluded.

“We are very pleased the CMS decided to define ‘uninsured’ on a service-specific basis, rather than an individual basis,” said Xiaoyi Huang, assistant vice president for policy at the National Association of Public Hospitals and Health Systems. Huang added that three types of costs are still excluded from DSH payments that the organization would like to see included: unpaid copayments and deductibles; payments that have been administratively denied; and cost of care to prisoners.