The federal government agreed to pay $666.1 million to 667 hospitals that had sued for back payments related to Medicare disproportionate-share-hospital, or DSH, funds. The settlement marks the largest Medicare reimbursement settlement in history, according to John Jacob, a partner in the law firm Akin Gump Strauss Hauer & Feld and one of the lead lawyers.
The case covers 2,359 cost-reporting periods for the core years 1991 through 1995, Jacob said. At issue was Medicares calculation of DSH payments and whether Medicaid unpaid patient daysrelated to Medicaid-eligible patients covered by some other kind of insuranceshould be included in the formula. Medicare previously only included Medicaid paid days until the rule was changed in 1997 as the result of numerous court decisions, but Medicare also refused to reopen previous cost reports retroactively, Jacob said.
Hospitals subsequently sued for back payments, led by three-hospital Baystate Health in Springfield, Mass. That led to decisions favorable to the hospitals in both district court and on appeal. In 2006, the Supreme Court declined the governments request for a hearing. I can say honestly that these settlement negotiations were incredibly complex, but the hospitals are tremendously pleased that this is over and they have been able to recoup DSH payments that have been overdue for two decades, Jacob said. CMS officials declined to comment. -- by Cinda Becker
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