Hospitals in states that did not expand Medicaid are suing HHS, arguing that they unfairly receive lower Medicare disproportionate share hospital payments because the agency does not consider some patients eligible for Medicaid in non-expansion states.
In their complaint, 32 hospitals that include Baylor University Medical Center in Dallas, Regional One Health, and Houston Methodist Hospital, allege HHS Secretary Xavier Becerra is discriminating against states that did not expand Medicaid under the Affordable Care Act.
The plaintiff hospitals are located in Alabama, Florida, Georgia, Texas, South Carolina, North Carolina, Oklahoma, Tennessee and Missouri.
During a 2012 Supreme Court case challenging the ACA, HHS did not recognize low-income patients who meet Medicaid eligibility in non-expansion states when determining DSH payments. They say mandates under the ACA require them to "amend their medical assistance plans to cover populations made newly eligible." However, they argue these changes were not properly compensated since HHS would not recognize days treating "Medicaid eligible patients" as part of a hospital's DSH entitlement.
The plaintiffs say in court documents that HHS "understates the true volume of low-income patients," treated by the plaintiffs and compensates them less under Medicare than "similarly situated hospitals" in states that have expanded Medicaid. The lawsuit calls for DSH payments to be increased based on the amount of days low-income patients were treated.
Federal law requires states to provide supplemental payments to hospitals disproportionately caring for low-income patients. These DSH payments increase relative to the portion of "Medicaid eligible" patients a hospital serves. But in states that did not expand Medicaid to adults under age 65 and with incomes up to 133% above the federal poverty line under the ACA, those newly eligible do not count toward a hospital's DSH payments.
According to the document, a language change by the secretary recognizing low-income patients as "eligible for Medicaid" to those "eligible for medical assistance under a state plan" is to blame for this exclusion. Hospitals argue that the financial assistance DSH payments provide is critical to care for surrounding populations with special needs. This lack of financial assistance is seen by the hospitals as an attempt to "simply ignore the actual presence of significant numbers of low income patients in non-expansion states."
Plaintiffs said they had petitioned former HHS Secretary Alex Azar on the issue and received a letter in December that neither granted nor denied their request.
HHS did not return a request for comment.