Laredo lawsuit challenges Medicaid eligibility DSH payments

Laredo Medical Center (Laredo) is suing Xavier Becerra, the Secretary of the HHS, over a Medicare payment dispute concerning low-income patient care.

What happened 

Laredo argued in their suit that the Medicare Administrative Contractor (MAC), a Medicare contractor, miscalculated the Medicaid eligible days in its ‘disproportionate share hospital’ (DSH) payment for the 2015 financial year. On June 29, 2018, the MAC issued its initial calculation, which the hospital contested, arguing that the contractor failed to include all Medicaid eligible days, including unpaid eligible days. Medicaid-eligible days are days that individuals can receive publicly-funded medical assistance, but may not have initially due to billing issues, or going over their qualified costs

The hospital's appeal was dismissed on August 2023, with the court asserting that Section 1115 waiver days are part of the general Medicaid eligible days and should not be treated as a distinct issue. The hospital also argues that regulatory rules and Provider Reimbursement Review Board (PRRB) guidelines on identifying specific components within an issue are consistent and confusing. 

Related: What does the Centers for Medicare and Medicaid Services (CMS) do?

What was said

According to the lawsuit, “As stated above, the MAC had already agreed to resolve the Medicaid eligible days issue through the Administrative Resolution process prior to filing its jurisdictional challenge over said issue on April 11, 2024. However, the addition of the section 1115 waiver days to the Provider’s final position paper caused the MAC to file its aforementioned jurisdictional challenge and arbitrarily disregard its previous intent to resolve the initial 303 Medicaid eligible days.” 

Related: HIPAA Compliant Email: The Definitive Guide

The big picture

While the dispute continues, the case will likely draw attention to issues related to Medicaid transparency and hospital funding. Many hospitals are reliant on this funding to serve patients, and the ruling could impact other hospitals and how their Medicaid-eligible days are calculated. 

FAQs

What is the function of CMS? 

The CMS administers Medicare and Medicaid programs. 

What is PHI?

Any health information that can identify a person, like medical records and payment details.