New DSH Proposed Rule Under Review at OMB - July 12, 2011

The U.S. Department of Health and Human Services (HHS) recently submitted a proposed rule for review to the Office of Management of Budget (OMB) that would clarify the definition of individuals who have no health coverage for purposes of calculating the limits on Medicaid disproportionate share hospital (DSH) reimbursement to safety net hospitals. Specifically, the rule will clarify guidance issued in 2008 as part of a Bush Administration rule (the DSH Audit Rule) that limited the types of costs a hospital could claim as uncompensated care. In doing so, HHS says, the proposed rule is designed to avoid “unintended financial impact” stemming from the guidance. NAPH has pushed HHS to revise the DSH Audit Rule since it was first proposed. While the DSH Audit Rule is primarily intended to develop new standards for auditing DSH hospitals, it has also scaled back the types of unreimbursed costs eligible for DSH funding. NAPH will continue to monitor the proposed rule and provide additional details as soon as they are released to the general public. Presently, it is not clear how long OMB will take to review the rule before it is released by HHS for comment.