Medicare Compliance & Reimbursement

Rural facilities may be more likely to qualify for disproportionate share hospital payments than they think. Witness the case of District Memorial Hospital of Southwestern North Carolina in Andrews, NC, which on May 12 scored a legal victory against the Department of Health and Human Services over how swing bed days factor into DSH calculations. At issue in the case was whether days during which swing beds were utilized may be included in the calculation of patient days for DSH purposes. The hospital said yes, based on regulatory language under which patient days should be tallied in "areas of the hospitals that are subject to the prospective payment system." The hospital reasoned that "areas" means just what it says: geographic areas of the hospital. HHS countered that "areas" has a more far-reaching, if more esoteric, definition that would exclude swing beds. In District Memorial Hospital v. Thompson (No. 2:01CV259C), the U.S. District Court for the Western District of North Carolina nixed HHS' broader - and more nebulous - take on the rule, maintaining that the agency is bound by the plain meaning of the regulation which, in the end, HHS itself wrote. That finding means District Memorial will be entitled to more than $600,000 in DSH payments that had previously been rejected. Lesson Learned: Small providers who fight back against distorted takes on reimbursement rules can prevail - if they're persistent.