SEATTLE (CN) – States may only include patients eligible for Medicaid when providing reimbursements to hospitals that treat a high volume of needy people, the 9th Circuit ruled.
Hospitals in Washington had wanted the state to calculate Medicare reimbursement grants based on patients whose care was indirectly paid by the state through programs funded by its Medicaid grant, even though the patients were not “categorically or medically” eligible.
Medicare is designed to cover older and disabled people, but Washington extends hospital care to two other populations – General Assistance-Unemployable (GAU) and Medically Indigent (MI) – that do not qualify for Medicare or Medicaid but have similar incomes to those who do qualify. Medicaid is a federal grant program used by the states to provide medical services to elderly, blind or disabled persons, or families with dependent children.
The intermediary responsible for distributing Medicare funds declined to adopt the hospitals’ comprehensive reimbursement calculation, and excluded GAU and MI patients.
A reimbursement oversight board overruled the intermediary and reversed the decision on appeal, but Secretary of Health and Human Services Kathleen Sebelius intervened and upheld the intermediary’s interpretation of regulations for Medicare reimbursement.
The 18 hospitals appealed, noting that GAU and MI patient populations are mentioned in Washington’s Medicaid plan and indirectly benefit from federal Medicaid dollars. Such patients are “eligible for medical assistance” under Washington’s plan, the hospitals claim, and should therefore be included in calculating reimbursement adjustments for Medicare.
Writing for a three-judge panel, Judge Robert Beezer rejected this interpretation and wrote that eligibility under state programs funded by Medicaid “is unambiguously limited to those eligible for traditional Medicaid.”
GAU and MI patients may be covered under Washington’s health plan, which is funded in part by Medicaid, but that does not mean they can be included in calculating Medicare reimbursements. “Adopting this interpretation would ignore the different funding mechanisms Congress created within the Social Security Act for the Medicare and Medicaid … adjustments,” Beezer wrote.
The ruling states that “much of the confusion in this case” comes from the fact that Washington uses a consolidated reimbursement system that appears to mingle all of the funding from Medicare, Medicaid and state sources of revenue when paying hospitals. This gives the illusion that federal funds cover the GAU and MI patients.
“Even though federal Medicaid money indirectly subsidized the medical treatment received by Washington’s GAU and MI populations … the federal government was not spending its funds for the GAU and MI populations’ care,” Beezer wrote.