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The purpose of the Change Request 13413 is to provide information and implementation instructions for CMS-1739-F | CMS issued June 9, 2023, which concerned the treatment of Medicare Part C days for the purposes of calculating Medicare DSH.

The MAC will verify the written notification it received from the provider and determine DSH payments for verified realignment requests in accordance with CR 13413. Below is the excerpt from the CR that CMS has posted on the CMS website at 2024 Transmittals.

All Correspondence or questions should be sent to ssirealignment@noridian.com

On June 9, 2023, in response to the Supreme Court’s ruling in Azar v. Allina Health Services, 139 S. Ct. 1804 (2019), the Centers for Medicare & Medicaid Services (CMS) issued a final rule (CMS-1739-F) that established a policy on the treatment of Part C days for purposes of calculating a hospital’s disproportionate patient percentage (DPP) for cost reporting periods starting before October 1, 2013 (that is, for cost reporting periods starting before Federal fiscal year (FY) 2014) (88 FR 37772). In this rule, CMS expressed its view that, in light of Becerra v. Empire Health Foundation, for Valley Hospital Medical Center, 597 U.S. 424, 435 (June 24, 2022), it is clear that the DSH statute requires CMS to count Part C days in the Medicare fraction because Medicare beneficiaries remain "entitled to [Medicare Part A]" regardless of whether they enroll in Part C, and thus there was no statutory gap to fill that would require rulemaking under Allina. Nonetheless, because Empire did not squarely address whether Part C enrollees remain "entitled to Part A," CMS adopted, through retroactive rulemaking for cost reporting periods starting before October 1, 2013, the same policy of including Part C days in the Medicare fraction (also known as the "SSI fraction" or "SSI ratio") that was prospectively adopted in the FY 2014 IPPS final rule. Under the policy articulated in this rule, CMS will calculate a hospital’s DPP by including Part C days in the Medicare fraction and excluding them from the numerator of the Medicaid fraction.

42 CFR 412.106(b)(3) allows a hospital the opportunity to request to have its SSI ratio realigned based on its cost reporting period (as opposed to the Federal fiscal year). Under this regulation, a realignment will be performed once per hospital per cost reporting period, and the resulting percentage becomes the hospital’s official SSI ratio for that period. After the Supreme Court’s Allina decision, CMS held processing of requests for SSI ratio realignment for cost reporting periods starting before FY 2014 due to a lack of policy established through notice-and-comment rulemaking regarding the treatment of Part C days for that period of time. With the issuance of the final rule (CMS-1739-F), the processing of realignment requests for cost reporting periods starting before FY 2014 will resume.

This letter explains the process for hospitals to confirm or make new realignment requests for cost reporting periods starting before October 1, 2013.

Posting of Cost Reporting Period-Based SSI Ratios for Cost Reporting Periods Starting Before October 1, 2013

Cost reporting period-based SSI ratios for cost reporting periods starting before October 1, 2013, are available on the CMS website at Disproportionate Share Hospital (DSH).

Realignment Requests for Cost Reporting Periods Starting Before October 1, 2013

Existing Realignment Requests: For any realignment requests for cost reporting periods starting before October 1, 2013, that the provider submitted to its MAC prior to August 1, 2024, providers MUST confirm these existing requests with their MAC before they can be processed.

New Realignment Requests: In addition to confirming existing requests, providers may also request realignments for other cost reporting periods starting before October 1, 2013, in accordance with CMS regulations.

Information to Send to MACs for Existing or New Realignment Requests: To confirm an existing request or make a new request for cost reporting periods starting before October 1, 2013, the provider must send a written notification to the MAC which contains the following information:

• Cost report begin date
• Cost report end date

The MAC will verify the written notification it received from the provider and determine DSH payments for verified realignment requests in accordance with CR 13413 (posted on the CMS website at 2024 Transmittals).

Finally, we note that, in accordance with the existing rules regarding realignment requests (42 CFR 412.106(b)(3)), once a hospital has confirmed its request for realignment of cost reporting periods starting before October 1, 2013 (in the case of requests made prior to August 1, 2024, or made a new request for such a reporting period, that request may not be withdrawn. The realigned ratio for the cost reporting period posted at Disproportionate Share Hospital (DSH) will be the hospital’s ratio, regardless of whether the ratio is higher or lower than the Federal fiscal year ratio.