The federal District Court for the District of Columbia on March 2 vacated a 2017 Centers for Medicare & Medicaid (CMS) final rule requiring Medicaid disproportionate share hospital (DSH) limit calculations to include Medicare and commercial insurance payments.

The decision marks the second time a federal court has invalidated the final rule. Like the previous ruling out of Missouri, the D.C. court held that the third-party payer policy in the final rule conflicts with federal DSH statute and therefore is beyond CMS’ statutory authority.

This is the first ruling to explicitly issue a decision with nationwide impact. Previous rulings invalidated guidance issued by CMS in 2010 on the same topic, but only on a state-specific basis.

Contact Senior Director of Policy Erin O’Malley at eomalley@essentialhospitals.org or 202.585.0127 with questions.

This article was prepared for America’s Essential Hospitals by Eyman Associates and does not constitute legal advice.