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 or 202.585.0127 with questions.

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