I 

111TH CONGRESS 

1ST SESSION H. R. 4250 

To direct the Secretary of Health and Human Services to revise regulations 

implementing the statutory reporting and auditing requirements for the 

Medicaid disproportionate share hospital (‘‘DSH’’) payment program to 

be consistent with the scope of the statutory provisions and avoid substantive changes to preexisting DSH policy. 

IN THE HOUSE OF REPRESENTATIVES 

DECEMBER 9, 2009 

Mr. MELANCON (for himself, Mr. ALEXANDER, Mr. CAO, Mr. CASSIDY, Mr. 

BOUSTANY, and Mr. FLEMING) introduced the following bill; which was 

referred to the Committee on Energy and Commerce 

A BILL 

To direct the Secretary of Health and Human Services to 

revise regulations implementing the statutory reporting 

and auditing requirements for the Medicaid disproportionate share hospital (‘‘DSH’’) payment program to be 

consistent with the scope of the statutory provisions and 

avoid substantive changes to preexisting DSH policy. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE; FINDINGS. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Medicaid DSH Integrity Act’’. 


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1 (b) FINDINGS.—Congress finds the following: 

2 (1) Medicaid disproportionate share hospital 

3 (‘‘DSH’’) payments are a critical source of funding 

4 for many safety net hospitals that provide essential 

5 access to care for the poor and uninsured. 

6 (2) The statutory reporting and auditing re7 quirements added by the Medicare Prescription 

8 Drug Improvement and Modernization Act of 2003 

9 are important to provide assurances to Congress, the 

10 Department of Health and Human Services, States 

11 and the public that DSH funds are being used to 

12 fulfill their intended statutory purpose of assisting 

13 hospitals that serve a disproportionate share of low14 income individuals. 

15 (3) The Centers for Medicare & Medicaid Serv16 ices issued Medicaid DSH auditing and reporting 

17 regulations (as defined in section 2(d)) that, in im18 plementing those reporting and auditing require19 ments, also implemented changes to underlying DSH 

20 policy which have the effect of narrowing the scope 

21 of DSH payments that may be made for many 

22 States. 

23 (4) In adding those reporting and auditing re24 quirements, Congress did not intend to alter the def25 inition of DSH-eligible costs or to narrow the scope 


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1 of DSH payments that may be made under the ex2 isting DSH program and the substantive standards 

3 in section 1923(g) of the Social Security Act (42 

4 U.S.C. 1396r–4(g)). 

5 (5) The policy changes in such regulations 

6 would result in DSH payment reductions of millions 

7 of dollars to critical safety net providers that have 

8 long participated in the Medicaid DSH program 

9 under payment methodologies previously approved 

10 by CMS. 

11 SEC. 2. REVISION OF MEDICAID DSH AUDITING AND RE12 PORTING REGULATIONS. 

13 (a) IN GENERAL.—Not later than 60 days after the 

14 date of enactment of this Act, the Secretary of Health and 

15 Human Services, in consultation with States and dis16 proportionate share hospitals (as determined for purposes 

17 of the Medicaid DSH program), shall— 

18 (1) indicate, in appropriate guidance, that CMS 

19 does not intend to enforce any changes in policy re20 lated to the calculation of the limits under section 

21 1923(g)(1)(A) of the Social Security Act that were 

22 contained in the Medicaid DSH auditing and report23 ing regulations; and 

24 (2) publish an interim final rule to revise the 

25 Medicaid DSH auditing and reporting regulations at 


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1 sections 447.299(c) and 455.304 of title 42, Code of 

2 Federal Regulations, as necessary— 

3 (A) to correct policy changes related to the 

4 calculation of the limits under section 

5 1923(g)(1)(A) of the Social Security Act; 

6 (B) to provide appropriate guidance for 

7 otherwise implementing the Medicaid DSH au8 diting and reporting regulations; and 

9 (C) to provide for the regulatory changes 

10 described in subsection (b). 

11 (b) REGULATORY CHANGES TO BE INCLUDED IN

12 NEW INTERIM FINAL RULE.—The regulatory changes de13 scribed in this subsection are the following: 

14 (1) In defining the costs of furnishing services 

15 to individuals with no health insurance (or other 

16 source of third-party coverage), CMS shall permit 

17 inclusion of all costs related to services provided to 

18 patients with no insurance for the service rendered, 

19 even if the patient has insurance that covers other 

20 services. The receipt by a hospital of nominal pay21 ments related to a service shall not constitute health 

22 insurance or a source of third-party coverage. 

23 (2) Consistent with prior guidance of CMS con24 tained in a letter to State Medicaid directors on Au25 gust 17, 1994, CMS shall permit States to use the 


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1 definition of allowable costs in its State Medicaid 

2 plan, or any other definition, in computing such 

3 costs as long as the costs determined under such a 

4 definition do not exceed the amounts that would be 

5 allowable under the Medicare principles of cost reim6 bursement. CMS shall interpret the language of the 

7 audit requirement at section 1923(j)(2)(C) of the 

8 Social Security Act describing ‘‘inpatient hospital 

9 and outpatient hospital services’’ to be consistent 

10 with the term ‘‘hospital services’’ as used in section 

11 1923(g)(1)(A) of such Act and not to indicate an in12 tent by Congress for a more restrictive interpreta13 tion of such section 1923(g)(1)(A). 

14 (3) CMS shall, as appropriate, revise the Gen15 eral DSH Audit and Reporting Protocol referenced 

16 in the Medicaid DSH auditing and reporting regula17 tions and issued at the same time as those regula18 tions, in particular, to permit the use of either an 

19 overall cost-to-charge ratio or departmental cost-to20 charge ratios. 

21 (4) CMS shall revise section 455.304(d)(2) of 

22 title 42, Code of Federal Regulations, to permit al23 ternative methodologies for determining actual costs, 

24 including through trending forward costs from prior 

25 years. 


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1 (c) INITIATION OF REQUIREMENTS.— 

2 (1) IN GENERAL.—Section 1923(j) of the Social 

3 Security Act (42 U.S.C. 1396r–4(j)) is amended by 

4 striking ‘‘2004’’ and inserting ‘‘2008’’. 

5 (2) EFFECTIVE DATE.—The amendment made 

6 by paragraph (1) shall be effective as if included in 

7 the enactment of the Medicare Prescription Drug, 

8 Improvement, and Modernization Act of 2003 (Pub9 lic Law 108–173). 

10 (d) DEFINITIONS.—In this Act: 

11 (1) The term ‘‘CMS’’ means the Centers for 

12 Medicare & Medicaid Services. 

13 (2) The term ‘‘Medicaid DSH auditing and re14 porting regulations’’ means the final regulation 

15 issued on December 19, 2008, and published begin16 ning at 73 Federal Register 77904. 

17 (3) The term ‘‘Medicaid DSH program’’ means 

18 the program of payment adjustments under section 

19 1923 of the Social Security Act (42 U.S.C. 1396r– 

20 4). 

21 (4) The term ‘‘Secretary’’ means the Secretary 

22 of Health and Human Services, acting through 

23 CMS. 

Æ 


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