Judge rules in favor of physicians, hospitals in federal Downcoding lawsuit
With no appeal by state, ruling stands and Virginia budget provision paying just $15 for nearly 800 emergency medicine diagnosis codes will end
By Jeff Kelley, VACEP Communications
Article originally published May 15
June 28, 2023 update: The Virginia Department of Medical Assistance Services (DMAS) and the Centers for Medicaid and Medicare Services (CMS) had until June 26 to file an appeal to this ruling, but did not. Therefore, the federal judge’s ruling stands, saying that Virginia’s downcoding policy is not in accordance with federal law and the prudent layperson standard and should be removed.
Virginia downcoding 101
Since 2020, Virginia’s budget has automatically cut Medicaid reimbursements for emergency department visits that are on a list of 800 emergency conditions for Medicaid patients — many of them common and acute diagnoses.
Based solely upon the patient’s final diagnosis, if the condition falls on the list, Virginia cuts Medicaid reimbursements to a paltry $15.45 per visit. That is not sustainable. Most of these conditions can be medically serious and life-threatening, and emergency physicians cannot and should not turn these patients away without providing appropriate evaluation and care.
This diagnosis list was intended to help managed-care organizations identify patients visiting the ED so frequently that they need additional assistance getting connected to other providers, like primary care and behavioral health. Instead, the list was used to penalize EDs while doing nothing to aid patients with high ED utilization.
Operationally, DMAS is in the process of updating software to end downcoding. Once fixed, they will automatically pay for downcodes that have occurred since the ruling on April 27. Medicaid MCOs are doing the same. Providers will not need to resubmit these claims, and once system changes are complete, new timely claims submitted for dates of service from April 27 forward will be processed without the Downcoding Provision.
Original article (from May 15):
VACEP has been a party in a federal lawsuit asking the Virginia Department of Medical Assistance Services (DMAS) and CMS to remove the harmful “Downcoding” provision in the Virginia budget. This policy is cutting Medicaid payments to emergency departments for a number of conditions that DMAS/CMS deemed to be preventable or avoidable.
In late April, a federal judge in Richmond ruled in favor of hospitals and physicians, saying the Virginia policy is not in accordance with federal law and the prudent layperson standard, and should be removed. Through the Virginia Hospital & Healthcare Association, we have contacted DMAS about the decision and asked for a meeting to discuss its application. We have also been contacted by several legislators who are aware of the decision.
The ruling is subject to appeal by CMS and DMAS, and they have until June 26 to file. VACEP leadership is working with the Governor’s Administration on next steps.
For more on Downcoding, visit our dedicated page on the issue.
