1 TAC §355.8065
The Health and Human Services Commission (HHSC) adopts an
amendment to §355.8065 (concerning reimbursement to disproportionate
share hospitals). The adopted amendment adds references to managed care data
and clarifies the language in the rule. There is no change to the graphic
in subsection (f), paragraph (2), subparagraph (B). This rule is adopted with
changes to the proposed text as published in the October 26, 2001, issue of
the
Texas Register
(26 TexReg 8435).
The following comments were received by HHSC concerning the proposed rule.
Following each comment is the response from the commission.
Comment: Concerning §355.8065, the Commission received several comments
in support of the rule changes in general.
Response: No response from the Commission is necessary.
Comment: Concerning the fixed amount of funds, the commission received
two comments that changing the recipients of a fixed amount of funds would
advantage some hospitals and disadvantage other hospitals.
Response: The Commission understands the commenter's concerns. However,
federal law establishes a fixed amount of funds.
Comment: Concerning inflation methodology in §355.8065(b)(12), one
commenter suggested that the commission add specific language similar to what
appears in §355.8063, rather than referencing the rule.
Response: The commission agrees and added the language as suggested to
the section on inflation methodology.
Comment: Concerning a redundant sentence in §355.8065(g)(3), one commenter
suggested its deletion.
Response: The commission agrees and deleted the redundant sentence.
Comment: Concerning §355.8065(e)(5), a commenter suggested that adding
the word "urban" to the section would clarify the commission's intent.
Response: The commission agrees and added the word.
Comment: Concerning §355.8065(b)(26), a commenter asked why the state
was changing the language regarding state and local revenue.
Response: The commission changed this wording because of inconsistency
in interpretation of the word revenue. The commission's intent is for hospitals
to report inpatient payments received from state and local governments. The
change was made to clarify the language and to improve consistency in the
data submitted to HHSC.
Comment: Concerning §355.8065(b)(23), one commenter asked how the
commission will determine and verify the number of days for which a patient
was eligible for Medicaid but for which claims were not filed.
Response: The commission expects hospitals to furnish sufficient patient
record detail to verify that the inpatient services occurred. The commission
will then verify the patient's eligibility for Medicaid services for the time
in question.
Comment: Concerning §355.8065(b)(9), a commenter asked the commission
to consider excluding distinct part units from the calculation of a hospital's
gross inpatient revenue.
Response: The commission will consider this suggestion in the future.
Comment: Concerning §355.8065(b)(24), one commenter asked the commission
to credit a hospital's potential Medicaid inpatient payments, foregone because
of selective contracting, towards its actual Medicaid inpatient payments.
Response: The commission will consider this suggestion in the future.
The amendment is adopted under the Texas Government Code, §531.033,
which provides the commissioner of HHSC with broad rulemaking authority; Human
Resources Code, §32.021, and the Texas Government Code, §531.021(a),
which provides the Health and Human Services Commission (HHSC) with the authority
to administer the federal medical assistance (Medicaid) program in Texas;
and the Texas Government Code, §531.021(b), which provides HHSC with
the authority to propose and adopt rules governing the determination of Medicaid
reimbursements.
The adopted amendment affects the Human Resources Code, Chapter 32 and
the Government Code, Chapter 531.
§355.8065.Additional Reimbursement to Disproportionate Share Hospitals.
(a)
Introduction. Hospitals participating in the Texas Medical
Assistance (Medicaid) program that meet the conditions of participation and
that serve a disproportionate share of low-income patients are eligible for
additional reimbursement from the disproportionate share hospital fund. The
single state agency or its designee shall establish each hospital's eligibility
for and amount of reimbursement as specified in this section. For purposes
of Medicaid disproportionate share eligibility determination, a multi-site
hospital is considered as one provider unless it has separate Medicaid cost
reports for each site. To verify data referred to in this section, hospitals
must allow state personnel access to the hospital and its records.
(b)
Definitions. For purposes of this section, the following
words and terms, shall have the following meanings, unless the context clearly
indicates otherwise.
(1)
Adjusted hospital specific limit--A hospital specific limit
trended forward to account for inflation update factor since the base year.
(2)
Bad debt charges--Uncollectible inpatient and outpatient
charges that result from the extension of credit. Bad debt charges are used
in the calculation of charges attributed to uninsured patients as defined
in paragraph (5) of this subsection, and are used only in the limited circumstances
described in subsection (f)(2)(D)(iv) of this section.
(3)
Charity care--The unreimbursed cost to a hospital of providing,
funding, or otherwise financially supporting health care services on an inpatient
or outpatient basis to a person classified by the hospital as financially
or medically indigent or providing, funding, or otherwise financially supporting
health care services provided to financially indigent patients through other
nonprofit or public outpatient clinics, hospitals, or health care organizations.
(4)
Charity charges--Total amount of hospital charges for inpatient
and outpatient services attributed to charity care in a hospital fiscal year.
These charges do not include bad debt charges, contractual allowances or discounts
(other than for indigent patients not eligible for medical assistance under
the approved Medicaid state plan); that is, reductions or discounts in charges
given to other third party payers such as, but not limited to, health maintenance
organizations, Medicare, or Blue Cross. Charity charges are used in the calculation
of charges attributed to uninsured patients as defined in paragraph (5) of
this subsection, only in the limited circumstances described in subsection
(f)(2)(D)(iv) of this section. The amount of total charity charges must be
consistent with the amount reported on the Texas Department of Health's (department)
annual hospital survey.
(5)
Cost of services to uninsured patients--Inpatient and outpatient
charges to patients who have no health insurance or other source of third
party payment for services provided during the year, multiplied by the hospital's
ratio of costs to charges (inpatient and outpatient), less the amount of payments
made by or on behalf of those patients. Uninsured patients are patients who
have no health insurance or other source of third party payments for services
provided during the year. Uninsured patients include those patients who do
not possess health insurance that would apply to the service for which the
individual sought treatment.
(6)
Cost-to-charge ratio (inpatient only)--Hospital's overall
inpatient cost-to-charge ratio, as determined from its Medicaid cost report
it submitted for its fiscal year ending in the previous calendar year. The
latest available Medicaid cost report will be used in the absence of the cost
report for the hospital fiscal year ending in the previous calendar year.
(7)
Cost-to-charge ratio (inpatient and outpatient)--Hospital's
overall cost-to-charge ratio, as determined from its Medicaid cost report
it submitted for its fiscal year ending in the previous calendar year. The
latest available Medicaid cost report will be used in the absence of the cost
report for the hospital fiscal year ending in the previous calendar year.
(8)
Financially indigent--An uninsured or underinsured person
who is accepted for care with no obligation or a discounted obligation to
pay for the services rendered based on the hospital's eligibility system.
(9)
Gross inpatient revenue--Amount of gross inpatient revenue
(charges) reported by the hospital in the appropriate part of the Medicaid
cost report it submitted for its fiscal year ending in the previous calendar
year. Gross inpatient revenue excludes revenue related to the professional
services of hospital-based physicians, swing bed facilities, skilled nursing
facilities, intermediate care facilities, and other revenue that is unidentified.
The latest available Medicaid cost report will be used in the absence of the
cost report for the hospital fiscal year ending in the previous calendar year.
(10)
Hospital eligibility criteria--The financial criteria
used by a hospital to determine if a patient is eligible for charity care.
The system includes income levels and means testing indexed to the federal
poverty guidelines; provided, however that a hospital may not establish an
eligibility system that sets the income level eligible for charity care lower
than that required by counties under the Texas Health and Safety Code, §61.023,
or higher, in the case of the financially indigent, than 200% of the federal
poverty guidelines. A hospital may determine that a person is financially
or medically indigent pursuant to the hospital's eligibility system after
health care services are provided.
(11)
Hospital specific limit--The sum of the following two
measurements:
(A)
the Medicaid shortfall; and
(B)
cost of services to uninsured patients.
(12)
Inflation update factor--The commission or its designee
applies a cost of living index to a hospital's unreimbursed Medicaid costs
and its cost of treating uninsured patients. The index used is the greater
of:
(A)
the Centers for Medicare and Medicaid Services (CMS) Market
Basket Forecast (PPS Hospital Input Price Index) based on the report issued
for the federal fiscal year quarter ending in March of each year, adjusted
for the state fiscal year by summing one-third of the annual forecasted rate
of the index for the current calendar year and two-thirds of the annual forecasted
rate of the index for the next calendar year; or
(B)
an amount determined by selecting the lesser of the following
two measures:
(i)
the change in total charges per case for the latest year
available compared to total charges per case for the previous year; or
(ii)
the change in the Texas medical consumer price index-urban
(that is, the arithmetic mean of the Houston and Dallas/Fort Worth medical
consumer price indices for urban consumers) for the latest year available
compared to the Texas medical consumer price index-urban for the previous
year.
(13)
Low-income days--Number of days derived by multiplying
a hospital's total inpatient census days by its low-income utilization rate.
(14)
Low-income utilization rate--The result of the following
computation: ((Title XIX inpatient hospital payments plus inpatient payments
received from state and local governments) divided by (gross inpatient revenue
multiplied by cost-to-charge ratio)) plus ((total inpatient charity charges
minus inpatient payments received from state and local governments) divided
by (gross inpatient revenue)).
(15)
Medicaid inpatient utilization rate--Fraction expressed
as a percentage, the numerator of which is the hospital's number of inpatient
days attributable to patients who (for these days) were eligible for medical
assistance under a state plan, and the denominator of which is the total number
of the hospital's inpatient days in that period. The term "inpatient day"
includes each day in which an individual (including a newborn) is an inpatient
in the hospital, whether or not the individual is in a specialized ward and
whether or not the individual remains in the hospital for lack of suitable
placement elsewhere.
(16)
Medicaid shortfall--The cost of services (inpatient and
outpatient) furnished to Medicaid patients, less the amount paid under the
nondisproportionate share hospital payment method under the state plan.
(17)
Medically indigent--A person whose medical or hospital
bills after payment by third-party payers exceed a specified percentage of
the patient's annual gross income, determined in accordance with the hospital's
eligibility system, and the person is financially unable to pay the remaining
bill.
(18)
Medicare inpatient utilization rate--Medicare inpatient
days divided by total inpatient census days.
(19)
Payments received--Payments received from uninsured patients
from or on behalf of uninsured patients as defined in paragraph (5) of this
subsection.
(20)
Rural area--Area outside a Metropolitan Statistical Area
(MSA) or a Primary Metropolitan Statistical Area (PMSA). MSA and PMSA are
defined by the Office of Management and Budget.
(21)
Total inpatient census days--Total number of a hospital's
inpatient census days during its fiscal year ending in the previous calendar
year.
(22)
Total inpatient charity charges--Total amount (excluding
bad debt charges) of the hospital's charges for inpatient hospital services
attributed to charity care (care provided to individuals who have no source
of payment, third-party or personal resources) in a cost reporting period.
The total inpatient charges attributable to charity care does not include
contractual allowances and discounts (other than for indigent patients not
eligible for medical assistance under an approved Medicaid State Plan); that
is, reduction or discounts, in charges given to other third-party payers such
as but not limited to HMOs, Medicare, or Blue Cross. The amount of total inpatient
charity charges must be consistent with the amount reported on the commission
or its designee's annual hospital survey.
(23)
Total Medicaid inpatient days--Total number of Title XIX
inpatient days based on the latest available state fiscal year data for patients
eligible for Title XIX benefits. The term excludes days for patients who are
covered for services which are fully or partially reimbursable by Medicare.
The term includes Medicaid-eligible days of care billed to managed care organizations.
Total Medicaid inpatient days includes days that were denied payment for reasons
other than eligibility. Included are inpatient days of care provided to patients
eligible for Medicaid at the time the service was provided, regardless of
whether the claim was filed or paid. These denied claims include, but are
not limited to, claims for patients whose spell of illness limits are exhausted,
or claims that were filed late. The term excludes days attributable to Medicaid
patients between the ages of 21 and 65 who live in an institution for mental
diseases. The term includes days attributable to individuals eligible for
Medicaid in other states. Total Medicaid inpatient days includes days with
dates of admissions between September 1 and August 31 (state fiscal year)
and claims finalized dates within the fiscal year and for nine months after
the end of the fiscal year (May 31).
(24)
Total Medicaid inpatient hospital payments--Total amount
of Title XIX funds, excluding Medicaid disproportionate share funds, a hospital
received for admissions during the latest available state fiscal year for
inpatient services. The term includes dollars received by a hospital for inpatient
services from managed care organizations. The term includes Medicaid inpatient
payments received by a hospital for patients eligible for Medicaid in other
states. Total Medicaid inpatient hospital payments includes payments associated
with dates of admissions between September 1 and August 31 (state fiscal year)
and dates of payments within the fiscal year and for nine months after the
end of the fiscal year (May 31).
(25)
Total operating costs--Total operating costs of a hospital
during its fiscal year ending in the calendar year before the start of the
current federal fiscal year, according to the hospital's Medicaid cost report
(tentative, or final audited cost report, if available).
(26)
Total state and local revenue--Total amount of state and
local payments a hospital received for inpatient care, excluding all Title
XIX payments, during its fiscal year ending in the previous calendar year.
Sources of state and local payments include but are not limited to County
Indigent Health Care, Children with Special Health Care Needs, Kidney Health
Care, and tax funds. Payment sources containing federal dollars are not to
be included in state and local payments. These sources include, but are not
limited to: Substance Abuse and Mental Health Services Administration, Ryan
White Title I, Ryan White Title II, Ryan White Title III, and TRICARE Foundation
Health, Medicare, and Medicare/Medicaid contractual funds and allowances.
The commission or its designee adjusts tax dollars for hospitals that report
all or none of their tax dollars received as inpatient tax dollars. To make
adjustments, the commission or its designee uses the appropriate parts of
the Medicaid cost report that the hospital submitted for its fiscal year ending
in the previous calendar year.
(27)
Urban--Area inside an MSA or PMSA.
(28)
Weighted low-income days--Low-income days multiplied by
an appropriate weighing factor.
(29)
Weighted Medicaid days--Medicaid days multiplied by an
appropriate weighing factor.
(30)
Available fund (state mental and chest hospitals)--Sum
of 100% of their adjusted hospital specific limits.
(31)
Available fund (hospitals other than mental and chest
hospitals)--Total federal fiscal year cap (state disproportionate share hospital
allotment) minus the available fund for state teaching hospitals minus the
available fund for state mental and chest hospitals.
(c)
Conditions of participation. Before the beginning of each
state fiscal year, which begins September 1, the single state agency or its
designee shall survey Medicaid hospitals to determine which hospitals meet
the state's conditions of participation. Hospitals must allow state personnel
access to the hospital and its records to ensure compliance with the conditions
of participation. Failure to meet all of the conditions of participation shall
result in ineligibility for participation in the program. These conditions
of participation do not apply to state-owned teaching hospitals as specified
in §355.8067 of this title (relating to Disproportionate Share Hospital
Reimbursement Methodology for State-Owned Teaching Hospitals). The conditions
of participation are as follows.
(1)
Hospital eligibility criteria for indigent patients needing
medical care. Each Medicaid hospital must submit to the state Medicaid director
its hospital eligibility criteria for indigent patients and the procedures
for identifying those indigent patients eligible for emergency and nonemergency
medical care. Hospital eligibility criteria should address financially indigent
people as well as the medically indigent and are indexed to the federal poverty
guidelines. Hospitals must identify the number of patients to whom they provide
charity care and must make available to state personnel sufficient records
to document the amount of charity care provided to those patients. A hospital
must allow state personnel to observe the implementation of its stated charity
policy and must permit state personnel access to the hospital or its records
evidencing charity care. Exception: State mental hospitals and state chest
hospitals are exempt. Indigent care criteria for these hospitals are defined
in state law.
(2)
Charity charge requirements. Exceptions: Urban hospitals
with combined Medicaid and Medicare inpatient utilization rates equal to or
greater than 80% are exempt. Rural and children's hospitals with combined
Medicare and Medicaid inpatient utilization rates equal to or greater than
65% are exempt. Any hospital that qualifies for Medicaid disproportionate
share funds in a state fiscal year, and that did not get Medicaid disproportionate
share funds in the previous year, is exempt from this specific condition.
State mental hospitals and state chest hospitals are exempt. The ratio of
a hospital's total inpatient and outpatient charity charges of a hospital
fiscal year must be equal to or greater than 25% of its net disproportionate
share payments received in the next state fiscal year.
(3)
Posting requirements. Each hospital must annually provide
assurances to the state Medicaid director that it posts policies informing
patients and prospective patients of its eligibility and charity care. These
policies must be posted prominently and continuously in common, patient-entry
points. Hospitals must advise all patients of the availability of no-cost
medical care and the application procedures. The posting must be in English
and Spanish.
(4)
Reporting requirements. Each hospital must report receipt
and expenditure of Medicaid disproportionate share funds to the commission
or its designee at least once a year. Each hospital must maintain records
for the receipt and expenditure of its disproportionate share funds for five
years.
(5)
Community health care assessment. Each hospital, or group
of hospitals, must annually furnish to the commission or its designee a copy,
developed at the direction of the hospital's governing board, of its assessment
of the health care needs of its community. The assessment must contain a socioeconomic
and demographic description of the hospital's service area and an assessment
of the service area's existing health care resources. The assessment must
demonstrate how the hospital is using its disproportionate share funds to
address its community health needs. Exceptions: State mental hospitals and
state chest hospitals are exempt because their expenditures are governed by
state law.
(6)
Alternative access to primary care. Each hospital must
annually report to the commission or its designee the availability of alternative
access (other than emergency care) to primary care in its community. Alternative
access to primary care includes, but is not limited to, primary care physician
offices, minor emergency centers, and primary care clinics. Hospitals must
have plans to arrange for nonemergency patients to receive care that is not
in their emergency rooms, unless they can demonstrate that there is no feasible
alternative in the community. This kind of plan includes, but is not limited
to, a hospital-based clinic for nonemergent patients referred to after triage.
Hospitals also must report their progress in treating nonemergency patients
apart from their emergency rooms. Exceptions: The following hospitals are
exempt from this condition: State mental and state chest hospitals; psychiatric
hospitals licensed by the Texas Department of Mental Health and Mental Retardation
(TXMHMR); and certain hospitals licensed as "special" by the Texas Department
of Health (department) (i.e., long-term care hospitals, ventilator hospitals,
burn institutes, and alcohol-chemical dependency hospitals); rehabilitation
hospitals; maternity hospitals; college infirmaries; contagious disease hospitals;
and hospitals for the terminally ill.
(7)
Trauma system. Disproportionate share hospitals must actively
participate in the development of a regional trauma system, which includes
trauma facility designation as defined in the state trauma laws (Health and
Safety Code, §773.111-773.120) and department rules. This condition shall
apply only if rules and procedures to designate facilities have been adopted.
Exceptions: The following hospitals are exempt from the trauma system condition:
State mental and state chest hospitals; psychiatric hospitals licensed by
TXMHMR; and certain hospitals licensed as "special" by the department (i.e.,
long term care hospitals, ventilator hospitals, burn institutes, and alcohol-chemical
dependency hospitals); rehabilitation hospitals; maternity hospitals; college
infirmaries; contagious disease hospitals; and hospitals for the terminally
ill. Pediatric and adolescent facilities are exempt from trauma facility designation
requirements until the time that state law authorizes the designation of pediatric
and/or adolescent trauma facilities.
(A)
Hospitals qualifying for the disproportionate share program
for the first time must meet the regional trauma system development participation
requirement in the first year of their participation in the disproportionate
share program, regional trauma system development participation and application
for trauma facility designation in the second year of their participation
in the disproportionate share program, regional trauma system development
participation and confirmation that a consultation survey has been scheduled
or a complete designation application packet has been submitted to the Bureau
of Emergency Management in the third year of their participation in the disproportionate
share program, regional trauma system development participation and confirmation
that a verification or designation survey has been scheduled in the fourth
year of their participation in the disproportionate share program and continued
participation and completed verification or designation survey in the fifth
year of their participation in the disproportionate share program, continued
participation and trauma facility designation in the sixth year of their participation
in the disproportionate share program, and continued participation and maintenance
of trauma facility designation in their subsequent years of participation
in the disproportionate share program. By March 1 of each year, the Bureau
of Emergency Management reports hospital participation in regional trauma
system development, application for trauma facility designation, and trauma
facility designation status to the disproportionate share program.
(B)
Hospitals shall be designated as trauma facilities under
four levels that range from "basic" (stabilization and transfer of major and
severe trauma patients) to "comprehensive" (care and management of all trauma
patients, plus education and research
(8)
Maintenance of effort. Hospital districts and city/county
hospitals with greater than 250 licensed beds in the state's largest MSAs
and PMSAs are not eligible for disproportionate share payments if local revenues
are reduced as a result of disproportionate share funds received.
(9)
Two-physician requirement. In order to qualify for disproportionate
share hospital payments, each hospital must have at least two physicians (M.D.
or D.O.) who have hospital staff privileges and who have agreed to provide
nonemergency obstetrical services to Medicaid clients. The two-physician requirement
does not apply to hospitals whose inpatients are predominantly under 18 years
old or that did not offer nonemergency obstetrical services as of December
22, 1987.
(d)
Qualifying formulas for determining disproportionate share
status. Each hospital must have a Medicaid inpatient utilization rate, at
a minimum, of 1.0%. The single state agency or its designee shall identify
the qualifying Medicaid disproportionate share providers from among the hospitals
that meet the two-physician requirement and the state's conditions of participation,
as specified in subsection (c)(1)-(9) of this section, by using the following
formulas. In the case of hospitals that have merged to form a single Medicaid
provider, the single state agency or its designee shall aggregate the data
points from the individual hospitals that now make up the single provider
to determine whether the single Medicaid provider qualifies as a Medicaid
disproportionate share hospital. Medicaid disproportionate share hospitals
shall receive payments if they merge with other hospitals during the fiscal
year, if they continue to meet the two-physician requirement, and if they
meet the other conditions of participation. Children's hospitals that do not
otherwise qualify as disproportionate share hospitals shall be deemed disproportionate
share hospitals. The formulas are as follows:
(1)
a Medicaid inpatient utilization rate at least one standard
deviation above the mean Medicaid inpatient utilization rate for all hospitals
participating in the Medicaid program: Title XIX Inpatient Days / Total Inpatient
Census Days;
(2)
for rural hospitals, a Medicaid inpatient utilization rate
greater than the mean Medicaid inpatient utilization rate for all hospitals
participating in the Medicaid program; or
(3)
a low-income utilization rate exceeding 25% but not more
than 100%. For a hospital, the low-income utilization rate is the sum (expressed
as a percentage) of the fractions calculated as follows:
(A)
the total Medicaid inpatient payments paid to the hospital,
plus the amount of payments received directly from state and local governments
for inpatient hospital care, excluding all Title XIX payments, in a hospital
fiscal year, divided by a hospital's gross inpatient revenue multiplied by
the hospital's inpatient cost-to-charge ratio for the same cost-reporting
period: (Title XIX Inpatient Hospital Payments + Total State and Local Revenue)
/ (Gross Inpatient Revenue x Cost to Charge Ratio).
(B)
the total amount of the hospital's charges for inpatient
hospital services attributable to charity care (care provided to individuals
who have no source of payment, third-party or personal resources), excluding
bad debt charges, in a cost reporting period, minus the amount of payments
for inpatient hospital services received directly from state and local governments,
excluding all Title XIX payments, in a hospital fiscal year, divided by the
total amount of the hospital's charges for inpatient services in the hospital
in the same period. The total inpatient charges attributable to charity care
will not include contractual allowances and discounts (other than for indigent
patients not eligible for medical assistance under an approved Medicaid state
plan); that is, reductions or discounts in charges given to other third-party
payers such as but not limited to HMOs, Medicare, or Blue Cross: (Total Inpatient
Charity Charges - Total State and Local Payments) / Gross Inpatient Revenue.
(4)
total Medicaid inpatient days at least one standard deviation
above the mean Medicaid inpatient days for all hospitals participating in
the Medicaid program.
(5)
Total Medicaid inpatient days at least 75 percent of one
standard deviation above the mean Medicaid inpatient days for all hospitals,
participating in the Medicaid program, in urban counties with populations
of 250,000 persons or less, according to the most recent decennial census.
(e)
Determining disproportionate share status. To determine
Medicaid disproportionate share status:
(1)
the single state agency arrays each hospital's Medicaid
utilization rate in descending order. The single state agency first selects
hospitals meeting the two-physician requirement or one of the exceptions to
the requirement whose Medicaid utilization rates are at least one standard
deviation above the mean Medicaid inpatient utilization rate for all hospitals
participating in the Medicaid program. The state considers these hospitals
to be Medicaid disproportionate share hospitals;
(2)
the single state agency arrays each rural hospital's Medicaid
utilization rate in descending order. The single state agency then selects
rural hospitals meeting the two-physician requirement or one of the exceptions
to the requirement whose Medicaid utilization rate is above the mean Medicaid
utilization rate for all hospitals participating in the Medicaid program.
The state considers these hospitals to be Medicaid disproportionate share
hospitals;
(3)
the single state agency then arrays each remaining hospital's
low income utilization rate in descending order. The single state agency selects
hospitals meeting the two-physician requirement or one of the exceptions to
the requirement whose low income utilization rates are greater than 25%. The
state considers these hospitals to be Medicaid disproportionate share hospitals;
(4)
the single state agency arrays each remaining hospital's
total Medicaid inpatient days in descending order. The single state agency
selects hospitals meeting the two-physician requirement or one of the exceptions
to the requirement whose total inpatient Medicaid days is at least one standard
deviation above the mean Medicaid inpatient days for all hospitals participating
in the Medicaid program. The state considers these hospitals to be Medicaid
disproportionate share hospitals.
(5)
the single state agency arrays each remaining hospital's
total Medicaid inpatient days in descending order. The single state agency
selects hospitals, located in urban counties with populations of 250,000 persons
or less, meeting the two-physician requirement or one of the exceptions to
the requirement, whose total Medicaid inpatient days is at least 75 percent
of one standard deviation above the mean Medicaid inpatient days for all hospitals
participating in the Medicaid program in urban counties of 250,000 persons
or less, according to the most recent decennial census. The state considers
these hospitals to be Medicaid disproportionate share hospitals.
(f)
Reimbursing Medicaid disproportionate share hospitals.
The department shall reimburse Medicaid disproportionate share hospitals on
a monthly basis. Monthly payments will equal one-twelfth of annual payments
unless it is necessary to adjust the amount because payments will not be made
for a full 12-month period, to comply with the annual state disproportionate
share hospital allotment, or to comply with other state or federal disproportionate
share hospital program requirements. Before the start of the next state fiscal
year, the department determines the size of the available funds to reimburse
disproportionate share hospitals for the next state fiscal year, which begins
each September 1. The funds available to reimburse the state chest hospitals
and state mental hospitals equal the total of their adjusted hospital specific
limits. The available fund for the remaining hospitals equals the lesser of
the funds remaining in the state's annual disproportionate share hospital
allotment or the sum of qualifying hospitals' adjusted hospital specific limits.
Payments shall be made in the following manner, unless the department determines
the hospital's proposed reimbursement has exceeded its specific limit.
(1)
A state chest hospital (facility of the Texas Department
of Health) or a state mental hospital (facility of the Texas Department of
Mental Health and Mental Retardation) that meets the requirements for disproportionate
share status and provides inpatient psychiatric care or inpatient hospital
services receives annually 100% of its adjusted hospital specific limit.
(2)
For the remaining hospitals, payments will be based on
both weighted inpatient Medicaid days and weighted low income days. The department
weighs each hospital's total inpatient Medicaid days and low income days by
the appropriate weighing factor. The department defines a low income day as
a day derived by multiplying a hospital's total inpatient census days from
its fiscal year ending in the previous calendar year by its low income utilization
rate. Hospital districts and city/county hospitals with greater than 250 licensed
beds in the state's largest MSAs shall receive weights based proportionally
on the MSA population according to the most recent decennial census. MSAs
with populations greater than or equal to 150,000, according to the most recent
decennial census, are considered as the "largest MSAs." Children's hospitals
also shall receive weights because of the special nature of the services they
provide. All other hospitals receive weighing factors of 1.0. The inpatient
Medicaid days of each hospital shall be based on the latest available state
fiscal year data for patients entitled to Title XIX benefits. The available
fund shall be divided into two parts. One half of the available fund will
reimburse each qualifying hospital on a monthly basis by its percent of the
total inpatient Medicaid days. One-half of the available fund will reimburse
each qualifying hospital by its percent of the total low income days. The
department determines whether hospitals in rural areas will receive 5.5% or
more of the gross disproportionate share hospital funds for non-state hospitals.
If hospitals in rural areas will receive at least 5.5% of the gross non-state
hospitals funds, the department will reimburse them using existing principles.
If hospitals in rural areas will not receive at least 5.5% of gross non-state
hospital funds, the department will reimburse them at 5.5% of non-state hospital
funds, using existing principles. Reimbursement for the remaining hospitals
is determined monthly as follows.
(A)
The single state agency or its designee determines the
average monthly number of weighted Medicaid inpatient days and weighted low-income
days of each qualifying hospital.
(B)
A qualifying hospital receives a monthly disproportionate
share payment based on the following formula:
Figure: 1 TAC §355.8065(f)(2)(B) (No change.)
(C)
All MSA population data are from the most recent decennial
census. The specific weights for certain hospital districts and children's
hospitals are as follows:
(i)
Children's hospitals are weighted at 1.25.
(ii)
MSAs with populations greater than or equal to 150,000
and less than 300,000 are weighted at 2.75.
(iii)
MSAs with populations greater than or equal to 300,000
and less than 1 million are weighted at 3.0.
(iv)
MSAs with populations greater than or equal to 1 million
and less than 3 million are weighted at 3.25.
(v)
MSAs with populations greater than or equal to 3 million
are weighted at 3.75.
(D)
The department or its designee determines the hospital
specific limit for each disproportionate share hospital. This limit is the
sum of a hospital's Medicaid shortfall, as defined in subsection (b)(16) of
this section, and its cost of services to uninsured patients, as defined in
subsection (b)(5) of this section, multiplied by the appropriate inflation
update factor, as provided for in subsection (g)(2)(E) of this section.
(i)
The Medicaid shortfall includes total Medicaid billed charges
and any Medicaid payment made for the corresponding inpatient and outpatient
services delivered to Texas Medicaid clients, as determined from the hospital's
fiscal year claims data, regardless of whether the claim was paid. These denied
claims include, but are not limited to, patients whose spell of illness claims
were exhausted, or payments were denied due to late filing. See subsection
(b)(16) of this section for definition of "Medicaid shortfall."
(ii)
The total Medicaid billed charges for each hospital are
converted to cost, utilizing a calculated cost-to-charge ratio (inpatient
and outpatient). The department or its designee determines that ratio by using
the hospital's Form HCFA 2552, Hospital and Hospital Health Care Complex Cost
Report, that was submitted for the fiscal year ending in the previous calendar
year. The department or its designee uses the latest available Medicaid cost
report in the absence of the Medicaid cost report submitted in the fiscal
year ending in the previous calendar year. To determine the cost-to-charge
ratio (inpatient and outpatient) for each hospital, the department or its
designee uses the total cost from the HCFA 2552, Worksheet B, Part I, Column
25, and total charges from the HCFA 2552, Worksheet C Part I, Column 6. The
ratio is the total cost divided by the total gross patient charges.
(iii)
The commission or its designee determines the cost of
services to patients who have no health insurance or source of third party
payments for services provided during the fiscal year for each hospital. Hospitals
are surveyed each year to determine charges that can be attributed to patients
without insurance or other third party resources. The charges from reporting
hospitals are multiplied by each hospital's cost-to-charge ratio (inpatient
and outpatient) to determine the cost.
(iv)
Hospitals that do not respond to the survey, or that are
unable to determine accurately the charges attributed to patients without
insurance, shall have their bad debt charges as defined in subsection (b)(2)
of this section, and their charity charges as defined in subsection (b)(4)
of this section, reduced by a percentage derived from a representative sample
of hospitals to be determined annually by the commission or its designee.
The commission or its designee derives the percentages using the following
formula; for each specific category of hospitals listed in clause (v) of this
subparagraph, the commission or its designee sums the total amount of charges
for patients without health insurance or other third party payments. For each
specific category of hospitals listed in clause (v) of this subparagraph,
the commission or its designee sums the charity and bad debt charges. For
each specific category of hospitals listed in clause (v) of this subparagraph,
the department then divides the charges for patients without health insurance
or other third party payments by the sum of charity and bad debt charges.
The commission or its designee then uses the resulting ratio for each specific
category of hospitals listed in clause (v) of this subparagraph in the following
manner. Individual hospitals that do not respond to the survey, or that are
unable to accurately determine the charges attributed to patients without
insurance have their hospital's individual sum of bad debt and charity charges
multiplied by the appropriate ratio for the specific hospital category. After
the commission or its designee has calculated a value for the charges for
patients without health insurance or other source of third party payment for
each individual hospital, the commission or its designee multiplies each hospital's
calculated value by that hospital's cost-to-charge ratio (inpatient and outpatient)
to obtain the proxy cost of services delivered to uninsured patients at each
hospital.
(v)
The representative sample of hospitals is one of the following
specific categories of hospitals: urban public, other urban, rural, state-operated
psychiatric and nonstate psychiatric. In the event that less than 20% of the
hospitals in a specific category provide data to the commission or its designee,
the commission or its designee uses the overall ratio calculated for all responding
hospitals. The commission or its designee creates additional categories, by
submitting a state plan amendment, as it deems appropriate for the economic
and efficient operation of the Medicaid disproportionate share hospital program.
(vi)
After the commission or its designee determines each disproportionate
share hospital's cost of services to patients who have no health insurance
or source of third party payments for services provided during the year, the
commission or its designee subtracts from each hospital's cost of services
the amount of payments made by or on behalf of those patients who have no
health insurance or source of third party payments for services provided during
the year.
(E)
The commission or its designee shall trend each hospital's
"hospital specific limit" calculated from its historical base period cost
report to the state's fiscal year disproportionate share program. For hospitals
without a full 12-month fiscal year cost report, the commission or its designee
shall convert their costs to annualized hospital specific limits. The commission
or its designee shall use the inflation rates described in (b)(12) of this
title. The commission or its designee shall calculate the number of months
from the mid-point of the hospital's cost reporting period to the mid-point
of the state fiscal year disproportionate share program. The commission or
its designee shall then multiply the portion of the hospital's cost report
year occurring in the state fiscal year by the inflation update factor used
for each state fiscal year in the calculation of hospital reimbursement rates
for each state fiscal year. The product of these calculations shall be multiplied
by each hospital's "hospital specific limit" to obtain each hospital's "adjusted
hospital specific limit."
(F)
The commission or its designee compares the projected payment
for each disproportionate share hospital, as determined by subsections (d)
and (e) of this section, with its adjusted hospital specific limit, as determined
by subparagraphs (D) and (E) of this paragraph. If the hospital's projected
payment is greater than its adjusted hospital specific limit, the commission
or its designee reduces the hospital's payment to its adjusted hospital specific
limit.
(G)
If there are disproportionate share hospital funds left
in the available fund for the remaining hospitals, because some hospitals
have had their disproportionate share hospital payments reduced to their adjusted
hospital specific limits, the commission or its designee distributes the excess
funds according to the provisions in this section. For hospitals whose projected
disproportionate share hospital payments are less than their adjusted hospital
specific limits, the commission or its designee does the following:
(i)
calculate the difference between its adjusted hospital
specific limit and its projected disproportionate share hospital payment;
(ii)
add all of the differences from clause (i) of this subparagraph;
(iii)
calculate a ratio for each hospital by dividing the difference
from clause (i) of this subparagraph by the sum for clause (ii) of this subparagraph;
and
(iv)
multiply the ratio from clause (iii) of this subparagraph
by the remaining available fund. Remaining Available Fund x
(H)
Only those hospitals that are below their adjusted hospital
specific limits are eligible to participate in this distribution. The disproportionate
share hospital funds remaining in the available fund are distributed to the
hospitals that have not already reached their adjusted hospital specific limits.
Each hospital's total disproportionate share payment (including the redistribution
of excess funds) cannot exceed its adjusted hospital specific limit.
(g)
Review of agency determination. The commission or its designee
notified hospitals of their tentative eligibility or ineligibility and the
estimated amount of payment before the beginning of the state fiscal year.
Any hospital, including those hospitals that do not qualify or that contend
the amount of payment is incorrect, is allowed to request a review by the
state. The actual amount of payment also may vary if a successful review request
by one or more hospitals necessitates an adjustment in the amount of payments
to the other hospitals in the program. Because of the state's ongoing review
of data elements used in the formulas before the first monthly payment, it
is possible that a hospital may either gain or lose eligibility after receiving
tentative notification, which would also affect payment amounts. The hospital's
written request for a review must be made to commission or its designee and
must be received within 10 business days after the hospital receives notification
of its eligibility or ineligibility. The hospital's request must contain specific
documentation supporting its contention that factual or calculation errors
were made, which, if corrected, would result in the hospital qualifying for
payments or receiving payment in a corrected amount. The state will accept
documentation from hospitals seeking reviews for 30 business days after the
hospital receives notification of its eligibility or ineligibility.
(1)
The hospital's written request for a review must be made
to the director of acute care services and must be received by the director
within 10 calendar days after the hospital receives notification of its eligibility
or ineligibility. The hospital's request must contain specific documentation
supporting its contention that factual or calculation errors were made, which,
if corrected, would result in the hospital qualifying for payments or receiving
payment in a corrected amount.
(2)
The review is:
(A)
limited to allegations of factual or calculation errors;
(B)
limited to a review of documentation submitted by the hospital
or used by the single state agency or its designee in making its original
determination; and
(C)
not conducted as an adversary hearing.
(3)
The commission or its designee conducts the review as quickly
as possible and makes its decision before the first monthly payment is made
for that fiscal year. Hospitals that have requested a review are notified
of the results of the review at the time of the first monthly payment. Any
adjustments made as a result of these reviews will not exceed the limits of
available funds for implementing the applicable disproportionate share program.
Once the first monthly payment is made, no additional review or appeal is
available to hospitals, with one exception. If a hospital, receiving a tentative
eligibility letter and not requesting a review, then receives a letter stating
the hospital is now ineligible for DSH funding, that hospital may now request
a review of eligibility determination according to the terms of (g)(1).
(h)
Disproportionate share funds held in reserve.
(1)
Hospitals participating in the disproportionate share program
are required to comply at all times with the conditions of participation specified
in subsection (c) of this section. If the commission or its designee has reason
to believe that a hospital is not complying with the conditions of participation,
the commission or its designee notifies the hospital of possible noncompliance.
Upon receipt of the notice of possible noncompliance, the hospital has 30
days to demonstrate its compliance with conditions of participation. If the
hospital fails to demonstrate its compliance within 30 days, the commission
or its designee has the authority to hold that hospital's disproportionate
share payments in reserve until the:
(A)
hospital can demonstrate its compliance with the conditions
of participation;
(B)
decision to hold payments in reserve is reviewed and the
decision results in favor of the hospital; or
(C)
date the last monthly payment in the relevant state fiscal
year occurs; whichever occurs first.
(2)
If a hospital's disproportionate share payments are being
held in reserve on the date of the last monthly payment in the state fiscal
year, the amount of the payments is divided proportionately among the hospitals
receiving a last monthly payment and is not restored to the hospital. If the
hospital demonstrates its compliance with the conditions of participation
or if the hospital receives a favorable review decision, the funds are restored
to the hospital.
(3)
Hospitals that have had disproportionate share payments
held in reserve may request a review by the single state agency or its designee.
(A)
The hospital's written request for a review must:
(i)
be made to the commission or its designee;
(ii)
be received by the commission or its designee within 10
days after the hospital's disproportionate share payments are held in reserve;
and
(iii)
contain specific documentation supporting its contention
that it is in compliance with the conditions of participation.
(B)
The review is:
(i)
limited to allegations of compliance with conditions of
participation;
(ii)
limited to a review of documentation submitted by the
hospital or used by the commission or its designee in making its original
determination; and
(iii)
not conducted as an adversary hearing.
(C)
The commission or its designee conducts the review as quickly
as possible and notifies hospitals requesting the review of the results. Once
the last monthly payment for the relevant state fiscal year is made, no additional
review or appeal is available to hospitals.
(4)
If a hospital that is already receiving Medicaid disproportionate
share funds closes, loses its license, loses its Medicare or Medicaid eligibility,
that hospital's disproportionate share funds are reallocated among the remaining
disproportionate share hospitals. If the hospital reopens, as the same hospital
type, regains similar licensure or Medicare and Medicaid eligibility during
the same fiscal year, that hospital receives monthly disproportionate share
payments for the remaining months in the state fiscal year, as determined
by the appropriate reimbursement formula and from available funds.
(i)
Provision for reduction in federal disproportionate share
cap. If the federal government reduces the amount of Medicaid disproportionate
share funds allotted to Texas, the state must reduce the net amount allotted
to each disproportionate share hospital during the state fiscal year by the
same percentage.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of
the Secretary of State on December 21, 2001.
TRD-200108264
Marina S. Henderson
Executive Deputy Commissioner
Texas Health and Human Services Commission
Effective date: January 10, 2002
Proposal publication date: October 26, 2001
For further information, please call: (512) 424-0576