1 TAC §355.8063
The Health and Human Services Commission (HHSC) adopts amendments
to §355.8063, concerning reimbursement methodology for inpatient hospital
services, with changes to the proposed text as published in the February 15,
2002, issue of the
Texas Register
(27 TexReg
1060).
Section 355.8063 is amended to describe the provision of supplemental payments
to certain high-volume hospitals. The amendments will function by describing
the methodology to be used to identify and reimburse high-volume hospitals.
The proposed text in the February 15, 2002, issue of the
Texas Register
also described certain cost containment initiatives
developed in response to Article II, §33 of the Special Provisions Relating
to All Health and Human Services Agencies contained in the General Appropriations
Act (Act of May 22, 2001, 77th Leg., R.S.). These initiatives are withdrawn
in favor of an alternative proposal for cost savings, which was developed
in cooperation with the hospital industry, including the Texas Hospital Association
and the Hospital Payment Advisory Committee. The alternative proposal will
be published in a future issue of the
Texas Register
.
The adopted rule reflects the deletion of the cost containment proposals
described above and clarification of the scope of the supplemental payments
included in the proposed amendment. The revisions are as follows:
The proposed amendment to subsection (n)(2) of §355.8063, which temporarily
would suspend application of a cost-of-living index, is withdrawn.
The proposed amendment to subsection (p)(1), which would establish a temporary
limit on the day outlier payment adjustment, is withdrawn.
The proposed amendment to subsection (p)(2), which would establish a temporary
limit on the cost outlier payment adjustment, is withdrawn.
Proposed subsection (t)(1) is revised to correctly identify which Texas
counties with a publicly-owned hospital or a hospital affiliated with a hospital
district are eligible for the supplemental payments proposed under new subsection
(t).
HHSC received comments from the Texas Association of Public and Non-Profit
Hospitals and a law firm.
The following comments were received during the comment period concerning
the proposed amendment.
Comment: One commenter inquired whether HHSC intended to have only one
hospital from the counties listed in subsection (t)(1) eligible to receive
supplemental high volume payments.
Response: HHSC revised subsection (t)(3) to clarify that only one publicly
owned hospital or hospital affiliated with a hospital district in each county
listed in subsection (t)(1) will be eligible to receive supplemental high
volume payments.
Comment: One commenter inquired whether HHSC intended to remove the inflation
factor adjustment in calculating the default Standard Dollar Amount for "Newly
Enrolled Hospitals," "Newly Constructed Hospitals," "Out-of-State Hospitals."
Response: As noted above, proposed subsection (n)(2) as published in the
February 15, 2002, issue of the
Texas Register
is withdrawn in favor of an alternative proposal for meeting Medicaid cost
containment mandates contained in the General Appropriations Act (Article
II, §33 of the Special Provisions Relating to All Health and Human Services
Agencies contained in the General Appropriations Act) (Act of May 22, 2001,
77th Leg., R.S.). The alternative proposal will be published in a future issue
of the
Texas Register
.
Comment: One commenter requested HHSC clarify subsection (t)(5) concerning
the meaning of fully offsetting Medicaid payments against the "hospital specific
limit".
Response: HHSC revised subsection (t)(5) to describe how the "hospital
specific limit", the "Medicaid Shortfall", and the "cost of services to uninsured
patients" will be adjusted by Medicaid payments in excess of Medicaid cost.
The amendments are adopted under authority granted to HHSC by §531.033,
Government Code, which authorizes the Commissioner of Health and Human Services
to adopt rules necessary to implement HHSC's duties, and under §531.021(a),
Government Code, which authorizes HHSC to administer federal medical assistance
(Medicaid) program funds.
§355.8063.Reimbursement Methodology for Inpatient Hospital Services.
(a)
Introduction. Except as otherwise specified in subsection
(q) of this section, the Texas Medical Assistance Program (Medicaid) reimburses
hospitals, except in-state children's hospitals, for covered inpatient hospital
services using a prospective payment system. In-state children's hospitals
are reimbursed for covered inpatient hospital services using the methodology
described in subsection (o) of this section. For hospitals other than in-state
children's hospitals, the department or its designee groups hospitals into
payment divisions using the average base year payment per case in each hospital
after adjusting each hospital's base year payment per case by a case mix index,
a cost-of-living index, and a budgetary reduction factor of 10%. The budgetary
reduction factor for admissions occurring in state fiscal year 1990 (September
1, 1989, through August 31, 1990) is 7.0% and the budgetary reduction factor
for admissions occurring in state fiscal year 1991 (September 1, 1990, through
August 31, 1991) is 5.5%. For admissions occurring in state fiscal year 1992
(September 1, 1991, through August 31, 1992) and subsequent state fiscal years,
a budgetary reduction factor is not applied. The payment divisions are separated
into $100 increments. If a payment division has less than ten observations
for Medicaid data, the department or its designee considers that payment division
to be statistically invalid. Hospitals within that payment division are placed
into the nearest valid payment division.
(b)
Definitions. The following words and terms, when used in
this section, shall have the following meanings, unless the context clearly
indicates otherwise.
(1)
Diagnosis-related group (DRG)--The taxonomy of diagnoses
as defined in the Medicare DRG system or as otherwise specified by the department
or its designee.
(2)
Case mix index--The hospital-specific average relative
weight.
(3)
Relative weight--The arithmetic mean of the dollars for
a specific DRG divided by the arithmetic mean of the dollars for all cases.
(4)
Standard dollar amount--The weighted mean base year payment
for all hospitals in a payment division after adjusting each hospital's base
year payment per case by a case mix index, a cost-of-living index, and a budgetary
reduction factor of 10%. The budgetary reduction factor for admissions occurring
in state fiscal year 1990 (September 1, 1989, through August 31, 1990) is
7.0% and the budgetary reduction factor for admissions occurring in state
fiscal year 1991 (September 1, 1990, through August 31, 1991) is 5.5%. For
admissions occurring in state fiscal year 1992 (September 1, 1991, through
August 31, 1992) and subsequent state fiscal years, a budgetary reduction
factor is not applied. The department or its designee establishes a minimum
standard dollar amount of $1,600 and applies it to those hospitals whose standard
dollar amount is less than the minimum. The department or its designee applies
cost-of-living indexes to the standard dollar amounts established for the
base year to calculate standard dollar amounts for prospective years. A cost-of-living
index is not applied to the minimum standard dollar amount.
(5)
Base year--A 12-consecutive-month period of claims data
selected by the department or its designee as the basis for establishing the
payment divisions, standard dollar amounts, and relative weights. The department
or its designee selects a new base year at least every three years.
(6)
Base year payment per case--The payment that would have
been made to a hospital if the department or its designee reimbursed the hospital
under similar methods and procedures used in Title XVIII of the Social Security
Act, as amended, effective October 1, 1982, by Public Law 97-248. In calculating
the base year payment per case, the department or its designee uses the interim
rate established at tentative or final settlement, if applicable, of the most
recent cost reporting period up to and including the cost reporting period
associated with the base year.
(7)
Interim rate--Total reimbursable Title XIX inpatient costs,
as specified in paragraph (6) of this subsection, divided by total covered
Title XIX inpatient charges per tentative or final cost reporting period.
Beginning with 1985 hospital fiscal year cost reporting periods, the interim
rate established at tentative settlement includes incentive/penalty payments
to the extent that they continue to be permitted by federal law and regulation
and continue to be included on Title XVIII cost reports.
(8)
New hospital--A facility that has been in operation under
present and previous ownership for less than three years and that initially
enrolls as a Title XIX provider after the current base year. A new hospital
must have been substantially constructed within the five previous years from
the effective date of the prospective rate period.
(9)
Children's hospital--A hospital within Texas that is recognized
by Medicare as a children's hospital and is exempted by Medicare from the
Medicare prospective payment system.
(10)
Out-of-state children's hospital--A hospital outside of
Texas that is recognized by Medicare as a children's hospital and is exempted
by Medicare from the Medicare prospective payment system.
(c)
Calculating relative weights and standard dollar amounts.
The department or its designee uses recent Texas claims data to calculate
both the relative weights and standard dollar amounts. A relative weight is
calculated for each DRG and applied to all payment divisions. A separate standard
dollar amount is calculated for each payment division. Except for border hospitals
with a Texas Medicaid provider number beginning with an H and out-of-state
children's hospitals, the department or its designee uses the overall arithmetic
mean base year payment per case, including the cost of living update as specified
in subsection (n) of this section, as the standard dollar amount to reimburse
out-of-state hospitals. The overall arithmetic mean base year payment per
case, including the cost of living update as specified in subsection (n) of
this section, is also used as the standard dollar amount to reimburse military
hospitals providing inpatient emergency services for admissions on or after
October 1, 1993. The calculation of the standard dollar amount for out-of-state
children's hospitals is described in subsection (r) of this section. Except
for new hospitals, the overall arithmetic mean base year payment per case,
including the cost of living update as specified in subsection (n) of this
section, is also used as the standard dollar amount to reimburse hospitals
that initially enroll as a Title XIX provider after the current base year.
The standard dollar amount for new hospitals is the lesser of the overall
arithmetic mean base year payment per case plus three percentile points, including
the cost of living update as specified in subsection (n) of this section,
or the hospital's average Medicaid cost per Medicaid discharge based on the
tentative or final settlement, if applicable, of the hospital's first 12-month
cost reporting period occurring after the hospital's enrollment as a Title
XIX provider. In the event that the new hospital is a replacement facility
for a hospital that is currently enrolled as a Title XIX provider, the hospital
is reimbursed by using either the standard dollar amount of the existing provider
or the standard dollar amount for new hospitals, whichever is greater. The
use of the hospital's average Medicaid cost per Medicaid discharge, after
adjusting for case-mix intensity, as its standard dollar amount is applied
prospectively to the beginning of the next prospective year and is applicable
only if the tentative or final settlement is completed and available at least
60 days before the beginning of the prospective year. The hospital's Medicaid
costs are determined using similar methods and procedures used in Title XVIII
of the Social Security Act, as amended, effective October 1, 1982, by Public
Law 97-248. When two or more Title XIX participating providers merge, the
department or its designee combines the Medicaid inpatient costs, as described
in this subsection, of each of the individual providers to calculate a standard
dollar amount, effective at the start of the next prospective period, to be
used to reimburse the merged entity. Acquisitions and buyouts do not result
in a recalculation of the standard dollar amount of the acquired provider
unless acquisitions or buyouts result in the purchased or acquired hospital
becoming part of another Medicaid participating provider. When the department
or its designee determines that the department or its designee has made an
error that, if corrected, would result in the standard dollar amount of the
provider for which the error was made changing to a new payment division,
either higher or lower, the department or its designee moves the provider
into the correct payment division, and the department or its designee reprocesses
claims paid using the initial, incorrect standard dollar amount that was in
effect for the current state fiscal year by using the existing standard dollar
amount of the payment division in which the provider was moved. In the determination
of the corrected payment division, the department or its designee uses the
relative weights that are currently in effect for the state fiscal year. The
correction of this error condition only applies to the current state fiscal
year payments. No corrections are made to payment rates for services provided
in previous state fiscal years. If a specific DRG has less than ten observations
for Medicaid data, the department or its designee uses the corresponding Medicare
relative weight, except for DRGs relating to organ transplants. Relative weights
for organ transplant DRGs with less than ten observations may be developed
using Medicaid-specific data. The relative weights include organ procurement
costs for both solid and nonsolid organs. The department or its designee makes
no distinction between urban and rural hospitals and there is no federal/national
portion within the payment.
(d)
Add-on payments. There are no separate add-on payments.
The department or its designee:
(1)
includes capital costs in the standard dollar amount for
each payment division;
(2)
includes the cost of indirect medical education in the
standard dollar amount for each payment division;
(3)
includes the cost of malpractice insurance in the standard
dollar amount for each payment division; and
(4)
includes return on equity in the standard dollar amount
for each payment division.
(e)
Calculating the payment amount. The department or its designee
reimburses each hospital for covered inpatient hospital services by multiplying
the standard dollar amount established for the hospital's payment division
by the appropriate relative weight. The patient's DRG classification is primarily
based on the patient's principal diagnosis. The resulting amount is the payment
amount to the hospital.
(f)
Patient transfers. If a patient is transferred, the department
or its designee establishes payment amounts as specified in paragraphs (1)-(4)
of this subsection. If appropriate, the department or its designee manually
reviews transfers for medical necessity and appropriate payment.
(1)
If the patient is transferred to a skilled nursing facility
or intermediate care facility, the department or its designee pays the transferring
hospital the total payment amount of the patient's DRG.
(2)
If the patient is transferred to another hospital, the
department or its designee pays the receiving hospital the total payment amount
of the patient's DRG. The department or its designee pays the transferring
hospital a DRG per diem. The DRG per diem is based on the following formula:
(DRG relative weight x standard dollar amount) / DRG mean length of stay (LOS)
x LOS. The LOS is the lesser of the DRG mean LOS, the claim LOS, or 30 days.
The 30-day factor is not used in establishing a DRG per diem amount for a
medically necessary stay of a recipient less than age one in a Title XIX participating
hospital or a recipient less than age six in a disproportionate share hospital
as defined by the department.
(3)
If the department or its designee determines that the transferring
hospital provided a greater amount of care than the receiving hospital, the
department or its designee reverses the payment amounts. The transferring
hospital is paid the total payment amount of the patient's DRG and the receiving
hospital is paid the DRG per diem.
(4)
The department or its designee makes multiple transfer
payments by applying the per diem formula to the transferring hospitals and
the total DRG payment amount to the discharging hospital.
(g)
Split billing. The department or its designee does not
allow interim billings by providers. The hospital may bill the department
or its designee when the patient exceeds his 30-day inpatient hospital limit
or is discharged. The department or its designee bases payment on the diagnosis
codes known at billing. The payment is final.
(h)
Rebasing the standard dollar amounts. The department or
its designee rebases the standard dollar amount for each payment division
at least every three years. The relative weights are recalibrated whenever
the standard dollar amounts are recalculated. The standard dollar amounts
are not rebased on an interim basis unless the department or its designee
determines that special circumstances warrant rebasing.
(i)
Recalibrating the relative weights. The department or its
designee recalibrates the relative weights whenever the standard dollar amounts
are rebased.
(j)
Revising the diagnosis related groups. The department or
its designee parallels the taxonomy of diagnoses as defined in the Medicare
DRG prospective payment system unless a revision is required based on Texas
claims data or other factors as determined by the department or its designee.
(k)
Appeals.
(1)
A hospital may appeal individual claims as specified in
other department rules. As specified in subparagraphs (A), (B), and (C) of
this paragraph, a hospital may also appeal mechanical, mathematical, and data
entry errors in base year claims data and incorrectly computed subsequent
adjustments to the hospital's base year claims data because of the base year's
tentative or final settlement.
(A)
If a hospital believes that the department or its designee
made a mechanical, mathematical, or data entry error in computing the hospital's
base year claims data, the hospital may request a review of the disputed calculation
by the department or, at the department's direction, its designee. A hospital
may not request a review if the disputed calculation is the result of the
hospital's submittal of incorrect data or the result of the department's or
its designee's application of an interim rate to the base year claims data
derived from a cost reporting period occurring before the base year. Upon
the provider hospital's request, the department or its designee provides the
applicable available data used in calculating the hospital's base year claims
data to the provider hospital. The hospital must submit a specific written
request for review and appropriate specific documentation supporting its contention
that there has been a mechanical, mathematical, or data entry error to the
department or its designee. Except as specified in subparagraph (C) of this
paragraph, the request must be submitted within 60 days after the hospital
receives initial notification of its payment division and standard dollar
amount. The department or its designee conducts the review as quickly as possible
and notifies the hospital of the results. If the hospital is dissatisfied
with the results of the review, the hospital may request a formal hearing
under the procedures, including the expedited processing provisions, contained
in Chapter 1 of this title (relating to the Texas Board of Health), except
that, in the event of any conflict, the procedures contained in this section
apply. Except as specified in subparagraph (C) of this paragraph, if the review
or appeal is completed at least 60 days before the beginning of the next prospective
year, any adjustment required after the completion of the review or appeal
is applied to that next prospective year. If the review or appeal is not completed
at least 60 days before the beginning of the next prospective year, any adjustment
required after the completion of the review or appeal is applied only to the
subsequent prospective year. The base year claims data used by the department
or its designee pending the review or appeal is the base year claims data
established by the department or its designee.
(B)
If a hospital believes that the department or its designee
incorrectly computed subsequent adjustments to the hospital's base year claims
data because of the base year's tentative or final settlement, the hospital
may request a review of the disputed calculation related to the tentative
or final settlement by the department or, at the department's direction, its
designee. The hospital's request may also include a request to review the
tentative or final settlement. The hospital must submit a specific written
request for review and appropriate specific documentation supporting its contention
that the tentative or final settlement is incorrect to the department or its
designee. Except as specified in subparagraph (C) of this paragraph, the request
must be submitted within 60 days after the hospital receives notification
of a tentative or final settlement of the base year data. The department or
its designee conducts the review as quickly as possible and notifies the hospital
of the results. If the hospital is dissatisfied with the results of the review,
the hospital may request a formal hearing under the procedures, including
the expedited processing provisions, contained in Chapter 1 of this title
(relating to the Texas Board of Health), except that, in the event of any
conflict, the procedures contained in this section apply. Except as specified
in subparagraph (C) of this paragraph, if the review or appeal is completed
at least 60 days before the beginning of the next prospective year, any adjustment
required after the completion of the review or appeal is applied to that next
prospective year. If the review or appeal is not completed at least 60 days
before the beginning of the next prospective year, any adjustment required
after the completion of the review or appeal is applied only to the subsequent
prospective year. The interim rate applied to the base year claims data pending
the review or appeal is the interim rate established by the department or
its designee.
(C)
If a hospital believes that the department or its designee
incorrectly computed the hospital's 1985 base year claims data as specified
in subparagraph (A) of this paragraph, the hospital may submit a specific
written request for review and appropriate specific documentation supporting
its contention within 60 days after the effective date of this section. If
a hospital believes that the department or its designee incorrectly computed
the tentative or final settlement of the cost reporting period associated
with the 1985 base year as specified in subparagraph (B) of this paragraph,
the hospital may submit a specific written request for review and appropriate
specific documentation supporting its contention within 60 days after the
effective date of this section. The hospital must follow the process described
in subparagraphs (A) or (B) of this paragraph, as appropriate. If the review
or appeal is completed by December 31, 1987, any adjustment required after
the completion of the review or appeal is applied to the March 1, 1988, adjustment
described in subsection (n) of this section. If the review or appeal is not
completed by December 31, 1987, any adjustment required after the completion
of the review or appeal is applied to the next prospective year.
(2)
A hospital may not appeal the prospective payment methodology
used by the department or its designee, including:
(A)
the payment division methodologies;
(B)
the DRGs established;
(C)
the methodology for classifying hospital discharges within
the DRGs;
(D)
the relative weights assigned to the DRGs; and
(E)
the amount of payment as being inadequate to cover costs.
(l)
Cost reports. Each hospital must submit a cost report at
periodic intervals as prescribed by Medicare or as otherwise prescribed by
the department or its designee. The department or its designee uses data from
these reports in rebasing years, in making adjustments as described in subsection
(n) and subsection (q) of this section, and in completing cost settlements
for children's hospitals.
(m)
Cost settlements. If a hospital has already begun its fiscal
year on September 1, 1986, cost settlement for that portion of the hospital's
fiscal year which occurs before September 1, 1986, is based on reimbursement
for covered inpatient hospital services under similar methods and procedures
used in the Social Security Act, Title XVIII, as amended, effective October
1, 1982, by Public Law 97-248. Except as otherwise specified in subsection
(q) of this section, there are no cost settlements for services provided to
recipients admitted as inpatients to hospitals reimbursed under the prospective
payment system on or after the implementation date of the prospective payment
system.
(n)
Adjustments to base year claims data.
(1)
Beginning with 1985 hospital fiscal year cost reporting
periods, the department or its designee adjusts each hospital's base year
claims data and resulting payment division and standard dollar amount to reflect
the interim rate established at tentative and final settlement, if applicable,
of the cost reporting period associated with the base year. The adjustments
are applied only to claims data for months within the base year that coincide
with months within the hospital's cost reporting period. The claims data for
months within the base year that do not coincide with months within the hospital's
cost reporting period remain unchanged until the tentative or final settlement
of the cost reporting period containing those months has been completed. The
adjustments are applied to the next prospective year beginning September 1,
1988, except as specified in subparagraphs (A), (B), and (C) of this paragraph.
(A)
If the tentative or final settlement is not completed and
available at least 60 days before the beginning of the next prospective year,
any adjustment required because of the settlement is applied to the subsequent
prospective year.
(B)
If a review or appeal of a tentative or final settlement
is not completed at least 60 days before the beginning of the next prospective
year, the interim rate applied to the claims data on which the hospital's
payment division and standard dollar amount are established is the interim
rate established at tentative or final settlement by the department or its
designee. Any adjustment required after the completion of the review or appeal
is applied only to the subsequent prospective year.
(C)
The department or its designee makes a March 1, 1988, adjustment
to each hospital's 1985 base year claims data and resulting payment division
and standard dollar amount to reflect the interim rate established at tentative
and final settlement, if applicable, of the cost reporting period associated
with the 1985 base year. Any additional adjustments required as a result of
reviews and appeals described in subsection (k) of this section and completed
by December 31, 1987, are also reflected in the March 1, 1988, adjustment.
Future adjustments as described in this subsection and subsection (k) of this
section are made at the beginning of each prospective year.
(2)
The department or its designee updates the standard dollar
amount each year for each payment division by applying a cost-of-living index
to the standard dollar amount established for the base year. The index used
to update the standard dollar amounts is the greater of:
(A)
the Health Care Financing Administration's (HCFA) 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.
(o)
Reimbursement to in-state children's hospitals. The department
or its designee reimburses in-state children's hospitals under similar methods
and procedures used in the Social Security Act, Title XVIII, as amended, effective
October 1, 1982, by Public Law 97-248, except for the cost of direct graduate
medical education. The department or its designee establishes target rates
and stipulates payments per discharge, incentives, and percentage of payments.
The department or its designee uses each hospital's 1987 final audited cost
reporting period (fiscal year ending during calendar year 1987) as its target
base period. The target base period for hospitals recognized by Medicare as
children's hospitals after the implementation of this subsection is the hospital's
first full 12-month cost reporting period occurring after its recognition
by Medicare. The department or its designee annually increases each hospital's
target amount for the target base period by the cost-of-living index described
in subsection (n) of this section. The department or its designee selects
a new target base period at least every three years. The department or its
designee bases interim payments to each hospital upon the interim rate derived
from the hospital's most recent tentative or final Medicaid cost report settlement.
If a Title XIX participating hospital is subsequently recognized by Medicare
as a children's hospital after the implementation of this subsection, the
hospital must submit written notification to the department or its designee
and include adequate documentation and claims data. Upon receipt of the written
notification from the hospital, the department or its designee reserves the
right to take 90 days to convert the hospital's reimbursement to the reimbursement
methodology described in this subsection.
(p)
Day and cost outliers. Effective for inpatient hospital
services provided on or after July 1, 1991, the HHSC or its designee pays
day or cost outliers for medically necessary inpatient services provided to
clients less than age one in all Title XIX participating hospitals and clients
less than age six in disproportionate share hospitals, as defined by the HHSC,
that are reimbursed under the prospective payment system. For purposes of
outlier payment adjustments, disproportionate share hospitals are defined
as those hospitals identified by the HHSC during the previous state fiscal
year as disproportionate share hospitals. If an admission qualifies for both
a day and a cost outlier, only the outlier resulting in the highest payment
to the hospital is paid. (Note: This subsection does not address reimbursement
for the provision of other necessary inpatient hospital services under the
Early and Periodic Screening, Diagnosis, and Treatment Program, as required
by the Omnibus Budget and Reconciliation Act of 1989.)
(1)
To establish day outliers, the HHSC or its designee first
removes from the current base year data those admissions whose actual lengths
of stay are greater than or equal to plus or minus three standard deviations
from the arithmetic mean length of stay for each DRG. The HHSC or its designee
then recomputes the arithmetic mean length of stay and the standard deviations
for each DRG. Inpatient days, which exceed two standard deviations beyond
the arithmetic mean length of stay for the DRG are eligible for a day outlier.
Payment is based on 70% of a per diem amount of a full DRG payment. The per
diem amount is established by dividing the full DRG payment amount by the
arithmetic mean length of stay for the DRG.
(2)
To establish cost outliers, the HHSC or its designee first
determines what the amount of reimbursement for the admission would have been
if the HHSC or its designee reimbursed the hospital under similar methods
and procedures used in the Social Security Act, Title XVIII, as amended, effective
October 1, 1982, by Public Law 97-248, Tax Equity and Fiscal Responsibility
Act (TEFRA). The HHSC or its designee then determines the outlier threshold
by using the greater of the full DRG payment amount multiplied by 1.5 or an
amount determined by selecting the lesser of the universe mean of the current
base year data multiplied by 11.14, or the hospital's standard dollar amount
multiplied by 11.14. The hospital's standard dollar amount is the amount that
the HHSC or its designee uses to reimburse the hospital under the prospective
payment system. The outlier threshold is subtracted from the amount of reimbursement
for the admission established under the TEFRA principles. The HHSC or its
designee multiplies any remainder by 70% to determine the actual amount of
the cost outlier payment.
(3)
If a recipient less than age one is admitted to and remains
in a hospital past his or her first birthday, medically necessary inpatient
days and hospital charges after the child reaches age one are included in
calculating the amount of any day or cost outlier payment.
(q)
Hospitals with 100 or fewer licensed beds. The policies
in this subsection apply only to hospital fiscal years beginning on or after
September 1, 1989, and are applicable only to hospitals with 100 or fewer
licensed beds at the beginning of the hospital's fiscal year. At tentative
cost settlement of the hospital's fiscal year (with subsequent adjustment
at final cost settlement, if applicable), the department or its designee determines
what the amount of reimbursement during the fiscal year would have been if
the department or its designee reimbursed the hospital under similar methods
and procedures used in Title XVIII of the Social Security Act, as amended,
effective October 1, 1982, by Public Law 97-248, Tax Equity and Fiscal Responsibility
Act (TEFRA). This determination is made without imposing a TEFRA cap. If the
amount of reimbursement under the TEFRA principles is greater than the amount
of reimbursement received by the hospital under the prospective payment system,
the department or its designee reimburses the difference to the hospital.
(r)
Reimbursement to out-of-state children's hospitals. For
admissions on or after September 1, 1991, the standard dollar amount for out-of-state
children's hospitals is calculated as specified in this subsection. The department
or its designee calculates the overall average cost per discharge for in-state
children's hospitals based on tentative or final settlement of cost reporting
periods ending in calendar year 1990. The overall average cost per discharge
is adjusted for intensity of service by dividing it by the average relative
weight for all admissions from in-state children's hospitals during state
fiscal year 1990 (September 1, 1989 through August 31, 1990). The adjusted
cost per discharge is updated each year by applying the cost-of-living index
described in subsection (n) of this section. The resulting product is the
standard dollar amount to be used for payment of claims as described in subsection
(e) of this section. The department or its designee selects a new cost reporting
period and admissions period from the in-state children's hospitals at least
every three years for the purpose of calculating the standard dollar amount
for out-of-state children's hospitals.
(s)
Reimbursement of inpatient direct graduate medical education
(GME) costs. The Medicaid allowable inpatient direct graduate medical education
cost, as specified under similar methods and procedures used in the Social
Security Act, Title XVIII, as amended, effective October 1, 1982, by Public
Law 97-248, is calculated for each hospital having inpatient direct graduate
medical education costs on its tentative or final audited cost report. Those
inpatient direct medical education costs are removed from the calculation
of the interim rate described in subsection (b)(7) of this section and are
used in the calculation of the provider's standard dollar amount described
in subsection (c) of this section. Those allowable inpatient direct graduate
medical education costs for services delivered to Medicaid eligible patients
with inpatient admission dates on or after September 1, 1997, will be subject
to the cost determination and settlement provisions as described in this subsection.
No Medicaid inpatient direct graduate medical education cost settlement provisions
are applied to inpatient hospital admissions prior to September 1, 1997. Providers
with Medicaid allowable inpatient direct graduate medical education costs
as described in this subsection will receive an interim monthly payment based
upon one-twelfth of their inpatient direct graduate medical education cost
from their most recent tentative or final audited cost report. The interim
payment amount as described in this subsection will not be updated during
the state fiscal year to reflect new tentative or final cost report settlements.
These payments are subject to settlement at both tentative and final audit
of provider cost reporting periods covering the state fiscal year.
(t)
Notwithstanding other provisions of this subchapter and
subject to the availability of funds, supplemental payments will be made each
state fiscal year in accordance with this subsection to eligible hospitals
that serve high volumes of Medicaid and uninsured patients.
(1)
Supplemental payments are available under this subsection
for inpatient hospital services provided by a publicly-owned hospital or hospital
affiliated with a hospital district in Bexar, Dallas, El Paso, Harris, and
Tarrant counties on or after July 6, 2001.
(2)
State funding for supplemental payments authorized under
this paragraph will be limited to and obtained through intergovernmental transfers
of local or hospital district funds. The supplemental payments described in
this paragraph will be made in accordance with the applicable regulations
regarding the Medicaid upper limit provisions codified at 42 C.F.R. §447.272.
(3)
In each county listed in subsection (t)(1) of this section,
the publicly-owned hospital or hospital affiliated with a hospital district
that incurs the greatest amount of cost for providing services to Medicaid
and uninsured patients, will be eligible to receive supplemental high volume
payments. The supplemental payments authorized under this paragraph are subject
to the following limits:
(A)
In each state fiscal year the amount of any inpatient supplemental
payments and outpatient supplemental payments may not exceed the hospital's
"hospital specific limit," as determined under §355.8065(f)(2)(D) of
this chapter (relating to Reimbursement to Disproportionate Share Hospitals
(DSH)); and
(B)
The amount of inpatient supplemental payments and fee-for-service
Medicaid inpatient payments the hospital receives in a state fiscal year may
not exceed Medicaid inpatient billed charges for inpatient services provided
by the hospital to fee-for-service Medicaid recipients in accordance with
42 CFR §447.271.
(4)
An eligible hospital will receive quarterly supplemental
payments. The quarterly payments will be limited to one-fourth of the lesser
of:
(A)
The difference between the hospital's Medicaid inpatient
billed charges and Medicaid payments the hospital receives for services provided
to fee-for-service Medicaid recipients. Medicaid billed charges and payments
will be based on a twelve consecutive-month period of fee-for-service claims
data selected by HHSC; or
(B)
The difference between the hospital's "hospital specific
limit," as determined under §355.8065(f)(2)(D) of this chapter (relating
to Reimbursement to Disproportionate Share Hospitals (DSH)) and the hospital's
DSH payments as determined by the most recently finalized DSH reporting period.
(5)
For purposes of calculating the "hospital specific limit"
in subsection (t)(4)(B) of this section, the "cost of services to uninsured
patients, " as defined by Texas Administrative Code §355.8065(b)(5) and
"Medicaid shortfall," as defined by Texas Administrative Code §355.8065(b)(16),
will be adjusted as follows:
(A)
The amount of Medicaid payments (including inpatient and
outpatient supplemental payments) that exceed Medicaid cost will be subtracted
from the "Medicaid shortfall."
(B)
The amount of the "Medicaid shortfall," as adjusted in
accordance with subsection (t)(5)(A) of this section, will be subtracted from
the "cost of services to uninsured patients" to ensure that, during any state
fiscal year, a hospital does not receive more in total Medicaid payments (inpatient
and outpatient rate payments, graduate medical education payments, supplemental
payments and disproportionate share hospital payments) than its cost of serving
Medicaid patients and patients with no health insurance.
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 June 17, 2002.
TRD-200203751
Marina S. Henderson
Executive Deputy Commissioner
Texas Health and Human Services Commission
Effective date: July 7, 2002
Proposal publication date: February 15, 2002
For further information, please call: (512) 424-6576