PART 15. TEXAS HEALTH AND HUMAN SERVICES COMMISSION
CHAPTER 354. MEDICAID HEALTH SERVICES
SUBCHAPTER A. PURCHASED HEALTH SERVICES
DIVISION 11. GENERAL ADMINISTRATION
The Texas Health and Human Services Commission (HHSC) adopts new §354.1189, concerning the implementation of an acute care Medicaid billing coordination system with changes to the proposed text as published in the May 23, 2008, issue of the Texas Register (33 TexReg 4058). The text of the rule will be republished.
Background and Justification
Section 2 of Senate Bill 10, 80th Legislature, Regular Session, 2007, amends Government Code §531.02413, Billing Coordination System. Section 531.02413 requires HHSC to implement, if cost effective and feasible, an acute care Medicaid billing coordination system for the fee-for-service and primary care case management delivery models. When an acute care claim is billed to Medicaid, the billing coordination system would identify, within 24 hours, whether another entity has primary payor responsibility for the claim and submit the claim to that payor.
New §354.1189 implements §531.02413, Government Code.
Comments
The 30-day comment period ended June 23, 2008. During this period, HHSC received comments regarding the proposed new rule from representatives of the following state and national insurance trade associations and insurance entities: Property Casualty Insurers Association of America; Wellcare Health Care Plans, Inc; Unicare; American Council of Life Insurers (ACLI); American Family Life Assurance Company of Columbus (AFLAC); America's Health Insurance Plans; Texas Association of Health Plans (TAHP); Texas Association of Business; National Association of Dental Plans; Equitable Life and Casualty Insurance Company; Delta Dental Insurance; American Insurance Association (AIA); and HCC Life Insurance Company. Some commenters submitted additional comments that did not relate to the proposed rule. A summary of the comments relating to the proposed rule and HHSC's responses follows.
Comment: TAHP asked that language be added to clarify that the proposed rule does not apply to non-Medicaid enrollees. Similarly, Equitable Life and Casualty Insurance Company asked that the requirement that HHSC access eligibility databases apply only to Texas residents who are Medicaid recipients. The commenter requested this be specified in the rule or the Memorandum of Understanding (MOU) with the insuring entities.
Response: The transfer of information required by S.B. 10 is not limited to Medicaid recipients. Under its new rule, however, HHSC will use eligibility information for billing coordination only for Medicaid enrollees. The rule language was not changed in response to the comment.
Comment: HHSC received a number of comments asking that property and casualty insurers in general, and workers' compensation insurers in particular, be excluded from the requirements in the rule.
The Property Casualty Insurers Association of America stated that the cost effectiveness of including property and casualty insurers in this program is questionable because: (1) these funds can already be collected through subrogation, so the amount of additional funds collected would be small; (2) workers' compensation would be the largest property and casualty line affected; and (3) by definition, the recipients of workers' compensation benefits are employed and, therefore, unlikely to be eligible for Medicaid. The commenter noted that the cost of gathering this information would far outweigh any additional amounts collected through the workers' compensation program. Furthermore, the commenter stated that S.B. 10 was intended to coordinate billing between Medicaid and what are commonly recognized as "health insurance" companies and was not intended to include property and casualty insurers, which includes workers' compensation insurers. The commenter requested that proposed §354.1189(1) be amended to specify types of licensees subject to this rule to clarify that property and casualty insurers are not subject to the proposal.
The Texas Association of Business (TAB) commented that there are already adequate means of protecting and coordinating Medicaid claims against workers' compensation insurers through subrogation and the tort system. Requiring workers' compensation carriers to open their databases unnecessarily and be forced to defend issues of compensability would be costly to insurance carriers as well as the State. The TAB asserted that any price increase incurred by carriers will be paid by employers, who are the ultimate payors of the workers' compensation system.
The American Insurance Association (AIA) also advocated for excluding workers' compensation insurers. The AIA contended that in the very rare instances that a Medicaid insured might find him/herself eligible for workers' compensation coverage, that coverage would be primary and would step in to pay before Medicaid ever becomes involved. Moreover, in AIA's opinion, it is unlikely that the billing coordination system could determine, within a 24-hour period, whether the rare Medicaid insured who is also covered by workers' compensation insurance would, on that fact alone, be an eligible claimant for a compensable claim.
The Texas Association of Business also remarked it would be impossible for the State's billing coordination system to identify within 24 hours whether a workers' compensation carrier is responsible for a claim merely because a Medicaid claimant has workers' compensation insurance. Although workers' compensation is similar to health insurance in that it pays for health care services, workers' compensation is limited to workplace injuries. A workplace injury is reported to the employer and the appropriate carrier is also alerted, at which time compensability is determined. The Texas Association of Business opined that there is no feasible way that compensability could be determined by workers' compensation carriers opening their databases to HHSC. The commenter requested that workers' compensation carriers and workers' compensation certified self-insured employers be exempt from this rulemaking process.
Response: This rule is not intended to include property and casualty insurers (including workers' compensation insurers). To clarify what entities are required to comply with this regulation, HHSC has added language to paragraph (1) of the rule.
Comment: Delta Dental Insurance stated that transfer of information is already supplied through a monthly eligibility feed, on behalf of all or a portion of its Texas enrollment, to HHSC via Health Management Solutions (a TMHP third party recovery subcontractor).
Response: HHSC currently performs data matching (transfer of information) via multiple avenues in order to identify entities that have the primary responsibility for paying a claim. The existing processes will remain in effect after the implementation of the billing coordination system. Because the billing coordination system is a new process and a different means of transferring information, a memorandum of understanding must be executed between HHSC or its designee and the insuring entity for the billing coordination system transfer of information. The rule language was not changed in response to the comment.
Comment: HHSC received a number of comments questioning the cost effectiveness and feasibility of the billing coordination system.
The National Association of Dental Plans stated that its members cover less than one percent of total Texas Medicaid enrollees and accessing its databases to verify Medicaid eligible children enrolled under private insurance will be extremely difficult. The commenter stated that due to the minimal number of Medicaid enrollees that may also be enrolled under its private insurance, it may not be cost effective to require access to its member databases.
Wellcare Health Care Plans, Inc., expressed concern that the proposed rule and preamble did not provide sufficient information on the cost effectiveness and feasibility of the proposed billing coordination system to allow the public to provide meaningful comment.
Unicare also expressed concern about whether HHSC had conducted the cost benefit and feasibility analysis required by S.B. 10. The commenter expressed concern that the cost-benefit/flexibility language of the statute reflects the 80th Legislature's awareness that implementation of the S.B. 10 billing coordination system is without precedent in any other state Medicaid program and that analysis of the project could show the system to be neither cost effective nor feasible, and therefore not in the best interest of the citizens of Texas.
Response: HHSC has reviewed the cost effectiveness and feasibility of the Medicaid billing coordination system, and has determined that the system is cost effective and feasible. The rule language was not changed in response to these comments.
Comment: Delta Dental Insurance requested that the rule further define "acute care" so that limited-benefit or specialized insurance carriers can better determine the applicability and scope of the proposed rule should specialty services, such as dental procedures, fall under the definition.
Response: Providing a definition of "acute care services" in the rule, to help determine applicability to carriers, is not necessary with the additional wording to be added to §354.1189(1) which now states, "An entity holding a permit, license, or certificate of authority issued by a state regulatory agency must allow HHSC or its designee to access databases that enable it to carry out the purposes of this section. Entities subject to this section are those entities that are, by statute, contract or agreement, legally responsible for the payment of a claim for a health care item or service."
Comment: HCC Life Insurance Company asked that HHSC add to the rule a paragraph to exempt appropriately authorized health insurance carriers that write medical stop-loss insurance with a specific attachment point of $5,000 or more from the requirements of the rule as it relates to this particular product only. The commenter also stated that there is a material discrepancy between the requirements for medical stop-loss policies to report eligibility under the proposed rule. Medical stop-loss policies reinsure a company for excess losses incurred by their self-funded employee benefit plan established under ERISA. It is a standard industry practice to not require documentation of individual eligibility under the employer's self-funded plan until the point in time when a claim is submitted for reimbursement. Therefore, no data for eligibility of the employer's population is maintained by the commenter for these medical stop-loss policies.
Response: The billing coordination system rule does not require that data be submitted for stop-loss policies. The rule language was not changed in response to the comment.
Comment: Unicare stated that the Centers for Medicare and Medicaid Services (CMS) has recently issued guidelines for how state Medicaid agencies should implement efforts related to eligibility determination and claims coordination. The commenter asserts that nothing in the CMS guidelines contemplates direct access to private insurance carrier and other private payor databases.
Response: Provisions in the federal Deficit Reduction Act (DRA) of 2005 (Pub.L. 109-171) give HHSC authority to obtain the database information required by this rule. The rule language was not changed in response to the comment.
Comment: One commenter stated that not all entities that hold a permit, license or certificate of authority issued by a state regulatory agency have information in their databases that would enable HHSC's contractor to carry out the purpose of the statute. The commenter suggested that §354.1189(1) be clarified to state: "An entity holding a permit, license or certificate of authority issued by a state regulatory agency that is a primary payor and maintains information in its databases about the identity of an entity that has primary payor responsibility for the fee-for-service or primary care case management delivery models must allow HHSC's contractor to access its databases to enable it to carry out the purposes of this section." (The commenter's recommended new language is italicized.)
Response: An entity that holds a permit, license or certificate of authority issued by a state regulatory agency may not have in its databases the information that would enable HHSC's contractor to carry out the purpose of the statute. The entity's information that would enable HHSC's contractor to carry out the purpose of the statute may be in the possession of the entity's third party administrator's database. The wording "provide access to their databases or their administrator's databases" will be added to the MOU. The rule language was not changed in response to the comment.
Comment: HHSC received several comments relating to privacy and the confidentiality of database information. WellCare of Texas, Inc., pointed out that many of the entities that hold permits, licenses or certificates of authority issued by the state regulatory agency are covered by the Health Insurance Portability and Accountability Act (HIPAA). WellCare further commented that, while the proposed rule cites HIPAA regulations and requires that the contractor ensure the security of information obtained and maintain the confidentiality of the client's health records, the proposed HHSC rule does not require the same protection for the protected health information of other individuals whose information is in the databases. Further, the HIPAA rules do not permit covered entities to disclose protected health information (PHI) for individuals who are not enrolled in the Medicaid program. Wellcare of Texas, Inc., recommended that: access should be limited to information necessary to determine whether a particular entity has primary responsibility; the privacy protections should be broader; and the rule should specifically require the contractor to enter into a HIPAA business associate agreement with each HIPAA-covered entity.
WellCare of Texas, Inc., also stated that many entities that hold permits, licenses or certificates of authority develop and maintain systems and databases through confidential and proprietary means, including entering into licensing and confidentiality agreements with third parties. In addition, the data in the databases is owned by the entity. Wellcare of Texas, Inc., recommended that the proposed rule should include protections for the entities' confidential and proprietary information and ownership interests. The commenter also recommended that the contractor: should be required to obtain consent from any third party that has a proprietary interest before using or accessing the databases; and should be required to enter into agreements with HHSC or its designee and the particular entity that would include: an acknowledgement that the entity owns the data; an agreement to return or destroy the data once the purpose for obtaining the data is accomplished; an agreement to maintain the confidentiality of the entity's confidential and proprietary information; and to use the confidential and proprietary information solely for determining whether a particular entity has primary responsibility.
WellCare of Texas, Inc., further stated that adopted rule 354.1189 should include details about the contractor's responsibilities, such as specifying a reliable process for the contractor to identify an entity with primary responsibility for paying a claim. It should also specify the type of information that should be in the report from the entity and the method for providing the report (e.g. electronic file).
America's Health Insurance Plans and Unicare expressed that the implementation of these provisions as currently drafted creates significant concerns related to maintaining compliance with the "minimum necessary" requirements under the federal HIPAA privacy standards, as well as the HIPAA information security standards and the information technology records maintenance requirements of the Sarbanes Oxley law. The commenters also expressed concern that the proposed changes could have serious HIPAA implications and would create a less efficient approach to coordination of Medicaid benefits.
America's Health Insurance Plans also recommended that HHSC consider an alternative approach that builds on the current system and avoids the privacy implications that are created by the broad approach adopted in the proposed rule. The suggested alternative approach obligates the entity to disclose the necessary information related to the entity's Medicaid fee-for-service and primary care case management business to HHSC, or its designee, within a reasonable timeframe after receiving a request for the data. Many insurance companies already have systems and processes in place to provide state regulators with information on the company's policyholders through an electronic file transfer. The commenter believes this approach allows the insurance company to remain in compliance with federal standards while, at the same time, providing the state with the necessary information to coordinate benefits for Medicaid beneficiaries.
The Texas Association of Business requested that there be an option for appropriate entities to transfer files to the appropriate HHSC contractor. Much of the information in a carrier's databases is proprietary and unnecessary for HHSC to determine whether another entity has primary payor responsibility. The commenter believes that through a determined file transfer methodology, appropriate privacy can be maintained while still giving the State the needed information.
Response: HHSC's contractor, in consultation with the insuring entity, will determine how the data transfers will operate. This information will be detailed in the MOU between HHSC and the insuring entity. The new final rule is in the interest of assuring correct payments for Medicaid services and is in compliance with HIPAA regulations. Language will be added to the MOU relating to the Business Associate Agreement. Entities must enter into a Business Associate Agreement with HHSC's contractor (AIM), acting on behalf of HHSC. The rule language was not changed in response to these comments.
Comment: The American Council of Life Insurers asked that the MOU allow a regulated entity to affirm that it does not pay claims for acute care services that would otherwise be paid for by Medicaid and that its databases would not contain the type of information sought by HHSC.
Response: The cover letter to be sent with the MOU will allow an entity to claim/confirm that its coverage does not pay claims for the types of acute care services provided under the Medicaid program. HHSC or its designee will address each occurrence. The rule language was not changed in response to this comment.
Comment: Unicare stated its belief that the billing coordination system in Section 2 of S.B. 10 was sought by a potential vendor of the billing coordination services. The commenter remarked that such had been the case in several other states in which similar legislation had been defeated. Unicare believes that this fact calls into question the "special interest" nature of this proposal and whether or not it is in the best interest of the state's Medicaid recipients, HHSC, and the tax paying public.
Response: Based on S.B. 10, passed by the 80th Texas Legislature (2007) and HHSC's determination that the Medicaid billing coordination system is cost effective and feasible, HHSC plans to implement the system in September 2008. The rule language was not changed in response to the comment.
Comment: HHSC received a number of comments concerning the scope of entities and policies potentially covered by the rule.
Equitable Life & Casualty stated that neither the rule nor the MOU is clear about insurance policies that are considered secondary or supplemental coverage. The commenter asked HHSC to clarify whether the rule intends to include Medicare Supplement policies, individuals with multiple active coverages, and limited benefit policies, such as a hospital indemnity policy.
The ACLI asked that the scope of the proposed rule be limited to products that would pay for items and services that would otherwise be paid for by Medicaid. The commenter stated that its member companies doing business in Texas are regulated entities for purposes of S.B. 10 and the proposed rule, but the products sold by its member companies in Texas are not designed to pay claims for the types of acute care services provided under the Medicaid program. ACLI contended that its member companies participation in the billing coordination system places undue burdens and costs on these insurers while providing no useful, productive data to HHSC's billing coordination system.
AFLAC is a carrier offering hospital indemnity, specified disease, accident-only, and disability income insurance policies in Texas. Hospital indemnity, specified disease, accident-only, and disability income insurance policies are not considered traditional health insurance or health benefit plan coverage. The commenter believes the legislative intent behind S.B. 10 provides sufficient guidance to limit the applicability of the rule to those entities that may in fact have primary payor responsibility. Because the federal Deficit Reduction Act of 2005 (DRA) is the basis for S.B. 10, the commenter believes there is sufficient statutory intent to incorporate the DRA's definition of the entities that may have primary payor responsibility. AFLAC stated that this is further supported by the language of Texas Government Code §531.02413(b), which outlines the purpose of the system as identifying an entity that "may have a contractual responsibility to pay for the types of acute care services provided under the Medicaid program." In light of this, the commenter recommended revising the proposed rule by adding the following DRA language to the end of Section 354.1189(l): "Entities subject to this section are those entities that are, by statute, contract, or agreement, legally responsible for payment of a claim for a health care item or service."
Unicare stated that, in its opinion, S.B. 10 contemplates access to data on new classes of health benefit coverage entities, such as third party administrators, workers' compensation carriers, and auto liability and other property and casualty insurers and asked that HHSC consider this interpretation.
The Texas Association of Business stated its belief that the language in the rule, as well as the legislation, casts too wide a net by requiring every entity licensed by the Texas Department of Insurance to be subject to the legislation. The commenter believes it is neither cost effective nor feasible to open the databases of every licensed entity. It believes that it is most cost effective and most appropriate to include first tier health care providers only.
Response: HHSC will add a sentence to §354.1189(1) to clarify that "Entities subject to this section are those entities that are, by statute, contract, or agreement, legally responsible for payment of a claim for a health care item or service.
Comment: Equitable Life & Casualty stated that the final rule or the MOU should state that the parties will work cooperatively to agree to the frequency, method, and form of the data supplied. The commenter's preferred method is an FTP site where it could upload a file.
WellCare of Texas, Inc., stated that, given the reporting requirement in Texas Government Code §531.02413(b), it is not clear that access to databases is necessary. WellCare also expressed concern that the proposed rule does not contain any guidance on the nature, the amount or the type of access the contractor will have to the databases, nor does the rule acknowledge the differences between different entities' databases. Because the Legislature conditioned access on cost-effectiveness and feasibility, the rule should include some limits.
Unicare stated that the implementation of a direct data access system that would attempt to determine Medicaid eligibility and or primary responsibility for health benefit claims would present a logistical nightmare for the agency. The commenter disagreed that access to the data of millions of privately insured individuals would result in anything more than the data match system currently in place and that the system, if feasible, would be far less efficient than the data match system currently in place.
America's Health Insurance Plans believes that the proposed rule, as currently drafted, requires "an entity holding a permit, license, or certificate of authority issued by a state regulatory agency" to grant HHSC, or its designee, access to the entity's databases. The commenter expressed concern that this language could be interpreted to require carriers to provide broad access to databases, which could include information outside of the Medicaid fee-for-service and primary care case management arena.
Response: The "frequency, method and form of data to be determined by HHSC or its designee" will be added to the language of the MOU. The rule language was not changed in response to these comments.
Comment: TAHP asked for clarification that the information collected may be used only for the limited purpose of the statute.
Response: This is addressed in §354.1189(1), which states "An entity holding a permit, license, or certificate of authority issued by a state regulatory agency must allow HHSC or its designee to access databases that enable it to carry out the purposes of this section." Information will be used only for purposes of the acute care billing coordination system. The rule language was not changed in response to the comment.
The new rule is adopted under the Texas Government Code, §531.033, which provides the Executive Commissioner of HHSC with broad rulemaking authority; and Texas Human Resources Code, §32.021, and Texas Government Code, §531.021(a), which provide HHSC with the authority to administer the federal medical assistance (Medicaid) program in Texas.
§354.1189.Acute Care Billing Coordination System.
The Acute Care Billing Coordination System is mandated by the Government Code §531.02413. The Health and Human Services Commission (HHSC or Commission) will develop and implement an acute care Medicaid billing coordination system for the fee-for-service and primary care case management delivery models that identifies whether another entity has primary payor responsibility.
(1) An entity holding a permit, license, or certificate of authority issued by a state regulatory agency must allow HHSC or its designee to access databases that enable it to carry out the purposes of this section. Entities subject to this section are those entities that are, by statute, contract or agreement, legally responsible for the payment of a claim for a health care item or service.
(2) HHSC shall refer any entity that violates this rule to the regulatory agency issuing the permit, license, or certificate of authority for possible administrative sanction.
(3) After September 1, 2008, no public funds shall be expended on entities not in compliance with this section unless a memorandum of understanding is entered into between the entity and the Commission.
(4) Information obtained under this section must be secure and maintain the confidentiality of the client's health records in compliance with security and privacy rules adopted by the U.S. Department of Health and Human Services under the Health Insurance Portability and Accountability Act of 1996 (HIPAA), 45 C.F.R. §§164.302 - 164.318 and §§164.500 - 164.534.
(5) The administrator of the acute care Medicaid billing coordination system shall be determined by HHSC. The administrator shall be responsible for meeting all requirements of the acute care Medicaid billing coordination system.
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 August 11, 2008.
TRD-200804250
Steve Aragón
Chief Counsel
Texas Health and Human Services Commission
Effective date: September 1, 2008
Proposal publication date: May 23, 2008
For further information, please call: (512) 424-6900
The Texas Health and Human Services Commission (HHSC) adopts new §354.1190, regarding the Medicaid Provider Database, in Title 1, Part 15, Chapter 354, Subchapter A, Division 11, concerning General Administration for Purchased Health Services. This rule is adopted without changes to the proposed text as published in the May 23, 2008, issue of the Texas Register (33 TexReg 4060), and will not be republished.
Pursuant to House Bill 2042, 80th Legislature, Regular Session, 2007, new §354.1190 establishes an electronic, searchable Internet-based database of all participating providers in the Texas Medicaid program. House Bill 2042 required HHSC to develop an electronic database of physicians, hospitals, and other health care providers participating in the state Medicaid program. HHSC had already developed a provider database that satisfies the requirements of House Bill 2042 pursuant to one of the requirements of the Frew Corrective Action Order. HHSC implemented this database on December 1, 2007.
This database will help Medicaid providers and recipients to determine which physicians and other providers participate in Medicaid, and of those who are, which are accepting new patients. The online provider lookup is located on the Texas Medicaid & Healthcare Partnership (TMHP) web site at www.tmhp.com.
The 30-day comment period ended June 23, 2008, during which HHSC did not receive any comments on the proposed rule.
The new rule is adopted under Texas Government Code §531.033, which provides the Executive Commissioner of HHSC with broad rulemaking authority; and Texas Human Resources Code §32.021 and Texas Government Code §531.021(a), which authorize HHSC to administer the federal medical assistance (Medicaid) program in Texas.
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 August 6, 2008.
TRD-200804119
Steve Aragón
Chief Counsel
Texas Health and Human Services Commission
Effective date: August 26, 2008
Proposal publication date: May 23, 2008
For further information, please call: (512) 424-6900
SUBCHAPTER J. PURCHASED HEALTH SERVICES
DIVISION 4. MEDICAID HOSPITAL SERVICES
The Texas Health and Human Services Commission (HHSC) adopts amendments to §355.8061, concerning payment for hospital services, and §355.8069, concerning supplemental payments to certain rural public hospitals, in Title 1, Part 15, Chapter 355, Subchapter J, Division 4, concerning Medicaid Hospital Services.
Section 355.8061 is adopted without changes to the proposed text as published in the April 18, 2008, issue of the Texas Register (33 TexReg 3095). However, the text of the rule will be republished. The April 18th proposal added new subsection (a)(4)(C) to §355.8061. However, while the April 18th amendment was still pending, HHSC inadvertently published a second amendment to §355.8061 in the May 30, 2008, issue of the Texas Register (33 TexReg 4279). The May 30th amendment revised subsection (a)(1), was adopted in the July 25, 2008, issue of the Texas Register (33 TexReg 5913) without changes, and was not republished. Section 355.8061 is being republished here in its entirety to reflect the April 18th amendment and to show the incorporation of the May 30th amendment. The May 30th amendment became effective August 3, 2008. Although adopted without changes to the April 18th and the May 30th proposed amendments, the rule is being republished as a convenience to the public and does not nullify the adoption or the effective date of the May 30th amendment.
Section 355.8069 is also adopted without changes to the proposed text as published in the April 18, 2008, issue of the Texas Register (33 TexReg 3095) and will not be republished.
The purpose of the amendments is to make changes to the Non-State-Owned Rural Public Hospital supplemental payment program (also known as the upper payment limit, or UPL, program for rural public hospitals). As a result of these amendments, the State will obtain additional federal revenue for non-state-owned rural public hospitals that participate in the Medicaid program.
The amendment to §355.8061 adds outpatient services to the supplemental payment calculation for non-state-owned rural public hospitals. Outpatient services are being added to the supplemental payment calculation for rural public hospitals because they are part of the Texas Medicaid safety net hospitals. This amendment will support these hospitals in their mission to serve Medicaid recipients. The intergovernmental transfer (IGT) to support the non-federal share of the outpatient supplemental payment will be provided by the individual eligible hospitals.
The amendment to §355.8069 changes the Medicaid charge deficit criteria from 1 percent to 0.5 percent for inpatient services. Currently, certain rural public hospitals whose Medicaid deficit (the difference between Medicaid fee-for-service billed charges and total Medicaid payments) is at least 1 percent of the total Medicaid deficit for all participating rural public hospitals provide the IGTs for the rural public hospital UPL program. Changing the deficit criteria from 1 percent to 0.5 percent allows for an increase in the number of qualified providers who would provide intergovernmental transfers and, therefore, increases the amount of supplemental payments to eligible providers.
HHSC submitted the state plan amendment containing these changes to the Centers for Medicare and Medicaid Services (CMS) on August 28, 2007. The associated amendment will be implemented on the effective date of this rule, which will be September 1, 2007.
The 30-day comment period for these amendments closed on May 19, 2008. HHSC received one comment from the Texas Organization of Rural & Community Hospitals (TORCH), which was in support of the proposed changes to these rules.
The amendments are adopted under Texas Government Code §531.033, which provides the Executive Commissioner of HHSC with broad rulemaking authority; Texas Human Resources Code §32.021 and Texas Government Code §531.021(a), which provide HHSC with the authority to administer the federal medical assistance (Medicaid) program in Texas, to administer Medicaid funds, and to adopt rules necessary for the proper and efficient operation of the Medicaid program; and Texas Government Code §531.021(b), which provides HHSC with the authority to propose and adopt rules governing the determination of Medicaid reimbursement.
§355.8061.Payment for Hospital Services.
(a) The Health and Human Services Commission (commission) or its designated agent shall reimburse hospitals approved for participation in the Texas Medical Assistance Program for covered Title XIX hospital services provided to eligible Medicaid recipients. The Texas Title XIX State Plan for Medical Assistance provides for reimbursement of covered hospital services to be determined as specified in paragraphs (1) - (4) of this subsection.
(1) The amount payable for inpatient hospital services shall be determined as specified in §355.8052 of this title (relating to Inpatient Hospital Reimbursement Methodology); §355.8054 of this title (relating to Children's Hospital Reimbursement Methodology); §355.8056 of this title (relating to State-Owned Teaching Hospital Reimbursement Methodology) and §355.8063 of this title (relating to Reimbursement Methodology for Inpatient Hospital Services).
(2) The amount payable for outpatient hospital services shall be determined under similar methods and procedures used in the Social Security Act, Title XVIII, as amended, effective October 1, 1982 through July 31, 2000, by Public Law 97-248, except as may be otherwise specified by the Health and Human Services Commission. For the period of September 1, 1999 through and including September 30, 2001, payments to all providers were at 80.3% of allowed costs. For the period beginning October 1, 2001, Medicaid reimbursement for outpatient hospital services for high-volume providers, as defined by the commission, shall be at 84.48% of allowable cost. For the remaining providers, reimbursement for outpatient hospital services shall be at 80.3% of allowable cost. For the purpose of establishing the proposed discount factor, a high-volume provider is defined as one, which is paid at least $200,000 during calendar year 2004. Any subsequent changes to the discount will require HHSC to hold a public hearing on proposed reimbursements before the HHSC approves any changes. The purpose of the hearing is to give interested parties an opportunity to comment on the proposed reimbursements. Notice of the hearing will be provided to the public. The notice of the public hearing will identify the name, address, and telephone number to contact for the materials pertinent to the proposed reimbursements. At least ten working days before the public hearing takes place, material pertinent to the proposed change will be made available to the public. This material will be furnished to anyone who requests it. After the public hearing, if negative comments are received, a summary of the comments made during the public hearing will be presented to the HHSC. Reimbursement for outpatient hospital surgery is limited to the lesser of the amount reimbursed to ambulatory surgical centers (ASCs) for similar services, the hospital's actual charge, the hospital's customary charge, or the allowable cost determined by the commission or its designee.
(3) Variances shall be accounted for in the Texas State Plan for Medical Assistance or as otherwise specified by the commission.
(4) Notwithstanding other provisions of this chapter and subject to the availability of funds, supplemental payments will be made each state fiscal year in accordance with this paragraph to eligible hospitals that serve high volumes of Medicaid and uninsured patients.
(A) Supplemental payments are available under this paragraph for outpatient hospital services provided by a non-state owned or operated, publicly-owned hospital or hospital affiliated with a hospital district in Bexar, Dallas, Ector, El Paso, Harris, Lubbock, Nueces, Tarrant, and Travis counties on or after July 6, 2001. Supplemental payments will be made for outpatient services on or after June 11, 2005, for Midland, Potter, and Randall Counties.
(B) Notwithstanding the provisions of subparagraph (A) of this paragraph, all hospitals that are eligible to receive funding under §355.8063(t)(4) of this title shall also be eligible to receive funding under this paragraph. Supplemental payments will be made for outpatient services on or after June 11, 2005, for hospitals in Hidalgo, Maverick, Montgomery, Travis, Bexar, and Webb counties. Supplemental payments will be made for outpatient services on or after November 12, 2005, for eligible hospitals in all other counties in the State of Texas.
(C) Notwithstanding the provisions of subparagraphs (A) and (B) of this paragraph, all hospitals that are eligible to receive funding under §355.8069 of this title (relating to Supplemental Payments to Certain Rural Public Hospitals) shall also be eligible to receive funding under this paragraph. Supplemental payments are available under this section for outpatient hospital services provided by certain rural public hospitals on or after September 1, 2007.
(D) State funding for supplemental payments authorized under this paragraph will be limited to and obtained through intergovernmental transfers of local or hospital district funds. State funding for supplemental payments authorized under subparagraph (B) of this paragraph will be limited to and obtained through intergovernmental transfers of local governmental entity or hospital district funds or transfer of State General Revenue. The supplemental payments described in this subsection will be made in accordance with the applicable regulations regarding the Medicaid upper payment limit provisions codified at 42 C.F.R. §447.321.
(E) The non-state owned or operated, publicly-owned hospital or hospital affiliated with a hospital district in a county listed in subparagraph (A) of this paragraph that incurs the greatest amount of cost for providing services to Medicaid and uninsured patients will be eligible to receive supplemental payments. Any hospital eligible under subparagraph (B) of this paragraph will be eligible to receive supplemental payments. The supplemental payments authorized under this subsection are subject to the following limits:
(i) In each state fiscal year the amount of inpatient supplemental payments and outpatient supplement payments may not exceed the hospital's "hospital specific limit," as determined under §355.8065(f)(2)(E) of this title (relating to Reimbursement to Disproportionate Share Hospitals (DSH)) for DSH hospitals; and
(ii) The amount of outpatient supplemental payments and fee-for-service Medicaid outpatient payments the hospital receives in a state fiscal year may not exceed Medicaid billed charges for outpatient services provided by the hospital to fee-for-service Medicaid recipients in accordance with 42 C.F.R. §447.325.
(F) An eligible hospital will receive quarterly supplemental payments. The quarterly payments will be limited to one-fourth of the difference between the hospital's Medicaid fee-for-service outpatient Medicaid payments received and 100% of Medicaid allowable outpatient hospital cost. Medicaid payments and cost will be based on a twelve consecutive-month period of fee-for-service claims data selected by HHSC.
(G) For purposes of calculating the "hospital specific limit" under this paragraph, the "cost of services to uninsured patients" and "Medicaid shortfall," as defined by §355.8065(b)(5) and (16) of this title, will be adjusted as follows:
(i) the amount of Medicaid payments (including inpatient and outpatient supplemental payments) that exceed Medicaid cost will be subtracted from the "Medicaid Shortfall."
(ii) The amount of the "Medicaid shortfall," as adjusted in accordance with clause (i) of this subparagraph, 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 payments, graduate medical education payments, supplemental payments and disproportionate share hospital payments) than its cost of serving Medicaid patients and patients without health insurance.
(5) Notwithstanding other provisions of this attachment, supplemental payments will be made each state fiscal year in accordance with this subsection to state government-owned or operated hospitals for outpatient services provided to Medicaid patients.
(A) Supplemental payments are available under this subsection for outpatient hospital services provided by state government-owned or operated hospitals on or after December 13, 2003. To qualify for a supplemental payment, the hospital must be owned or operated by the state of Texas.
(B) The aggregate supplemental payment amount will be the annual difference between the aggregate upper payment limit and the outpatient fee-for-service Medicaid payments made to the state government-owned or operated hospitals under this attachment. The aggregate upper payment limit will be calculated, based on Medicare payment principles and in accordance with the federal upper limit regulations at 42 CFR §447.321, using the most recent cost report data available.
(C) The amount of the supplemental payment made to each state government-owned or operated hospital will be determined by:
(i) dividing each hospital's fee-for-service Medicaid payments by the sum of the Medicaid fee-for-service payments of all state government-owned of operated hospitals; and
(ii) multiplying the percentage calculated in clause (i) of this subparagraph by the aggregate supplemental payment calculated in subparagraph (B) of this paragraph.
(D) Supplemental payments determined under this subsection will be calculated annually and paid quarterly.
(E) Supplemental payments made under this subsection when combined with other outpatient payments made under this attachment shall not exceed the maximum amounts allowable under applicable federal regulations at 42 CFR §447.325.
(b) Title XIX providers may not carry forward those unreimbursed costs attributed to either the lower costs or charge limitations authorized by 42 Code of Federal Regulations §405.455 et seq., effective for all accounting periods beginning on or after January 1, 1982.
(c) The direct and indirect costs of caring for charity patients shall have no relationship to eligible recipients of the Texas Medical Assistance program and are not allowable costs under the Texas Title XIX Medical Assistance program. Obligations by hospitals to provide free care, under the Hill-Burton Act or any other arrangement as a condition to secure federal grants or loans, are not recognized as a cost under the Texas Medical Assistance program.
(d) The contents of subsections (a) - (c) of this section do not describe the amount, duration, or scope of services provided to eligible recipients under the Texas Medical Assistance Program.
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 August 6, 2008.
TRD-200804118
Steve Aragón
Chief Counsel
Texas Health and Human Services Commission
Effective date: August 26, 2008
Proposal publication date: April 18, 2008
For further information, please call: (512) 424-6900
The Health and Human Services Commission (HHSC) adopts an amendment to §355.8065, concerning additional reimbursement to disproportionate share hospitals (DSH), with changes to the proposed text as published in the July 4, 2008, issue of the Texas Register (33 TexReg 5115), and will be republished. The rule changes clarify current practices as well as make changes to the processes used to determine, review, and audit DSH payments. The adopted rule will become effective on September 1, 2008.
One of the purposes of the rule is to more equitably distribute federal DSH funds among Texas hospitals. Since there is a set amount of aggregate DSH money available to Texas hospitals, if one hospital receives more DSH money, other hospitals receive less. HHSC proposes to standardize a number of DSH program elements among hospitals participating in the DSH program to create consistent requirements for all hospitals.
In subsections (d)(5) and (e)(5), HHSC proposed to lower the threshold by which small urban hospitals qualify for DSH funding, which will allow some hospitals that serve as important safety nets in their areas to qualify for funding.
In subsection (f)(4)(C), HHSC proposed to lower weights used in the current DSH formula that are applied to certain hospital districts' Medicaid and low-income days. The effect of this change is to emphasize in the formula each DSH provider's actual number of inpatient days for Medicaid and low-income patients.
The rule also incorporates assurances given by HHSC to the Centers for Medicare and Medicaid Services (CMS). After an audit by the federal Health and Human Services Office of Inspector General, HHSC agreed to add DSH rule language to codify its administrative practices relating to: calculating cost-to-charge ratios, handling Medicaid profits in calculating a hospital's Medicaid shortfall, and calculating uninsured costs.
In conjunction with an amendment to 1 Texas Administrative Code §355.8063(u), which discontinues high volume payments made annually to approximately 60 private urban hospitals, the amended rule removes conversion factors to restore DSH funds to these same hospitals. The amendment to §355.8063(u) was proposed in the May 30, 2008, issue of the Texas Register (33 TexReg 4280).
Finally, the changes in subsections (f)(2) and (i) relate to Medicaid reform initiatives at Chapter 531 of the Texas Government Code, Subchapter N, Texas Health Opportunity Pool Trust Fund. HHSC submitted a Medicaid reform waiver request to CMS on April 16, 2008, with a comprehensive plan to transform health care in Texas by providing more people with insurance, reducing reliance on expensive emergency room visits for basic care, and making it easier for the working poor to buy into employer-sponsored health coverage. HHSC proposes to use a portion of the DSH funds that are the subject of these amendments to help finance the reform.
Comments
HHSC received 18 written comments during the 30-day comment period from hospitals, hospital systems and hospital advocacy organizations. These comments came from Wadley Hospital, DeTar Healthcare Systems, Community Healthcare System, Shannon Medical Center, the Texas Organization of Rural and Community Hospitals (TORCH), the Texas Association of Public and Nonprofit Hospitals (TAPNH), the Texas Coalition of Transferring Hospitals, St. Joseph Regional Hospital, the Travis County Healthcare District (TCHD), the Texas Hospital Association (THA), Texas Health Resources, Trinity Mother Frances Healthcare System, Trinity Mother Frances Jacksonville, Cedar Crest Hospital, Scott & White Hospital, Baylor University Medical Center, the Catholic Health Association of Texas and the Hospital Corporation of America. A summary of the comments and HHSC's responses follows.
Comment: HHSC received comments supporting its plan to redistribute DSH funds following recoupment after an overpayment to a DSH provider.
Response: HHSC appreciates the support of this rule change and believes that the new rule language will be beneficial to HHSC and the provider community. The rule language was not changed in response to this comment.
Comment: HHSC received comments opposing its plan in subsection (i) to withdraw funds from the DSH program when a DSH provider voluntarily withdraws from the DSH program. The commenters seek, instead, to have these DSH funds redistributed to other DSH providers. One commenter believes that the plan to make a hospital that voluntarily withdraws from the DSH program ineligible for DSH funding for three years is excessive, punitive and without purpose.
Response: The proposed change to subsection (i) is contingent on HHSC's successfully obtaining federal approval of its Medicaid reform waiver. The proposed amendment supports HHSC's Medicaid reform efforts to transform health care in Texas by providing more people with insurance, reducing reliance on expensive emergency room visits for basic care, and making it easier for the working poor to buy into employer-sponsored health coverage. Should the waiver be approved, hospitals that remain in the DSH program will receive the same amount in DSH funding that they would have received had the exiting hospital remained in the DSH program. HHSC believes that the three-year ineligibility period protects the hospitals remaining in the program by stabilizing the DSH allocation for the remaining DSH hospitals for a period of three years. The rule language was not changed in response to these comments.
Comment: HHSC received comments opposed to using the Centers for Medicare and Medicaid Services (CMS) Prospective Payment System (PPS) Market Basket Index exclusively for DSH inflationary rates. The commenters asked that HHSC continue to use the greater of the PPS Market Basket Index or the Texas-specific medical care component of the Consumer Price Index. Commenters requested that HHSC clarify that the PPS Market Basket Index would not reflect any decreases to that figure required by Congress.
Response: HHSC has employed the greater of the CMS PPS Market Basket Index and the Texas-specific medical component of the Consumer Price Index in the past for hospital reimbursement. However, applying the greater of the two indexes may have skewed the rates higher or lower over time. HHSC decided to use the CMS PPS Market Basket Index because CMS uses this index as the trend factor for inflationary cost. HHSC will use the CMS PPS Market Basket Index as published by CMS for the inpatient cost-of-living increase calculations. The rule language was not changed in response to the comment.
Comment: HHSC received comments strongly supporting significant liquidated damages for fiscal intermediaries that submit late or inaccurate data to the state.
Response: HHSC will consider this comment when it develops provisions for liquidated damages for fiscal intermediaries. The rule language was not changed as a result of this comment.
Comment: HHSC received comments recommending it share the methods used to determine sample size with the audited hospitals for their review of the sampling methodology.
Response: HHSC will consider this comment when it develops the methods to determine audit sample sizes. The rule language was not changed in response to the comment.
Comment: HHSC received several comments stating that it was premature to include Medicaid reform language in the proposed rule.
Response: The language related to Medicaid reform was included here to facilitate timely implementation of the waiver should CMS approve the waiver. The proposed language related to Medicaid reform is contingent on HHSC's successfully obtaining federal approval of its Medicaid reform waiver. If CMS does not approve the waiver, these provisions will not impact DSH hospitals. The rule language was not changed in response to this comment.
Comment: HHSC received several comments stating that it should provide more detail to assure that hospitals will be held harmless during Medicaid reform.
Response: HHSC will work with hospitals to ensure that a hospital's DSH funds will not decrease by more than its increase in Medicaid inpatient or outpatient hospital payment rates. HHSC will share hospital-specific detail with specific hospitals and the hospital industry when it becomes available. The rule language was not changed in response to this comment.
Comment: HHSC received several comments urging it not to proceed with its Medicaid reform proposals until it convenes a hospital industry workgroup to examine operational and policy issues in more detail.
Response: The language related to Medicaid reform was included here to facilitate timely implementation of the waiver should CMS approve the waiver. HHSC has coordinated with the hospital industry on the proposed rule, and will continue to work with the hospital industry on future operational and policy issues. The rule language was not changed in response to this comment.
Comment: HHSC received several comments criticizing the plan to include outpatient funds as a mechanism to fund the Health Opportunity Pool.
Response: The proposed change to include outpatient funds as a mechanism to fund the Health Opportunity Pool is contingent on HHSC's successfully obtaining federal approval of its Medicaid reform waiver. The proposed amendment supports HHSC's Medicaid reform efforts to transform health care in Texas by providing more people with insurance, reducing reliance on expensive emergency room visits for basic care, and making it easier for the working poor to buy into employer-sponsored health coverage. The rule language was not changed in response to this comment.
Comment: HHSC received comments criticizing it for planning to reduce DSH providers' DSH funds in exchange for inpatient funding increases, while non-DSH providers would retain inpatient funding increases.
Response: Senate Bill 10, 80th Legislature, Regular Session, 2007, lays out how the Health Opportunity Pool (HOP) may be funded. Senate Bill 10 allows HHSC to use DSH funds to fund the HOP if hospital rates are increased. Based on this authority, DSH funds will be moved to the HOP only if there are corresponding rate increases to DSH hospitals. Senate Bill 10 does not, however, provide authority for HHSC to fund the HOP based on rate increases to non-DSH hospitals. The rule language was not changed in response to this comment.
Comment: HHSC received a comment opposing its plan to substitute increased Medicaid reimbursement for DSH funding because increasing inpatient payment rates would not hold Travis County Hospital District harmless, because the leased University Medical Center at Brackenridge would get the funding increase rather than the hospital district.
Response: HHSC believes that this issue is one that may be resolved by the Travis County Hospital District and the company that leases the University Medical Center at Brackenridge. The rule language was not changed in response to this comment.
Comment: HHSC received a comment criticizing its plan to substitute increased Medicaid reimbursement for DSH funding because rebased inpatient Medicaid rates are not guaranteed to increase. The commenter believes future utilization will show if any increase rates actually balance out the loss of DSH funding.
Response: HHSC will work with hospitals to ensure that a hospital's DSH funds will not decrease by more than its increase in Medicaid inpatient or outpatient hospital payment rates. DSH funds will not be recouped from a DSH provider who does not receive an increase in its Medicaid inpatient standard dollar amount (SDA). The rule language was not changed in response to this comment.
Comment: HHSC received a comment supporting its use of adjudicated data rather than billed data in DSH calculations.
Response: HHSC appreciates the support of this rule change and believes that the new rule language will be beneficial to HHSC and the provider community. The rule language was not changed in response to this comment.
Comment: HHSC received several comments supporting its elimination of six conditions of participation.
Response: HHSC appreciates the support of this rule change and believes that the new rule language will be beneficial to HHSC and the provider community. The rule language was not changed in response to this comment.
Comment: HHSC received comments pointing out that its language in §355.8065(d)(3), "a low-income utilization rate exceeding 25 percent but not more than 100 percent" would prohibit a hospital with a low income utilization rate above 100 percent from qualifying for DSH reimbursement.
Response: Based on this comment, HHSC revised §355.8065(d)(3) to read "a low-income utilization rate exceeding 25 percent." The language "but not more than 100 percent" was removed from the adopted rule language.
Comment: HHSC received comments pointing out that its definition of "total state and local revenue" in §355.8065(d)(3)(A) is inconsistent with its definition of "total state and local revenue" in §355.8065(b)(26), which defines "total state and local revenue" as "payments a hospital received for inpatient care."
Response: Based on this comment, HHSC revised §355.8065(d)(3)(A) to clarify that "total state and local revenue" is limited to payments for inpatient care. This is consistent with the definition in of "state and local revenue" in §355.8065(b)(26).
Comment: HHSC received comments supporting its elimination of conversion factors.
Response: HHSC appreciates the support of this rule change and believes that the new rule language will be beneficial to HHSC and the provider community. The rule language was not changed in response to this comment.
Comment: HHSC received many comments opposing the weights used for Medicaid days and low-income days in §355.8065(f)(4)(C). Many commenters asked that HHSC revise the weights for Medicaid inpatient days and low-income days.
Response: Based on these comments, HHSC reviewed and changed some of the weights in §355.8065(f)(4)(C). Metropolitan Statistical Areas (MSAs) with populations greater than or equal to 121,000 and less than 300,000 are weighted at 2.5. MSAs with populations greater than or equal to 300,000 and less than 1,000,000 are weighted at 2.75. MSAs with populations greater than or equal to 1,000,000 and less than 3,000,000 are weighted at 3.0. MSAs with populations greater than or equal to 3,000,000 are weighted at 3.5.
Comment: HHSC received comments supporting its decision to drop the qualifying threshold for small urban hospitals from 75 to 70 percent of the sum of the mean Medicaid days and one standard deviation of Medicaid days for urban hospitals in counties with populations under 250,000 persons.
Response: HHSC appreciates the support of this rule change and believes that the new rule language will be beneficial to HHSC and the provider community. The rule language was not changed in response to this comment.
Comment: HHSC received comments suggesting alternative language in §355.8065(d)(5) in support of its decision to drop the qualifying threshold for small urban hospitals from 75 to 70 percent of the sum of the mean Medicaid days and one standard deviation above the mean Medicaid inpatient days for urban hospitals in counties with populations under 250,000 persons.
Response: Proposed §355.8065(d)(5) reads, in part, "Total Medicaid inpatient days at least 70 percent of a figure calculated by adding the mean Medicaid inpatient days plus one standard deviation above the mean Medicaid inpatient days for." The suggested language reads, in part, "Total Medicaid inpatient days at least 70 percent of a figure calculated by adding the mean Medicaid inpatient days and one standard deviation thereof." Suggested language is not materially different from proposed language. The rule language was not changed in response to the comment.
Comment: HHSC received comments suggesting alternative language in §355.8065(e)(5) in support of its decision to drop the qualifying threshold for small urban hospitals from 75 to 70 percent of the sum of the mean Medicaid days and one standard deviation above the mean Medicaid inpatient days for urban hospitals in counties with populations under 250,000 persons.
Response: Proposed §355.8065(e)(5) reads, in part, "HHSC arrays each remaining hospital's total Medicaid inpatient days in descending order. HHSC selects hospitals, located in urban counties with populations of 250,000 persons or less, whose total Medicaid inpatient days is at least 70 percent of a figure calculated by adding the mean Medicaid inpatient days plus one standard deviation above the mean Medicaid inpatient days for all hospitals." The suggested language reads, in part, "HHSC arrays each remaining hospital's total Medicaid inpatient days in descending order. HHSC selects hospitals, located in urban counties with populations of 250,000 persons or less, whose total Medicaid inpatient days is at least 70 percent of a figure calculated by adding the mean Medicaid inpatient days and one standard deviation thereof, for all hospitals." Suggested language is not materially different from proposed language. The rule was not changed in response to the comment.
Comment: HHSC received one comment supporting its decision to exempt hospitals located in counties with fewer than 50,000 persons from being included in the reductions for inpatient funding.
Response: HHSC appreciates the support of this rule change and believes that the new rule language will be beneficial to HHSC and the provider community. The rule language was not changed in response to this comment.
Comment: HHSC received comments supporting its decision to revise the appeal language in the rule.
Response: HHSC appreciates the support of this rule change and believes that the new rule language will be beneficial to HHSC and the provider community. The rule language was not changed in response to this comment.
Comment: HHSC received comments on its treatment of Children's Health Insurance Funds (CHIP) in its definition of "total state and local revenue." Commenters recommended revising §355.8065(b)(26) by deleting the language "payments that are funded entirely with general revenue" and adding clarifying language directing hospitals to include all CHIP non-federal funds.
Response: Throughout the history of the Texas Medicaid DSH program, hospitals have been instructed that payment sources containing federal dollars are not to be included as "state and local revenue." Since Title XXI CHIP program payments contain federal dollars, the rule amendment clarifies that no portion of the payments for Title XXI CHIP clients are to be included as "state and local revenue." The rule language was not changed in response to this comment.
Comment: HHSC received a comment in support of its treatment of Medicaid profit in its calculation of non-reimbursed Medicaid cost.
Response: HHSC appreciates the support of this rule change and believes that the new rule language will be beneficial to HHSC and the provider community. The rule language was not changed in response to this comment.
Comment: HHSC received a comment in support of its calculation of cost-to-charge ratios.
Response: HHSC appreciates the support of this rule change and believes that the new rule language will be beneficial to HHSC and the provider community. The rule language was not changed in response to this comment.
Comment: HHSC received one comment opposing its decision to exclude residential treatment center costs from its calculation of cost-to-charge ratios.
Response: Proposed §355.8065(f)(4)(D)(ii) reads, in part, "The cost-to-charge ratio is an all-payer ratio. HHSC removes from the calculation of the cost-to-charge ratio non-hospital services including, but not limited to, ambulance, rural health clinics, primary home care, home health agencies, hospice, skilled nursing facilities, and residential treatment centers." The commenter asked that HHSC remove residential treatment centers from the list of non-hospital services that will be excluded from the calculation of the cost-to-charge ratio. HHSC is not prepared at this time to accept or reject the request that residential treatment center (RTC) costs not be excluded from the calculation of related disproportionate share hospital (DSH) cost-to-charge ratios. However, HHSC is deleting "residential treatment centers" from §355.8065(f)(4)(D)(ii) pending further research and policy clarification. Removing RTCs from the list of non-hospital services should not be construed to mean that HHSC has determined that RTC services are hospital services or that RTC costs should be included in DSH cost-to-charge ratio calculations.
Legal Authority
The amendment is adopted under Texas Government Code §531.033, which provides the Executive Commissioner of HHSC with broad rulemaking authority; and Human Resources Code §32.021, and Texas Government Code §531.021(a), which provide HHSC with the authority to administer the federal medical assistance (Medicaid) program in Texas.
§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 (DSH) fund. DSH funds are available only to an entity licensed as a hospital by the state. HHSC 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. Each year, HHSC will mail a DSH application packet to all active Medicaid hospitals. The application packet may request self-reported data HHSC deems necessary to supplement the AHA/THA/DSHS annual hospital survey and the fiscal intermediary data. A hospital may apply for DSH funds annually by completing the application packet by the deadline specified by HHSC in the packet's cover letter. A hospital that fails to submit a complete application by the deadline specified by HHSC will not be eligible to receive DSH funds that year. This section applies to all hospitals that participate in the DSH program other than state-owned teaching hospitals, whose DSH requirements are outlined in §355.8067 of this title (relating to Disproportionate Share Hospital Reimbursement Methodology for State-Owned Teaching Hospitals).
(b) Definitions. For purposes of this section, the following words and terms shall have the following meanings, unless the context clearly indicates otherwise.
(1) Adjudicated--A hospital claim that is approved or denied for payment by HHSC or its designee, or another payer in the case of non-HHSC programs.
(2) Adjusted hospital specific limit--A hospital specific limit trended forward to account for an inflation update factor since the base year.
(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 care maintenance organizations, Medicare or Blue Cross. The amount of total charity charges must be consistent with the amount reported on the Department of State Health Services (DSHS) 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)--Total adjudicated inpatient charges for each hospital from all payers, which are converted to cost by dividing the total cost by the total gross patient charges. The cost-to-charge ratio is an all-payer ratio that covers all applicable hospital costs and charges relating to patient care. This ratio does not distinguish between payer types such as Medicare, Medicaid or private pay.
(7) Cost-to-charge ratio (inpatient and outpatient)--Total adjudicated inpatient and outpatient charges for each hospital from all payers, which are converted to cost by dividing the total cost by the total gross patient charges. The cost-to-charge ratio is an all-payer ratio that covers all applicable hospital costs and charges relating to patient care. This ratio does not distinguish between payer types such as Medicare, Medicaid or private pay.
(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 percent 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--HHSC or its designee applies a cost of living index to a hospital's unreimbursed Medicaid costs and its cost of treating uninsured patients based on the Centers for Medicare and Medicaid Services (CMS) Prospective Payment System Hospital Market Basket Index.
(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 the Medicaid 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 non-disproportionate 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 United States 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 HHSC 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 adjudicated claims 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 adjudicated by managed care organizations. Total Medicaid inpatient days includes days that were denied payment for reasons other than eligibility. 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 adjudicated days attributable to individuals eligible for Medicaid in other states. Total Medicaid inpatient days includes days with adjudicated dates between September 1 and August 31 (state fiscal year).
(24) Total Medicaid inpatient hospital payments--Total amount of Title XIX funds, excluding Medicaid disproportionate share funds, a hospital received for adjudicated claims 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 adjudicated claims between September 1 and August 31 (state fiscal year).
(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 including, but not limited to, County Indigent Health Care, Children with Special Health Care Needs, Kidney Health Care, Children's Health Insurance Program (CHIP) payments that are funded entirely with state general revenue, 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: Children's Health Insurance Program (CHIP) payments funded under Title XXI, 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. HHSC 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, HHSC or its designee uses the appropriate parts of the latest available Medicaid cost report in the absence of the cost report for the hospital 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.
(c) Conditions of participation. Before the beginning of each federal fiscal year, which begins October 1, HHSC or its designee shall survey Medicaid hospitals to determine which hospitals meet the state's conditions of participation.
(1) Trauma system. Disproportionate share hospitals must actively participate in the development of a regional trauma system, which includes obtaining trauma facility designation as defined in the state trauma laws (Health and Safety Code, §§773.111 - 773.120) and Department of State Health Services (DSHS) rules. This condition shall apply only if rules and procedures to designate trauma 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 DSHS; and certain hospitals licensed as "special" by DSHS (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.
(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 Office of EMS/Trauma Systems Coordination 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 Office of EMS/Trauma Systems Coordination 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).
(2) 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. MSAs with populations greater than or equal to 121,000, according to the most recent decennial census, are considered "the largest MSAs."
(3) 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 non-emergency obstetrical services to Medicaid recipients. 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.
(4) Each hospital must have a Medicaid inpatient utilization rate of at least one percent.
(5) A hospital eligible for DSH reimbursement must allow HHSC or its designee to have access to its hospital records and accounting systems during regular business hours.
(d) Qualifying formulas for determining disproportionate share status. HHSC will use the following formulas to identify the qualifying Medicaid disproportionate share providers from among the hospitals that meet the two-physician requirement and the state's other conditions of participation in subsection (c) of this section. In the case of hospitals that have merged to form a single Medicaid provider, HHSC or its designee will 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 will receive payments if they merge with other hospitals during the fiscal year, if they continue to meet the conditions of participation in subsection (c) of this section. Children's hospitals that do not otherwise qualify as disproportionate share hospitals will 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 percent. 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 plus the total state and local revenue paid to the hospital for inpatient care in a hospital's fiscal year, divided by a hospital's gross inpatient revenue multiplied by the hospital's inpatient-only 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 70 percent of a figure calculated by adding the mean Medicaid inpatient days plus 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) HHSC arrays each hospital's Medicaid utilization rate in descending order. HHSC first selects hospitals 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) HHSC arrays each rural hospital's Medicaid utilization rate in descending order. HHSC then selects rural hospitals 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) HHSC then arrays each remaining hospital's low income utilization rate in descending order. HHSC selects hospitals whose low income utilization rates are greater than 25 percent. The state considers these hospitals to be Medicaid disproportionate share hospitals.
(4) HHSC arrays each remaining hospital's total Medicaid inpatient days in descending order. HHSC selects hospitals 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) HHSC arrays each remaining hospital's total Medicaid inpatient days in descending order. HHSC selects hospitals, located in urban counties with populations of 250,000 persons or less, whose total Medicaid inpatient days is at least 70 percent of a figure calculated by adding the mean Medicaid inpatient days plus 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. HHSC 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 federal fiscal year, HHSC determines the size of the available funds to reimburse disproportionate share hospitals for the next federal fiscal year, which begins each October 1.
(1) The funds available to reimburse the state chest hospitals equal the total of their adjusted hospital specific limits. The DSH funds available to reimburse state institutes for mental disease (IMDs) are equal to the total of their adjusted hospital specific limit within available DSH funds. If sufficient DSH funds are not available to fully fund adjusted hospital specific limits, then each hospital's funding is adjusted within the DSH funds available under federal law. After DSH funds have been allocated to state chest hospitals and state IMDs, the remaining DSH funds are available for allocation to other qualifying hospitals. The available DSH funds for the remaining hospitals equal the lesser of the funds remaining in the state's annual disproportionate share allotment or the sum of qualifying hospitals' adjusted hospital specific limits.
(2) If HHSC obtains a federal waiver under Section 1115 of the Social Security Act to implement the Medicaid reform provisions in Chapter 531 of the Texas Government Code, Subchapter N, Texas Health Opportunity Pool Trust Fund:
(A) HHSC will subtract from the amount of aggregate DSH funds in a federal fiscal year and subsequent years the estimated aggregate dollar value increase in hospital payments resulting from an increase in Medicaid inpatient or outpatient hospital payment rates for non-state DSH providers approved during the federal fiscal year, if needed to implement the Texas Health Opportunity Pool Trust Fund for the duration of the waiver.
(B) The adjustment prescribed by this subparagraph does not apply to:
(i) a children's hospital,
(ii) an institute for mental disease (IMD),
(iii) a hospital located in a county with 50,000 or fewer persons,
(iv) a hospital that is a Medicare-designated Rural Referral Center (RRC) or Sole Community Hospital (SCH) that is not located in a Metropolitan Statistical Area (MSA) as defined by the U.S. Office of Management and Budget, or
(v) a hospital that is a Medicare-designated Critical Access Hospital (CAH).
(3) Payments for state chest hospitals and state institutes for mental disease (IMDs) are made in the following manner, unless HHSC determines the hospital's proposed reimbursement has exceeded its specific limit.
(A) A state chest hospital that meets the requirements for disproportionate share status and provides inpatient hospital services receives annually up to 100 percent of its adjusted hospital specific limit.
(B) A state IMD that meets the requirements of disproportionate share status and provides inpatient psychiatric services receives up to 100 percent of its adjusted hospital specific limit within available DSH funds. If sufficient DSH funds are not available to fully fund adjusted hospital specific limits, then each hospital's funding is adjusted pro rata within the DSH funds available under federal law. Aggregate payments made to IMD facilities statewide are subject to federally mandated reimbursement limits.
(4) Payments for the remaining hospitals will be made in the following manner, unless HHSC determines the hospital's proposed reimbursement has exceeded its specific limit. Payments will be made based on both weighted inpatient Medicaid days and weighted low-income days. HHSC weights each hospital's total inpatient Medicaid days and low-income days by the appropriate weighting factor. HHSC defines a low-income day as a day derived by multiplying a hospital's total inpatient census days from its fiscal year ending 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 121,000, according to the most recent decennial census, are considered "the largest MSAs." Children's hospitals also shall receive weights because of the special nature of the services they provide. All other hospitals receive weighting 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 by its percent of the total inpatient Medicaid days. One-half of the available fund will reimburse each qualifying hospital by its percent of low income days. HHSC determines whether hospitals in rural areas will receive 5.5 percent or more of the gross disproportionate share hospital funds for non-state hospitals. If hospitals in rural areas will receive at least 5.5 percent of the gross non-state hospital funds, HHSC will reimburse them using existing principles. If hospitals in rural areas will not receive at least 5.5 percent of non-state hospital funds, HHSC will reimburse them at 5.5 percent of non-state hospital funds, using existing principles. Reimbursement for the remaining hospitals is determined as follows:
(A) HHSC 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)(4)(B)
(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 121,000 and less than 300,000 are weighted at 2.5.
(iii) MSAs with populations greater than or equal to 300,000 and less than 1,000,000 are weighted at 2.75.
(iv) MSAs with populations greater than or equal to 1,000,000 and less than 3,000,000 are weighted at 3.0.
(v) MSAs with populations greater than or equal to 3,000,000 are weighted at 3.5.
(vi) HHSC may change the weights as needed in the DSH program to address changes in program size.
(D) HHSC 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 subparagraph (E) of this subsection. If HHSC or its designee determines that a hospital's Medicaid payments exceed its Medicaid costs, HHSC will reduce the hospital's cost of uninsured patients in the year the DSH payment is made by the amount of the overage.
(i) The Medicaid shortfall includes total Medicaid charges related to adjudicated claims 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 charges related to adjudicated claims for each hospital are converted to cost, utilizing a calculated cost-to-charge ratio (inpatient and outpatient). HHSC or its designee determines that ratio by using the hospital's CMS Form 2552, Hospital and Hospital Health Care Complex Cost Report, that was submitted for the fiscal year ending in the previous calendar year. HHSC 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, HHSC or its designee uses the total cost from the CMS Form 2552, Worksheet B, Part I, Column 25, and total charges from the CMS Form 2552, Worksheet C, Part I, Column 8. The ratio is the total cost divided by the total gross patient charges. The cost-to-charge ratio is an all-payer ratio. HHSC removes from the calculation of the cost-to-charge ratio non-hospital services including, but not limited to, ambulance, rural health clinics, primary home care, home health agencies, hospice, and skilled nursing facilities.
(iii) HHSC 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. Hospitals must not include non-reimbursable cost centers listed on the CMS Form 2552, Schedule B, Part I, Column 25, Lines 96 through 100. The charges from reporting hospitals are multiplied by each hospital's cost-to-charge ratio (inpatient and outpatient) to determine the cost. Hospitals that report on their annual DSH application charges for patients without health insurance or other source of third party payments, and payments made by or on behalf of those patients, must include adjustments to charges and payments received during the hospital's fiscal year and for five months after the end of the hospital's fiscal year.
(iv) After HHSC 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, HHSC 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) HHSC or its designee shall trend each hospital's hospital specific limit using the inflation rates described in subsection (b)(12) of this section. HHSC 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 federal fiscal year DSH program. HHSC or its designee shall then multiply the portion of the hospital's cost report year occurring in the federal fiscal year by the inflation update factor used for each federal fiscal year in the calculation of hospital reimbursement rates for each federal 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) HHSC 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, HHSC or its designee reduces the hospital's payment to its adjusted hospital specific limit.
(G) If there are DSH funds left in the available fund for the remaining hospitals, because some hospitals have had their DSH payments reduced to their adjusted hospital specific limits, HHSC or its designee distributes the excess funds according to the provisions in this section. For hospitals whose projected DSH payments are less than their adjusted hospital specific limits, HHSC 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.
(H) Only those hospitals that are below their adjusted hospital specific limits are eligible to participate in this distribution. The DSH 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 HHSC determination of eligibility and estimated payment amount. HHSC notifies a hospital of its tentative eligibility or ineligibility and estimated payment amount at the beginning of the federal fiscal year. A hospital that does not qualify or that contends the amount of payment is incorrect may request a review by the state in accordance with paragraph (1) of this subsection. Tentative eligibility determinations and estimated payment amounts for all hospitals may change depending on the outcome of the review.
(1) Except as specified in paragraph (4) of this subsection, a request for review must be submitted in writing to HHSC within 15 calendar days of the date of the notification of tentative eligibility or ineligibility. The request must contain specific documentation supporting its contention that HHSC made factual or calculation errors that, if corrected, would result in the hospital's qualifying for payments or receiving a higher payment amount. A hospital must submit additional documentation within 30 calendar days of the date of notification of tentative eligibility or ineligibility. The written request for review and all supporting documentation must be sent to the Director of Hospital Reimbursement, Rate Analysis Department of HHSC.
(2) The review is:
(A) limited to allegations of factual or calculation errors made by HHSC.
(B) supported by documentation submitted by the hospital or used by HHSC in making its original determination.
(C) solely a paper review and is not an adversarial hearing.
(3) HHSC makes a determination and notifies the hospital of the results of a review at the time of the first monthly payment. Any adjustments made as a result of a review will not exceed the limits of available DSH funds.
(4) No additional review is conducted after first monthly payments are made unless, at the time of the first monthly payments, HHSC gives a hospital its first notice that the hospital is ineligible for DSH funding. In that case, the hospital may then request a review in accordance with paragraph (1) of this subsection.
(5) A request for review may not be based on a hospital's claim that the data submitted to HHSC by the hospital or a fiscal intermediary is incorrect or incomplete. On or about April 1 of each year, HHSC sends each participating hospital a report of adjudicated data received from fiscal intermediaries reflecting the hospital's Medicaid days, Medicaid charges, and Medicaid payments during the relevant time period. A hospital may communicate directly with the fiscal intermediary to correct any data in that report that the hospital believes is inaccurate. The fiscal intermediary must submit a corrected report to HHSC by July 1 of each year for the corrected report to be considered.
(6) At the request of a hospital, HHSC will conduct administrative reviews in cases where a hospital and a fiscal intermediary cannot resolve differences in adjudicated data. HHSC will make the final determination in these cases.
(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 HHSC or its designee has reason to believe that a hospital is not complying with the conditions of participation, HHSC 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, HHSC 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 federal 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 federal 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 HHSC or its designee.
(A) The hospital's written request for a review must:
(i) be made to HHSC or its designee;
(ii) be received by HHSC 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 HHSC or its designee in making its original determination; and
(iii) not conducted as an adversary hearing.
(C) HHSC 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 federal fiscal year, as determined by the appropriate reimbursement formula and from available funds.
(i) Voluntary withdrawal from the DSH program. If HHSC obtains a federal waiver under Section 1115 of the Social Security Act to implement the Medicaid reform provisions in Chapter 531 of the Texas Government Code, Subchapter N, Texas Health Opportunity Pool Trust Fund:
(1) HHSC will recoup all DSH payments made during the same federal fiscal year to a hospital that voluntarily terminates its participation in the DSH program.
(2) HHSC will not redistribute to other hospitals under this division the amount of any recovered and non-reimbursed projected DSH funds.
(3) A hospital that voluntarily terminates from the DSH program will be ineligible to receive payments under this section for the next three consecutive federal fiscal years after the hospital's termination.
(4) If a hospital receives DSH funding in one federal fiscal year and does not apply for DSH funding in the following federal fiscal year, even though it would have qualified in that year, the amount of that hospital's DSH funding in the previous year will not be redistributed to other hospitals under this division.
(5) If a hospital does not apply for DSH funding in the federal fiscal year following a federal fiscal year in which it received DSH funding, even though it would have qualified for DSH funding in that year, the hospital will be ineligible to receive payments under this section for the next three consecutive federal fiscal years after the year in which it did not apply.
(j) Recovery of DSH funds. If a hospital receives an overpayment of DSH funds, including an overpayment that results from HHSC error or audit, HHSC will recoup such overpayment. Notwithstanding subsection (i) of this section, these funds will be redistributed to DSH providers that are eligible for additional payments subject to their hospital specific limits.
(k) All DSH payments are subject to the availability of appropriated state and federal funds.
(l) If a hospital is located in a county that is declared a federal natural disaster area, it may request that the state use the hospital's data, excluding data used to calculate the one percent Medicaid minimum utilization rate and the adjusted hospital specific limit, from the most recent year prior to the natural disaster for qualification and reimbursement purposes. This request must be submitted in writing to the state with the hospital's annual DSH application. The state reserves the right to approve or deny the written exception request and will notify the hospital of its decision prior to the beginning of the DSH program year. Hospitals may request an administrative review of the state's decision in this subsection. The review will be conducted under the provisions of subsection (g) of this section.
(m) Audit process. HHSC or its designee will audit periodically DSH providers. HHSC will determine the number of hospitals that will be audited on site and that will undergo desk reviews. HHSC will use statistically valid methods to determine the sample size of information for auditing or desk review.
(n) Failure to provide supporting documentation. HHSC or its designee will exclude data from calculations under this section if a hospital fails to maintain and provide adequate documentation to support that data.
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 August 11, 2008.
TRD-200804244
Steve Aragón
Chief Counsel
Texas Health and Human Services Commission
Effective date: September 1, 2008
Proposal publication date: July 4, 2008
For further information, please call: (512) 424-6900
The Health and Human Services Commission (HHSC) adopts an amendment to §355.8067, concerning disproportionate share hospital reimbursement methodology for state-owned teaching hospitals, with changes to the proposed text as published in the July 4, 2008, issue of the Texas Register (33 TexReg 5127). The text of the rule will be republished. The rule changes clarify current practices as well as make changes to the processes used to determine, review, and audit DSH payments. The rule will become effective on September 1, 2008.
One of the purposes of the rule is to more equitably distribute federal DSH funds among Texas hospitals. Since there is a set amount of aggregate DSH money available to Texas hospitals, if one hospital receives more DSH money, other hospitals receive less. HHSC proposed to standardize a number of DSH program elements among hospitals participating in the DSH program to create consistent requirements for all hospitals.
The rule also incorporates assurances given by HHSC to the Centers for Medicare and Medicaid Services (CMS). After an audit by the federal Health and Human Services Office of Inspector General, HHSC agreed to add DSH rule language to codify its administrative practices relating to: calculating cost-to-charge ratios, handling Medicaid profits in calculating a hospital's Medicaid shortfall, and calculating uninsured costs.
Finally, the rule includes changes in subsection (j) that relate to Medicaid reform initiatives at Chapter 531 of the Texas Government Code, Subchapter N, Texas Health Opportunity Pool Trust Fund. HHSC submitted a Medicaid reform waiver request to CMS on April 16, 2008, with a comprehensive plan to transform health care in Texas by providing more people with insurance, reducing reliance on expensive emergency room visits for basic care, and making it easier for the working poor to buy into employer-sponsored health coverage. Under the conditions specified in this amendment, if a state-owned teaching hospital withdraws from the DSH program, HHSC will use its DSH funds to help finance the reform.
Comments
HHSC received written comments during the 30-day comment period from the Travis County Healthcare District (TCHD) and the Texas Association of Public and Nonprofit Hospitals (TAPNH). A summary of the comments and HHSC's responses follows.
Comment: Both TCHD and TAPNH supported the plan to redistribute DSH funds following recoupment after an overpayment to a DSH provider.
Response: HHSC appreciates the support of this rule change and believes that the new rule language will be beneficial to HHSC and the provider community. The rule language was not changed in response to this comment.
Comment: Both TCHD and TAPNH opposed the plan in subsection (j) to withdraw funds from the DSH program when a DSH provider voluntarily withdraws from the DSH program. TCHD and TAPNH seek instead to have these DSH funds redistributed to other DSH providers. TAPNH believes that the plan to make a hospital that voluntarily withdraws from the DSH program ineligible for DSH funding for three years is excessive, punitive and without purpose.
Response: The proposed change to subsection (j) is contingent on HHSC's successfully obtaining federal approval of its Medicaid reform waiver. The proposed amendment supports HHSC's Medicaid reform efforts to transform health care in Texas by providing more people with insurance, reducing reliance on expensive emergency room visits for basic care, and making it easier for the working poor to buy into employer-sponsored health coverage. Should the waiver be approved, hospitals that remain in the DSH program will receive the same amount in DSH funding that they would have received had the exiting hospital remained in the DSH program. HHSC believes that the three-year ineligibility period protects the hospitals remaining in the program by stabilizing the DSH allocation for the remaining DSH hospitals for a period of three years. The rule language was not changed in response to these comments.
Comment: TAPNH opposed using the Centers for Medicare and Medicaid Services (CMS) Prospective Payment System (PPS) Market Basket Index exclusively for DSH inflationary rates. TAPNH asked that HHSC continue to use the greater of the PPS Market Basket Index or the Texas-specific medical care component of the Consumer Price Index. Also, TAPNH requested that HHSC clarify that the PPS Market Basket Index would not reflect any decreases to that figure required by Congress.
Response: HHSC has employed the greater of the CMS PPS Market Basket Index and the Texas-specific medical component of the Consumer Price Index in the past for hospital reimbursement. However, applying the greater of two indexes may have skewed the rates higher or lower over time. HHSC decided to use the CMS PPS Market Basket Index because CMS uses this index as the trend factor for inflationary cost. HHSC will use the CMS PPS Market Basket Index as published by CMS for the inpatient cost-of-living increase calculations. The rule language was not changed in response to the comment.
Comment: TAPNH suggested HHSC clarify in §355.8067(f) what time period a "hospital's year" refers to.
Response: As a result of this comment, HHSC changed the language in subsection (f) to refer to a "hospital's cost reporting period" instead of a "hospital's year."
Comment: TAPNH strongly supports significant liquidated damages for fiscal intermediaries that submit late or inaccurate data to the state.
Response: HHSC will consider this comment when it develops provisions for liquidated damages for fiscal intermediaries. The rule language was not changed as a result of this comment.
Comment: TAPNH recommends HHSC share the methods used to determine sample size with the audited hospitals for their review of the sampling methodology.
Response: HHSC will consider this comment when it develops methods to determine audit sample sizes. The rule language was not changed as a result of this comment.
Legal Authority
The amendment is adopted under Texas Government Code §531.033, which provides the Executive Commissioner of HHSC with broad rulemaking authority; and Human Resources Code §32.021, and Texas Government Code §531.021(a), which provide HHSC with the authority to administer the federal medical assistance (Medicaid) program in Texas.
§355.8067.Disproportionate Share Hospital Reimbursement Methodology for State-Owned Teaching Hospitals.
(a) A state-owned teaching hospital is eligible for disproportionate share hospital (DSH) reimbursement. A state-owned teaching hospital is a hospital owned and operated by a state university or other agency of the state. Each year, HHSC will mail a DSH application packet to all active Medicaid hospitals. The application packet may request self-reported data HHSC deems necessary to supplement the AHA/THA/DSHS annual hospital survey and the fiscal intermediary data. A state-owned teaching hospital may apply for DSH funds annually by completing the application packet by the deadline specified by HHSC in the packet's cover letter. A hospital that fails to submit a complete application by the deadline specified by HHSC will not be eligible to receive DSH funds that year.
(b) Conditions of participation. Before the beginning of each federal fiscal year, which begins October 1, HHSC will survey Medicaid hospitals to determine which hospitals meet the state's conditions of participation.
(1) A hospital eligible for DSH reimbursement must allow HHSC or its designee to have access to its hospital records and accounting systems during regular business hours.
(2) Each hospital participating in the DSH program must have a Medicaid inpatient utilization rate of at least one percent.
(3) To qualify for disproportionate share payments, each hospital must have at least two physicians (M.D. or D.O.), with staff privileges at the hospital, who have agreed to provide non-emergency 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 non-emergency obstetrical services to the general population as of December 22, 1987.
(c) For purposes of this section, the following words and terms shall have the following meanings, unless the context clearly indicates otherwise.
(1) Total Medicaid inpatient days--The total number of Title XIX inpatient days based on the latest available state fiscal year adjudicated claims data for patients eligible for Title XIX benefits. The term excludes days for patients who are covered for services that are fully or partially reimbursable by Medicare. The term includes Medicaid-eligible days of care adjudicated by managed care organizations. Total Medicaid inpatient days include days that were denied payment for reasons other than eligibility. 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 adjudicated dates between September 1 and August 31 (state fiscal year).
(2) Total inpatient census days--The total number of a hospital's inpatient census days during its fiscal year ending in the previous calendar year.
(3) Cost of services to uninsured patients--The 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 those 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.
(4) Hospital specific limit--The sum of the following two measurements: Medicaid shortfall and costs of services to uninsured patients.
(5) Medicaid shortfall--The cost of services (inpatient and outpatient) furnished to Medicaid patients, less the amount paid under the non-disproportionate share hospital payment methodology.
(6) Cost-to-charge ratio (inpatient and outpatient)--Total adjudicated charges for each hospital from all payers that are converted to cost by dividing the total cost by the total gross inpatient charges. The cost-to-charge ratio is an all-payer ratio that covers all applicable hospital costs and charges relating to patient care. This ratio does not distinguish between payer types such as Medicare, Medicaid or private pay.
(7) Adjusted hospital specific limit--A hospital specific limit trended forward to account for the inflation update factor since the base year.
(8) Inflation update factor--HHSC or its designee applies a cost of living index to a hospital's unreimbursed Medicaid costs and its cost of treating uninsured patients, based on the Centers for Medicare and Medicaid Services (CMS) Prospective Payment System Hospital Market Basket Index.
(9) Medicaid inpatient utilization rate--The 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.
(10) Payments received from uninsured patients--Those payments received from or on behalf of uninsured patients as defined in paragraph (3) of this subsection.
(11) Charity charges--The total amount of hospital charges for inpatient and outpatient services attributed to charity care in a cost reporting period.
(12) Available fund--The total amount of funds that may be reimbursed to the state-owned teaching hospitals.
(13) HHSC--The Texas Health and Human Services Commission or its designee.
(14) Adjudicated--A hospital claim that is approved or denied for payment by HHSC or its designee, or another payer in the case of non-HHSC programs.
(d) HHSC reimburses state-owned teaching hospitals on a monthly basis from the available fund for state-owned teaching hospitals. Monthly payments equal one-twelfth of annual payments unless it is necessary to adjust the amount because payments are not 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. Prior to the start of the next federal fiscal year, HHSC determines the size of the fund to reimburse state-owned teaching hospitals for the next federal fiscal year. The available fund to reimburse the state-owned teaching hospitals equals the total of their disproportionate share hospital payments, as follows: a state-owned teaching hospital that meets the requirements for disproportionate share status receives annually up to 100 percent of its adjusted hospital specific limit.
(e) HHSC 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 (c)(5) of this section, and its cost of services to uninsured patients as defined in subsection (c)(3) of this section, multiplied by the appropriate inflation update factor, as provided for in subsection (f) of this section.
(1) The Medicaid shortfall includes total Medicaid charges related to adjudicated claims and any Medicaid payments 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. Refer to subsection (c)(5) of this section.
(A) The total Medicaid charges related to adjudicated claims for each hospital are converted to cost, utilizing a calculated cost-to-charge ratio (inpatient and outpatient). HHSC determines that ratio by using the hospital's CMS 2552-92, Hospital and Hospital Health Care Complex Cost Report, that was submitted for the fiscal year ending in the previous calendar year. HHSC or its designee uses the latest available Medicare cost report in the absence of the Medicare 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, HHSC uses the total cost from the CMS 2552-92, Worksheet B, Part 1, Column 25, and total charges from the CMS 2552-92, Worksheet C, Part 1, Column 8. The ratio is the total cost divided by the total gross patient charges. The ratio of costs to charges is an all-payer ratio, which does not distinguish between payer types. HHSC removes from the calculation of the cost-to-charge ratio non-hospital services including, but not limited to, ambulance, rural health clinics, primary home care, home health agencies, hospice, and skilled nursing facilities.
(B) HHSC determines the cost of services to patients who have no health insurance or source of third party payments for services provided during the 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. Hospitals must not include non-reimbursable cost centers listed on the CMS Form 2552, Schedule B, Part I, Column 25, Lines 96 through 100. The charges are multiplied by each hospital's cost-to-charge ratio (inpatient and outpatient) to determine the cost. Hospitals that report annually charges for patients without health insurance or other source of third party payments, and payments made by or on behalf of those patients, must include charge and payment adjustments made during the hospital's fiscal year and for five months after the end of the hospital's fiscal year.
(2) After HHSC 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, HHSC subtracts from each hospital's cost of services the amount of payments made by or on behalf of those patients.
(3) If HHSC determines that a hospital's Medicaid payments exceed its Medicaid costs in the hospital's fiscal year, HHSC will reduce the hospital's cost of uninsured patients in the year the DSH payment is made by the amount of the overage.
(f) HHSC trends each hospital's hospital specific limit using the inflation update factor, as defined in subsection (c)(8) of this section, in calculating the adjusted hospital specific limit. HHSC calculates the number of months from the mid-point of the hospital's cost reporting period to the mid-point of the federal DSH program fiscal year. HHSC then multiplies the portion of the hospital's cost reporting period occurring in the DSH program fiscal year by the inflation update factor defined in subsection (c)(8) of this section to obtain each hospital's adjusted hospital specific limit.
(g) If a hospital is located in a county that is declared a federal natural disaster area, it may request that the state use the hospital's data, excluding data used to calculate the one percent Medicaid minimum utilization rate and the adjusted hospital specific limit in compliance with sections 1923(d)(3) and 1923(g) of the Social Security Act, from the most recent year prior to the natural disaster for qualification and reimbursement purposes. This request must be submitted in writing to the state with the hospital's annual DSH application. The state reserves the right to approve or deny the written exception request and will notify the hospital of its decision prior to the beginning of the DSH program year. Hospitals may request a review of the state's decision in this subsection.
(h) All DSH payments are subject to the availability of appropriated state and federal funds.
(i) Review of HHSC determination of eligibility and estimated payment amount. HHSC notifies a hospital of its tentative eligibility or ineligibility and estimated payment amount at the beginning of the federal fiscal year. A hospital that does not qualify or that contends the amount of payment is incorrect may request a review by the state in accordance with paragraph (1) of this subsection. Tentative eligibility determinations and estimated payment amounts for all hospitals may change depending on the outcome of the review.
(1) Except as specified in paragraph (4) of this subsection, a request for review must be submitted in writing to HHSC within 15 calendar days of the date of the notification of tentative eligibility or ineligibility. The request must contain specific documentation supporting its contention that HHSC made factual or calculation errors which, if corrected, would result in the hospital's qualifying for payments or receiving a higher payment amount. A hospital must submit additional documentation within 30 calendar days of the date of notification of tentative eligibility or ineligibility. The written request for review and all supporting documentation must be sent to the Director of Hospital Reimbursement, Rate Analysis Department of HHSC.
(2) The review is:
(A) limited to allegations of factual or calculation errors made by HHSC.
(B) supported by documentation submitted by the hospital or used by HHSC in making its original determination.
(C) solely a paper review and is not an adversarial hearing.
(3) HHSC makes a determination and notifies the hospital of the results of a review at the time of the first monthly payment. Any adjustments made as a result of a review will not exceed the limits of available DSH funds.
(4) No additional review is conducted after first monthly payments are made unless, at the time of the first monthly payments, HHSC gives a hospital its first notice that the hospital is ineligible for DSH funding. In that case, the hospital may then request a review in accordance with paragraph (1) of this subsection.
(5) A request for review may not be based on a hospital's claim that the data submitted to HHSC by the hospital or a fiscal intermediary is incorrect or incomplete. On or about April 1 of each year, HHSC sends each participating hospital a report of adjudicated data received from fiscal intermediaries reflecting the hospital's Medicaid days, Medicaid charges, and Medicaid payments during the relevant time period. A hospital may communicate directly with the fiscal intermediary to correct any data in that report that the hospital believes is inaccurate. The fiscal intermediary must submit a corrected report to HHSC by July 1 of each year for the corrected report to be considered.
(6) At the request of a hospital, HHSC will conduct administrative reviews in cases where a hospital and a fiscal intermediary cannot resolve differences in adjudicated data. HHSC will make the final determination in these cases.
(j) Voluntary withdrawal from the DSH program. If HHSC successfully obtains a federal waiver under Section 1115 of the Social Security Act to implement the Medicaid reform provisions in Chapter 531 of the Texas Government Code, Subchapter N, Texas Health Opportunity Pool Trust Fund:
(1) HHSC will recoup all DSH payments made during the same federal fiscal year to a hospital that voluntarily terminates its participation in the DSH program.
(2) HHSC will not redistribute to other hospitals under this division the amount of any recovered and non-reimbursed projected DSH funds.
(3) A hospital that voluntarily terminates from the DSH program will be ineligible to receive payments under this section for the next three consecutive federal fiscal years after the hospital's termination.
(4) If a hospital receives DSH funding in one federal fiscal year and does not apply for DSH funding in the following federal fiscal year, even though it would have qualified in that year, the amount of that hospital's DSH funding in the previous year will not be redistributed to other hospitals under this section.
(5) If a hospital does not apply for DSH funding in the federal fiscal year following a federal fiscal year in which it received DSH funding, even though it would have qualified for DSH funding in that year, the hospital will be ineligible to receive payments under this section for the next three consecutive federal fiscal years after the year in which it did not apply.
(k) Recovery of DSH funds. If a hospital receives an overpayment of DSH funds, including an overpayment that results from HHSC error or audit, HHSC will recoup such overpayment. Notwithstanding subsection (j) of this section, these funds will be redistributed to DSH providers that are eligible for additional payments subject to their hospital specific limits.
(l) Audit process. HHSC will periodically audit and desk review data submitted by DSH providers. HHSC will determine the number of hospitals that will be audited on site and that will undergo desk reviews. HHSC will use statistically valid methods to determine the sample size of information for auditing or desk review.
(m) Failure to provide supporting documentation. HHSC will exclude data from calculations under this section if a hospital fails to maintain and provide adequate documentation to support that data.
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 August 11, 2008.
TRD-200804245
Steve Aragón
Chief Counsel
Texas Health and Human Services Commission
Effective date: September 1, 2008
Proposal publication date: July 4, 2008
For further information, please call: (512) 424-6900