DEPARTMENT OF
PUBIC WELFAREInpatient Hospital Services [35 Pa.B. 303] This notice provides notice of the Department of Public Welfare's (Department) intent to revise its payment method for inpatient hospital services effective on or after January 1, 2005. These revisions will affect acute care general hospitals, private psychiatric hospitals, psychiatric units of general hospitals, rehabilitation hospitals and rehabilitation units of general hospitals.
The Department and representatives of the hospital industry have met extensively to negotiate the terms of a Hospital Rate Agreement. Based on these negotiations, the Department proposes to change its payment methodology for inpatient services as follows:
Base Payment Rates
Effective January 1, 2005, the Department will increase each hospital's or hospital unit's base payment rate for inpatient services provided on a fee-for-service basis by 2.5%.
Inpatient Disproportionate Share; Outpatient Disproportionate Share; and Direct Medical Education Payments
Effective January 1, 2005, the Department intends to increase Inpatient Disproportionate Share payments by 3.5%. For Fiscal Year (FY) 2004-2005, the aggregate amount of Inpatient Disproportionate Share payments is to be limited to $63.211 million in total funds. In addition to the current three qualifying methods for hospitals, a new qualifying method will be added for acute care hospitals effective January 1, 2005. An acute care hospital, including its units, will be eligible for inpatient DSH if its total number of Medical Assistance (MA) inpatient days (including exempt unit days) is equal to or greater than two standard deviations above the mean of all such days for all hospitals in this Commonwealth. Hospitals qualifying under this method will be ranked with all other previously qualified hospitals to determine a payment amount.
Effective January 1, 2005, the Department intends to increase Outpatient Disproportionate Share payments by 3.0%, with no change in the current methodology for determining eligibility for those payments. For FY 2004-2005, the aggregate amount of Outpatient Disproportionate Share payments is to be limited to $61.405 million in total funds.
Effective January 1, 2005, the Department intends to increase Medical Education payments by 3.0%, with no change in the current methodology for determining eligibility for those payments. For FY 2004-2005, the aggregate amount of Medical Education payments is to be limited to $76.712 million in total funds.
Hospital Quality Care Incentive Proposal
The Department is proposing a pilot program that would begin July 1, 2005, and would adjust the rate of increase for disproportionate share hospitals' medical education and disproportionate share payments based on individual hospital performance related to certain quality related measures and activities.
In this program, the Department proposes to provide incentives to hospitals that demonstrate commitment to improved management of the healthcare needs of MA consumers by rewarding hospitals for the better management of chronic diseases and drug therapies, better coordination with physicians, Managed Care Organizations and the ACCESS Plus Program and investing in quality related infrastructure.
The Department is proposing a payment system that would adjust the rate of increase for hospitals' disproportionate share and medical education payments by up to 150% based on a scoring system used to measure re-admission rates for the most common chronic diseases in the MA population, measures related to left ventricular function assessment and community acquired pneumonia, the reduction of pharmacy errors, the use of a single medical record and quality reporting used to score hospitals.
Changes to Acute Care Hospital Reimbursement Methodology
The Department proposes to convert its current Medicare-based Diagnosis Related Group (DRG) payment methodology to the All Patient Refined DRG methodology in calendar year 2006. The Department intends to publish a separate public notice detailing this new payment methodology.
Medical Short Stay Program
The Department intends to establish a Medical Short Stay Program (Program) to provide for payments for patients seen by hospitals where an inpatient admission is not warranted, but care beyond a typical emergency room visit is required. The Department will publish a separate public notice detailing this Program.
Fiscal Impact
This change will result in a cost of $6.111 million in total funds ($3.270 million in Federal funds, $2.841 million in State funds) for FY 2004-05 and a cost of $28.557 million in total funds ($15.476 million in Federal funds, $13.081 million in State funds) for FY 2005-06.
Public Comment
Interested persons are invited to submit written comments regarding this notice to the Department of Public Welfare, Office of Medical Assistance Programs, c/o Deputy Secretary's Office, Attention: Regulations Coordinator, Room 515, Health and Welfare Building, Harrisburg, PA 17120. Comments received within 30 days will be reviewed and considered in determining the final payment rates and payment methodologies for inpatient hospital services.
Persons with a disability who require an auxiliary aid or service may submit comments using the AT&T Relay Service at (800) 654-5984 (TDD users) or (800) 654-5988 (voice users).
ESTELLE B. RICHMAN,
SecretaryFiscal Note: 14-NOT-406. (1) General Fund;
Inpatient
Outpatient
(2) Implementing Year 2004-05 is $2.633 million $208,000 (3) 1st Succeeding Year 2005-06 is $12.013 million $1.068 million 2nd Succeeding Year 2006-07 $12.013 million $1.068 million 3rd Succeeding Year 2007-08 $12.013 million $1.068 million 4th Succeeding Year 2008-09 $12.013 million $1.068 million 5th Succeeding Year 2009-10 $12.013 million $1.068 million (4) 2003-04 Program $411.042 million $727.979 million 2002-03 Program $407.104 million $666.832 million 2001-02 Program $417.512 million $705.750 million (7) MA-Inpatient and MA-Outpatient; (8) recommends adoption. Funds for Fiscal Year 2004-05 payments have been included in Act 7-A of 2004, the General Appropriation Act of 2004. [Pa.B. Doc. No. 05-67. Filed for public inspection January 7, 2005, 9:00 a.m.]
