Disproportionate Share and Supplemental Hospital Payments [42 Pa.B. 1003]
[Saturday, February 18, 2012]The Department of Public Welfare (Department) is providing final notice of a change to the formula used to calculate the disproportionate share hospital (DSH) payments to small and sole community hospitals and the Medical Assistance (MA) Rehabilitation Adjustment Payments authorized under the Commonwealth's Medicaid State Plan for Fiscal Year (FY) 2010-2011.
Background
The Department published notice of its intent to change the formulas used to calculate the DSH payments to small and sole community hospitals and the MA Rehabilitation Adjustment Payments authorized under the Commonwealth's Medicaid State Plan at 41 Pa.B. 3161 (June 18, 2011). The Department received no public comments during the 30-day comment period.
Changes to the DSH Payments to Small and Sole Community Hospitals
Since Centers for Medicare and Medicaid Services (CMS) approval of the DSH payments to small and sole community hospitals for FY 2010-2011, the Department determined that additional hospitals qualify under the approved eligibility criteria for this payment. The Department proposed to revise the payment percentage amount to conform payments to the amount allocated in the State Plan for these payments. The Department specifically proposed that payments to hospitals qualifying under the second criterion be changed from 27.3% to 24.6% of each qualifying hospital's calculated disproportionate OBRA 1993 limit. In addition, the Department proposed recalculating all hospitals' disproportionate share OBRA 1993 limits using 2008-2009 cost report data. The Department intended to use these updated disproportionate share limits in the determination of payments for hospitals qualifying under criteria (a)(2) or (a)(3).
As a result of further analysis, the Department determined that specifying a percentage under the second criterion of each qualifying hospital's calculated disproportionate OBRA 1993 limit and implementing the recalculated hospital specific disproportionate share OBRA 1993 limits using updated 2008-2009 cost report data would cause the Department to exceed the amount allocated for these payments. Therefore, the Department is not implementing the change as detailed in the notice of intent.
To ensure that the amount allocated under the State Plan is not exceeded for any year in which the DSH payments to Small and Sole Community Hospitals are made, the Department will make payments to qualifying hospitals under the second criterion as a proportionate amount of the remaining funds allocated to this DSH payment after reducing the allocated amount by payments made under the other qualifying criteria. A hospital's proportionate amount is determined by dividing the qualifying hospital's calculated DSH OBRA 1993 limit by the total calculated DSH OBRA 1993 limits for all hospitals meeting the second qualifying criterion for this payment. For purposes of this calculation, the hospitals' DSH OBRA 1993 limits will remain those calculated using FY 2007-2008 MA cost report data available to the Department as of July 2010 as reduced by all MA payments the Department calculated the hospital to have received as of September 30, 2010.
The Department will not use the updated hospital specific disproportionate share OBRA 1993 limits but will continue to use the DSH OBRA 1993 limit based on the FY 2007-2008 MA cost report data available to the Department as of July 2010.
Changes to the MA Rehabilitation Adjustment Payment
Under the approved State Plan, freestanding rehabilitation hospitals that qualify for an MA Rehabilitation Adjustment Payment receive a supplemental payment equal to 92% of the total inpatient MA fee-for-service (FFS) payment amount made to the hospital as reported in the hospital's FY 2007-2008 MA cost report available to the Department as of July 2010. Since CMS approval of this payment, an additional $4.2 million was allocated to this payment. The Department proposed increasing the amount allocated to the MA Rehabilitation Adjustment Payments to $18.619 million and the percentage used to determine the payment amount for each qualifying freestanding rehabilitation hospital to 116% of a hospital's FY 2007-2008 inpatient MA FFS payments. The Department implemented these changes as detailed in the intent notice.
Fiscal Impact
The FY 2010-2011 fiscal impact, as a result of these changes to the small and sole community hospitals DSH payments and the MA Rehabilitation Adjustment Payments is $4.198 million ($1.862 million in State general funds and $2.336 million in Federal funds upon approval by CMS).
GARY D. ALEXANDER,
SecretaryFiscal Note: 14-NOT-743. (1) General Fund; (2) Implementing Year 2010-11 is $1,862,000; (3) 1st Succeeding Year 2011-12 is $0; 2nd Succeeding Year 2012-13 is $0; 3rd Succeeding Year 2013-14 is $0; 4th Succeeding Year 2014-15 is $0; 5th Succeeding Year 2015-16 is $0; (4) 2009-10 Program—$371,515,000; 2008-09 Program—$426,822,000; 2007-08 Program—$468,589,000; (7) MA—Inpatient and MA—Outpatient; (8) recommends adoption. Funds have been included in the budget to cover this increase.
[Pa.B. Doc. No. 12-301. Filed for public inspection February 17, 2012, 9:00 a.m.]
