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(a)Introduction. The Texas Health and Human Services Commission (HHSC) uses the methodology described in this section to calculate a hospital-specific limit for each Medicaid hospital participating in either the Disproportionate Share Hospital (DSH) program, described in §355.8065 of this title (relating to Disproportionate Share Hospital (DSH) Reimbursement Methodology), or in the Texas Healthcare Transformation and Quality Improvement Program (the waiver), described in §355.8201 of this title (relating to Waiver Payments to Hospitals). (b)Definitions. (1)Adjudicated claim--A hospital claim for payment for a covered Medicaid service that is paid or adjusted by HHSC or another payer. (2)Centers for Medicare and Medicaid Services (CMS)--The federal agency within the United States Department of Health and Human Services responsible for overseeing and directing Medicare and Medicaid, or its successor. (3)Data year--A 12-month period that is two years before the program year from which HHSC will compile data to determine DSH or uncompensated-care waiver program qualification and payment. (4)Disproportionate share hospital (DSH)--A hospital identified by HHSC that meets the DSH program conditions of participation and that serves a disproportionate share of Medicaid or indigent patients. (5)Dually eligible patient--A patient who is simultaneously eligible for Medicare and Medicaid. (6)HHSC--The Texas Health and Human Services Commission or its designee. (7)Hospital-specific limit--The maximum payment amount that a hospital may receive in reimbursement for the cost of providing Medicaid-allowable services to individuals who are Medicaid eligible or uninsured. The term does not apply to payment for costs of providing services to individuals who have third-party coverage; costs associated with pharmacies, clinics, and physicians; or costs associated with Delivery System Reform and Incentive Payment projects. (A)Interim hospital-specific limit--Applies to payments that will be made during the program year and is calculated as described in subsection (c)(1) - (3) of this section using cost and payment data from the data year. (B)Final hospital-specific limit--Applies to payments made during a prior program year and is calculated as described in subsection (c)(4) of this section using actual cost and payment data from that period. (8)Inflation update factor--Cost of living index based on the annual CMS Prospective Payment System Hospital Market Basket Index. (9)Institution for mental diseases (IMD)--A hospital that is primarily engaged in providing psychiatric diagnosis, treatment, or care of individuals with mental illness, defined in §1905(i) of the Social Security Act. (10)Medicaid contractor--Fiscal agents and managed care organizations with which HHSC contracts to process data related to the Medicaid program. (11)Medicaid cost report--Hospital and Hospital Health Care Complex Cost Report (Form CMS 2552), also known as the Medicare cost report. (12)Medicaid hospital--A hospital meeting the qualifications set forth in §354.1077 of this title (relating to Provider Participation Requirements) to participate in the Texas Medicaid program. (13)Medicaid shortfall--The unreimbursed cost of Medicaid inpatient and outpatient hospital services furnished to Medicaid patients. (14)Outpatient charges--Amount of gross outpatient charges related to the applicable data year and used in the calculation of the Medicaid shortfall. (15)Program year--The 12-month period beginning October 1 and ending September 30. The period corresponds to the waiver demonstration year. (16)Ratio of cost-to-charges (inpatient and outpatient)--A Medicaid cost report-derived cost center ratio that covers all applicable hospital costs and charges relating to patient care, inpatient and outpatient. This ratio is used in calculating the hospital-specific limit and does not distinguish between payer types such as Medicare, Medicaid, or private pay. (17)The waiver--The Texas Healthcare Transformation and Quality Improvement Program, a Medicaid demonstration waiver under §1115 of the Social Security Act that was approved by CMS on December 12, 2011. Pertinent to this section, the waiver establishes a funding pool to assist hospitals with uncompensated-care costs. (18)Third-party coverage--Creditable insurance coverage consistent with the definitions in 45 Code of Federal Regulations (CFR) Parts 144 and 146, or coverage based on a legally liable third-party payer. (19)Total state and local payments--Total amount of state and local payments that a hospital received for inpatient and outpatient care during the data year. The term includes payments under state and local programs that are funded entirely with state general revenue funds and state or local tax funds, such as County Indigent Health Care, Children with Special Health Care Needs, and Kidney Health Care. The term excludes payment sources that contain federal dollars such as Medicaid payments, Children's Health Insurance Program (CHIP) payments funded under Title XXI of the Social Security Act, Substance Abuse and Mental Health Services Administration, Ryan White Title I, Ryan White Title II, Ryan White Title III, and contractual discounts and allowances related to TRICARE, Medicare, and Medicaid. (20)Uncompensated-care waiver payments--Payments to hospitals participating in the waiver that are intended to defray the uncompensated costs of eligible services provided to eligible individuals. (21)Uninsured cost--The cost to a hospital of providing inpatient and outpatient hospital services to uninsured patients as defined by CMS. (c)Calculating a hospital-specific limit. Using information from each hospital's DSH or uncompensated-care waiver application and from HHSC's Medicaid contractors, HHSC will determine the hospital's interim hospital-specific limit in compliance with paragraphs (1) - (3) of this subsection. Final hospital-specific limits will be determined for DSH hospitals only in compliance with paragraph (4) of this subsection. (1)HHSC will calculate a hospital's interim hospital-specific limit by adding the hospital's net uninsured costs for the data year and its Medicaid shortfall for the data year, both adjusted for inflation. (2)HHSC will determine the individual components of the hospital-specific limit as follows: (A)Uninsured costs. (i)Each hospital will report in its application its inpatient and outpatient charges for services that would be covered by Medicaid that were provided to uninsured patients discharged during the data year. In addition to the charges in the previous sentence, an IMD may report charges for Medicaid-allowable services that were provided during the data year to Medicaid-eligible and uninsured patients ages 21 through 64. (ii)Each hospital will report in its application all payments received for services that would be covered by Medicaid that are provided to uninsured patients discharged during the data year. (I)For purposes of this section, a payment received is any payment from an uninsured patient or from a third party (other than an insurer) on the patient's behalf, including payments received for emergency health services furnished to undocumented aliens under §1011 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, Pub. L. No. 108-173, except as described in subclause (II) of this clause. (II)State and local payments to hospitals for indigent care are not included as payments made by or on behalf of uninsured patients. (iii)HHSC will convert uninsured charges to uninsured costs using the ratio of cost-to-charges (inpatient and outpatient) as calculated under paragraph (3) of this subsection. (iv)HHSC will subtract all payments received under clause (ii) of this subparagraph from the uninsured costs under clause (iii) of this subparagraph, resulting in net uninsured costs. (B)Medicaid shortfall. (i)HHSC will request from its Medicaid contractors the inpatient and outpatient Medicaid charge and payment data for claims adjudicated during the data year for all active Medicaid participating hospitals. There are circumstances, including the following, in which HHSC will request modifications to the adjudicated data. (I)HHSC will include as appropriate charges and payments for: (-a-)claims associated with the care of dually eligible patients, including Medicare charges and payments; (-b-)claims or portions of claims that were not paid because they exceeded the spell-of-illness limitation; and (-c-)outpatient claims associated with the Women's Health Program. (II)HHSC will exclude charges and payments for: (-a-)claims for services not covered by Medicaid, including: (-1-)claims for the Children's Health Insurance Program; and (-2-)inpatient claims associated with the Women's Health Program; and (-b-)claims submitted after the 95-day filing deadline. (ii)Upon receipt of the requested data from the Medicaid contractors, HHSC will review the information for accuracy and make additional adjustments as necessary. (iii)HHSC will convert the Medicaid charges to Medicaid costs using the ratio of cost-to-charges (inpatient and outpatient) as calculated under paragraph (3) of this subsection. (iv)HHSC will subtract each hospital's Medicaid payments, including cost report settlement payments, supplemental payments (including upper payment limit payments), uncompensated-care waiver payments (excluding payments associated with pharmacies, clinics, and physicians) and graduate medical education payments, from its Medicaid costs. (v)If a hospital's payments are less than its costs, the hospital has a positive Medicaid shortfall. If a hospital's payments are greater than its costs, the hospital has a negative Medicaid shortfall. A negative Medicaid shortfall will still be used in the calculation in paragraph (1) of this subsection. (vi)HHSC may apply an adjustment factor to Medicaid payment data to more accurately approximate the Medicaid shortfall following a rebasing or other change in reimbursement rate under other sections of this division. (C)Inflation adjustment. (i)HHSC will trend each hospital's interim hospital-specific limit using the inflation update factor as defined in subsection (b) of this section. (ii)HHSC will use the inflation update factors for the period beginning at the midpoint of each data year to the midpoint of the program year. (iii)HHSC will multiply each hospital's sum of the net uninsured costs and Medicaid shortfall by the inflation update factor to obtain its interim hospital-specific limit. (3)Ratio of cost-to-charges. HHSC will calculate the ratio of cost-to-charges used in setting hospital-specific limits in conformity with the following conditions and procedures: (A)HHSC will convert to cost the portion of the total Medicaid charges related to adjudicated claims that are allocated to the various cost centers of the hospital. The ratio is derived by allocating allowable charges to each cost center. (B)HHSC will calculate the ratio of cost-to-charges for the respective cost centers using information from the appropriate worksheets from one or both of the hospital's Medicaid cost reports corresponding to the data year. (4)Final hospital-specific limit. (A)HHSC will calculate the individual components of a hospital's final hospital-specific limit using the calculation set out in paragraphs (2) and (3) of this subsection, except that HHSC will: (i)use the hospital's actual charges and payments for services described in paragraph (2)(A) and (B) of this subsection provided to Medicaid-eligible and uninsured patients during the program year; and (ii)include charges and payments for claims submitted after the 95-day filing deadline for Medicaid-allowable services provided during the program year unless such claims were submitted after the Medicare filing deadline. (B)For payments to a hospital under the DSH program, the final hospital-specific limit will be calculated at the time of the independent audit conducted under §355.8065(o) of this title.
This agency hereby certifies that the proposal
has been reviewed by legal counsel and found to be within the agency's
legal authority to adopt.
Filed with the Office
of the Secretary of State on April 9, 2012
TRD-201201763 Steve Aragon
Chief Counsel
Texas Health and Human Services Commission
Earliest possible date of adoption: May 20, 2012
For further information, please call: (512) 424-6900
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