PART 2. TEXAS ETHICS COMMISSION
CHAPTER 50. LEGISLATIVE SALARIES AND PER DIEM
The Texas Ethics Commission adopts an amendment to §50.1, to set the legislative per diem as required by the Texas Constitution, Article III, §24a. The amendment is adopted without changes to the proposed text as published in the October 31, 2008, issue of the Texas Register (33 TexReg 8855) and will not be republished.
Section 50.1 sets the per diem for members of the legislature and the lieutenant governor at $168 for each day during the regular session and any special session.
No comments were received regarding the proposed rule during the comment period.
This amendment is adopted under the Texas Constitution, Article III, §24a, and the Government Code, Chapter 571, §571.062.
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 December 8, 2008.
TRD-200806381
Natalia Luna Ashley
General Counsel
Texas Ethics Commission
Effective date: December 28, 2008
Proposal publication date: October 31, 2008
For further information, please call: (512) 463-5800
CHAPTER 355. REIMBURSEMENT RATES
SUBCHAPTER J. PURCHASED HEALTH SERVICES
DIVISION 4. MEDICAID HOSPITAL SERVICES
The Texas Health and Human Services Commission (HHSC) adopts the amendment to 1 TAC §355.8052, to make implementation of the fiscal year 2009 rebased payment division standard dollar amounts (PDSDAs) contingent on the availability of state funds for that purpose and federal approval of the Medicaid reform waiver. The amended rule is adopted with changes to the proposed text published in the October 24, 2008, issue of the Texas Register (33 TexReg 8702). The text of the rule will be republished.
During the 80th Legislative Session, HHSC received guidance from state leadership that the implementation of the rebasing initiative described in the General Appropriations Act for the 2008-2009 Biennium, Article II, Special Provisions Relating to All Health and Human Services Agencies, §57(c), would be contingent on the approval of the Medicaid reform waiver authorized in §7, Senate Bill 10, 80th Legislature, Regular Session, 2007. HHSC submitted the Medicaid reform waiver request to the Centers for Medicare and Medicaid Services (CMS) in April 2008.
When HHSC adopted §355.8052 in the August 8, 2008, issue of the Texas Register (33 TexReg 6362), HHSC anticipated receiving guidance from CMS in the near future in relation to the Medicaid reform waiver request. Based on preliminary information from CMS, however, the final decision on federal approval of the Medicaid reform waiver may not be made before the current rebasing project is completed.
Therefore, HHSC is amending §355.8052 to add contingency language to stop the current hospital rebasing project if HHSC does not receive federal approval of the Medicaid reform waiver or HHSC does not implement the waiver. If the Medicaid reform waiver is not approved or implemented or funds are not available for rebasing, hospitals will continue to be paid based on the rates in effect on August 31, 2008.
A non-substantive change was made to the proposed text, adding clarifying language in subsection (d)(1)(B).
Comments
During the 30-day comment period, which ended November 23, 2008, staff received written comments from the Texas Hospital Association, Teaching Hospitals of Texas, Hospital Corporation of America, Brown McCarroll, LLP, as well as numerous other individuals. Staff did not make changes to the proposed rule in response to the comments received. A summary of the comments and responses follows.
Comment: Approximately 100 comments opposed the proposed changes to the rule that make fiscal year 2009 hospital inpatient rebasing contingent on the federal approval and implementation of the Medicaid reform waiver or available funds. All but one of these comments was in the same format and received via e-mail. The comments asserted that the 2008-2009 General Appropriations Act, Article II, Special Provisions, §57(c), 80th Legislature, Regular Session, 2007, required HHSC to rebase inpatient hospital rates. Additionally, the commenters stated that the language in §57(c) of the appropriations bill specifically requires HHSC to rebase hospital rates in FY 2009 and that neither the Medicaid reform language in Senate Bill 10, nor additional guidance from state leadership can relieve HHSC of its obligation to rebase the rates. They also stated that the appropriations bill and Senate Bill 10 are not linked and that HHSC cannot legally use one to influence the other.
Response: The language in 2008-2009 General Appropriations Act, Article II, Special Provisions, §57(c), 80th Legislature, Regular Session, 2007, was informational rather than specifically directive, serving to help explain appropriations made elsewhere in the Act. It provided HHSC with the upper limit on the amount of funds that can be used for inpatient hospital rebasing if the agency rebases the hospital rates. Together with the mandates of Senate Bill 10, the method of financing for the Medicaid reform waiver was understood to be intertwined with inpatient hospital rebasing and the DRG-DSH swap, and as such, is dependent on federal approval and implementation of the Medicaid reform waiver.
Comment: Three comments were received during the public hearing on November 21, 2008, from Teaching Hospitals of Texas, Texas Hospital Association, and Hospital Corporation of America. Each commenter expressed concern that the last rebasing of hospital inpatient rates was seven years ago, and since then, the treatment protocols, technology, cost structures and case mix have changed, resulting in higher costs for inpatient hospital services. The commenters also noted that hospital inpatient rates have been reduced related to a 5 percent cost reduction and subsequent 8 percent reduction for SSI-related clients in managed care counties. Each commenter suggested that if the hospital rates are not adjusted, the appropriated funding should be used to eliminate the 5 percent and 8 percent SSI-related reductions, fund graduate medical education, fund a catastrophic care program or expand funding for regional initiatives, including three-share programs.
Response: HHSC is optimistic the Medicaid reform waiver will receive federal approval and will be implemented during state fiscal year 2009, which will allow the rebasing of hospital rates. In the event the Medicaid reform waiver is not approved and implemented, HHSC will rely on state leadership guidance on whether to use the funds identified in the informational rider for alternative purposes.
Legal Authority
The revised rule is 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; and Texas Government Code §531.021(b), which provides HHSC with the authority to propose and adopt rules governing the determination of Medicaid reimbursements.
§355.8052.Inpatient Hospital Reimbursement.
(a) Application and general reimbursement method.
(1) The prospective payment system described in this section applies to inpatient hospital payments for admissions beginning in Fiscal Year (FY) 2009.
(2) HHSC calculates reimbursement for a covered inpatient hospital service, determined in subsection (g) of this section, by multiplying the hospital's payment division standard dollar amount, determined in subsection (d) of this section, by the relative weight for the appropriate diagnosis-related group, determined in subsection (e) of this section.
(3) HHSC will send a hospital an initial notification letter describing the hospital-specific and payment division standard dollar amounts, determined in subsection (d) of this section. HHSC will send a hospital a final notification letter reporting the payment division standard dollar amount, adjusted as described in subsection (d)(2) of this section, to be used in calculating the hospital's reimbursements.
(4) HHSC will rebase hospital-specific and payment division standard dollar amounts in subsequent years when funds are appropriated for that purpose.
(b) Exceptions. The prospective payment system described in this section does not apply to the following types of hospitals for covered inpatient hospital services:
(1) In-state and out-of-state children's hospitals. In-state and out-of-state children's hospitals are reimbursed using the methodology described in §355.8054 of this chapter (relating to Children's Hospital Reimbursement Methodology).
(2) State-owned teaching hospitals. A state-owned teaching hospital is reimbursed in accordance with the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA) principles using the methodology described in §355.8056 of this chapter (relating to State-Owned Teaching Hospital Reimbursement Methodology).
(3) Freestanding psychiatric hospitals. A freestanding psychiatric hospital is reimbursed under the methodology described in §355.8063 of this chapter (relating to Reimbursement Methodology for Inpatient Hospital Services).
(c) Definitions. When used in this section, and §355.8054 and §355.8056 of this chapter, the following words and terms will have the following meanings, unless the context clearly indicates otherwise.
(1) Adjudicated--The approval or denial of an inpatient hospital claim by HHSC.
(2) Average base year cost per claim--One factor used in arriving at the hospital-specific standard dollar amount; the arithmetic mean of base year costs per claim for a hospital, obtained by dividing the sum of all base year costs per claim for that hospital by the number of base year claims in the set.
(3) Base year--A period of 12 consecutive months selected by HHSC.
(4) Base year claims--All Medicaid inpatient hospital claims for reimbursement filed by a hospital that:
(A) Have a date of admission occurring within the base year;
(B) Are adjudicated and approved for payment during the base year and the six-month grace period that immediately follows the base year or another grace period designated by HHSC and communicated in writing to all hospitals;
(C) Are not claims for patients who are covered by Medicare; and
(D) Are not Medicaid spend-down claims.
(5) Base year cost per claim--One factor used in arriving at the hospital-specific standard dollar amount; the cost for a claim that would have been made to a hospital if HHSC reimbursed the hospital under methods and procedures used in the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA), described in subsection (d)(3)(A) of this section.
(6) Case mix index--The average relative weight of a hospital's base year claims, obtained by summing the hospital's relative weights for all base year claims divided by the total number of that hospital's base year claims.
(7) Cost-of-Living Index--An adjustment applied to hospital-specific standard dollar amounts based on the Market Basket Index to account for changes in cost of living.
(8) Cost outlier payment adjustment--A payment adjustment for a claim with extraordinarily high costs.
(9) Cost outlier threshold--One factor used in determining the cost outlier payment adjustment.
(10) Data entry error--An error resulting from mis-keyed or mistyped data that is different from the intended entry. This type of error does not include the omission of claims approved for payment after the base year and grace period.
(11) Day outlier threshold--One factor used in determining the day outlier payment adjustment.
(12) Day outlier payment adjustment--A payment adjustment for a claim with an extended length of stay.
(13) Diagnosis-related group (DRG)--The classification of medical diagnoses as defined in the Medicare DRG system or as otherwise specified by HHSC.
(14) Final settlement--Reconciliation of cost in the Medicare/Medicaid hospital fiscal year end cost report performed by HHSC within six months after HHSC receives the cost report audited by a Medicare intermediary, or in the case of children's hospitals, audited by HHSC.
(15) HHSC--The Texas Health and Human Services Commission or its designee.
(16) Hospital--specific standard dollar amount (HSDA)--One factor used in arriving at the payment division standard dollar amount (PDSDA); the average base year cost per claim for a hospital, adjusted by the case mix index and cost-of-living index.
(17) In-state children's hospital--A hospital located within Texas that is recognized by Medicare as a children's hospital and is exempted by Medicare from the Medicare prospective payment system.
(18) Interim payment--An initial payment made to a hospital that is later settled to Medicaid-allowable costs, for hospitals reimbursed under methods and procedures in the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA).
(19) Interim rate--The ratio of Medicaid allowed inpatient costs to Medicaid allowed inpatient charges filed on a hospital's Medicare/Medicaid cost report, or inpatient cost-to-charge ratio, expressed as a percentage. The interim rate established at tentative settlement includes incentive and penalty payments associated with TEFRA target caps to the extent that they continue to be permitted by federal law and regulation.
(20) Market Basket Index--The Centers for Medicare and Medicaid Services (CMS) projection of the annual percentage increase in hospital inpatient operating costs, as defined in 42 C.F.R. §413.40.
(21) Mathematical error--An error that results from the erroneous application of variables, quotients, or functions within a methodology formula resulting in a different result than intended methodology results. This type of error does not include the omission of claims approved for payment after the base year and grace period.
(22) Mean length of stay (MLOS)--One factor used in determining the payment amount calculated for each diagnosis related group; for each diagnosis related group, the average number of days that a patient stays in the hospital.
(23) Military hospital--A hospital operated by the armed forces of the United States.
(24) New hospital--A hospital that was newly constructed and enrolled as a Medicaid provider after the end of the base year.
(25) Newly enrolled hospital--A hospital that was assigned a new Texas Provider Identification number (TPI) and was enrolled as a Medicaid provider after the end of the base year.
(26) Out-of-state children's hospital--A hospital located outside of Texas that is recognized by Medicare as a children's hospital and is exempted by Medicare from the Medicare prospective payment system.
(27) Payment division--A group of hospitals whose calculated hospital-specific standard dollar amounts fall within a $100 range, where the $100 increments begin at zero.
(28) Payment division standard dollar amount (PDSDA)--The weighted average dollar amount per claim calculated for all hospitals in a payment division.
(29) Relative weight--The weighting factor HHSC assigns to a diagnosis related group representing the time and resources associated with providing services for that diagnosis related group.
(30) State-owned teaching hospital--The following hospitals: University of Texas Medical Branch (UTMB); University of Texas Health Center Tyler; and M.D. Anderson Hospital.
(31) TEFRA cost for rebasing--One factor used in arriving at the hospital-specific standard dollar amount; Medicaid allowable charges for base year claims adjusted to cost by the interim rate derived from tentative or final settlement of cost reports that cover time periods in the base year.
(32) TEFRA target cap--A limit set under the Social Security Act §1886(b) (42 U.S.C. §1395ww(b)) and applied to the cost settlement for a hospital reimbursed under methods and procedures in the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA). TEFRA target cap is not applied to patients under age 21, and incentive and penalty payments associated with this limit are not applicable to patients under age 21.
(33) Tentative settlement--Reconciliation of cost in the Medicare/Medicaid hospital fiscal year-end cost report performed by HHSC within six months after HHSC receives an acceptable cost report filed by a hospital.
(34) Universal Mean--Average base year cost per claim for all hospitals.
(35) Weighted hospital-specific standard dollar amount (HSDA)--One factor used in arriving at the payment division standard dollar amount; the product obtained by multiplying a hospital's hospital-specific standard dollar amount by the number of its base year claims.
(d) Payment Division Standard Dollar Amount (PDSDA).
(1) Recalculation of PDSDAs.
(A) HHSC will recalculate PDSDAs for payments in FY 2009 unless:
(i) HHSC's application for the Medicaid reform waiver authorized under Senate Bill 10 (80th Legislature, Regular Session, Chapter 268, §7 (2007) does not receive federal approval;
(ii) HHSC does not implement the Medicaid reform waiver authorized under Senate Bill 10 (80th Legislature, Regular Session, Chapter 268, §7 (2007); or
(iii) Funds are not available for the purpose of recalculating PDSDAs.
(B) In the event HHSC does not recalculate PDSDAs for payments in FY 2009, payments will be based on the rates in effect on August 31, 2008.
(C) HHSC recalculates PDSDAs for payments in FY 2009 using FY 2006 base year claims. HHSC will not include claims that are adjudicated and approved for payment after the base year and subsequent six-month grace period. The six-month grace period is intended to allow inclusion of as many base year claims as possible, given practical time constraints.
(2) Adjustment of PDSDAs.
(A) HHSC may adjust PDSDAs in accordance with §355.201 of this title if HHSC determines that a recalculated PDSDA may have a significant and measurable effect on provider participation or have a significant and measurable effect on a provider's ability to deliver services.
(B) If HHSC recalculates PDSDAs for payments in FY 2009, HHSC will:
(i) Adjust PDSDAs pro rata among hospitals to available funds;
(ii) Exempt a hospital from the adjustment in clause (i) of this subparagraph if such adjustment would result in a lower rate than the hospital received as of August 31, 2008, in order to preserve the Medicaid provider base, ensure access to Medicaid hospital services, and minimize the effects of PDSDA decreases;
(iii) Apply a rate in place of the PDSDA, for a hospital that is exempted under clause (ii) of this subparagraph, that is the lesser of:
(I) the rate the hospital received as of August 31, 2008; or
(II) the fully rebased PDSDA before applying the adjustment described in clause (i) of this subparagraph;
(iv) Apply the PDSDA described in clause (i) of this subparagraph for all hospitals that are not exempted under clause (ii) of this subparagraph, without any recalculation within the payment divisions; and
(v) Not apply to any hospital a rate lower than the minimum PDSDA described in paragraph (7) of this subsection.
(3) Hospital-specific standard dollar amount (HSDA). Using base year claims, HHSC calculates an HSDA for each hospital as follows:
(A) Determines for each claim, the base year cost per claim, which is the greater of:
(i) the amount of TEFRA cost for rebasing, which is calculated under paragraph (10) of this subsection; or
(ii) payments from other insurance;
(B) Sums the dollar amount for each hospital's base year costs per claim determined in subparagraph (A) of this paragraph;
(C) Calculates the average base year cost per claim by dividing the result in subparagraph (B) of this paragraph by the total number of base year claims for the hospital;
(D) Calculates the case mix index by summing the hospital's relative weights for all base year claims divided by the total number of that hospital's base year claims;
(E) Divides the average base year cost per claim determined in subparagraph (C) of this paragraph by the hospital's case mix index determined in subparagraph (D) of this paragraph; and
(F) Multiplies the result in subparagraph (E) of this paragraph by the cost-of-living index described in paragraph (4) of this subsection to adjust costs from the base year to the rate year, which results in the HSDA.
(4) Cost-of-Living Index. HHSC updates HSDAs by applying a cost-of-living index to the HSDA established for the base year. HHSC uses the CMS Prospective Payment System Hospital Market Basket Index based on a federal fiscal year adjusted to a state fiscal year.
(5) Payment Divisions. HHSC groups hospital HSDAs into payment divisions by one-hundred-dollar ($100) increments beginning at zero. For example, all hospitals with HSDAs between $1,600.00 and $1,699.99 are grouped together.
(6) Payment Division Standard Dollar Amount (PDSDA).
(A) HHSC computes a PDSDA for all hospitals within a payment division as follows:
(i) multiplies each hospital's HSDA by the hospital's total number of base year claims, resulting in a weighted HSDA;
(ii) sums the weighted HSDAs determined in clause (i) of this subparagraph for all hospitals within a payment division; and
(iii) divides the result in clause (ii) of this subparagraph by the total number of base year claims for all hospitals within a payment division, which results in the PDSDA.
(B) The PDSDA calculation does not include data from the following types of hospitals:
(i) out-of-state hospitals;
(ii) military hospitals;
(iii) new or newly enrolled hospitals;
(iv) in-state and out-of-state children's hospitals;
(v) inpatient psychiatric hospitals; and
(vi) state-owned teaching hospitals.
(C) If a payment division has fewer than 20 total base year claims, HHSC considers that payment division to be statistically invalid. Hospitals within that payment division are assigned a PDSDA equal to the mathematically closest valid PDSDA.
(7) Minimum PDSDA. The minimum PDSDA of $1,600.00 is applied to any hospital with an HSDA equal to or less than $1,600.00.
(8) PDSDA calculation for specific types of hospitals.
(A) The following types of hospitals are assigned the Universal Mean plus the cost-of-living update as specified in paragraph (4) of this subsection, as their PDSDA:
(i) military hospitals;
(ii) out-of-state hospitals; and
(iii) newly enrolled hospitals.
(B) New Hospitals.
(i) For new hospitals, HHSC will assign a PDSDA that is three percentile points higher than the Universal Mean in an array of base year costs per claim, plus the cost-of-living update as specified in paragraph (4) of this subsection. This rate applies for five years from enrollment as a new Medicaid hospital or until HHSC recalculates PDSDAs, whichever is earlier. After five years from enrollment, if HHSC has not recalculated PDSDAs, the hospital's PDSDA will be the Universal Mean.
(ii) A replacement facility constructed for a hospital that is currently enrolled as a Medicaid provider is reimbursed by using either the PDSDA of the existing provider or the PDSDA for new hospitals, whichever is greater.
(9) Merged hospitals.
(A) When two or more Medicaid participating hospitals merge during or after the base year but before the date of HHSC's final PDSDA notification letter, HHSC combines the amounts determined in paragraph (3)(A) of this subsection for all hospitals involved in the merger and calculates the HSDA and PDSDA for the merged entity as described for all other hospitals in this subsection.
(B) When two or more Medicaid participating hospitals merge after the base year and after the date of HHSC's final PDSDA notification letter, HHSC combines the original base year costs per claim determined in paragraph (3)(A) of this subsection from the most recent rebasing period for all hospitals involved in the merger. HHSC calculates a new HSDA for the merged entity and assigns a PDSDA equal to the mathematically closest valid PDSDA.
(C) Acquisitions and buyouts do not result in a recalculation of the PDSDA of an acquired hospital unless acquisitions or buyouts result in the purchased or acquired hospital becoming part of another Medicaid participating provider. The acquired hospital will continue being reimbursed based on the PDSDA applied before the acquisition or buyout.
(10) TEFRA Cost for Rebasing. HHSC adjusts base year claims to arrive at a result based on cost reimbursement principles described in the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA), and calculates TEFRA cost for rebasing as follows:
(A) HHSC adjusts each hospital's base year claims using the interim rate computed as a result of tentative or final cost reports covering the base year. The adjustments are applied to claims in months within the base year that coincide with months within the hospital's cost reporting periods.
(B) The TEFRA cost for rebasing is calculated by multiplying the Medicaid allowed charges for each base year claim by the interim rate described in subparagraph (A) of this paragraph.
(C) HHSC uses the tentative or final cost report settlement that is complete and available on the date HHSC sends the initial PDSDA notification letter to the hospital. The results of a tentative or final cost report settlement completed after the date HHSC sends the initial PDSDA notification letter to the hospital are not considered for purposes of this subsection.
(D) If there is no tentative or final cost report settlement available, the TEFRA cost for rebasing is calculated using an assigned interim rate of 50 percent.
(11) Correction of payment division error and reprocessing of claims.
(A) HHSC will place a hospital in the correct payment division if HHSC determines that the hospital was incorrectly assigned to a payment division due to a mathematical error or data entry error by HHSC.
(B) HHSC will reprocess all claims adjudicated during that state fiscal year that were paid to the hospital using the incorrect PDSDA by applying the corrected PDSDA to the claims. No corrections are made for claims adjudicated in previous state fiscal years.
(e) Diagnosis Related Groups (DRGs) Statistical Calculations. HHSC adopts the classification of diagnoses defined in the Medicare DRG prospective payment system unless a revision is required based on Texas claims data or other factors, as determined by HHSC. HHSC recalibrates the relative weights, mean length of stay, and day outlier threshold whenever the PDSDAs are recalculated.
(1) Recalibration of relative weights. HHSC calculates a relative weight for each DRG as follows:
(A) Base year claims are grouped by DRG;
(B) For each DRG, HHSC:
(i) sums the base year costs per claim as determined in subsection (d)(3)(A) of this section;
(ii) divides the result in clause (i) of this subparagraph by the number of claims in the DRG; and
(iii) divides the result in clause (ii) of this subparagraph by the Universal Mean, resulting in the relative weight for the DRG.
(2) Recalibration of mean length of stay (MLOS). HHSC calculates a mean length of stay (MLOS) for each DRG as follows:
(A) Base year claims are grouped by DRG;
(B) For each DRG, HHSC:
(i) sums the number of days billed for all base year claims;
(ii) divides the result in clause (i) of this subparagraph by the number of claims in the DRG, resulting in the MLOS for the DRG.
(3) Recalibration of day outlier thresholds. HHSC calculates a day outlier threshold for each DRG as follows:
(A) Calculates for all claims the standard deviations from the MLOS in paragraph (2) of this subsection;
(B) Removes each claim with a length of stay (number of days billed by a hospital) greater than or equal to three standard deviations above or below the MLOS. The remaining claims are those with a length of stay less than three standard deviations above or below the MLOS;
(C) Sums the number of days billed by all hospitals for a DRG for the remaining claims in subparagraph (B) of this paragraph;
(D) Divides the result in subparagraph (C) of this paragraph by the number of remaining claims in subparagraph (B) of this paragraph;
(E) Calculates one standard deviation for the result in subparagraph (D) of this paragraph; and
(F) Multiplies the result in subparagraph (E) of this paragraph by two and adds that to the result in subparagraph (D) of this paragraph; resulting in the day outlier threshold for the DRG.
(4) If a DRG has fewer than ten base year claims, HHSC will assign the corresponding Medicare relative weight and Medicare mean length of stay and will calculate the day outlier threshold based on the Medicare mean length of stay and standard deviation.
(5) If one of the DRGs specific to an organ transplant has less than five base year claims, HHSC will assign the corresponding Medicare relative weight and Medicare mean length of stay and will calculate the day outlier threshold based on the Medicare mean length of stay and standard deviation. In addition, HHSC adds a relative weight to account for the cost of procuring the organ to the Medicare relative weight for the DRG. HHSC uses the organ procurement costs published by the Acquisition of Organ Procurement Organization (AOPO). To calculate the relative weight for procurement, HHSC divides the average cost of organ procurement by the universal mean for all claims.
(f) Request for Review. Except as otherwise provided in this subsection, HHSC uses the following process for reviews and appeals.
(1) If a hospital believes that HHSC made a mathematical error or data entry error in calculating the hospital's PDSDA, the hospital may request a review of the disputed calculation.
(A) A review of the calculation of a hospital's PDSDA will not be granted if the disputed calculation is the result of the hospital's submission of incorrect data or the result of the use of an interim rate derived from a cost reporting period occurring before the base year.
(B) The hospital must submit to HHSC a written request for review and appropriate specific documentation supporting its contention that there has been a mathematical or data entry error. The written request for review must be printed on the hospital's letterhead. HHSC Rate Analysis must receive a written request for an informal review by hand delivery, United States (U.S.) mail, or special mail delivery no later than 45 calendar days from the date of the initial PDSDA notification letter. If the 45th calendar day is a weekend day, national holiday, or state holiday, then the first business day following the 45th calendar day is the final day the receipt of the written request will be accepted. HHSC will not grant extensions of the 45-day deadline.
(C) If the hospital disagrees with the outcome of the review, the hospital may formally appeal in accordance with §§357.481 - 357.490 of this title (relating to Hearings Under the Administrative Procedure Act).
(2) A hospital may not appeal the elements of the prospective payment methodology used by HHSC, including:
(A) the payment division methodologies, including the HSDA and PDSDA calculations;
(B) the DRGs assigned through claims adjudication;
(C) the DRGs assigned to base year claims as a result of HHSC updating to a new version of the Medicare DRGs;
(D) the relative weights assigned to the DRGs;
(E) the adequacy of payments;
(F) the exclusion of claims that were not adjudicated and paid within the base year or six-month grace period; and
(G) the interim rate, computed as a result of tentative or final cost reports covering the base year that are completed after the date HHSC sends the initial PDSDA notification letter to the hospital.
(g) Reimbursements
(1) Calculating the payment amount. HHSC reimburses a hospital a prospective payment for covered inpatient hospital services by multiplying the PDSDA for the hospital's payment division by the relative weight for the DRG assigned to the adjudicated claim. The resulting amount is the payment amount to the hospital.
(2) The prospective payment as described in paragraph (1) of this subsection is considered full payment for covered inpatient hospital services. A hospital's request for payment in an amount higher than the prospective payment will be denied. The PDSDA result in subsection (d) of this section includes but is not limited to the following:
(A) capital costs;
(B) cost of indirect medical education;
(C) cost of malpractice insurance; and
(D) return on equity.
(3) Day and cost outlier adjustments. HHSC pays a day outlier or a cost outlier for medically necessary inpatient services provided to clients under age 21 in all Medicaid participating hospitals that are reimbursed under the prospective payment system. If a patient age 20 is admitted to and remains in a hospital past his or her twenty-first (21st) birthday, inpatient days and hospital charges after the patient reaches age 21 are included in calculating the amount of any day outlier or cost outlier payment adjustment.
(A) Day outlier payment adjustment. HHSC or its designee calculates a day outlier payment adjustment for each claim as follows:
(i) determines whether the number of medically necessary days allowed for a claim exceeds:
(I) the MLOS by more than two days; and
(II) the DRG day outlier threshold as calculated in subsection (e)(3)(F) of this section;
(ii) if clause (i) of this subparagraph is true, subtracts the DRG day outlier threshold from the number of medically necessary days allowed for the claim;
(iii) multiplies the DRG relative weight by the PDSDA;
(iv) divides the result in clause (iii) of this subparagraph by the DRG MLOS described in subsection (e)(2) of this section, to arrive at the DRG per diem amount;
(v) multiplies the number of days in clause (ii) of this subparagraph by the result in clause (iv) of this subparagraph;
(vi) multiplies the result in clause (v) of this subparagraph by 70 percent.
(B) Cost outlier payment adjustment. HHSC makes a cost outlier payment adjustment for an extraordinarily high-cost claim as follows:
(i) to establish a cost outlier, the cost outlier threshold must be determined by first selecting the lesser of the Universal Mean of base year claims multiplied by 11.14 or the hospital's PDSDA multiplied by 11.14;
(ii) the full DRG prospective payment amount is multiplied by 1.5;
(iii) the cost outlier threshold is the greater of clause (i) or (ii) of this subparagraph;
(iv) the cost outlier threshold is subtracted from the amount of reimbursement for the claim established under cost reimbursement principles described in the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA); and
(v) the result in clause (iv) of this subparagraph is multiplied by 70 percent to determine the amount of the cost outlier payment.
(C) If an admission qualifies for both a day outlier and a cost outlier payment adjustment, HHSC pays the higher outlier payment.
(4) A hospital may submit a claim to HHSC before a patient is discharged, but only the first claim for that patient will be reimbursed the prospective payment described in paragraph (1) of this subsection. Subsequent claims for that stay are paid zero dollars. When the patient is discharged and the hospital submits a final claim to ensure accurate calculation for potential outlier payments for clients younger than 21 years of age, HHSC recoups the first prospective payment and issues a final payment in accordance with paragraphs (1) and (3) of this subsection.
(5) Patient transfers and split billing. If a patient is transferred, HHSC establishes payment amounts as specified in subparagraphs (A) - (D) of this paragraph. HHSC manually reviews transfers for medical necessity and payment.
(A) If the patient is transferred from a hospital to a nursing facility, HHSC pays the transferring hospital the total payment amount of the patient's DRG.
(B) If the patient is transferred from one hospital (transferring hospital) to another hospital (discharging hospital), HHSC pays the discharging hospital the total payment amount of the patient's DRG. HHSC calculates a DRG per diem and a payment amount for the transferring hospital as follows:
(i) multiplies the DRG relative weight by the PDSDA;
(ii) divides the result in clause (i) of this subparagraph by the DRG MLOS described in subsection (e)(2) of this section, to arrive at the DRG per diem amount; and
(iii) to arrive at the transferring hospital's payment amount:
(I) multiplies the result in clause (ii) of this subparagraph by the lesser of the DRG MLOS, the transferring hospital's number of medically necessary days allowed for the claim, or 30 days; or
(II) for a patient under age 21, multiplies the result in clause (ii) of this subparagraph by the lesser of the DRG MLOS or the transferring hospital's number of medically necessary days allowed for the claim.
(C) HHSC makes payments to multiple hospitals transferring the same patient by applying the per diem formula in subparagraph (B) of this paragraph to all the transferring hospitals and the total DRG payment amount to the discharging hospital.
(D) HHSC performs a post-payment review to determine if the hospital that provided the most significant amount of care received the total DRG payment. If the review reveals that the hospital that provided the most significant amount of care did not receive the total DRG payment, an adjustment is initiated to reverse the payment amounts. The transferring hospital is paid the total DRG payment amount and the discharging hospital is paid the DRG per diem.
(h) Cost reports. Each hospital must submit an initial cost report at periodic intervals as prescribed by Medicare or as otherwise prescribed by HHSC.
(1) Each hospital must send a copy of all cost reports audited and amended by a Medicare intermediary to HHSC within 30 days after the hospital's receipt of the cost report. Failure to submit copies or respond to inquiries on the status of the Medicare cost report will result in provider vendor hold.
(2) HHSC uses data from these reports in rebasing years, in making adjustments as described in subsection (d) of this section, and in completing cost settlements for children's hospitals and state-owned teaching hospitals as outlined in §355.8054 and §355.8056 of this chapter.
(3) Except as otherwise specified in subsection (i) of this section, there are no cost settlements for inpatient services under the prospective payment system in this section.
(4) The cost settlement process is limited by the TEFRA target cap.
(i) Hospitals in counties with 50,000 or fewer persons and certain other hospitals.
(1) Hospitals are reimbursed under this subsection if, as of the most recent decentennial census, the hospital is:
(A) located in a county with 50,000 or fewer persons;
(B) a Medicare-designated Rural Referral Center (RRC) or Sole Community Hospital (SCH) not located in a metropolitan statistical area (MSA), as defined by the U.S. Office of Management and Budget; or
(C) a Medicare-designated Critical Access Hospital (CAH).
(2) A hospital that qualifies under this subsection is reimbursed for a cost reporting period the greater of:
(A) All Medicaid payments based on the prospective payment system; or
(B) The cost-reimbursement methodology described in the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA) without the imposition of the TEFRA target cap described in subsection (h)(4) of this section.
(3) The amounts in this subsection are calculated using the most recent data for Medicaid Fee-for-Service (FFS) and Primary Care Case Management (PCCM) inpatient services.
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 December 8, 2008.
TRD-200806393
Steve Aragón
Chief Counsel
Texas Health and Human Services Commission
Effective date: December 28, 2008
Proposal publication date: October 24, 2008
For further information, please call: (512) 424-6900