114 CMR, § 40.12 - Extraordinary Disproportionate Share Adjustment for Psychiatric Hospitals

The Division shall determine for FY 1996 and succeeding years an extraordinary disproportionate share adjustment for all eligible psychiatric hospitals, using the data and methodology described in 114.1 CMR 40.12.

(1) Data Sources. The Division shall use the RSC-403 report for the fiscal year two years prior to the fiscal year of the calculation of the disproportionate share adjustment to determine the cost, free care, charge, patient day, and net revenue amounts. If said RSC-403 report is not available, the Division shall use the most recent available previous RSC-403 report to estimate these variables. If the specified data source is unavailable, then the Division shall determine and use the best alternative data source.

(2) Determination of Eligibility.

(a) In order to be eligible for the extraordinary disproportionate share payment adjustment, a psychiatric hospital must:

1. specialize in providing psychiatric/psychological care and treatment;

2. provide for special active treatment such as treatment of deafness, developmental disabilities, and the elderly;

3. accept all patients without regard to their ability to pay;

4. consist partly or wholly of locked wards;

5. meet requirements for the receipt of federal matching funds;

6. meet the low-income standard as set forth in 114.1 CMR 40.12(2)(b); and

7. meet the unreimbursed cost standard as set forth in 114.1 CMR 40.12(2)(c).

(b) Low-income standard.

1. For each psychiatric hospital, the Division shall calculate the hospital-specific low-income utilization rate as follows:

a. The Division shall divide each hospital's net Medicaid revenue by its total gross patient service revenue.

b. The Division shall divide each hospital's free care charges by its total charges.

c. The total of these percentages shall equal the hospital's low-income utilization rate.

2. If the hospital-specific low-income utilization rate exceeds 45%, then the psychiatric hospital meets the low-income standard.

(c) Unreimbursed cost standard.

1. For each psychiatric hospital, the Division shall calculate the hospital-specific unreimbursed cost percentage as follows:

a. The Division shall calculate the costs of providing hospital services to Medicaid-eligible individuals and uninsured individuals, by multiplying Medicaid RFR by the ratio of Medicaid charges plus self pay charges plus free care charges to total charges.

b. The Division shall subtract the total of Medicaid payments (excluding any disproportionate share payments) plus self pay payments, from the costs determined in 114.1 CMR 40.12(2)(c)1.a., to determine the amount of unreimbursed costs.

c. The Division shall divide the amount of unreimbursed costs determined in 114.1 CMR 40.12(2)(c)1.b. by the costs determined in 114.1 CMR 40.12(2)(c)1.a. to determine the percentage of unreimbursed costs.

2. If the hospital-specific percentage of unreimbursed costs exceeds 50%, then the psychiatric hospital meets the unreimbursed cost standard.

(3) Determination of Payment. Except as provided in 114.1 CMR 40.10(2), for each psychiatric hospital determined eligible for the extraordinary disproportionate share adjustment under 114.1 CMR 40.12(2), the payment amount shall be equal to the estimated rate year unreimbursed cost of providing hospital services to Medicaid-eligible individuals and uninsured individuals, calculated as follows:

a. First, determine the estimated rate year cost of providing hospital services to Medicaid-eligible individuals and uninsured individuals as set forth in 114.1 CMR 40.12(2)(c)1.a., substituting rate year Reasonable Financial Requirements for source data RFR.

b. Then, multiply this cost by the unreimbursed cost percentage determined pursuant to 114.1 CMR 40.12(2)(c)1.c.

(4) Payments made pursuant to this section are subject to Health Care Financing Administration approval of state plan amendments incorporating this methodology.

Notes

114 CMR, § 40.12