(1) Except as
provided by other provisions of this chapter, each hospital's reimbursable
inpatient costs will be determined in accordance with Medicare Title XVIII
principles from a base year cost reporting period, as defined by Rule
1200-13-9-.01(8). Costs will be separated into an operating component (defined
by Rule 1200-13-9-.01(5)) and a pass-through component (defined by Rule
1200-13-9-.01(6). A trending factor (defined by Rule 1200-13-9-.08(3)) will be
applied to the operating component only. The prospective rate will consist of
the trended operating component. Tennessee Medicaid costs will be determined by
a computed utilization ratio (defined by Rule 1200-13-9-.01(3)) from HCFA Form
2552 which must be submitted by the provider. The prospective payment
(operating costs) will be made as a rate per inpatient day. On and after July
1, 1988, in psychiatric hospitals and institutions for mental disease, which
dates apply without regard to the date upon which the provider's fiscal year
may end, the pass-through component will not be a part of the per diem rate,
but will, instead, be paid in lump sum amounts on a monthly basis.
(2) Pass Through Component
(a) For inpatient services in psychiatric
facilities on or after July 1, 1988, irrespective of provider fiscal year end,
the reimbursable per diem rate will consist of only the operating component.
The remaining components: capital, direct medical education, and return on
equity will be paid in a lump sum amount. Capital, direct medical education,
and return on equity costs will be estimated from each provider's most recent
cost report on file as of 4:30 p.m. C.D.T., Monday, June 30, 1988. The
estimates will be used to compute a lump sum amount for capital, direct medical
education, and return on equity. Payments will be made monthly starting July 1,
1988. Each provider's subsequent cost report will be used to adjust the
capital, direct medical education, and return on equity for the subsequent
fiscal year. This adjustment shall be effective on the first day of the next
month, one month subsequent to the date of receipt of the provider's cost
report. Capital, direct medical education, and return on equity costs will be
subject to year end cost settlement for inpatient psychiatric services on and
after July 1, 1988. Upon the effective date of these rules, the Services Tax
will be an allowable cost included in the pass-through component.
(b) Additional costs due to revalued assets
will be recognized only when an existing provider is purchased by another
provider in a bona fide sale (arms length transaction). The new value for
reimbursement purposes shall be the lesser of (1) the purchase price of the
asset at the time of the sale, (2) the fair market value of the asset at the
time of the sale (as determined by an MAI appraisal), (3) current reproduction
cost of the asset depreciated on a straight line basis over its useful life to
the time of the sale, or (4) for facilities undergoing a change of ownership on
or after July 18, 1984, the acquisition cost to the first owner of record on or
after July 18, 1984. The purchaser has the burden of proving that the
transaction is a bona fide sale should the issue arise. Gains realized from the
disposal of depreciable assets while a provider is participating in the program
are to be a deduction from allowable capital costs.
(c) The payment of return on equity (for
Proprietary providers only) will be determined by Medicare principles of cost
reimbursement, 42 CFR Part
405, in effect on August 1, 1983 providing that,
effective April 20, 1983, return on equity shall be adjusted to reflect 100% of
the average rate of interest on obligations issued for purchase by the Federal
Hospital Insurance Trust Fund.
1. The return
on equity for acute care and psychiatric proprietary provider will be reduced
as follows: for cost reporting periods beginning after September 1986, payment
will be 75% of the current amount; 50 % of the current amount for reporting
periods beginning after September 1987; 25 % of the current amount for
reporting periods beginning after September 1988; and zero
thereafter.
(d)
Beginning with fiscal years beginning July 1, 1987 and later, capital costs
will be reduced by 3.5% for dates of service July 1, 1987 through September 30,
1987, by 7 % for dates of service October 1, 1987 through December 31, 1987, by
12% for dates of service January 1, 1988 through September 30, 1988 and by 15%
for dates of service October 1, 1988 through September 30, 1989, by 0% for
dates of service October 1, 1989 through December 31, 1989, and by 15 % for
dates of service January 1, 1990 and later. Reduction will be figured into year
end final settlements. Hospitals designated as Sole Community Hospitals are
exempt from percentage reductions in capital costs. Upon the effective date of
these rules, hospitals will be reimbursed 100% of their capital
costs.
(3) Operating
Component - Each facility's initial prospective rate shall also include an
operating component which is computed from the base year cost report. In base
years all providers including providers that are within the first three years
of operation will be subject to the routine per diem cost limitations for
prospective rate purposes. The routine per diem limitations for these purposes
will be set in the same manner as those used for acute care hospitals. All new
providers may have their prospective rate adjusted at the end of the first five
year period. The operating component will be trended forward each year. The
trending period shall be from the midpoint of each hospital's base year to the
midpoint of the hospital's first cost reporting period subject to prospective
payment. Trending to the new rebased year (1988 cost reports or if not
available the prior cost report) will be computed by utilizing the indexing
rate recommended by the Prospective Payment Assessment Commission, applied from
the end of the hospital's fiscal year to October 1, 1989.
Thereafter, the treading index shall be that rate of increase
on prospective payments as recommended by the Prospective Payment Assessment
Commission and as published in the Tennessee Administrative
Register. The trending indexes above shall be applied from October 1,
1989, to the midpoint of the state's fiscal year, no earlier than December 31,
1990, and shall be effective the first of the state's fiscal year, no earlier
than July 1, 1990. When necessary, indexes will be prorated to correspond to
the provider's year end. Each provider will be notified of their new operating
rate due to indexing within 30 days of the beginning of the state's fiscal
year.
Medical malpractice insurance reimbursement will be limited
to 7.5% of allowable malpractice insurance premiums for prospective rate
purposes.
Education costs are considered as a part of the operating
component, when educational services are an integral part of a recipients acute
inpatient psychiatric care involving active treatment, pursuant to an
individual plan of care developed by an inter-disciplinary treatment, and
ordered by the recipient's attending physician.
Notes
Tenn. Comp. R.
& Regs.
1200-13-09-.08
Original rule filed June
2, 1988; effective July 17, 1988. Amendment filed August 8. 1990, effective
September 22, 1990. Amendment filed September 25, 1992, effective November 9,
1992. Amendment filed November 17, 1983; effective January 31,
1994.
Authority: T.C.A. ยงยง
4-5-202,
12-4-301,
71-5-105 and
71-5-109; Public Chapter 913 of
the Acts of 1992.
