(1) The license fee
shall be calculated as provided in Section 2 of Public Chapter 459, Acts of
1991 and computations shall be based on the most current complete compilation
of all hospitals' Joint Annual Report data, as of April 30 of each year, and
the latest information available from Cost Reports, as of April 30 of each
year. The Joint Annual Report data is considered complete when all hospitals
have submitted data, the data has been queried, edited, updated, and the annual
tabulations and computer files are created.
The Commissioner is authorized pursuant
to T.C.A. §
establish a license fee for any hospital covered therein. These fees shall be
directly related to each hospital's Medicaid utilization rate, low income
utilization rate and large volume of Medicaid days per year. The fee cannot
exceed the hospital's bad debt, charity care, medically indigent care, and
Medicare/Medicaid contractual adjustments adjusted to expense.
Any hospital meeting any one of the
following criteria shall be subject to a license fee:
1. Any hospital with a Medicaid utilization
rate of 14% or greater; or
hospital with a low income utilization rate of 25% or greater; or
3. Any hospital providing more than 3,000
Medicaid days per year; or
teaching hospital that incurs educational costs.
The license fee shall be computed as
1. By multiplying the Medicaid
utilization rate for every whole percent in excess of 14% by a factor of six
(6) capped at 34%. An additional 10% will be added if free outpatient services
and outpatient pharmacy services are provided to the medically
2. By multiplying each
whole percent increment above the 25 % low income ratio by a factor of two (2)
capped at 10%.
3. By multiplying
each complete 1,000 day increment above 3,000 days by a factor of six (6)
capped at 34%. If total Medicaid days exceed 3,650 but are less than 4,000,
then a factor of three (3) is used to determine the license fee as described in
Part 4 below. An additional 10% will be added if free outpatient and outpatient
pharmacy services are provided to the medically indigent.
4. The highest computation from Parts 1, 2,
or 3 above for each hospital will be multiplied times the hospital per them
rate composed of capital, direct education, and the untrended operating
component, and multiplied by the projected Medicaid days. The computed amount
in this paragraph cannot exceed 80% of a hospital's inpatient bad debt, charity
care, and medically indigent care. The license fee shall be 31.55% of the
5. In addition to
all other license fees in this paragraph, any hospital that receives a payment
for educational costs shall be assessed an additional fee equal to 31.55% of
the total direct and indirect education payments. This amount shall not be
included in the computation described in Part 4 above relating to the 80%
An acute care
hospital that pays a license fee described above, with the exception of those
that pay only the fee levied in paragraph (2)(b)5., shall also be assessed an
additional license fee if both of the following conditions are met:
1. The hospital Medicaid days are projected
to be 1,000 days per year or greater.
2. The Medicaid day ratio for the hospital is
greater than the acute care industry average utilization rate.
(d) The additional license fee
will be computed by taking the difference obtained by subtracting the industry
average utilization rate from the qualifying hospital's Medicaid Day Ratio
multiplied times a factor of 9.45 times the per them described in paragraph
(2)(b)4. above and then multiplied by the projected Medicaid days.
(e) The sum of the computed amount which
serves as the basis for the fee in subparagraph (b)4. plus the amount of the
additional fee in subparagraph (d) cannot exceed the cost adjusted sum of the
hospital's total bad debt, charity care and medically indigent care adjustments
plus the Medicaid and Medicare contractual adjustment. This sum is adjusted to
cost using the cost to charge ratio for each hospital determined from each
hospital's Joint Annual Report.
The sum of all calculations provided for in Rule 1200-24-1-.03(1) through
1200-24- 1-.03(2)(e) shall then be multiplied by twenty-five percent (25%) and
this amount shall represent the assessment of the hospital services license fee
for July 1, 1992.
the event a hospital fails to submit a Joint Annual Report or fails to include
data on it that is necessary to calculate the amount due, the hospital shall
submit or amend the report promptly, to reflect the data as accurately as
possible. The hospital may not change data that is submitted.
(4) The fees collected by these rules are to
be placed in the Indigent Health Care Risk Fund.
Tenn. Comp. R. &
Original rule filed
March 30, 1990; effective May 14, 1990. Amendment filed July 25, 1990;
effective September 8, 1990. Amendment filed September 25, 1991; effective
November 9, 1991.
Authority: Public Chapter 434, Acts of 1989,