Medicaid Program; Final FY 2009 and Preliminary FY 2011 Disproportionate Share Hospital Allotments, and Final FY 2009 and Preliminary FY 2011 Institutions for Mental Diseases Disproportionate Share Hospital Limits, 148-159 [2010-32979]

Download as PDF 148 Federal Register / Vol. 76, No. 1 / Monday, January 3, 2011 / Notices ESTIMATED ANNUALIZED BURDEN HOURS—Continued Number of respondents Respondent category Total .......................................................................................................... Dated: December 27, 2010. Carol E. Walker, Acting Reports Clearance Officer, Centers for Disease Control and Prevention. [FR Doc. 2010–33128 Filed 12–30–10; 8:45 am] BILLING CODE P DEPARTMENT OF HEALTH AND HUMAN SERVICES Centers for Medicare & Medicaid Services [CMS–2321–N] RIN 0938–AQ44 Medicaid Program; Final FY 2009 and Preliminary FY 2011 Disproportionate Share Hospital Allotments, and Final FY 2009 and Preliminary FY 2011 Institutions for Mental Diseases Disproportionate Share Hospital Limits AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS. ACTION: Notice. SUMMARY: This notice announces the final Federal share disproportionate share hospital (DSH) allotments for Federal FY (FY) 2009 and the preliminary Federal share DSH allotments for FY 2011. This notice also announces the final FY 2009 and the preliminary FY 2011 limitations on aggregate DSH payments that States may make to institutions for mental disease and other mental health facilities. In addition, this notice includes background information describing the methodology for determining the amounts of States’ FY DSH allotments. DATES: Effective Date: This notice is effective March 4, 2011. The final allotments and limitations set forth in this notice are effective for the fiscal years specified. FOR FURTHER INFORMATION CONTACT: Richard Strauss, (410) 786–2019. SUPPLEMENTARY INFORMATION: jlentini on DSKJ8SOYB1PROD with NOTICES I. Background A. Disproportionate Share Hospital Allotments for Federal FY 2003 Under section 1923(f)(3) of the Social Security Act (the Act), States’ Federal fiscal year (FY) 2003 disproportionate share hospital (DSH) allotments were calculated by increasing the amounts of VerDate Mar<15>2010 20:10 Dec 30, 2010 Jkt 223001 Number of responses per respondent Average burden response (in hours) ........................ ........................ ........................ the FY 2002 allotments for each State (as specified in the chart, entitled ‘‘DSH Allotment (in millions of dollars)’’, contained in section 1923(f)(2) of the Act) by the percentage change in the Consumer Price Index for all Urban Consumers (CPI–U) for the prior fiscal year. The allotment, determined in this way, is subject to the limitation that an increase to a State’s DSH allotment for a FY cannot result in the DSH allotment exceeding the greater of the State’s DSH allotment for the previous FY or 12 percent of the State’s total medical assistance expenditures for the allotment year (this is referred to as the 12 percent limit). Most States’ actual FY 2002 allotments were determined in accordance with the provisions of section 1923(f)(4) of the Act which allowed for a special DSH calculation rule for FY 2001 and FY 2002. However, as indicated previously, the calculation of States’ FY 2003 allotments was not based on the actual FY 2002 DSH allotments; rather, section 1923(f)(3) of the Act requires that the States’ FY 2003 allotments be determined using the amount of the States’ FY 2002 allotments specified in the chart in section 1923(f)(2) of the Act. The exception to this is the calculation of the FY 2003 DSH allotments for certain ‘‘Low-DSH States’’ (defined in section 1923(f)(5) of the Act). Under the LowDSH State provision, there is a special calculation methodology for the LowDSH States only. Under this methodology, the FY 2003 allotments were determined by increasing States’ actual FY 2002 DSH allotments, rather than their FY 2002 allotments specified in the chart in section 1923(f)(2) of the Act, by the percentage change in the CPI–U for the previous fiscal year. B. DSH Allotments for FY 2004 Section 1001(a) of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108–173, enacted on December 8, 2003) amended section 1923(f)(3) of the Act to provide for a ‘‘Special, Temporary Increase In Allotments On A One-Time, Non-Cumulative Basis.’’ Under this provision, States’ FY 2004 DSH allotments were determined by increasing their FY 2003 allotments by 16 percent, and the FY DSH allotment PO 00000 Frm 00068 Fmt 4703 Sfmt 4703 Total burden (in hours) 63 amounts so determined were not subject to the 12 percent limit. C. DSH Allotments for Non-Low DSH States for FY 2005, and FYs Thereafter Under the methodology contained in section 1923(f)(3)(C) of the Act, as amended by section 1001(a)(2) of the MMA, the non-Low-DSH States’ DSH allotments for FY 2005 and subsequent FYs continue at the same level as the States’ DSH allotments for FY 2004 until a ‘‘fiscal year specified’’ occurs. The fiscal year specified is the first FY for which the Secretary estimates that a State’s DSH allotment equals (or no longer exceeds) the DSH allotment as would have been determined under the statute in effect before the enactment of the MMA. We determine whether the fiscal year specified has occurred under a special parallel process. Specifically, under this parallel process, a ‘‘parallel’’ DSH allotment is determined for FYs after 2003 by increasing the State’s DSH allotment for the previous FY by the percentage change in the CPI–U for the prior FY, subject to the 12 percent limit. This is the methodology as would otherwise have been applied under section 1923(f)(3)(A) of the Act, notwithstanding the application of the provisions of MMA. The fiscal year specified, is the FY in which the parallel DSH allotment calculated under this special parallel process equals or exceeds the FY 2004 DSH allotment, as determined under the MMA provisions. Once the fiscal year specified occurs for a State, that State’s FY DSH allotment will be calculated by increasing the State’s previous actual FY DSH allotment (which would be equal to the FY 2004 DSH allotment) by the percentage change in the CPI–U for the previous FY, subject to the 12 percent limit. The following example illustrates how the FY DSH allotment would be calculated for FYs after FY 2004. Example—In this example, we are determining the parallel FY 2009 DSH allotment. A State’s actual FY 2003 DSH allotment is $100 million. Under the MMA, this State’s actual FY 2004 DSH allotment would be $116 million ($100 million increased by 16 percent). The State’s DSH allotment for FY 2005 and subsequent FYs would continue at the $116 million FY 2004 DSH allotment for FYs following FY 2004 until the fiscal year specified occurs. Under the separate parallel process, we determine E:\FR\FM\03JAN1.SGM 03JAN1 Federal Register / Vol. 76, No. 1 / Monday, January 3, 2011 / Notices jlentini on DSKJ8SOYB1PROD with NOTICES whether the fiscal year specified has occurred by calculating the State’s DSH allotments in accordance with the statute in effect before the enactment of the MMA. Under this special process, we continue to determine the State’s parallel DSH allotment for each FY by increasing the State’s parallel DSH allotment for the previous FY (as also determined under the special parallel process) by the percentage change in the CPI– U for the previous FY, and subject to the 12 percent limit. Assume for purposes of this example that, in accordance with this special parallel process, the State’s parallel FY 2008 DSH allotment was determined to be $115 million and the percentage change in the CPI–U for FY 2008 (the previous FY) relevant for the calculation of the FY 2009 DSH allotment was 4.4 percent. That is, the percentage change for the CPI–U for FY 2008, the year before FY 2009, was 4.4 percent. Therefore, the State’s special parallel process FY 2009 DSH allotment amount would be calculated by increasing the special parallel process FY 2008 DSH allotment amount of $115 million by 4.4 percent; this results in a parallel process DSH allotment process amount for FY 2009 of $120.06 million. Since $120.06 million is greater than $116 million (the actual FY 2004 DSH allotment calculated under the MMA), we would determine that FY 2009 is the fiscal year specified (the first year that the FY 2004 allotment equals or no longer exceeds the parallel process allotment). Since FY 2009 is the fiscal year specified, we would then determine the State’s FY 2009 allotment by increasing the State’s actual FY 2008 DSH allotment ($116 million) by the percentage change in the CPI– U for FY 2008 (4.4 percent). Therefore, the State’s FY 2009 DSH allotment would be $121.104 million ($116 million increased by 4.4 percent); for purposes of the calculation in this example, the application of the 12 percent limit has no effect. Furthermore, for FY 2009 and thereafter, the State’s DSH allotment would be calculated under the provisions of section 1923(f)(3)(A) of the Act by increasing the State’s previous FY’s DSH allotment by the percentage change in the CPI–U for the previous FY, subject to the 12 percent limit. However, as amended by section 1001(b)(4) of the MMA, section 1923(f)(5)(B) of the Act also contains criteria for determining whether a State is a Low-DSH State, beginning with FY 2004. This provision is described in section I.D. D. DSH Allotments for Low-DSH States for FY 2004 and FYs Thereafter Section 1001(b)(1) of the MMA amended section 1923(f)(5) of the Act regarding the calculation of the FY DSH allotments for ‘‘Low-DSH’’ States for FY 2004 and subsequent fiscal years. Specifically, under section 1923(f)(5)(B) of the Act, as amended by section 1001(b)(4) of the MMA, a State is considered a Low-DSH State for FY 2004 if its total DSH payments under its State plan for FY 2000 (including Federal and State shares) as reported to CMS as of August 31, 2003, are greater than 0 percent and less than 3 percent VerDate Mar<15>2010 20:10 Dec 30, 2010 Jkt 223001 of the State’s total FY 2000 expenditures under its State plan for medical assistance. For States that meet the LowDSH criteria, their FY 2004 DSH allotments are calculated by increasing their FY 2003 DSH allotments by 16 percent. Therefore, for FY 2004, LowDSH States’ FY DSH allotments are calculated in the same way as the DSH allotments for regular States, which under section 1923(f)(3) of the Act, get the special temporary increase for FY 2004. Furthermore, for States meeting the MMA’s Low-DSH definition, the DSH allotments for FYs 2005 through 2008 will continue to be determined by increasing the previous FY’s DSH allotment by 16 percent. The Low-DSH States’ DSH allotments for FYs 2004 through 2008 are not subject to the 12 percent limit. The Low-DSH States’ DSH allotments for FYs 2009 and subsequent FYs are calculated by increasing those States’ DSH allotments for the prior FY by the percentage change in the CPI–U for that prior fiscal year. For FYs 2009 and thereafter, the DSH allotments so determined would be subject to the 12 percent limit. E. Institutions for Mental Diseases DSH Limits for FYs 1998 and Thereafter Under section 1923(h) of the Act, Federal financial participation (FFP) is not available for DSH payments to institutions for mental diseases (IMDs) and other mental health facilities that are in excess of State-specific aggregate limits. Under this provision, this aggregate limit for DSH payments to IMDs and other mental health facilities is the lesser of a State’s FY 1995 total computable (State and Federal share) IMD and other mental health facility DSH expenditures applicable to the State’s FY 1995 DSH allotment (as reported on the Form CMS–64 as of January 1, 1997), or the amount equal to the product of the State’s current year total computable DSH allotment and the applicable percentage. Each State’s IMD limit on DSH payments to IMDs and other mental health facilities was calculated by first determining the State’s total computable DSH expenditures attributable to the FY 1995 DSH allotment for mental health facilities and inpatient hospitals. This calculation was based on the total computable DSH expenditures reported by the State on the Form CMS–64 as mental health DSH and inpatient hospital DSH as of January 1, 1997. We then calculate an ‘‘applicable percentage.’’ The applicable percentage for FY 1998 through FY 2000 (1995 IMD DSH percentage) is calculated by dividing the total computable amount of PO 00000 Frm 00069 Fmt 4703 Sfmt 4703 149 IMD and mental health DSH expenditures applicable to the State’s FY 1995 DSH allotment by the total computable amount of all DSH expenditures (mental health facility plus inpatient hospital) applicable to the FY 1995 DSH allotment. For FY 2001 and thereafter, the applicable percentage is defined as the lesser of the applicable percentage as calculated above (for FYs 1998 through 2001) or 50 percent for FY 2001; 40 percent for FY 2002; and 33 percent for each subsequent fiscal year. The applicable percentage is then applied to each State’s total computable FY DSH allotment for the current fiscal year. The State’s total computable FY DSH allotment is calculated by dividing the State’s Federal share DSH allotment for the FY by the State’s Federal medical assistance percentage (FMAP) for that fiscal year. In the final step of the calculation of the IMD DSH Limit, the State’s total computable IMD DSH limit for the FY is set at the lesser of the product of a State’s current FY total computable DSH allotment and the applicable percentage for that FY, or the State’s FY 1995 total computable IMD and other mental health facility DSH expenditures applicable to the State’s FY 1995 DSH allotment as reported on the Form CMS–64. The MMA legislation did not amend the Medicaid statute with respect to the calculation of the IMD DSH limit. F. Publication in the Federal Register of Preliminary and Final Notice for DSH Allotments and IMD DSH Limits In general, we initially determine States’ DSH allotments and IMD DSH limits for a FY using estimates of medical assistance expenditures, including DSH expenditures in their Medicaid programs. These estimates are provided by States each year on the August quarterly Medicaid budget reports (Form CMS–37) before the FY for which the DSH allotments and IMD DSH limits are being determined. Also, as part of the basic determination of preliminary DSH allotments for a FY, we use the available CPI–U percentage increase that is available before the beginning of the FY for which the allotment is being determined to determine the preliminary FY DSH allotment. For example, in determining the preliminary FY 2011 DSH allotment, we would apply the CPI–U percentage increase for FY 2010 that was available just before the beginning of FY 2011 on October 1, 2010. The DSH allotments and IMD DSH limits determined using these estimates and CPI–U percentage increases E:\FR\FM\03JAN1.SGM 03JAN1 150 Federal Register / Vol. 76, No. 1 / Monday, January 3, 2011 / Notices available before the beginning of the FY are referred to as ‘‘preliminary.’’ Only after we receive States’ reports of the actual related medical assistance expenditures through the quarterly expenditure report (Form CMS–64), and the final historic CPI–U percentage increases for the prior FY, which occurs after the end of the FY, are the ‘‘final’’ DSH Allotments and IMD DSH limits determined. The notice published in the Federal Register on December 19, 2008 (73 FR 77704), included the announcement of the preliminary FY 2009 DSH allotments (based on estimates), and the preliminary FY 2009 IMD DSH limits (since they were based on the preliminary DSH allotments for FY 2009). A correction notice published in the Federal Register on January 26, 2009 (74 FR 4439) provided a correction to the chart of preliminary FY 2009 DSH allotments published in the December 19, 2008 Federal Register. Finally, the notice published in the Federal Register on April 23, 2010 (75 FR 21314), included the announcement of the revised preliminary FY 2009 DSH allotments to reflect increases in the amount of the States’ DSH allotments for FY 2009 and FY 2010 pursuant to the enactment on February 17, 2009 of the American Recovery and Reinvestment Act of 2009 (section 5002 of Pub. L. 111–5) and revisions to the CPI–U percentage increase for FY 2008, and the revised preliminary FY 2009 IMD DSH limits (since they were based on the revised preliminary DSH allotments for FY 2009). This notice announces the final FY 2009 DSH allotments and the final FY 2009 IMD DSH limits (since these are now based on the actual expenditures for that fiscal year), the preliminary FY 2011 DSH allotments (based on expenditure estimates), and the preliminary IMD DSH limits for FY 2011 (since they are based on the preliminary DSH allotments for FY 2011). This notice does not include the final FY 2010 DSH allotments or the final FY 2010 IMD DSH limits, since the associated actual expenditures for FY 2010 are not available at this time. jlentini on DSKJ8SOYB1PROD with NOTICES G. DSH Allotment Provisions for Certain States 1. DSH Allotments for the State of Tennessee Section 1923(f)(6)(A) of the Act, as amended by section 404 of Public Law 109–432 (enacted on December 20, 2006), section 204 of Public Law 110– 173 (enacted on December 29, 2007), section 202 of Public Law 110–275 (enacted on July 15, 2008), section 616 VerDate Mar<15>2010 20:10 Dec 30, 2010 Jkt 223001 of Public Law 111–3 (enacted on February 4, 2009), and most recently as amended by Section 1054 of Public Law 111–152 (enacted on March 30, 2010) provides for the determination of a DSH allotment for the State of Tennessee for each of FYs 2007 through FY 2011, for 2 periods encompassing FY 2012, and for FY 2013. In accordance with this provision, Tennessee’s DSH allotment for each of FYs 2007 through 2011 is the greater of $280 million and the FY 2007 Federal medical assistance percentage of the DSH payment adjustments reflected in the State’s TennCare Demonstration Project for the demonstration year ending in 2006. In accordance with this provision, the State’s Federal share DSH allotment for each of FYs 2007 through 2011 is $305,451,928. Furthermore, Tennessee’s DSH allotment for the period October 1, 2011 through December 31, 2011 (the first quarter of FY 2012) is one-fourth of this amount; that is, $76,362,982. Section 1923(f)(6)(A)(ii) of the Act further limits the amount of Federal funds that are available for DSH payments that Tennessee may make in each of the FYs 2007 through 2011, and for the first quarter of FY 2012 to 30 percent of the DSH allotment. In this regard, the limit on the DSH payments that the State of Tennessee may make is effectively $91,635,578 (30 percent of $305,451,928) for each FY 2007 through FY 2011, and $22,908,895 (30 percent of $76,362,982) for the period October 1, 2011 through December 31, 2011 (the first quarter of FY 2012. The statute also provides for additional allotments for Tennessee for the period January 1, 2011 through September 30, 2012 (quarters 2 through 4 of FY 2012) and for all of FY 2013; future Federal Register notices will describe the determination of the amounts of DSH allotments for Tennessee for FY 2012 and FY 2013. 2. DSH Allotments for the State of Hawaii Section 1923(f)(6)(B) of the Act, as amended by section 404 of Public Law 109–432, section 204 of Public Law 110–173, section 202 of Public Law 110–275, section 616 of Public Law 111–3 (enacted on February 4, 2009) most recently as amended by Section 10201(e)(1) of Public Law 111–148 (enacted on March 23, 2010) provides for a DSH allotment for the State of Hawaii for each of FYs 2007 through 2011, for 2 periods encompassing FY 2012, and certain other provisions providing for a DSH allotment for FY 2013. In accordance with the statute, Hawaii’s DSH allotment each year for FY 2007 through FY 2011 is $10 PO 00000 Frm 00070 Fmt 4703 Sfmt 4703 million. Furthermore, for the period October 1, 2011 through December 31, 2011 (the first quarter of FY 2012) Hawaii’s DSH allotment is $2.5 million, and for the period January 1, 2012 through September 30, 2012 Hawaii’s DSH allotment is $7.5 million. Future Federal Register notices will describe the determination of the amounts of DSH allotments for Hawaii for FY 2012 and FY 2013. H. DSH Allotments for FY 2009 and FY 2010 Under the Recovery Act Section 5002 of the Recovery Act added a new section 1923(f)(3)(E) of the Act; this new section provides for a temporary increase in States’ DSH allotments only for FY 2009 and FY 2010. 1. Revised Preliminary DSH Allotments for FY 2009 States’ preliminary FY 2009 DSH allotments were previously published in the Federal Register on January 26, 2009. However, section 5002 of the Recovery Act enacted after the publication of the preliminary FY 2009 DSH allotments provided for an increase in States’ DSH allotments from what were previously determined and published in the Federal Register on January 26, 2009. The Recovery Act provided fiscal relief to States during the recent national economic downturn. In that regard, section 1923(f)(3)(E)(i)(I) of the Act, as created by section 5002 of the Recovery Act, requires that, in general, States’ DSH allotments for FY 2009 be equal to 102.5 percent of the FY 2009 allotments that would otherwise have been determined; this provision does not apply to certain States as discussed in section G. above. As described in section F. above, we typically publish States’ preliminary DSH allotments based on expenditure estimates and CPI–U percentage increases available before the FY for which the preliminary DSH allotment is being determined. The preliminary DSH allotments are subsequently finalized after the FY is over and when the applicable inputs for determining the DSH allotments (that is, the applicable expenditures and the CPI–U percentage increase for the previous FY) are final. Due to the Recovery Act temporary increase for FY 2009, in this notice we revised the preliminary FY 2009 DSH allotments previously published to reflect updated States’ expenditures, and more significantly, to reflect an updated and increased CPI–U percentage increase. As described above, States’ DSH allotments are determined by increasing the previous FY allotment by the applicable CPI–U E:\FR\FM\03JAN1.SGM 03JAN1 Federal Register / Vol. 76, No. 1 / Monday, January 3, 2011 / Notices percentage increase. In particular, when we previously calculated the preliminary FY 2009 allotments, the applicable CPI–U percentage increase for FY 2008 (used for determining the FY 2009 DSH allotment), which was available before the beginning of FY 2009, was 4.0 percent. However, subsequent to our initial determination of the preliminary FY 2009 DSH allotments, the historical applicable CPI–U percentage increase for FY 2008 became available; that actual CPI–U increase for FY 2008 is 4.4 percent. In order to ensure that the full increase in DSH allotments for FY 2009 is available to States during FY 2009, we revised the preliminary FY 2009 DSH allotments prior to the end of FY 2009 to reflect both the updated increase in the applicable CPI–U percentage increase for FY 2008 and the 2.5 percent increase in States’ FY 2009 DSH allotments as required under the Recovery Act. The final FY 2009 allotments contained in this Federal Register notice reflect the final CPI–U percentage increase for FY 2008 and the actual expenditures in Medicaid for FY 2009. jlentini on DSKJ8SOYB1PROD with NOTICES 2. Preliminary DSH Allotments for FY 2011 Sections 1923(f)(3)(E) of the Act, as amended by Section 5002 of the Recovery Act, in general (with the exceptions for certain States described above) provided for a 2.5 percent increase in States’ FY 2009 DSH allotments and for States’ FY 2010 DSH allotments to be determined as the higher of: • 102.5 percent of the DSH allotment for FY 2009, as determined under the Recovery Act provision, or • The FY 2010 DSH allotment as would otherwise be calculated without the application of the Recovery Act provision. The final FY 2009 DSH allotments contained in this Federal Register notice and the preliminary FY 2010 DSH allotment for States (as published in the Federal Register on April 23, 2010, 75 FR 21314) were determined in accordance with the law, as amended by the Recovery Act. As indicated, the Recovery Act DSH allotment provisions apply only for FY 2009 and FY 2010; that is, States’ DSH allotments for FY 2011 are determined as DSH allotments were determined prior to the enactment of the Recovery Act. VerDate Mar<15>2010 20:10 Dec 30, 2010 Jkt 223001 3. Effect of the Recovery Act DSH Provision on Calculation of the States’ IMD DSH Limits for FY 2009 and FY 2010, and Determination of Such Limits for FY 2011 Section E above described the determination of States’ IMD DSH limits for FYs beginning FY 1998 and after, as determined under section 1923(h) of the Act. Section 5002 of the Recovery Act did not amend section 1923(h) of the Act. Accordingly, States’ preliminary IMD DSH limits for FY 2009 and FY 2010, the FYs for which the Recovery Act provisions are applicable, were determined as under the existing provisions. As described in section E above, States’ DSH allotments are an element of the determination of the IMD DSH limit. Therefore, the DSH allotments for FY 2009 and FY 2010, as determined under the Recovery Act provisions, were used in calculating States’ Final FY 2009 (as contained in this Federal Register notice) and States’ preliminary FY 2010 (as previously published in the Federal Register on April 23, 2010, 75 FR 21314) IMD DSH limits. This is the same application of States’ DSH allotments for purposes of determining States’ IMD DSH limits as was applied under section 1923(h) of the Act, regardless of the Recovery Act provision. II. Provisions of the Notice A. Calculation of the Final FY 2009 Federal Share State DSH Allotments, and the Preliminary FY 2011 Federal Share State DSH Allotments 1. Final FY 2009 Federal Share State DSH Allotments Chart 1 of the Addendum to this notice provides the States’ final FY 2009 DSH allotments as discussed above in section I.H.1 of this notice. As discussed in that section of this notice, the revised preliminary FY 2009 DSH allotments were previously published in the Federal Register on April 23, 2010. As described above and in previous Federal Register notices in determining non-Low DSH States’ DSH allotments for FYs after FY 2004 under section 1923(f)(3)(C) of the Act for DSH allotments, we determined States’ DSH allotments under a ‘‘parallel’’ process. Under the parallel process, for each FY for each State, we have been determining whether the fiscal year specified (as defined in section 1923(f)(3)(D) of the Act) has occurred. Under section 1923(f)(3)(D) of the Act, the fiscal year specified is determined separately for each State and ‘‘is the first FY for which the Secretary estimates that the DSH allotment for that State PO 00000 Frm 00071 Fmt 4703 Sfmt 4703 151 will equal (or no longer exceed) the DSH allotment for that State under the law as in effect before the date of enactment’’ of MMA. The process in effect before the enactment in MMA is the process described in section 1923(f)(3)(A) of the Act; under this process each States’ DSH allotment since FY 2003 is increased by the CPI–U increase for the prior FY and the result is then compared to the State’s FY 2004 DSH allotment, as determined under section 1923(f)(3)(C)(i) of the Act (under which the States’ FY 2003 DSH allotments were increased by 16 percent). The fiscal year specified for a State is the FY when the FY 2004 allotment is no longer greater than the parallel process DSH allotment. We are reiterating the parallel process provision because we determined that FY 2009 was the fiscal year specified for all non-Low DSH States (except Louisiana). Therefore, as indicated in section 1923(f)(3)(C)(ii) of the Act, the Final FY 2009 DSH allotment for all non-Low DSH States (except Louisiana) is equal to the prior FY 2008 DSH allotment increased by the CPI–U increase for FY 2008 (4.4 percent). Chart 1 contains the final FY 2009 DSH allotments. For the non-Low DSH States for which the FY 2009 is the fiscal year specified, the FY 2010 and subsequent FY DSH allotments are calculated by increasing the prior FY DSH allotment by the CPI–U increase for the prior fiscal year. For Low-DSH States, the FY 2009 DSH allotment is calculated using the same methodology as for the non-Low DSH States for which the fiscal year specified has occurred. That is, for FY 2009 and following FYs, the DSH allotment for Low-DSH States is calculated by increasing the prior FY DSH allotment by the percentage change in the CPI–U for the prior fiscal year. The preliminary FY 2009 allotments were initially determined using the States’ August 2008 expenditure estimates submitted by the States on the Form CMS–37, and the percentage increase in the CPI–U for the previous FY that was available before the beginning of FY 2009. As discussed in section I.H.1 above, based on the updated CPI–U percentage increase for FY 2008 (from 4.0 percent to 4.4 percent), and the enactment of section 5002 of the Recovery Act (which provides that States’ FY 2009 DSH allotments are equal to 102.5 percent of these allotments as would otherwise be determined for the FY), we revised the preliminary FY 2009 DSH allotments, which were published in the Federal Register on April 23, 2010. States’ final FY 2009 DSH allotments as contained in E:\FR\FM\03JAN1.SGM 03JAN1 152 Federal Register / Vol. 76, No. 1 / Monday, January 3, 2011 / Notices this Federal Register were determined based on States’ four quarterly Medicaid expenditure reports (Form CMS–64) for FY 2009 received following the end of FY 2009 and the final applicable percentage increase to CPI–U for the previous FY 2008. 2. Calculation of the Preliminary FY 2011 Federal Share State DSH Allotments Chart 2 of the Addendum to this notice provides the preliminary FY 2011 DSH allotments determined in accordance with the section 1923(f)(3) of the Act, as described in section I.H.2. As described in that section of this notice, the Recovery Act provisions which increased States’ DSH allotments for FY 2009 and FY 2010 are not applicable for determining States’ FY 2011 DSH allotments. States’ final FY 2011 DSH allotments will be published in the Federal Register following receipt of the States’ four quarterly Medicaid expenditure reports (Form CMS–64) for FY 2010 following the end of FY 2011. B. Calculation of the Final FY 2009 and Preliminary FY 2011 IMD DSH Limits As discussed in section I.E. and I.H.3 above of this notice, section 1923(h) of the Act specifies the methodology to be used to establish the limits on the amount of DSH payments that a State can make to IMDs and other mental health facilities. FFP is not available for IMD or DSH payments that exceed the IMD limits. In this notice, we are publishing the final FY 2009 IMD DSH Limit and the preliminary FY 2011 IMD DSH Limit determined in accordance with the provisions discussed above, and for FY 2009, reflecting the DSH allotments for the FY determined under the provisions of section 1923(f)(3)(E) of the Act, as amended by section 5002 of the Recovery Act. Charts 3 and 4 of the Addendum to this notice detail each State’s final IMD DSH Limit for FY 2009 and the preliminary IMD DSH Limit for FY 2011, respectively, determined in accordance with section 1923(h) of the Act. jlentini on DSKJ8SOYB1PROD with NOTICES III. Collection of Information Requirements This document does not impose information collection and recordkeeping requirements. Consequently, it need not be reviewed by the Office of Management and Budget under the authority of the Paperwork Reduction Act of 1995 (44 U.S.C. 35). VerDate Mar<15>2010 20:10 Dec 30, 2010 Jkt 223001 IV. Regulatory Impact Statement We have examined the impact of this rule as required by Executive Order 12866 on Regulatory Planning and Review (September 1993), the Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96–354), section 1102(b) of the Social Security Act, section 202 of the Unfunded Mandates Reform Act of 1995 (March 22, 1995; Pub. L. 104–4), Executive Order 13132 on Federalism (August 4, 1999) and the Congressional Review Act (5 U.S.C. 804(2)). Executive Order 12866 directs agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). A regulatory impact analysis (RIA) must be prepared for major rules with economically significant effects ($100 million or more in any 1 year). This notice does reach the $100 million economic threshold and thus is considered a major rule under the Congressional Review Act. There are no changes between the revised preliminary and final FY 2009 DSH allotments and FY 2009 IMD DSH limits. The preliminary FY 2011 DSH allotments being published in this notice are about $365 million less than the preliminary FY 2010 DSH allotments published in the Federal Register on April 23, 2010 (75 FR 21314). These decreases are a direct result of the application of the provisions of section 1923(f)(3) of the Act in the calculation of States’ DSH allotments, and in particular the provisions of section 1923(f)(3)(E) of the Act as amended by the Recovery Act (which provided for a temporary increase in States’ DSH allotments for FY 2009 and FY 2010 during the specified recession period) do not apply with respect to the FY 2011 and following FY DSH allotments. The preliminary FY 2011 IMD DSH Limits being published in this notice are about $23 million less than the preliminary FY 2010 IMD DSH Limits published in Federal Register on April 23, 2010 (75 FR 21314). This is because the DSH allotment for a FY is a factor in the determination of the IMD DSH limit for the FY, and since the preliminary FY 2011 DSH allotments were decreased as compared to the preliminary FY 2010 DSH allotments, the associated FY 2011 IMD DSH limits for some States were also decreased. PO 00000 Frm 00072 Fmt 4703 Sfmt 4703 The RFA requires agencies to analyze options for regulatory relief of small businesses, if a rule has a significant impact on a substantial number of small entities. For purposes of the RFA, small entities include small businesses, nonprofit organizations, and small governmental jurisdictions. Most hospitals and most other providers and suppliers are small entities, either by nonprofit status or by having revenues of $7.0 million to $34.5 million in any one year. Individuals and States are not included in the definition of a small entity. We are not preparing an analysis for the RFA because the Secretary has determined that this notice will not have significant economic impact on a substantial number of small entities. Specifically, the effects of the various controlling statutes on providers are not impacted by a result of any independent regulatory impact and not this notice. The purpose of the notice is to announce the latest distributions as required by the statute. In addition, section 1102(b) of the Act requires us to prepare a regulatory impact analysis if a rule may have a significant impact on the operations of a substantial number of small rural hospitals. This analysis must conform to the provisions of section 604 of the RFA. For purposes of section 1102(b) of the Act, we define a small rural hospital as a hospital that is located outside of a Core-Based Statistical Area for Medicaid payment regulations and has fewer than 100 beds. We are not preparing analysis for section 1102(b) of the Act because the Secretary has determined that this notice will not have a significant impact on the operations of a substantial number of small rural hospitals. The Medicaid statute (including as most recently amended by the Recovery Act) specifies the methodology for determining the amounts of States’ DSH allotments and IMD DSH limits; and as described previously, results in increases in States’ DSH allotments and IMD DSH limits for the FYs referred to. The statute applicable to these allotments and limits does not apply to the determination of the amounts of DSH payments made to specific DSH hospitals; rather, these allotments and limits represent an overall limit on the total of such DSH payments. In this regard, we do not believe that this notice will have a significant economic impact on a substantial number of small entities. Section 202 of the Unfunded Mandates Reform Act of 1995 also requires that agencies assess anticipated costs and benefits before issuing any rule whose mandates require spending E:\FR\FM\03JAN1.SGM 03JAN1 153 Federal Register / Vol. 76, No. 1 / Monday, January 3, 2011 / Notices in any 1 year of $100 million in 1995 dollars, updated annually for inflation. In 2010, that threshold is approximately $135 million. This notice will have no consequential effect on State, local, or Tribal governments, in the aggregate, or on the private sector. Executive Order 13132 establishes certain requirements that an agency must meet when it promulgates a proposed rule (and subsequent final rule) that imposes substantial direct requirement costs on State and local governments, preempts State law, or otherwise has Federalism implications. Since this notice does not impose any costs on State or local governments, the requirements of E.O. 13132 are not applicable. Alternatives Considered The methodologies for determining the States’ fiscal year DSH allotments and IMD DSH Limits, as reflected in this notice, were established in accordance with the methodologies and formula for determining States’ allotments as specified in statute. This notice does not put forward any further discretionary administrative policies for determining such allotments. TABLE—ACCOUNTING STATEMENT: CLASSIFICATION OF ESTIMATED EXPENDITURES, FROM FY 2010 TO FY 2011 [In millions] Category Accounting Statement As required by OMB Circular A–4 (available at https:// www.whitehouse.gov/omb/circulars/ a004/a-4.pdf), in the table below, we have prepared an accounting statement showing the classification of the estimated expenditures associated with the provisions of this notice. This table provides our best estimate of the change (decrease) in the Federal share of States’ Medicaid DSH payments resulting from the application of the provisions of the Medicaid statute relating to the calculation of States’ FY DSH allotments and the increase in the FY DSH allotments from FY 2010 to FY 2011. Annualized Monetized Transfers. From Whom To Whom?. Transfers ¥$365. Federal Government to States. In accordance with the provisions of Executive Order 12866, this notice was reviewed by the Office of Management and Budget. Addendum This addendum contains the charts 1 through 4 (preceded by associated keys) that are referred to in the preamble of this notice. Key to Chart 1. Final DSH Allotments for FY 2009. KEY TO CHART 1—FINAL DSH ALLOTMENTS FOR FISCAL YEAR: 2009 [The Final FY 2009 DSH Allotments for the NON-Low DSH States are presented in the top section of this chart, and the Final FY 2009 DSH Allotments for the Low-DSH States are presented in the bottom section of this chart.] Column Description Column A ................... Column B ................... State. 1923(f)(3)(D) Test Met. This column indicates whether the ‘‘FY Specified’’ has occurred with respect to Non-Low DSH States, determined in accordance with section 1923(f)(3)(D) of the Act. ‘‘YES’’ indicates the FY Specified has occurred; ‘‘NOT MET’’ indicates that the FY Specified has not occurred; and ‘‘na’’ indicates that this provision is not applicable. This provision is not applicable for Low-DSH States indicated in the bottom portion of chart 2. For all States, the entries in Columns C through K present the determination of the final FY 2009 DSH allotments as would be calculated without the application of section 1923(f)(3)(E) of the Act as amended by section 5002 of ARRA. For all States, the entries in Column M present the calculation of the final FY 2009 DSH Allotments, determined in accordance with the provisions of section 5002 of ARRA. For Non-Low DSH States indicated in the top portion of Chart 2, entries in Columns C through K are only for States meeting the ‘‘FY Specified’’ test (‘‘YES’’ in Column B). For States not meeting the test indicated in Column B, these Columns indicate ‘‘NA’’, and for States for which such test is not applicable, these Columns indicate ‘‘na’’. For Low DSH States, entries are in the bottom portion of Chart 2. FY 2009 FMAPS. This column contains the States’ FY 2009 Federal Medical Assistance Percentages. FY 2008 DSH Allotment For States Meeting Test. This column contains the States’ prior FY 2008 DSH Allotments. FY 2008 Allotments X (1 + Percentage Increase in CPI–U): 1.044. This column contains the amount in Column D increased by 1 plus the percentage increase in the CPI–U for the prior FY (4.4 percent). FY 2009 TC MAP Exp. Incl. DSH. This column contains the amount of the States’ actual FY 2009 total computable medical assistance expenditures including DSH expenditures. FY 2009 TC MAP Exp. Net of DSH. This column contains the amount of the States’ actual FY 2009 total computable DSH expenditures. FY 2009 TC MAP Exp. Net of DSH. This column contains the amount of the States’ actual FY 2009 total computable medical assistance expenditures net of DSH expenditures, calculated as the amount in Column F minus the amount in Column G. 12% AMOUNT. This column contains the amount of the ‘‘12 percent limit’’ in Federal share, determined in accordance with the provisions of section 1923(f)(3) of the Act. Greater of FY 2008 Allotment or 12% Limit. This column contains the greater of the State’s prior FY (FY 2008) DSH allotment or the amount of the 12% Limit, determined as the maximum of the amount in Column D or Column I. FY 2009 DSH Allotment PRE–ARRA. This column contains the States’ FY 2009 DSH allotments as would be determined prior to ARRA, determined as the minimum of the amount in Column J or Column E. For Non-Low DSH States that have not met the ‘‘FY Specified’’ test (entry in Column B is ‘‘NOT MET’’), the amount in Column K is equal to the State’s FY 2004 DSH allotment. For States for which the entry in Column B is ‘‘na’’, the amount in Column K is determined in accordance with the provisions of section 1923(f)(6) of the Act. FY 2009 DSH Allotment Under ARRA. This column contains the State’s FY 2009 DSH allotment as determined in accordance with section 5002 of ARRA, and calculated as the amount in Column K multiplied by 1.025. Final FY 2009 DSH Allotment Under ARRA. (Max of Col K or L.) This column contains the State’s final FY 2009 DSH allotment as determined in accordance with section 1923(f)(3)(E) of the Act as amended by section 5002 of ARRA, and determined as the maximum of the amount in Column K or L. Columns C–L ............. Column C .................. Column D .................. Column E ................... Column F ................... Column G .................. Column H .................. Column I .................... Column J ................... jlentini on DSKJ8SOYB1PROD with NOTICES Column K ................... Column L ................... Column M .................. VerDate Mar<15>2010 20:10 Dec 30, 2010 Jkt 223001 PO 00000 Frm 00073 Fmt 4703 Sfmt 4703 E:\FR\FM\03JAN1.SGM 03JAN1 154 Federal Register / Vol. 76, No. 1 / Monday, January 3, 2011 / Notices Key to Chart 2. Preliminary DSH Allotments for FY 2011. KEY TO CHART 2—PRELIMINARY DSH ALLOTMENTS FOR FISCAL YEAR: 2011 [The Preliminary FY 2011 DSH Allotments for the NON-Low DSH States are presented in the top section of this chart, and the Preliminary FY 2011 DSH Allotments for the Low-DSH States are presented in the bottom section of this chart.] Column Description Column A ................... Column B ................... State. 1923(f)(3)(D) Test Met. This column indicates whether the ‘‘FY Specified’’ has occurred with respect to Non-Low DSH States, determined in accordance with section 1923(f)(3)(D) of the Act. ‘‘YES’’ indicates the FY Specified has occurred; ‘‘NOT MET’’ indicates that the FY Specified has not occurred; and ‘‘na’’ indicates that this provision is not applicable. This provision is not applicable for Low-DSH States indicated in the bottom portion of chart 3. For all States, the entries in Columns B through K present the determination of the preliminary FY 2011 DSH allotments as would be calculated without the application of section 5002 of ARRA since such provisions were only applicable for FY 2009 and FY 2010. For Non-Low DSH States indicated in the top portion of Chart 2, entries in Columns C through J are only for States meeting the ‘‘FY Specified’’ test (‘‘YES’’ in Column B). For States not meeting the test indicated in Column B, these Columns indicate ‘‘NA’’, and for States for which such test is not applicable, these Columns indicate ‘‘na’’. For Low DSH States, entries are in the bottom portion of Chart 2. FY 2011 FMAPS. This column contains the States’ FY 2011 Federal Medical Assistance Percentages. FY 2010 DSH Allotment For States Meeting Test. This column contains the States’ prior FY 2010 DSH Allotments as would be determined without the application of section 5002 of ARRA. FY 2010 Allotments X (1 + Percentage Increase in CPI–U): 1.018. This column contains the amount in Column D increased by 1 plus the percentage increase in the CPI–U for the prior FY (1.8 percent). FY 2011 TC MAP Exp. Incl. DSH. This column contains the amount of the States’ projected FY 2011 total computable medical assistance expenditures including DSH expenditures. FY 2011 TC DSH Expenditures. This column contains the amount of the States’ projected FY 2011 total computable DSH expenditures. FY 2011 TC MAP Exp. Net of DSH. This column contains the amount of the States’ projected FY 2011 total computable medical assistance expenditures net of DSH expenditures, calculated as the amount in Column F minus the amount in Column G. 12% AMOUNT. This column contains the amount of the ‘‘12 percent limit’’ in Federal share, determined in accordance with the provisions of section 1923(f)(3) of the Act. Greater of FY 2010 Allotment or 12% Limit. This column contains the greater of the State’s prior FY (FY 2010) DSH allotment or the amount of the 12% Limit, determined as the maximum of the amount in Column D or Column I. FY 2011 DSH Allotment. This column contains the States’ FY 2011 DSH allotments as would be determined without the application of the provisions of section 5002 of ARRA, determined as the minimum of the amount in Column J or Column E. For Non-Low DSH States that have not met the ‘‘FY Specified’’ test (entry in Column B is ‘‘NOT MET’’), the amount in Column K is equal to the State’s FY 2004 DSH allotment. For States for which the entry in Column B is ‘‘na’’, the amount in Column K is determined in accordance with the provisions of section 1923(f)(6) of the Act. Columns C–K ............ Column C .................. Column D .................. Column E ................... Column F ................... Column G .................. Column H .................. Column I .................... Column J ................... Column K ................... Key to Chart 3. Final IMD DSH Limit for FY 2009. KEY TO CHART 3—FINAL IMD DSH LIMIT FOR FY: 2009 [Key to the Chart of the Final FY 2009 IMD Limitations.—The Final FY 2009 IMD DSH Limits for the regular States are presented in the top section of this chart and the final FY IMD DSH Limits for the Low-DSH States are presented in the bottom section of the chart.] Column Description Column A ................... Column B ................... State. Inpatient Hospital Services FY 95 DSH Total Computable. This column contains the States’ total computable FY 1995 inpatient hospital DSH expenditures as reported on the Form CMS–64. IMD and Mental Health Services FY 95 DSH Total Computable. This column contains the total computable FY 1995 mental health facility DSH expenditures as reported on the Form CMS–64 as of January 1, 1997. Total Inpatient & IMD & Mental Health FY 95 DSH Total Computable, Col B + C. This column contains the total computation of all inpatient hospital DSH expenditures and mental health facility DSH expenditures for FY 1995 as reported on the Form CMS–64 as of January 1, 1997 (representing the sum of Column B and Column C). Applicable Percentage Col C/D. This column contains the ‘‘applicable percentage’’ representing the total computable FY 1995 mental health facility DSH expenditures divided by total computable all inpatient hospital and mental health facility DSH expenditures for FY 1995 (the amount in Column C divided by the amount in Column D). Per section 1923(h)(2)(A)(ii)(III) of the Act, for FYs after FY 2002, the applicable percentage can be no greater than 33 percent. FY 2009 Allotment in FS Under ARRA. This column contains the States’ final FY 2009 DSH allotments as determined under ARRA. FY 2009 FMAP. This column contains the States’ FY 2009 FMAPs. FY 2009 DSH Allotments in TC. Col. F/G. This column contains the FY 2009 total computable DSH Allotment (determined as the amount in Column F divided by the amount in Column G). Col E * Col H in TC. This column contains the applicable percent of FY 2008 total computable DSH allotment (calculated as the amount in Column E multiplied by the amount in Column H). Column C .................. Column D .................. jlentini on DSKJ8SOYB1PROD with NOTICES Column E ................... Column F ................... Column G .................. Column H .................. Column I .................... VerDate Mar<15>2010 20:10 Dec 30, 2010 Jkt 223001 PO 00000 Frm 00074 Fmt 4703 Sfmt 4703 E:\FR\FM\03JAN1.SGM 03JAN1 Federal Register / Vol. 76, No. 1 / Monday, January 3, 2011 / Notices 155 KEY TO CHART 3—FINAL IMD DSH LIMIT FOR FY: 2009—Continued [Key to the Chart of the Final FY 2009 IMD Limitations.—The Final FY 2009 IMD DSH Limits for the regular States are presented in the top section of this chart and the final FY IMD DSH Limits for the Low-DSH States are presented in the bottom section of the chart.] Column Description Column J ................... FY 2009 TC IMD DSH Limit. Lesser of Col. C or I. This column contains the FY 2009 TC IMD DSH Limit equal to the lesser of the amount in Column C or Column I. FY 2009 IMD DSH Limit in FS U/ARRA. Col. G × J. This column contains the FY 2009 Federal share IMD DSH limit determined by converting the total computable FY 2009 IMD DSH Limit from Column J into a Federal share amount by multiplying it by the FY 2009 FMAP in Column G. Column K ................... Key to Chart 4. Preliminary IMD DSH Limit for FY 2011. KEY TO CHART 4—PRELIMINARY IMD DSH LIMIT FOR FY: 2011 [Key to the Chart of the FY 2011 IMD Limitations—The preliminary FY 2011 IMD DSH Limits for the Non-Low DSH States are presented in the top section of this chart and the preliminary FY 2011 IMD DSH Limits for the Low-DSH States are presented in the bottom section of the chart.] Column Description Column A ................... Column B ................... State. Inpatient Hospital Services FY 95 DSH Total Computable. This column contains the States’ total computable FY 1995 inpatient hospital DSH expenditures as reported on the Form CMS–64. IMD and Mental Health Services FY 95 DSH Total Computable. This column contains the total computable FY 1995 mental health facility DSH expenditures as reported on the Form CMS–64 as of January 1, 1997. Total Inpatient & IMD & Mental Health FY 95 DSH Total Computable, Col. B + C. This column contains the total computation of all inpatient hospital DSH expenditures and mental health facility DSH expenditures for FY 1995 as reported on the Form CMS–64 as of January 1, 1997 (representing the sum of Column B and Column C). Applicable Percent Col. C/D. This column contains the ‘‘applicable percentage’’ representing the total Computable FY 1995 mental health facility DSH expenditures divided by total computable all inpatient hospital and mental health facility DSH expenditures for FY 1995 (the amount in Column C divided by the amount in Column D) Per section 1923(h)(2)(A)(ii)(III) Of the Act, for FYs after FY 2002, the applicable Percentage can be no greater than 33 percent. FY 2011 Federal Share DSH Allotment. This column contains the States’ preliminary FY 2011 DSH allotments. FY 2011 FMAP. This column contains the States’ FY 2010 FMAPs. FY 2011 DSH Allotments in Total Computable Col. F/G. This column contains States’ FY 2011 total computable DSH allotment (determined as Column F/Column G). Col E * Col H in TC. This column contains the applicable percent of FY 2010 total computable DSH allotment (calculated as the percentage in Column E multiplied by the amount in Column H). FY 2011 TC IMD DSH Limit. Lesser of Col. C or I. This column contains the FY 2011 TC IMD DSH Limit equal to the lesser of the amount in Column C or Column I. FY 2011 IMD DSH Limit in Federal Share, Col. G x J. This column contains the FY 2011 Federal share IMD DSH limit determined by converting the total computable FY 2011 IMD DSH Limit from Column J into a Federal share amount by multiplying it by the FY 2011 FMAP in Column G. Column C .................. Column D .................. Column E ................... Column F ................... Column G .................. Column H .................. Column I .................... Column J ................... Column K ................... jlentini on DSKJ8SOYB1PROD with NOTICES BILLING CODE 4120–01–P VerDate Mar<15>2010 20:10 Dec 30, 2010 Jkt 223001 PO 00000 Frm 00075 Fmt 4703 Sfmt 4703 E:\FR\FM\03JAN1.SGM 03JAN1 VerDate Mar<15>2010 Federal Register / Vol. 76, No. 1 / Monday, January 3, 2011 / Notices 15:48 Dec 30, 2010 Jkt 223001 PO 00000 Frm 00076 Fmt 4703 Sfmt 4725 E:\FR\FM\03JAN1.SGM 03JAN1 EN03JA11.000</GPH> jlentini on DSKJ8SOYB1PROD with NOTICES 156 VerDate Mar<15>2010 15:48 Dec 30, 2010 Jkt 223001 PO 00000 Frm 00077 Fmt 4703 Sfmt 4725 E:\FR\FM\03JAN1.SGM 03JAN1 157 EN03JA11.001</GPH> jlentini on DSKJ8SOYB1PROD with NOTICES Federal Register / Vol. 76, No. 1 / Monday, January 3, 2011 / Notices VerDate Mar<15>2010 Federal Register / Vol. 76, No. 1 / Monday, January 3, 2011 / Notices 15:48 Dec 30, 2010 Jkt 223001 PO 00000 Frm 00078 Fmt 4703 Sfmt 4725 E:\FR\FM\03JAN1.SGM 03JAN1 EN03JA11.002</GPH> jlentini on DSKJ8SOYB1PROD with NOTICES 158 (Catalog of Federal Domestic Assistance Program No. 93.778, Medical Assistance Program) DEPARTMENT OF HEALTH AND HUMAN SERVICES Dated: October 20, 2010. Donald M. Berwick, Administrator, Centers for Medicare & Medicaid Services. Dated: November 17, 2010. Kathleen Sebelius, Secretary. Health Resources and Services Administration [FR Doc. 2010–32979 Filed 12–30–10; 8:45 am] jlentini on DSKJ8SOYB1PROD with NOTICES 15:48 Dec 30, 2010 AGENCY: Health Resources and Services Administration (HRSA), HHS. ACTION: Notice of noncompetitive program supplemental award. SUMMARY: HRSA will be issuing noncompetitive supplemental grant funding to the University of Wisconsin, Laboratory of Hygiene, Madison, Wisconsin, under the Maternal Child and Health Bureau’s Blood Lead Proficiency Testing Program. The University of Wisconsin will use these funds to initiate an orderly closeout of BILLING CODE 4120–01–C VerDate Mar<15>2010 Discretionary Grant Program Jkt 223001 PO 00000 Frm 00079 Fmt 4703 Sfmt 4703 159 HRSA-funded activities which clearly fall within the purview of the Centers for Disease Control and Prevention’s ‘‘Preventing Lead Poisoning in Young Children’’ initiative at their National Center for Environmental Health. This action will also accord the University of Wisconsin and the Center additional time to solicit recommendations from the CDC’s Advisory Committee on Childhood Lead Poisoning Prevention with respect to future funding for this activity. The Maternal and Child Health Bureau (MCHB) has continuously supported the National Blood Lead and Erythrocyte Protoprophyrin (EP) Proficiency Testing Program through the University of Wisconsin since 1988. Childhood lead poisoning is a wellcharacterized public health problem in E:\FR\FM\03JAN1.SGM 03JAN1 EN03JA11.003</GPH> Federal Register / Vol. 76, No. 1 / Monday, January 3, 2011 / Notices

Agencies

[Federal Register Volume 76, Number 1 (Monday, January 3, 2011)]
[Notices]
[Pages 148-159]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-32979]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

[CMS-2321-N]
RIN 0938-AQ44

Medicaid Program; Final FY 2009 and Preliminary FY 2011
Disproportionate Share Hospital Allotments, and Final FY 2009 and
Preliminary FY 2011 Institutions for Mental Diseases Disproportionate
Share Hospital Limits

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Notice.

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SUMMARY: This notice announces the final Federal share disproportionate
share hospital (DSH) allotments for Federal FY (FY) 2009 and the
preliminary Federal share DSH allotments for FY 2011. This notice also
announces the final FY 2009 and the preliminary FY 2011 limitations on
aggregate DSH payments that States may make to institutions for mental
disease and other mental health facilities. In addition, this notice
includes background information describing the methodology for
determining the amounts of States' FY DSH allotments.

DATES: Effective Date: This notice is effective March 4, 2011. The
final allotments and limitations set forth in this notice are effective
for the fiscal years specified.

FOR FURTHER INFORMATION CONTACT: Richard Strauss, (410) 786-2019.

SUPPLEMENTARY INFORMATION:

I. Background

A. Disproportionate Share Hospital Allotments for Federal FY 2003

Under section 1923(f)(3) of the Social Security Act (the Act),
States' Federal fiscal year (FY) 2003 disproportionate share hospital
(DSH) allotments were calculated by increasing the amounts of the FY
2002 allotments for each State (as specified in the chart, entitled
``DSH Allotment (in millions of dollars)'', contained in section
1923(f)(2) of the Act) by the percentage change in the Consumer Price
Index for all Urban Consumers (CPI-U) for the prior fiscal year. The
allotment, determined in this way, is subject to the limitation that an
increase to a State's DSH allotment for a FY cannot result in the DSH
allotment exceeding the greater of the State's DSH allotment for the
previous FY or 12 percent of the State's total medical assistance
expenditures for the allotment year (this is referred to as the 12
percent limit).
Most States' actual FY 2002 allotments were determined in
accordance with the provisions of section 1923(f)(4) of the Act which
allowed for a special DSH calculation rule for FY 2001 and FY 2002.
However, as indicated previously, the calculation of States' FY 2003
allotments was not based on the actual FY 2002 DSH allotments; rather,
section 1923(f)(3) of the Act requires that the States' FY 2003
allotments be determined using the amount of the States' FY 2002
allotments specified in the chart in section 1923(f)(2) of the Act. The
exception to this is the calculation of the FY 2003 DSH allotments for
certain ``Low-DSH States'' (defined in section 1923(f)(5) of the Act).
Under the Low-DSH State provision, there is a special calculation
methodology for the Low-DSH States only. Under this methodology, the FY
2003 allotments were determined by increasing States' actual FY 2002
DSH allotments, rather than their FY 2002 allotments specified in the
chart in section 1923(f)(2) of the Act, by the percentage change in the
CPI-U for the previous fiscal year.

B. DSH Allotments for FY 2004

Section 1001(a) of the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 (MMA) (Pub. L. 108-173, enacted on December
8, 2003) amended section 1923(f)(3) of the Act to provide for a
``Special, Temporary Increase In Allotments On A One-Time, Non-
Cumulative Basis.'' Under this provision, States' FY 2004 DSH
allotments were determined by increasing their FY 2003 allotments by 16
percent, and the FY DSH allotment amounts so determined were not
subject to the 12 percent limit.

C. DSH Allotments for Non-Low DSH States for FY 2005, and FYs
Thereafter

Under the methodology contained in section 1923(f)(3)(C) of the
Act, as amended by section 1001(a)(2) of the MMA, the non-Low-DSH
States' DSH allotments for FY 2005 and subsequent FYs continue at the
same level as the States' DSH allotments for FY 2004 until a ``fiscal
year specified'' occurs. The fiscal year specified is the first FY for
which the Secretary estimates that a State's DSH allotment equals (or
no longer exceeds) the DSH allotment as would have been determined
under the statute in effect before the enactment of the MMA. We
determine whether the fiscal year specified has occurred under a
special parallel process. Specifically, under this parallel process, a
``parallel'' DSH allotment is determined for FYs after 2003 by
increasing the State's DSH allotment for the previous FY by the
percentage change in the CPI-U for the prior FY, subject to the 12
percent limit. This is the methodology as would otherwise have been
applied under section 1923(f)(3)(A) of the Act, notwithstanding the
application of the provisions of MMA. The fiscal year specified, is the
FY in which the parallel DSH allotment calculated under this special
parallel process equals or exceeds the FY 2004 DSH allotment, as
determined under the MMA provisions. Once the fiscal year specified
occurs for a State, that State's FY DSH allotment will be calculated by
increasing the State's previous actual FY DSH allotment (which would be
equal to the FY 2004 DSH allotment) by the percentage change in the
CPI-U for the previous FY, subject to the 12 percent limit. The
following example illustrates how the FY DSH allotment would be
calculated for FYs after FY 2004.

Example--In this example, we are determining the parallel FY
2009 DSH allotment. A State's actual FY 2003 DSH allotment is $100
million. Under the MMA, this State's actual FY 2004 DSH allotment
would be $116 million ($100 million increased by 16 percent). The
State's DSH allotment for FY 2005 and subsequent FYs would continue
at the $116 million FY 2004 DSH allotment for FYs following FY 2004
until the fiscal year specified occurs. Under the separate parallel
process, we determine

[[Page 149]]

whether the fiscal year specified has occurred by calculating the
State's DSH allotments in accordance with the statute in effect
before the enactment of the MMA. Under this special process, we
continue to determine the State's parallel DSH allotment for each FY
by increasing the State's parallel DSH allotment for the previous FY
(as also determined under the special parallel process) by the
percentage change in the CPI-U for the previous FY, and subject to
the 12 percent limit. Assume for purposes of this example that, in
accordance with this special parallel process, the State's parallel
FY 2008 DSH allotment was determined to be $115 million and the
percentage change in the CPI-U for FY 2008 (the previous FY)
relevant for the calculation of the FY 2009 DSH allotment was 4.4
percent. That is, the percentage change for the CPI-U for FY 2008,
the year before FY 2009, was 4.4 percent. Therefore, the State's
special parallel process FY 2009 DSH allotment amount would be
calculated by increasing the special parallel process FY 2008 DSH
allotment amount of $115 million by 4.4 percent; this results in a
parallel process DSH allotment process amount for FY 2009 of $120.06
million. Since $120.06 million is greater than $116 million (the
actual FY 2004 DSH allotment calculated under the MMA), we would
determine that FY 2009 is the fiscal year specified (the first year
that the FY 2004 allotment equals or no longer exceeds the parallel
process allotment). Since FY 2009 is the fiscal year specified, we
would then determine the State's FY 2009 allotment by increasing the
State's actual FY 2008 DSH allotment ($116 million) by the
percentage change in the CPI-U for FY 2008 (4.4 percent). Therefore,
the State's FY 2009 DSH allotment would be $121.104 million ($116
million increased by 4.4 percent); for purposes of the calculation
in this example, the application of the 12 percent limit has no
effect. Furthermore, for FY 2009 and thereafter, the State's DSH
allotment would be calculated under the provisions of section
1923(f)(3)(A) of the Act by increasing the State's previous FY's DSH
allotment by the percentage change in the CPI-U for the previous FY,
subject to the 12 percent limit.
However, as amended by section 1001(b)(4) of the MMA, section
1923(f)(5)(B) of the Act also contains criteria for determining
whether a State is a Low-DSH State, beginning with FY 2004. This
provision is described in section I.D.

D. DSH Allotments for Low-DSH States for FY 2004 and FYs Thereafter

Section 1001(b)(1) of the MMA amended section 1923(f)(5) of the Act
regarding the calculation of the FY DSH allotments for ``Low-DSH''
States for FY 2004 and subsequent fiscal years. Specifically, under
section 1923(f)(5)(B) of the Act, as amended by section 1001(b)(4) of
the MMA, a State is considered a Low-DSH State for FY 2004 if its total
DSH payments under its State plan for FY 2000 (including Federal and
State shares) as reported to CMS as of August 31, 2003, are greater
than 0 percent and less than 3 percent of the State's total FY 2000
expenditures under its State plan for medical assistance. For States
that meet the Low-DSH criteria, their FY 2004 DSH allotments are
calculated by increasing their FY 2003 DSH allotments by 16 percent.
Therefore, for FY 2004, Low-DSH States' FY DSH allotments are
calculated in the same way as the DSH allotments for regular States,
which under section 1923(f)(3) of the Act, get the special temporary
increase for FY 2004.
Furthermore, for States meeting the MMA's Low-DSH definition, the
DSH allotments for FYs 2005 through 2008 will continue to be determined
by increasing the previous FY's DSH allotment by 16 percent. The Low-
DSH States' DSH allotments for FYs 2004 through 2008 are not subject to
the 12 percent limit. The Low-DSH States' DSH allotments for FYs 2009
and subsequent FYs are calculated by increasing those States' DSH
allotments for the prior FY by the percentage change in the CPI-U for
that prior fiscal year. For FYs 2009 and thereafter, the DSH allotments
so determined would be subject to the 12 percent limit.

E. Institutions for Mental Diseases DSH Limits for FYs 1998 and
Thereafter

Under section 1923(h) of the Act, Federal financial participation
(FFP) is not available for DSH payments to institutions for mental
diseases (IMDs) and other mental health facilities that are in excess
of State-specific aggregate limits. Under this provision, this
aggregate limit for DSH payments to IMDs and other mental health
facilities is the lesser of a State's FY 1995 total computable (State
and Federal share) IMD and other mental health facility DSH
expenditures applicable to the State's FY 1995 DSH allotment (as
reported on the Form CMS-64 as of January 1, 1997), or the amount equal
to the product of the State's current year total computable DSH
allotment and the applicable percentage.
Each State's IMD limit on DSH payments to IMDs and other mental
health facilities was calculated by first determining the State's total
computable DSH expenditures attributable to the FY 1995 DSH allotment
for mental health facilities and inpatient hospitals. This calculation
was based on the total computable DSH expenditures reported by the
State on the Form CMS-64 as mental health DSH and inpatient hospital
DSH as of January 1, 1997. We then calculate an ``applicable
percentage.'' The applicable percentage for FY 1998 through FY 2000
(1995 IMD DSH percentage) is calculated by dividing the total
computable amount of IMD and mental health DSH expenditures applicable
to the State's FY 1995 DSH allotment by the total computable amount of
all DSH expenditures (mental health facility plus inpatient hospital)
applicable to the FY 1995 DSH allotment. For FY 2001 and thereafter,
the applicable percentage is defined as the lesser of the applicable
percentage as calculated above (for FYs 1998 through 2001) or 50
percent for FY 2001; 40 percent for FY 2002; and 33 percent for each
subsequent fiscal year.
The applicable percentage is then applied to each State's total
computable FY DSH allotment for the current fiscal year. The State's
total computable FY DSH allotment is calculated by dividing the State's
Federal share DSH allotment for the FY by the State's Federal medical
assistance percentage (FMAP) for that fiscal year.
In the final step of the calculation of the IMD DSH Limit, the
State's total computable IMD DSH limit for the FY is set at the lesser
of the product of a State's current FY total computable DSH allotment
and the applicable percentage for that FY, or the State's FY 1995 total
computable IMD and other mental health facility DSH expenditures
applicable to the State's FY 1995 DSH allotment as reported on the Form
CMS-64.
The MMA legislation did not amend the Medicaid statute with respect
to the calculation of the IMD DSH limit.

F. Publication in the Federal Register of Preliminary and Final Notice
for DSH Allotments and IMD DSH Limits

In general, we initially determine States' DSH allotments and IMD
DSH limits for a FY using estimates of medical assistance expenditures,
including DSH expenditures in their Medicaid programs. These estimates
are provided by States each year on the August quarterly Medicaid
budget reports (Form CMS-37) before the FY for which the DSH allotments
and IMD DSH limits are being determined. Also, as part of the basic
determination of preliminary DSH allotments for a FY, we use the
available CPI-U percentage increase that is available before the
beginning of the FY for which the allotment is being determined to
determine the preliminary FY DSH allotment. For example, in determining
the preliminary FY 2011 DSH allotment, we would apply the CPI-U
percentage increase for FY 2010 that was available just before the
beginning of FY 2011 on October 1, 2010.
The DSH allotments and IMD DSH limits determined using these
estimates and CPI-U percentage increases

[[Page 150]]

available before the beginning of the FY are referred to as
``preliminary.'' Only after we receive States' reports of the actual
related medical assistance expenditures through the quarterly
expenditure report (Form CMS-64), and the final historic CPI-U
percentage increases for the prior FY, which occurs after the end of
the FY, are the ``final'' DSH Allotments and IMD DSH limits determined.
The notice published in the Federal Register on December 19, 2008
(73 FR 77704), included the announcement of the preliminary FY 2009 DSH
allotments (based on estimates), and the preliminary FY 2009 IMD DSH
limits (since they were based on the preliminary DSH allotments for FY
2009). A correction notice published in the Federal Register on January
26, 2009 (74 FR 4439) provided a correction to the chart of preliminary
FY 2009 DSH allotments published in the December 19, 2008 Federal
Register. Finally, the notice published in the Federal Register on
April 23, 2010 (75 FR 21314), included the announcement of the revised
preliminary FY 2009 DSH allotments to reflect increases in the amount
of the States' DSH allotments for FY 2009 and FY 2010 pursuant to the
enactment on February 17, 2009 of the American Recovery and
Reinvestment Act of 2009 (section 5002 of Pub. L. 111-5) and revisions
to the CPI-U percentage increase for FY 2008, and the revised
preliminary FY 2009 IMD DSH limits (since they were based on the
revised preliminary DSH allotments for FY 2009).
This notice announces the final FY 2009 DSH allotments and the
final FY 2009 IMD DSH limits (since these are now based on the actual
expenditures for that fiscal year), the preliminary FY 2011 DSH
allotments (based on expenditure estimates), and the preliminary IMD
DSH limits for FY 2011 (since they are based on the preliminary DSH
allotments for FY 2011). This notice does not include the final FY 2010
DSH allotments or the final FY 2010 IMD DSH limits, since the
associated actual expenditures for FY 2010 are not available at this
time.

G. DSH Allotment Provisions for Certain States

1. DSH Allotments for the State of Tennessee
Section 1923(f)(6)(A) of the Act, as amended by section 404 of
Public Law 109-432 (enacted on December 20, 2006), section 204 of
Public Law 110-173 (enacted on December 29, 2007), section 202 of
Public Law 110-275 (enacted on July 15, 2008), section 616 of Public
Law 111-3 (enacted on February 4, 2009), and most recently as amended
by Section 1054 of Public Law 111-152 (enacted on March 30, 2010)
provides for the determination of a DSH allotment for the State of
Tennessee for each of FYs 2007 through FY 2011, for 2 periods
encompassing FY 2012, and for FY 2013. In accordance with this
provision, Tennessee's DSH allotment for each of FYs 2007 through 2011
is the greater of $280 million and the FY 2007 Federal medical
assistance percentage of the DSH payment adjustments reflected in the
State's TennCare Demonstration Project for the demonstration year
ending in 2006. In accordance with this provision, the State's Federal
share DSH allotment for each of FYs 2007 through 2011 is $305,451,928.
Furthermore, Tennessee's DSH allotment for the period October 1, 2011
through December 31, 2011 (the first quarter of FY 2012) is one-fourth
of this amount; that is, $76,362,982. Section 1923(f)(6)(A)(ii) of the
Act further limits the amount of Federal funds that are available for
DSH payments that Tennessee may make in each of the FYs 2007 through
2011, and for the first quarter of FY 2012 to 30 percent of the DSH
allotment. In this regard, the limit on the DSH payments that the State
of Tennessee may make is effectively $91,635,578 (30 percent of
$305,451,928) for each FY 2007 through FY 2011, and $22,908,895 (30
percent of $76,362,982) for the period October 1, 2011 through December
31, 2011 (the first quarter of FY 2012. The statute also provides for
additional allotments for Tennessee for the period January 1, 2011
through September 30, 2012 (quarters 2 through 4 of FY 2012) and for
all of FY 2013; future Federal Register notices will describe the
determination of the amounts of DSH allotments for Tennessee for FY
2012 and FY 2013.
2. DSH Allotments for the State of Hawaii
Section 1923(f)(6)(B) of the Act, as amended by section 404 of
Public Law 109-432, section 204 of Public Law 110-173, section 202 of
Public Law 110-275, section 616 of Public Law 111-3 (enacted on
February 4, 2009) most recently as amended by Section 10201(e)(1) of
Public Law 111-148 (enacted on March 23, 2010) provides for a DSH
allotment for the State of Hawaii for each of FYs 2007 through 2011,
for 2 periods encompassing FY 2012, and certain other provisions
providing for a DSH allotment for FY 2013. In accordance with the
statute, Hawaii's DSH allotment each year for FY 2007 through FY 2011
is $10 million. Furthermore, for the period October 1, 2011 through
December 31, 2011 (the first quarter of FY 2012) Hawaii's DSH allotment
is $2.5 million, and for the period January 1, 2012 through September
30, 2012 Hawaii's DSH allotment is $7.5 million. Future Federal
Register notices will describe the determination of the amounts of DSH
allotments for Hawaii for FY 2012 and FY 2013.

H. DSH Allotments for FY 2009 and FY 2010 Under the Recovery Act

Section 5002 of the Recovery Act added a new section 1923(f)(3)(E)
of the Act; this new section provides for a temporary increase in
States' DSH allotments only for FY 2009 and FY 2010.
1. Revised Preliminary DSH Allotments for FY 2009
States' preliminary FY 2009 DSH allotments were previously
published in the Federal Register on January 26, 2009. However, section
5002 of the Recovery Act enacted after the publication of the
preliminary FY 2009 DSH allotments provided for an increase in States'
DSH allotments from what were previously determined and published in
the Federal Register on January 26, 2009. The Recovery Act provided
fiscal relief to States during the recent national economic downturn.
In that regard, section 1923(f)(3)(E)(i)(I) of the Act, as created by
section 5002 of the Recovery Act, requires that, in general, States'
DSH allotments for FY 2009 be equal to 102.5 percent of the FY 2009
allotments that would otherwise have been determined; this provision
does not apply to certain States as discussed in section G. above.
As described in section F. above, we typically publish States'
preliminary DSH allotments based on expenditure estimates and CPI-U
percentage increases available before the FY for which the preliminary
DSH allotment is being determined. The preliminary DSH allotments are
subsequently finalized after the FY is over and when the applicable
inputs for determining the DSH allotments (that is, the applicable
expenditures and the CPI-U percentage increase for the previous FY) are
final.
Due to the Recovery Act temporary increase for FY 2009, in this
notice we revised the preliminary FY 2009 DSH allotments previously
published to reflect updated States' expenditures, and more
significantly, to reflect an updated and increased CPI-U percentage
increase. As described above, States' DSH allotments are determined by
increasing the previous FY allotment by the applicable CPI-U

[[Page 151]]

percentage increase. In particular, when we previously calculated the
preliminary FY 2009 allotments, the applicable CPI-U percentage
increase for FY 2008 (used for determining the FY 2009 DSH allotment),
which was available before the beginning of FY 2009, was 4.0 percent.
However, subsequent to our initial determination of the preliminary FY
2009 DSH allotments, the historical applicable CPI-U percentage
increase for FY 2008 became available; that actual CPI-U increase for
FY 2008 is 4.4 percent. In order to ensure that the full increase in
DSH allotments for FY 2009 is available to States during FY 2009, we
revised the preliminary FY 2009 DSH allotments prior to the end of FY
2009 to reflect both the updated increase in the applicable CPI-U
percentage increase for FY 2008 and the 2.5 percent increase in States'
FY 2009 DSH allotments as required under the Recovery Act.
The final FY 2009 allotments contained in this Federal Register
notice reflect the final CPI-U percentage increase for FY 2008 and the
actual expenditures in Medicaid for FY 2009.
2. Preliminary DSH Allotments for FY 2011
Sections 1923(f)(3)(E) of the Act, as amended by Section 5002 of
the Recovery Act, in general (with the exceptions for certain States
described above) provided for a 2.5 percent increase in States' FY 2009
DSH allotments and for States' FY 2010 DSH allotments to be determined
as the higher of:
102.5 percent of the DSH allotment for FY 2009, as
determined under the Recovery Act provision, or
The FY 2010 DSH allotment as would otherwise be calculated
without the application of the Recovery Act provision.
The final FY 2009 DSH allotments contained in this Federal Register
notice and the preliminary FY 2010 DSH allotment for States (as
published in the Federal Register on April 23, 2010, 75 FR 21314) were
determined in accordance with the law, as amended by the Recovery Act.
As indicated, the Recovery Act DSH allotment provisions apply only
for FY 2009 and FY 2010; that is, States' DSH allotments for FY 2011
are determined as DSH allotments were determined prior to the enactment
of the Recovery Act.
3. Effect of the Recovery Act DSH Provision on Calculation of the
States' IMD DSH Limits for FY 2009 and FY 2010, and Determination of
Such Limits for FY 2011
Section E above described the determination of States' IMD DSH
limits for FYs beginning FY 1998 and after, as determined under section
1923(h) of the Act. Section 5002 of the Recovery Act did not amend
section 1923(h) of the Act. Accordingly, States' preliminary IMD DSH
limits for FY 2009 and FY 2010, the FYs for which the Recovery Act
provisions are applicable, were determined as under the existing
provisions. As described in section E above, States' DSH allotments are
an element of the determination of the IMD DSH limit. Therefore, the
DSH allotments for FY 2009 and FY 2010, as determined under the
Recovery Act provisions, were used in calculating States' Final FY 2009
(as contained in this Federal Register notice) and States' preliminary
FY 2010 (as previously published in the Federal Register on April 23,
2010, 75 FR 21314) IMD DSH limits. This is the same application of
States' DSH allotments for purposes of determining States' IMD DSH
limits as was applied under section 1923(h) of the Act, regardless of
the Recovery Act provision.

II. Provisions of the Notice

A. Calculation of the Final FY 2009 Federal Share State DSH Allotments,
and the Preliminary FY 2011 Federal Share State DSH Allotments

1. Final FY 2009 Federal Share State DSH Allotments
Chart 1 of the Addendum to this notice provides the States' final
FY 2009 DSH allotments as discussed above in section I.H.1 of this
notice. As discussed in that section of this notice, the revised
preliminary FY 2009 DSH allotments were previously published in the
Federal Register on April 23, 2010. As described above and in previous
Federal Register notices in determining non-Low DSH States' DSH
allotments for FYs after FY 2004 under section 1923(f)(3)(C) of the Act
for DSH allotments, we determined States' DSH allotments under a
``parallel'' process. Under the parallel process, for each FY for each
State, we have been determining whether the fiscal year specified (as
defined in section 1923(f)(3)(D) of the Act) has occurred. Under
section 1923(f)(3)(D) of the Act, the fiscal year specified is
determined separately for each State and ``is the first FY for which
the Secretary estimates that the DSH allotment for that State will
equal (or no longer exceed) the DSH allotment for that State under the
law as in effect before the date of enactment'' of MMA. The process in
effect before the enactment in MMA is the process described in section
1923(f)(3)(A) of the Act; under this process each States' DSH allotment
since FY 2003 is increased by the CPI-U increase for the prior FY and
the result is then compared to the State's FY 2004 DSH allotment, as
determined under section 1923(f)(3)(C)(i) of the Act (under which the
States' FY 2003 DSH allotments were increased by 16 percent). The
fiscal year specified for a State is the FY when the FY 2004 allotment
is no longer greater than the parallel process DSH allotment.
We are reiterating the parallel process provision because we
determined that FY 2009 was the fiscal year specified for all non-Low
DSH States (except Louisiana). Therefore, as indicated in section
1923(f)(3)(C)(ii) of the Act, the Final FY 2009 DSH allotment for all
non-Low DSH States (except Louisiana) is equal to the prior FY 2008 DSH
allotment increased by the CPI-U increase for FY 2008 (4.4 percent).
Chart 1 contains the final FY 2009 DSH allotments. For the non-Low DSH
States for which the FY 2009 is the fiscal year specified, the FY 2010
and subsequent FY DSH allotments are calculated by increasing the prior
FY DSH allotment by the CPI-U increase for the prior fiscal year.
For Low-DSH States, the FY 2009 DSH allotment is calculated using
the same methodology as for the non-Low DSH States for which the fiscal
year specified has occurred. That is, for FY 2009 and following FYs,
the DSH allotment for Low-DSH States is calculated by increasing the
prior FY DSH allotment by the percentage change in the CPI-U for the
prior fiscal year.
The preliminary FY 2009 allotments were initially determined using
the States' August 2008 expenditure estimates submitted by the States
on the Form CMS-37, and the percentage increase in the CPI-U for the
previous FY that was available before the beginning of FY 2009. As
discussed in section I.H.1 above, based on the updated CPI-U percentage
increase for FY 2008 (from 4.0 percent to 4.4 percent), and the
enactment of section 5002 of the Recovery Act (which provides that
States' FY 2009 DSH allotments are equal to 102.5 percent of these
allotments as would otherwise be determined for the FY), we revised the
preliminary FY 2009 DSH allotments, which were published in the Federal
Register on April 23, 2010. States' final FY 2009 DSH allotments as
contained in

[[Page 152]]

this Federal Register were determined based on States' four quarterly
Medicaid expenditure reports (Form CMS-64) for FY 2009 received
following the end of FY 2009 and the final applicable percentage
increase to CPI-U for the previous FY 2008.
2. Calculation of the Preliminary FY 2011 Federal Share State DSH
Allotments
Chart 2 of the Addendum to this notice provides the preliminary FY
2011 DSH allotments determined in accordance with the section
1923(f)(3) of the Act, as described in section I.H.2. As described in
that section of this notice, the Recovery Act provisions which
increased States' DSH allotments for FY 2009 and FY 2010 are not
applicable for determining States' FY 2011 DSH allotments. States'
final FY 2011 DSH allotments will be published in the Federal Register
following receipt of the States' four quarterly Medicaid expenditure
reports (Form CMS-64) for FY 2010 following the end of FY 2011.

B. Calculation of the Final FY 2009 and Preliminary FY 2011 IMD DSH
Limits

As discussed in section I.E. and I.H.3 above of this notice,
section 1923(h) of the Act specifies the methodology to be used to
establish the limits on the amount of DSH payments that a State can
make to IMDs and other mental health facilities. FFP is not available
for IMD or DSH payments that exceed the IMD limits. In this notice, we
are publishing the final FY 2009 IMD DSH Limit and the preliminary FY
2011 IMD DSH Limit determined in accordance with the provisions
discussed above, and for FY 2009, reflecting the DSH allotments for the
FY determined under the provisions of section 1923(f)(3)(E) of the Act,
as amended by section 5002 of the Recovery Act.
Charts 3 and 4 of the Addendum to this notice detail each State's
final IMD DSH Limit for FY 2009 and the preliminary IMD DSH Limit for
FY 2011, respectively, determined in accordance with section 1923(h) of
the Act.

III. Collection of Information Requirements

This document does not impose information collection and
recordkeeping requirements. Consequently, it need not be reviewed by
the Office of Management and Budget under the authority of the
Paperwork Reduction Act of 1995 (44 U.S.C. 35).

IV. Regulatory Impact Statement

We have examined the impact of this rule as required by Executive
Order 12866 on Regulatory Planning and Review (September 1993), the
Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-354),
section 1102(b) of the Social Security Act, section 202 of the Unfunded
Mandates Reform Act of 1995 (March 22, 1995; Pub. L. 104-4), Executive
Order 13132 on Federalism (August 4, 1999) and the Congressional Review
Act (5 U.S.C. 804(2)).
Executive Order 12866 directs agencies to assess all costs and
benefits of available regulatory alternatives and, if regulation is
necessary, to select regulatory approaches that maximize net benefits
(including potential economic, environmental, public health and safety
effects, distributive impacts, and equity). A regulatory impact
analysis (RIA) must be prepared for major rules with economically
significant effects ($100 million or more in any 1 year). This notice
does reach the $100 million economic threshold and thus is considered a
major rule under the Congressional Review Act.
There are no changes between the revised preliminary and final FY
2009 DSH allotments and FY 2009 IMD DSH limits.
The preliminary FY 2011 DSH allotments being published in this
notice are about $365 million less than the preliminary FY 2010 DSH
allotments published in the Federal Register on April 23, 2010 (75 FR
21314). These decreases are a direct result of the application of the
provisions of section 1923(f)(3) of the Act in the calculation of
States' DSH allotments, and in particular the provisions of section
1923(f)(3)(E) of the Act as amended by the Recovery Act (which provided
for a temporary increase in States' DSH allotments for FY 2009 and FY
2010 during the specified recession period) do not apply with respect
to the FY 2011 and following FY DSH allotments.
The preliminary FY 2011 IMD DSH Limits being published in this
notice are about $23 million less than the preliminary FY 2010 IMD DSH
Limits published in Federal Register on April 23, 2010 (75 FR 21314).
This is because the DSH allotment for a FY is a factor in the
determination of the IMD DSH limit for the FY, and since the
preliminary FY 2011 DSH allotments were decreased as compared to the
preliminary FY 2010 DSH allotments, the associated FY 2011 IMD DSH
limits for some States were also decreased.
The RFA requires agencies to analyze options for regulatory relief
of small businesses, if a rule has a significant impact on a
substantial number of small entities. For purposes of the RFA, small
entities include small businesses, nonprofit organizations, and small
governmental jurisdictions. Most hospitals and most other providers and
suppliers are small entities, either by nonprofit status or by having
revenues of $7.0 million to $34.5 million in any one year. Individuals
and States are not included in the definition of a small entity. We are
not preparing an analysis for the RFA because the Secretary has
determined that this notice will not have significant economic impact
on a substantial number of small entities. Specifically, the effects of
the various controlling statutes on providers are not impacted by a
result of any independent regulatory impact and not this notice. The
purpose of the notice is to announce the latest distributions as
required by the statute.
In addition, section 1102(b) of the Act requires us to prepare a
regulatory impact analysis if a rule may have a significant impact on
the operations of a substantial number of small rural hospitals. This
analysis must conform to the provisions of section 604 of the RFA. For
purposes of section 1102(b) of the Act, we define a small rural
hospital as a hospital that is located outside of a Core-Based
Statistical Area for Medicaid payment regulations and has fewer than
100 beds. We are not preparing analysis for section 1102(b) of the Act
because the Secretary has determined that this notice will not have a
significant impact on the operations of a substantial number of small
rural hospitals.
The Medicaid statute (including as most recently amended by the
Recovery Act) specifies the methodology for determining the amounts of
States' DSH allotments and IMD DSH limits; and as described previously,
results in increases in States' DSH allotments and IMD DSH limits for
the FYs referred to. The statute applicable to these allotments and
limits does not apply to the determination of the amounts of DSH
payments made to specific DSH hospitals; rather, these allotments and
limits represent an overall limit on the total of such DSH payments. In
this regard, we do not believe that this notice will have a significant
economic impact on a substantial number of small entities.
Section 202 of the Unfunded Mandates Reform Act of 1995 also
requires that agencies assess anticipated costs and benefits before
issuing any rule whose mandates require spending

[[Page 153]]

in any 1 year of $100 million in 1995 dollars, updated annually for
inflation. In 2010, that threshold is approximately $135 million. This
notice will have no consequential effect on State, local, or Tribal
governments, in the aggregate, or on the private sector.
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a proposed rule (and subsequent
final rule) that imposes substantial direct requirement costs on State
and local governments, preempts State law, or otherwise has Federalism
implications. Since this notice does not impose any costs on State or
local governments, the requirements of E.O. 13132 are not applicable.

Alternatives Considered

The methodologies for determining the States' fiscal year DSH
allotments and IMD DSH Limits, as reflected in this notice, were
established in accordance with the methodologies and formula for
determining States' allotments as specified in statute. This notice
does not put forward any further discretionary administrative policies
for determining such allotments.

Accounting Statement

As required by OMB Circular A-4 (available at https://www.whitehouse.gov/omb/circulars/a004/a-4.pdf), in the table below, we
have prepared an accounting statement showing the classification of the
estimated expenditures associated with the provisions of this notice.
This table provides our best estimate of the change (decrease) in the
Federal share of States' Medicaid DSH payments resulting from the
application of the provisions of the Medicaid statute relating to the
calculation of States' FY DSH allotments and the increase in the FY DSH
allotments from FY 2010 to FY 2011.

Table--Accounting Statement: Classification of Estimated Expenditures,
From FY 2010 to FY 2011
[In millions]
------------------------------------------------------------------------
Category Transfers
------------------------------------------------------------------------
Annualized Monetized Transfers............ -$365.
From Whom To Whom?........................ Federal Government to
States.
------------------------------------------------------------------------

In accordance with the provisions of Executive Order 12866, this
notice was reviewed by the Office of Management and Budget.

Addendum

This addendum contains the charts 1 through 4 (preceded by
associated keys) that are referred to in the preamble of this notice.
Key to Chart 1. Final DSH Allotments for FY 2009.

Key to Chart 1--Final DSH Allotments for Fiscal Year: 2009
[The Final FY 2009 DSH Allotments for the NON-Low DSH States are
presented in the top section of this chart, and the Final FY 2009 DSH
Allotments for the Low-DSH States are presented in the bottom section of
this chart.]
------------------------------------------------------------------------
Column Description
------------------------------------------------------------------------
Column A.............................. State.
Column B.............................. 1923(f)(3)(D) Test Met. This
column indicates whether the
``FY Specified'' has occurred
with respect to Non-Low DSH
States, determined in
accordance with section
1923(f)(3)(D) of the Act.
``YES'' indicates the FY
Specified has occurred; ``NOT
MET'' indicates that the FY
Specified has not occurred; and
``na'' indicates that this
provision is not applicable.
This provision is not
applicable for Low-DSH States
indicated in the bottom portion
of chart 2.
Columns C-L........................... For all States, the entries in
Columns C through K present the
determination of the final FY
2009 DSH allotments as would be
calculated without the
application of section
1923(f)(3)(E) of the Act as
amended by section 5002 of
ARRA. For all States, the
entries in Column M present the
calculation of the final FY
2009 DSH Allotments, determined
in accordance with the
provisions of section 5002 of
ARRA.
For Non-Low DSH States indicated
in the top portion of Chart 2,
entries in Columns C through K
are only for States meeting the
``FY Specified'' test (``YES''
in Column B). For States not
meeting the test indicated in
Column B, these Columns
indicate ``NA'', and for States
for which such test is not
applicable, these Columns
indicate ``na''. For Low DSH
States, entries are in the
bottom portion of Chart 2.
Column C.............................. FY 2009 FMAPS. This column
contains the States' FY 2009
Federal Medical Assistance
Percentages.
Column D.............................. FY 2008 DSH Allotment For States
Meeting Test. This column
contains the States' prior FY
2008 DSH Allotments.
Column E.............................. FY 2008 Allotments X (1 +
Percentage Increase in CPI-U):
1.044. This column contains the
amount in Column D increased by
1 plus the percentage increase
in the CPI-U for the prior FY
(4.4 percent).
Column F.............................. FY 2009 TC MAP Exp. Incl. DSH.
This column contains the amount
of the States' actual FY 2009
total computable medical
assistance expenditures
including DSH expenditures.
Column G.............................. FY 2009 TC MAP Exp. Net of DSH.
This column contains the amount
of the States' actual FY 2009
total computable DSH
expenditures.
Column H.............................. FY 2009 TC MAP Exp. Net of DSH.
This column contains the amount
of the States' actual FY 2009
total computable medical
assistance expenditures net of
DSH expenditures, calculated as
the amount in Column F minus
the amount in Column G.
Column I.............................. 12% AMOUNT. This column contains
the amount of the ``12 percent
limit'' in Federal share,
determined in accordance with
the provisions of section
1923(f)(3) of the Act.
Column J.............................. Greater of FY 2008 Allotment or
12% Limit. This column contains
the greater of the State's
prior FY (FY 2008) DSH
allotment or the amount of the
12% Limit, determined as the
maximum of the amount in Column
D or Column I.
Column K.............................. FY 2009 DSH Allotment PRE-ARRA.
This column contains the
States' FY 2009 DSH allotments
as would be determined prior to
ARRA, determined as the minimum
of the amount in Column J or
Column E. For Non-Low DSH
States that have not met the
``FY Specified'' test (entry in
Column B is ``NOT MET''), the
amount in Column K is equal to
the State's FY 2004 DSH
allotment. For States for which
the entry in Column B is
``na'', the amount in Column K
is determined in accordance
with the provisions of section
1923(f)(6) of the Act.
Column L.............................. FY 2009 DSH Allotment Under
ARRA. This column contains the
State's FY 2009 DSH allotment
as determined in accordance
with section 5002 of ARRA, and
calculated as the amount in
Column K multiplied by 1.025.
Column M.............................. Final FY 2009 DSH Allotment
Under ARRA. (Max of Col K or
L.) This column contains the
State's final FY 2009 DSH
allotment as determined in
accordance with section
1923(f)(3)(E) of the Act as
amended by section 5002 of
ARRA, and determined as the
maximum of the amount in Column
K or L.
------------------------------------------------------------------------

[[Page 154]]

Key to Chart 2. Preliminary DSH Allotments for FY 2011.

Key to Chart 2--Preliminary DSH Allotments for Fiscal Year: 2011
[The Preliminary FY 2011 DSH Allotments for the NON-Low DSH States are
presented in the top section of this chart, and the Preliminary FY 2011
DSH Allotments for the Low-DSH States are presented in the bottom
section of this chart.]
------------------------------------------------------------------------
Column Description
------------------------------------------------------------------------
Column A.............................. State.
Column B.............................. 1923(f)(3)(D) Test Met. This
column indicates whether the
``FY Specified'' has occurred
with respect to Non-Low DSH
States, determined in
accordance with section
1923(f)(3)(D) of the Act.
``YES'' indicates the FY
Specified has occurred; ``NOT
MET'' indicates that the FY
Specified has not occurred; and
``na'' indicates that this
provision is not applicable.
This provision is not
applicable for Low-DSH States
indicated in the bottom portion
of chart 3.
Columns C-K........................... For all States, the entries in
Columns B through K present the
determination of the
preliminary FY 2011 DSH
allotments as would be
calculated without the
application of section 5002 of
ARRA since such provisions were
only applicable for FY 2009 and
FY 2010.
For Non-Low DSH States indicated
in the top portion of Chart 2,
entries in Columns C through J
are only for States meeting the
``FY Specified'' test (``YES''
in Column B). For States not
meeting the test indicated in
Column B, these Columns
indicate ``NA'', and for States
for which such test is not
applicable, these Columns
indicate ``na''. For Low DSH
States, entries are in the
bottom portion of Chart 2.
Column C.............................. FY 2011 FMAPS. This column
contains the States' FY 2011
Federal Medical Assistance
Percentages.
Column D.............................. FY 2010 DSH Allotment For States
Meeting Test. This column
contains the States' prior FY
2010 DSH Allotments as would be
determined without the
application of section 5002 of
ARRA.
Column E.............................. FY 2010 Allotments X (1 +
Percentage Increase in CPI-U):
1.018.
This column contains the amount
in Column D increased by 1 plus
the percentage increase in the
CPI-U for the prior FY (1.8
percent).
Column F.............................. FY 2011 TC MAP Exp. Incl. DSH.
This column contains the amount
of the States' projected FY
2011 total computable medical
assistance expenditures
including DSH expenditures.
Column G.............................. FY 2011 TC DSH Expenditures.
This column contains the amount
of the States' projected FY
2011 total computable DSH
expenditures.
Column H.............................. FY 2011 TC MAP Exp. Net of DSH.
This column contains the amount
of the States' projected FY
2011 total computable medical
assistance expenditures net of
DSH expenditures, calculated as
the amount in Column F minus
the amount in Column G.
Column I.............................. 12% AMOUNT. This column contains
the amount of the ``12 percent
limit'' in Federal share,
determined in accordance with
the provisions of section
1923(f)(3) of the Act.
Column J.............................. Greater of FY 2010 Allotment or
12% Limit. This column contains
the greater of the State's
prior FY (FY 2010) DSH
allotment or the amount of the
12% Limit, determined as the
maximum of the amount in Column
D or Column I.
Column K.............................. FY 2011 DSH Allotment. This
column contains the States' FY
2011 DSH allotments as would be
determined without the
application of the provisions
of section 5002 of ARRA,
determined as the minimum of
the amount in Column J or
Column E. For Non-Low DSH
States that have not met the
``FY Specified'' test (entry in
Column B is ``NOT MET''), the
amount in Column K is equal to
the State's FY 2004 DSH
allotment. For States for which
the entry in Column B is
``na'', the amount in Column K
is determined in accordance
with the provisions of section
1923(f)(6) of the Act.
------------------------------------------------------------------------

Key to Chart 3. Final IMD DSH Limit for FY 2009.

Key to Chart 3--Final IMD DSH Limit for FY: 2009
[Key to the Chart of the Final FY 2009 IMD Limitations.--The Final FY
2009 IMD DSH Limits for the regular States are presented in the top
section of this chart and the final FY IMD DSH Limits for the Low-DSH
States are presented in the bottom section of the chart.]
------------------------------------------------------------------------
Column Description
------------------------------------------------------------------------
Column A.............................. State.
Column B.............................. Inpatient Hospital Services FY
95 DSH Total Computable. This
column contains the States'
total computable FY 1995
inpatient hospital DSH
expenditures as reported on the
Form CMS-64.
Column C.............................. IMD and Mental Health Services
FY 95 DSH Total Computable.
This column contains the total
computable FY 1995 mental
health facility DSH
expenditures as reported on the
Form CMS-64 as of January 1,
1997.
Column D.............................. Total Inpatient & IMD & Mental
Health FY 95 DSH Total
Computable, Col B + C. This
column contains the total
computation of all inpatient
hospital DSH expenditures and
mental health facility DSH
expenditures for FY 1995 as
reported on the Form CMS-64 as
of January 1, 1997
(representing the sum of Column
B and Column C).
Column E.............................. Applicable Percentage Col C/D.
This column contains the
``applicable percentage''
representing the total
computable FY 1995 mental
health facility DSH
expenditures divided by total
computable all inpatient
hospital and mental health
facility DSH expenditures for
FY 1995 (the amount in Column C
divided by the amount in Column
D). Per section
1923(h)(2)(A)(ii)(III) of the
Act, for FYs after FY 2002, the
applicable percentage can be no
greater than 33 percent.
Column F.............................. FY 2009 Allotment in FS Under
ARRA. This column contains the
States' final FY 2009 DSH
allotments as determined under
ARRA.
Column G.............................. FY 2009 FMAP. This column
contains the States' FY 2009
FMAPs.
Column H.............................. FY 2009 DSH Allotments in TC.
Col. F/G. This column contains
the FY 2009 total computable
DSH Allotment (determined as
the amount in Column F divided
by the amount in Column G).
Column I.............................. Col E * Col H in TC. This column
contains the applicable percent
of FY 2008 total computable DSH
allotment (calculated as the
amount in Column E multiplied
by the amount in Column H).

[[Page 155]]

Column J.............................. FY 2009 TC IMD DSH Limit. Lesser
of Col. C or I. This column
contains the FY 2009 TC IMD DSH
Limit equal to the lesser of
the amount in Column C or
Column I.
Column K.............................. FY 2009 IMD DSH Limit in FS U/
ARRA. Col. G x J. This column
contains the FY 2009 Federal
share IMD DSH limit determined
by converting the total
computable FY 2009 IMD DSH
Limit from Column J into a
Federal share amount by
multiplying it by the FY 2009
FMAP in Column G.
------------------------------------------------------------------------

Key to Chart 4. Preliminary IMD DSH Limit for FY 2011.

Key to Chart 4--Preliminary IMD DSH Limit for FY: 2011
[Key to the Chart of the FY 2011 IMD Limitations--The preliminary FY
2011 IMD DSH Limits for the Non-Low DSH States are presented in the top
section of this chart and the preliminary FY 2011 IMD DSH Limits for the
Low-DSH States are presented in the bottom section of the chart.]
------------------------------------------------------------------------
Column Description
------------------------------------------------------------------------
Column A.............................. State.
Column B.............................. Inpatient Hospital Services FY
95 DSH Total Computable. This
column contains the States'
total computable FY 1995
inpatient hospital DSH
expenditures as reported on the
Form CMS-64.
Column C.............................. IMD and Mental Health Services
FY 95 DSH Total Computable.
This column contains the total
computable FY 1995 mental
health facility DSH
expenditures as reported on the
Form CMS-64 as of January 1,
1997.
Column D.............................. Total Inpatient & IMD & Mental
Health FY 95 DSH Total
Computable, Col. B + C. This
column contains the total
computation of all inpatient
hospital DSH expenditures and
mental health facility DSH
expenditures for FY 1995 as
reported on the Form CMS

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