Medicaid Program; Final FY 2018, Final FY 2019, Preliminary FY 2020, and Preliminary FY 2021 Disproportionate Share Hospital Allotments, and Final FY 2018, Final FY 2019, Preliminary FY 2020, and Preliminary FY 2021 Institutions for Mental Diseases Disproportionate Share Hospital Limits, 14858-14888 [2022-05459]

Agencies

• Centers for Medicare & Medicaid Services
• DEPARTMENT OF HEALTH AND HUMAN SERVICES

[Federal Register Volume 87, Number 51 (Wednesday, March 16, 2022)]
[Notices]
[Pages 14858-14888]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-05459]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

[CMS-2436-N]
RIN 0938-ZB62


Medicaid Program; Final FY 2018, Final FY 2019, Preliminary FY 
2020, and Preliminary FY 2021 Disproportionate Share Hospital 
Allotments, and Final FY 2018, Final FY 2019, Preliminary FY 2020, and 
Preliminary FY 2021 Institutions for Mental Diseases Disproportionate 
Share Hospital Limits

AGENCY: Centers for Medicare & Medicaid Services (CMS), Department of 
Health and Human Services (HHS).

ACTION: Notice.

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SUMMARY: This notice announces the final Federal share (FS) 
disproportionate share hospital (DSH) allotments for Federal fiscal 
year (FY) 2018 and FY 2019, and the preliminary FS DSH allotments for 
FY 2020 and FY 2021. This notice also announces the final FY 2018 and 
FY 2019 and the preliminary FY 2020 and FY 2021 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: The allotments announced in this notice are effective April 15, 
2022. The final allotments and limitations set forth in this notice are 
applicable for the fiscal years specified.

FOR FURTHER INFORMATION CONTACT: Stuart Goldstein, (410) 786-0694 and 
Richard Cuno, (410) 786-1111.

SUPPLEMENTARY INFORMATION: 

I. Background

A. Fiscal Year DSH Allotments

    A State's Federal fiscal year (FY) disproportionate share hospital 
(DSH) allotment represents the aggregate limit on the Federal share 
(FS) amount of the State's DSH payments to DSH hospitals in the State 
for the FY. The amount of such allotment is determined in accordance 
with the provisions of section 1923(f) of the Social Security Act (the 
Act), with some State-specific exceptions as specified in section 
1923(f) of the Act. Under such provisions, in general, a State's FY DSH 
allotment is calculated by increasing the amount of its DSH allotment 
for the preceding FY by the percentage change in the Consumer Price 
Index for all Urban Consumers (CPI-U) for the previous FY.
    The Patient Protection and Affordable Care Act of 2010 (Pub. L. 
111-148), as amended by the Health Care and Education Reconciliation 
Act of 2010 (Pub. L. 111-152) (collectively, the Affordable Care Act), 
amended Medicaid DSH provisions, adding section 1923(f)(7) of the Act. 
Section 1923(f)(7) of the Act would have required reductions to States' 
FY DSH allotments from FY 2014 through FY 2020, the calculation of 
which was described in the Disproportionate Share Hospital Payment 
Reduction final rule published in the September 18, 2013 Federal 
Register (78 FR 57293). Subsequent legislation, most recently the 
Consolidated Appropriations Act, 2021 (Pub. L. 116-260, enacted 
December 27, 2020), delayed the start of these reductions until FY 
2024. The final rule delineating a revised methodology for the 
calculation of DSH allotment reductions beginning in 2020 (subsequently 
delayed by further statutory enactment) was published in the September 
25, 2019 Federal Register (84 FR 50308).
    Because there are no reductions to DSH allotments for FY 2018 
through FY 2023 under section 1923(f)(7) of the Act, as amended, this 
notice contains only the State-specific final FY 2018 and FY 2019 DSH 
allotments and preliminary FY 2020 and FY 2021 DSH allotments, as 
calculated under the statute without application of the reductions that 
would have been imposed beginning as early as FY 2014 under prior 
versions of section 1923(f)(7) of the Act. This notice also provides 
information on the calculation of the FY DSH allotments, the 
calculation of the States' institution for mental diseases (IMD) DSH 
limits, and the amounts of States' final FY 2018 and FY 2019 IMD DSH 
limits and preliminary FY 2020 and FY 2021 IMD DSH limits.

B. Determination of Fiscal Year DSH Allotments

    Generally, in accordance with the methodology specified under 
section 1923(f)(3) of the Act, a State's FY DSH allotment is calculated 
by increasing the amount of its DSH allotment for the preceding FY by 
the percentage change in the CPI-U for the previous FY. Also, in 
accordance with section 1923(f)(3) of

[[Page 14859]]

the Act, a State's DSH allotment for a FY 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).
    Furthermore, under section 1923(h) of the Act, Federal financial 
participation (FFP) for DSH payments to IMDs and other mental health 
facilities is limited to State-specific aggregate amounts. Under this 
provision, the 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 FS) 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 specified in section 1923(h) of 
the Act.

C. Determination of Fiscal Year DSH Allotments for FY 2020 and FY 2021

    The Families First Coronavirus Response Act's (FFCRA) (Pub. L. 116-
127, enacted March 18, 2020) temporary Federal medical assistance 
percentage (FMAP) increase of 6.2 percentage points went into effect on 
January 1, 2020 for eligible States, as provided in section 6008 of the 
FFCRA. As relevant to this notice, this FMAP increase applies to 
eligible Medicaid expenditures including DSH payments for FY 2020 (with 
the exception of the 1st quarter, from October 1, 2019 through December 
31, 2019), and FY 2021, and all States currently are receiving the 
temporary FFCRA FMAP increase. For States that exhaust their entire DSH 
allotment, the FFCRA FMAP increase would effectively reduce the amount 
of total computable (TC) DSH payments that such States could pay to 
qualifying providers.
    To avoid this reduction in TC DSH allotments, section 9819 of the 
American Rescue Plan Act of 2021 (ARP) (Pub. L. 117-2, enacted March 
11, 2021) added section 1923(f)(3)(F) of the Act, adjusting FS DSH 
allotments during periods when and for States where the temporary 6.2 
percentage point FMAP increase under section 6008 of the FFCRA is in 
effect. As directed by the ARP, we are required to recalculate FS DSH 
allotments to an amount that will allow States to make the same amount 
of TC DSH payments as they would have been otherwise able to make in 
the absence of the FFCRA FMAP increase.
    In accordance with section 1923(f)(3)(B) of the Act, a State's DSH 
allotment for a FY 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. Because States incur medical assistance 
expenditures throughout the fiscal year, the calculations for the 12 
percent limit under section 1923(f)(3)(B)(ii) of the Act were performed 
using a prorated FMAP for FY 2020. To arrive at the stated limits, we 
prorated each State's FY 2020 FMAP rate because the temporary 6.2 
percentage point FMAP increase under section 6008 of the FFCRA does not 
apply to the 1st quarter of FY 2020. For the calculation of the 12 
percent limit for FY 2021, we used the FFCRA FMAP rate (that is, the 
otherwise applicable FMAP rate plus the temporary 6.2 percentage point 
FFCRA FMAP increase), because the FFCRA FMAP rate applies to the entire 
FY for qualifying States, and medical assistance expenditures are made 
throughout the year.
    Section 1923(f)(3)(F)(i) of the Act requires us to recalculate the 
annual DSH allotment, including the DSH allotment specified under 
paragraph (6)(A)(vi), to ensure that the total DSH payments (including 
both Federal and State shares) that a State may make related to a 
fiscal year is equal to the total DSH payments that the State could 
have made for such fiscal year without such FMAP increase. To meet the 
statutory requirement to enable States to make the same amount of TC 
DSH payments as if the FFCRA FMAP increase were not in effect, we have 
used the full (non-prorated) FFCRA-increased FMAP rate in the 
calculation of the increased FY 2020 and FY 2021 FS DSH allotments. We 
used the full FFCRA-increased FMAP rate rather than a prorated FMAP 
rate for the FY 2020 calculation, despite it not being applicable to 
the 1st quarter of FY 2020, to ensure this provision applies to all 
States consistent with the statutory requirement, including a State 
that made all DSH payments for FY 2020 in quarters other than the first 
fiscal quarter of that fiscal year.
    While States have distinct payment methodologies that specify when 
DSH payments are made to providers, States may not claim TC DSH 
payments in excess of the amount they would have otherwise been able to 
claim without the application of the temporary 6.2 percentage point 
FFCRA FMAP rate increase. This is regardless of whether a portion of 
unspent FS DSH allotment as adjusted to account for section 
1923(f)(3)(F) of the Act, as added by section 9819 of the ARP, remains. 
For example, if the State made all DSH payments for FY 2020 during the 
first quarter of that FY, then no increase to the State's DSH allotment 
is available for that year, since the temporary 6.2 percentage point 
FMAP increase under section 6008 of the FFCRA was not available for 
that quarter and section 1923(f)(3)(F) therefore has no effect. We will 
monitor both the FS and TC DSH allotments to ensure that States do not 
exceed statutory authority to claim DSH payments. Consistent with 
previous guidance by CMS during the public health emergency, States 
should follow existing Federal requirements regarding the applicability 
of a particular match rate available for a given quarter, including 
reporting prior period adjustments.
    For calculation of the FY 2020 and FY 2021 IMD limits determined 
under section 1923(h) of the Act, we used the ARP-adjusted DSH 
allotments and the associated non-prorated FFCRA-increased FMAP rates 
for FY 2020 and FY 2021, to reflect the maximum DSH allotment amount 
and IMD limit that might be available to a State, for FY 2020, 
depending on the State's timing of DSH payments.
    In general, we determine States' DSH allotments for a FY and the 
IMD DSH limits for the same FY using the most recent available 
estimates of or actual medical assistance expenditures, including DSH 
expenditures and the most recent available CPI-U data for the FY in 
accordance with the methodology prescribed in the statute. The 
indicated estimated or actual expenditures are obtained from States for 
each relevant FY from the most recent available quarterly Medicaid 
budget reports (Form CMS-37) or quarterly Medicaid expenditure reports 
(Form CMS-64), respectively, submitted by the States. For example, as 
part of the initial determination of a State's FY DSH allotment 
(referred to as the preliminary DSH allotments) that is determined 
before the beginning of the FY for which the DSH allotments and IMD DSH 
limits are being determined, we use estimated expenditures for the FY 
obtained from the August submission of the CMS-37 submitted by States 
prior to the beginning of the FY; such estimated expenditures are 
subject to update and revision during the FY before actual expenditure 
data become available. We also use the most recent available estimated 
CPI-U percentage change that

[[Page 14860]]

is available before the beginning of the FY for determining the States' 
preliminary FY DSH allotments; such estimated CPI-U percentage change 
is subject to update and revision during the FY before the actual CPI-U 
percentage change becomes available. In determining the final DSH 
allotments and IMD DSH limits for a FY we use the actual expenditures 
for the FY and actual CPI-U percentage change for the previous FY.

II. Provisions of the Notice

A. Calculation of the Final FY 2018 and FY 2019 FS State DSH Allotments 
and the Preliminary FY 2020 and FY 2021 FS State DSH Allotments

1. Final FY 2018 FS State DSH Allotments
    Addendum 1 to this notice provides the States' final FY 2018 DSH 
allotments determined in accordance with section 1923(f)(3) of the Act. 
As described in the background section, in general, the DSH allotment 
for a FY is calculated by increasing the FY DSH allotment for the 
preceding FY by the CPI-U increase for the previous fiscal year. For 
purposes of calculating the States' final FY 2018 DSH allotments, the 
preceding final fiscal year DSH allotments (for FY 2017) were published 
in the February 11, 2019 Federal Register (84 FR 3169). For purposes of 
calculating the States' final FY 2018 DSH allotments we are using the 
actual Medicaid expenditures for FY 2018. Finally, for purposes of 
calculating the States' final FY 2018 DSH allotments, the applicable 
historical percentage change in the CPI-U for the previous FY (FY 2017) 
was 2.1 percent; we note that this is lower than the estimated 2.4 
percentage change in the CPI-U for FY 2017 that was available and used 
in the calculation of the preliminary FY 2018 DSH allotments which were 
published in the July 6, 2018 Federal Register (83 FR 31536).
2. Final FY 2019 FS State DSH Allotments
    Addendum 2 to this notice provides the States' final FY 2019 DSH 
allotments determined in accordance with section 1923(f)(3) of the Act. 
As described in the background section, in general, the DSH allotment 
for a FY is calculated by increasing the FY DSH allotment for the 
preceding FY by the CPI-U increase for the previous fiscal year. For 
purposes of calculating the States' final FY 2019 DSH allotments, the 
preceding final fiscal year DSH allotments (for FY 2018) are being 
published in this notice. For purposes of calculating the States' final 
FY 2019 DSH allotments we are using the actual Medicaid expenditures 
for FY 2019. Finally, for purposes of calculating the States' final FY 
2019 DSH allotments, the applicable historical percentage change in the 
CPI-U for the previous FY (FY 2018) was 2.4 percent; we note that this 
is the same as the estimated 2.4 percentage change in the CPI-U for FY 
2018 that was available and used in the calculation of the preliminary 
FY 2019 DSH allotments which were published in the February 11, 2019 
Federal Register (84 FR 3169).
3. Calculation of the Preliminary FY 2020 FS State DSH Allotments
    Addendum 3 to this notice provides the preliminary FY 2020 DSH 
allotments determined in accordance with section 1923(f)(3) of the Act. 
The preliminary FY 2020 DSH allotments contained in this notice were 
determined based on the most recent available estimates from States of 
their FY 2020 total computable Medicaid expenditures and by increasing 
the preliminary FY 2019 DSH allotments. The applicable historical 
percentage change in the CPI-U for FY 2019 was 1.9 percent (we 
originally published the preliminary FY 2019 DSH allotments in the 
February 11, 2019 Federal Register (84 FR 3169)). We then used each 
State's FS DSH allotment divided by its respective regular FMAP rate in 
order to determine the TC amount of DSH payments each State would have 
otherwise been able to make without application of the FFCRA-increased 
FMAP rate. We then multiplied each State's TC DSH payment amount by its 
respective FFCRA-increased FMAP rate in order to calculate the 
increased FY 2020 DSH allotment.
    We will publish States' final FY 2020 DSH allotments in a future 
notice based on the States' four quarterly Medicaid expenditure reports 
(Form CMS-64) for FY 2020 available following the end of FY 2020 
utilizing the actual change in the CPI-U for FY 2019.
4. Calculation of the Preliminary FY 2021 FS State DSH Allotments
    Addendum 4 to this notice provides the preliminary FY 2021 DSH 
allotments determined in accordance with section 1923(f)(3) of the Act. 
The preliminary FY 2021 DSH allotments contained in this notice were 
determined based on the most recent available estimates from States of 
their FY 2021 total computable Medicaid expenditures and by increasing 
the preliminary FY 2020 DSH allotments calculated prior to the 
application of the ARP adjustment. The applicable historical percentage 
change in the CPI-U for FY 2020 was 1.5 percent (we are publishing the 
preliminary FY 2020 DSH allotments in this notice). We then used each 
State's FS DSH allotment divided by its respective regular FMAP rate in 
order to determine the TC amount of DSH payments each State would have 
otherwise been able to make without application of the FFCRA-increased 
FMAP rate. We then multiplied each State's TC DSH payment amount by its 
respective FFCRA-increased FMAP rate in order to calculate the ARP-
adjusted FY 2021 DSH allotment.
    We will publish States' final FY 2021 DSH allotments in a future 
notice based on the States' four quarterly Medicaid expenditure reports 
(Form CMS-64) for FY 2021 available following the end of FY 2021.

B. Calculation of the Final FY 2018 and FY 2019 and Preliminary FY 2020 
and FY 2021 IMD DSH Limits

    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 DSH payments to IMDs or other mental health facilities that exceed 
the IMD DSH limits. In this notice, we are publishing the final FY 2018 
and FY 2019 and the preliminary FY 2020 and FY 2021 IMD DSH limits 
determined in accordance with the provisions discussed above.
    Addendums 5 through 8 to this notice detail each State's final FY 
2018 and FY 2019 and preliminary FY 2020 and FY 2021 IMD DSH limits, 
respectively, determined in accordance with section 1923(h) of the Act.

III. Collection of Information Requirements

    As it relates to the Paperwork Reduction Act of 1995 (PRA; 44 
U.S.C. 3501 et seq.), this notice does not impose any new or revised 
``collection of information'' requirements or burden. With respect to 
the PRA and this section of the preamble, collection of information is 
defined under 5 CFR 1320.3(c) of the PRA's implementing regulations. 
While discussed in sections I.B., I.C., II.A.3., II.A.4., and in 
Addendums 3 through 8 of this notice, the requirements and burden 
associated with form CMS-37 and form CMS-64 are unaffected by this 
notice. Both forms are approved by the Office of Management and Budget 
(OMB) under control number 0938-1265, which expires on April 30, 2024. 
Since this notice will not impose any new or revised collection of 
information requirements/burden, we are not

[[Page 14861]]

making any changes under that control number.

IV. Regulatory Impact Analysis

    We have examined the impact of this notice 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 Act, section 202 of the Unfunded Mandates Reform 
Act of 1995 (Pub. L. 104-4; enacted on March 22, 1995) (UMRA `95), 
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 
reaches the $100 million economic threshold and thus has been 
designated a major rule under the Congressional Review Act by the 
Office of Information and Regulatory Affairs.
    The final FY 2018 DSH allotments being published in this notice are 
$36 million less than the preliminary FY 2018 DSH allotments published 
in the July 6, 2018 Federal Register (83 FR 31536). This is due to the 
actual percentage change in the CPI-U for FY 2017 used in the 
calculation of the final FY 2018 allotments (2.1 percent) being less 
than the estimated percentage change in the CPI-U for FY 2017 used in 
the calculation of the preliminary FY 2018 allotments (2.4 percent). 
The final FY 2018 IMD DSH limits being published in this notice are 
$2.4 million less than the preliminary FY 2018 IMD DSH limits published 
in the July 6, 2018 Federal Register (83 FR 31536). Since the final FY 
2018 DSH allotments were less than the preliminary FY 2018 DSH 
allotments, the associated FY 2018 IMD DSH limits also decreased.
    The final FY 2019 DSH allotments being published in this notice are 
$36 million less than the preliminary FY 2019 DSH allotments published 
in the February 11, 2019 Federal Register (84 FR 3169). The decrease in 
the final FY 2019 DSH allotments is a result of being calculated by 
multiplying the actual increase in the CPI-U for 2018 by the final FY 
2018 DSH allotments, while the preliminary FY 2019 DSH allotments were 
calculated by multiplying the estimated CPI-U for 2018 by the 
preliminary FY 2018 DSH allotments. Although the estimated and actual 
increase in the CPI-U remained the same at 2.4 percent, the preliminary 
FY 2018 DSH allotments were higher than the final FY 2018 DSH 
allotments and therefore the final FY 2019 DSH allotments are lower 
than the preliminary FY 2019 DSH allotments. The final FY 2019 IMD DSH 
limits being published in this notice are approximately $2 million 
lower than the preliminary FY 2019 IMD DSH limits published in the 
February 11, 2019 Federal Register (84 FR 3169). The decreases in the 
IMD DSH limits are because the DSH allotment for a FY is a factor in 
the determination of the IMD DSH limit for the FY. Since the final FY 
2019 DSH allotments were decreased as compared to the preliminary FY 
2019 DSH allotments, the associated FY 2019 IMD DSH limits for some 
States were also decreased. This is a result of statutory provision, 
discussed above, that the aggregate limit for DSH payments to IMDs and 
other mental health facilities is the lesser of a State's FY 1995 total 
computable IMD and other mental health facility DSH expenditures 
applicable to the State's FY 1995 DSH allotment or the amount equal to 
the product of the State's current year total computable DSH allotment 
and the applicable percentage specified in section 1923(h) of the Act. 
As a result of the final FY 2019 DSH allotments decreasing from the 
preliminary FY 2019 DSH allotments, States that had applicable 
percentages of their current year's total computable DSH allotments 
lower than FY 1995 total computable IMD and other mental health 
facility DSH expenditures had their IMD limits decreased as a result.
    The preliminary FY 2020 DSH allotments being published in this 
notice have been increased by approximately $1.6 billion more than the 
preliminary FY 2019 DSH allotments published in the February 11, 2019 
Federal Register (84 FR 3169). The increase in the DSH allotments is 
due to the application of the statutory formula for calculating DSH 
allotments under which the prior fiscal year allotments are increased 
by the percentage increase in the CPI-U for the prior fiscal year, and 
to the ARP adjustment, as discussed in more detail in the next 
paragraph. The preliminary FY 2020 IMD DSH limits being published in 
this notice are approximately $246 million more than the preliminary FY 
2019 IMD DSH limits published in the February 11, 2019 Federal Register 
(84 FR 3169). The increases in the IMD DSH limits are because the DSH 
allotment for a FY is a factor in the determination of the IMD DSH 
limit for the FY. Since the preliminary FY 2020 DSH allotments are 
greater than the preliminary FY 2019 DSH allotments, the associated 
preliminary FY 2020 IMD DSH limits for some States also increased.
    The preliminary FY 2020 DSH allotments (before application of the 
ARP adjustment) being published in this in this notice are 
approximately $238 million more than the final FY 2019 DSH allotments 
being published in this notice. This increase is attributable to the 
application of the statutory formula for calculating DSH allotments 
under which the prior fiscal year allotments are increased by the 
percentage increase in the CPI-U for the prior fiscal year. The 
applicable historical percentage change in the CPI-U for FY 2019 was 
1.9 percent. The preliminary FY 2020 DSH allotments were further 
increased by approximately $1.4 billion in order to comply with the 
statutory provisions of the ARP requiring us to recalculate FS DSH 
allotments to an amount that will allow States to make the same amount 
of TC DSH payments as they would have been otherwise able to make in 
the absence of the FFCRA FMAP increase.
    The preliminary FY 2021 DSH allotments (before application of the 
ARP adjustment) being published in this notice are approximately $192 
million more than the preliminary FY 2020 DSH allotments published in 
this notice. The increase in the DSH allotments is due to the 
application of the statutory formula for calculating DSH allotments 
under which the prior fiscal year allotments are increased by the 
percentage increase in the CPI-U for the prior fiscal year. The 
applicable historical percentage change in the CPI-U for FY 2020 was 
1.5 percent. The preliminary FY 2020 DSH allotments were increased by 
approximately $1.4 billion in order to comply with the statutory 
provisions of the ARP requiring us to recalculate FS DSH allotments to 
an amount that will allow States to make the same amount of TC DSH 
payments as they would have been otherwise able to make in the absence 
of the FFCRA FMAP increase. The preliminary FY 2021 DSH allotments were 
further increased by approximately $1.4 billion in order to comply with 
the statutory provisions of the ARP requiring us to recalculate FS DSH 
allotments to an amount that will allow States to make the same amount 
of TC DSH payments as they would have been otherwise able to make in 
the absence of the FFCRA FMAP increase.

[[Page 14862]]

    The preliminary FY 2021 IMD DSH limits being published in this 
notice are approximately $16 million more than the preliminary FY 2020 
IMD DSH limits published in this notice. The increases in the IMD DSH 
limits are because the DSH allotment for a FY is a factor in the 
determination of the IMD DSH limit for the FY. Since the preliminary FY 
2021 DSH allotments are greater than the preliminary FY 2020 DSH 
allotments, the associated preliminary FY 2021 IMD DSH limits for some 
States also increased.
    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 less than $8.0 million to $41.5 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, any impact on providers is due to the effect of the 
various controlling statutes; providers are not impacted as a result of 
the independent regulatory action in publishing this notice. The 
purpose of the notice is to announce the latest DSH allotments and IMD 
DSH limits, 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 specifies the methodology for determining the 
amounts of States' DSH allotments and IMD DSH limits; and as described 
previously, the application of the methodology specified in statute 
results in the decreases or increases in States' DSH allotments and IMD 
DSH limits for the applicable FYs. 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. For this reason, 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 in any 1 year of $100 
million in 1995 dollars, updated annually for inflation. In 2021, that 
threshold is approximately $158 million. This notice will have no 
consequential effect on spending by 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 issues 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 or otherwise have Federalism implications, the 
requirements of E.O. 13132 are not applicable.

A. Alternatives Considered

    Because the FFCRA temporary FMAP increase of 6.2 percentage points 
was not applicable to the 1st quarter of FY 2020, we considered 
utilizing prorated FMAP rates in the calculation of the ARP-adjusted FY 
2020 DSH allotments. However, this could have been contrary to the 
statutory language at section 1923(f)(3)(F) of the Act requiring us to 
recalculate FS DSH allotments to an amount to allow for States to make 
the same amount of TC DSH payments as they would have been otherwise 
able to make in the absence of the FFCRA FMAP increase, depending on 
States' timing of their DSH payments to eligible providers. 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 and limits as specified in statute. This notice does not put 
forward any further discretionary administrative policies for 
determining such allotments and limits, or otherwise.

B. Accounting Statement

    As required by OMB Circular A-4 (available at https://obamawhitehouse.archives.gov/omb/circulars_a004_a-4/), in Tables 1 and 
2, we have prepared an accounting statement showing the classification 
of the estimated expenditures associated with the provisions of this 
notice. Table 1 provides our best estimate of the change (decrease) in 
the FS 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 2019 to FY 2020. Table 2 provides our best estimate of the 
change (decrease) in the FS 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 2020 to FY 2021.

Table 1--Accounting Statement: Classification of Estimated Expenditures,
                       From the FY 2019 to FY 2020
                              [In millions]
------------------------------------------------------------------------
                 Category                             Transfers
------------------------------------------------------------------------
Annualized Monetized Transfers............  $238.
From Whom To Whom?                          Federal Government to
                                             States.
------------------------------------------------------------------------


Table 2--Accounting Statement: Classification of Estimated Expenditures,
                       From the FY 2020 to FY 2021
                              [In millions]
------------------------------------------------------------------------
                 Category                             Transfers
------------------------------------------------------------------------
Annualized Monetized Transfers............  $192.
From Whom To Whom?                          Federal Government to
                                             States.
------------------------------------------------------------------------

C. Congressional Review Act

    This document is subject to the Congressional Review Act provisions 
of the Small Business Regulatory Enforcement Fairness Act of 1996 (5 
U.S.C. 801 et seq.) and has been transmitted to the Congress and the 
Comptroller General for review.

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    In accordance with the provisions of Executive Order 12866, this 
notice was reviewed by the Office of Management and Budget.
    Chiquita Brooks-LaSure, Administrator of the Centers for Medicare & 
Medicaid Services, approved this document on February 1, 2022.

    Dated: March 9, 2022.
Xavier Becerra,
Secretary, Department of Health and Human Services.
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[FR Doc. 2022-05459 Filed 3-14-22; 4:15 pm]
BILLING CODE 4120-01-C