Medicaid Program; Final FY 2020, Final FY 2021, Preliminary FY 2022, and Preliminary FY 2023 Disproportionate Share Hospital Allotments, and Final FY 2020, Final FY 2021, Preliminary FY 2022, and Preliminary FY 2023 Institutions for Mental Diseases Disproportionate Share Hospital Limits, 23049-23083 [2023-07927]

Agencies

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

[Federal Register Volume 88, Number 72 (Friday, April 14, 2023)]
[Notices]
[Pages 23049-23083]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-07927]



[[Page 23049]]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

[CMS-2443-N]
RIN 0938-ZB78


Medicaid Program; Final FY 2020, Final FY 2021, Preliminary FY 
2022, and Preliminary FY 2023 Disproportionate Share Hospital 
Allotments, and Final FY 2020, Final FY 2021, Preliminary FY 2022, and 
Preliminary FY 2023 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 (FS) 
disproportionate share hospital (DSH) allotments for Federal fiscal 
year (FY) 2020 and FY 2021, and the preliminary FS DSH allotments for 
FY 2022 and FY 2023. This notice also announces the final FY 2020 and 
FY 2021 and the preliminary FY 2022 and FY 2023 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 May 15, 
2023. 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 (82 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 2020 and FY 2021 DSH 
allotments and preliminary FY 2022 and FY 2023 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 2020 and FY 2021 IMD DSH 
limits and preliminary FY 2022 and FY 2023 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 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, FY 2021, FY 
2022, and FY 2023

    The Families First Coronavirus Response Act's (FFCRA) (Pub. L. 116-
127, enacted March 18, 2020) temporary Federal medical assistance 
percentage (FMAP) increase went into effect on January 1, 2020 for 
eligible States, as provided in section 6008 of the FFCRA. All DSH 
allotment amounts listed in this notice assume that all States qualify 
for the temporary FMAP increase under section 6008 of the FFCRA for the 
period of January 1, 2020 through March 31, 2023, during which time the 
FMAP increase available under the FFCRA is 6.2 percentage points. 
Section 5131 of the Consolidated Appropriations Act, 2023 (CAA, 2023) 
(Pub. L. 117-328, enacted December 29, 2022) amended section 6008 of 
the FFCRA such that the FMAP increase is phased down beginning on April 
1, 2023, and ends on December 31, 2023. As a result, qualifying States 
will receive a temporary FMAP increase for FY 2023 of 5 percentage 
points for the period of April 1, 2023, through June 30, 2023 and 2.5 
percentage points for the period July 1, 2023, through September 30, 
2023. The CAA, 2023 provides for a 1.5 percentage point FMAP increase 
for the period of October 1, 2023, through December 31, 2023, but this 
period is not applicable to the FY 2023 DSH allotment.
    As relevant to this notice, the 6.2 percentage point 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), FY 2021, FY 2022, and FY 2023 (with respect 
only to the 1st and 2nd quarters, from October 1, 2022, through March 
31, 2023). All States currently are receiving the temporary 6.2 percent 
FFCRA FMAP increase.

[[Page 23050]]

Thereafter, qualifying States will receive a temporary FMAP increase 
for FY 2023 of 5 percentage points for the period of April 1, 2023, 
through June 30, 2023 and 2.5 percentage points for the period of July 
1, 2023, through September 30, 2023. Please note that not all States 
may qualify for the temporary FMAP increase, for one or more quarters, 
under section 6008 of the FFCRA, as amended by section 5131 of the CAA, 
2023. States will be subject to the applicable FMAP rate in effect at 
the time when DSH payments are made to providers, dependent on each 
State's qualifying status with respect to any FMAP increase that may be 
available under section 6008 of the FFCRA, as amended.
    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 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 equal 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 (that is, October 1, 2019, through 
December 31, 2020). For FY 2023, we prorated each State's FY 2023 FMAP 
rate because the temporary 6.2 percentage point FMAP increase under 
section 6008 of the FFCRA only applies to the 1st and 2nd quarters of 
FY 2023, whereas the FMAP rate, for qualifying States, is 5 percentage 
points for the 3rd quarter and 2.5 percentage points for the 4th 
quarter of FY 2023, respectively. Please note that these calculations 
are subject to change based upon each State's qualifying status under 
section 6008 of the FFCRA, as amended. For the calculation of the 12 
percent limit for FY 2021 and FY 2022, we used the FFCRA FMAP rate 
(that is, the otherwise applicable FMAP rate plus the temporary 6.2 
percentage point FFCRA FMAP increase that was in effect in both FYs), 
because the 6.2 percentage point FFCRA FMAP rate applies to both entire 
FYs 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 final FY 2020 and FY 2021 FS DSH 
allotments and preliminary FY 2022 and FY 2023 FS DSH allotments. We 
used the 6.2 percentage point FFCRA-increased FMAP rate rather than a 
prorated FMAP rate for the FY 2020 and FY 2023 calculations, despite it 
not being applicable to either full FY, to ensure this provision 
applies to all States consistent with the statutory requirement. For 
instance, a State may have made all DSH payments for FY 2020 in 
quarters other than the first fiscal quarter of that FY or may make all 
of its DSH payments for FY 2023 in the first two fiscal quarters of 
that FY. While States may qualify for the FFCRA temporary FMAP increase 
of 5 percentage points for the 3rd quarter and 2.5 percentage points 
for the 4th quarter of FY 2023, respectively, the FY 2023 DSH 
allotments must reflect the 6.2 percentage point temporary FMAP 
increase in order to ensure States may make the same amount of TC DSH 
payments as they would have been otherwise able to make in the absence 
of the FFCRA temporary FMAP increase, regardless of which FY 2023 
quarter in which the State makes DSH payments.
    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 FFCRA FMAP 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 FMAP increase under section 6008 of the FFCRA was not 
available for that quarter and section 1923(f)(3)(F) therefore has no 
effect. Similarly, for FY 2023, only the increase to the State's DSH 
allotment associated with the FFCRA temporary FMAP increase (in the 
amount that applies to each quarter of FY 2023) will be available for 
qualifying States making DSH payments in the 3rd and 4th fiscal 
quarters of FY 2023. 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 provided 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 through FY 2023 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 each respective FY, to reflect the maximum DSH allotment 
amount and IMD limit that might be available to a State, for FY 2020 
and FY 2023, 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

[[Page 23051]]

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 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 2020 and FY 2021 FS State DSH Allotments 
and the Preliminary FY 2022 and FY 2023 FS State DSH Allotments

1. Final FY 2020 FS State DSH Allotments
    Addendum 1 to this notice provides the States' final FY 2020 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 2020 DSH allotments, the 
preceding final fiscal year DSH allotments (for FY 2019) were published 
in the March 16, 2022 Federal Register (87 FR 14858). For purposes of 
calculating the States' final FY 2020 DSH allotments we are using the 
actual Medicaid expenditures for FY 2020. Finally, for purposes of 
calculating the States' final FY 2020 DSH allotments, the applicable 
historical percentage change in the CPI-U for the previous FY (FY 2019) 
was 1.9 percent; we note that this is the same as the estimated 1.9 
percentage change in the CPI-U for FY 2019 that was available and used 
in the calculation of the preliminary FY 2020 DSH allotments which were 
published in the March 16, 2022 Federal Register (87 FR 14858). We then 
used each State's FS DSH allotment divided by its respective regular 
FMAP rate 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 to calculate the 
increased FY 2020 DSH allotment.
2. Final FY 2021 FS State DSH Allotments
    Addendum 2 to this notice provides the States' final FY 2021 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 2021 DSH allotments, the 
preceding final fiscal year DSH allotments (for FY 2020) are being 
published in this notice. For purposes of calculating the States' final 
FY 2021 DSH allotments we are using the actual Medicaid expenditures 
for FY 2021. Finally, for purposes of calculating the States' final FY 
2021 DSH allotments, the applicable historical percentage change in the 
CPI-U for the previous FY (FY 2020) was 1.5 percent; we note that this 
is the same as the estimated 1.5 percentage change in the CPI-U for FY 
2020 that was available and used in the calculation of the preliminary 
FY 2021 DSH allotments which were published in the March 16, 2022 
Federal Register (87 FR 14858). We then used each State's FS DSH 
allotment divided by its respective regular FMAP rate 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 to calculate the increased FY 2021 DSH allotment.
3. Calculation of the Preliminary FY 2022 FS State DSH Allotments
    Addendum 3 to this notice provides the preliminary FY 2022 DSH 
allotments determined in accordance with section 1923(f)(3) of the Act. 
The preliminary FY 2022 DSH allotments contained in this notice were 
determined based on the most recent available estimates from States of 
their FY 2022 total computable Medicaid expenditures and by increasing 
the preliminary FY 2021 DSH allotments. The applicable historical 
percentage change in the CPI-U for FY 2021 was 3.3 percent (we 
originally published the preliminary FY 2021 DSH allotments in the 
March 16, 2022 Federal Register (87 FR 14858)). We then used each 
State's FS DSH allotment divided by its respective regular FMAP rate 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 to calculate the increased FY 2022 DSH 
allotment.
    We will publish States' final FY 2022 DSH allotments in a future 
notice based on the States' four quarterly Medicaid expenditure reports 
(Form CMS-64) for FY 2022 available following the end of FY 2022 
utilizing the actual change in the CPI-U for FY 2021.
4. Calculation of the Preliminary FY 2023 FS State DSH Allotments
    Addendum 4 to this notice provides the preliminary FY 2023 DSH 
allotments determined in accordance with section 1923(f)(3) of the Act. 
The preliminary FY 2023 DSH allotments contained in this notice were 
determined based on the most recent available estimates from States of 
their FY 2023 total computable Medicaid expenditures and by increasing 
the preliminary FY 2022 DSH allotments calculated prior to the 
application of the ARP adjustment. The applicable historical percentage 
change in the CPI-U for FY 2022 was 7.6 percent (we are publishing the 
preliminary FY 2022 DSH allotments in this notice). We then used each 
State's FS DSH allotment divided by its respective regular FMAP rate 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 to calculate the ARP-adjusted FY 2023 DSH 
allotment.
    We will publish States' final FY 2023 DSH allotments in a future 
notice based on the States' four quarterly Medicaid expenditure reports 
(Form CMS-64) for FY 2023 available following the end of FY 2023.

B. Calculation of the Final FY 2020 and FY 2021 and Preliminary FY 2022 
and FY 2023 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 2020 
and FY 2021 and the preliminary

[[Page 23052]]

FY 2022 and FY 2023 IMD DSH limits determined in accordance with the 
provisions discussed above.
    Addendums 5 through 8 to this notice detail each State's final FY 
2020 and FY 2021 and preliminary FY 2022 and FY 2023 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. For 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 1 
through 8 of this notice, the currently approved requirements and 
burden associated with form CMS-37 and form CMS-64 are unaffected by 
this notice. They are approved by the Office of Management and Budget 
(OMB) under control number 0938-1265. Since this notice will not impose 
any new or revised collection of information requirements/burden, the 
notice is not subject to the requirements of the PRA.

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 2020 DSH allotments being published in this notice are 
equal to the preliminary FY 2020 DSH allotments published in the March 
16, 2022 Federal Register (87 FR 14858). This is due to the actual 
percentage change in the CPI-U for FY 2019 used in the calculation of 
the final FY 2020 allotments (1.9 percent) being equal to the estimated 
percentage change in the CPI-U for FY 2019 used in the calculation of 
the preliminary FY 2020 allotments (1.9 percent). The final FY 2020 IMD 
DSH limits being published in this notice are also equal to the 
preliminary FY 2020 IMD DSH limits published in the March 16, 2022 
Federal Register (87 FR 14858). Since the final FY 2020 DSH allotments 
were the same as the preliminary FY 2020 DSH allotments, the associated 
FY 2020 IMD DSH limits also remained the same.
    The final FY 2021 DSH allotments being published in this notice are 
equal to the preliminary FY 2021 DSH allotments published in the March 
16, 2022 Federal Register (87 FR 14858). This is due to the actual 
percentage change in the CPI-U for FY 2020 used in the calculation of 
the final FY 2021 allotments (1.5 percent) being equal to the estimated 
percentage change in the CPI-U for FY 2020 used in the calculation of 
the preliminary FY 2021 allotments (1.5 percent). The final FY 2021 IMD 
DSH limits being published in this notice are also equal to the 
preliminary FY 2021 IMD DSH limits published in the March 16, 2022 
Federal Register (87 FR 14858). Since the final FY 2021 DSH allotments 
were the same as the preliminary FY 2021 DSH allotments, the associated 
FY 2021 IMD DSH limits also remained the same.
    The preliminary FY 2022 DSH allotments (before application of the 
ARP adjustment) being published in this notice are approximately $428 
million more than the preliminary FY 2021 DSH allotments published in 
the March 16, 2022 Federal Register (87 FR 14858). 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 2021 was 3.3 percent. The preliminary FY 2022 DSH allotments 
were increased by approximately $1.5 billion 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 temporary FMAP increase.
    The preliminary FY 2022 IMD DSH limits being published in this 
notice are approximately $29 million more than the preliminary FY 2021 
IMD DSH limits published in the March 16, 2022 Federal Register (87 FR 
14858). 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 2022 DSH allotments are 
greater than the preliminary FY 2021 DSH allotments, the associated 
preliminary FY 2022 IMD DSH limits for some States also increased.
    The preliminary FY 2023 DSH allotments (before application of the 
ARP adjustment) being published in this notice are approximately $1 
billion more than the preliminary FY 2022 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 2022 was 
7.6 percent. The preliminary FY 2023 DSH allotments were increased by 
approximately $1.6 billion 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 
temporary FMAP increase.
    The preliminary FY 2023 IMD DSH limits being published in this 
notice are approximately $57 million more than the preliminary FY 2022 
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 
2023 DSH allotments are greater than the preliminary FY 2022 DSH 
allotments, the associated preliminary FY 2023 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 1 year. 
Individuals and States are not included in the definition of a small 
entity. We are not preparing

[[Page 23053]]

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 2022, that 
threshold is approximately $165 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 and the phased down 
FMAP rates are applicable to the 3rd and 4th quarters of FY 2023, we 
considered utilizing prorated FMAP rates in the calculation of the ARP-
adjusted final FY 2020 and preliminary FY 2023 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 temporary 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://www.whitehouse.gov/omb/circulars/a004/a-4.pdf), 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 2021 to FY 2022. 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 2022 to FY 2023.

Table 1--Accounting Statement: Classification of Estimated Expenditures,
                       From the FY 2021 to FY 2022
                              [In millions]
------------------------------------------------------------------------
            Category                             Transfers
------------------------------------------------------------------------
Annualized Monetized Transfers    $428.
From Whom To Whom?                Federal Government to States.
------------------------------------------------------------------------


Table 2--Accounting Statement: Classification of Estimated Expenditures,
                       From the FY 2022 to FY 2023
                              [In millions]
------------------------------------------------------------------------
            Category                             Transfers
------------------------------------------------------------------------
Annualized Monetized Transfers    $1,018.
From Whom To Whom?                Federal Government to States.
------------------------------------------------------------------------

C. Congressional Review Act

    This proposed regulation 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.
    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 March 22, 2023.

    Dated: April 11, 2023.
Xavier Becerra,
Secretary, Department of Health and Human Services.
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[FR Doc. 2023-07927 Filed 4-13-23; 8:45 am]
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