Current through Register Vol. 30, No. 38, September 20, 2024
Inpatient hospital reimbursement. The Administration shall
pay for covered inpatient acute care hospital services provided to eligible
persons for claims with admission dates and discharge dates from October 1,
1998 through September 30, 2014, on a prospective reimbursement basis. The
prospective rates represent payment in full, excluding quick-pay discounts,
slow-pay penalties, and third-party payments for both accommodation and
ancillary department services. The rates include reimbursement for operating
and capital costs. The Administration shall make reimbursement for direct
graduate medical education as described in A.R.S. §
36-2903.01.
For payment purposes, the Administration shall classify each AHCCCS inpatient
hospital day of care into one of several tiers appropriate to the services
rendered. The rate for a tier is referred to as the tiered per diem rate of
reimbursement. The number of tiers is seven and the maximum number of tiers
payable per continuous stay is two. Payment of outlier claims, transplant
claims, or payment to out-of-state hospitals, freestanding psychiatric
hospitals, and other specialty facilities may differ from the inpatient
hospital tiered per diem rates of reimbursement described in this
Section.
1. Tier rate data. The
Administration shall base tiered per diem rates effective on and after October
1, 1998 on Medicare Cost Reports for Arizona hospitals for the fiscal year
ending in 1996 and a database consisting of inpatient hospital claims and
encounters for dates of service matching each hospital's 1996 fiscal year end.
a. Medicare Cost Report data. Because
Medicare Cost Report years are not standard among hospitals and were not
audited at the time of the rate calculation, the Administration shall inflate
all the costs to a common point in time as described in subsection (2) for each
component of the tiered per diem rates. The Administration shall not make any
changes to the tiered per diem rates if the Medicare Cost Report data are
subsequently updated or adjusted. If a single Medicare Cost Report is filed for
more than one hospital, the Administration shall allocate the costs to each of
the respective hospitals. A hospital shall submit information to assist the
Administration in this allocation.
b. Claim and encounter data. For the
database, the Administration shall use only those inpatient hospital claims
paid by the Administration and encounters that were accepted and processed by
the Administration at the time the database was developed for rates effective
on and after October 1, 1998. The Administration shall subject the claim and
encounter data to a series of data quality, reasonableness, and integrity edits
and shall exclude from the database or adjust claims and encounters that fail
these edits. The Administration shall also exclude from the database the
following claims and encounters:
i. Those
missing information necessary for the rate calculation,
ii. Medicare crossovers,
iii. Those submitted by freestanding
psychiatric hospitals, and
iv.
Those for transplant services or any other hospital service that the
Administration would pay on a basis other than the tiered per diem
rate.
2. Tier
rate components. The Administration shall establish inpatient hospital
prospective tiered per diem rates based on the sum of the operating and capital
components. The rate for the operating component is a statewide rate for each
tier except for the NICU and Routine tiers, which are based on peer groups. The
rate for the capital component is a blend of statewide and hospital-specific
values, as described in A.R.S. §
36-2903.01.
The Administration shall use the following methodologies to establish the rates
for each of these components.
a. Operating
component. Using the Medicare Cost Reports and the claim and encounter
database, the Administration shall compute the rate for the operating component
as follows:
i. Data preparation. The
Administration shall identify and group into department categories, the
Medicare Cost Report data that provide ancillary department cost-to-charge
ratios and accommodation costs per day. To comply with
42 CFR
447.271, the Administration shall limit
cost-to-charge ratios to 1.00 for each ancillary department.
ii. Operating cost calculation. To calculate
the rate for the operating component, the Administration shall derive the
operating costs from claims and encounters by combining the Medicare Cost
Report data and the claim and encounter database for all hospitals. In
performing this calculation, the Administration shall match the revenue codes
on the claims and encounters to the departments in which the line items on the
Medicare Cost Reports are grouped. The ancillary department cost-to-charge
ratios for a particular hospital are multiplied by the covered ancillary
department charges on each of the hospital's claims and encounters. The AHCCCS
inpatient days of care on the particular hospital's claims and encounters are
multiplied by the corresponding accommodation costs per day from the hospital's
Medicare Cost Report. The ancillary cost-to-charge ratios and accommodation
costs per day do not include medical education and capital costs. The
Administration shall inflate the resulting operating costs for the claims and
encounters of each hospital to a common point in time, December 31, 1996, using
the DRI inflation factor and shall reduce the operating costs for the hospital
by an audit adjustment factor based on available national data and Arizona
historical experience in adjustments to Medicare reimbursable costs. The
Administration shall further inflate operating costs to the midpoint of the
rate year (March 31, 1999).
iii.
Operating cost tier assignment. After calculating the operating costs, the
Administration shall assign the claims and encounters used in the calculation
to tiers based on diagnosis, procedure, or revenue codes, or NICU
classification level, or a combination of these. For the NICU tier, the
Administration shall further assign claims and encounters to NICU Level II or
NICU Level III peer groups, based on the hospital's certification by the
Arizona Perinatal Trust. For the Routine tier, the Administration shall further
assign claims and encounters to the general acute care hospital or
rehabilitation hospital peer groups, based on state licen-sure by the
Department of Health Services. For claims and encounters assigned to more than
one tier, the Administration shall allocate ancillary department costs to the
tiers in the same proportion as the accommodation costs. Before calculating the
rate for the operating component, the Administration shall identify and exclude
any claims and encounters that are outliers as defined in subsection
(6).
iv. Operating rate
calculation. The Administration shall set the rate for the operating component
for each tier by dividing total statewide or peer group hospital costs
identified in this subsection within the tier by the total number of AHCCCS
inpatient hospital days of care reflected in the claim and encounter database
for that tier.
b.
Capital component. For rates effective October 1, 1999 the capital component is
calculated as described in A.R.S. §
36-2903.01.
c. Statewide inpatient hospital
cost-to-charge ratio. For dates of service prior to October 1, 2007, the
statewide inpatient hospital cost-to-charge ratio is used for payment of
outliers, as described in subsections (4), (5), and (6), and out-of-state
hospitals, as described in
R9-22-712(B).
The Administration shall calculate the AHCCCS statewide inpatient hospital
cost-to-charge ratio by using the Medicare Cost Report data and claim and
encounter database described in subsection (1) and used to determine the tiered
per diem rates. For each hospital, the covered inpatient days of care on the
claims and encounters are multiplied by the corresponding accommodation costs
per day from the Medicare Cost Report. Similarly, the covered ancillary
department charges on the claims and encounters are multiplied by the ancillary
department cost-to-charge ratios. The accommodation costs per day and the
ancillary department cost-to-charge ratios for each hospital are determined in
the same way described in subsection (2)(a) but include costs for operating and
capital. The Administration shall then calculate the statewide inpatient
hospital cost-to-charge ratio by summing the covered accommodation costs and
ancillary department costs from the claims and encounters for all hospitals and
dividing by the sum of the total covered charges for these services for all
hospitals.
d. Unassigned tiered per
diem rates. If a hospital has an insufficient number of claims to set a tiered
per diem rate, the Administration shall pay that hospital the statewide average
rate for that tier.
3.
Tier assignment. The Administration shall assign AHCCCS inpatient hospital days
of care to tiers based on information submitted on the inpatient hospital claim
or encounter including diagnosis, procedure, or revenue codes, peer group, NICU
classification level, or a combination of these.
a. Tier hierarchy. In assigning claims for
AHCCCS inpatient hospital days of care to a tier, the Administration shall
follow the Hierarchy for Tier Assignment through September 30, 2014 in
R9-22-712.09. The Administration shall not pay a claim for inpatient hospital
services unless the claim meets medical review criteria and the definition of a
clean claim. The Administration shall not pay for a hospital stay on the basis
of more than two tiers, regardless of the number of interim claims that are
submitted by the hospital.
b. Tier
exclusions. The Administration shall not assign to a tier or pay AHCCCS
inpatient hospital days of care that do not occur during a period when the
person is eligible. Except in the case of death, the Administration shall pay
claims in which the day of admission and the day of discharge are the same,
termed a same day admit and discharge, including same day transfers, as an
outpatient hospital claim. The Administration shall pay same day admit and
discharge claims that qualify for either the maternity or nursery tiers based
on the lesser of the rate for the maternity or nursery tier, or the outpatient
hospital fee schedule.
c. Seven
tiers. The seven tiers are:
i. Maternity. The
Administration shall identify the Maternity Tier by a primary diagnosis code.
If a claim has an appropriate primary diagnosis, the Administration shall pay
the AHCCCS inpatient hospital days of care on the claim at the maternity tiered
per diem rate.
ii. NICU. The
Administration shall identify the NICU Tier by a revenue code. A hospital does
not qualify for the NICU tiered per diem rate unless the hospital is classified
as either a NICU Level II or NICU Level III perinatal center by the Arizona
Perinatal Trust. The Administration shall pay AHCCCS inpatient hospital days of
care on the claim that meet the medical review criteria for the NICU tier and
have a NICU revenue code at the NICU tiered per diem rate. The Administration
shall pay any remaining AHCCCS inpatient hospital day on the claim that does
not meet NICU Level II or NICU Level III medical review criteria at the nursery
tiered per diem rate.
iii. ICU. The
Administration shall identify the ICU Tier by a revenue code. The
Administration shall pay AHC-CCS inpatient hospital days of care on the claim
that meets the medical review criteria for the ICU tier and has an ICU revenue
code at the ICU tiered per diem rate. The Administration may classify any
AHCCCS inpatient hospital days on the claim without an ICU revenue code, as
surgery, psychiatric, or routine tiers.
iv. Surgery. The Administration shall
identify the Surgery Tier by a revenue code and a valid surgical procedure code
that is not on the AHCCCS excluded surgical procedure list. The excluded
surgical procedure list identifies minor procedures such as sutures that do not
require the same hospital resources as other procedures. The Administration
shall only split a surgery tier with an ICU tier. AHCCCS shall pay at the
surgery tier rate only when the surgery occurs on a date during which the
member is eligible.
v. Psychiatric.
The Administration shall identify the Psychiatric Tier by either a psychiatric
revenue code and a psychiatric diagnosis or any routine revenue code if all
diagnosis codes on the claim are psychiatric. The Administration shall not
split a claim with AHCCCS inpatient hospital days of care in the psychiatric
tier with any tier other than the ICU tier.
vi. Nursery. The Administration shall
identify the Nursery Tier by a revenue code. The Administration shall not split
a claim with AHCCCS inpatient hospital days of care in the nursery tier with
any tier other than the NICU tier.
vii. Routine. The Administration shall
identify the Routine Tier by revenue codes. The routine tier includes AHCCCS
inpatient hospital days of care that are not classified in another tier or paid
under any other provision of this Section. The Administration shall not split
the routine tier with any tier other than the ICU tier.
4. Annual update. The
Administration shall annually update the inpatient hospital tiered per diem
rates through September 30, 2011.
5. New hospitals. For rates effective on and
after October 1, 1998, the Administration shall pay new hospitals the statewide
average rate for each tier, as appropriate. The Administration shall update new
hospital tiered per diem rates through September 30, 2011.
6. Outliers. The Administration shall
reimburse hospitals for AHCCCS inpatient hospital days of care identified as
outliers under this Section by multiplying the covered charges on a claim by
the Medicare Urban or Rural Cost-to-Charge Ratio. The Urban cost-to-charge
ratio will be used for hospitals located in a county of 500,000 residents or
more. The Rural cost-to-charge ratio will be used for hospitals located in a
county of fewer than 500,000 residents.
a.
Outlier criteria. For rates effective on and after October 1, 1998, the
Administration set the statewide outlier cost threshold for each tier at the
greater of three standard deviations from the statewide mean operating cost per
day within the tier, or two standard deviations from the statewide mean
operating cost per day across all the tiers. If the covered costs per day on a
claim exceed the urban or rural cost threshold for a tier, the claim is
considered an outlier. Outliers will be paid by multiplying the covered charges
by the applicable Medicare Urban or Rural CCR. The resulting amount will be the
outlier payment. If there are two tiers on a claim, the Administration shall
determine whether the claim is an outlier by using a weighted threshold for the
two tiers. The weighted threshold is calculated by multiplying each tier rate
by the number of AHCCCS inpatient hospital days of care for that tier and
dividing the product by the total tier days for that hospital. Routine
maternity stays shall be excluded from outlier reimbursement. A routine
maternity is any one-day stay with a delivery of one or two babies. A routine
maternity stay will be paid at tier.
b. Update. The CCR is updated annually by the
Administration for dates of service beginning October 1, using the most current
Medicare cost-to-charge ratios published or placed on display by CMS by August
31 of that year. The Administration shall update the outlier cost thresholds
for each hospital through September 30, 2011 as described under A.R.S. §
36-2903.01.
For inpatient hospital admissions with begin dates of service on and after
October 1, 2011, AHCCCS will increase the outlier cost thresholds by 5% of the
thresholds that were effective on September 30, 2011.
c. Medicare Cost-to-Charge Ratio Phase-In.
AHCCCS shall phase in the use of the Medicare Urban or Rural Cost-to-Charge
Ratios for outlier determination, calculation and payment. The three-year
phase-in does not apply to out-of-state or new hospitals.
i. Medicare Cost-to-Charge Ratio Phase-In
outlier determination and threshold calculation. For outlier claims with dates
of service on or after October 1, 2007 through September 30, 2008, AHCCCS shall
adjust each hospital specific inpatient cost-to-charge ratio in effect on
September 30, 2007 by subtracting one-third of the difference between the
hospital specific inpatient cost-to-charge ratio and the effective Medicare
Urban or Rural Cost-to-Charge Ratio. For outlier claims with dates of service
on or after October 1, 2008 through September 30, 2009, AHCCCS shall adjust
each hospital specific inpatient cost-to-charge ratio in effect on September
30, 2007 by subtracting two-thirds of the difference between the hospital
specific inpatient cost-to-charge ratio and the effective Medicare Urban or
Rural Cost-to-Charge Ratio. The adjusted hospital specific inpatient
cost-to-charge ratios shall be used for all calculations using the Medicare
Urban or Rural Cost-to-Charge Ratios, including outlier determination, and
threshold calculation.
ii. Medicare
Cost-to-Charge Ratio Phase-In calculation for payment. For payment of outlier
claims with dates of service on or after October 1, 2007 through September 30,
2008, AHCCCS shall adjust the statewide inpatient hospital cost-to-charge ratio
in effect on September 30, 2007 by subtracting one-third of the difference
between the statewide inpatient hospital cost-to-charge ratio and the effective
Medicare urban or rural cost-to-charge ratio. For payment of outlier claims
with dates of service on or after October 1, 2008 through September 30, 2009,
AHCCCS shall adjust the statewide inpatient hospital cost-to-charge ratio in
effect on September 30, 2007 by subtracting two-thirds of the difference
between the statewide inpatient hospital cost-to-charge ratio and the effective
Medicare urban or rural cost-to-charge ratio.
iii. Medicare Cost-to-Charge Ratio for
outlier determination, threshold calculation, and payment. For outlier claims
with dates of service on or after October 1, 2009, the full Medicare Urban or
Rural Cost-to-Charge Ratios shall be utilized for all outlier
calculations.
d.
Cost-to-Charge Ratio used for qualification and payment of outlier claims.
i. For qualification and payment of outlier
claims with begin dates of service on or after April 1, 2011 through September
30, 2011, the CCR will be equal to 95% of the ratios in effect on October 1,
2010.
ii. For qualification and
payment of outlier claims with begin dates of service on or after October 1,
2011, the CCR will be equal to 90.25% of the most recent published Urban or
Rural Medicare CCR as described in subsection (6)(b).
iii. For qualification and payment of outlier
claims with begin dates of service on or after October 1, 2011 through
September 30, 2012, AHCCCS will reduce the cost-to-charge ratio determined
under subsection (6)(d)(ii) for a hospital that filed a charge master with ADHS
on or after April 1, 2011 by an additional percentage equal to the total
percent increase reported on the charge master.
iv. Subject to approval by CMS, for
qualification and payment of outlier claims with begin dates of service on or
after October 1, 2012, AHCCCS will reduce the cost-to-charge ratio determined
under subsection (6)(d)(ii) for a hospital that filed a charge master with ADHS
on or after June 1, 2012 by an additional percentage equal to the total percent
increase reported on the charge master.
7. Transplants. The Administration shall
reimburse hospitals for an AHCCCS inpatient stay in which a covered transplant
as described in
R9-22-206
is performed through the terms of the relevant contract. If the Administration
and a hospital that performs transplant surgery on an eligible person do not
have a contract for the transplant surgery, the Administration shall not
reimburse the hospital more than what would have been paid to the contracted
hospital for that same surgery.
8.
Ownership change. The Administration shall not change any of the components of
a hospital's tiered per diem rates upon an ownership change.
9. Psychiatric hospitals. The Administration
shall pay freestanding psychiatric hospitals an all-inclusive per diem rate
based on the contracted rates used by the Department of Health
Services.
10. Specialty facilities.
The Administration may negotiate, at any time, reimbursement rates for
inpatient specialty facilities or inpatient hospital services not otherwise
addressed in this Section as provided by A.R.S. §
36-2903.01.
For purposes of this subsection, "specialty facility" means a facility where
the service provided is limited to a specific population, such as
rehabilitative services for children.
11. Outliers for new hospitals. Outliers for
new hospitals will be calculated using the Medicare Urban or Rural
Cost-to-Charge Ratio times covered charges. If the resulting cost is equal to
or above the cost threshold, the claim will be paid at the Medicare Urban or
Rural Cost-to-Charge ratio.
12.
Reductions to tiered per diem payment for inpatient hospital services.
Inpatient hospital admissions with begin dates of service on or after October
1, 2011, shall be reimbursed at 95 percent of the tiered per diem rates in
effect on September 30, 2011.
