Current through Register Vol. 50, No. 9, March 1, 2024
RELATES TO:
KRS
13B.140,
142.303,
205.510(16),
205.565,
205.637,
205.638,
205.639,
205.640,
216.380,
42 C.F.R. Parts 412, 413,
440.10,
440.140,
447.250-447.280, 42 U.S.C. 1395f(l), 1395ww(d)(5)(F), 1395x(mm), 1396a, 1396b,
1396d, 1396r-4
NECESSITY, FUNCTION, AND CONFORMITY: The Cabinet for Health and
Family Services, Department for Medicaid Services has responsibility to
administer the Medicaid Program.
KRS
205.520(3) authorizes the
cabinet, by administrative regulation, to comply with a requirement that may be
imposed, or opportunity presented, by federal law for the provision of medical
assistance to Kentucky's indigent citizenry. This administrative regulation
establishes the Department for Medicaid Services' reimbursement provisions and
requirements for acute care inpatient hospital services provided to a Medicaid
recipient who is not enrolled with a managed care organization.
Section 1. Definitions.
(1) "Acute care hospital" is defined by
KRS
205.639(1).
(2) "Appalachian Regional Hospital System"
means a private, not-for-profit hospital chain operating in a Kentucky county
that receives coal severance tax proceeds.
(3) "Capital cost" means capital related
expenses including insurance, taxes, interest, and depreciation related to
plant and equipment.
(4) "CMS"
means the Centers for Medicare and Medicaid Services.
(5) "CMS IPPS Pricer Program" means the
software program published on the CMS Web site of
http://www.cms.hhs.gov, which shows
the Medicare rate components and payment rates under the Medicare inpatient
prospective payment system for a discharge within a given federal fiscal
year.
(6) "Cost outlier" means a
claim for which estimated cost exceeds the outlier threshold.
(7) "Critical access hospital" or "CAH" means
a hospital:
(a) Meeting the licensure
requirements established in
906 KAR
1:110; and
(b) Designated as a critical access hospital
by the department.
(8)
"Department" means the Department for Medicaid Services or its designated
agent.
(9) "Diagnosis code" means a
code:
(a) Maintained by the Centers for
Medicare and Medicaid Services (CMS) to group and identify a disease, disorder,
symptom, or medical sign; and
(b)
Used to measure morbidity and mortality.
(10) "Diagnosis related group" or "DRG" means
a clinically similar grouping of services that can be expected to consume
similar amounts of hospital resources.
(11) "Distinct part unit" means a separate
unit within an acute care hospital that meets the qualifications established in
42 C.F.R.
412.25 and is designated as a distinct part
unit by the department.
(12) "DRG
base payment" means the sum of the operating base payment and capital base
payment, calculated as described in Section 2(4)(b) and (c) of this
administrative regulation.
(13)
"DRG geometric mean length-of-stay" means an average hospital length-of-stay,
expressed in days, for each DRG, with the geometric mean calculated by taking
the nth (number of values in the set) root of the product of all length-of-stay
values within a given DRG.
(14)
"Enrollee" means a recipient who is enrolled with a managed care
organization.
(15) "Enrollee day"
means a day of an inpatient hospital stay of a Medicaid recipient who is
enrolled with a managed care organization.
(16) "Federal financial participation" is
defined by
42 C.F.R.
400.203.
(17) "Fixed loss cost threshold" means an
amount, established annually by CMS, which is combined with the full DRG
payment or transfer payment for each DRG to determine the outlier
threshold.
(18) "Government entity"
means an entity that qualifies as a unit of government for the purposes of
42 U.S.C.
1396b(w)(6)(A).
(19) "Graduate medical education program"
means a Medicare-approved education and training program for interns and
residents in medicine, osteopathy, dentistry, or podiatry.
(20) "Hospital-acquired condition" means a
condition:
(a)
1. Associated with a diagnosis code selected
by the Secretary of the U.S. Department of Health and Human Services pursuant
to
42 U.S.C.
1395ww(d)(4)(D);
and
2. Not present upon the
recipient's admission to the hospital; and
(b) That is recognized by the Centers for
Medicare and Medicaid Services as a hospital acquired condition.
(21) "Indirect medical education
costs" means additional costs of serving Medicaid recipients, incurred by
teaching hospitals, to provide training and education to interns and residents
in graduate medical education programs, which are not reimbursed through direct
graduate medical education payments.
(22) "Long-term acute care hospital" means a
long term care hospital that meets the requirements established in
42 C.F.R.
412.23(e).
(23) "Managed care organization" means an
entity for which the Department for Medicaid Services has contracted to serve
as a managed care organization as defined by
42
C.F.R. 438.2.
(24) "Medicaid fee-for-service" means a
service associated with a Medicaid recipient who is not enrolled with a managed
care organization.
(25) "Medicaid
fee-for-service covered day" means an inpatient hospital day associated with a
Medicaid recipient who is not enrolled with a managed care
organization.
(26) "Medicaid
shortfall" means the difference between a provider's allowable cost of
providing services to Medicaid recipients and the amount received in accordance
with the payment provisions established in Section 2 of this administrative
regulation.
(27) "Medically
necessary" or "medical necessity" means that a covered benefit shall be
provided in accordance with
907
KAR 3:130.
(28) "Medicare-dependent hospital" means a
hospital designated as a Medicare dependent hospital by the Centers for
Medicare and Medicaid Services.
(29) "Medicare IPPS Final Rule Data Files and
Tables" means information related to Medicare hospital reimbursement that is:
(a) Published annually by the Centers for
Medicare and Medicaid Services; and
(b) Located online at the Centers for
Medicare and Medicaid Services acute inpatient PPS Web site located at:
http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html.
(30) "Medicare operating and
capital cost-to-charge ratios" means two (2) hospital-specific calculations:
(a) Completed by Medicare using CMS 2552 cost
report information;
(b) In which:
1. Medicare operating costs are divided by
total applicable charges to determine a Medicare operating cost-to-charge
ratio; and
2. Medicare capital
costs are divided by total applicable charges to determine a Medicare capital
cost-to-charge ratio; and
(c) That are published annually by CMS in an
impact file released with the Medicare IPPS Final Rule Data Files and Tables
for a given federal fiscal year.
(31) "Never event" means:
(a) A procedure, service, or hospitalization
not reimbursable by Medicare pursuant to CMS Manual System Pub 100-03 Medicare
National Coverage Determinations Transmittal 101; or
(b) A hospital-acquired condition.
(32) "Outlier threshold" means the
sum of the DRG base payment or transfer payment and the fixed loss cost
threshold.
(33) "Pediatric teaching
hospital" is defined by
KRS
205.565(1).
(34) "Per diem rate" means the per diem rate
paid by the department for:
(a) Inpatient care
in an in-state psychiatric or rehabilitation hospital;
(b) Inpatient care in a long-term acute care
hospital;
(c) Inpatient care in a
critical access hospital;
(d)
Psychiatric, substance use disorder, or rehabilitation services in an in-state
acute care hospital which has a distinct part unit; or
(e) A psychiatric or rehabilitation service
in an in-state acute care hospital.
(35) "Psychiatric hospital" means a hospital
that meets the licensure requirements as established in
902 KAR
20:180.
(36) "Quality improvement organization" or
"QIO" means an organization that complies with
42 C.F.R.
475.101.
(37) "Rehabilitation hospital" means a
hospital meeting the licensure requirements as established in
902
KAR 20:240.
(38) "Relative weight" means the factor
assigned to each Medicare DRG classification that represents the average
resources required for a Medicare DRG classification paid under the DRG
methodology relative to the average resources required for all DRG discharges
paid under the DRG methodology for the same period.
(39) "Resident" means an individual living in
Kentucky who is not receiving public assistance in another state.
(40) "Rural hospital" means a hospital
located in a rural area pursuant to
42
C.F.R.
412.64(b)(1)(ii)(C).
(41) "Sole community hospital" means a
hospital that is currently designated as a sole community hospital by the
Centers for Medicare and Medicaid Services.
(42) "State university" means the University
of Kentucky or the University of Louisville.
(43) "State university teaching hospital"
means a hospital that is owned or operated by a state university, or a state
university-related party organization, as allowed by
42 C.F.R.
413.17, with a state university affiliated
graduate medical education program.
(44) "Transfer payment" means a payment made
for a recipient who is transferred to or from another hospital for a service
reimbursed on a prospective discharge basis.
(45) "Universal rate year" means the twelve
(12) month period under the prospective payment system, beginning October 1 of
each year, for which a payment rate is established for a hospital regardless of
the hospital's fiscal year end.
(46) "Urban hospital" means a hospital
located in an urban area pursuant to
42
C.F.R.
412.64(b)(1)(ii).
(47) "Urban trauma center hospital" means an
acute care hospital that:
(a) Is designated as
a Level I Trauma Center by the American College of Surgeons;
(b) Has a Medicaid utilization rate greater
than twenty-five (25) percent; and
(c) Has at least fifty (50) percent of its
Medicaid population as residents of the county in which the hospital is
located.
Section
2. Payment for an Inpatient Acute Care Service in an In-state
Acute Care Hospital.
(1)
(a) The department shall reimburse an
in-state acute care hospital for an inpatient acute care service, except for a
service not covered pursuant to
907 KAR
10:012, on a fully-prospective per discharge
basis.
(b) The department's
reimbursement pursuant to this administrative regulation shall approximate
ninety-five (95) percent of a hospital's Medicare reimbursement excluding the
following Medicare reimbursement components:
1. A Medicare low-volume hospital
payment;
2. A Medicare end stage
renal disease payment;
3. A
Medicare new technology add-on payment;
4. A Medicare routine pass-through
payment;
5. A Medicare ancillary
pass-through payment;
6. A Medicare
value-based purchasing payment or penalty;
7. A Medicare readmission penalty in
accordance with paragraph (c) of this subsection;
8. A Medicare hospital-acquired condition
penalty in accordance with paragraph (c) of this subsection;
9. Any type of Medicare payment implemented
by Medicare after October 1, 2015; or
10. Any type of Medicare payment not
described in this administrative regulation.
(c) The department's:
1. Never event and hospital-acquired
condition provisions established in Section 3 of this administrative regulation
shall apply to acute care inpatient hospital reimbursement under this
administrative regulation; and
2.
Readmission provisions established in Section 12 of this administrative
regulation shall apply to acute care inpatient hospital reimbursement under
this administrative regulation.
(2)
(a) For
an inpatient acute care service, except for a service not covered pursuant to
907 KAR
10:012, in an in-state acute care hospital, the total
hospital-specific per discharge payment shall be the sum of:
1. A DRG base payment; and
2. If applicable, a cost outlier
payment.
(b) The
resulting payment shall be limited to ninety-five (95) percent of the
calculated value.
(c) If
applicable, a transplant acquisition fee payment shall be added pursuant to
subsection (11)(b) of this section.
(3)
(a) The
department shall assign a DRG classification to each unique discharge billed by
an acute care hospital.
(b)
1. The DRG assignment shall be based on the
most recent Medicare Severity DRG (MS-DRG) grouping software released by the
Centers for Medicare and Medicaid Services beginning with version 32 on October
1, 2015 unless CMS releases version 33 on October 1, 2015.
2. If CMS releases version 33 on October 1,
2015, the department shall make interim payments for dates of service beginning
October 1, 2015 based on version 32 and then retroactively adjust claims for
dates of service beginning October 1, 2015 using version 33.
3. The grouper version shall be updated in
accordance with Section 8 of this administrative regulation.
(c) In assigning a DRG for a
claim, the department shall exclude from consideration any secondary diagnosis
code associated with a never event.
(4)
(a) A
DRG base payment shall be the sum of the operating base payment and the capital
base payment calculated as described in paragraphs (c) and (d) of this
subsection.
(b) All calculations in
this subsection shall be subject to special rate-setting provisions for sole
community hospitals and Medicare dependent hospitals as described in Sections 5
and 6 of this administrative regulation.
(c)
1. The
operating base payment shall be determined by multiplying the hospital-specific
operating rate by the DRG relative weight.
2. If applicable, the resulting product of
subparagraph 1. of this paragraph shall be multiplied by the sum of one (1) and
a hospital-specific operating indirect medical education (IME) factor
determined in accordance with subparagraph 7. of this paragraph.
3. Beginning October 1, 2015, the
hospital-specific operating rate referenced in subparagraph 1. of this
paragraph shall be calculated using inputs from the Federal Fiscal Year 2016
Medicare IPPS Final Rule Data Files and Tables published by CMS as described in
subparagraphs 4. through 6. of this paragraph.
4. The Medicare IPPS standard amount
established for operating labor costs shall be multiplied by the wage index
associated with the final Core Based Statistical Area (CBSA) assigned to the
hospital by Medicare, inclusive of any Section 505 adjustments applied by
Medicare.
5. The resulting product
of subparagraph 4. of this paragraph shall be added to the Medicare IPPS
standard amount for non-labor operating costs.
6. The operating rate shall be updated in
accordance with Section 8 of this administrative regulation.
7.
a.
Beginning October 1, 2015, the hospital-specific operating IME factor shall be
taken from the Federal Fiscal Year 2016 Medicare Inpatient Prospective Payment
System (IPPS) Final Rule Data Files and Tables published by CMS.
b. The operating IME factor shall be updated
in accordance with Section 8 of this administrative regulation.
(d)
1. The capital base payment shall be
determined by multiplying the hospital-specific capital rate by the DRG
relative weight.
2. If applicable,
the resulting product of subparagraph 1. of this paragraph shall be multiplied
by the sum of one (1) and a hospital-specific capital indirect medical
education factor determined in accordance with subparagraph 6. of this
paragraph.
3. Beginning October 1,
2015, the hospital-specific capital rate referenced in subparagraph 1. of this
paragraph shall be calculated using inputs from the Federal Fiscal Year 2016
Medicare IPPS Final Rule Data Files and Tables published by CMS as described in
subparagraphs 4. and 5. of this paragraph.
4. The Medicare IPPS standard amount
established for capital costs shall be multiplied by the geographic adjustment
factor (GAF) associated with the final CBSA assigned to the hospital by
Medicare.
5. The capital rate shall
be updated in accordance with Section 8 of this administrative
regulation.
6.
a. Beginning October 1, 2015, the
hospital-specific capital IME factor shall be taken from the Medicare Inpatient
Prospective Payment System (IPPS) Final Rule Data Files and Tables published by
CMS.
b. The capital IME factor
shall be updated in accordance with Section 8 of this administrative
regulation.
(e)
1.
Effective beginning May 10, 2019 pursuant to federal approval, the department
shall make an annual IME payment to state university teaching hospitals, in
addition to the adjustments specified in paragraphs (c)2. and (d)2. of this
subsection, equal to:
a. The total of all
operating base payments, as determined under paragraph (c)1. of this
subsection, received by the hospital during the previous year multiplied by the
sum of one (1) and the adjusted hospital-specific education (IME) factor
determined in accordance with subparagraph 2. of this paragraph; plus
b. The total of all capital base payments, as
determined under paragraph (d)1. of this subsection, received by the hospital
during the previous year multiplied by the sum of one (1) and the adjusted
hospital-specific education (IME) factor determined in accordance with
subparagraph 2. of this paragraph; plus
c. The total of all inpatient operating and
capital base hospital payments received from managed care organizations in the
previous year multiplied by the sum of one (1) and the adjusted
hospital-specific education (IME) factor determined in accordance with
subparagraph 2. of this paragraph; minus
d. The amount of IME adjustments to the
operating base rate received during the previous year pursuant to paragraph
(c)2. of this subsection; minus
e.
The amount of IME adjustments to the capital base rate received during the
previous year pursuant to paragraph (d)2. of this subsection; minus
f. The amount of IME adjustments received
from managed care organizations during the previous year.
2. The adjusted hospital-specific operating
IME factor shall be calculated pursuant to
42
C.F.R. 412.105(d); however,
the count of full-time equivalent (FTE) residents in the resident-to-bed ratio
in the formula described within
42
C.F.R. 412.105(d) shall be
substituted with the number of FTE residents reported on Worksheet E Part A,
Lines 10 and 11, Column 1 of the Medicare cost report.
(5)
(a) The department shall make a cost outlier
payment for an approved discharge meeting the Medicaid criteria for a cost
outlier for each DRG as established in paragraphs (b) to (e) of this
subsection.
(b) A cost outlier
shall be subject to QIO review and approval.
(c) A discharge shall qualify for a cost
outlier payment if its estimated cost exceeds the DRG's outlier
threshold.
(d)
1. The department shall calculate the
estimated cost of a discharge:
a. For
purposes of comparing the discharge cost to the outlier threshold;
and
b. By multiplying the sum of
the hospital-specific Medicare operating and capital-related cost-to-charge
ratios by the Medicaid allowed charges.
2.
a. A
Medicare operating and capital-related cost-to-charge ratio shall be extracted
from the Federal Fiscal Year 2016 Medicare IPPS Final Rule Data Files and
Tables published by CMS.
b. The
Medicare operating and capital cost-to-charge ratios shall be updated in
accordance with Section 8 of this administrative regulation.
(e)
1. The department shall calculate an outlier
threshold as the sum of a hospital's DRG base payment or transfer payment and
the fixed loss cost threshold.
2.
a. Beginning October 1, 2015, the fixed loss
cost threshold shall equal the Medicare fixed loss cost threshold established
for Federal Fiscal Year 2016.
b.
The fixed loss cost threshold shall be updated in accordance with Section 8 of
this administrative regulation.
(f)
1. For
specialized burn DRGs as established by Medicare, a cost outlier payment shall
equal ninety (90) percent of the amount by which estimated costs exceed a
discharge's outlier threshold.
2.
For all other DRGs, a cost outlier payment shall equal eighty (80) percent of
the amount by which estimated costs exceed a discharge's outlier
threshold.
(6)
(a) The
department shall establish DRG relative weights obtained from the Medicare IPPS
Final Rule Data Files and Tables corresponding to the grouper version in effect
under subsection (3) of this section.
(b) Relative weights shall be revised to
match the grouping software version for updates in accordance with Section 8 of
this administrative regulation.
(7) The department shall separately reimburse
for a mother's stay and a newborn's stay based on the DRGs assigned to the
mother's stay and the newborn's stay.
(8)
(a) If a
patient is transferred to or from another hospital, the department shall make a
transfer payment to the transferring hospital if the initial admission and the
transfer are determined to be medically necessary.
(b) For a service reimbursed on a prospective
discharge basis, the department shall calculate the transfer payment amount
based on the average daily rate of the transferring hospital's payment for each
covered day the patient remains in that hospital, plus one (1) day, up to 100
percent of the allowable per discharge reimbursement amount.
(c)
1. The
department shall calculate an average daily discharge rate by dividing the DRG
base payment by the Medicare geometric mean length-of-stay for a patient's DRG
classification.
2. The Medicare
geometric length-of-stay shall be obtained from the Medicare IPPS Final Rule
Data Files and Tables corresponding to the grouper version in effect under
subsection (3) of this section.
3.
The geometric length-of-stay values shall be revised to match the grouping
software version for updates in accordance with Section 8 of this
administrative regulation.
(d) Total reimbursement to the transferring
hospital shall be the transfer payment amount and, if applicable, a cost
outlier payment amount, limited to ninety-five (95) percent of the amount
calculated for each.
(e) For a
hospital receiving a transferred patient, the department shall reimburse the
standard DRG payment established in subsection (2) of this section.
(9)
(a) The department shall reimburse a
transferring hospital for a transfer from an acute care hospital to a
qualifying post-acute care facility for selected DRGs in accordance with
paragraphs (b) through (d) of this subsection as a post-acute care
transfer.
(b) The following shall
qualify as a post-acute care setting:
1. A
skilled nursing facility;
2. A
cancer or children's hospital;
3. A
home health agency;
4. A
rehabilitation hospital or rehabilitation distinct part unit located within an
acute care hospital;
5. A long-term
acute care hospital;
6. A
psychiatric hospital or psychiatric distinct part unit located within an acute
care hospital; or
7. A hospice
provider.
(c) A DRG
eligible for a post-acute care transfer payment shall be in accordance with
42 U.S.C.
1395ww(d)(5)(J).
(d)
1. The
department shall pay each transferring hospital an average daily rate for each
day of a stay.
2. A
transfer-related payment shall not exceed the full DRG payment that would have
been made if the patient had been discharged without being
transferred.
3. A DRG identified by
CMS as being eligible for special payment shall receive fifty (50) percent of
the full DRG payment plus the average daily rate for the first day of the stay
and fifty (50) percent of the average daily rate for the remaining days of the
stay up to the full DRG base payment.
4. A DRG that is referenced in paragraph (b)
of this subsection and not referenced in subparagraph 2. of this paragraph
shall receive twice the average daily rate for the first day of the stay and
the average daily rate for each following day of the stay prior to the
transfer.
5. Total reimbursement to
the transferring hospital shall be the transfer payment amount and, if
applicable, a cost outlier payment amount, limited to ninety-five (95) percent
of the amount calculated for each.
(e)
1. The
average daily rate shall be the base DRG payment allowed divided by the
Medicare geometric mean length-of-stay for a patient's DRG
classification.
2. The Medicare
geometric mean length-of-stay shall be determined and updated in accordance
with subsection (8)(c) of this section.
(10) The department shall reimburse a
receiving hospital for a transfer to a rehabilitation or psychiatric distinct
part unit the facility-specific distinct part unit per diem rate, in accordance
with
907 KAR
10:815, for each day the patient remains in the
distinct part unit.
(11)
(a) The department shall reimburse for an
organ transplant on a prospective per discharge method according to the
recipient's DRG classification.
(b)
1. The department's organ transplant
reimbursement shall include an interim reimbursement followed by a final
reimbursement.
2. The final
reimbursement shall:
a. Include a cost
settlement process based on the Medicare 2552 cost report form; and
b. Be designed to reimburse hospitals for
ninety-five (95) percent of organ acquisition costs.
3.
a. An
interim organ acquisition payment shall be made using a fixed-rate add-on to
the standard DRG payment using the rates established in subclauses (i), (ii),
(iii), (iv), and (v) of this clause:
(i)
Kidney Acquisition - $65,000;
(ii)
Liver Acquisition - $55,000;
(iii)
Heart Acquisition - $70,000;
(iv)
Lung Acquisition - $65,000; or
(v)
Pancreas Acquisition - $40,000.
b. Upon receipt of a hospital's as-filed
Medicare cost report, the department shall calculate a tentative settlement at
ninety-five (95) percent of costs for organ acquisition costs utilizing
worksheet D-4 of the CMS 2552 cost report for each organ specified in clause a.
of this subparagraph.
c. Upon
receipt of a hospital's finalized Medicare cost report, the department shall
calculate a final reimbursement, which shall be a cost settlement at
ninety-five (95) percent of costs for organ acquisition costs utilizing
worksheet D-4 of the CMS 2552 cost report for each organ specified in clause a.
of this subparagraph.
d. The final
cost settlement shall reflect any cost report adjustments made by
CMS.
Section 3. Never Events.
(1) For each diagnosis on a claim, a hospital
shall specify on the claim whether the diagnosis was present upon the
individual's admission to the hospital.
(2) In assigning a DRG for a claim, the
department shall exclude from the DRG assignment consideration of any secondary
diagnosis code associated with a hospital-acquired condition.
(3) A hospital shall not seek payment for
treatment for or related to a never event through:
(a) A recipient;
(b) The Cabinet for Health and Family
Services for a child in the custody of the cabinet; or
(c) The Department for Juvenile Justice for a
child in the custody of the Department for Juvenile Justice.
(4) A recipient, the Cabinet for
Health and Family Services, or the Department for Juvenile Justice shall not be
liable for treatment for or related to a never event.
Section 4. Preadmission Services for an
Inpatient Acute Care Service. A preadmission service provided within three (3)
calendar days immediately preceding an inpatient admission reimbursable under
the prospective per discharge reimbursement methodology shall:
(1) Be included with the related inpatient
billing and shall not be billed separately as an outpatient service;
and
(2) Exclude a service furnished
by a home health agency, a skilled nursing facility, or hospice, unless it is a
diagnostic service related to an inpatient admission or an outpatient
maintenance dialysis service.
Section
5. Reimbursement for Sole Community Hospitals. An operating rate
for sole community hospitals shall be calculated as described in subsections
(1) and (2) of this section.
(1)
(a) For each sole community hospital, the
department shall utilize the hospital's hospital-specific (HSP) rate calculated
by Medicare.
(b) The HSP rate shall
be extracted from the Federal Fiscal Year 2016 Medicare IPPS Final Rule Data
Files and Tables.
(c) Effective
October 1, 2016 and for subsequent years on October 1, the HSP rate shall be
updated in accordance with Section 8 of this administrative
regulation.
(2)
(a) The department shall compare the rate
referenced in subsection (1) of this section with the operating rate calculated
in Section 2(4)(c) of this administrative regulation.
(b) The higher of the two (2) rates compared
in paragraph (a) of this subsection shall be utilized as the operating rate for
sole community hospitals.
Section 6. Reimbursement for Medicare
Dependent Hospitals.
(1)
(a) For a Medicare-dependent hospital, the
department shall utilize the hospital's hospital-specific (HSP) rate calculated
by Medicare.
(b) The HSP rate shall
be extracted from the Federal Fiscal Year 2016 Medicare IPPS Final Rule Data
Files and Tables.
(c) Effective
October 1, 2016 and for subsequent years on October 1, the HSP rate shall be
updated in accordance with Section 8 of this administrative
regulation.
(2)
(a) The department shall compare the rate
referenced in subsection (1) of this section with the operating rate calculated
in Section 2(4)(c) of this administrative regulation.
(b) If the Section 2(4)(c) rate is higher, it
shall be utilized as the hospital's operating rate for the period.
(c)
1. If
the rate referenced in subsection (1) of this section is higher, the department
shall calculate the arithmetic difference between the two (2) rates.
2. The difference shall be multiplied by
seventy-five (75) percent.
3. The
resulting product shall be added to the Section 2(4)(c) rate to determine the
hospital's operating rate for the period.
(d) If CMS terminates the Medicare-dependent
hospital program, a hospital that is a Medicare-dependent hospital at the time
that CMS terminates the program shall receive operating rates as calculated in
Section 2(4)(c) of this administrative regulation.
Section 7. Direct Graduate Medical
Education Costs at In-state Hospitals with Graduate Medical Education Programs.
(1) If federal financial participation for
direct graduate medical education (DGME) costs is not provided to the
department, the department shall not reimburse eligible in-state hospitals for
direct graduate medical education costs.
(2) If federal financial participation for
direct graduate medical education costs is provided to the department, the
department shall provide a base DGME payment to in-state hospitals for the
direct costs of a graduate medical education program approved by Medicare as
established in this subsection.
(a) A base
DGME payment shall be made:
1. Separately from
the per discharge and per diem payment methodologies; and
2. On an annual basis corresponding to the
hospital's fiscal year.
(b) The department shall determine an annual
base DGME payment amount for a hospital as established in subparagraphs 1.
through 4. of this paragraph.
1. Total direct
graduate medical education costs shall be obtained from a facility's as-filed
CMS 2552 cost report, worksheet E-4, line 25.
2.
a. The
facility's Medicaid utilization shall be calculated by dividing Medicaid
fee-for-service covered days during the cost report period, as reported by the
Medicaid Management Information System, by total inpatient hospital days, as
reported on worksheet E-4, line 27 of the CMS 2552 cost report.
b. The resulting Medicaid utilization factor
shall be rounded to six (6) decimals.
3. The total graduate medical education costs
referenced in subparagraph 1. of this paragraph shall by multiplied by the
Medicaid utilization factor calculated in subparagraph 2. of this paragraph to
determine the total graduate medical education costs related to the
fee-for-service Medicaid program.
4. Medicaid program graduate medical
education costs shall then be multiplied by ninety-five (95) percent to
determine the annual base DGME payment amount.
(3) Effective beginning May 10, 2019 pursuant
to federal approval, the department shall provide a supplemental direct
graduate medical education (supplemental DGME) payment for the direct costs of
graduate medical education incurred by eligible in-state hospitals as
established in paragraph (a) of this subsection.
(a) In-state hospitals eligible for
supplemental DGME shall include:
1. Those
hospitals receiving direct graduate medical education payments from the
department as of April 1, 2019; and
2. Any hospital that sponsors a graduate
medical education program affiliated with a state university on or after April
1, 2019.
(b) A
supplemental DGME payment shall be made:
1.
Separately from the per discharge and per diem payment methodologies;
2. In addition to any base DGME payment made
pursuant to subsection (2) of this section; and
3. On an annual basis corresponding to the
hospital's fiscal year.
(c) The annual supplemental DGME payment
shall be calculated by the department by subtracting any base DGME payments
made by the department pursuant to subsection (2) of this section, any DGME
payments received through outpatient cost settlements, and any DGME payments
received from Medicaid managed care organizations from the total DGME amount
determined under paragraph (d) of this subsection.
(d) The total DGME amount shall equal the
product of:
1. Total DGME costs, obtained from
Worksheet B, Part 1, Line 118, Columns 21 and 22 of the CMS 2552 cost report;
and
2. The hospital's Medicaid
utilization, calculated by dividing the total number of Medicaid inpatient
days, including both fee for service and managed care days, by total inpatient
days.
(e) The
supplemental DGME payment shall be calculated prior to the determination of
applicable supplemental payments described in Section 14 of this administrative
regulation. Only the portion of the supplemental DGME payment associated with
Medicaid fee for service days shall count towards the upper payment limit
described in Section 18 of this administrative regulation.
Section 8. Reimbursement Updating
Procedures.
(1)
(a) The department shall annually update the
Medicare grouper software to the most current version used by the Medicare
program. The annual update shall be effective October 1 of each year, except as
provided in paragraph (b) of this subsection.
(b) If Medicare does not release a new
grouper version effective October 1 of a given year:
1. The current grouper effective prior to
October 1 shall remain in effect until a new grouper is released; and
2. When the new grouper is released by
Medicare, the department shall update the Medicare grouper software to the most
current version used by the Medicare program.
(c) The department shall not update the
Medicare grouper software more than once per federal fiscal year, which shall
be October 1 through September 30 of the following year.
(2) At the time of the grouper update
referenced in subsection (1) of this section, all DRG relative weights and
geometric length-of-stay values shall be updated to match the most recent
relative weights and geometric length-of-stay values effective for the Medicare
program.
(3)
(a) Annually, on October 1, all values
obtained from the Medicare IPPS Final Rule Data Files and Tables shall be
updated to reflect the most current Medicare IPPS final rule in
effect.
(b)
1. Within thirty (30) days after the Centers
for Medicare and Medicaid Services publishes the Medicare IPPS Final Rule Data
Files and Tables for a given year, the department shall send a notice to each
hospital containing the hospital's data from the Medicare IPPS Final Rule Data
Files and Tables to be used by the department to establish diagnosis related
group rates on October 1.
2. The
notice referenced in subparagraph 1. of this paragraph shall request that the
hospital:
a. Review the information;
and
b. If the hospital discovers
that the data in the notice sent by the department does not match the data
published by the Centers for Medicare and Medicaid Services, notify the
department of the discrepancy prior to October 1.
(4) All Medicare IPPS
final rule values utilized in this administrative regulation shall be updated
to reflect any correction notices issued by CMS, if applicable.
(5) Except for an appeal in accordance with
Section 22 of this administrative regulation, the department shall make no
other adjustment.
Section
9. Universal Rate Year.
(1) A
universal rate year shall be established as October 1 of one (1) year through
September 30 of the following year.
(2) A hospital shall not be required to
change its fiscal year to conform with a universal rate year.
Section 10. Cost Reporting
Requirements.
(1)
(a) An in-state hospital participating in the
Medicaid Program shall submit to the department, in accordance with the
requirements in this section:
1. A copy of
each Medicare cost report it submits to CMS;
2. An electronic cost report file
(ECR);
3. The Supplemental Medicaid
Schedule KMAP-1; and
4. The
Supplemental Medicaid Schedule KMAP-6.
(b) A document listed in paragraph (a) of
this subsection shall be submitted:
1. For the
fiscal year used by the hospital; and
2. Within five (5) months after the close of
the hospital's fiscal year.
(c) Except as provided in subparagraph 1. or
2. of this paragraph, the department shall not grant a cost report submittal
extension.
1. If an extension has been granted
by Medicare, the cost report shall be submitted simultaneously with the
submittal of the Medicare cost report.
2. If a catastrophic circumstance exists, for
example flood, fire, or other equivalent occurrence, the department shall grant
a thirty (30) day extension.
(2) If a cost report submittal date lapses
and no extension has been granted, the department shall immediately suspend all
payments to the hospital until a complete cost report is received.
(3) A cost report submitted by a hospital to
the department shall be subject to audit and review.
(4) An in-state hospital shall submit to the
department a final Medicare-audited cost report upon completion by the Medicare
intermediary along with an electronic cost report file (ECR).
Section 11. Unallowable Costs.
(1) The following shall not be allowable
costs for Medicaid reimbursement:
(a) A cost
associated with a political contribution;
(b) A cost associated with a legal fee for an
unsuccessful lawsuit against the Cabinet for Health and Family Services. A
legal fee relating to a lawsuit against the Cabinet for Health and Family
Services shall only be included as a reimbursable cost in the period in which
the suit is settled after a final decision has been made that the lawsuit is
successful or if otherwise agreed to by the parties involved or ordered by the
court; and
(c) A cost for travel
and associated expenses outside the Commonwealth of Kentucky for the purpose of
a convention, meeting, assembly, conference, or a related activity, subject to
the limitations of subparagraphs 1. and 2. of this paragraph.
1. A cost for a training or educational
purpose outside the Commonwealth of Kentucky shall be allowable.
2. If a meeting is not solely educational,
the cost, excluding transportation, shall be allowable if an educational or
training component is included.
(2) A hospital shall identify an unallowable
cost on a Supplemental Medicaid Schedule KMAP-1.
(3) A Supplemental Medicaid Schedule KMAP-1
shall be completed and submitted to the department with an annual cost
report.
Section 12.
Readmissions.
(1) An unplanned inpatient
admission within fourteen (14) calendar days of discharge for the same
diagnosis shall be considered a readmission and reviewed by the QIO.
(2) Reimbursement for an unplanned
readmission with the same diagnosis shall be included in an initial admission
payment and shall not be billed separately.
Section 13. Reimbursement for Out-of-State
Hospitals.
(1) The department shall reimburse
an acute care out-of-state hospital for inpatient care on a fully prospective
per discharge basis except for the following hospitals:
(a) A children's hospital located in a
Metropolitan Statistical Area as defined by the United States Office of
Management and Budget whose boundaries overlap Kentucky and a bordering state;
and
(b) Vanderbilt Medical
Center.
(2) For an
inpatient acute care service, except for a service not covered pursuant to
907 KAR
10:012, in an out-of-state acute care hospital the
total hospital-specific per discharge payment shall be calculated in the same
manner as an in-state hospital as described in Section 2(2) of this
administrative regulation with modifications to rates used as described in
subsections (3) through (7) of this section.
(3) The DRG payment parameters listed in this
subsection shall be modified for out-of-state hospitals not specifically
excluded in subsection (1) of this section.
(a) The operating rate used in the
calculation of the operating base payment described in Section 2(4)(c)1. of
this administrative regulation shall equal the average of all in-state acute
care hospital operating rates calculated in accordance with Section 2(4)(c) of
this administrative regulation multiplied by eighty (80) percent, excluding any
adjustments made for:
1. Sole community
hospitals pursuant to Section 5 of this administrative regulation; or
2. Medicare-dependent hospitals pursuant to
Section 6 of this administrative regulation.
(b) The capital rate used in the calculation
of the capital base payment described in Section 2(4)(c)1. of this
administrative regulation shall equal the average of all in-state acute care
hospital capital rates calculated in accordance with Section 2(4)(c) of this
administrative regulation multiplied by eighty (80) percent.
(c) The DRG relative weights used in the
calculation of the operating base payment described in Section 2(4)(c)1. of
this administrative regulation and the calculation of the capital base payment
described in Section 2(4)(c)1. of this administrative regulation shall be
reduced by twenty (20) percent.
(d)
The following provisions shall not be applied:
1. Medicare indirect medical education cost
or reimbursement;
2. Organ
acquisition cost settlements;
3.
Disproportionate share hospital distributions; and
4. Any adjustment mandated for in-state
hospitals pursuant to
KRS
205.638.
(e) The Medicare operating and capital
cost-to-charge ratios used to estimate the cost of each discharge, for purposes
of comparing the estimated cost of each discharge to the outlier threshold,
shall be determined by calculating the arithmetic mean of all in-state
cost-to-charge ratios established in accordance with Section 2(5)(d) of this
administrative regulation.
(4) The department shall reimburse for
inpatient acute care provided by an out-of-state children's hospital located in
a Metropolitan Statistical Area as defined by the United States Office of
Management and Budget and whose boundaries overlap Kentucky and a bordering
state, and except for Vanderbilt Medical Center, the average operating rate and
average capital rate paid to in-state children's hospitals.
(5) The department shall reimburse for
inpatient care provided by Vanderbilt Medical Center using the
hospital-specific Medicare base rate extracted from the CMS IPPS Pricer Program
in effect at the time that the care was provided multiplied by eighty-five (85)
percent.
(6) The out-of-state
hospitals referenced in subsections (4) and (5) of this section shall not be
eligible to receive indirect medical education reimbursement, organ acquisition
cost settlements, or disproportionate share hospital payments.
(7)
(a) The
department shall reimburse a hospital referenced in subsection (4) or (5) of
this section a cost outlier payment for an approved discharge meeting Medicaid
criteria for a cost outlier for each Medicare DRG.
(b) A cost outlier shall be subject to
quality improvement organization review and approval.
(c) The department shall determine the cost
outlier threshold for an out-of-state claim regarding a hospital referenced in
subsection (4) or (5) of this section using the same method used to determine
the cost outlier threshold for an in-state claim.
Section 14. Supplemental Payments.
(1) Payment of a supplemental payment
established in this section shall be contingent upon the department's receipt
of corresponding federal financial participation.
(2) If federal financial participation is not
provided to the department for a supplemental payment, the department shall not
make the supplemental payment.
(3)
In accordance with subsections (1) and (2) of this section, the department
shall:
(a) In addition to a payment based on a
rate developed under Section 2 of this administrative regulation, make
quarterly supplemental payments to:
1. A
hospital that qualifies as an in-state non-state owned pediatric teaching
hospital in an amount:
a. Equal to the sum of
the hospital's Medicaid shortfall for Medicaid fee-for-service recipients under
the age of eighteen (18) plus an additional $250,000 ($1,000,000 annually);
and
b. Prospectively determined by
the department with an end of the year settlement based on actual patient days
of Medicaid fee-for-service recipients under the age of eighteen
(18);
2. A hospital that
qualifies as a pediatric teaching hospital and additionally meets the criteria
of a state university teaching hospital in an amount:
a. Equal to the difference between payments
made in accordance with Sections 2 and 7 of this administrative regulation and
the amount allowable under
42 C.F.R.
447.272, not to exceed the payment limit as
specified in
42 C.F.R.
447.271;
b. That is prospectively determined subject
to a year-end reconciliation; and
c. Based on the state matching contribution
made available for this purpose by a facility that qualifies under this
paragraph; and
3. A
hospital that qualifies as an urban trauma center hospital in an amount:
a. Based on the state matching contribution
made available for this purpose by a government entity on behalf of a facility
that qualifies under this paragraph;
b. Based upon a hospital's proportion of
Medicaid patient days to total Medicaid patient days for all hospitals that
qualify under this paragraph;
c.
That is prospectively determined with an end of the year settlement;
and
d. That is consistent with the
requirements of
42 C.F.R.
447.271;
(b) Make quarterly supplemental payments to
the Appalachian Regional Hospital system:
1.
In an amount that is equal to the lesser of:
a. The difference between what the department
pays for inpatient services pursuant to Sections 2 and 7 of this administrative
regulation and what Medicare would pay for inpatient services to Medicaid
eligible individuals; or
b. $7.5
million per year in aggregate;
2. For a service provided on or after July 1,
2005; and
3. Subject to the
availability of coal severance funds, in addition to being subject to the
availability of federal financial participation, which supply the state's share
to be matched with federal funds; and
(c) Base a quarterly payment to a hospital in
the Appalachian Regional Hospital System on its Medicaid claim volume in
comparison to the Medicaid claim volume of each hospital within the Appalachian
Regional Hospital System.
(4) An overpayment made to a hospital under
this section shall be recovered by subtracting the overpayment amount from a
succeeding year's payment to be made to the hospital.
(5) For the purpose of this section, Medicaid
patient days shall not include enrollee days.
(6) A payment made under this section shall
not duplicate a payment made via
907 KAR
10:820.
(7) A payment made in accordance with this
section shall be in compliance with the limitations established in
42 C.F.R.
447.272.
Section 15. Certified Public Expenditures.
(1)
(a) The
department shall reimburse an in-state public government-owned or operated
hospital the full cost of a Medicaid fee-for-service inpatient service provided
during a given state fiscal year via a certified public expenditure (CPE)
contingent upon approval by the Centers for Medicare and Medicaid Services
(CMS).
(b) A payment referenced in
paragraph (a) of this subsection shall be limited to the federal match portion
of the hospital's uncompensated care cost for inpatient Medicaid
fee-for-service recipients.
(2) To determine the amount of costs eligible
for a CPE, a hospital's allowed charges shall be multiplied by cost-center
specific cost-to-charge ratios from the hospital's 2552 cost report.
(3) The department shall verify whether or
not a given CPE is allowable as a Medicaid cost.
(4)
(a)
Subsequent to a cost report being submitted to the department and finalized, a
CPE shall be reconciled with the actual costs reported to determine the actual
CPE for the period.
(b) If any
difference between actual cost and submitted costs remains, the department
shall reconcile any difference with the provider.
Section 16. Access to
Subcontractor's Records. If a hospital has a contract with a subcontractor for
services costing or valued at $10,000 or more over a twelve (12) month period:
(1) The contract shall contain a provision
granting the department access:
(a) To the
subcontractor's financial information; and
(b) In accordance with
907
KAR 1:672; and
(2) Access shall be granted to the department
for a subcontract between the subcontractor and an organization related to the
subcontractor.
Section
17. New Provider, Change of Ownership, or Merged Facility.
(1)
(a) The
department shall reimburse a new acute care hospital based on the Medicare IPPS
Final Rule Data Files and Tables inputs described in this administrative
regulation in effect at the time of the hospital's enrollment with the Medicaid
program.
(b) If applicable rate
information does not exist in the Medicare IPPS Final Rule Data Files and
Tables for a given period for an in-state acute care hospital, the department
shall use, for the in-state acute care hospital, the average of all in-state
acute care hospitals for the operating rate, capital rate, and outlier
cost-to-charge ratio, excluding any adjustments made for sole community
hospitals or Medicare dependent hospitals.
(2) If a hospital undergoes a change of
ownership, the new owner shall continue to be reimbursed at the rate in effect
at the time of the change of ownership.
Section 18. Department reimbursement for
inpatient hospital care shall not exceed the upper payment limit established in
42 C.F.R.
447.271 or
447.272.
Section 19. Not Applicable to Managed Care
Organizations. A managed care organization shall not be required to reimburse
in accordance with this administrative regulation for a service covered
pursuant to:
(1)
907 KAR
10:012; and
(2) This administrative regulation.
Section 20. Federal Approval and
Federal Financial Participation. The department's reimbursement for services
pursuant to this administrative regulation shall be contingent upon:
(1) Receipt of federal financial
participation for the reimbursement; and
(2) Centers for Medicare and Medicaid
Services' approval for the reimbursement.
Section 21. Matters Subject to an Appeal. A
hospital may appeal whether the Medicare data specific to the hospital that was
extracted by the department in establishing the hospital's reimbursement was
the correct data.
Section 22.
Appeal Process.
(1) An appeal shall comply
with the requirements and provisions established in this section.
(2)
(a) A
request for a review of an appealable issue shall be received by the department
within sixty (60) calendar days of the date of receipt by the provider of the
department's notice of rates set under this administrative
regulation.
(b) The request
referenced in paragraph (a) of this subsection shall:
1. Be sent to the Office of the Commissioner,
Department for Medicaid Services, Cabinet for Health and Family Services, 275
East Main Street, 6th Floor, Frankfort, Kentucky 40621-0002; and
2. Contain the specific issues to be reviewed
with all supporting documentation necessary for the departmental
review.
(3)
(a) The department shall review the material
referenced in subsection (2) of this section and notify the provider of the
review results within thirty (30) days of its receipt except as established in
paragraph (b) of this subsection.
(b) If the provider requests a review of a
non-appealable issue under this administrative regulation, the department
shall:
1. Not review the request;
and
2. Notify the provider that the
review is outside of the scope of this section.
(4)
(a) A
provider may appeal the result of the department's review, except for a
notification that the review is outside the scope of this section, by sending a
request for an administrative hearing to the Office of the Ombudsman and
Administrative Review within thirty (30) days of receipt of the department's
notification of its review decision.
(b) A provider shall not appeal a
notification that a review is outside of the scope of this section.
(5)
(a) An administrative hearing shall be
conducted in accordance with KRS Chapter 13B.
(b) Pursuant to
KRS
13B.030, the secretary of the Cabinet for
Health and Family Services delegates to the Cabinet for Health and Family
Services, Office of the Ombudsman and Administrative Review the authority to
conduct administrative hearings under this administrative regulation.
(c) A notice of the administrative hearing
shall comply with
KRS
13B.050.
(d) The administrative hearing shall be held
in Frankfort, Kentucky no later than ninety (90) calendar days from the date
the request for the administrative hearing is received by the Office of the
Ombudsman and Administrative Review.
(e) The administrative hearing date may be
extended beyond the ninety (90) calendar days by:
1. A mutual agreement by the provider and the
department; or
2. A continuance
granted by the hearing officer.
(f)
1. If
the prehearing conference is requested, it shall be held at least thirty (30)
calendar days in advance of the hearing date.
2. Conduct of the prehearing conference shall
comply with
KRS
13B.070.
(g) If a provider does not appear at the
hearing on the scheduled date, the hearing officer may find the provider in
default pursuant to
KRS
13B.050(3)(h).
(h) A hearing request shall be withdrawn only
under the following circumstances:
1. The
hearing officer receives a written statement from a provider stating that the
request is withdrawn; or
2. A
provider makes a statement on the record at the hearing that the provider is
withdrawing the request for the hearing.
(i) Documentary evidence to be used at the
hearing shall be made available in accordance with
KRS
13B.090.
(j) The hearing officer shall:
1. Preside over the hearing; and
2. Conduct the hearing in accordance with
KRS 13B.080
and
13B.090.
(k) The provider shall have the
burden of proof concerning the appealable issues under this administrative
regulation.
(l)
1. The hearing officer shall issue a
recommended order in accordance with
KRS
13B.110.
2. An extension of time for completing the
recommended order shall comply with the requirements of
KRS 13B.110(2) and
(3).
(m)
1. A
final order shall be entered in accordance with
KRS
13B.120.
2. The cabinet shall maintain an official
record of the hearing in compliance with
KRS
13B.130.
3. In the correspondence transmitting the
final order, clear reference shall be made to the availability of judicial
review pursuant to
KRS
13B.140,
13B.150,
and
13B.160.
Section 23.
Incorporation by Reference.
(1) The following
material is incorporated by reference:
(a)
"Supplemental Medicaid Schedule KMAP-1"; 2013;
(b) "Supplemental Medicaid Schedule KMAP-6",
2013; and
(c) "CMS Manual System
Pub 100-03 Medicare National Coverage Determinations Transmittal 101", June 12,
2009.
(2) This material
may be inspected, copied, or obtained, subject to applicable copyright law:
(a) At the Department for Medicaid Services,
275 East Main Street, Frankfort, Kentucky 40621, Monday through Friday, 8 a.m.
to 4:30 p.m.; or
STATUTORY AUTHORITY:
KRS
194A.030(2),
194A.050(1),
205.520(3),
205.560(2),
205.637(3),
205.640(1),
216.380(12),
42 C.F.R.
447.200,
447.250,
447.252,
447.253,
447.271,
447.272,
42 U.S. C. 1396a, 1396r-4