Code of Massachusetts Regulations
101 CMR - EXECUTIVE OFFICE FOR HEALTH AND HUMAN SERVICES
Title 101 CMR 614.00 - Health Safety Net Payments and Funding
Section 614.05 - Surcharge on Acute Hospital Payments

Universal Citation: 101 MA Code of Regs 101.614

Current through Register 1518, March 29, 2024

(1) General. There is a surcharge on certain payments to Acute Hospitals and Ambulatory Surgical Centers. The surcharge amount equals the product of payments subject to surcharge as defined in 101 CMR 614.05(1)(b) and the Surcharge Percentage as defined in 101 CMR 614.05(2).

(a) Surcharge Payer.
1. A Surcharge Payer is an individual or entity that makes payments for the purchase of health care Hospital Services and Ambulatory Surgical Center Services, including a Managed Care Organization; provided, however, that the term "surcharge payer" does not include Title XVIII and Title XIX of the Social Security Act programs and their beneficiaries or recipients, except Managed Care Organizations; other governmental programs of public assistance and their beneficiaries or recipients; and the workers' compensation program established pursuant to M.G.L. c. 152.

2. The same entity that pays that Acute Hospital or Ambulatory Surgical Center for services must pay the surcharge. If an entity such as a Third Party Administrator acts on behalf of a client plan and uses the client plan's funds to pay for the services, or advances funds to pay for the services for which it is reimbursed by the client plan, it must also act on behalf of the client plan and use the client plan's funds to pay the surcharge or advance funds to pay the surcharge for which it will be reimbursed by the client plan.

(b) Payments Subject to Surcharge. Payments subject to surcharge include
1. direct and indirect payments made by Surcharge Payers to Massachusetts Acute Hospitals for the purchase of Acute Hospital Services and to Massachusetts Ambulatory Surgical Centers for the purchase of Ambulatory Surgical Center Services, with the following exceptions:
a. except for Managed Care Organization payments for MassHealth members and Commonwealth Care enrollees, the surcharge applies to all payments made on or after January 1, 1998, regardless of the date services were provided; and

b. for Managed Care Organization payments for MassHealth members younger than 65 years old and for Commonwealth Care enrollees, the surcharge applies to all payments made on or after December 1, 2010, regardless of the date services were provided;

2.. payments made by national health insurance plans operated by foreign governments and payments made by an embassy on behalf of a foreign national not employed by the embassy;

3. direct payments made under an employer health plan by a health care reimbursement arrangement funded by the employer; and

4. payments made by Medicare supplemental plans and other health insurance plans secondary to Medicare.

(c) Payments Not Subject to Surcharge. Payments not subject to surcharge include
1. payments, settlements, and judgments arising out of third party liability claims for bodily injury that are paid under the terms of property or casualty insurance policies;

2. payments made on behalf of MassHealth members by MassHealth, Medicare beneficiaries by Medicare (including Medicare Advantage plans) except as provided in 101 CMR 614.05(1)(b), persons enrolled in the Premium Assistance Payment Program Operated by the Health Connector, or persons enrolled in policies issued pursuant to M.G.L. c. 176K or similar policies issued on a group basis, except that payments made by Managed Care Organizations on behalf of MassHealth members younger than 65 years old who are not enrolled in an integrated care organization and Commonwealth Care enrollees are subject to surcharge;

3. payments made by an Acute Hospital to a second Acute Hospital for services that the first Acute Hospital billed to a Surcharge Payer;

4. payments made by a group of Providers, including one or more Massachusetts Acute Hospitals or Ambulatory Surgical Centers, to member Acute Hospitals or Ambulatory Surgical Centers for services that the group billed to an entity licensed or approved under M.G.L. chs. 175, 176A, 176B, 176G, or 176I;

5. payments made on behalf of an individual covered under the Federal Employees Health Benefits Act at 5 U.S.C. 8901 et seq.^

6. payments made on behalf of an individual covered under the workers' compensation program under M.G.L. c. 152; and

7. payments made on behalf of foreign embassy personnel who hold a Tax Exemption Card issued by the United States Department of State.

(d) The surcharge is distinct from any other amount paid by a Surcharge Payer for the services provided by an Acute Hospital or Ambulatory Surgical Center. Surcharge amounts paid are deposited in the Health Safety Net Trust Fund.

(e) The Health Safety Net Office may issue additional guidance to clarify policies and understanding of substantive provisions of 101 CMR 614.05(1).

(2) Calculation of the Surcharge Percentage. The Health Safety Net Office uses the following methodology to calculate the percentage of the surcharge to be assessed on certain payments to Acute Hospitals and Ambulatory Surgical Centers, established in M.G.L. c. 118E, § 68. The Health Safety Net Office establishes the Surcharge Percentage before September 1st of each year, as follows.

(a) The Health Safety Net Office determines the total amount to be collected by adjusting the Total Surcharge Amount for any over or under collections from Institutional Payers and individuals in previous years, including audit adjustments, as well as any over or under collections projected for October or November of the coming year.

(b) The Health Safety Net Office projects annual aggregate payments subject to the surcharge based on historical data, excluding projected annual aggregate payments made by Managed Care Organizations on behalf of MassHealth members and Commonwealth Care enrollees, with any adjustments the Health Safety Net Office deems necessary.

(c) The Health Safety Net Office divides the amount determined in 101 CMR 614.05(2)(a) by the amount determined in 101 CMR 614.05(2)(b).

(3) Payer Registration.

(a) Except for non-United States national insurers that have made fewer than ten payments per year in the prior three years to Massachusetts Acute Hospitals and/or Ambulatory Surgical Centers, all Institutional Payers must register with the Health Safety Net Office by completing and submitting the Surcharge Payer Registration form. These payers must submit the registration form to the Health Safety Net Office within 30 days after making a payment to any Massachusetts Acute Hospital or Ambulatory Surgical Center.

(b) The Health Safety Net Office compiles lists of registered Institutional Payers, and updates the lists quarterly. The Health Safety Net Office distributes these lists to Acute Hospitals and Ambulatory Surgical Centers upon request.

(c) Institutional Payers must register only once, except that an Institutional Payer that is also a Managed Care Organization must register separately as a Managed Care Organization. A registered payer is automatically registered for the next Fiscal Year.

(4) Billing Process for Institutional Payers.

(a) Each Acute Hospital and Ambulatory Surgical Center must send a bill for the Health Safety Net surcharge to Surcharge Payers, as required by M.G.L. c. 118E, § 68. Acute Hospitals and Ambulatory Surgical Centers must send this bill to Surcharge Payers from whom they have received payment for services in the most recent four quarters for which data is available. The bill must state the Surcharge Percentage. Acute Hospitals and Ambulatory Surgical Centers must send this bill to payers before September 1st of each Fiscal Year and before the effective date of any Surcharge Percentage.

(b) Each Acute Hospital and Ambulatory Surgical Center must also send a bill for the surcharge at the same time as the bill for services provided to Institutional Payers who have not registered with the Health Safety Net Office pursuant to 101 CMR 614.05(3)(a) and from whom they have received payment. The bill must be sent within 30 days of receiving the payment from the unregistered payer. The bill must state the Surcharge Percentage, but not the dollar amount owed, and must include notification of the surcharge payment process set forth below, as well as a registration form specified by the Health Safety Net Office. Until the Acute Hospital or Ambulatory Surgical Center receives the Registered Payer List, it must send a bill for the surcharge at the same time as the bill for services provided to Institutional Payers that it did not already bill pursuant to 101 CMR 614.05(4)(a).

(5) Payment Process for Institutional Payers.

(a) Monthly Surcharge Liability. After the end of each calendar month, each Institutional Payer must determine the surcharge amount it owes to the Health Safety Net Trust Fund for that month. The amount owed is the product of the amount of payments subject to surcharge, as defined in 101 CMR 614.05(1)(b), by the Surcharge Percentage in effect during that month. The Institutional Payer may adjust the surcharge amount owed for any surcharge over- or under-payments in a previous period.
1. Institutional Payers that pay a global fee or capitation for services that include Acute Hospital or Ambulatory Surgical Center Services, as well as other services not subject to the surcharge, must develop a reasonable method for allocating the portion of the payment intended to be used for services provided by Acute Hospitals or Ambulatory Surgical Centers. Such Institutional Payers must file this allocation method by October 1st of each Fiscal Year. If there is a significant change in the global fee or capitation payment arrangement that necessitates a change in the allocation method, the Institutional Payer must file the new method with the Health Safety Net Office before the new payment arrangement takes effect. Institutional Payers may not change the allocation method later in the year unless there is a significant change in the payment arrangement.
a. The Health Safety Net Office will review allocation plans within 90 days of receipt. During this review period the Health Safety Net Office may require an Institutional Payer to submit supporting documentation or to make changes in this allocation method if it finds that the method does not reasonably allocate the portion of the global payment or capitation intended to be used for services provided by Acute Hospitals or Ambulatory Surgical Centers.

b. An Institutional Payer must include the portion of the global payment or capitation intended to be used for services provided by Acute Hospitals or Ambulatory Surgical Centers, as determined by this allocation method, in its determination of payments subject to surcharge.

2. An Institutional Payer must include all payments made as a result of settlements, judgments, or audits in its determination of payments subject to surcharge. An Institutional Payer may include payments made by Massachusetts Acute Hospitals or Ambulatory Surgical Centers to the Institutional Payer as a result of settlements, judgments, or audits as a credit in its determination of payments subject to surcharge.

(b) Monthly Payments. Institutional Payers must make payments to the Health Safety Net Trust Fund monthly. Each Institutional Payer must remit the surcharge amount it owes to the Health Safety Net Trust Fund, determined pursuant to 101 CMR 614.05(5)(a), to the Health Safety Net Office for deposit in the Health Safety Net Trust Fund. Institutional Payers must remit the surcharge payment by the first business day of the second month following the month for which the surcharge amount was determined. For example, surcharge payments based on payments made to Acute Hospitals and Ambulatory Surgical Centers in January are due by March 1st.

(c) Biannual Surcharge Payment Option.
1. An Ambulatory Surgical Center may request a biannual surcharge payment option if
a. it has remitted four or fewer payments during the previous Fiscal Year;

b. it has remitted all required surcharge payments and submitted all monthly coupons;

c. it submitted a Surcharge Verification Form for the previous Fiscal Year; and

d. it has reported less than $10,000 in surcharge payments in the Surcharge Verification Form.

2. The Health Safety Net Office notifies payers eligible for the biannual option. The Payer may elect to receive biannual surcharge notices or to continue to receive monthly notices. Each biannual surcharge payment equals the product of the appropriate surcharge percentage and all payments made by the payer to Massachusetts Acute Hospitals and Ambulatory Surgical Centers for the prior six months.

(d) All surcharge payments must be payable in United States dollars and drawn on a United States bank. The Health Safety Net Office assesses a $30.00 penalty on any Surcharge Payer whose check is returned for insufficient funds.

(e) Any Institutional Payer, except Third Party Administrators, that has a surcharge liability of less than $5.00 in any month or biannual payment period may delay payment until its surcharge liability is at least $5.00. For example, XYZ Company's surcharge liability for July is $3.50 and its liability for August is $2.00. XYZ Company may delay payment in July but must remit a check for $5.50 in August.

(6) Payment Process for Individual Payers (Self-pay). There is a surcharge on certain payments made by Individual Payers to Acute Hospitals and Ambulatory Surgical Centers.

(a) Billing.
1. Acute Hospitals and Ambulatory Surgical Centers must include the surcharge amount on all bills to Individual Payers unless
a. the Patient's liability is less than the individual payment threshold of $10,000;

b. the Patient is a non-Massachusetts resident for whom the Acute Hospital or Ambulatory Surgical Center can verify that the Patient's income would otherwise qualify the Patient as a Low Income Patient under 101 CMR 613.04: Eligible Services to Low Income Patients; or

c. the Patient is approved for Medical Hardship in accordance with the requirements of 101 CMR 613.05: Medical Hardship. The bill must direct Individual Payers to pay the surcharge to the Acute Hospital or Ambulatory Surgical Center when making payment for services.

2. The amount of the surcharge billed is the product of the Patient's liability to the Acute Hospital or Ambulatory Surgical Center, and the Surcharge Percentage in effect on the billing date.

3. The amount of the surcharge owed by an Individual Payer is the product of the total amount paid by the individual to an Acute Hospital or Ambulatory Surgical Center and the Surcharge Percentage in effect on the payment date. Payments greater than or equal to the threshold received by Acute Hospitals and Ambulatory Surgical Centers from Individual Surcharge Payers are subject to the surcharge.

(b) Acute Hospitals and Ambulatory Surgical Centers must remit to the Health Safety Net Office the surcharge amount owed by Individual Payers for every payment greater than or equal to the threshold made by Individual Payers. If an Individual Payer makes separate payments over a 12-month period that are equal to or greater than the threshold and relate to an outpatient visit or inpatient stay, the surcharge amount due applies to the aggregate amount paid for the outpatient visit or inpatient stay. The first surcharge payment is due to the Health Safety Net Office when the total Individual Payer payment amount reaches the threshold.

(c) Acute Hospitals and Ambulatory Surgical Centers must remit such surcharge payments by the first business day of the second month following the month during which the surcharge was received. For example, surcharge payments received by Acute Hospitals and Ambulatory Surgical Centers in January are due to the Health Safety Net Office on March 1st. Acute Hospitals and Ambulatory Surgical Centers may deduct collection agency fees for the collection of surcharge payments from Individual Payers from the total amount of surcharge payments forwarded to the Health Safety Net Office.

(d) All payments must be payable in United States dollars and drawn on a United States bank. The Health Safety Net Office assesses a $30.00 penalty on any Surcharge Payer whose check is returned for insufficient funds.

(e) If an embassy of a foreign government pays an Acute Hospital or Ambulatory Surgical Center bill on behalf of an individual, the Provider may either bill the embassy for the individual's surcharge according to the billing and payment process for Individual Payers set forth in 101 CMR 614.05(6) or bill the embassy according to the billing process for Institutional Payers as set forth in 101 CMR 614.05(4). If the Provider chooses to bill the embassy as an Institutional Payer and the embassy is not listed on the Registered Payer List, the Provider must include the embassy on the Unmatched Payer Report and send surcharge payer registration information to the embassy.

(7) Penalties. If an Acute Hospital, Ambulatory Surgical Center, or Surcharge Payer fails to forward surcharge payments pursuant to 101 CMR 614.05, the Health Safety Net Office imposes an additional 1.5% interest penalty on the outstanding balance. The interest is calculated from the due date. For each month a payment remains delinquent, an additional 1.5% penalty accrues against the outstanding balance, including prior penalties.

(a) The Health Safety Net Office credits partial payments first to the current outstanding liability, and second to the amount of the penalties.

(b) The Health Safety Net Office may reduce the penalty at the Health Safety Net Office's discretion. In determining a waiver or reduction, the Health Safety Net Office's consideration includes, but is not limited to, the entity's payment history, financial situation, and relative share of the payments to the Health Safety Net Trust Fund.

(8) Administrative Review. The Health Safety Net Office may conduct an administrative review of surcharge payments at any time.

(a) The Health Safety Net Office reviews data submitted by Acute Hospitals, Ambulatory Surgical Centers, and Institutional Payers pursuant to 101 CMR 614.08, the Surcharge Payer Registration forms submitted by Institutional Payers pursuant to 101 CMR 614.05(3)(a), and any other pertinent data. All information provided by, or required from, any Surcharge Payer, pursuant to 101 CMR 614.00 is subject to audit by the Health Safety Net Office. For surcharge payments based upon a global fee or capitation allocated according to an allocation method accepted by the Health Safety Net Office pursuant to 101 CMR 614.05(5)(a)1., the Health Safety Net Office's review is limited to determining whether this method was followed accurately and whether the amounts reported were accurate.

(b) The Health Safety Net Office may require the Surcharge Payer to submit additional documentation reconciling the data it submitted with data received from Acute Hospitals.

(c) If the Health Safety Net Office determines through its review that a Surcharge Payer's payment to the Health Safety Net Trust Fund was materially incorrect, the Health Safety Net Office may require a payment adjustment. Payment adjustments are subject to interest penalties and late fees, pursuant to 101 CMR 614.05(7), from the date the original payment was owed to the Health Safety Net Trust Fund.

(d) Processing of Payment Adjustments.
1. Notification. The Health Safety Net Office notifies a Surcharge Payer of its proposed adjustments. The notification is in writing and contains a complete listing of all proposed adjustments, as well as the Health Safety Net Office's explanation for each adjustment.

2. Objection Process. If a Surcharge Payer wishes to object to a Health Safety Net Office proposed adjustment contained in the notification letter, it must do so in writing, within 15 business days of the mailing of the notification letter. The Surcharge Payer may request an extension of this period for cause. The written objection must, at a minimum, contain
a. each adjustment to which the Surcharge Payer is objecting;

b. the Fiscal Year for each disputed adjustment;

c. the specific reason for each objection; and

d. all documentation that supports the Surcharge Payer's position.

3. Upon review of the Surcharge Payer's objections, the Health Safety Net Office notifies the Surcharge Payer of its determination in writing. If the Health Safety Net Office disagrees with the Surcharge Payer's objections, in whole or in part, the Health Safety Net Office provides the Surcharge Payer with an explanation of its reasoning.

4. The Surcharge Payer may request a conference on objections after receiving the Health Safety Net Office's explanation of reasons. The Health Safety Net Office schedules such conference on objections only when it believes that further articulation of the Surcharge Payer's position is beneficial to the resolution of the disputed adjustments.

(e) Payment of Adjustment Amounts. Adjustment amounts and any interest penalty and late fee amounts are due to the Health Safety Net Trust Fund 30 calendar days following the mailing of the notification letter. If the Surcharge Payer submitted a written objection, then adjustment amounts and any interest penalty and late fee amounts are due to the Health Safety Net Trust Fund 30 calendar days following the mailing of the Health Safety Net Office's determination. The Health Safety Net Office may establish a payment schedule for adjustment amounts.

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