(1) A hospital may apply for a discretionary
administrative adjustment to its Inpatient Per Diem Rate. Any such application,
except for those related to New Governmental Requirements and Disaster Losses,
must be based upon the grounds set forth below and must be filed within 90 days
of initial rate approval to receive consideration. Applications for New
Governmental Requirements and Disaster Losses must be based upon the grounds
set forth below and must be filed within 60 days from the date the costs were
incurred to receive consideration. Except for adjustments granted for
Mechanical Error, adjustments shall be effective on the later of 1) the
beginning of the quarter (October 1, January 1, April 1, July 1) in which a
complete application is received or 2) the date the costs will be incurred.
Adjustments granted for Mechanical Error shall be effective on the date the
rate containing the error went into effect Adjustments granted for New
Governmental Requirements and Disaster Losses shall be effective on the date
the costs were incurred.
(2) In
order to qualify for an administrative adjustment, the hospital must
demonstrate the following:
(a) the timing and
amount of the increase in costs is reasonably certain; and
(b) the category of cost for which an
administrative adjustment is sought is not included in the base year
cost;
(c) the amount requested is
greater than 1% of the hospital's total patient care costs. Multiple unrelated
requests for administrative adjustments may be grouped together to meet the
materiality limit; however, each individual item must equal or exceed 1/10 of
1% (.10%).
(d) the adjustment is
necessary for the appropriate provision of services. The Division will consider
a cost "necessary" only if it can be demonstrated to the satisfaction of the
Division that such costs cannot be met through efficient management and
economic operation at the existing reimbursable cost level.
(3) Requests for an administrative
adjustment shall be accompanied by full and complete documentation of the
request. The Division may deny any request for an administrative adjustment for
which documentation is not submitted.
(4) A hospital must begin to expend the costs
for which it has received approval within 60 days of the effective date of the
administrative adjustment. An interim financial report demonstrating these
expenditures must be submitted within 90 days of the effective date of the
administrative adjustment. Failure to submit this will result in the approved
amount being deducted from current rate year rates. If the hospital does not
begin to expend such costs within 60 days, the hospital must notify the
Division that approved amounts were not expended. The approved amount will then
be deducted from current rate year rates.
(5) The Division will not allow an
administrative adjustment for the following types of costs:
(a) a cost increase which results from or is
attributable to a hospital's voluntary business decision;
(b) an increase in the cost of doing business
which affects the industry as a whole;
(c) costs incurred to correct Department of
Public Health or JCAHO deficiencies; and
(d) costs which fall within a category
encompassed by an inflation factor.
(6) The following are grounds for an
administrative adjustment provided the criteria set forth in 114. 1 CMR
39.05(2) and 39.05(3) are met:
(a)
Mechanical Error. There has been a mechanical error in
calculating the Inpatient or Outpatient Per Diem Rate approved under 114. 1 CMR
39.00.
(b)
New
Governmental Requirements. Statutory or regulatory requirements of
a governmental unit or federal government have generated a substantial increase
in allowable costs as adjusted pursuant to 114. 1 CMR 39.05. An increase in
existing governmental requirements shall not be considered to be a new
governmental requirement. Documentation shall include written certification or
a copy of an official notice from the governmental unit detailing the new
requirements imposed on the hospital and the verification of the
costs.
(c)
Disaster
Losses. The hospital has incurred disaster losses in excess of
insurance or extraordinary costs related to disaster losses not covered by
outside sources. Documentation shall include verification of loss or
extraordinary cost and the insurance or outside source payment. If, however,
the loss or extraordinary cost is caused by a facility being inadequately
insured according to the standards of the hospital industry, or through
negligence on the part of hospital management, such losses or costs shall not
be approved.
(d)
DON
Operating Costs. A hospital has incurred or expects to incur an
increase in operating costs associated with a major capital expenditure or
substantial change in services which is subject to and has received a
determination of need pursuant to M.G.L. c. 111, §§ 25B through 25G. In its
application, the hospital must segregate the increased costs from other allowed
operating costs and must demonstrate that the increased costs requested are
reasonable. If an approved DON results in increased patient days, those
increased patient days will be added to the Inpatient Per Diem Patient Day
Divisor.
(e)
Wage
Parity. The Commission may allow an administrative adjustment for
costs for reasonable increases in direct care staff salaries and wages in
excess of the amount allowed through inflation. This administrative adjustment
is not to exceed actual rate year expenditures for such increases.
1. Wage relief may be requested for
technicians, nurses, nursing aides, orderlies, attendants, occupational
therapists, speech therapists, recreational therapists, physical therapists,
and respiratory therapists. Any personnel in these categories who are primarily
conducting administrative job duties and are not directly involved with
providing patient care are not eligible for wage relief under this
exception.
2. The adjustment for
reasonable increases in direct care staff salaries and wages is defined as the
reasonable rate year wage rate less the inflated base year wage rate, times the
lesser of the rate year FTE direct care labor force or the base year FTE direct
care labor. The reasonable rate year wage shall be the level of increase
required to attract sufficient staff to ensure minimum quality of care as
determined by the Department of Public Health for current patients. The rate
will be determined by the Commission with reference to average rates prevailing
at other hospitals within the same Medicare labor market region, subject to the
following conditions:
a. Outlier wage rates
as defined by the Commission shall be excluded from the computation;
b. Special weight shall be given to rates
prevailing at non-acute hospitals located in the hospital's Medicare labor
market region; and
c. In no case
shall the reasonable rate year wage rate used in this calculation exceed the
wage rate actually prevailing at hospitals located in the hospital's Medicare
labor market region at the time of application.
d. The determined Medicare Labor Market
Regions and their associated counties are as follows:
|
Medicare Labor Market
Region
|
Counties
|
|
Eastern Mass
|
Bristol
Essex
Middlesex
Norfolk
Plymouth
Suffolk
Worcester
|
|
Berkshire
|
Berkshire
|
|
Springfield
|
Hampden Hampshire
|
|
Barnstable
|
Barnstable
Dukes
Nantucket
|
|
Rural
|
Franklin
|
3. In order to be eligible for this
adjustment, a hospital must demonstrate that it is facing extraordinary
difficulties in the market for direct care staff, as indicated by one or more
of the criteria established in St. 1988, c. 270. These criteria include, but
are not limited to:
a. existence of
significant vacancy rates for a period of time sufficient to jeopardize the
welfare of patients according to Department of Public Health standards, JCAHO
standards or other qualifying guidelines utilized in Massachusetts to ensure
adequate care; and
b. persistent
difficulty in recruitment.
(f)
Case Mix
Intensity. The Division may allow an administrative adjustment for
an increase in inpatient care costs generated by increased care or services
required by a more intensely ill patient population.
1. In order to qualify for an administrative
adjustment for case mix intensity, the hospital must demonstrate a net increase
in Medicaid patient care intensity between the base upon which the rate is
calculated.
2. If the Division
determines that the hospital has demonstrated a net increase in intensity, the
hospital must document the increase in patient care costs resulting from the
higher level of intensity.
(g)
Transfers of
Costs.1. Where a hospital has
reduced or increased costs by the transfer of those costs to or from other
persons or entities which provide health care and services, the Division may
modify the allowable cost pursuant to 114. 1 CMR 39.05(2)(b) to reflect the
change in cost. In order to give effect to a transfer of cost each hospital
must file information concerning cost, volume and revenue 30 days prior to
implementation of a proposed transfer of cost, and must submit any additional
information regarding the transfer of cost which the Division may
require.
2. An increase (transfer
on) or decrease (transfer off) of hospital costs related to persons or entities
which provide hospital care or services, and which change compensation
arrangements from non-hospital based to hospital-based (transfer on) or from
hospital-based to non-hospital based (transfer off). A transfer on of physician
compensation will only be allowed if reasonable.
