Pennsylvania Code
Title 55 - HUMAN SERVICES
Part III - MEDICAL ASSISTANCE MANUAL
Chapter 1163 - INPATIENT HOSPITAL SERVICES
Subchapter B - HOSPITALS AND HOSPITAL UNITS UNDER COST REIMBURSEMENT PRINCIPLES
PAYMENT FOR COST REIMBURSED HOSPITAL SERVICES
Section 1163.452 - Payment methods and rates

Universal Citation: 55 PA Code ยง 1163.452

Current through Register Vol. 54, No. 44, November 2, 2024

(a) Subject to the per diem cap on interim and final payment specified in subsection (f), the Department's payment policies relating to interim payments for cost reimbursed services are as follows:

(1) The Department will pay an interim per diem rate for inpatient hospital care provided by freestanding licensed rehabilitation hospitals, general hospital distinct part medical rehabilitation units and distinct part units of general hospitals that are approved by the Department of Health to provide both detoxification and rehabilitation services.

(2) The amount of the Department's interim payment for services provided to each MA recipient per admission will be the hospital's or the unit's interim per diem rate as specified in this section multiplied by the number of compensable days minus payment owed by the recipient, a legally responsible relative or a third-party payor. Medicare Part B payments and other resources available to the patient to meet the cost of inpatient hospital care also are deducted from the interim payment.

(3) For Fiscal Years 1991-92-1994-95, for existing freestanding rehabilitation hospitals and medical rehabilitation units, the Department will determine the interim payment rate as described in subparagraphs (i)-(iv). "Existing" refers to hospitals and units which have submitted an MA cost report covering the 12-month cost reporting period ending June 30, 1988.
(i) The Department will use Fiscal Year 1987-88 as the base year for determining the interim payment rate.

(ii) The Department will use the following inflation factors in the interim rate calculation:
(A) 5.6% from Fiscal Year 1987-88 to 1988-89.

(B) 5.0% from Fiscal Year 1988-89 to 1989-90.

(C) 5.3% from Fiscal Year 1989-90 to 1990-91.

(D) 5.2% from Fiscal Year 1990-91 to 1991-92.

(E) 4.6% from Fiscal Year 1991-92 to 1992-93.

(F) 4.3% from Fiscal Year 1992-93 to 1993-94 to be applied as follows:
(I) Hospitals and units that qualified for a disproportionate share payment other than a supplemental disproportionate share payment for Fiscal Year 1992-93 will receive the 4.3% inflation factor effective July 1, 1993.

(II) Hospitals and units that did not qualify for a disproportionate share payment other than a supplemental disproportionate share payment for Fiscal Year 1992-93 will receive the 4.3% inflation factor effective January 1, 1994.

(G) For Fiscal Year 1994-95, effective January 1, 1995, hospitals and units will receive an inflation factor equal to the prospective payment system type hospital market basket moving average inflation factor published by DRI/McGraw-Hill in the fourth calendar quarter of 1993 for the second calendar quarter of 1995.

(iii) For freestanding rehabilitation hospitals, the Department will determine the interim rate as follows:
(A) The Department will identify the audited MA per diem cost without ceiling adjustments for Fiscal Year 1987-88 and later.

(B) If the audited MA per diem cost for Fiscal Year 1987-88 or thereafter is not available, the Department will use the reported MA per diem cost for Fiscal Year 1987-88 in the calculation.

(C) The Department will inflate each per diem cost identified under clause (A) or (B), as applicable, by the applicable inflation factors in subparagraph (ii).

(D) The Department will establish the interim per diem rate at the lowest of the rates calculated under clause (C).

(iv) For medical rehabilitation units, the Department will determine the interim rate as follows:
(A) The Department will identify audited MA per diem costs without ceiling adjustment for all fiscal years and MA reported per diem costs for unaudited years.

(B) The Department will inflate each per diem identified under clause (A) by the applicable inflation factors in subparagraph (ii).

(C) The Department will establish the interim rate at the lowest of the rates calculated under clause (B).

(4) For Fiscal Years 1991-92-1994-95, for new freestanding rehabilitation hospitals and medical rehabilitation units, the Department will determine the interim payment rate as described in subparagraphs (i)-(iii). "New" refers to facilities which had not completed a 12-month cost report for the period ending June 30, 1988.
(i) For the first fiscal year of operation, the Department will base the interim per diem rate on a projected budget submitted to, and accepted by, the Department for the forthcoming fiscal year.

(ii) For subsequent fiscal years except as provided under subparagraph (iii), the Department will base the interim per diem rate on the projected budget submitted to the Department for the first fiscal year of operation, adjusted for inflation by the applicable inflation factors specified in paragraph (3)(ii).

(iii) When a full fiscal year cost report is submitted to the Department by a new hospital or unit, covered under this paragraph, the interim per diem rate paid by the Department will be based on the full fiscal year reported cost, adjusted for inflation by the applicable inflation factors under paragraph (3)(ii).

(5) The MA Program recognizes only one interim per diem rate for a hospital at one time.

(6) If the patient pay amount plus the insurance payment for hospital care equals or exceeds the hospital's interim per diem rate multiplied by the number of compensable days, the Department will not make payment for the hospital care.

(7) For Fiscal Years 1993-94 to 1994-95, for existing drug and alcohol units, the Department will determine the interim payment rate as described in subparagraphs (i)-(iii). "Existing" refers to hospitals and units which have submitted an MA cost report covering the 12-month cost reporting period ending June 30, 1990.
(i) The Department will identify the following per diem rates for each facility:
(A) The Fiscal Year 1989-90 audited MA per diem cost without ceiling adjustment.

(B) The latest MA final audited per diem payment rate, subsequent to Fiscal Year 1989-90.

(C) The reported MA per diem costs for unaudited Fiscal Years 1989-90 or later.

(ii) The Department will inflate each per diem rate identified under subparagraph (i) to the forthcoming fiscal year by the applicable inflation factors in paragraph (3)(ii).

(iii) The Department will establish the interim rate at the lowest of the per diem rates calculated under subparagraph (ii).

(8) For Fiscal Years 1993-94 and 1994-95, for new drug and alcohol units, the Department will determine the interim payment rate as described in subparagraphs (i)-(iii). "New" refers to units which have not submitted an MA cost report covering the 12-month cost reporting period ending June 30, 1990.
(i) For the first fiscal year, the Department will base the interim per diem rate on a projected budget submitted to, and accepted by, the Department for the forthcoming fiscal year of operation.

(ii) Except as provided under subparagraph (iii), for subsequent fiscal years, the Department will base the interim per diem rate on the projected budget submitted to the Department for the first fiscal year of operation adjusted for inflation by the applicable inflation factors specified in paragraph (3)(ii).

(iii) When a full fiscal year cost report is submitted to the Department for a unit covered under this paragraph, the interim per diem rate paid by the Department will be based on the full fiscal year reported cost adjusted for inflation by the applicable factors under paragraph (3)(ii).

(b) The Department's payment policies relating to cost settlements pertaining to cost reimbursed providers are as follows:

(1) A hospital shall complete form MA 336 (Financial Report for Hospital and Hospital-Health Care Complex Under the Medical Assistance Program of the Department of Human Services, Commonwealth of Pennsylvania) or its successor in accordance with Medicare principles at 42 CFR Part 413 (relating to principles of reasonable cost reimbursement; payment for end-stage renal disease services) and in accordance with the instructions accompanying the cost report.

(2) The hospital shall submit form MA 336 to the Department's Office of Medical Assistance Programs by September 30 of each year. If the cost reimbursed provider participates in Medicare, a completed copy of Form HCFA-2552 (Hospital and Hospital Health Care Complex Cost Report) also shall be submitted by the hospital to the Department as a supplement to form MA 336.

(3) The cost reimbursed provider's cost report shall:
(i) Be prepared using the accrual basis of accounting.

(ii) Cover a fiscal period of 12 consecutive months from July 1 to June 30, except as noted in subparagraph (iv).

(iii) Include information necessary for the proper determination of costs payable under the program, including financial records and statistical data.

(iv) Cover the period from the date of approval for participation in the MA Program to the end of that fiscal year, for a cost reimbursed provider beginning operations during the fiscal year.

(v) Identify separately the costs attributed to each of those units, for distinct part drug and alcohol detoxification/rehabilitation and medical rehabilitation units of general hospitals.

(vi) Be adjusted to remove the costs of direct care by salaried physicians and other salaried practitioners.

(4) For cost reporting periods ending prior to October 1, 1985, if the total amount of the MA payment for interim claims for services rendered by a cost reimbursed provider during the fiscal year exceeds that provider's total audited costs, the Department will notify the provider that an overpayment has occurred. If an overpayment has occurred, the Department offsets the overpayment against the current payments due to the provider unless the provider, within 60 days of the notification of the overpayment, either:
(i) Makes payment in full for the overpayment.

(ii) Makes arrangements for repayment with the Department's Office of the Comptroller and repays the overpayment with 180 days of this arrangement.

(c) Subject to the per diem cap on final payment specified in subsection (f), the Department's payment policies relating to upper limits to final audited payments to cost reimbursed providers are as follows:

(1) Except as specified in paragraphs (2) and (3), the Department will not pay a final audited per diem rate that exceeds the hospital's or the unit's audited per diem rate for the preceding fiscal year multiplied by the applicable inflation factor in subsection (a)(3)(ii). The audited per diem rate ceiling will be calculated to exclude costs excluded under subsection (d).

(2) For Fiscal Years 1991-92-1994-95, for freestanding rehabilitation hospitals and distinct part medical rehabilitation units of general hospitals, the Department will use Fiscal Year 1987-88 as the base year to establish reimbursement ceilings. The Department will use the first complete fiscal year of enrollment as the base year for new hospitals and units. For hospitals and units covered under this paragraph, the Department will calculate reimbursement ceilings by inflating the base year MA audited per diem by the applicable inflation factors in subsection (a)(3)(ii). The Department will establish the final per diem payment rate at the lesser of the facility's audited per diem cost or the reimbursement ceiling. If a facility's audited per diem cost falls below the reimbursement ceiling, its base year will be its lowest cost year.

(3) For Fiscal Year 1993-94-1994-95, for distinct part drug and alcohol units of general hospitals, the Department will use Fiscal Year 1989-90 as the base year to establish reimbursement ceilings. For units which enrolled in the MA Program after July 1, 1989, the Department will use the first complete fiscal year of enrollment as the base year. For units covered under this paragraph, the Department will calculate reimbursement ceilings by inflating the base year MA audited per diem by the applicable inflation factors listed in subsection (a)(3)(ii). The Department will establish the final per diem payment rate at the lesser of the facility's audited per diem cost or reimbursement ceiling. If a facility's audited per diem cost falls below the reimbursement ceiling, its base year will be its lowest cost year.

(4) For a medical rehabilitation unit that is not recognized by Medicare for exclusion after completing the 12-month evaluation period, final payment will be the lesser of the unit's audited per diem rate determined by the Department in accordance with the Department's regulations and Medicare cost reimbursement principles, or the number of allowable MA days for the unit multiplied by a Statewide average of the final per diem rates of enrolled Medicare excluded medical rehabilitation units for the same fiscal year.

(5) Payment for inpatient hospital services, including acute care general hospitals and their distinct part units, private psychiatric hospitals and freestanding rehabilitation hospitals, may not exceed the lower of the amount that would be paid in the aggregate for the services under Medicare principles of reimbursement under 42 CFR Part 413 (relating to principles of reasonable cost reimbursement, payment for end stage renal disease services), or the hospital's customary charges to the general public for the services.

(d) The Department's payment policies relating to costs excluded from upper limits on payments to cost reimbursed providers are as follows:

(1) The Department will exclude certain costs from the final audited per diem rate limits established in subsection (c). To apply for this cost exclusion, a provider shall submit documentation sufficient to enable the Department to verify that the requirements of this section are met. For the purposes of this subsection, "provider" refers to the cost reimbursed hospital or cost reimbursed hospital unit covered under this subchapter, and references to the provider's costs or data refer to the specific costs or data of the cost reimbursed provider.

(2) Costs excluded from the per diem rate limit are:
(i) Increases in a provider's allowable depreciation and interest costs for a fixed asset which was entered in the hospital's fixed asset ledger in the year being audited.

(ii) Costs incurred by a provider which meets the requirements of paragraph (3).

(iii) Costs attributable to a fixed asset project that is:
(A) Subject to review for Certificate of Need approval and approved under 28 Pa. Code Chapter 301 or 401 (relating to limitation on Federal participation for capital expenditures; or Certificate of Need Program).

(B) Related to patient care under Medicare standards.

(3) For cost reimbursed providers to qualify for the cost exclusion in this subsection, the following requirements shall be met:
(i) The provider's rate of increase in overall audited costs shall exceed 15%. This rate of increase is established by comparing the provider's audited costs for the fiscal year for which eligibility for the exclusion is being sought to its audited costs for the preceding fiscal year.

(ii) The provider's rate of increase for allowable depreciation and interest shall exceed its rate of increase for net operating costs. The rate of increase in a provider's net operating costs is established by comparing the provider's audited net operating costs for the fiscal year for which eligibility for the exclusion is being sought to its audited net operating costs for the preceding fiscal year. The rate of increase of a provider's depreciation and interest costs is established as follows:
(A) The provider's allowable audited depreciation and interest costs for the preceding fiscal year are determined, including costs excluded in a preceding fiscal year, under paragraph (2).

(B) The amount allowable under paragraph (2) for the fiscal year being audited is added to the amount determined in clause (A).

(C) The amounts determined in clauses (A) and (B) are compared to determine the rate of increase.

(4) Costs excluded from the limits established in subsection (c) are excluded in subsequent fiscal years, until base year rates are rebased to a period which is either the same as, or is subsequent to, the period of the cost exclusion.

(e) For cost reporting periods ending on or after October 1, 1985, if the total amount of MA payment for interim claims for services during the fiscal year exceeds the total audited costs, the Department will recover the overpaid amount from the provider under § 1101.69(b) (relating to overpayment-underpayment).

(f) For Fiscal Years 1993-94 and 1994-95, the cap on both the interim and final per diem rates for cost reimbursed services will be as set forth in paragraphs (1) and (2). The cap does not apply to services rendered to a recipient who has not attained his first birthday, or in the case of such an individual who is an inpatient on his first birthday until the individual is discharged.

(1) For Fiscal Year 1993-94, $950 inclusive of costs which may be excluded from the upper limits on payment under subsection (d), but exclusive of disproportionate share payments determined under § 1163.459 (relating to disproportionate share payments).

(2) For Fiscal Year 1994-95, $950, adjusted for inflation effective January 1, 1995, by the inflation factor listed in subsection (a)(3)(ii)(G), inclusive of cost which may be excluded from the upper limits on payment under subsection (d), but exclusive of disproportionate share payments determined under § 1163.459.

The provisions of this §1163.452 amended under sections 201 and 443.1(1) of the Public Welfare Code (62 P. S. §§ 201 and 443.1(1)).

This section cited in 55 Pa. Code § 1163.451 (relating to general payment policy); and 55 Pa. Code § 1163.457 (relating to payment policies relating to out-of-State hospitals).

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