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DEPARTMENT OF
HUMAN SERVICES

Supplemental Payments to Qualifying Hospitals

[49 Pa.B. 3543]
[Saturday, July 6, 2019]

 The Department of Human Services (Department) is announcing its intent to allocate annualized funds beginning Fiscal Year (FY) 2019-2020 for supplemental payments to qualifying hospitals located in counties in which a significant percentage of the county's population is enrolled in the Medical Assistance (MA) Program.

Background

 On July 4, 2008, the General Assembly enacted Article VIII-E of the Human Services Code (code) to authorize the City of Philadelphia (City) to impose, by ordinance, a monetary assessment on the non-Medicare net operating revenue of acute care general hospitals located in the City for purposes of assuring access to hospital and emergency department services. See 62 P.S. §§ 801-E—808-E. The City enacted an ordinance implementing a monetary assessment effective January 1, 2009, and the Hospital Assessment Program (Program) has been in place since that time. The Program has generated additional revenues that are used to fund supplemental payments for MA services in the City. The Program has also generated additional funding to support the City's public health clinics.

 The Program is set to expire June 30, 2019. If Article VIII-E is reauthorized and the City reenacts an ordinance continuing the monetary assessment, the Program is expected to generate additional funding to continue support for supplemental MA payments and to support the City's public health clinics and programs. To ensure receipt of federal matching funds for the MA payments made using the Program revenues, the Department submitted a waiver request under 42 CFR 433.68(e) and 433.72 (relating to permissible health care-related taxes; and waiver provisions applicable to health care-related taxes) to the Centers for Medicare & Medicaid Services (CMS). Once the State legislation and City ordinance are enacted and the waiver is approved, the City may impose the assessment in accordance with the code.

Qualifying Criteria

 If the Program is reauthorized, the Department intends to use funds generated from the Program for a new class of supplemental payments to acute care general hospitals located in counties in which a significant percentage of the population is enrolled in the Pennsylvania (PA) MA program.

 A hospital is eligible for these supplemental payments if the hospital meets the following criteria. The sources of information listed in the following criteria shall be utilized in the version available to the Department as of May 21, 2019:

 1) The hospital is an acute care general hospital enrolled in the PA MA program;

 2) The hospital is located in a county in which greater than 40% of the county's population is enrolled in the PA MA program. The percentage of a county's PA MA enrollment is calculated by dividing the number of PA MA beneficiaries in the county (as determined from the Department's March 2019 enrollment data report) by the total county population (as determined from the United States Census Bureau's Annual Estimates of the Resident Population: April 1, 2010, to July 1, 2018);

 3) The hospital does not provide acute care inpatient services to patient populations predominantly under the age of 18. A hospital's patient population is predominantly under the age of 18 if the hospital's number of discharges for ''0—17 Years'' is less than 50% of the hospital's number of ''Total'' discharges. Discharges are determined from the calendar year 2017 PA Department of Health Reports 3-A and 3-B; and,

 4) The hospital's ratio of MA revenue to net patient revenue is greater than 10%. The ratio of MA revenue and net patient revenue is determined from the Pennsylvania Health Care Cost Containment Council's (PHC4) Financial Analysis 2017.

Payment Methodology

 A qualifying hospital's initial payment amount is calculated by utilizing hospital data from the FY 2015-2016 MA-336 Hospital Cost Report on file with the Departmentas of June 5, 2018, except as otherwise specified. For each qualifying hospital, the Department will calculate an initial payment amount as follows:

 a) The hospital's total MA Fee-for-Service (FFS) inpatient acute care days are divided by the total MA FFS inpatient acute care days for all qualifying hospitals to calculate the initial payment ratio;

 b) The hospital's initial payment ratio, as calculated in subsection a), is then multiplied by the amount of funds allocated for these payments to calculate the hospital's unadjusted initial payment amount; and,

 c) The hospital's unadjusted initial payment amount, as calculated in subsection b), is then limited to a percentage of the hospital's net inpatient revenue (NIR) as follows:

 (i) for qualifying hospitals with both an operating margin of less than negative 5% and a combined MA and Medicare revenue amount greater than 66%, a limit of 4.5% of the hospital's NIR is applied. The operating margin, MA revenues and Medicare revenues are determined from the PHC4s Financial Analysis 2017;

 (ii) for qualifying hospitals that do not meet the criteria in subsection c)(i) but provided greater than 10,000 MA FFS inpatient acute care days, a limit of 2.5% of the hospital's NIR is applied; or,

 (iii) for all other qualifying hospitals that do not meet the criteria in subsections c)(i) or c)(ii), a limit of 1.5% of the hospital's NIR is applied.

 If, after calculating the initial payment amounts, funds remain from the total funds allocated for the fiscal year for these payments, the Department will add to the initial payment amount, payment amounts for qualifying hospitals whose initial payment amounts were less than their hospital-specific payment limitations, as calculated in subsection c). Subsequent payment amounts are calculated as follows:

 1) The hospital's total MA FFS inpatient acute care days are divided by the total MA FFS inpatient acute care days of all qualifying hospitals that have not met their hospital-specific payment limitation, as calculated in subsection c), to calculate a subsequent payment ratio for the hospital;

 2) The hospital's subsequent payment ratio, as calculated in subsection 1), is then multiplied by the remaining allocated funds to calculate the hospital's subsequent payment amount;

 3) The hospital's subsequent payment amount, as calculated in subsection 2), is then added to the initial payment amount. This increased payment amount is subject to the hospital's hospital-specific payment limitation, as calculated in subsection c); and,

 4) This methodology is applied until either all funds allocated for the fiscal year for these supplemental payments are allocated to qualifying hospitals, or all qualifying hospitals have reached their hospital-specific payment limitation, as calculated in subsection c).

 The hospital supplemental payment includes the initial and subsequent payment amounts. In no case will the supplemental payments for a hospital exceed the hospital's hospital-specific payment limitation, as calculated in subsection c), in a single fiscal year.

Fiscal Impact

 Beginning with FY 2019-2020, the Department will allocate an annualized amount of $95.309 million in total funds for these supplemental payments upon approval by CMS.

Public Comment

 Interested persons are invited to submit written comments regarding the proposed supplemental payment to the Department of Human Services, Office of Medical Assistance Programs, c/o Regulations Coordinator, Room 515, Health and Welfare Building, Harrisburg, PA 17120. The Department will review and consider comments received within 30 days in determining the final payment methodology for these payments.

 Persons with a disability who require an auxiliary aid or service may submit comments using the Pennsylvania AT&T Relay Service at (800) 654-5984 (TDD users) or (800) 654-5988 (voice users).

TERESA D. MILLER, 
Secretary

Fiscal Note: 14-NOT-1349. (1) General Fund; (2) Implementing Year 2018-19 is $0; (3) 1st Succeeding Year 2019-20 is $26,696,000; 2nd Succeeding Year 2020-21 through 5th Succeeding Year 2023-24 are $27,201,000; (4) 2017-18 Program—$477,690,000; 2016-17 Program—$450,970,000; 2015-16 Program—$392,918,000; (7) MA—FFS; (8) recommends adoption. Funds have been included in the budget to cover this increase.

[Pa.B. Doc. No. 19-1031. Filed for public inspection July 5, 2019, 9:00 a.m.]



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