205.6406 Hospital rate improvement programs -- Calculation and payment of
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/ky/205-6406A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
assessment on hospitals to provide state matching dollars for federal Medicaid
funds -- Supplemental payments to hospitals -- Federal participation and
approval required for implementation of programs -- Modification upon
approval of supplemental payment formula -- Program to increase outpatient
reimbursement.
(1)To the extent allowable under federal law, the department shall develop the
following programs to increase Medicaid reimbursement for inpatient and
outpatient hospital services provided by a qualifying hospital to Medicaid
recipients:
(a)A program to increase inpatient reimbursement to qualifying hospitals within
the Medicaid fee-for-service program in an aggregate amount equivalent to
the UPL gap;
(b)A program to increase inpatient reimbursement to qualifying hospitals within
the Medicaid managed care program in an aggregate amount equivalent to the
managed care gap for inpatient services; and
(c)A program to increase outpatient reimbursement to qualifying hospitals within
the Medicaid managed care program in an aggregate amount equivalent to the
managed care gap for outpatient services.
(2)On an annual basis prior to the start of each program year, the department shall
determine:
(a)The maximum allowable UPL for inpatient services provided in the Kentucky
Medicaid fee-for-service program;
(b)The fee-for-service UPL gap for applicable ownership groups;
(c)A per discharge uniform add-on amount to be applied to Medicaid fee-for-
service discharges at qualifying hospitals for that program year, determined
by dividing the UPL gap for the applicable ownership group by total fee-for-
service hospital inpatient discharges at qualifying hospitals in the data used to
calculate the UPL gap. Claims for discharges that already receive an enhanced
rate at qualifying hospitals that also are classified as a pediatric teaching
hospital or as a psychiatric access hospital shall be excluded from the
calculation of the per discharge uniform add-on, unless the department is
required to include these claims to obtain federal approval;
(d)The maximum managed care gap for inpatient services;
(e)A per discharge uniform add-on amount to be applied to Medicaid managed
care discharges at qualifying hospitals for that program year in an amount that
is calculated by dividing the managed care gap for inpatient services by total
managed care in-state qualifying hospital inpatient discharges in the data used
to calculate the managed care gap. Claims for discharges that already receive
an enhanced rate at qualifying hospitals that also are classified as a pediatric
teaching hospital or as a psychiatric access hospital shall be excluded from the
calculation of the per discharge uniform add-on, unless the department is
required to include these claims to obtain federal approval;
(f)The maximum managed care gap for outpatient services; and
(g)A uniform add-on amount to be paid to each qualifying hospital to supplement
Medicaid managed care payments for outpatient services performed by the
qualifying hospital in a program year. The uniform add-on amount payable to
each qualifying hospital shall be:
1. A uniform percentage increase calculated by dividing the managed care
gap for outpatient services by the total payments from managed care to
in-state qualifying hospitals for outpatient services taken from the data
used to calculate the managed care gap for outpatient services unless a
different method for calculating the uniform add-on amount is required
by the Centers for Medicare and Medicaid Services; and
2. Made as a lump-sum payment to each qualifying hospital on a quarterly
basis unless a different method for paying qualifying hospitals the
uniform add-on amount is required by the Centers for Medicare and
Medicaid Services.
At least thirty
(30)days prior to the beginning of each program year, the department
shall provide each qualifying hospital the opportunity to verify the base data to be
utilized in both the fee-for-service and managed care gap calculations for both
inpatient and outpatient services, with data sources and methodologies identified.
(3)On a quarterly basis in the program year, the department shall:
(a)Calculate a fee-for-service quarterly supplemental payment for each
qualifying hospital using fee-for-service claims for inpatient discharges paid
in the quarter to the qualifying hospital multiplied by the uniform add-on
amount determined in subsection (2)(c) of this section;
(b)Calculate a managed care quarterly supplemental payment for each qualifying
hospital to be paid by each managed care organization using managed care
encounter claims for inpatient discharges received in the quarter multiplied by
the uniform add-on amount determined in subsection (2)(e) of this section;
(c)Calculate a managed care quarterly supplemental payment for each qualifying
hospital to be paid by each managed care organization as determined in
subsection (2)(g) of this section;
(d)Make the quarterly supplemental payment calculated under paragraph
(a)of
this subsection;
(e)Provide each managed care organization with a listing of the supplemental
payments as calculated under paragraphs
(b)and
(c)of this subsection to be
paid by each managed care organization to each qualifying hospital for both
inpatient and outpatient services;
(f)Provide each managed care organization with a supplemental capitation
payment to cover the managed care organization's quarterly supplemental
payments to be paid to qualifying hospitals for both inpatient and outpatient
services in the quarter;
(g)Determine the amount of state funds necessary to obtain federal matching
funds that equal the total quarterly supplemental payments to be paid to all
qualifying hospitals in both the fee-for-service and the Medicaid managed
care programs authorized by this section;
(h)For purposes of the inpatient program authorized by subsection (1)(b) of this
section, determine a per discharge hospital inpatient assessment for the
quarter for each qualifying hospital, which shall be calculated by first
applying towards the state share determined under paragraph
(g)of this
subsection the qualifying hospital disproportionate share percentage of the
excess disproportionate share taxes and then dividing the remaining state
share by the total discharges reported by all in-state qualifying hospitals on
the Medicare cost report filed by those qualifying hospitals in the calendar
year two
(2)years prior to the program year;
(i)Determine each qualifying hospital's quarterly inpatient assessment by
multiplying the assessment established in paragraph
(h)of this subsection by
the hospital's total discharges from the qualifying hospital's Medicare cost
report filed in the calendar year two
(2)years prior to the program year;
(j)For purposes of the outpatient program authorized by subsection (1)(c) of this
section, determine each qualifying hospital's assessment to be contributed to
the state's share of this outpatient program as calculated under paragraph
of this subsection. Each qualifying hospital's outpatient assessment shall be a
percentage of the state share calculated as the qualifying hospital's total
outpatient net revenue divided by the total outpatient net revenue of all
qualifying hospitals on the Medicare cost reports filed in the calendar year
two
(2)years prior to the program year;
(k)Determine each qualifying hospital's quarterly outpatient assessment by
multiplying the outpatient portion of the assessment established in paragraph
(g)of this subsection by the hospital's percentage established in paragraph
of this subsection; and
(l)Provide each qualifying hospital with a notice sent on the same day as the
distribution to managed care organizations of the supplemental capitation
payments pursuant to paragraph
(f)of this subsection, of the qualifying
hospital's quarterly assessment, that shall state the total amount due from the
assessment, the date assessment is due, the total number of inpatient paid
claims and total outpatient payments used to calculate the qualifying hospital's
quarterly supplemental distribution, and the amount of quarterly supplemental
distribution payments for inpatient and outpatient services due to be received
by the qualifying hospital from the department and each Medicaid managed
care organization.
(4)In calculating the quarterly supplemental payments under subsection (3)(a), (b), and
(c)of this section for qualifying hospitals that are also classified as a pediatric
teaching hospital or as a psychiatric access hospital, no add-on shall be applied to
the paid claims for the services for which that hospital also receives supplemental
payments pursuant to state plan methodologies and managed care contracts in effect
on January 1, 2019.
(5)Each qualifying hospital shall receive four
(4)quarterly supplemental payments in
the program year, as determined under subsection
(3)of this section.
(6)Medicaid managed care organizations shall pay the supplemental payments to
qualifying hospitals within five
(5)business days of receiving the supplemental
capitation payment from the department.
(7)A qualifying hospital shall pay its quarterly assessment no later than fifteen
days from the date the qualifying hospital is notified of the assessment from the
department. A non-state government-owned hospital may make payment of its
assessment through an intergovernmental transfer. The department may delay or
withhold a portion of the supplemental payment if a hospital is delinquent in its
payment of a quarterly assessment.
(8)The department shall complete the actions required under subsection
(3)of this
section expeditiously and within the same quarter as all required information is
received.
(9)Qualifying hospitals may notify the department of errors in the data used to make a
quarterly supplemental payment by providing documentation within thirty
(30)days
of receipt of a quarterly supplemental payment from a Medicaid managed care
organization. If the department agrees that an error occurred in a qualifying
hospital's quarterly supplemental payment, the department shall reconcile the
payment error through an adjustment in the qualifying hospital's next quarterly
supplemental payment.
(10)The programs in this section shall not be implemented if federal financial
participation is not available or if the provider tax waiver is not approved. A
qualifying hospital shall have no obligation to pay an assessment if any federal
agency determines that federal financial participation is not available for any
assessment. Any assessments received by the department that cannot be matched
with federal funds shall be returned pro rata to the qualified hospitals that paid the
assessments.
(11)The department may implement the hospital rate improvement programs only if
Medicaid state plan amendments required for federal financial participation are
approved by the United States Centers for Medicare and Medicaid Services.
(12)The assessment authorized under KRS 205.6405 to 205.6408 shall be restricted for
use to accomplish the inpatient and outpatient reimbursement increases established
under this section. The Commonwealth shall not maintain or revert funds received
under KRS 205.6405 to 205.6408 to the state general fund, except that the
department may receive two hundred fifty thousand dollars ($250,000) in state
funds each program year to administer the programs. The department shall not
establish Medicaid fee-for-service rate-setting methodology changes that result in
rate reductions from policies in effect as of October 1, 2018, for acute care hospitals
and July 1, 2019, for hospitals paid on a per diem basis.
(13)The department shall promulgate administrative regulations to implement the
provisions of KRS 205.6405 to 205.6408.
(14)If the department submits, and the United States Centers for Medicare and
Medicaid Services
(CMS)approves, a supplemental payment formula that permits
the managed care gap to be calculated based upon a percentage of average
commercial rates
(ACR)that results in a total annual supplemental payment greater
than eighty percent (80%) of ACR for both inpatient and outpatient services,
instead of the Medicare upper payment limit, then the hospital rate improvement
programs for qualifying hospitals shall be modified as follows:
(a)The amount of funds the department may receive to administer the programs
as stated in subsection
(12)of this section shall be replaced by an
administrative fee that shall be calculated to be an amount equal to four
percent (4%) of the assessment collected under this section. The
administrative fee payable under this paragraph shall accrue only for
supplemental payments attributable to state fiscal year 2021-2022 and for
state fiscal years thereafter so long as CMS approves the supplemental
payment formula in accordance with this subsection. The administrative fee
shall be paid within thirty
(30)days after supplemental payments for inpatient
and outpatient services are issued to qualifying hospitals; and
(b)The department shall not be required under KRS 205.6408 to transfer any
excess disproportionate share taxes to the hospital Medicaid assessment fund
for use as state matching dollars for the payments made under this section.
(15)To the extent federal matching funds are available, the department may create a
program to increase outpatient reimbursement to qualifying hospitals within the
Medicaid fee-for-service program in an aggregate amount equivalent to the UPL
gap.