NOTICES

Inpatient Hospital Services

[31 Pa.B. 7075]

   This announcement provides final public notice of the Department of Public Welfare's (Department) payment methodology for the period July 1, 2001, through December 31, 2003. The payment methodology affects acute care general hospitals, private psychiatric hospitals, psychiatric units of general hospitals, rehabilitation hospitals and rehabilitation units of general hospitals.

   The Department published a public notice at 31 Pa.B. 2853 (June 2, 2001) which stated that the Department would negotiate with representatives of the hospital industry, the possibility of renewing the existing Hospital Payment Rate Agreement (agreement), which governs the payment methods and standards applicable to hospitals participating in the Medical Assistance Fee-for-Service Program. The agreement was effective July 1, 1999, and expired on June 30, 2001, with regard to disproportionate share and medical education payments. The payment rates under the agreement are in effect through December 31, 2001.

   Although, the Department did not receive any formal comments, the Department has met extensively with representatives of the hospital industry. These negotiation sessions provided a forum for the representatives of the hospital industry to voice their comments and together, the interested parties have reached a consensus on the terms of an agreement.

   The Department will use the basic payment methods set forth in the expired rate agreement as follows:

Base Payment Rates:

   Effective July 1, 2001, there will be no change to a hospital's or unit's base payment rate.

January 1-- June 30, 2002	Effective January 1, 2002, the Department will increase each hospital's or unit's base payment rate by 4%.
July 1-- December 31, 2002	Effective July 1, 2002, the Department will increase each hospital's or unit's base payment rate by 1%.
January 1-- June 30, 2003	Effective January 1, 2003, the Department will increase each hospital's or unit's base payment rate by 3.1%.
July 1-- December 31, 2003	Effective July 1, 2003, the Department will increase each hospital's or unit's base payment rate by 1%.

Inpatient Disproportionate Share; Outpatient Disproportionate Share; and Direct Medical Education Payments:

   *  As provided under the Department's current methods, for all fiscal years of the agreement, the Department will pay eligible hospitals their inpatient and outpatient disproportionate share and direct medical education payments quarterly during the month following the end of the quarter.

   *  The Department will redetermine eligibility for inpatient disproportionate share effective July 1, 2002, using current methods for determining eligibility. Additionally, the Department will retain current eligibility for outpatient disproportionate share and direct medical education and the prospective payment for direct medical education.

   *  FY 2001-2002: Effective July 1, 2001, the aggregate amount of inpatient and outpatient disproportionate share and direct medical education shall be limited to $94.225 million total funds. Effective January 1, 2002, the aggregate amount of inpatient and outpatient disproportionate share and direct medical education shall be limited to $95.167 million total funds. Allocation of these funds between the three programs will be in direct proportion to the distribution of these funds between the three programs under the July 1, 1999 through June 30, 2001, Hospital Rate Agreement or in some other proportion acceptable to the Department.

   *  FY 2002-2003: Effective July 1, 2002, the aggregate amount of inpatient and outpatient disproportionate share and direct medical education payments shall be limited to $98.118 million total funds. Effective July 1, 2002, the aggregate amount of inpatient and outpatient disproportionate share and direct medical education payments shall be limited to $99.099 million total funds. Allocation of these funds between the three programs shall be as determined through the eligibility redetermination process effective July 1, 2002, acceptable to the Department and the industry.

Fiscal Impact

   This change will result in a cost of $12.148 million in total funds ($5.599 million in State funds and $6.548 million in Federal funds) for Fiscal Year 2001-02, a cost of $39.119 million in total funds ($17.945 million in State funds and $21.173 million in Federal funds) for FiscalYear 2002-03 and a cost of $52.512 million in total funds ($24.107 million in State funds and $28.405 million in Federal funds) for the period July 1, 2003, through December 31, 2003.

FEATHER O. HOUSTOUN,   
Secretary

   Fiscal Note:  14-NOT-312. (1) General Fund;

		Med Assist	Med Assist
		Inpatient	Outpatient
(2)	Implementing Year 2001-02 is	$4,915,000	$684,000
(3)	1st Succeeding Year 2002-03 is	$16,874,000	$1,071,000
	2nd Succeeding Year 2003-04 is	$23,036,000	$1,071,000
	3rd Succeeding Year 2004-05 is	$23,036,000	$1,071,000
	4th Succeeding Year 2005-06 is	$23,036,000	$1,071,000
	5th Succeeding Year 2006-07 is	$23,036,000	$1,071,000

		Med Assist	Med Assist
		Inpatient	Outpatient
(4)	2000-01 Program--	$418,707,000	$668,586,000
	1999-00 Program--	$392,528,000	$668,586,000
	1998-99 Program--	$453,594,000	$668,586,000

   (8)  recommends adoption. Funds for these changes were included in the 2001-02 budget.

[Pa.B. Doc. No. 01-2332. Filed for public inspection December 28, 2001, 9:00 a.m.]

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