RULES AND REGULATIONS
Title 55--PUBLIC WELFARE
DEPARTMENT OF PUBLIC WELFARE
[55 PA. CODE CH. 1163]
Inpatient Hospital Services
[37 Pa.B. 4065]
[Saturday, July 28, 2007]The Department of Public Welfare (Department), under sections 201 and 443.1 of the Public Welfare Code (code) (62 P. S. §§ 201 and 443.1), amends Chapter 1163 (relating to inpatient hospital services) to read as set forth in Annex A.
Omission of Proposed Rulemaking
The Department is omitting notice of proposed rulemaking in accordance with section 204(1)(iv) and (3) of the act of July 31, 1968 (P. L. 769, No. 240) (45 P. S. § 1204(1)(iv) and (3)), known as the Commonwealth Documents Law (CDL), and 1 Pa. Code § 7.4(1)(iv) and (3) because:
* The Department finds that publication of these amendments as proposed rulemaking is contrary to the public interest. The primary purpose of these amendments is to limit the Department's payment of Medicare cost-sharing amounts for inpatient hospital services rendered to dual eligible Medical Assistance (MA) recipients. This final-omitted rulemaking will enable the Department to both realize substantial cost-savings and to make its Medicare cost-sharing payment policies uniform for all providers and services.
* The Department finds that notice of proposed rulemaking is, under the circumstances, impracticable and unnecessary. The Department has engaged in public outreach through which the Department has already notified affected parties of the promulgation of these amendments, and has solicited and received input from the hospital industry and other interested persons. The Department has given careful consideration to this public input in developing this final-omitted rulemaking. The Department believes that publishing notice of proposed rulemaking is not likely to result in additional comments that are substantially different than those already received and considered in developing the regulations.
* This final-omitted rulemaking relates to reimbursement for inpatient hospital services under the MA Program, which is a Commonwealth grant or benefit.
Purpose
The purpose of this final-omitted rulemaking is to limit the Department's payment of Medicare cost-sharing amounts for inpatient hospital services rendered to dual eligible MA recipients in the same manner as the Department's payments of Medicare cost-sharing payments for all other services.
Background
Under the Medicare Program, Medicare beneficiaries receive coverage of inpatient hospital services, skilled nursing facility services and hospice services through Medicare Part A, and coverage of physician services, hospital outpatient services and certain other outpatient services through Medicare Part B. Medicare beneficiaries participate in the costs of both their Medicare Part A and Part B services by paying deductibles and coinsurance payments. These payments are generally referred to as ''cost-sharing.''
Some Medicare beneficiaries are also eligible for MA under the Commonwealth's MA Program. Other Medicare beneficiaries, known as Qualified Medicare Beneficiaries (QMBs), are not eligible for the full scope of MA benefits but, because of their income, cannot afford to pay Medicare cost-sharing payments. Under Federal law, the Department has paid Medicare cost-sharing amounts for both dual eligible recipients and QMBs; however, historically those payments were subject to certain conditions. Immediately prior to 1994, the Department paid Medicare cost-sharing amounts only if the applicable MA fee or payment for the service exceeded the Medicare payment amount received by the provider. In these instances, the Department reimbursed Medicare cost-sharing amounts up to the difference between the MA fee or payment and the Medicare payment amount. For example, if the Medicare approved payment amount for a service equaled $100 and the beneficiary's Medicare coinsurance amount equaled 20% or $20, the provider would receive payment of $80 from Medicare. If the MA fee for the same service equaled $90, the Department would pay $10 of the $20 coinsurance.
In 1994, the United States Court of Appeals for the Third Circuit ruled in Pennsylvania Medical Society v. Snider, 29 F.3d 886 (3rd Cir. 1994) (PMS) that the Department was obligated to pay providers for the full cost sharing amounts, including coinsurance and deductibles, for QMBs. The Department amended the Commonwealth's Title XIX State Plan and its payment policies to comply with the Court's ruling. The Department, however, made no change in its regulations. To the extent the regulations prescribed cost-sharing payment different than Federal law, as construed by the Third Circuit in PMS, the Department considered the regulations superseded.
Thereafter, Congress amended section 1902(n)(2) of the Social Security Act (42 U.S.C.A. § 1396a(n)(2)), regarding State plans for MA, as part of the Balance Budget Act of 1997 (BBA) (Pub.L. No. 105-33, § 4714(a)), to state, in pertinent part, that:
[A] State is not required to provide any payment for any expenses incurred relating to payment for deductibles, coinsurance, or copayments for Medicare cost-sharing to the extent that payment under title XVIII for the service would exceed the payment amount that otherwise would be made under the State plan under this [title XIX] for such service if provided to an eligible recipient other than a Medicare beneficiary.The BBA authorized, but did not require, states to limit payments for cost-sharing amounts as the Department had prior to PMS. Following enactment of the BBA, the Department took the necessary steps, including the submission of a new State plan amendment (SPA 97-08), to reinstate the payment policies that had been amended following PMS. Because the Department had not amended its regulations as a result of PMS, the Department did not issue new regulations or amendments to its regulations in response to the BBA.
Although SPA 97-08 amended those portions of the State Plan that had been changed after PMS, it did not amend the methods and standards for establishing payment rates for inpatient hospital services set forth in the Commonwealth's approved Title XIX State Plan. Nor did it alter the manner in which MA payments for these services are calculated under the Department's regulations, including payments relating to inpatient services to dual eligible recipients and QMBs. Rather, the SPA indicated that MA fees and payments would be determined and limited in accordance with the provisions of the State Plan and implementing Department regulations for the service.
Since 1984, § 1163.66 (relating to third-party liability) has specified a different MA payment for Medicare cost-sharing amounts for inpatient hospital services than other services. Instead of comparing the Medicare payment received by the provider with the applicable MA payment, § 1163.66 requires a comparison of the Medicare cost-sharing amount with the applicable MA diagnosis related group (DRG) payment for the hospitalization and, if less, provides for a payment up to the DRG amount less other resources available for the inpatient services. If the previous example involved inpatient hospital services, and the beneficiary had no other third party resources, the MA payment under § 1163.66 would be $20. Now, the Department has determined that it is appropriate to amend its regulations to limit cost-sharing payments for inpatient services to conform its payment policies to those used for all other services.
Requirements
This final-omitted rulemaking amends § 1163.66 to limit MA payment of cost sharing amounts for inpatient hospital services to hospital inpatients who are MA recipients covered on a primary basis by Medicare Part A. As a result of the final-omitted rulemaking, the Department will make an MA payment for Medicare cost-sharing amounts only if the applicable DRG payment, including an outlier payment, for the hospitalization exceeds the Medicare payment amount received by the provider. In these instances, the Department will reimburse Medicare cost-sharing amounts up to the difference between the applicable DRG payment, including an outlier payment, and the Medicare payment amount. The total MA payment combined with the amount paid by Medicare Part A, exclusive of cost-sharing, and amounts paid by other available resources will be no greater than the applicable DRG payment amount, including an outlier payment, that would be made under the Department's DRG regulations and approved State Plan for inpatient hospital services if the MA recipient were not also eligible for coverage under Medicare Part A. As further limitations, no co-payment or deductible, if any, will be paid in excess of the applicable DRG or per diem amounts that would be due under the fee-for-service MA Program or in excess of the maximum cost-sharing amounts. This requirement will apply to inpatient hospital services with discharge dates on or after July 1, 2007.
Affected Individuals and Organizations
Acute care general hospitals enrolled as providers in the MA Program will be affected by this final-omitted rulemaking.
Accomplishments and Benefits
Adoption of these amendments by final-omitted rulemaking will enable the Department to both realize substantial cost-savings and to make its Medicare cost-sharing payment policies uniform for all providers and services.
Fiscal Impact
The amended payment policies for inpatient hospital services rendered to dual eligible MA recipients will result in reduced payments to hospitals enrolled in the MA Program. The Commonwealth anticipates savings of $30 million ($13.753 million in State funds) in Fiscal Year 2007-2008 as the result of this final-omitted rulemaking.
Public Comment
Although this regulation is being adopted without publication as proposed rulemaking, interested persons are invited to submit written comments, suggestions or objections to the Department of Public Welfare, Office of Medical Assistance Programs, Attention: Regulations Coordinator, c/o Deputy Secretary's Office, Room 515, Health and Welfare Building, Harrisburg, PA 17102. Comments will be reviewed and considered for subsequent revision of the regulation.
Persons with a disability who require an auxiliary aid or service may submit comments by using the AT&T Relay Service at (800) 654-5984 (TDD users) or (800) 654-5988 (voice users).
Regulatory Review Act
Under section 5.1(c) of the Regulatory Review Act (71 P. S. § 745.5a(c)), on June 5, 2007, the Department submitted a copy of the final-omitted rulemaking and a copy of a Regulatory Analysis Form to the Independent Regulatory Review Commission (IRRC) and to the Chairpersons of the House Committee on Health and Human Services and the Senate Committee on Public Health and Welfare. On the same date, the regulation was submitted to the Office of Attorney General for review and approval under the Commonwealth Attorneys Act (71 P. S. §§ 732-101--732-506).
Under section 5.1(j.1) and (j.2) of the Regulatory Review Act, on June 25, 2007, the final-omitted rulemaking was deemed approved by the House and Senate Committees. Under section 5.1(e) of the Regulatory Review Act, IRRC met on July 19, 2007, and approved the final-omitted rulemaking.
Findings
The Department finds that:
(1) Notice of proposed rulemaking is omitted in accordance with section 204(1)(iv) and (3) of the CDL and 1 Pa. Code § 7.4(1)(iv) and (3) because this rulemaking relates to Commonwealth grants and benefits.
(2) The adoption of this regulation in the manner provided by this order is necessary and appropriate for the administration and enforcement of the code.
(3) A delay in the effective date of this rulemaking would be impracticable, unnecessary and contrary to the public interest since it would significantly reduce the cost-savings associated with this change and would continue to maintain a disparate payment policy for inpatient hospital providers.
Order
The Department, acting under sections 201 and 443.1 of the code, orders that:
(a) The regulations of the Department, 55 Pa. Code Chaper 1163, are amended by amending § 1163.66 to read as set forth in Annex A.
(b) The Secretary of the Department shall submit this order and Annex A to the Offices of General Counsel and Attorney General for approval as to legality and form as required by law.
(c) The Secretary of the Department shall certify and deposit this order and Annex A with the Legislative Reference Bureau as required by law.
(d) This order shall take effect immediately and apply to inpatient hospital services with discharge dates on or after July 1, 2007.
ESTELLE B. RICHMAN,
Secretary(Editor's Note: For the text of the order of the Independent Regulatory Review Commission, relating to this document, see 37 Pa.B. 4153 (July 28, 2007).)
Fiscal Note: 14-511. No fiscal impact; (8) recommends adoption.
Annex A
TITLE 55. PUBLIC WELFARE
PART III. MEDICAL ASSISTANCE MANUAL
CHAPTER 1163. INPATIENT HOSPITAL SERVICES
Subchapter A. ACUTE CARE GENERAL HOSPITALS UNDER THE PROSPECTIVE PAYMENT SYSTEM
PAYMENT FOR HOSPITAL SERVICES § 1163.66. Third-party liability.
(a) Hospitals shall utilize the available third-party resources for services a recipient receives while in the hospital. Medicare lifetime reserve days are considered available resources.
(b) If expected payment by a third party resource is not realized, the hospital may bill the MA Program.
(c) If the hospital receives reimbursement from a third-party subsequent to payment from the Department, the hospital shall repay the Department by submitting a claim adjustment.
(d) If a recipient or the legal representative of a recipient requests a copy of the hospital invoice, the hospital shall submit a copy of the invoice and the request to the Bureau of Claim Settlement, MA Recovery Unit, at the address specified in the Provider Handbook. The Bureau of Claim Settlement will forward the requested copy to the requestor and take follow-up action necessary to ensure the repayment of MA expenditures.
(e) For a hospitalization with a discharge date on or after July 1, 2007, if a recipient is entitled to Medicare Part A benefits, the Department will not pay any deductible and coinsurance amounts if the Medicare payment exceeds the applicable DRG payment, including any outlier payments. If the Medicare payment is less than the applicable DRG payment including any outlier payments, the Department pays Medicare deductible and coinsurance amounts to the extent that the Department's payment, the Medicare payment and any other resources available to the recipient for the hospital inpatient care combined do not exceed the applicable DRG payment, including any outlier payments. The Department will not pay more than the maximum deductible and coinsurance amounts.
(f) Except as specified in subsection (g), if a recipient is entitled to hospital insurance benefits other than Medicare Part A, the Department will pay the applicable DRG payment rate minus the insurer's liability amount and other resources available to the recipient for hospital care, including any Medicare Part B payment.
(g) If the resources available to a recipient for inpatient hospital care equal or exceed the Department's applicable DRG payment rate, the Department will make no payment for the hospital care.
(h) The hospital shall utilize resources available through Medicare Part B for those services provided in the hospital that are covered and approved for payment by Medicare.
[Pa.B. Doc. No. 07-1344. Filed for public inspection July 27, 2007, 9:00 a.m.]
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