NOTICES
DEPARTMENT OF
HUMAN SERVICES
Disproportionate Share Payments and Supplemental Payments to Qualifying Hospitals
[54 Pa.B. 3848]
[Saturday, July 6, 2024]The Department of Human Services (Department) is announcing its intent to allocate funds in Fiscal Year (FY) 2024-2025 to establish new classes of supplemental payments to qualifying hospitals. The Department is also announcing its intent to discontinue certain disproportionate share hospital (DSH) payments and supplemental payments.
Background
On July 4, 2008, the General Assembly enacted Article VIII-E of the Human Services Code (Code) (62 P.S. §§ 801-E—808-E) 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 generated additional revenues that are used to fund increased payments for Medical Assistance (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, 2024.
Discussion
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 support Medicaid payments. To ensure receipt of Federal matching funds for the Medicaid payments made using the Program revenues, the Department will submit 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.
If the Program is reauthorized, the Department intends to use funds generated from the Program for Medicaid Supplemental payments to acute care general hospitals located in a city of the first class as follows:
Inpatient Supplemental Payment for Qualifying Cancer Hospitals
The Department intends to establish a new supplemental payment program to qualifying acute care hospitals that are freestanding cancer treatment hospitals. A hospital is eligible for this supplemental payment if the hospital meets all of the following criteria:
a) The hospital is enrolled in the Pennsylvania (PA) MA Program as a general acute care hospital.
b) The hospital is licensed by the Department of Health (DOH) as of February 1, 2024.
c) The hospital is a Medicare Prospective Payment System-Exempt Cancer Hospital as of February 22, 2024.
d) The hospital is located in a city of the first class (as defined in the Pennsylvania Manual (Volume 124)).
Payments will be divided proportionately among qualified hospitals based on each hospital's fee-for-service (FFS) PA MA inpatient acute care days to total FFS PA MA inpatient acute care days for all qualifying hospitals as reported on the FY 2021-2022 MA-336 Medicaid Hospital Cost Report (available to the Department as of December 11, 2023).
Beginning with FY 2024-2025, the Department will allocate an annualized amount of $7.500 million in total funds (State and Federal) for these supplemental payments, upon approval by CMS.
Inpatient Supplemental Payment for Qualifying Children's Hospitals
The Department intends to establish a new supplemental payment for children's hospitals located in a city of the first class. A hospital is eligible for this additional class of supplemental payments if the hospital meets all of the following criteria:
a) The hospital is enrolled in the PA MA Program as an acute care hospital, licensed by the DOH.
b) The hospital provides acute care inpatient services to patient populations predominately under 18 years of age. A hospital's patient population is predominately under 18 years of age if the hospital's number of discharges for ''0—17 Years'' is greater than 50% of the hospital's number of ''Total'' discharges. Discharges are determined from the calendar year 2022 DOH Reports 3-A and 3-B.
c) The hospital is located in a city of the first class (as defined in the Pennsylvania Manual (Volume 124)).
The Department will calculate annual payment amounts for each qualifying hospital according to the methodology as follows. Unless otherwise stated, the source of the information is the FY 2018-2019 MA-336 Hospital Cost Report, as available to the Department on June 22, 2021.
1) $300,000 will be divided equally among qualifying hospitals.
2) A per diem payment equal to $757.33 multiplied by number of Total MA FFS acute days.
3) The annual amount for qualifying hospitals is equal to the amount calculated in 1) plus the amount calculated in 2).
For FY 2024-2025, the Department will allocate an annualized amount of $23.661 million in total funds (State and Federal) for these supplemental payments, upon approval by CMS.
Inpatient Supplemental Payment for Qualifying Hospitals with High Birth Rate
The Department intends to establish a new supplemental payment for hospitals with high birth rates located in a city of the first class. A hospital is eligible for this additional class of supplemental payments if the hospital meets all criteria as follows. Unless otherwise stated, the source of information is from the FY 2018-2019 MA-336 Hospital Cost Report on file with the Department as of June 22, 2021.
a) The hospital is located in a city of the first class (as defined in the Pennsylvania Manual (Volume 124)) and is enrolled in the PA MA Program as an acute care general hospital, licensed by the DOH.
b) The hospital reported at least 50,000 PA MA inpatient days (FFS and managed care combined).
c) The hospital reported at least 4,000 live births for the period January 1, 2022, to December 31, 2022, according to utilization data available from the DOH as of February 22, 2024.
Payments will be divided proportionately among qualified hospitals based on each hospital's FFS PA MA IP acute care days to total FFS PA MA IP acute care days for all qualifying hospitals.
For FY 2024-2025, the Department will allocate an annualized amount of $6.245 million in total funds (State and Federal) for these supplemental payments, upon approval by CMS.
Inpatient Supplemental Payment for Qualifying Hospitals with Low-Commercial Payer Rate and over 450 available Acute Care Beds
The Department intends to establish a new supplemental payment for hospitals located in a city of the first class that have a low-commercial payer rate. The Department will make supplemental payments to qualifying hospitals with greater than the Statewide average of uncompensated care, Medicare share of net patient revenue (NPR) and MA share of NPR.
A hospital is eligible for this additional class of supplemental payments if the hospital meets all criteria as follows. Unless otherwise stated, the source of information is from the Pennsylvania Health Care Cost Containment Council's (PHC4) Financial Analysis 2022 (Volume 1).
a) The hospital is located in a city of the first class (as defined in the Pennsylvania Manual (Volume 124)) and enrolled in the PA MA Program as an acute care general hospital, licensed by the DOH.
b) The hospital has at least 450 acute care beds available according to the FY 2018-2019 MA-336 Hospital Cost Report on file with the Department as of June 22, 2021.
c) The hospital's percent of uncompensated care FY 2022 is greater than the Statewide percent of uncompensated care for FY 2022.
d) The hospital's Medicare share of NPR FY 2022 is greater than the Statewide Medicare share of NPR for FY 2022.
e) The hospital's MA share of NPR FY 2022 is greater than the Statewide MA share of NPR for FY 2022.
Payments will be divided proportionately among qualified hospitals based on each hospital's FFS PA MA inpatient acute care days to total FFS PA MA inpatient acute care days for all qualifying hospitals as reported on the FY 2018-2019 MA-336 Hospital Cost Report on file with the Department as of June 22, 2021.
For FY 2024-2025, the Department will allocate an annualized amount of $7.292 million in total funds (State and Federal) for these supplemental payments, upon approval by CMS.
Inpatient Supplemental Payment for Qualifying Hospitals with Low-Commercial Payer Rate and Negative Trend
The Department intends to establish a new supplemental payment for qualifying acute-care general hospitals enrolled in the PA MA Program that have a low commercial-payer ratio, a negative trend in their NPR and are located in an area of the Commonwealth with a disproportionate need for MA services.
A hospital is eligible for this additional class of supplemental payments if the hospital meets all criteria listed as follows. Unless otherwise stated, the source of information is the FY 2018-2019 MA-336 Hospital Cost Report available to the Department as of June 22, 2021.
a) The hospital is an acute care general hospital enrolled in the PA MA Program.
b) The hospital is located in a city of the first class, (as defined in the Pennsylvania Manual (Volume 124)).
c) The hospital's 3-year average change in NPR for FYs 2019—2022 is negative according to PHC4's FY 2022 Financial Analysis.
d) The hospital's commercial payer ratio, defined as 100% minus the hospital's Medicare share of NPR for FY 2022 (expressed as a percent) minus the hospital's MA share of NPR for FY 2022 (expressed as a percent), is less than 25%, according to PHC4's FY 2022 Financial Analysis.
e) The hospital does not qualify for payment under State Plan Amendment 4.19A, page 21s.
Payments will be divided proportionally among qualifying hospitals based on the percentage of each qualifying hospital's FFS PA MA inpatient days to the total FFS PA MA inpatient days of all qualifying hospitals.
Beginning with FY 2024-2025, the Department will allocate an annualized amount of $0.725 million in total funds (State and Federal) for these supplemental payments, upon approval by CMS.
Discontinuation of MA Payments
The Department intends to discontinue the following MA DSH and supplemental payments beginning with FY 2024-2025. Subject to approval by CMS, the Department will no longer fund previous amounts for these MA payments:
a) Disproportionate Share Hospital Payment for Enhanced Access to Emergency Services;
b) Emergency Department and Outpatient Access Payments; and
c) Additional Class of Supplemental Payment for Qualifying Hospitals located in counties in which a significant percentage of the county's population is enrolled in the MA Program.
Fiscal Impact
Effective FY 2024-2025, the Department intends to fund $45.423 million in total funds (State and Federal) for the MA payments identified as newly established in this notice, upon CMS approval.
The notice for intent to allocate additional funding for payments to qualifying hospitals in the City is being published separately.
Public Comment
Interested persons are invited to submit written comments regarding this notice to the Department of Human Services, Office of Medical Assistance Programs, c/o Regulations Coordinator, P.O. Box 2675, Harrisburg, PA 17120, RA-PWMAProgComments@pa.gov. Comments received within 30 days will be reviewed and considered for any subsequent revision of the notice.
Persons with a disability who require an auxiliary aid or service may submit comments using the Pennsylvania Hamilton Relay Service at (800) 654-5984 (TDD users) or (800) 654-5988 (voice users).
VALERIE A. ARKOOSH,
SecretaryFiscal Note: 14-NOT-1637. Under section 612 of The Administrative Code of 1929 (71 P.S. § 232), (1) General Fund; (2) Implementing Year 2023-24 is $0; (3) 1st Succeeding Year 2024-25 through 5th Succeeding Year 2028-29 are $12,659,000; (4) 2022-23 Program—$589,137,000; 2021-22 Program—$644,059,000; 2020-21 Program—$808,350,000; (7) MA—FFS; (8) recommends adoption. Funds have been included in the budget to cover this increase.
[Pa.B. Doc. No. 24-948. Filed for public inspection July 5, 2024, 9:00 a.m.]
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