NOTICES
DEPARTMENT OF
HUMAN SERVICES
Supplemental Payments to Qualifying Hospitals
[54 Pa.B. 3851]
[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 for qualifying hospitals with graduate medical education programs.
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 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 Indirect Medical Education (IME) Payments
The Department intends to establish an Inpatient IME payment program intended to recognize the higher patient care costs of teaching hospitals. A hospital is eligible for Inpatient IME payments if the hospital meets all of the following criteria:
a) The hospital is an acute care general hospital enrolled in the Pennsylvania (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 submitted a FY 2021-2022 MA-336 Hospital Cost Report to the Department.
d) The hospital's resident-to-bed ratio exceeds 0.0 as reported within CMS' FY 2024 Final Rule Impact File, August 2023.
e) The hospital does not provide 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 Department of Health (DOH) Reports 3-A and 3-B.
f) The hospital is not a Medicare Prospective Payment System (PPS) Exempt Cancer Hospital as of February 22, 2024.
The Department will determine each qualifying hospital's annual Inpatient IME payment amount by multiplying the amount in 1) as follows by the IME Factor in 2) as follows and by the Adjustment Factor as determined in 3) as follows.
1) The hospital's PA Medicaid managed care inpatient revenues as specified within the hospital's FY 2021-2022 MA-336 Hospital Cost Report as available to the Department on December 11, 2023.
2) IME Factor = 1.35 × (((1+r)0.405)−1), where r is the eligible hospital's resident-to-bed ratio as reported within CMS' FY 2024 Final Rule Impact File, August 2023.
3) Adjustment Factor
(i) For qualifying hospitals where the product of the amount in 1) previously listed multiplied by the IME Factor in 2) does not exceed $800,000, the Adjustment Factor is 1.0.
(ii) For qualifying hospitals that do not meet the criteria in 3)(i) and where the product of the amount in 1) previously listed multiplied by the IME Factor in 2) previously listed exceeds 3% of the sum of the hospital's inpatient and outpatient net revenues earned less bad debt, charity care and contractual allowance expenses as filed on the FY 2021-2022 MA-336 Hospital Cost Report as available to the Department on December 11, 2023, the Adjustment Factor is as follows:
a. 0.5 for hospitals having a resident-to-bed ratio as reported within CMS' FY 2024 Final Rule Impact File, August 2023 that exceeds 0.8.
b. 0.35 for all other hospitals.
(iii) For all other qualifying hospitals that do not meet the criteria in 3)(i) or 3)(ii), the Adjustment Factor is 1.0.
Beginning with FY 2024-2025, the Department will allocate an annualized amount of $184.718 million in total funds (State and Federal) for these Inpatient IME payments, upon approval by CMS.
Outpatient IME Payments
The Department intends to establish an Outpatient IME payment program intended to recognize the higher patient care costs of teaching hospitals. A hospital is eligible for Outpatient IME payments if the hospital meets all of the following criteria:
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 submitted a FY 2021-2022 MA-336 Hospital Cost Report to the Department.
d) The hospital's resident-to-bed ratio exceeds 0.0 as reported within CMS' FY 2024 Final Rule Impact File, August 2023.
e) The hospital does not provide 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 PA DOH Reports 3-A and 3-B.
f) The hospital is not a Medicare PPS-Exempt Cancer Hospital as of February 22, 2024.
The Department will determine each qualifying hospital's annual Outpatient IME payment amount by multiplying the amount in 1) as follows by the IME Factor in 2) as follows and by the Adjustment Factor as determined in 3) as follows.
1) The hospital's PA Medicaid (Title XIX) managed care outpatient revenues as specified within the hospital's FY 2021-2022 MA-336 Hospital Cost Report as available to the Department on December 11, 2023.
2) IME Factor = 1.35 × (((1+r)0.405)−1), where r is the eligible hospital's resident-to-bed ratio as reported within CMS' FY 2024 Final Rule Impact File, August 2023.
3) Adjustment Factor
(i) For qualifying hospitals where the product of the amount in 1) previously listed multiplied by the IME Factor in 2) does not exceed $800,000, the Adjustment Factor is 1.0.
(ii) For qualifying hospitals that do not meet the criteria in 3)(i) and where the product of the amount in 1) previously listed multiplied by the IME Factor in 2) previously listed exceeds 3% of the sum of the hospital's inpatient and outpatient net revenues earned less bad debt, charity care and contractual allowance expenses as filed on the FY 2021-2022 MA-336 Hospital Cost Report as available to the Department on December 11, 2023, the Adjustment Factor is as follows:
a. 0.5 for hospitals having a Resident to Bed ratio as reported within CMS' FY 2024 Final Rule Impact File, August 2023 that exceeds 0.8.
b. 0.35 for all other hospitals.
(iii) For all other qualifying hospitals that do not meet the criteria in 3)(i) or 3)(ii), the Adjustment Factor is 1.0.
Beginning with FY 2024-2025, the Department will allocate an annualized amount of $77.186 million in total funds (State and Federal) for these Outpatient IME payments, upon approval by CMS.
Fiscal Impact
The FY 2024-2025 impact, as a result of the funding allocation for these payments is $261.904 million in total funds (State and Federal), upon approval by CMS.
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-1638. 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 $117,621,000; (4) 2022-23 Program—$589,137,000; 2021-22 Program—$644,059,000; 2020-21 Program—$808,350,000; (7) MA—Fee-for-Service; (8) recommends adoption. Funds have been included in the budget to cover this increase.
[Pa.B. Doc. No. 24-950. Filed for public inspection July 5, 2024, 9:00 a.m.]
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