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PA Bulletin, Doc. No. 09-1903



Emergency Department and Outpatient Access Payments

[39 Pa.B. 5994]
[Saturday, October 10, 2009]

Purpose of Notice

 The purpose of this notice is to announce that the Department of Public Welfare (Department) amended the Commonwealth's Title XIX State Plan to authorize additional outpatient payments to certain acute care general hospitals that will be funded with revenues generated through a hospital assessment imposed by the City of Philadelphia. Public notice announcing the Department's intent to make these payments and requesting public comments was published at 38 Pa.B. 7123 (December 27, 2008).


 On July 4, 2008, the Pennsylvania General Assembly enacted Article IV-E of the Public Welfare Code to authorize the City of Philadelphia to impose, by ordinance, a monetary assessment on the non-Medicare net operating revenue of acute care general hospitals located in the City. See 62 P. S. §§ 801-E—808-E. The new Hospital Assessment Program (Program) is intended to generate additional revenues to fund Medical Assistance (MA) expenditures for hospital emergency department services in Philadelphia. The Program is also expected to generate additional funding to support the City's public health clinics. To ensure receipt of Federal matching funds for the MA payments made with these assessment revenues, the Department submitted a waiver request to the Federal Centers for Medicare and Medicaid Services (CMS). That waiver request has been approved, and the assessment will be imposed as specified in Article IV-E effective January 1, 2009 through June 30, 2013.

 In authorizing the Program, the General Assembly recognized that a greater proportion of Philadelphia's population receives MA benefits than any other county in the Commonwealth and that the demand for emergency department services in City hospitals often exceeds the capacity of the area's emergency department's system. By establishing a mechanism to generate additional revenues through hospital assessments, the General Assembly sought to ensure that MA recipients would continue to have access to critical hospital services and that all citizens would have access to emergency department services within the City. Under Article IV-E, funds generated from the Program will be deposited in a restricted account and used by the Department to make ''supplemental or increased medical assistance payments for emergency department services to general acute care hospitals . . . and to maintain or increase other medical assistance payments to hospitals within [Philadelphia], as specified in the Commonwealth's approved Title XIX State Plan.'' 62 P. S. § 804-E.

 Consistent with Article IV-E, the Department submitted and received approval for a State Plan Amendment (SPA) from CMS to authorize the emergency department and outpatient access payments to acute care general hospitals in Philadelphia with emergency departments that provide at least 1,000 emergency department services to Pennsylvania MA patients per year. Under the SPA, the Department distributes the additional payments to qualifying acute care general hospitals based on each qualifying hospital's historical outpatient MA claims. Payments to a qualifying hospital under the State Plan are limited to the amount permitted by the hospital's OBRA 93 hospital specific limit and by a limit on the maximum payment each hospital can receive as a percentage of their hospital's net patient revenue. Hospitals that furnish acute care inpatient services to patients who are predominantly under the age of 18 or hospitals that receive a disproportionate share payment for enhanced access to multiple types of medical care in economically distressed areas of Pennsylvania under the State Plan are not eligible to receive these additional payments.

Public Comments

 One organization submitted comments in response to the Department's initial Public Notice at 38 Pa.B. 7123. The commentator objected to the use of a payment limit for the proposed emergency department and outpatient access payments as contrary to the interest of the MA Program and the intent of the statue. The commentator also suggested that the Department did not provide adequate advance notice of the change in its payment methods because it did not publish sufficient underlying information or data for interested parties to determine with certainty what impact the Program would have on providers.

 The Department disagrees with the commentator on both counts. First, the Department determined that intent of the legislation, as well as the interest of the MA Program, would be best served by ensuring that all qualified hospitals within the city receive a reasonable portion of the funds dedicated for emergency department and outpatient access payments, rather than by allowing a disproportionate amount of those funds to be funneled to a limited number of hospitals.

 Second, the Department engaged in an open and collaborative process in designing these new payments. As noted previously, the Department published a notice in the Pennsylvania Bulletin, which provided a summary of the proposed emergency department and outpatient access payments and requested interested persons to submit comments. In addition, during the past year, the Department met numerous times with the affected hospitals or hospital systems, both individually and as a group to provide regular updates and information on the Program, including the estimated payments that would be made with the anticipated Program revenue, and to solicit their input and address any concerns the hospitals may have had. This process was more than sufficient to allow any comments and concerns regarding this initiative to be identified and addressed.

Fiscal Impact

 The additional emergency department and outpatient access payments resulted in increased costs of $69.404 million ($24.763 million in State funds) in the MA —Outpatient Program in Fiscal Year (FY) 2008-2009 and are projected at $138.307 million ($47.493 million in State funds) in FY 2009-2010. These payments are to be offset by actual assessment revenue of $50.717 million in FY 2008-2009 and projected assessment revenue of $102.587 million in FY 2009-2010. These State funds estimates are based on the increased Federal Medical Assessment Percentages as determined under the American Recovery and Reinvestment Act, which will expire December 31, 2010.



Fiscal Note: 14-NOT-621. (1) General Fund; (2) Implementing Year 2008-09 is $24.763M; (3) 1st Succeeding Year 2009-10 is $47.493M; 2nd Succeeding Year 2010-11 is $55.315M; 3rd Succeeding Year 2011-12 is $63.227M; 4th Succeeding Year 2012-13 is $63.227M; 5th Succeeding Year 2013-14 is $00.000M; (4) 2008-09 Program— $519.681M; 2007-08 Program—$593.992M; 2006-07 Program—$671.472M; (7) MA—Outpatient; (8) recommends adoption. Funds have been included in the budget to cover this increase.

[Pa.B. Doc. No. 09-1903. Filed for public inspection October 9, 2009, 9:00 a.m.]

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