UTILIZATION CONTROL
§ 1163.70. Changes of ownership or control.
(a) A hospital is not entitled to additional reimbursement due solely to a change of ownership or control.
(b) If a change of ownership occurs, the Department will establish prospective payment base rates as follows:
(1) If the change involves only one hospital, the Department will use the prospective payment rate assigned to the hospital before the change.
(2) If the change combines two or more hospitals into a single entity, such as a merger or consolidation, the Department will establish a new prospective payment rate for the new entity by averaging rates of the previous entities on a case-weighted basis. To determine that case-weighted average, the Department will use the MA cases of each previously enrolled hospital as reported in the most recent fiscal year for which all the previous entities filed acceptable Cost Reports (MA 336).
(3) If the change divides one enrolled hospital into two or more entities, the Department will use the prospective payment rate assigned to the hospital before the change, for the resulting entities.
(4) The Department will not rebase rates established under this subsection until it rebases rates Statewide.
(5) If the Department rebases rates Statewide after a change in ownership has occurred, by using a base year which predates or corresponds to the year of change, the Department will use the Cost Reports (MA 336) and the claims data for the base year regardless of who owned the entity in that base year.
(c) If a change of ownership occurs, the Department will establish cost-to-charge ratios as follows:
(1) If the change involves only one hospital, the Department will use the cost-to-charge ratio assigned to the hospital before the change.
(2) If the change combines two or more hospitals into one entity, such as a merger or consolidation, the Department will establish a cost-to-charge ratio for the new entity by averaging the cost-to-charge ratios of the previous entities on a case-weighted basis. To determine that case-weighted average, the hospital will use the MA cases of each previously enrolled hospital as reported in the most recent fiscal year for which all the previous entities filed acceptable Cost Reports (MA 336).
(3) If the change divides one enrolled hospital into two or more entities, the Department will use the cost-to-charge ratio assigned to the hospital before the change for the resulting entities.
(4) Cost-to-charge ratios established under subsection (c) will not be updated until cost-to-charge ratios are updated Statewide.
(5) If the Department rebases cost-to-charge ratios Statewide after a change of ownership has occurred, by using a base year which predates or corresponds to the year of the change, the Department will use the cost reports for the base year, regardless of who owned the entity in that base year.
(d) If a change of ownership occurs, disproportionate share payment policy will be as follows:
(1) If the change involves only one hospital, the Department will use the disproportionate share status assigned to the hospital before the change, so long as the resulting hospital maintains the nonemergency obstetric services by which it previously complied with section 1923(d) of the Social Security Act (42 U.S.C.A. § 1396r-4(d)).
(2) If the change combines two or more hospitals into a single entity, such as a merger or consolidation, the Department will establish the new entity as eligible for disproportionate share payments if one or more of the previous entities was eligible for disproportionate share payments, so long as the resulting entity maintains the nonemergency obstetric services by which one of the previous entities complied with section 1923(d) of the Social Security Act. To determine the monthly disproportionate share payment for the new entity, the Department will add the monthly disproportionate share payments of the previous entities.
(3) If the change divides one enrolled hospital into two or more entities, the Department will use the disproportionate share status assigned to the hospital before the change, so long as each of the resulting entities maintains the nonemergency obstetric services by which the previous entity complied with section 1923(d) of the Social Security Act. The Department will prorate the monthly disproportionate share payment of the previous entity on the basis of ratio of utilization agreed upon by the entities.
(4) The Department will not recalculate a hospital’s disproportionate share status status established under this subsection until it rebases disproportionate share status Statewide.
(5) If the Department makes a Statewide redetermination of disproportionate share status after a change of ownership has occurred, and uses a base year which predates or corresponds to the year of the change, the Department will use the cost reports for the base year, regardless of who owned the entity in that base year.
(6) For a Statewide redetermination of disproportionate share status, the determination of disproportionate share status for the entities resulting from a division will be made on the basis of ratio of utilization for the base year as agreed upon by the entities.
(e) If a change of ownership occurs, the Department will establish medical education payments as follows:
(1) If the change involves only one hospital, the Department will use the medical education base assigned to the hospital before the change.
(2) If the change combines two or more hospitals into a single entity, such as a merger or consolidation, the Department will establish a medical education base for the new entity by adding the medical education bases of the previous entities.
(3) If the change divides one enrolled hospital into two or more entities, the Department will establish medical education bases for the resulting entities by prorating the base of the previous entity on the basis of ratio of utilization and medical education cost accounting agreed upon by the entities.
(f) If a change of ownership occurs, the Department will establish exceptional capital eligibility as follows:
(1) If the change involves only one hospital, the Department will use the exceptional capital status assigned to the hospital before the change.
(2) If the change combines two or more hospitals into a single entity such as a merger or consolidation, the Department will establish exceptional capital eligibility as follows:
(i) If all of the previous entities were eligible for exceptional capital, the resulting entity will be eligible for exceptional capital.
(ii) If none of the previous entities was eligible for exceptional capital, the resulting entity will not be eligible for exceptional capital.
(iii) In a merger or consolidation of one or more entities eligible for exceptional capital and one or more entities not eligible for exceptional capital, the resulting entity will be eligible for a prorated percentage of the capital payment to which the resulting entity would be entitled if it were designated exceptional in its entirety. The Department will determine eligibility and payment as follows:
(A) The Department will establish a percentage of capital in the final full fiscal year of operation before the merger or consolidation, by dividing the MA allowable acute care inpatient capital costs of the entity previously eligible for exceptional capital, by the combined MA allowable acute care inpatient capital costs of all the previous entities.
(B) To determine the exceptional capital payment for the resulting entity, the Department will first calculate the amount of payment to which the resulting entity would be eligible under § 1163.53a(e) (relating to prospective capital reimbursement system) if the entity were eligible in its entirety. The Department will then multiply the amount determined under this clause by the percentage determined under clause (A).
(3) If the change divides one enrolled hospital into two or more entities, the Department will use the exceptional capital status assigned to the hospital before the change for the resulting entities.
(4) Additional costs resulting solely from change of ownership or control will not be eligible for exceptional capital payments.
(g) A hospital that changes ownership or closes shall submit final Cost Reports (MA 336) to the Department within 45 days of the change of ownership or closure.
(h) This section applies only to hospitals which change ownership in the period July 1, 1993—June 30, 1995.
Authority The provisions of this § 1163.70 issued under sections 201 and 443.1(1) of the Public Welfare Code (62 P. S. § § 201 and 443.1(1)).
Source The provisions of this § 1163.70 adopted June 18, 1993, effective July 1, 1993, 23 Pa.B. 2917; amended October 29, 1993, effective July 1, 1993, 23 Pa.B. 5241. Immediately preceding text appears at serial pages (181840) to (181843).
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