December 23, 2009 Health Plan Letter

December 23, 2009

Dear Health Plans,

The purpose of this letter is to provide Health Plans with the inpatient reform rates effective 12/1/2009 which reflect the new All Patient Refined (APR) DRGs.

As enacted in Chapter 58 of the Laws of 2009, Pubic Health Law Section 35 was added which updated the base year for the Medicaid FFS rate to 2005 and requires the use of the new APR-DRGs. The APR-DRGs consist of 314 DRGs with four severity levels for each DRG. In addition, the various components and payments have changed so that there is no longer short stay or long stay payments as a result of the severity adjustments. There still remain transfer payments and cost outlier payments in this new methodology.

In accordance with state statute, there is a 'contract' and 'default' rate calculated effective 12/1/2009 - 12/31/2009. The difference between these two rates is the adjustment that is set forth in Article 2807-c(33) of the PHL. It should be noted that, as of January 1, 2010, only the 'contract' rate will be in effect as authorized by subdivision 10 of section 364-j of the Social Services Law, which specifies that managed care contracts in effect on April 1, 2008, that use the Medicaid FFS rate as a basis for payment of inpatient hospital services, shall not be adjusted to reflect the across the board reduction set forth in Section 33 of Article 2807-c of the PHL up until January 1, 2010. This rate should be utilized for either in network or out of network patient claims.

These attached schedules also contain in accordance with section 2807-c (a-2) and (a-3), the rate components that have been established for payments of Graduate Medical Education (GME) costs as under previously contained in prior years schedules (formally referred to as Alternate Payment Rates).

Chapter 58 of the Laws of 2009 also added section new paragraph (e-1)(e-2) to subdivision 4 of 2807-c which updated the base year for various exempt services including Physical Medicine Rehabilitation, Chemical Dependency (Alcohol and Drug Rehab prior to December 1, 2009), Critical Access Hospitals, Specialty Long Term Care Hospitals and Cancer Hospitals as well as Blythedale Children's Hospital. HIV, Epilepsy and Burn exempt services were eliminated effective 12/1/2009 and folded into the APR-DRGs and reimbursed on a per case basis.

We have attached several schedules as part of this package to assist health plans with understanding the new rates and how to pay the different types of claims. These include the schedule of various rate components (see detail description below) and payment methodology examples for all types of payments. Other needed items such as cost outlier thresholds and APR-DRGs and weights have been posted to DOH website: www.nyhealth.gov/facilities/hospital/reimbursement/apr-drg/

In order to implement these provisions so that health plans have the required information we are providing schedules that have both &contract & and &default & rate components where applicable as described below, which are effective for the discharges between December 1, 2009 through December 31, 2009. The columns for &contract & and &default & described below:

  • Medicaid Managed Care (MMC) Rates (Including PHL Section 2807-c (33) &Default &): These columns of rates for Acute Case Payment reflect the reduction in rates as provided by this provision. (See columns 1 and 3 on the enclosed schedule)
  • Medicaid Managed Care (MMC) Rates (Excluding PHL Section 2807-c33 &Contract &): These columns of rates for Acute Case Payment have not been reduced by this provision. (See columns 2 and 4 on the enclosed schedule) As stated above, these rates will continue to be paid effective January 1, 2010 through March 31, 2010 for all claims.

Please note that we have included all hospitals on the attached schedules as in the past and the Medicaid Managed Care Rate and GME rates are provided, where applicable, for the following inpatient services:

  • Acute Case Payment (Per Discharge)
  • Psychiatric Exempt Unit (Per Diem)
  • Medical Rehab Exempt Unit (Per Diem)
  • Specialty Hospitals (Long Term Acute, Cancer and Blythedale Children's Per Diem)
  • Chemical Dependency Exempt Unit (Per Diem)
  • Critical Access Hospitals (Per Diem)

Acute Care Per Case Rate Schedules - These are the rate components to be paid to hospitals for acute services:

  1. Default Discharge Case Payment Rate {Including PHL 2807-c(33)}: Acute per case payment to be used when HMO plan contract is not applicable. This is the default statewide price adjusted by ISAF. (Column 5 below)
  2. Contract Discharge Case Payment Rate {Excluding PHL 2807-c(33)}: Acute per case payment to be used when the HMO plan contract is applicable. This is the contract statewide base price adjusted by ISAF (Column 5 below)
  3. Default Statewide Base Price {Including PHL 2807-c (33)}: Statewide base price when HMO contract is not applicable.
  4. Contract Statewide Base Price {Excluding PHL 2807-c (33)}: Statewide base price when HMO contract is applicable.
  5. Institutional Specific Adjustment Factor (ISAF): Hospital specific adjustment to reflect wage differences (Wage Equalization Factor).
  6. High Cost Charge Convertor: Charge convertor to reduce hospital charges for cost outlier payments.
  7. Indirect Medical Education Percentage (IME %): This is the indirect medical education percentage and is provided here for information only.
  8. Direct Medical Education (DME) Add-on: This is the Direct Medical Education per discharge add on and is provided for information only.
  9. Capital Per Discharge (Excluding Non-comparable Add-ons): Capital Per Discharge to be included after application of Service Intensity Weights (SIW's).
  10. Ambulance Add-ons: This represents ambulance per discharge to be added on after application of SIW.
  11. TEA Physician Add-on: This is the add-on for physicians' costs for those hospitals that are Teaching Electing Amendment hospital for Medicare program after application of SIW.
  12. School of Nursing Add-on: This represents an add-on per discharge for those hospitals with Schools of Nursing and is added after application of SIW.
  13. Capital Per Diem: This is the capital per diem to be used when transfer payment on a per diem basis is being made.
  14. ALC Per Diem: This is the Alternate Level of Care per diem for those patients who no longer requires acute hospital care and is awaiting placement or discharge.
  15. Indigent Care and Health Care Initiatives Surcharge: This is the surcharge percentage obligation as authorized by Public Health Law Section 2807-j.

Inpatient Exempt Unit Rates - These rate components are those to be used for exempt hospitals or exempt units within general hospital in accordance with Article 2807-c of the Public Health Law:

  1. Specialty Acute Hospital Billing Rate (w/out DME): This per diem for specialty long term acute hospitals, cancer hospitals, and Children's Hospitals
  2. Specialty Acute DME Add-on: Direct Medical Education per diem for information only.
  3. Specialty Acute ALC Per Diem: Alternate Level of Care per diem for those patients who no longer require specialty acute services and are awaiting placement or discharge.
  4. Psychiatric Per Diem: Please note that new psychiatric exempt unit rates have not been finalized at this time, so plans should continue to use existing psychiatric per diems that were transmitted effective July 1, 2008. Further information to be provided in near further.
  5. Psychiatric DME: Same as number 4.
  6. Psychiatric ALC Per Diem Rate: Same as Number 4.
  7. Chemically Dependency Billing Rate: Per diem for Alcohol or Drug Rehabilitation programs which have now been combined into one service type.
  8. Chemically Dependent DME Add-on: Direct Medical Education per diem for information only.
  9. Chemically Dependency ALC Per Diem: Alternate Level of Care per diem for those patients who no longer require acute services and are waiting placement or discharge.
  10. Critical Access Hospital Billing Rate: Per Diem to be paid to those hospitals that are designated as critical access hospitals.
  11. Critical Access Hospital ALC Per Diem: Alternative Level of Care per diem to be paid for patients who no longer require acute care and is waiting placement or discharge.
  12. Medical Rehabilitation Billing Rate:Per diem for medical rehabilitation services.
  13. Medical Rehabilitation DME Add-on: Direct Medical Education per diem for information only.
  14. Medical Rehabilitation ALC Per Diem: Alternative Level of Care per diem to be paid for patients who no longer require acute care and is waiting placement or discharge.
  15. Detox Medically Managed Billing Rate: Per diem to be paid to hospitals for medically managed services with certified detox program by OASAS.
  16. Detox Medically Supervised Billing Rate: Per diem to be paid to hospital for medically supervised services with certified detox program by OASAS.
  17. Indigent Care and Health Care Initiative Surcharge: This is the surcharge percentage obligation as authorized by Public Health Law Section 2807-j.

Sample Payment Calculation Worksheets - With the inception of Medicaid reform and updates as authorized in Chapter 58 of the Laws of 2009, these payment schedules have been updated to incorporate the various changes in payment methodologies for inlier, transfers, cost outliers, and exempt unit services. It also contains columns for both the "Contract" payments and "Default" payments as described above.

The rates on the enclosed schedules have been computed by the Bureau of Primary and Acute Care Reimbursement and, should you have any questions regarding these schedules, please contact John W. Gahan Jr. the director of this bureau at (518) 474-3267. As requested by the Health Plans, the Department's recommendation for implementation of the APR-DRG rates effective 12/1/2009, while we are waiting for CMS approval, is also attached.

Sincerely,

John E. Ulberg, Jr.
Director
Division of Health Care Financing

Enclosure(s)