February 7, 2011 Health Plan Letter

February 7, 2011

Dear Health Plans:

The purpose of this letter is to provide Health Plans with the initial Medicaid inpatient reform rates for the period January 1, 2011 through March 31, 2011.

The rates for the period January 1, 2011 through March 31, 2011 are based on the same methodology and data as used in the rates for the period October 1, 2010 through December 31, 2010 but take into consideration the following for the Acute per Case, Exempt Hospital and Exempt Unit rates:

  1. Update of budgeted capital effective January 1, 2011 to reflect the use of budgeted capital, as submitted by hospitals for 2011, and edited by staff. Budgeted capital costs are allocated using 2008 capital cost allocations per the 2008 submitted Institutional Cost Report. These capital costs have been reduced in accordance with over budgeting percentage using 2008 actual costs compared with 2008 budgeted costs, as required by Section 8 of 2807-c of the Public Health Law.
  2. Implementation of a 2011 trend factor of 1% based upon methodology as set forth in Article 2807-c (10).
  3. The Potentially Preventable Readmissions (PPR) adjustment included in the January 1, 2011 through March 31, 2011 Acute and Exempt Hospital rates has been revised from the previous PPR adjustment calculation. In a data quality assurance process, an error was discovered with the PPR adjustment that was included in the October 1, 2010 rate. Specifically, the error discovered was related to how the data was sorted. The 3M PPR software requires that hospital event data be sorted in a precise way in order to accurately identify PPRs. What was determined is that the hospital event data was not sorted correctly and the observed PPR rates, expected PPR rates, and "excess" PPR rates have been recalculated. The total statewide PPR reduction is still valued at $47M full annual, however the corrected data redistributes the reduction among 69 more hospitals than previously calculated. The PPR adjustments included in the January 1, 2011 through March 31, 2011 rates were revised to reflect this correction. Questions related to the PPR adjustment should be emailed to BHOFAMAIL@health.state.ny.us

The Acute Statewide Price calculation has been updated to reflect the 2011 average APR-DRG casemix index (CMI) based on the Service Intensity Weights (SIW) in effect beginning January 1, 2011 whereas the October 1, 2010 through December 31, 2010 used the average APR-DRG CMI based on the SIWs in effect for the period beginning December 1, 2009. The SIW update is in accordance with Part 86-1.18 of the Commissioner of Health's Administrative Rules and Regulations.

The updated 2011 APR-DRG SIWs and cost outlier thresholds can be found on the Department of Health's website at: www.nyhealth.gov/facilities/hospital/reimbursement/apr-drg.

The enclosed rate schedules include the rate components required to process Medicaid claims. Also included are schedules that display how each of the components from the schedule are used in the payment of a Medicaid claim, where applicable. These rate schedule calculations are unchanged from the previous October 1, 2010 publication.

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 below listed inpatient services. The Chemical Dependency Detox rates have not been included with this release of rates and a separate notification will be sent when these rates are available. In addition, the Psychiatric Exempt Unit rates have not been included. These rates are still waiting the Centers for Medicare and Medicaid Services (CMS) and the Division of the Budget approvals.

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

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

  1. Default & Contract Discharge Case Payment Rate {Including PHL 2807-c(33) but Excluding GME}: Acute per case payment to be used when either an HMO plan contract is applicable or not applicable. This is the statewide price adjusted by ISAF (Column 3). The per discharge has been adjusted to reflect the reduction for PPRs.
  2. Default & Contract Statewide Base Price {Including PHL 2807-c (33)}: Statewide base price when HMO contract is applicable or not applicable.
  3. Institutional Specific Adjustment Factor (ISAF): Hospital specific adjustment to reflect wage differences (Wage Equalization Factor).
  4. High Cost Charge Convertor: Charge convertor to reduce hospital charges for cost outlier payments.
  5. Indirect Medical Education Percentage (IME %): This is the indirect medical education percentage and is provided here for information only.
  6. Direct Medical Education (DME) Add-on: This is the Direct Medical Education per discharge add on and is provided for information only. Even though PPRs have not been approved by CMS and implemented in the Medicaid fee-for-service rates, the add-on displayed in this column has been adjusted to reflect the reduction for PPRs.
  7. Capital Per Discharge (Excluding Non-comparable Add-ons): Capital Per Discharge to be included after application of Service Intensity Weights (SIW's).
  8. Ambulance Add-ons: This represents ambulance per discharge to be added on after application of SIW. This add-on has been adjusted to reflect the reduction for PPRs.
  9. TEA Physician Add-on: This is the add-on for physician costs for those hospitals that are Teaching Election Amendment hospitals for the Medicare program to be added on after application of SIW. This add-on has been adjusted to reflect the reduction for PPRs.
  10. 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. This add-on has been adjusted to reflect the reduction for PPRs.
  11. Capital Per Diem: This is the capital per diem to be used when transfer payment on a per diem basis is being made.
  12. Sterilization During Delivery: This is for Managed Care enrollees of Fidelis Care only.
  13. 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.
  14. 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 is 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. Even though PPRs have not been approved by CMS and implemented in the Medicaid fee-for-service rates, the add-on displayed in this column has been adjusted to reflect the reduction for PPRs.
  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: Plans should continue to use existing psychiatric per diems that were transmitted effective January 1, 2009.
  5. Psychiatric DME: Same as number 4.
  6. Psychiatric ALC Per Diem Rate: Same as number 4.
  7. Chemical Dependency Billing Rate: Per diem for Alcohol and Drug Rehabilitation programs which have now been combined into one service type.
  8. Chemical Dependent DME Add-on: Direct Medical Education per diem for information only.
  9. Chemical 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 are 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 are 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. This information will be published on a separate schedule.
  16. Detox Medically Supervised Billing Rate: Per diem to be paid to hospital for medically supervised services with certified detox program by OASAS. This information will be published on a separate schedule.
  17. Indigent Care and Health Care Initiative Surcharge: This is the surcharge percentage obligation as authorized by Public Health Law Section 2807-j.

Should you have any questions regarding the above data, please do not hesitate to contact me at (518) 474-3267.

Sincerely,

John W. Gahan, Jr.
Director
Bureau of Primary and Acute Care Reimbursement