September 21, 2012 Health Plan Letter

September 21, 2012

Dear Health Plans:

The purpose of this letter is to provide Health Plans with the initial Medicaid inpatient rates for the period April 1, 2012 through December 31, 2012 for acute APR-DRG services.

The rates for the above period were based upon the same methodology and data used in the January 1, 2012 through March 31, 2012 period but take into consideration the following:

  1. The Centers for Medicare and Medicaid Services (CMS) approved State Plan Amendment (SPA) 12-47-B, which proposed to reduce the inpatient rates of payment for the period July 1, 2011 through March 31, 2012 by an aggregate of $24.2M through a reduction in the statewide price. Subsequent to the 12-47-B SPA approval, SPA 12-21 was approved by CMS which revised the reduction from $24.2M to $19.2M effective May 1, 2012 through March 31, 2013. The May 1, 2012 effective date versus an April 1, 2012 date was due to the Federal Public Notice being posted on April 25, 2012. The $5M that was removed from the reduction was included as a Phase II MRT initiative. Please note that with the original reduction of $24.2M being reduced to $19.2M, the statewide price increases.

    In order to eliminate a one month rate for the period April 1, 2012 through April 30, 2012 and also eliminate a May 1, 2012 through December 31, 2012 rate, the reduction change has been incorporated into these April 1, 2012 rates. With incorporating the $19.2M into the April 1, 2012 rates, the reduction will be recouped over the 12 month period of April 1, 2012 through March 31, 2013 versus an 11 month period of May 1, 2012 through March 31, 2013.
  2. In accordance with existing regulatory provisions, the pool allocation for Transition II decreased from $75M to $50M for the period 4/1/2012 - 3/31/2013. As the Transition payments are not included in the MMC rates, the $25M reduction initially was to be added back into the statewide price however, the funds were redirected per the final 2012/2013 budget for other initiatives. Therefore, there was no adjustment to the statewide base price.
  3. There was no change to the exempt unit rates for the period April 1, 2012 through December 31, 2012.

The enclosed rate schedules include the rate components required to process Medicaid claims. Also included are schedules that display how each component from the schedule are used in the payment of a Medicaid claim, where applicable. These rates schedule calculations are unchanged from the previous January 1, 2012 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 Acute inpatient services only.

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 Medicaid 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. 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 of 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 require acute hospital care and are awaiting placement or discharge.
  14. Indigent Care and Health Care Initiatives Surcharge: This is the surcharge percentage obligation as authorized by Public Health Law 2807-j.

Should you have any questions regarding the above information, please contact me at (518) 474-3267.

Sincerely,

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