APR-DRG and Exempt Rates for Medicaid Fee-for-Service and Medicaid Managed Care

May 5, 2017

Dear Health Plans:

The purpose of this letter is to provide Health Plans with the initial hospital Medicaid inpatient rates for the following period:

  • January 1, 2017 through December 31, 2017 for Acute DRG, Exempt Hospitals, Exempt Hospital Units and Chemical Dependency Detoxification services.
    • Based upon the same methodology and data used in the January 1, 2016 through December 31, 2016 rate period.
    • Please be advised that a rate schedule with an April 1, 2017 effective date is anticipated to reflect rate add-ons associated with the SFY 2017-2018 Quality and Sole Community Pool distributions.

The following rate adjustments have been incorporated into the above mentioned rate schedule:

  • 2016 budgeted capital prospective adjustments for all inpatient services due to the continued payment of 2015 budgeted capital in the 2016 Medicaid Managed Care rates.
  • 2017 budgeted capital, as reported by hospitals, and calculated in accordance with Section 8 of Article 2807-c of Public Health Law.
  • Prospective rate adjustments associated with the capital component of each of the inpatient rates to reflect the reconciliation of budget to actual costs and utilization for the period December 1, 2009 – December 31, 2013.
  • Article 19 of NYS Labor Law established new minimum wage increases beginning January 1, 2017. Consequently, the Department of Health has incorporated adjustments to the acute, critical access hospital and medical rehabilitation unit rates for applicable hospitals.
  • The Across the Board Reduction for Elective Deliveries was eliminated from the January 1, 2017 Acute rates. The adjustments owed to hospitals for the period April 1, 2015- December 31, 2016 were included in the statewide base price calculation and resulted in a reduced budget neutrality factor.
  • The Acute Transition factors were updated based on the revised statewide price, as well as changes that were implemented to the floor on Medicaid losses and ceiling on Medicaid gains.
  • The Potentially Preventable Negative Outcomes (PPNOs) rate reductions were eliminated from the January 1, 2017 Acute rates. The adjustments owed to the hospitals for the period April 1, 2015- December 31, 2016 were included as prospective rate adjustments to the operating components of the January 1, 2017- December 31, 2017 Acute rates.

In addition to the above, adjustments were made to the acute rates for the following hospitals based on rate appeals:

  • Mount Sinai Hospital (including Mount Sinai Hospital of Queens), Mount Sinai Beth Israel, Mount Sinai Beth Israel Kings Highway and New York Ear and Eye Infirmary of Mount Sinai were approved for acute DRG rate adjustments
  • NYU Lutheran Medical Center (formerly Lutheran Medical Center) merged with NYU Hospitals Center which resulted in revised acute DRG rate adjustments.
  • Long Island Jewish Forest Hills (formerly Forest Hills Hospital) and Long Island Jewish Valley Stream (formerly Franklin Hospital) were approved for acute DRG rate adjustments.

The Department has fully funded all the above-mentioned adjustments, which were processed based on Section 86-1.31 (Mergers Acquisitions and Consolidations) of the New York Compilation of the Rules and Regulations, in the April 2017 health plan premiums. Therefore, Managed Care Organizations should pay all rate adjustments owed for discharges retroactive to January 1, 2017.

Until further notice, the July 1, 2014 APR-DRG Service Intensity Weights (SIWs) will continue to be in effect for discharges on and after January 1, 2017. The July 1, 2014 Average Length of Stay (ALOS) and Cost Outlier Thresholds will also continue to be used for transfer and cost outlier payments for 2017 discharges. The 3M APR-DRG v.33 grouper was previously implemented by the Department for discharges on and after October 1, 2015 and will continue to be used for payment of Medicaid claims until such time the Department issues updated SIWs, ALOS, and Cost Outlier Thresholds and rates. To avoid retroactivity, the Department plans on implementing the 2017 weights and v.34 APR-DRG grouper on a prospective basis and not retroactive to January 1, 2017. Implementation is anticipated during the Summer 2017.

The enclosed rate schedules include the rate components required to process Medicaid claims. Also included are payment calculation files that display how each component from the schedule is used in the payment of a Medicaid claim, where applicable.

On the attached schedules, we have included all hospitals and the Medicaid Managed Care Rates and GME rate components, where applicable, for the following inpatient services.

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

Acute Care Per Case Rate Schedule- 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).
    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.
    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.
    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.
    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.
    11. Minimum Wage Add-on (**New**): This represents an add-on per discharge for those hospitals affected by the minimum wage increases effective January 1, 2017.
    12. Capital Per Diem: This is the capital per diem to be used when transfer payment on a per diem basis is being made.
    13. Sterilization During Delivery: This is for Managed Care enrollees of Fidelis Care only.
    14. 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.
    15. Indigent Care and Health Care Initiatives Surcharge: This is the surcharge percentage obligation as authorized by Public Health Law 2807-j.

Inpatient Exempt Rate Schedule-These are the rate components 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.
    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 Billing Rate: This is the operating portion of the billing rate which consists of the statewide price adjusted by an institution specific adjustment factor (ISAF) and a rural adjustment factor (if applicable).
    5. Psychiatric Non-Operating Billing Rate (w/out DME): This is the capital portion of the billing rate.
    6. Psychiatric DME: This is the Direct Medical Education per diem add-on which has been provided for informational purposes only.
    7. Psychiatric ECT Payment: This is the Electroconvulsive Therapy add-on (per treatment) which has been adjusted by the same ISAF as the statewide price.
    8. Psychiatric ALC Per Diem Rate: Alternative Level of Care per diem for those patients who no longer require psychiatric services and are awaiting placement or discharge.
    9. Chemical Dependency Billing Rate: Per diem for Alcohol and Drug Rehabilitation programs which have now been combined into one service type.
    10.Chemical Dependent DME Add-on: Direct Medical Education per diem for information only.
    11.Chemical Dependency ALC Per Diem: Alternate Level of Care per diem for those patients who no longer require CD Rehab services and are waiting placement or discharge.
    12.Critical Access Hospital Billing Rate: Per Diem to be paid to those hospitals that are designated as critical access hospitals.
    13.Critical Access Hospitals ALC Per Diem: Alternate Level of Care per diem to be paid for patients who no longer require acute care and are waiting placement or discharge.
    14.Medical Rehabilitation Billing Rate: Per diem for medical rehabilitation services.
    15.Medical Rehabilitation DME Add-on: Direct Medical Education per diem for information only.
    16.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.
    17.Detox Medically Managed Billing Rate: Per diem to be paid to hospitals for medically managed services with certified detox program by OASAS. This information has been published on a separate schedule.
    18.Detox Medically Supervised Billing Rate: Per diem to be paid to hospital for medically supervised services with certified detox program by OASAS. This information has been published on a separate schedule
    19.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 submit your inquiry to HospFFSunit@health.ny.gov email address and either Monique Grimm or Tami Berdi from the hospital fee-for-service unit will respond.

Sincerely,

Michael Dembrosky
Director
Bureau of Acute & Managed Care Reimbursement