APR-DRG and Exempt Rates for Medicaid Managed Care

April 6, 2018

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, 2018 through December 31, 2018 for Acute DRG, Exempt Hospitals, Exempt Hospital Units and Chemical Dependency Detoxification services.
    • Based upon the same methodology and data used in the April 1, 2017 through December 31, 2017 rate period.
    • Please be advised that a rate schedule with an April 1, 2018 effective date is anticipated to reflect revised rate add-ons associated with the SFY 2017-2018 Quality and Sole Community Pool distributions, as well as the inclusion of 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 January 1, 2014 – December 31, 2015. Also, a rate schedule with a July 1, 2018 effective date is anticipated due to the rebasing of the costs in the acute and exempt rates.

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

  • Removal of various prospective adjustments that had been previously included in the 2017 inpatient rates, including:
    • Budgeted capital prospective adjustments for all inpatient services due to the continued payment of 2015 budgeted capital in the 2016 Medicaid Managed Care rates.
    • 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.
    • Across the Board Reduction for Elective Deliveries adjustments for the period April 1, 2015 – December 31, 2016 had been included in the calculation of the budget neutrality factor (BNF) applied to the statewide base price. The BNF was recalculated as result of those adjustments being removed.
    • Potentially Preventable Negative Outcomes (PPNOs) adjustments for the period April 1, 2015 – December 31, 2016 had been included as prospective rate adjustments to the operating components.
  • 2018 budgeted capital, as reported by hospitals, and calculated in accordance with Section 8 of Article 2807-c of the Public Health Law.
  • Article 19 of NYS Labor Law established new minimum wage increases beginning January 1, 2018. Consequently, the Department of Health has incorporated adjustments to the acute, critical access hospital and medical rehabilitation unit rates for applicable hospitals.
  • Elimination of the transition factors applied to the operating components of the acute rates.

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

  • The operating components of the acute rates for Westchester Medical Center and Mid-Hudson Valley Division of Westchester Medical Center (formerly St. Francis Hospital of Poughkeepsie) were combined. Previously, the Mid-Hudson Valley Division had been approved to receive the temporary rate adjustment, which ended effective July 1, 2017.
  • The operating components of the acute rates for University Hospital-Stony Brook and Southampton Hospital were merged as a result of their merger, which was effective August 1, 2017.

    • Note: the April 1, 2017 Managed Care Rate Publications were also updated to reflect the merged rates for these hospitals.

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, 2018. 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 2018 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 updated SIWs, ALOS, Cost Outlier Thresholds, as well as an updated version of the 3M grouper (v.34), on a prospective basis (anticipated for July 1, 2018).

The enclosed rate schedules include the rate components required to process Medicaid claims. Based on the above changes, plans are encouraged to process adjustments according to the terms of their provider contracts with hospitals. This includes any reprocessing that should occur consistent with those agreements. As a reminder, the Managed Care model contract requires Managed Care Organizations (MCOs) to pay hospitals for quality and sole community provider pool distributions. Managed Care premium adjustments for included rate schedule updates will be incorporated into the July 2018 update to the April 2018 premiums.

Also enclosed 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 informational 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: This represents an add-on per discharge for those hospitals affected by the minimum wage increases effective January 1, 2018.
    12. Quality Pool Add-on: This represents an add-on per discharge for hospitals that qualify for the Quality Pool for SFY 2017-18.
    13. Sole Community Provider Pool Add-on: This represents an add-on per discharge for hospitals that qualify for the Sole Community Provider Pool for SFY 2017-18.
    14. Capital Per Diem: This is the capital per diem to be used when transfer payment on a per diem basis is being made.
    15. Sterilization During Delivery: This is for Managed Care enrollees of Fidelis Care only.
    16. 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.
    17. 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 Hospital Quality Pool Per Diem Add-on: Quality Pool per diem for information only (amount is already included in column 1 rate).
    4. 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.
    5. 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).
    6. Psychiatric Non-Operating Billing Rate (w/out DME): This is the capital portion of the billing rate.
    7. Psychiatric DME: This is the Direct Medical Education per diem add-on which has been provided for informational purposes only.
    8. Psychiatric ECT Payment: This is the Electroconvulsive Therapy add-on (per treatment) which has been adjusted by the same ISAF as the statewide price.
    9. 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.
    10.Chemical Dependency Rehabilitation Billing Rate: Per diem for Alcohol and Drug Rehabilitation programs which have now been combined into one service type.
    11.Chemical Dependent Rehabilitation DME Add-on: Direct Medical Education per diem for information only.
    12.Chemical Dependency Rehabilitation Quality Pool Per Diem Add-on: Quality Pool per diem for information only (amount is already included in column 10 rate)
    13.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.
    14.Critical Access Hospital Billing Rate: Per Diem to be paid to those hospitals that are designated as critical access hospitals.
    15.Critical Access Hospital Quality Pool Per Diem Add-on: Quality Pool per diem for information only (amount is already included in column 14 rate).
    16.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.
    17.Medical Rehabilitation Billing Rate: Per diem for medical rehabilitation services.
    18.Medical Rehabilitation DME Add-on: Direct Medical Education per diem for information only.
    19.Medical Rehabilitation Quality Pool Per Diem Add-on: Quality Pool per diem for information only (amount is already included in column 17 rate).
    20.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.
    21.Detox Medically Managed & Medically Supervised Withdrawl Billing Rates: 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.
    22.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 rate information, please submit your inquiry to HospFFSunit@health.ny.gov 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