Health Plan Letter

• Letter is also available in Portable Document Format

September 13, 2023

Dear Health Plans:

The purpose of this letter is to provide Health Plans with information regarding the initial hospital Medicaid Managed Care (MMC) inpatient rates, based on the initial Medicaid fee-for-service rates, effective April 1, 2023 for Acute DRG, Exempt Hospitals and Exempt Hospital Unit services.

The rates are based on the same methodology and data used in the rates effective January 1, 2023, but take into consideration the following updates:

• 7.5% operating component rate increase in accordance with Part E of Chapter 57 of the Laws of 2023 of the State Fiscal Year 2023/2024 enacted Budget.
• For dates of service April 1, 2023 - March 31, 2024, the Centers for Medicare and Medicaid Services (CMS) recently approved revised rate add-ons to the Medicaid Managed Care rates of payment for hospitals that qualified as safety net/financially distressed. These add-ons, which have been added to the rate publication schedules posted to the Department of Health’s website, are only applicable to the acute DRG and psychiatric exempt unit services, as outlined in the billing guidelines attachment to this letter. The Safety Net/Financially Distressed Hospital Add-ons included with this rate publication will also be included in the January 1, 2024 Managed Care rate publication once released and will be effective through March 31, 2024.
• For dates of service April 1, 2023 - March 31, 2024, the NYC Upper Payment Limit (UPL) add-ons require CMS approval and will be published once the necessary approvals have been received.

Plans should treat these adjustments in accordance with Section 22.19 and Appendix V of the Managed Care Model Contract and the terms of their provider contracts with hospitals. This includes any reprocessing or claims settlements that should occur consistent with those agreements. The Department is currently in the process of effectuating premium payments to health plans to align with the updated Safety Net/Financially Distressed Hospital Rate Add-Ons and the 7.5% operating rate increase.

For payment of the April 1, 2023 rates, the July 1, 2018 service intensity weights (SIWs), average lengths of stay (ALOS) and cost outlier thresholds should continue to be utilized, as well as the 3M APR-DRG grouper version 34.

Within the published rate schedules, we have included MMC rates and informational Graduate Medical Education (GME) components, for the inpatient services listed below. Also published is a payment calculation file that displays how each component from the rate schedules is used in the payment of Medicaid claims.

• Acute Case Payment (Per Discharge)
• Specialty Hospitals - Long Term Acute Care, Cancer and Children's Hospitals (Per Diem)
• Psychiatric Exempt Unit (Per Diem)
• Psychiatric Adult Dual Diagnosis 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 rate schedule

Column Descriptions for the Acute and Exempt Hospital/Exempt Unit Rate Schedules:

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

1. Default & Contract Discharge Case Payment Rate (Including PHL 2807-c(33) but Excluding GME): Acute per case payment to be used when a health plan contract is applicable or not applicable. This is the statewide price adjusted by ISAF (Column 3) and transition adjustments (where applicable).
2. Default & Contract Statewide Base Price (Including PHL 2807-c(33)): Statewide base price when a health plan contract is applicable or not applicable and is provided for informational purposes only. The statewide price is used in the development of the discharge rate in Column 1.
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 %): Indirect Medical Education percentage and is provided for informational purposes only.
6. Direct Medical Education (DME) Add-on: Direct Medical Education per discharge add-on and is provided for informational purposes only.
7. Capital Per Discharge (Excluding Non-Comparable Add-ons): Capital per discharge add-on to be paid after application of SIW to the discharge rate.
8. Ambulance Add-ons: Ambulance per discharge add-on to be paid after application of SIW to the discharge rate.
9. Teaching Election Amendment (TEA) Physicians Add-on: TEA per discharge add-on to be paid after application of SIW to the discharge rate.
10. School of Nursing Add-on: School of Nursing per discharge add-on to be paid after application of SIW to the discharge rate.
11. Minimum Wage Add-on: Minimum Wage per discharge add-on to be paid after application of SIW to the discharge rate for those hospitals affected by the minimum wage increases.
12. Safety Net/Financially Distressed Hospital Add-on: Safety net/financially distressed hospital add-on to be paid after the application of SIW to the discharge rate (see Attachment for details).
13. NYC Upper Payment Limit (UPL) Conversion Add-on (Pending Approval): UPL add-on to be paid after the application of SIW to the discharge rate.
14. Capital Per Diem: Capital per diem to be used when transfer payment on a per diem basis is being made.
15. ALC Per Diem: Alternate Level of Care per diem for those patients who no longer require acute hospital care and are awaiting placement or discharge.
16. Indigent Care and Health Care Initiatives Surcharge: Surcharge percentage obligation as authorized by Public Health Law 2807-j.

Exempt Hospital/Exempt Unit Rate Schedule - These are the rate components to be used for exempt hospitals or exempt units within a general hospital:

1. Specialty Acute Hospital Billing Rate (w/out DME, incl UPL Add-on): Per diem rate for specialty long term acute care hospitals, cancer hospitals, and children's hospitals.
2. Specialty Acute Hospital DME Add-on: Direct Medical Education per diem for informational purposes only.
3. Specialty Acute Long-Term Care NYC Upper Payment Limit (UPL) Conversion Add-on (Pending Approval): UPL per diem for informational purposes only (amount is already included in column 1 rate).
4. Specialty Acute Hospital 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 (age 18 and over): 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). Since individuals age 18 and over are not eligible for an age adjustment factor, this column represents the billing rate without any adjustment for the age factor (or any other adjustment factors related to Mental Retardation or Comorbidities).
   
   5a. Psychiatric Billing Rate (age 17 and under): Rate from column 5 adjusted by 1.3597 age adjustment factor only (no adjustments related to Mental Retardation or Comorbidities).
6. Psychiatric Non-Operating Billing Rate (w/out DME): Capital portion of the billing rate.
7. Psychiatric Safety Net/Financially Distressed Hospital Add-on: Safety net/ financially distressed hospital per diem add-on (see Attachment for details).
8. Psychiatric DME Add-on: Direct Medical Education per diem for informational purposes only.
9. Psychiatric ECT Payment: Electroconvulsive Therapy (ECT) add-on (per treatment) which has been adjusted by the same ISAF as the statewide price.
10. 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.
11. Psychiatric Adult Dual Diagnosis Billing Rate: Per diem rate for specialized hospital-based inpatient psychiatric units, certified by the Office of Mental Health, solely dedicated to the treatment of adults with diagnosis of both developmental disability and either serious mental illness or serious emotional disturbance.
12. Chemical Dependency Rehabilitation Billing Rate (w/out DME): Per diem rate for Alcohol and Drug Rehabilitation programs which are combined into one service type.
13. Chemical Dependency Rehabilitation DME Add-on: Direct Medical Education per diem for informational purposes only.
14. Chemical Dependency Rehabilitation ALC Per Diem: Alternate Level of Care per diem for those patients who no longer require Chemical Dependency Rehab services and are awaiting placement or discharge.
15. Critical Access Hospital Billing Rate (w/out DME): Per diem rate for those hospitals that are federally designated as Critical Access Hospitals.
16. Critical Access Hospital ALC Per Diem: Alternate Level of Care per diem for those patients who no longer require acute care and are awaiting placement or discharge.
17. Medical Rehabilitation Billing Rate (w/out DME): Per diem rate for medical rehabilitation services.
18. Medical Rehabilitation DME Add-on: Direct Medical Education per diem for informational purposes only.
19. Medical Rehabilitation ALC Per Diem: Alternate Level of Care per diem for patients who no longer require medical rehabilitation and are awaiting placement or discharge.
20. Detox Medically Managed & Medically Supervised Withdrawal Billing Rates: Per diem rates to be paid to hospitals with certified detox program by OASAS for medically managed/supervised services. These rates are published on a separate schedule.
21. Indigent Care and Health Care Initiative Surcharge: 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 Tami Berdi or John Neuberger from the hospital fee-for-service rate setting unit will respond. Questions regarding Managed Care premium payments should be addressed to phr@health.ny.gov.

Sincerely,

Michael Dembrosky
Director
Bureau of Managed Care Reimbursement

ATTACHMENT