[Federal Register: August 26, 2005 (Volume 70, Number 165)]
[Proposed Rules]
[Page 50262-50268]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr26au05-34]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 447 and 455
[CMS-2198-P]
RIN 0938-AN09
Medicaid Program; Disproportionate Share Hospital Payments
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Proposed rule.
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SUMMARY: This proposed rule would implement section 1001(d) of the
Medicare Prescription Drug, Improvement, and Modernization Act of 2003
(MMA) which establishes new reporting and auditing requirements for
State Disproportionate Share Hospital payments.
DATES: To be assured consideration, comments must be received at one of
the addresses provided below, no later than 5 p.m. on October 25, 2005.
ADDRESSES: In commenting, please refer to file code CMS-2198-P. Because
of staff and resource limitations, we cannot accept comments by
facsimile (FAX) transmission.
You may submit comments in one of three ways (no duplicates,
please):
1. Electronically. You may submit electronic comments on specific
issues in this regulation to http://www.cms.hhs.gov/regulations/ecomments.
(Attachments should be in Microsoft Word, WordPerfect, or
Excel; however, we prefer Microsoft Word).
2. By mail. You may mail written comments (one original and two
copies) to the following address ONLY: Centers for Medicare & Medicaid
Services, Department of Health and Human Services, Attention: CMS-2198-
P, P.O. Box 8010, Baltimore, MD 21244-1850.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By hand or courier. If you prefer, you may deliver (by hand or
courier) your written comments (one original and two copies) before the
close of the comment period to one of the following addresses. If you
intend to deliver your comments to the Baltimore address, please call
telephone number (410) 786-9994 in advance to schedule your arrival
with one of our staff members. Room 445-G, Hubert H. Humphrey Building,
200 Independence Avenue, SW., Washington, DC 20201; or 7500 Security
Boulevard, Baltimore, MD 21244-8010.
(Because access to the interior of the HHH Building is not readily
available to persons without Federal Government identification,
commenters are encouraged to leave their comments in the CMS drop slots
located in the main lobby of the building. A stamp-in clock is
available for persons wishing to retain a proof of filing by stamping
in and retaining an extra copy of the comments being filed.)
Comments mailed to the addresses indicated as appropriate for hand
or courier delivery may be delayed and received after the comment
period.
FOR FURTHER INFORMATION CONTACT: Jim Frizzera, (410) 786-9535.
SUPPLEMENTARY INFORMATION:
[[Page 50263]]
Submitting Comments: We welcome comments from the public on all
issues set forth in this rule to assist us in fully considering issues
and developing policies. You can assist us by referencing the file code
CMS-2198-P and the specific ``issue identifier'' that precedes the
section on which you choose to comment.
Inspection of Public Comments: All comments received before the
close of the comment period are available for viewing by the public,
including any personally identifiable or confidential business
information that is included in a comment. CMS posts all electronic
comments received before the close of the comment period on its public
Web site as soon as possible after they have been received. Hard copy
comments received timely will be available for public inspection as
they are received, generally beginning approximately 3 weeks after
publication of a document, at the headquarters of the Centers for
Medicare & Medicaid Services, 7500 Security Boulevard, Baltimore,
Maryland 21244, Monday through Friday of each week from 8:30 a.m. to 4
p.m. To schedule an appointment to view public comments, phone 1-800-
743-3951.
I. Background
Title XIX of the Social Security Act (the Act) authorizes Federal
grants to States for Medicaid programs that provide medical assistance
to low-income families, the elderly, and persons with disabilities.
Section 1902(a)(13)(A)(iv) of the Act requires that States make
Medicaid payment adjustments for hospitals that serve a
disproportionate number of low-income patients with special needs.
Section 1923(a)(2)(D) of the Act requires States to provide an annual
report to the Secretary describing the payment adjustments made to each
disproportionate share hospital (DSH).
Section 1923 of the Act also sets out certain limits on Federal
financial participation for State DSH payments. Section 1923(f) of the
Act defines, for each State, an aggregate annual limit on Federal
financial participation for DSH payments. Section 1923(g)(1) of the Act
also defines hospital-specific limits on Federal financial
participation for DSH payments. Under the hospital-specific limits, a
hospital's DSH payments must not exceed the costs incurred by that
hospital in furnishing services during the year to Medicaid patients
and the uninsured, less other Medicaid payments made to the hospital
and payments made by uninsured patients (``uncompensated care costs'').
II. The Medicare Prescription Drug, Improvement, and Modernization Act
of 2003
Section 1001(d) of the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 (MMA) (Pub. L. 108-173, enacted on December
8, 2003) added section 1923(j) to the Act to require States to report
additional information about their DSH programs. Section 1923(j)(1) of
the Act requires States to submit an annual report that includes the
following:
Identification of each DSH that received a DSH payment
under the State's Medicaid program in the preceding fiscal year and the
amount of DSH payments paid to that hospital in the same year.
Such other information as the Secretary of Health and
Human Services determines necessary to ensure the appropriateness of
DSH payments.
Section 1923(j)(2) of the Act also requires States to have their DSH
payment programs independently audited and to submit the independent
certified audit annually to the Secretary. The certified independent
audit must verify:
The extent to which hospitals in the State have reduced
uncompensated care costs to reflect the total amount of claimed
expenditures made under section 1923 of the Act.
DSH payments to each hospital comply with the applicable
hospital-specific DSH payment limit.
Only the uncompensated care costs of providing inpatient
hospital and outpatient hospital services to Medicaid eligible
individuals and uninsured individuals as described in section
1923(g)(1)(A) of the Act are included in the calculation of the
hospital-specific limits.
The State included all Medicaid payments, including
supplemental payments, in the calculation of such hospital-specific
limits.
The State has separately documented and retained a record
of all its costs under the Medicaid program, claimed expenditures under
the Medicaid program, uninsured costs in determining payment
adjustments under section 1923 of the Act, and any payments made on
behalf of the uninsured from payment adjustments under section 1923 of
the Act.
Under section 1923(j) of the Act, Federal matching payments are
contingent upon a State's submission of the annual DSH report and
independent certified audit.
III. Provisions of the Proposed Regulations
A. Reporting Requirements
To implement the reporting requirements in section 1923(j)(1) of
the Act, we are proposing to modify the DSH reporting requirements in
Federal regulations at 42 CFR 447.
Currently, under Sec. 447.299, each State is required to report
and maintain certain information about DSH program spending. Under
Sec. 447.299(a) and (b), each State is required to submit and report
to CMS the quarterly aggregate amount of DSH payments. Each State is
also required, under Sec. 447.299(c), to maintain and make available
upon request supporting documentation for the State's DSH program,
including the amount of DSH payments to each individual hospital each
quarter. Section 447.299(d) provides that future grant awards may be
deferred or disallowed if a State fails to comply with these reporting
requirements.
We are proposing to add a new paragraph (c) to the reporting
requirements in Sec. 447.299. We are proposing to redesignate the
documentation requirements in paragraph (c) as paragraph (d) and
redesignate the deferrals and disallowances information in paragraph
(d) as paragraph (e), respectively. We are proposing that the following
information reflects the data elements necessary to ensure that DSH
payments are appropriate such that each qualifying hospital receives no
more in DSH payments than the amount permitted under section 1923(g) of
the Act. Specifically, proposed paragraph (c) would require each State
receiving an allotment under section 1923(f) of the Act, beginning with
the first full State fiscal year (SFY) immediately after the enactment
of section 1001(d) of the Medicare Prescription Drug, Improvement, and
Modernization Act (MMA) and each year thereafter, to report to us the
following information for each DSH hospital:
Hospital Name.
Medicare Provider Number.
Medicaid Provider Number.
Type of Hospital. The State would indicate if the hospital
is an acute, long-term care, psychiatric, teaching, children's,
rehabilitation, or other facility. If other facility, the State would
be asked to specify the type.
Type of Hospital Ownership. The State would indicate
whether the hospital is a privately-owned, State government-owned, non-
State government-owned, or a facility owned by the Indian Health
Service, or a tribal government. The State would also
[[Page 50264]]
indicate whether the hospital is privately operated, State-government
operated, non-State government operated, or a facility operated by the
Indian Health Service, or a tribal government.
Medicaid Inpatient Utilization Rate. The State would
indicate the hospital's Medicaid inpatient utilization rate, as defined
in section 1923(b)(2) of the Act.
Low Income Utilization Rate. The State would indicate the
hospital's low income utilization rate, as defined in section
1923(b)(3) of the Act. The low income utilization rate determination
should only include those individuals that have no source of third
party coverage for the inpatient hospital services they receive.
DSH Payments. The State would indicate the total annual
DSH payments made to the hospital. States need only report the single,
aggregate annual amount of DSH payments made to the hospital,
regardless of the number of separate DSH pools or the number of
individual payments.
Regular Medicaid Rate Payments. The State would indicate
the total annual amount paid to the hospital by the State, not
including any DSH payments or supplemental/enhanced payments, for
inpatient hospital and outpatient hospital services furnished to
Medicaid eligible individuals.
Medicaid Managed Care Organization Payments. The State
would indicate the total annual amount paid to the hospital by Medicaid
managed care organizations for inpatient hospital and outpatient
hospital services furnished to Medicaid eligible individuals.
Supplemental/Enhanced Medicaid Payments. The State would
indicate the total annual amount of supplemental/enhanced Medicaid
payments made to the hospital by the State for inpatient hospital and
outpatient hospital services furnished to Medicaid eligible
individuals. These amounts do not include DSH payments, regular
Medicaid rate payments, and Medicaid managed care organization
payments.
Indigent Care Revenue. The State would indicate the total
annual payments received by the hospital from individuals with no
source of third party coverage for inpatient hospital and outpatient
hospital services they receive.
Transfers. The State would indicate the total annual
amount of funds transferred by the hospital to the State or local
governmental entity as a condition of the hospital receiving any
Medicaid payment or DSH payment.
Total Cost of Care. The State would indicate separately
the total annual costs incurred for furnishing inpatient hospital and
outpatient hospital services provided to Medicaid individuals and the
total costs incurred for furnishing those services provided to
individuals with no source of third party coverage for the inpatient
hospital and outpatient hospital services they receive.
Uncompensated Care Costs. The State would indicate
separately the total annual amount of uncompensated care costs for
furnishing inpatient hospital and outpatient hospital services to
Medicaid eligible individuals and to individuals with no source of
third party coverage for the inpatient hospital and outpatient services
they receive. The total annual uncompensated care cost equals the total
cost of care for furnishing inpatient hospital and outpatient hospital
services to Medicaid eligible individuals and to individuals with no
source of third party coverage for the inpatient hospital and
outpatient hospital services they receive less the sum of regular
Medicaid rate payments, Medicaid managed care organization payments,
supplemental/enhanced Medicaid payments, and indigent care revenue).
Uncompensated care costs do not include bad debt or payer discounts.
Medicaid Eligible and Uninsured Individuals. The State
would indicate the total annual unduplicated number of Medicaid
eligible individuals receiving inpatient hospital and outpatient
hospital services and the total annual unduplicated number of
individuals with no source of third party coverage for the inpatient
hospital and outpatient hospital services they receive.
Section 1011, Federal Reimbursement of Emergency Health Services
Furnished to Undocumented Aliens, of the MMA, requires that the
Secretary directly pay hospitals and certain other providers for their
otherwise un-reimbursed costs of providing services required by section
1867 of the Act (EMTALA) and related hospital inpatient, outpatient,
and ambulance services furnished to undocumented aliens, aliens paroled
into the United States at a U.S. port of entry for the purpose of
receiving such services, and Mexican citizens permitted temporary entry
to the U.S. with a laser visa. In addition, payment will be made from
an allotment that varies by the number of undocumented aliens in each
State. Provider payments are subject to a pro-rata reduction if the
State allocation is insufficient to provide full reimbursement under
the formula established by the Secretary.
In general, we believe that the receipt of a section 1011 payment
will not impact the calculation of a hospital's Medicaid DSH payment
amount if the hospital has not reached its DSH cap. For hospitals
receiving DSH payments at or near their DSH limit, States will need to
consider a section 1011 payment when determining the hospital's DSH
limit, because the total DSH payments should not exceed the total
amount of uncompensated care at the hospital.
To ensure uniform and timely data transmission, we have prepared an
Excel spreadsheet for States to use to transmit their DSH information
to us. The information supplied on this spreadsheet would satisfy the
requirements under sections 1923(a)(2)(D) and 1923(j)(1) of the Act.
B. Audit Requirements
Section 1001(d) of the MMA amended section 1923(j)(2) of the Act to
require States to annually submit to CMS an independent certified audit
report that verifies information about DSH payments to hospitals. The
statute specifies five items that require verification by an
independent audit. Collectively, these five items will provide
independent verification that State Medicaid DSH payments comply with
the hospital-specific DSH limit in section 1923(g) of the Act, and that
such limits are accurately computed.
In proposed Sec. 455.201, we state that ``SFY'' stands for State
fiscal year. In addition, we are proposing to define that an
``independent audit'' means an audit conducted according to the
standards specified in the generally accepted government auditing
standards issued by the Comptroller General of the United States.
Section 1923(j) of the Act requires that each State must submit
annually the independent certified audit of its DSH program as a
condition for receiving Federal payments under section 1903(a)(1) and
1923 of the Act. We are proposing to add a new Sec. 455.204(a) to
reflect this requirement.
As noted previously, each State must obtain an independent
certified audit, beginning with an audit of its State fiscal year 2005
DSH program. We are proposing to add a new Sec. 455.204(b) to reflect
this requirement. We are proposing a submission requirement within 1
year of the independent certified audit.
In the audit report, the auditor must verify whether the State's
method of computing the hospital-specific DSH limit and the DSH
payments made to the hospital comply with the following five items
required by section 1923(j)(2) of the Act:
Verification 1: The extent to which hospitals in the State
have reduced their uncompensated care costs to reflect the
[[Page 50265]]
total amount of claimed expenditures made under section 1923 of the
Act.
Section 1923(g)(1) of the Act defines a hospital-specific limit on
Federal financial participation for DSH payments. Each State must
develop a methodology to compute this hospital-specific limit for each
DSH hospital in the State. As defined in section 1923(g)(1) of the Act,
the State's methodology must calculate for each hospital, for each
fiscal year, the difference between the costs incurred by that hospital
for furnishing inpatient hospital and outpatient hospital services
during the applicable State fiscal year to Medicaid individuals and
individuals with no source of third party coverage for the inpatient
hospital and outpatient hospital services they receive, less all
Medicaid payments made to the hospital for such hospital services and
payments made by uninsured individuals for such hospital services. This
difference, if any, between incurred inpatient hospital and outpatient
hospital costs and associated Medicaid payments and other payments
received from or on behalf of individuals with no source of third party
coverage is considered the hospital's uncompensated care cost (UCC)
limit. Federal financial participation is not available for DSH
payments that exceed the hospital's UCC for furnishing inpatient
hospital and outpatient hospital services to Medicaid eligible
individuals and individuals with no source of third party coverage in
any given State fiscal year.
For purposes of Federal claiming, States report DSH expenditures to
CMS. These DSH expenditures are matched at the Federal Medicaid
Assistance Percentage. In some States, the non-Federal share of the DSH
expenditures are funded by State and/or local government general fund
appropriations. In other States, the DSH hospitals, either through
intergovernmental transfers or certified public expenditures, fund the
non-Federal share of the DSH expenditures. In determining compliance
with the hospital-specific limit, total DSH expenditures, regardless of
the source of the non-Federal share, cannot exceed the UCC.
We interpret section 1923(j)(2)(A) of the Act to require that the
independent audit verify whether total claimed DSH expenditures for
each hospital, including the non-Federal share, are included as
revenues when determining whether DSH payments are less than or equal
to each hospital's UCC. Obligations of the qualifying DSH hospital to
fund the non-Federal share of a DSH payment or any other Medicaid
payment cannot be included as uncompensated care for purposes of the
hospital-specific DSH limit. We are proposing to add a new Sec.
455.204(c)(1) to reflect the requirement that the audit report include
a determination that qualifying hospitals in States have properly
reduced their uncompensated care costs to reflect the total amount of
claimed DSH expenditures.
Verification 2: DSH payments to hospitals comply with the
hospital-specific DSH limit.
We interpret section 1923(j)(2)(B) of the Act to require that the
audit verify whether claimed DSH expenditures for each eligible
hospital are less than or equal to the hospital's UCC. In order to
evaluate compliance with this hospital-specific DSH limit, DSH payments
made in the audited State fiscal year (SFY) must be measured against
the actual uncompensated care costs in that same audited SFY, which for
all States will begin with their respective SFY 2005. We are proposing
to add a new Sec. 455.204(c)(2) to reflect the requirement that the
audit report include a determination that DSH payments to each
qualifying hospital in the State comply with the hospital-specific DSH
payment limit, that is, the DSH payments do not exceed the
uncompensated care for furnishing inpatient hospital and outpatient
hospital services to Medicaid eligible individuals and to individuals
with no source of third party coverage for the inpatient hospital and
outpatient hospital services they receive.
Verification 3: Only uncompensated care costs of providing
inpatient and outpatient hospital services to Medicaid eligible
individuals and uninsured individuals are included in the hospital-
specific DSH payment limit.
The independent audit must verify whether the hospital-specific DSH
limits calculated by the State include only costs incurred for
inpatient hospital and outpatient hospital services furnished to
Medicaid eligible individuals and to individuals with no source of
third party coverage for the inpatient hospital and outpatient hospital
services they receive.
First, the audit must verify whether the State has included only
costs incurred for inpatient hospital and outpatient hospital services
in the estimate of uncompensated care costs for each DSH hospital.
Medicaid regulations at Sec. 440.10 and Sec. 440.20(a) define
inpatient hospital services and outpatient hospital services, which
generally include facility services furnished under the direction of a
physician or dentist. The uncompensated care costs of providing
physician services cannot be included in the calculation of hospital-
specific DSH limit. In some circumstances, government-owned and
operated hospitals fund the non-Federal share of DSH and other Medicaid
payments through intergovernmental transfers to the State. These
intergovernmental transfers cannot be considered an incurred cost for
the purposes of calculating the hospital-specific DSH limits. The audit
must verify whether the State has excluded such transfer amounts when
determining hospitals' costs for the purposes of the hospital-specific
DSH limits.
Second, the audit must verify that only costs incurred for Medicaid
eligible individuals and uninsured individuals are included in the
hospital-specific limit calculation. Medicaid eligible individuals are
those individuals that a State has determined to be eligible for its
Federal Medicaid program in accordance with applicable eligibility
requirements. Uninsured individuals are individuals with no source of
third party coverage for the inpatient hospital and outpatient hospital
services they receive.
We are proposing to add a new Sec. 455.204(c)(3) to reflect the
requirement that the audit report include a determination that each
qualifying hospital's DSH limit is determined by including only the
uncompensated care costs for furnishing inpatient hospital and
outpatient hospital services to Medicaid eligible individuals and to
individuals with no source of third party coverage for the inpatient
hospital and outpatient hospital services they receive.
Verification 4: The State included all payments under this
title, including supplemental payments, in the calculation of hospital-
specific DSH payment limits.
This provision requires the audit to verify that all sources of
Medicaid payments received by a hospital are fully counted in the
State's calculation of the hospital-specific DSH limits. For example, a
State might supplement the Medicaid payments that are made to hospitals
under a prospective payment system with additional/enhanced non-DSH
Medicaid payments. Under these circumstances, the total amount of these
supplemental/enhanced Medicaid payments should be added to all other
Medicaid payments received by the hospital to determine the hospital's
UCC.
In addition, the audit must verify whether or not the State has
properly accounted for all Medicaid payments in the calculation of
uncompensated care
[[Page 50266]]
costs, regardless of whether Medicaid payments exceeded the incurred
cost of furnishing inpatient hospital and outpatient hospital services
to Medicaid patients. For purposes of this hospital-specific DSH limit,
Medicaid payments made to a DSH hospital for furnishing inpatient
hospital and outpatient hospital services that are in excess of the
Medicaid incurred costs of such services should be applied against the
uncompensated care costs of furnishing inpatient hospital and
outpatient hospital services to patients with no source of third party
coverage for such services. That is, Medicaid ``overpayments'' for
Medicaid individuals must be used to offset any shortfalls in payment
for uninsured individuals. Therefore, the audit must verify whether the
State has appropriately calculated uncompensated care costs by
subtracting total, combined payments for Medicaid and uninsured
payments from total, combined incurred costs of furnishing inpatient
hospital and outpatient hospital services to Medicaid eligible
individuals and individuals with no source of third party coverage for
the inpatient hospital and outpatient hospital services they receive.
We are proposing to add a new Sec. 455.204(c)(4) to reflect the
requirement that the audit report include a determination that States
properly account for all Medicaid payments, including regular Medicaid
rates and Medicaid supplemental/enhanced payments, made to hospitals
for furnishing inpatient hospital and outpatient hospital services to
Medicaid eligible individuals.
Verification 5: The State has separately documented and
retained a record of all its costs under this Medicaid program, claimed
expenditures under this Medicaid program, uninsured costs in
determining payment adjustments under this section, and any payments
made on behalf of the uninsured from payment adjustments under this
section.
This provision requires that the audit verify whether the State has
collected and continues to maintain appropriate documentation for its
calculation of hospital-specific DSH limits and for the payments made
to eligible hospitals. We are proposing to add a new Sec.
455.204(c)(5) to reflect the requirement that the audit report include
a determination that the State has collected, documented, and is
retaining appropriate documentation for its DSH limits calculation and
payments to the qualified hospitals.
As part of the documentation verification, the audit report must
describe the methodology used by the State to calculate each hospital's
limit under section 1923(g)(1) of the Act. Included in the description
of the methodology, the audit report must specify how the State defines
incurred inpatient hospital and outpatient hospital costs. We are
proposing to add a new Sec. 455.204(c)(6) to reflect the requirement
that the audit report include a determination that each State employs
an appropriate methodology for calculating the hospital-specific DSH
limit.
IV. Collection of Information Requirements
Under the Paperwork Reduction Act of 1995, we are required to
provide 60-day notice in the Federal Register and solicit public
comment before a collection of information requirement is submitted to
the Office of Management and Budget (OMB) for review and approval. In
order to fairly evaluate whether an information collection should be
approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act
of 1995 requires that we solicit comment on the following issues:
The need for the information collection and its usefulness
in carrying out the proper functions of our agency.
The accuracy of our estimate of the information collection
burden.
The quality, utility, and clarity of the information to be
collected.
Recommendations to minimize the information collection
burden on the affected public, including automated collection
techniques.
Therefore, we are soliciting public comments on each of these
issues for the information collection requirements discussed below.
The following information collection requirements and associated
burdens are subject to the PRA.
We also received one public comment responding to the proposed
requirements for a Medicaid Disproportionate Share Annual Report for
Hospitals and Institutions in the Federal Register notice dated March
26, 2004, (69 FR 15853). We have determined that there was an error in
the Collection of Information portion of that notice and are drafting a
correction notice for publication.
Section 447.299 Reporting Requirements
In summary, paragraph (c) of this section requires the States to
submit to CMS information for each DSH for the most recently-completed
State fiscal year beginning with the first full State fiscal year (SFY)
after the enactment of section 1001(d) of the MMA, which for all States
will begin with their respective SFY 2005 and each subsequent SFY. This
paragraph presents the information to be submitted.
The burden associated with this requirement is the time and effort
for the States to prepare and submit the required information. We
estimate that it will take each State approximately 30 minutes to
prepare and submit the information for each of its DSHs. On average,
each State has approximately 75 DSHs. Therefore, we estimate it will
take 38 hours per State to comply for a total of 1,976 annual hours.
Section 455.202 Audit Reporting Requirements
In summary, this section states what information must be included
in the audit report.
The PRA exempts the information collection activities referenced in
this section. In particular, 5 CFR 1320.4 excludes collection
activities during the conduct of administrative actions,
investigations, or audits involving an agency against specific
individuals or entities.
Section 455.203 Submission Date
In summary, this section requires States to submit to us an
independent certified audit.
The PRA exempts the information collection activities referenced in
this section. In particular, 5 CFR 1320.4 excludes collection
activities during the conduct of administrative actions,
investigations, or audits involving an agency against specific
individuals or entities.
We have submitted a copy of this proposed rule to OMB for its
review of the information collection requirements described above.
These requirements are not effective until they have been approved by
OMB.
If you comment on any of these information collection and record
keeping requirements, please mail copies directly to the following:
Centers for Medicare & Medicaid Services, Office of Strategic
Operations and Regulatory Affairs, Regulations Development and
Issuances Group, Attn: Jimmy Wickcliffe, CMS-2198-P Room C5-11-04, 7500
Security Boulevard, Baltimore, MD 21244-1850; and
Office of Information and Regulatory Affairs, Office of Management and
Budget, Room 10235, New Executive Office Building, Washington, DC
20503, Attn: Katherine Astrich, CMS Desk Officer.
Comments submitted to OMB may also be e-mailed to the following
address: e-mail: Katherine--T.--Astrich
[[Page 50267]]
V. Response to Comments
Because of the large number of public comments we normally receive
on Federal Register documents, we are not able to acknowledge or
respond to them individually. We will consider all comments we receive
by the date and time specified in the DATES section of this preamble,
and, when we proceed with a subsequent document, we will respond to the
comments in the preamble to that document.
VI. Regulatory Impact Statement
We have examined the impact of this rule as required by Executive
Order 12866 (September 1993, Regulatory Planning and Review), the
Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-354),
section 1102(b) of the Social Security Act, the Unfunded Mandates
Reform Act of 1995 (Pub. L. 104-4), and Executive Order 13132.
Executive Order 12866 directs agencies to assess all costs and
benefits of available regulatory alternatives and, if regulation is
necessary, to select regulatory approaches that maximize net benefits
(including potential economic, environmental, public health and safety
effects, distributive impacts, and equity). A regulatory impact
analysis (RIA) must be prepared for major rules with economically
significant effects ($100 million or more in any 1 year). This rule
does not reach the economic threshold and thus is not considered a
major rule.
The RFA requires agencies to analyze options for regulatory relief
of small businesses. For purposes of the RFA, small entities include
small businesses, nonprofit organizations, and government agencies.
Most hospitals and most other providers and suppliers are small
entities, either by nonprofit status or by having revenues of $6
million to $29 million in any 1 year. Individuals and States are not
included in the definition of a small entity. We are not preparing an
analysis for the RFA because we have determined that this rule would
not have a significant economic impact on a substantial number of small
entities.
In addition, section 1102(b) of the Act requires us to prepare a
regulatory impact analysis if a rule may have a significant impact on
the operations of a substantial number of small rural hospitals. This
analysis must conform to the provisions of section 603 of the RFA. For
purposes of section 1102(b) of the Act, we define a small rural
hospital as a hospital that is located outside of a Metropolitan
Statistical Area and has fewer than 100 beds. We are not preparing an
analysis for section 1102(b) of the Act because we have determined that
this rule would not have a significant impact on the operations of a
substantial number of small rural hospitals.
Section 202 of the Unfunded Mandates Reform Act of 1995 also
requires that agencies assess anticipated costs and benefits before
issuing any rule that may result in expenditure in any 1 year by State,
local, or tribal governments, in the aggregate, or by the private
sector, of $110 million. This rule would have no consequential effect
on the governments mentioned or on the private sector.
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a proposed rule (and subsequent
final rule) that imposes substantial direct requirement costs on State
and local governments, preempts State law, or otherwise has Federalism
implications. Since this regulation does not impose any costs on State
or local governments, the requirements of E.O. 13132 are not
applicable.
In accordance with the provisions of Executive Order 12866, this
regulation was reviewed by the Office of Management and Budget.
List of Subjects
42 CFR Part 447
Accounting, Administrative practice and procedure, Drugs, Grant
programs-health, Health facilities, Health professions, Medicaid,
Reporting and record keeping requirements, Rural areas.
42 CFR Part 455
Fraud, Grant programs-health, Health facilities, Health
professions, Investigations, Medicaid, Reporting and recordkeeping
requirements.
For the reasons set forth in the preamble, the Centers for Medicare
& Medicaid Services proposes to amend 42 CFR chapter IV as follows:
PART 447--PAYMENTS FOR SERVICES
1. The authority citation for part 447 continues to read as
follows:
Authority: Sec. 1102 of the Social Security Act (42 U.S.C.
1302).
2. Section 447.299 is amended by--
A. Redesignating existing paragraphs (c) and (d) as paragraphs (d)
and (e).
B. Adding a new paragraph (c) to read as set forth below.
Sec. 447.299 Reporting requirements.
* * * * *
(c) Beginning with each State's fiscal year 2005 and each
subsequent State fiscal year, States must submit to CMS the following
information for each DSH hospital:
(1) Hospital name.
(2) Medicare provider number.
(3) Medicaid provider number.
(4) Type of hospital. Indicate whether the hospital is an acute,
long-term care, psychiatric, teaching, children's, rehabilitation, or
other facility. If other facility, specify the type.
(5) Type of hospital ownership. Indicate whether the hospital is
owned by a private entity, State government, non-State government, the
Indian Health Service, or a tribal government. Indicate whether the
hospital is operated by a private entity, State government, non-State
government, the Indian Health Service, or a tribal government.
(6) Medicaid inpatient utilization rate. Indicate the hospital's
Medicaid inpatient utilization rate, as defined in section 1923(b)(2)
of the Act.
(7) Low income utilization rate. Indicate the hospital's low income
utilization rate, as defined in section 1923(b)(3) of the Act. The low
income utilization rate calculation only includes individuals that have
no source of third party coverage for the inpatient and/or outpatient
hospital services they receive.
(8) Disproportionate share hospital payments. Indicate total annual
payment adjustments made to the hospital under section 1923(g) of the
Act.
(9) Regular Medicaid rate payments. Indicate the total annual
amount paid to the hospital by the State, not including DSH payments or
supplemental/enhanced Medicaid payments, for inpatient and outpatient
services furnished to Medicaid eligible individuals.
(10) Medicaid managed care organization payments. Indicate the
total annual amount paid to the hospital by Medicaid managed care
organizations for inpatient hospital and outpatient hospital services
furnished to Medicaid eligible individuals.
(11) Supplemental/enhanced Medicaid payments. Indicate the total
annual amount of supplemental/enhanced Medicaid payments made to the
hospital by the State for inpatient hospital and outpatient hospital
services furnished to Medicaid eligible individuals. These amounts do
not include DSH payments, regular Medicaid rate payments, and Medicaid
managed care organization payments.
(12) Indigent care revenue. Indicate total annual payments received
by the
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hospital from individuals with no source of third party coverage for
inpatient and outpatient hospital services they receive.
(13) Transfers. Indicate the total annual amount of funds
transferred by the hospital to the State or local governmental entity
as a condition of the hospital receiving any Medicaid payment or DSH
payment.
(14) Total cost of care. Indicate separately the total annual costs
incurred for furnishing inpatient hospital and outpatient hospital
services to Medicaid eligible individuals and the total costs incurred
for furnishing inpatient hospital and outpatient hospital services to
individuals with no source of third party coverage for the hospital
services they receive.
(15) Uncompensated care costs. Indicate separately the total annual
amount of uncompensated care costs for furnishing inpatient hospital
and outpatient hospital services to Medicaid eligible individuals and
to individuals with no source of third party coverage for the hospital
services they receive. The total annual uncompensated care cost equals
the total cost of care for furnishing inpatient hospital and outpatient
hospital services to Medicaid eligible individuals and to individuals
with no source of third party coverage for the hospital services they
receive less the sum of regular Medicaid rate payments, Medicaid
managed care organization payments, supplemental/enhanced Medicaid
payments, and indigent care revenue. Uncompensated care costs do not
include bad debt or payer discounts.
(16) Medicaid eligible and uninsured individuals. Indicate the
total annual unduplicated number of Medicaid eligible individuals
receiving inpatient hospital and outpatient hospital services and the
total annual unduplicated number of individuals with no source of third
party coverage for the inpatient hospital and outpatient hospital they
receive.
* * * * *
PART 455--PROGRAM INTEGRITY: MEDICAID
1. The authority citation for part 455 continues to read as
follows:
Authority: Sec 1102 of the Social Security Act (42 U.S.C. 1302).
2. Add new subpart C to read as follows:
Subpart C--Independent Certified Audit of State Disproportionate Share
Hospital Payment Adjustments
Sec.
455.200 Purpose.
455.201 Definitions.
455.204 Condition for Federal financial participation (FFP).
Subpart C--Independent Certified Audit of State Disproportionate
Share Hospital Payment Adjustments
Sec. 455.200 Purpose.
This subpart implements section 1923(j)(2) of the Act.
Sec. 455.201 Definitions.
For the purposes of this subpart--
Independent certified audit means an audit that is conducted in
accordance with generally accepted government auditing standards, as
defined by the Comptroller General of the United States.
SFY stands for State fiscal year.
Sec. 455.204 Condition for Federal financial participation (FFP).
(a) General rule. A State must submit an independent certified
audit to CMS, according to the requirements in this subpart, to receive
Federal disproportionate share hospital (DSH) payment under sections
1903(a)(1) and 1923 of the Act.
(b) Timing. Beginning with FY 2005, a State must submit to CMS an
independent certified audit report no later than 1 year after the
completion of each State's fiscal year.
(c) Specific requirements. The independent certified audit report
must verify the following:
(1) Each hospital that qualifies for a DSH payment in the State has
reduced its uncompensated care costs for furnishing inpatient hospital
and outpatient hospital services during the SFY to Medicaid eligible
individuals and individuals with no source of third party coverage for
the services in order to reflect the total amount of claimed DSH
expenditures.
(2) DSH payments made to each qualifying hospital comply with the
hospital-specific DSH payment limit. For each audited SFY, the DSH
payments made in that audited SFY must be measured against the actual
uncompensated care cost in that same audited SFY.
(3) Only uncompensated care costs of furnishing inpatient and
outpatient hospital services to Medicaid eligible individuals and
individuals with no third party coverage for the inpatient and
outpatient hospital services they receive as described in section
1923(g)(1)(A) of the Act are included in the calculation of the
hospital-specific disproportionate share limit payment limit, as
described in section 1923(g)(1)(A) of the Act.
(4) For purposes of this hospital-specific limit calculation, any
Medicaid payments (including regular Medicaid rate payments,
supplemental/enhanced Medicaid payments, and Medicaid managed care
organization payments) made to a disproportionate share hospital for
furnishing inpatient hospital and outpatient hospital services to
Medicaid eligible individuals, which are in excess of the Medicaid
incurred costs of such services, are applied against the uncompensated
care costs of furnishing inpatient hospital and outpatient hospital
services to individuals with no source of third party coverage for such
services.
(5) Any information and records of all of its inpatient and
outpatient hospital service costs under the Medicaid program; claimed
expenditures under the Medicaid program; uninsured inpatient and
outpatient hospital service costs in determining payment adjustments
under this section; and any payments made on behalf of the uninsured
from payment adjustments under this section has been separately
documented and retained by the State.
(6) The information specified in paragraph (c)(5) of this section
includes a description of the methodology for calculating each
hospital's payment limit under section 1923(g)(1) of the Act. Included
in the description of the methodology, the audit report must specify
how the State defines incurred inpatient hospital and outpatient
hospital costs for furnishing inpatient hospital and outpatient
hospital services to Medicaid eligible individuals and individuals with
no source of third party coverage for the inpatient hospital and
outpatient hospital services they receive.
(Catalog of Federal Domestic Assistance Program No. 93.778, Medical
Assistance Program)
(Catalog of Federal Domestic Assistance Program No. 93.773,
Medicare--Hospital Insurance; and Program No. 93.774, Medicare--
Supplementary Medical Insurance Program)
Dated: January 5, 2005.
Mark B. McClellan,
Administrator, Centers for Medicare & Medicaid Services.
Approved: May 5, 2005.
Michael O. Leavitt,
Secretary.
[FR Doc. 05-16974 Filed 8-25-05; 8:45 am]
BILLING CODE 4120-01-P