[Federal Register: December 19, 2008 (Volume 73, Number 245)]
[Notices]
[Page 77704-77714]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr19de08-102]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
[CMS-2274-N]
RIN 0938-AP09
Medicaid Program; Fiscal Year Disproportionate Share Hospital
Allotments and Disproportionate Share Hospital Institutions for Mental
Disease Limits
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS
ACTION: Notice.
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SUMMARY: This notice announces the final Federal share disproportionate
share hospital (DSH) allotments for Federal fiscal year (FFY) 2007 and
the preliminary Federal share DSH allotments for FFY 2009. This notice
also announces the final FFY 2007 and the preliminary FFY 2009
limitations on aggregate DSH payments that States may make to
institutions for mental disease and other mental health facilities. In
addition, this notice includes background information describing the
methodology for determining the amounts of States' FFY DSH allotments.
DATES: Effective Date: This notice is effective on 60 days after the
date of publication in the Federal Register. The final allotments and
limitations set forth in this notice are effective for the fiscal years
specified.
FOR FURTHER INFORMATION CONTACT: Richard Strauss, (410) 786-2019.
SUPPLEMENTARY INFORMATION:
I. Background
A. Disproportionate Share Hospital Allotments for Federal Fiscal Year
2003
Under section 1923(f)(3) of the Social Security Act (the Act),
States' Federal fiscal year (FFY) 2003 disproportionate share hospital
(DSH) allotments were calculated by increasing the amounts of the FFY
2002 allotments for each State (as specified in the chart, entitled
``DSH Allotment (in millions of dollars),'' contained in section
1923(f)(2) of the Act) by the percentage change in the Consumer Price
Index for all Urban Consumers (CPI-U) for the prior fiscal year. The
allotment, determined in this way, is subject to the limitation that an
increase to a State's DSH allotment for a fiscal year cannot result in
the DSH allotment exceeding the greater of the State's DSH allotment
for the previous fiscal year or 12 percent of the State's total medical
assistance expenditures for the allotment year (this is referred to as
the 12 percent limit).
Most States' actual FY 2002 allotments were determined in
accordance with the provisions of section 1923(f)(4) of the Act.
However, as indicated previously, the calculation of States' FFY 2003
allotments was not based on the actual FFY 2002 DSH allotments; rather,
section 1923(f)(3) of the Act requires that the States' FY 2003
allotments be determined using the amount of the States' FY 2002
allotments specified in the chart in section 1923(f)(2) of the Act. The
exception to this is the calculation of the FFY 2003 DSH allotments for
certain ``Low-DSH States'' (defined in section 1923(f)(5) of the Act).
Under the Low-DSH State provision, there is a special calculation
methodology for the Low-DSH States only. Under this methodology, the
FFY 2003 allotments were determined by using (that is, increasing)
States' actual FFY 2002 DSH allotments (not their FFY 2002 allotments
specified in the chart in section 1923(f)(2) of the Act) by the
percentage change in the CPI-U for the previous fiscal year.
B. DSH Allotments for FFY 2004
Section 1001(a) of the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 (MMA) (Pub. L. 108-173, enacted on December
8, 2003) amended section 1923(f)(3) of the Act to provide for a
``Special, Temporary Increase in Allotments on a One-Time, Non-
Cumulative Basis.'' Under this provision, States' FFY 2004 DSH
allotments were determined by increasing their FFY 2003 allotments by
16 percent, and the fiscal year DSH allotment amounts so determined
were not subject to the 12 percent limit.
C. DSH Allotments for Non-Low DSH States for FFY 2005, and Fiscal Years
Thereafter
Under the methodology contained in section 1923(f)(3)(C) of the
Act, as amended by section 1001(a)(2) of the MMA, the non-Low-DSH
States' DSH allotments for FFY 2005 and subsequent fiscal years
continue at the same level as the States' DSH allotments for FFY 2004
until a ``fiscal year specified'' occurs. The ``fiscal year specified''
is the first fiscal year for which the Secretary estimates that a
State's DSH allotment equals (or no longer exceeds) the DSH allotment
as would have been determined under the statute in effect before the
enactment of the MMA. We determine whether the fiscal year specified
has occurred under a special parallel process. Specifically, under this
parallel process, a ``parallel'' DSH allotment is determined for FFYs
after 2003 by increasing the State's DSH allotment for the previous
fiscal year by the percentage change in the CPI-U for the prior fiscal
year, subject to the 12 percent limit. This is the methodology as would
otherwise have been applied under section 1923(f)(3)(A) of the Act
notwithstanding the application of the provisions of MMA. The ``fiscal
year specified,'' is the fiscal year in which the parallel DSH
allotment calculated under this special parallel process finally equals
or exceeds the FY 2004 DSH allotment, as determined under the MMA
provisions. Once the fiscal year specified occurs for a State, that
State's fiscal year DSH allotment will be calculated by increasing the
State's previous actual fiscal year DSH allotment (which would be equal
to the FY 2004 DSH allotment) by the percentage change in the CPI-U for
the previous fiscal year, subject to the 12 percent limit. The
following example illustrates how the fiscal year DSH allotment would
be calculated for fiscal years after FFY 2004.
Example--In this example, we are determining the parallel FFY 2009
DSH
[[Page 77705]]
allotment. A State's actual FFY 2003 DSH allotment is $100 million.
Under the MMA, this State's actual FFY 2004 DSH allotment would be $116
million ($100 million increased by 16 percent). The State's DSH
allotment for FFY 2005 and subsequent fiscal years would continue at
the $116 million FFY 2004 DSH allotment for fiscal years following FFY
2004 until the ``fiscal year specified'' occurs. Under the separate
parallel process, we determine whether the fiscal year specified has
occurred by calculating the State's DSH allotments in accordance with
the statute in effect before the enactment of the MMA. Under this
special process, we would continue to determine the State's parallel
DSH allotment for each fiscal year by increasing the State's parallel
DSH allotment for the previous fiscal year (as also determined under
the special parallel process) by the percentage change in the CPI-U for
the previous fiscal year, and subject to the 12 percent limit. Assume
for purposes of this example that, in accordance with this special
parallel process, the State's parallel FFY 2008 DSH allotment was
determined to be $115 million and the percentage change in the CPI-U
for FFY 2008 (the previous fiscal year) relevant for the calculation of
the FFY 2009 DSH allotment was 4.0 percent. That is, the percentage
change for the CPI-U for FFY 2008, the year before FFY 2009, was 4.0
percent. Therefore, the State's special parallel process FFY 2009 DSH
allotment amount would be calculated by increasing the special parallel
process FFY 2008 DSH allotment amount of $115 million by 4.0 percent;
this results in a parallel process DSH allotment process amount for FFY
2009 of $119.6 million. Since $119.6 million is greater than $116
million (the actual FFY 2004 DSH allotment calculated under the MMA),
we would determine that FFY 2009 is the ``fiscal year specified'' (the
first year that the FFY 2004 allotment equals or no longer exceeds the
parallel process allotment). Since FY 2009 is the fiscal year
specified, we would then determine the State's FFY 2009 allotment by
increasing the State's actual FFY 2008 DSH allotment ($116 million) by
the percentage change in the CPI-U for FFY 2008 (4.0 percent).
Therefore, the State's FFY 2009 DSH allotment would be $120.6 million
($116 million increased by 4.0 percent); for purposes of this example,
the application of the 12 percent limit has no effect. Furthermore, for
FFY 2009 and thereafter, the State's DSH allotment would be calculated
under the provisions of section 1923(f)(3)(A) of the Act by increasing
the State's previous fiscal year's DSH allotment by the percentage
change in the CPI-U for the previous fiscal year, subject to the 12
percent limit.
However, as amended by section 1001(b)(4) of the MMA, section
1923(f)(5)(B) of the Act also contains criteria for determining whether
a State is a Low-DSH State, beginning with FFY 2004. This provision is
described in section I.D.
D. DSH Allotments for Low-DSH States for FFY 2004 and Fiscal Years
Thereafter
Section 1001(b)(1) of the MMA amended section 1923(f)(5) of the Act
regarding the calculation of the fiscal year DSH allotments for ``Low-
DSH'' States for FFY 2004 and subsequent fiscal years. Specifically,
under section 1923(f)(5)(B) of the Act, as amended by section
1001(b)(4) of the MMA, a State is considered a Low-DSH State for FFY
2004 if its total DSH payments under its State plan for FFY 2000
(including Federal and State shares) as reported to CMS as of August
31, 2003, are greater than 0 percent and less than 3 percent of the
State's total FFY 2000 expenditures under its State plan for medical
assistance. For States that meet the new Low-DSH criteria, their FFY
2004 DSH allotments are calculated by increasing their FFY 2003 DSH
allotments by 16 percent. Therefore, for FFY 2004, Low-DSH States'
fiscal year DSH allotments are calculated in the same way as the DSH
allotments for regular States, which under section 1923(f)(3) of the
Act, get the special temporary increase for FFY 2004.
Furthermore, for States meeting the MMA's Low-DSH definition, the
DSH allotments for FFYs 2005 through 2008 will continue to be
determined by increasing the previous fiscal year's DSH allotment by 16
percent. The Low-DSH States' DSH allotments for FFYs 2004 through 2008
are not subject to the 12 percent limit. The Low-DSH States' DSH
allotments for FFYs 2009 and subsequent fiscal years are calculated by
increasing those States' DSH allotments for the prior fiscal year by
the percentage change in the CPI-U for that prior fiscal year. For FFYs
2009 and thereafter, the DSH allotments so determined would be subject
to the 12 percent limit.
E. Institutions for Mental Diseases DSH Limits for FFYs 1998 and
Thereafter
Under section 1923(h) to the Act, Federal financial participation
(FFP) is not available for DSH payments to institutions for mental
diseases (IMDs) and other mental health facilities that are in excess
of State-specific aggregate limits. Under this provision, this
aggregate limit for DSH payments to IMDs and other mental health
facilities is the lesser of a State's FFY 1995 total computable (State
and Federal share) IMD and other mental health facility DSH
expenditures applicable to the State's FFY 1995 DSH allotment (as
reported on the Form CMS-64 as of January 1, 1997), or the amount equal
to the product of the State's current year total computable DSH
allotment and the applicable percentage.
Each State's IMD limit on DSH payments to IMDs and other mental
health facilities was calculated by first determining the State's total
computable DSH expenditures attributable to the FFY 1995 DSH allotment
for mental health facilities and inpatient hospitals. This calculation
was based on the total computable DSH expenditures reported by the
State on the Form CMS-64 as mental health DSH and inpatient hospital as
of January 1, 1997. We then calculate an ``applicable percentage.'' The
applicable percentage for FFY 1998 through FFY 2000 (1995 IMD DSH
percentage) is calculated by dividing the total computable amount of
IMD and mental health DSH expenditures applicable to the State's FFY
1995 DSH allotment by the total computable amount of all DSH
expenditures (mental health facility plus inpatient hospital)
applicable to the FFY 1995 DSH allotment. For FFY 2001 and thereafter,
the applicable percentage is defined as the lesser of the applicable
percentage as calculated above (for FFYs 1998 through 2001) or 50
percent for FFY 2001; 40 percent for FFY 2002; and 33 percent for each
subsequent FFY.
The applicable percentage is then applied to each State's total
computable FFY DSH allotment for the current FFY. The State's total
computable FFY DSH allotment is calculated by dividing the State's
Federal share DSH allotment for the FFY by the State's Federal medical
assistance percentage (FMAP) for that FFY.
In the final step of the calculation of the IMD DSH Limit, the
State's total computable IMD DSH limit for the FFY is set at the lesser
of the product of a State's current fiscal year total computable DSH
allotment and the applicable percentage for that fiscal year, or the
State's FFY 1995 total computable IMD and other mental health facility
DSH expenditures applicable to the State's FFY 1995 DSH allotment as
reported on the Form CMS-64.
The MMA legislation did not amend the Medicaid statute with respect
to the calculation of the IMD DSH limit.
[[Page 77706]]
F. Publication in the Federal Register of Preliminary and Final Notice
for DSH Allotments and IMD DSH Limits
In general, we initially determine States' DSH allotments and IMD
DSH limits for a fiscal year using estimates of medical assistance
expenditures, including DSH expenditures in their Medicaid programs.
These estimates are provided by States each year on the August
quarterly Medicaid budget reports (Form CMS-37) before the Federal
fiscal year for which the DSH allotments and IMD DSH limits are being
determined. The DSH allotments and IMD DSH limits determined using
these estimates are referred to as ``preliminary.'' Only after we
receive States' reports of the actual related medical assistance
expenditures through the quarterly expenditure report (Form CMS-64),
which occurs after the end of the fiscal year, are the ``final'' DSH
Allotments and IMD DSH limits determined.
As indicated in section I.F. of this notice, the notice published
in the Federal Register on October 3, 2006, included the announcement
of the preliminary FFY 2007 DSH allotments (based on estimates), and
the preliminary FFYs 2007 IMD DSH limits (since they were based on the
preliminary DSH allotments for FFYs 2007). The notice published in the
Federal Register on December 28, 2007 announced the final FFY 2006 DSH
allotments and the final FFY 2006 IMD DSH limits (since they were based
on the actual expenditures related to those years), and the preliminary
FFY 2008 allotments (based on estimates), and the preliminary FFYs 2008
IMD DSH limits (since they were based on the preliminary DSH allotments
for FFYs 2008).
This notice announces the final FFY 2007 DSH allotments and the
final FFY 2007 IMD DSH limits (since these are now based on the actual
expenditures for those fiscal years), the preliminary FFY 2009 DSH
allotments (based on estimates), and the preliminary IMD DSH limits for
FFY 2009 (since they are based on the preliminary DSH allotments for
FFY 2009). This notice does not include the final FFY 2008 DSH
allotments or the final FFY 2008 IMD DSH limits, since the associated
actual expenditures for FFY 2008 are not available at this time.
G. DSH Allotment Provisions for Certain States
1. DSH Allotments for the District of Columbia
The provisions of section 6054 of the Deficit Reduction Act (DRA)
of 2005 Public Law 109-171, enacted February 8, 2006) affected the
determination of the DSH allotment for the District of Columbia. Under
section 6054 of the DRA, for purposes of determining only the FFY 2006
and subsequent fiscal year DSH allotments for the District of Columbia,
the table in section 1923(f)(2) of the Act is amended by increasing the
FFY DSH allotment amounts indicated in that table for the District of
Columbia for FFYs 2000, 2001, and 2002 to $49 million for each of those
fiscal years. Before the DRA amendment, the amount in the chart in
section 1923(f)(2) of the Act for the District of Columbia for each of
those fiscal years was $32 million. This DRA provision increases the
fiscal year DSH allotment for the District of Columbia effective with
the FFY 2006 DSH allotment. This change is because the DSH allotments
for FFY 2003 were based on the amounts of States' DSH allotments for
FFY 2002 as contained in the chart in section 1923(f)(2) of the Act.
Since (for purposes of ultimately determining the FFY 2006 allotment)
the DRA provision increased the FFY 2002 allotment for the District of
Columbia, as indicated above, the FFY 2003 allotment was increased.
Furthermore, for this purpose, the FFY 2004 allotment for the District
of Columbia would then have been determined by increasing the FFY 2003
allotment (as so determined) by 16 percent. For fiscal years subsequent
to FFY 2006, the DSH allotments are determined as described above. The
final FFY 2007 DSH allotment and the preliminary FFY 2009 DSH allotment
for the District of Columbia contained in this notice reflect the
provision of section 6054 of the DRA.
As described below, in accordance with section 6054 of the DRA, the
final FFY 2007 DSH allotment for the District of Columbia is
$57,692,600. As amended by section 6054 of the DRA, the FFY 2002 DSH
allotment amount for the District of Columbia contained in the chart in
section 1923(f)(2) of the Act was increased to $49,000,000. In
accordance with section 1923(f)(3)(A) of the Act, the FFY 2003 DSH
allotment is determined by increasing the $49,000,000 DSH Allotment for
FFY 2002 (as referenced in section 1923(f)(2) of the Act) by the
percentage change in the CPI-U for 2002 (in this case, 1.5 percent) to
$49,735,000. In accordance with section 1923(f)(3)(C)(i) of the Act,
the FFY 2004 DSH allotment for DC would be determined by increasing the
$49,735,000 FFY 2003 DSH allotment amount by 16 percent to $57,692,600.
In accordance with the provisions of section 1923(f)(3)(C)(ii) of the
Act, as applicable for other Non-Low DSH States under the ``parallel''
process described above, the District of Columbia's DSH allotments for
FFYs 2005 and following fiscal years would remain at $57,692,600 until
the fiscal year specified occurs. In accordance with section 6054 of
the DRA, the District of Columbia's DSH allotment was actually
increased as described above, effective beginning with FFY 2006 to the
$57,692,600 amount. The final FY 2007 DSH allotment for DC is also
$57,692,600.
2. DSH Allotments for the State of Tennessee.
Section 1923(f)(6)(A) of the Act, as amended by section 404 of
Public Law 109-432 (enacted on December 20, 2006), section 204 of
Public Law 110-173 (enacted on December 29, 2007), and section 202 of
Public Law 110-275 (enacted on July 15, 2008) provides for the
determination of a DSH allotment for the State of Tennessee for FY
2007, FY 2008, FY 2009, and for a period in FY 2010. In accordance with
this provision, Tennessee's DSH allotment for each of these fiscal
years is the greater of $280 million and the FY 2007 Federal medical
assistance percentage of the DSH payment adjustments reflected in the
State's TennCare Demonstration Project for the demonstration year
ending in 2006. In accordance with this provision, the State's Federal
share DSH allotment for FY 2007, FY 2008, and FY 2009 was determined to
be $305,451,928. Furthermore, Tennessee's DSH allotment for the period
October 1, 2009, through December 31, 2009, is one-fourth of this
amount; that is, $76,362,982. Section 1923(f)(6)(A)(ii) of the Act
further limits the amount of Federal funds that are available for DSH
payments that Tennessee may make in each fiscal year to 30 percent of
the DSH allotment. In this regard, the limit on the DSH payments that
the State of Tennessee may make is effectively $91,635,578 (30 percent
of $305,451,928) for each FY 2007 through FY 2009, and $22,908,895 (30
percent of $76,362,982) for the period October 1, 2009, through
December 31, 2009.
3. DSH Allotments for the State of Hawaii
Section 1923(f)(6)(B) of the Act, as amended by section 404 of
Public Law 109-432, section 204 of Public Law 110-173, and section 202
of Public Law 110-275 provides for a DSH allotment for the State of
Hawaii for FY 2007, FY 2008, FY 2009, and for a period in FY 2010. In
accordance with this provision, Hawaii's DSH allotment for FY 2007, FY
2008, and FY 2009 is $10 million.
[[Page 77707]]
Furthermore, Hawaii's DSH allotment for the period October, 1, 2009,
through December 31, 2009, is $2.5 million.
II. Provisions of the Notice
A. Calculation of the Final FFY 2007 Federal Share State DSH Allotments
and the Preliminary FFY 2009 Federal Share State DSH Allotments
Chart 1 of the Addendum to this notice provides the States'
``final'' FFY 2007 DSH allotments. The final FFY 2007 DSH allotments
for each State were computed in accordance with the provisions of the
Medicaid statute as amended by the MMA. As required by the provisions
of the MMA, the final FFY 2004 DSH allotments for the ``Low-DSH''
States and all the other States were calculated by increasing the FFY
2003 DSH allotments by 16 percent. In the notice published on March 26,
2004 notice published in the Federal Register (69 FR 15850), we
explained the definition and determination of the ``Low-DSH'' States
under the MMA provisions. However, for following fiscal years, the DSH
allotments are determined under a process which incorporates a parallel
process described in section I.C. of this notice. Under that parallel
process, States final FFY 2007 DSH allotments were determined using the
States' expenditure reports (Form CMS-64) for FFY 2007.
B. Calculation of the Preliminary FFY 2009 Federal Share State DSH
Allotments
Chart 2 of the Addendum to this notice provides the States'
``preliminary'' FFY 2009 DSH allotments. These preliminary allotments
were determined using the States' August 2008 expenditure estimates
submitted by the States on the Form CMS-37, and the currently available
percentage change in the consumer price index for all urban consumers
(all items; U.S. city average), for the previous fiscal year (that is,
for FY 2008). The final FFY 2009 DSH allotments for each State will be
published following receipt of the States' four quarterly Medicaid
expenditure reports (Form CMS-64) for FFY 2009.
As discussed previously, in determining non-Low DSH States' DSH
allotments for fiscal years after FY 2004 under section 1923(f)(3)(C)
of the Act for DSH allotments, we have been determining States' DSH
allotments under a ``parallel'' process. Under the parallel process,
for each fiscal year for each State we have been determining whether
the ``Fiscal Year Specified'' (as defined in section 1923(f)(3)(D) of
the Act) has occurred. Under section 1923(f)(3)(D) of the Act, the
Fiscal Year Specified is determined separately for each State and ``is
the first fiscal year for which the Secretary estimates that the DSH
allotment for that State will equal (or no longer exceed) the DSH
allotment for that State under the law as in effect before the date of
enactment'' of MMA. The process in effect prior to the enactment in MMA
is the process described in section 1923(f)(3)(A) of the Act; under
this process each States' DSH allotment since FY 2003 is increased by
the CPIU increase for the prior fiscal year and the result is then
compared to the State's FY 2004 DSH allotment, as determined under
section 1923(f)(3)(C)(i) of the Act (under which the States' FY 2003
DSH allotments were increased by 16 percent). In other words, the
Fiscal Year Specified for a State is the fiscal year when the FY 2004
allotment is no longer greater than the parallel process DSH allotment.
We are reiterating the parallel process provision because for all
non-Low DSH States (except one), we have determined that FY 2009 is the
``Fiscal Year Specified''. Therefore, as indicated in section
1923(f)(3)(C)(ii) of the Act, the FY 2009 DSH allotment for all non-Low
DSH States (except one)is equal to the prior FY 2008 DSH allotment
increased by the CPIU increase for FY 2008 (4.0 percent). Chart 2
reflects this. For the non-Low DSH States for which the FY 2009 is the
Fiscal Year Specified, the FY 2010 and subsequent fiscal year DSH
allotments will be calculated by increasing the prior fiscal year DSH
allotment by the CPIU increase for the prior fiscal year.
For Low-DSH States, the FY 2009 DSH allotment is calculated using
the same methodology as for the non-Low DSH States for which the Fiscal
year specified has occurred. That is, for FY 2009 and following fiscal
years, the DSH allotment for Low-DSH States is calculated by increasing
the prior fiscal year DSH allotment by the CPIU increase for the prior
fiscal year.
C. Calculation of the FFYs 2007 and FFY 2009 IMD DSH Limits
Section 1923(h) of the Act specifies the methodology to be used to
establish the limits on the amount of DSH payments that a State can
make to IMDs and other mental health facilities. FFP is not available
for IMD or DSH payments that exceed the lesser of the State's FFY 1995
total computable mental health DSH expenditures applicable to the
State's FFY 1995 DSH allotment as reported to us on the Form CMS-64 as
of January 1, 1997; or the amount equal to the product of the State's
current FFY total computable DSH allotment and the applicable
percentage. We are publishing the final FFY 2007 IMD DSH limit, and the
preliminary FFY 2009 IMD DSH limit, along with an explanation of the
calculation of these limits.
For FFY 2003 and following fiscal years, the applicable percentage
is the lesser of 33 percent or the 1995 DSH IMD percentage of the
amount computed for FFY 2000. This percentage was applied to the
State's fiscal year total computable DSH allotment. This result was
then compared to the State's FFY 1995 total computable mental health
DSH expenditures applicable to the State's FFY 1995 DSH allotment as
reported on the Form CMS-64 as of January 1, 1997. The lesser of these
two amounts was the State's limitation on total computable IMD/DSH
expenditures for FFY 2003 and following fiscal years.
Charts 3 and 4 of the Addendum to this notice detail each State's
final IMD/DSH limitation for FFY 2007 and the preliminary IMD/DSH
limitation for FFY 2009, respectively, in accordance with section
1923(h) of the Act.
III. Collection of Information Requirements
This document does not impose information collection and
recordkeeping requirements. Consequently, it need not be reviewed by
the Office of Management and Budget under the authority of the
Paperwork Reduction Act of 1995 (44 U.S.C. 35).
IV. 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 notice
does reach the economic threshold and thus is considered a major rule.
We note that the total preliminary FY 2009 DSH
[[Page 77708]]
allotments announced in this notice are about $385 million greater than
the total preliminary FY 2008 DSH allotments, which were announced in
the Federal Register published on December 28, 2008 (72 FR 73831). As
described previously, this change in allotment is a result of the
application of the explicit provisions of the Medicaid statute, which
requires that for the ``fiscal year specified'' the fiscal year DSH
allotments for non-Low DSH states be calculated by increasing the
previous fiscal year's DSH allotment by the increase in the CPI-U for
the prior fiscal year. Except for one State, for all non-Low DSH States
FY 2009 is the fiscal year specified, and therefore, the FY 2009 DSH
allotment for these states must be calculated by increasing the FY 2008
DSH allotments by the CPI-U for FY 2008 (in this case 4 percent).
Additionally, in accordance with the Medicaid statute, the calculation
of all Low-DSH states' FY 2009 allotments reflects this CPI-U increase.
After application of these statutory provisions, the resulting total FY
2009 DSH allotments are about $385 million more than the total FY 2008
DSH allotments; this notice announces those amounts.
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 small governmental
jurisdictions. Most hospitals and most other providers and suppliers
are small entities, either by nonprofit status or by having revenues of
$6.5 million to $31.5 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, and the Secretary
certifies, that this notice will not have significant economic impact
on a substantial number of small entities. Specifically, the effects of
the various controlling statutes on providers are not impacted by a
result of any independent regulatory impact and not this notice. The
purpose of the notice is to announce the latest distributions as
required by the statute.
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 604 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 Core-Based
Statistical Area for Medicaid payment regulations and has fewer than
100 beds. We are not preparing analysis for section 1102(b) of the Act
because we have determined and the Secretary certifies that this notice
will not have a significant impact on the operations of a substantial
number of small rural hospitals.
In addition, the MMA set statutorily defined limits on the amount
of Federal share DSH expenditures available for FFY 2004 and subsequent
fiscal years. Specifically, section 1001 of the MMA increased the DSH
allotment for States beginning with fiscal year 2004. While overall the
statute mandated some increases in DSH payments, we do not believe that
this notice will have a significant economic impact on a substantial
number of small entities.
Section 202 of the Unfunded Mandates Reform Act of 1995 also
requires that agencies assess anticipated costs and benefits before
issuing any rule whose mandates require spending in any 1 year of $100
million in 1995 dollars, updated annually for inflation. That threshold
level is currently approximately $130 million. This notice will have no
consequential effect on State, local, or tribal governments 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 notice does not impose any costs on State or
local governments, the requirements of E.O. 13132 are not applicable.
Accounting Statement
As required by OMB Circular A-4 (available at), in the table below,
we have prepared an accounting statement showing the classification of
the estimated expenditures associated with the provisions of this
notice. This table provides our best estimate of the increase in the
Federal share of States' Medicaid DSH payments resulting from of the
application of the provisions of the Medicaid statute relating to the
calculation of States' fiscal year DSH allotments and the increase in
such fiscal year DSH allotments from FY 2008 to FY 2009.
Table--Accounting Statement: Classification of Estimated Expenditures,
From the FY 2008 to FY 2009
[In millions]
------------------------------------------------------------------------
Category Transfers
------------------------------------------------------------------------
Annualized Monetized Transfers............ $385
From Whom To Whom? Federal Government to States
------------------------------------------------------------------------
In accordance with the provisions of Executive Order 12866, this
notice was reviewed by the Office of Management and Budget.
Addendum
This addendum contains the charts 1 through 4 (proceeded by
associated keys) that are referred to in the preamble of this notice.
Key to Chart 1--Final DSH Allotments for FY 2007
[Key to the chart of the final FFY 2007 DSH allotments. The final FFY
2007 DSH allotments for the regular states are presented in the top
section of this chart and the final FFY 2007 DSH allotments for the Low-
DSH states are presented in the bottom section of the chart.]
------------------------------------------------------------------------
Column Description
------------------------------------------------------------------------
For Non-Low-DSH States:
Column A........................... State.
Column B........................... Final FY 2004 DSH Allotments--
This column contains the final
Federal share FFY 2004 DSH
Allotments.
Column C........................... FY 2007 DSH Allotment--This
column contains the final
Federal share FFY 2007 DSH
Allotments.
Column D........................... MMA Low-DSH Status--This column
indicates the MMA Low-DSH
Status of each State.
For Low-DSH States:
Column A........................... State.
Column B........................... Prior FY DSH Allotments--This
column contains the final FFY
2006 DSH Allotments.
[[Page 77709]]
Column C........................... FY 2007 DSH Allotments--This
column contains the final
Federal share FFY 2007 DSH
Allotments = Column B
multiplied by 1.16.
Column D........................... MMA Low-DSH Status--This column
indicates the MMA Low-DSH
Status of each State.
------------------------------------------------------------------------
Key to Chart 2--Preliminary DSH Allotment for Fiscal Year 2009
[Key to the chart of the preliminary FY 2009 DSH allotments. The
preliminary FY 2009 DSH allotments for the Non-Low DSH states are
presented in the top section of this chart, and preliminary FY 2009 DSH
allotments for the Low-DSH states are presented in the bottom section of
this chart.]
------------------------------------------------------------------------
Column Description
------------------------------------------------------------------------
Column A............................... State.
Column B............................... 1923(f)(3)(D) Test Met.
This column indicates whether
the ``Fiscal Year Specified''
has occurred, determined in
accordance with section
1923(f)(3)(D) of the Act.
``YES'' indicates the Fiscal
Year Specified has occurred;
``NOT MET'' indicates that the
Fiscal Year Specified has not
occurred; and ``NA'' indicates
that this provision is not
applicable.
Columns C-K............................ For Non-Low DSH States entries
in Columns C through K are
only for States meeting the
``Fiscal Year Specified'' test
(``YES'' in Column B).
Column C............................... FY 2009 FMAPS.
This column contains the
States' FY 2009 Federal
Medical Assistance
Percentages.
Column D............................... FY 2008 DSH Allotment For
States Meeting Test.
This column contains the
States' FY 2008 DSH
Allotments.
Column E............................... FY 2008 Allotments x CPIU
Increase: 1.04.
This column contains the amount
in Column D increased by the
increase in the CPIU for the
prior fiscal year (4.0
percent).
Column F............................... FY 2009 TC MAP Exp. Incl. DSH.
This column contains the amount
of the States' projected FY
2009 total computable medical
assistance expenditures
including DSH expenditures.
Column G............................... FY 2009 TC DSH Expenditures.
This column contains the amount
of the States' projected FY
2009 total computable DSH
expenditures.
Column H............................... FY 2009 TC MAP Exp. Net of DSH.
This column contains the amount
of the States' projected FY
2009 total computable medical
assistance expenditures net of
DSH expenditures, calculated
as the amount in Column F
minus the amount in Column G.
Column I............................... 12% AMOUNT.
This column contains the amount
of the ``12 percent limit'' in
Federal share, determined in
accordance with the provisions
of section 1923(f)(3) of the
Act.
Column J............................... Greater of FY 2008 Allotment or
12% Limit.
This column contains the
greater of the State's prior
fiscal year (FY 2008) DSH
allotment or the amount of the
12% Limit, determined as the
maximum of the amount in
Column D or Column I.
Column K............................... FY 2009 DSH Allotment.
This column contains the
States' FY 2009 DSH
allotments, determined as the
minimum of the amount in
Column J or Column E. For Non-
Low DSH States that have not
met the ``Fiscal Year Year
Specified'' test (entry in
Column B is ``NOT MET''), the
amount in Column K is equal to
the State's FY 2004 DSH
allotment. For States for
which the entry in Column B is
``NA'', the amount in Column K
is determined in accordance
with the provisions of section
1923(f)(6) of the Act.
------------------------------------------------------------------------
Key to Chart 3--Final FFY 2007 IMD DSH Limits
[Key to the Chart of the FFY 2007 IMD Limitations. The final FFY 2007
IMD DSH Limits for the regular States are presented in the top section
of this chart and the final FFY IMD DSH Limits for the Low-DSH States
are presented in the bottom section of the chart.]
------------------------------------------------------------------------
Column Description
------------------------------------------------------------------------
Column A............................... State.
Column B............................... Inpatient Hospital Services FY
95 DSH Total Computable. This
column contains the States'
total computable FFY 1995
inpatient hospital DSH
expenditures as reported on
the Form CMS-64.
[[Page 77710]]
Column C............................... IMD and Mental Health Services
FY 95 DSH Total Computable.
This column contains the total
computable FFY 1995 mental
health facility DSH
expenditures as reported on
the Form CMS-64 as of January
1, 1997.
Column D............................... Total Inpatient & IMD & Mental
Health FY 95 DSH Total
Computable, Col B + C. This
column contains the total
computation of all inpatient
hospital DSH expenditures and
mental health facility DSH
expenditures for FFY 1995 as
reported on the Form CMS-64 as
of January 1, 1997
(representing the sum of
Column B and Column C).
Column E............................... Applicable Percentage Col C/D.
This column contains the
``applicable percentage''
representing the total
computable FFY 1995 mental
health facility DSH
expenditures divided by total
computable all inpatient
hospital and mental health
facility DSH expenditures for
FFY 1995 (the amount in Column
C divided by the amount in
Column D). Per section
1923(h)(2)(A)(ii)(II) of the
Act, for FFYs after FY 2002,
the applicable percentage can
be no greater than 33 percent.
Column F............................... FY 2007 Federal Share DSH
Allotment. This column
contains the States' final FFY
2007 DSH allotments.
Column G............................... FFY 2007 FMAP.
Column H............................... FY 2007 DSH Allotments in TC.
Col. F/G. This column contains
the FFY 2007 total computable
DSH Allotment (determined as
Column F/Column G).
Column I............................... Col E x Col H in TC. This
column contains the applicable
percent of FFY 2007 total
computable DSH allotment
(calculated as Column E x
Column H).
Column J............................... FY 2007 IMD DSH Limit Total
Computable. Lesser of Col. C
or I. The column contains the
lesser of Column I or C.
Column K............................... FY 2007 IMD DSH Limit Federal
Share, Col. G x J. This column
contains the total computable
IMD DSH Limit from Col. J and
converts that amount into a
Federal share (calculated as
Col. G x Col. J).
Column L............................... LOW DSH Status. This column
contains Low DSH status for
each State.
------------------------------------------------------------------------
Key to Chart 4--Preliminary FFY 2009 IMD DSH Limits
[Key to the Chart of the FFY 2009 IMD Limitations. The preliminary FFY
2009 IMD DSH Limits for the regular States are presented in the top
section of this chart and the preliminary FFY 2009 IMD DSH Limits for
the Low-DSH States are presented in the bottom section of the chart.]
------------------------------------------------------------------------
Column Description
------------------------------------------------------------------------
Column A............................... State.
Column B............................... Inpatient Hospital Services FY
95 DSH Total Computable. This
column contains the States'
total computable FFY 1995
inpatient hospital DSH
expenditures as reported on
the Form CMS-64.
Column C............................... IMD and Mental Health Services
FY 95 DSH Total Computable.
This column contains the total
computable FFY 1995 mental
health facility DSH
expenditures as reported on
the Form CMS-64 as of January
1, 1997.
Column D............................... Total Inpatient & IMD & Mental
Health FY 95 DSH Total
Computable, Col. B + C. This
column contains the total
computation of all inpatient
hospital DSH expenditures and
mental health facility DSH
expenditures for FFY 1995 as
reported on the Form CMS-64 as
of January 1, 1997
(representing the sum of
Column B and Column C).
Column E............................... Applicable Percentage Col. C/D.
This column contains the
``applicable percentage''
representing the total
Computable FFY 1995 mental
health facility DSH
expenditures divided by total
computable all inpatient
hospital and mental health
facility DSH expenditures for
FFY 1995 (the amount in Column
C divided by the amount in
Column D). Per section
1923(h)(2)(A)(ii)(II) of the
Act, for FFYs after FY 2002,
the applicable percentage can
be no greater than 33 percent.
Column F............................... FY 2009 Federal Share DSH
Allotment. This column
contains the States'
preliminary FFY 2009 DSH
allotments.
Column G............................... FFY 2009 FMAP.
Column H............................... FY 2009 DSH Allotment Total
Computable Col. F/G. This
column contains FFY 2009 total
computable DSH allotment
(determined as Column F/Column
G).
Column I............................... Col E x Col H in TC. This
column contains the applicable
percent of FFY 2009 total
computable DSH allotment
(calculated as Column E x
Column H).
Column J............................... FY 2009 IMD DSH Limit Total
Computable. Lesser of Col. C
or I. The column contains the
lesser of Column I or C.
Column K............................... FY 2009 IMD DSH Limit Federal
Share, Col. G x J. This column
contains the total computable
IMD DSH Limit from Col. J and
converts that amount into a
Federal share (calculated as
Col. G x Col. J).
Column L............................... Low DSH Status. This column
contains Low DSH status for
each State.
------------------------------------------------------------------------
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BILLING CODE 4120-01-C
(Catalog of Federal Domestic Assistance Program No. 93.778, Medical
Assistance Program)
Dated: September 25, 2008.
Kerry Weems,
Acting Administrator, Centers for Medicare & Medicaid Services.
Dated: October 14, 2008.
Michael O. Leavitt,
Secretary.
Editorial Note: This document was received in the Office of the
Federal Register on Tuesday, December 16, 2008.
[FR Doc. E8-30267 Filed 12-18-08; 8:45 am]
BILLING CODE 4120-01-P