[Code of Federal Regulations] [Title 42, Volume 4] [Revised as of October 1, 2006] From the U.S. Government Printing Office via GPO Access [CITE: 42CFR447.321] [Page 327-329] TITLE 42--PUBLIC HEALTH CHAPTER IV--CENTERS FOR MEDICARE & MEDICAID SERVICES, DEPARTMENT OF HEALTH AND HUMAN SERVICES (CONTINUED) PART 447_PAYMENTS FOR SERVICES--Table of Contents Subpart F_Payment Methods for Other Institutional and Noninstitutional Services Sec. 447.321 Outpatient hospital and clinic services: Application of upper payment limits. (a) Scope. This section applies to rates set by the agency to pay for outpatient services furnished by hospitals and clinics within one of the following categories: (1) State government-owned or operated facilities (that is, all facilities that are either owned or operated by the State). (2) Non-State government-owned or operated facilities (that is, all government facilities that are neither owned nor operated by the State). (3) Privately-owned and operated facilities. (b) General rules. (1) Upper payment limit refers to a reasonable estimate of the amount that would be paid for the services furnished by the group of facilities under Medicare payment principles in subchapter B of this chapter. (2) Except as provided in paragraph (c) of this section, aggregate Medicaid payments to a group of facilities within one of the categories described in paragraph (a) of this section may not exceed the upper payment limit described in paragraph (b)(1) of this section. (c) Exception--Indian Health Services and tribal facilities. The limitation in paragraph (b) of this section does not [[Page 328]] apply to Indian Health Services facilities and tribal facilities that are funded through the Indian Self-Determination and Education Assistance Act (Public Law 93-638). (d) Compliance dates. Except as permitted under paragraph (e) of this section, a State must comply with the upper payment limit described in paragraph (b)(1) of this section by one of the following dates: (1) For non-State government-owned or operated hospitals--March 19, 2002. (2) For all other facilities--March 13, 2001. (e) Transition periods--(1) Definitions. For purposes of this paragraph, the following definitions apply: (i) Transition period refers to the period of time beginning March 13, 2001 through the end of one of the schedules permitted under paragraph (e)(2)(ii) of this section. (ii) UPL stands for the upper payment limit described in paragraph (b)(1) of this section for the referenced year. (iii) X stands for the payments to a specific group of providers described in paragraph (a) of this section in State FY 2000 that exceeded the amount that would have been under the upper payment limit described in paragraph (b) of this section if that limit had been applied to that year. (2) General rules. (i) The amount that a State's payment exceeded the upper payment limit described in paragraph (b) of this section must not increase. (ii) A State with an approved State plan amendment payment provision effective on one of the following dates and that makes payments that exceed the upper payment limit described in paragraph (b) of this section to providers described in paragraph (a) of this section may follow the respective transition schedule: (A) For State plan provisions that are effective after September 30, 1999 and were approved before January 22, 2001, payments may exceed the upper payment limit in paragraph (b) of this section until September 30, 2002. (B) For approved plan provisions that are effective after October 1, 1992 and before October 1, 1999, payments during the transition period may not exceed the following-- (1) For State FY 2003: State FY 2003 UPL + .75X. (2) For State FY 2004: State FY 2004 UPL + .50X. (3) For State FY 2005: State FY 2005 UPL + .25X. (4) For State FY 2006; State FY 2006 UPL. (C) For approved plan provisions that are effective on or before October 1, 1992, payments during the transition period may not exceed the following: (1) For State FY 2004: State FY 2004 UPL + .85X. (2) For State FY 2005: State FY 2005 UPL + .70X. (3) For State FY 2006: State FY 2006 UPL + .55X. (4) For State FY 2007: State FY 2007 UPL + .40X. (5) For State FY 2008: State FY 2008 UPL + .25X. (6) For the portion of State FY 2009 before October 1, 2008: State FY 2009 UPL + .10X. (7) Beginning October 1, 2008: UPL described in paragraph (b) of this section. (D) For State plan provisions that were effective after September 30, 1999, submitted to CMS before March 13, 2001, and approved by CMS after January 21, 2001, payments may exceed the limit in paragraph (b) of this section until the later of November 5, 2001, or 1 year from the approved effective date of the State plan provision. (iii) When State FY 2003 begins after September 30, 2002, the reduction schedule in paragraphs (e)(2)(ii)(C)(1) through (e)(2)(ii)(C)(7) will begin on State FY 2003. (iv) If a State meets the criteria in paragraph (e)(2)(ii) of this section and its State plan amendment expires before the end of the applicable transition period, the State may continue making payments that exceed the UPL described in paragraph (b) of this section in accordance with the applicable transition schedule described in paragraph (e)(2)(ii) of this section. (v) A State with an approved State plan amendment payment provision that makes payments up to 150 percent of the UPL described in paragraph (b)(1) of this section to providers described in paragraph (a)(2) of this section does not qualify for a transition period. [[Page 329]] (f) Reporting requirements for payments during the transition periods. States that are eligible for a transition period described in paragraph (e) of this section, and that make payments that exceed the limit under paragraph (b)(1) of this section, must report annually the following information to CMS: (1) The total Medicaid payments made to each facility for services furnished during the entire State fiscal year. (2) A reasonable estimate of the amount that would be paid for the services furnished by the facility under Medicare payment principles. [66 FR 3176, Jan. 12, 2001, as amended at 66 FR 46399, Sept. 5, 2001; 67 FR 2611, Jan. 18, 2002] Other Inpatient and Outpatient Facilities