Title 7 . Health and Social Services

Chapter 43 . Hearings

Section 677. 1396b

7 AAC 43.677. Methodology and criteria for proportionate share payments to hospitals under 42 U.S.C. 1396b

(a) Publicly owned or operated hospitals. To implement the provisions of 42 U.S.C. 1396b regarding federal financial participation under Medicaid, and subject to legislative appropriations for that purpose, the department will make a public hospital proportionate share payment to, and receive a funding transfer of public money from, a hospital that qualifies under (1) of this subsection in order to ensure continued access to inpatient hospital services at certain hospitals that provide basic support for community or regional health care, and in order to secure for the state in accordance with AS 47.07.040 the optimum federal participation for inpatient hospital services in the state's medical assistance program. The following procedures and requirements apply to a proportionate share payment under this subsection:

(1) to qualify to receive a public hospital proportionate share payment under this subsection, a hospital must

(A) be

(i) enrolled as a Medicaid provider of inpatient hospital services;

(ii) located within the state; and

(iii) a public facility;

(B) submit an application to the department

(i) on a form designated by the department, in which the hospital attests that it meets the requirements of (A) of this paragraph, along with the specified documentation necessary to allow the department to verify that the hospital meets the requirements; and

(ii) no later than the date specified in a written announcement distributed by the department; the department will not specify an application submission date that is earlier than 30 days after the date of the department's written announcement; and

(C) enter into a written agreement with the department that controls the conditions for receipt of the public hospital proportionate share payment;

(2) the department will provide written notification to an applicant hospital of a decision that the hospital has or has not met the requirements of (1) of this subsection; unless a request for reconsideration is filed under (9) of this subsection, the department's decision under this paragraph is the department's final administrative action regarding whether an applicant hospital meets the requirements of (1) of this subsection;

(3) repealed 3/18/2006;

(4) the total amount available for distribution as public hospital proportionate share payments under this subsection will be established by the department each year, based on the department's projection of hospital expenditures and within the payment limits of 42 C.F.R. 447.271 - 447.272; subject to legislative appropriation, payment of the amount the department determines to be available for public hospital proportionate share payments will be apportioned among qualifying hospitals based on the relative weight of each qualifying hospital's occupancy level;

(5) the department will determine the occupancy level of each qualifying hospital by using the hospital's most recent Medicare cost report on file with the department on April 1 of a year for that hospital's fiscal year that ended 24 months before the beginning of the hospital's fiscal year in which the payment under this subsection is to be made; the hospital may not update or amend the Medicare cost report for the purpose of the proportionate share payment under this subsection; the department will determine the hospital's occupancy level to be the percentage that results from dividing the total number of inpatient days by the total number of available bed days, as both are shown on the Medicare cost report described in this paragraph;

(6) the department will assign an occupancy weight for each qualifying hospital in relation to its occupancy level, as follows:

Occupancy Weight 40 percent or more 1.00 unit 30 - 39 percent 1.05 units 20 - 29 percent 1.10 units 10 - 19 percent 1.15 units less than 10 percent 1.20 units

(7) the department will determine the dollar value of an occupancy weight unit for the year of payment under this subsection by dividing the total amount of money available for public hospital proportionate share payments by the sum of the occupancy weight units of the qualifying hospitals;

(8) the department will determine the amount of a public hospital proportionate share payment under this subsection to a qualifying hospital by multiplying the occupancy weight assigned to the hospital by the value of an occupancy weight unit as calculated under (7) of this subsection; the sum of the payments made to all qualifying hospitals is equal to the total amount of money available for public hospital proportionate share payments in that year; the department will notify each qualifying hospital in writing of the amount of that hospital's payment as determined under this paragraph; unless a request for reconsideration is filed under (10) of this subsection, the department's determination under this paragraph is the department's final administrative action regarding the amount of a qualifying hospital's proportionate share payment under this subsection;

(9) a hospital aggrieved by the department's decision under (2) of this subsection may request reconsideration of the decision by filing a request for reconsideration with the department, and sending a copy of the request to each qualifying hospital, within 10 days after the date of the department's written notice under (2) of this subsection; the request for reconsideration must state the facts in the record that support a reversal of the initial decision; a qualifying hospital to which a request for reconsideration was sent may file with the department, within 10 days after the date the request was sent, a response to the request for reconsideration; the response must be based on facts in the record; the department's decision on reconsideration is the department's final administrative action on a reconsideration request under this paragraph; if the department does not issue a decision on reconsideration within 30 days after the deadline for filing a response to the request for reconsideration, and does not waive the 30-day deadline, the request is considered denied by the department; the denial is the department's final administrative action on a reconsideration request under this paragraph;

(10) a qualifying hospital aggrieved by the department's determination under (8) of this subsection may request reconsideration of the determination by filing a request for reconsideration with the department, and sending a copy of the request to each of the other qualifying hospitals, within 10 days after the date of the department's written notice under (8) of this subsection; a request for reconsideration under this paragraph must state the facts in the record supporting a change in the payment amount; a qualifying hospital to which a request for reconsideration was sent may file with the department, within 10 days after the date the request was sent, a response to the request for reconsideration; the response must be based on facts in the record; the department's decision on reconsideration is the department's final administrative action on a reconsideration request under this paragraph; if the department does not issue a decision on reconsideration within 30 days after the deadline for filing a response to the request for reconsideration, and does not waive the 30-day deadline, the request is considered denied by the department; the denial is the department's final administrative action on a reconsideration request under this paragraph;

(11) if a decision on reconsideration under this subsection results in a reapportioning of the amount determined under (4) of this subsection to be available for public hospital proportionate share payments, the department will calculate the necessary adjustment to the amount of the payment made under this subsection in that year to the qualifying hospitals; a qualifying hospital shall provide to the department any additional documentation requested by the department in order to make the necessary calculations; the department will notify a hospital in writing of any amount that must be repaid to the department by that hospital as a result of the adjustment; the hospital shall make the repayment to the department promptly after receipt of the department's notice; if the repayment is not made within 30 days after the date of the department's notice, other payments due to that hospital under AS 47.07 may, consistent with state and federal law, be reduced by the amount not repaid;

(12) in this subsection, "qualifying hospital" means a hospital that qualifies under (1) of this subsection for a public hospital proportionate share payment.

(b) Privately owned or operated hospitals. To implement the provisions of 42 U.S.C. 1396b regarding federal financial participation under Medicaid, and subject to legislative appropriations for that purpose, the department will make a private hospital proportionate share payment to, and will require under (2) - (4) of this subsection that specific services be performed by, a hospital that qualifies under (1) of this subsection in order to ensure continued access to hospital services, and in order to secure for the state in accordance with AS 47.07.040 the optimum federal participation for inpatient hospital services in the state's medical assistance program. The following procedures and requirements apply to a proportionate share payment under this subsection:

(1) to qualify to receive a private hospital proportionate share payment under this subsection, a hospital must

(A) be enrolled as a Medicaid provider of inpatient hospital services;

(B) be located within the state;

(C) be a privately owned facility; and

(D) submit to the department the Medicaid reporting forms for the qualifying year from the Medicaid Hospital and Long-Term Care Facility Reporting Manual, adopted by reference in 7 AAC 43.679(a) ;

(2) a qualifying hospital may receive proportionate share payments allocated to one or more of the following private hospital proportionate share classifications, if that hospital meets any additional criteria applicable to that classification, and subject to the limitations set out in (5) - (6) of this subsection:

(A) each qualifying hospital may receive payments for rural hospital assistance (RHA), if the qualifying hospital enters into an agreement with the department to provide support services in accordance with (4) of this subsection through a rural hospital and complies with the requirements of that agreement;

(B) each qualifying hospital may receive payments for rural hospital clinic assistance (RHCA), if the qualifying hospital enters into an agreement with the department to provide support services in accordance with (4) of this subsection through a rural clinic and complies with the requirements of that agreement;

(C) each qualifying hospital may receive payments for mental health clinic assistance (MHCA), if the qualifying hospital enters into an agreement with the department to provide mental health services through a mental health clinic and complies with the requirements of that agreement;

(D) each qualifying hospital may receive payments for single-point-of-entry psychiatric assistance (SPEP), if the qualifying hospital enters into an agreement with the department to provide single-point-of-entry psychiatric services and complies with the requirements of that agreement;

(E) each qualifying hospital may receive payments for designated evaluation and treatment assistance (DET), if the qualifying hospital

(i) is designated as an evaluation and treatment facility as required by 7 AAC 72; and

(ii) enters into an agreement with the department to provide designated evaluation and treatment services and complies with the requirements of that agreement;

(F) each qualifying hospital may receive payments for children's medical care assistance (CMC), if the qualifying hospital enters into an agreement with the department for health and hospital care expenses for children and complies with the requirements of that agreement;

(G) each qualifying hospital may receive payments for institutional community health care assistance (ICHC), if the qualifying hospital enters into an agreement with the department for health and hospital care expenses for individuals in institutions who are not Medicaid-eligible, and complies with the requirements of that agreement;

(H) each qualifying hospital may receive payments for substance abuse treatment provider assistance (SATP), if the qualifying hospital enters into an agreement with the department to provide substance abuse treatment through a substance abuse treatment provider and complies with the requirements of that agreement;

(3) in an agreement under (2) of this subsection, the department may authorize the qualifying hospital to provide the required services directly, through the purchase of services, or through a person, clinic, or hospital designated by the department; a payment made under this section is not an allowable cost under the facility rate setting methodology set out in 7 AAC 43.670 - 7 AAC 43.676 and 7 AAC 43.679 - 7 AAC 43.701;

(4) for purposes of an agreement under (2)(A) or (2)(B) of this subsection, the support services that a qualifying hospital provides must include one or more of the following:

(A) health services at the rural hospital site or rural clinic site; the qualifying hospital may include, as services, the services of a primary care provider, nurse mid-wife services, obstetrical services, and pediatrician's services;

(B) assistance in arranging safe transport for those who require emergency transport and services;

(C) other health services agreed to by the qualifying hospital and the department;

(5) the total amount available for distribution as private hospital proportionate share payments under this subsection will be established by the department each year, based on the department's projection of hospital expenditures and within the payment limits of 42 C.F.R. 447.271 - 447.272; subject to legislative appropriation, payment of the amount the department determines to be available for private hospital proportionate share payments will be apportioned among qualifying hospitals;

(6) beginning 8/11/2004, the department will allocate the following percentage of the private hospital proportionate share payments for each payment year by proportionate share classification:

(A) to the rural hospital assistance (RHA) private hospital classification, one percent;

(B) to the rural health clinic assistance (RHCA) private hospital classification, 54 percent;

(C) to the mental health clinic assistance (MHCA) private hospital classification, 23 percent;

(D) to the single-point-of-entry psychiatric (SPEP) private hospital classification, six percent;

(E) to the designated evaluation and treatment (DET) private hospital classification, one percent;

(F) to the children's medical care (CMC) private hospital classification, eight percent;

(G) to the institutional community health care (ICHC) private hospital classification, one percent;

(H) to the substance abuse treatment provider (SATP) private hospital classification, six percent;

(7) each payment for the private hospital proportionate share classifications will be calculated within each classification based on the number of encounters to be performed by the qualifying hospital for that classification, as specified in the agreement required under (2) of this subsection for that classification, divided by the total number of encounters to be performed by all qualifying hospitals within that classification, as specified in the agreements required for that classification; the resulting percentage will be multiplied by the allocation amount applicable to that classification, as calculated in (5) - (6) of this subsection;

(8) on or before the qualification date, the department will send to each privately owned hospital a list of the qualifying hospitals and the amount of the payments for the upcoming payment year; the total amount available for distribution as private hospital proportionate share payments under this subsection will be established by the department each year, based on the department's projection of hospital expenditures and within the payment limits of 42 C.F.R. 447.271 - 447.272; the department's determination under this paragraph is the department's final administrative action regarding

(A) whether a hospital is a qualifying hospital, unless a request for reconsideration is filed under (10) of this subsection; and

(B) the amount of a qualifying hospital's proportionate share payment under this subsection, unless a request for reconsideration is filed under (11) of this subsection;

(9) to optimize, consistent with AS 47.07 and this chapter, the use of federal money allotted to private hospital proportionate share payments, the department may enter into other agreements under (2)(A) - (H) of this subsection, if

(A) the amount of the federal allotment is greater than the sum of payments listed under (8) of this subsection;

(B) the part of the federal allotment allocated under (6) of this subsection to a particular classification is not fully used within that classification; or

(C) after issuance of the list under (8) of this subsection, part of the federal allotment becomes available for distribution because an agreement or other criterion required under (2) of this subsection was not reached or satisfied;

(10) a hospital aggrieved by the department's decision under (8) of this subsection, regarding whether a hospital is a qualifying hospital, may request reconsideration of the decision by filing a request with the department, and sending a copy of the request to each qualifying hospital, within 10 days after the date of the department's list under (8) of this subsection; a request for reconsideration under this paragraph must state the facts in the record that support a reversal of the initial decision; a qualifying hospital to which a request for reconsideration was sent may file with the department, within 10 days after the date the request was sent, a response to the request for reconsideration; the response must be based on facts in the record; the department's decision on reconsideration under this paragraph is the department's final administrative action on a reconsideration request under this paragraph; if the department does not issue a decision on reconsideration within 30 days after the deadline for filing a response to the request for reconsideration, and does not waive the 30-day deadline, the request is considered denied by the department; the denial is the department's final administrative action on a reconsideration request under this paragraph;

(11) a hospital aggrieved by the department's decision under (8) of this subsection, regarding the amount of a qualifying hospital's proportionate share payment under this subsection, may request reconsideration of the decision by filing a request with the department, and sending a copy of the request to each of the other qualifying hospitals, within 10 days after the date of the department's list under (8) of this subsection; if the department has made the private hospital proportionate share payment under this subsection to the qualifying hospital, the department will accept and consider a request for reconsideration under this paragraph only after return of any unearned portion of the payment is made; a request for reconsideration under this paragraph must state the facts in the record that support a change in the payment amount; a qualifying hospital to which a request for reconsideration was sent may file with the department, within 10 days after the date the request was sent, a response to the request for reconsideration; the response must be based on facts in the record; the department's decision on reconsideration under this paragraph is the department's final administrative action on a reconsideration request under this paragraph; if the department does not issue a decision on reconsideration within 30 days after the deadline for filing a response to the request for reconsideration, and does not waive the 30-day deadline, the request is considered denied by the department; the denial is the department's final administrative action on a reconsideration request under this paragraph;

(12) the administrative appeal process provided by 7 AAC 43.703 and the exceptional relief process set out in 7 AAC 43.708 are not available to a hospital disputing an item on the department's list under (8) of this subsection of qualifying hospitals and amounts;

(13) unless the department considers it impractical, the department will recalculate and reallocate the proportionate share eligibility and payments for all hospitals and will recoup payments from all hospitals on a prorated basis if the

(A) proportionate share eligibility and payment for any private hospital will be recalculated as a result of a decision under (10) or (11) of this subsection or of a court decision; or

(B) outcome of a decision under (10) or (11) of this subsection or of a court decision would cause the total private hospital proportionate share payments to exceed the federal allotment for the federal fiscal year in which the payment rate was in effect;

(14) in this subsection, "qualifying hospital" means a hospital that qualifies under (1) of this subsection for a private hospital proportionate share payment.

(c) State-owned or operated hospitals. To implement the provisions of 42 U.S.C. 1396b regarding federal financial participation under Medicaid, and subject to legislative appropriations for that purpose, the department will make a state hospital proportionate share payment to, and may require specific services to be performed by, a hospital that qualifies under (1) of this subsection in order to ensure continued access to inpatient and outpatient hospital services or other health services, and in order to secure for the state in accordance with AS 47.07.040 , the optimum federal participation for inpatient hospital services in the state's medical assistance program. The following procedures and requirements apply to a proportionate share payment under this subsection:

(1) to qualify for a state hospital proportionate share payment under this subsection, a hospital must

(A) be a state-owned or operated Medicaid provider of inpatient hospital services; and

(B) be located within the state;

(2) the total amount available for distribution as state hospital proportionate share payments under this subsection will be established by the department each year, based on the department's projection of hospital expenditures and within the payment limits of 42 C.F.R. 447.271 - 447.272; subject to legislative appropriation, payment of the amount the department determines to be available for state hospital proportionate share payments will be apportioned among qualifying hospitals;

(3) in this subsection, "qualifying hospital" means a hospital that qualifies under (1) of this subsection for a state hospital proportionate share payment.

(d) Definitions. In this section, unless the context otherwise requires,

(1) "encounter" means a unit of service, visit, or face-to-face contact that is a covered service under an agreement with the department as required under (b) of this section;

(2) "payment year" means the state fiscal year;

(3) "qualification date" means July 1 of each year;

(4) "qualifying year" means the hospital's most recent fiscal year that the department determines complete;

(5) "total number of available bed days" means the number shown on line 12, column 2, of worksheet S-3 of the qualifying hospital's Medicare cost report;

(6) "total number of inpatient days" means the number shown on line 12, column 6, of worksheet S-3 of the qualifying hospital's Medicare cost report.

History: Eff. 4/26/2000, Register 154; am 7/30/2000, Register 155; am 9/28/2001, Register 159; am 3/28/2003, Register 165; am 1/1/2004, Register 168; am 8/11/2004, Register 171; am 3/18/2006, Register 177

Authority: AS 47.05.010

AS 47.07.030

AS 47.07.040