7 AAC 43.860. Payment

(a) Except for services listed in (i) of this section, the department will determine a rural health clinic's payment rate based on the clinic's reasonable costs. Reasonable costs must be determined by using the same methodology used under 42 U.S.C. 1395l(a)(3) and 42 C.F.R. 413.1 - 413.157. Costs must be related to furnishing medically necessary and appropriate services to Medicaid-eligible patients in compliance with (b) - (d) of this section. Costs may not include the cost of providing prescription drugs. The department will consider only costs that are related to providing Medicaid-eligible services to Medicaid-eligible patients, and will exclude other costs. A rural health clinic may receive payment only for services provided to a patient of the clinic by an employee or a contract worker of the clinic. The department's payment for services provided by the rural health clinic will be paid to the rural health clinic.

(b) Services may not be provided off-site of the rural health clinic unless

(1) the rural health clinic patient is homebound; the department will consider a rural health clinic patient to be homebound if, due to the individual's medical or health condition, the individual is permanently confined to the individual's residence, or cannot leave the residence without considerable effort; the department will not disqualify an individual from being considered homebound for infrequent absences of short duration from the residence, including absences to attend religious services, or for absences from the residence in order to receive health care treatment, including participation in therapeutic or medical treatment as part of adult day services provided under 7 AAC 43.1043 by a provider that is certified under 7 AAC 43.1090; the department will not consider an individual to be homebound if the individual's residence is a hospital, or is a long-term care facility as defined in 7 AAC 43.709;

(2) a rural health clinic physician, acting within the scope of the physician's license to practice, provides the services in a

(A) nursing facility that is

(i) licensed under 7 AAC 12; and

(ii) in compliance with 7 AAC 12.250 - 7 AAC 12.290; or

(B) hospital that is

(i) licensed under 7 AAC 12; and

(ii) in compliance with 7 AAC 12.100 - 7 AAC 12.225; or

(3) a rural health clinic physician assistant or rural health clinic advanced nurse practitioner, acting within the scope of that individual's license to practice, provides the services in a hospital that is

(A) licensed under 7 AAC 12; and

(B) in compliance with 7 AAC 12.100 - 7 AAC 12.225.

(c) If the department makes an agreement under (g) of this section with a rural health clinic to reimburse the clinic at the prospective payment rate calculated under that subsection, the department will pay that rate per rural health clinic visit for a Medicaid-eligible patient for

(1) primary care services; the department will pay for those services only if a physician, physician assistant, or advanced nurse practitioner, acting within the scope of that individual's license to practice, provides those services; the department will not pay for services that the department determines to be incidental to primary care services; for purposes of this paragraph, services that are incidental to primary care services include laboratory services, X-ray services, and supplies;

(2) ambulatory services; and

(3) dental services, if the dental provider has enrolled separately under this chapter.

(d) The department will pay a rural health clinic for the following mental health services, if a psychologist or clinical social worker, acting within the scope of that individual's license, provides those services to a Medicaid-eligible patient:

(1) psychiatric diagnostic interview procedures;

(2) psychological testing and exam services;

(3) individual psychotherapy;

(4) group psychotherapy;

(5) family psychotherapy;

(6) health and behavior assessment and intervention services.

(e) The department will not pay for services or supplies that the rural health clinic routinely

(1) provides to patients other than Medicaid-eligible patients; and

(2) furnishes for free or without regard to the patient's ability to pay.

(f) Unless the department and a rural health clinic make an agreement for the department to reimburse the clinic at the rates calculated under (g) of this section, the department will reimburse the clinic in accordance with 42 U.S.C. 1396a(bb)(1) - (5), revised as of January 15, 2002 and adopted by reference.

(g) If, consistent with the alternative payment methodology provisions of 42 U.S.C. 1396a(bb)(6), revised as of January 15, 2002 and adopted by reference, the department and a rural health clinic make an agreement for the department to reimburse the clinic at the rate calculated under this subsection, the department will calculate a prospective payment rate as follows:

(1) base rates will be calculated prospectively,

(A) in an amount calculated on a per visit basis and equal to 100 percent of the inflated average of the allowable costs

(i) of the rural health clinic of furnishing services during the rural health clinic's fiscal years 1999 and 2000; and

(ii) that are reasonable and related to the cost of furnishing such services; and

(B) according to the following formula:

(i) the clinic's total allowable and reasonable cost of providing primary care and ambulatory services for fiscal year 1999 will be inflated by the number set out in the first quarter 1999 publication of DRI-WEFA's Health Care Cost Review, Skilled Nursing Facility Total Market Basket, inflated to 2001;

(ii) the clinic's total allowable and reasonable cost of providing primary care and ambulatory services for fiscal year 2000 will be inflated by the number set out in the first quarter 2000 publication of DRI-WEFA's Health Care Cost Review, Skilled Nursing Facility Total Market Basket, inflated to 2001;

(iii) to obtain the base per visit rate, the sum of the numbers calculated in (i) and (ii) of this subparagraph will be divided by the total number of visits as calculated under (k) of this section;

(iv) the base per visit rate obtained under (iii) of this subparagraph will be adjusted to take into account any increase or decrease in the scope of services during fiscal year 2001 that the department has approved under (j) of this section;

(2) beginning with the rural health clinic fiscal year 2003, and for each rural health clinic fiscal year that follows, the payment rate as calculated in (1) of this subsection will be

(A) increased in that fiscal year by using the first quarter publication of Global Insight's Health-Care Cost Review, Skilled Nursing Facility Total Market Basket for yearly adjustment factors applied to rural health clinics; and

(B) adjusted for that fiscal year to take into account any increase or decrease in the scope of services that the department has approved under (j) of this section, whether the change in the scope of services is proposed for that fiscal year or occurred in the preceding fiscal year.

(3) the payment rate calculated under this subsection must result in a payment to the rural health clinic that is equal to or greater than the amount required to be paid to the clinic under 42 U.S.C. 1396a(bb)(1) - (5); if the payment rate calculated under this subsection is less than that amount, the department will reimburse the rural health clinic under (f) of this section; to ensure compliance with this paragraph, the department will evaluate annually the

(A) Medicare Economic Index as required by 42 U.S.C. 1396a(bb)(3)(A); and

(B) number set out in the first quarter publication of Global Insight's Health-Care Cost Review, Skilled Nursing Facility Total Market Basket;

(4) the department will annually evaluate the payment rate calculated under this subsection to ensure it is within the payment limit set under 42 C.F.R. 447.300 - 447.371, as revised as of October 1, 2001 and adopted by reference.

(h) For purposes of this section, the department will consider rural health clinic costs to be allowable costs if they are documented costs as described in 42 C.F.R. 405.2468, after all adjustments, cost disallowances, and reclassifications have been made, if those costs are reasonable in amount, if they are proper and necessary for the efficient delivery of rural health clinic services, and if they are not disallowed under AS 47.07, this chapter, or applicable federal statutes or regulations. Allowable costs do not include overhead costs not directly related to rural health clinic services, bad debts, charity care, contractual allowances, return on equity, income taxes, or services and supplies furnished to non-Medicaid patients for free or without regard to the patient's ability to pay.

(i) In establishing a payment rate under this section, the department will not include services that are paid by a different payment rate methodology in this chapter. Services that are paid by a different payment rate methodology include

(1) prescription drugs subject to the drug coverage limitations in 7 AAC 43.590 and reimbursed in accordance with 7 AAC 43.591; and

(2) hospital deliveries reimbursed in accordance with 7 AAC 43.107(b) .

(j) Changes in the scope of services that are provided by a rural health clinic will be used to adjust the per visit rate for a rural health clinic. These adjustments will be made upon the written notification of the provider and approval by the department. The change in scope of services must have increased or decreased a rural health clinic's cost per visit by more than two and one-half percent. The change in the scope of services must be directly related to a new or terminated program or service, and may not include general increases or decreases in costs associated with programs that were already a part of an established rate. The department will examine a written request for a change in scope of services within 60 days after receipt to determine if the change satisfies the requirements of this subsection. The rural health clinic shall submit to the department a brief narrative describing the services that are to be added or deleted or that result in an increase or decrease in the scope of services. Additionally, a rural health clinic that proposes a change in the scope of services for future implementation must provide a one-year budget that specifies the change in the scope of services, shows the projected number of rural health clinic visits, and provides revenue and expense projections associated with the proposed change. If the department determines that a change in the scope of services has occurred, the per visit rate will be adjusted. A final decision regarding the disposition of a request for a change in scope of services will be given to a clinic in writing. If the rural health clinic notifies the department

(1) before implementing the change in the scope of services that a change will occur, any adjustment will be made to coincide with the implementation date of the change;

(2) after implementing the change that an increase or decrease in the scope of services occurred, any adjustment will be made to coincide with the

(A) date of notification, for the addition of a category of service; a post-implementation request for a rate adjustment must be received no later than 45 days after the change in scope of services occurred; or

(B) implementation date of the change, for the deletion of a category of service or a change in the intensity of a service.

(k) For purposes of calculating a rate under (g) of this section, the department will consider the total number of visits to be the sum of the following:

(1) the total number of rural health clinic visits for all patients provided services by a full-time equivalent physician employed by the clinic; the department will calculate this figure by using the greater of the actual number of visits or a number that represents the minimum rural health clinic productivity standard, as follows:

(A) at least 2,100 visits per year per full-time equivalent physician employed by the clinic;

(B) 50 percent of the number set out in (A) of this paragraph, for a rural health clinic's first year of enrollment, and 75 percent of that number for a rural health clinic's second year of enrollment;

(2) the total number of rural health clinic visits for all patients provided services by a full-time equivalent physician assistant or advanced nurse practitioner employed by the clinic; the department will calculate this figure by using the greater of the actual number of visits or a number that represents the minimum rural health clinic productivity standard, as follows:

(A) at least 1,050 visits per year per full-time equivalent physician assistant or advanced nurse practitioner employed by the clinic;

( l ) A rural health clinic that enrolls during or after rural health clinic fiscal year 2000, and that

(1) submits cost data for a minimum of six months during the rural health clinic fiscal year 1999 and 2000 period, may request payment at a per visit rate that is based on the submitted data;

(2) does not submit cost data for a minimum of six months, will be paid a per visit rate equal to the statewide weighted average of the total Medicaid per visit payment rates made to rural health clinics; the base per visit rate will be re-determined

(A) after Medicare cost reports for rural health clinic fiscal years one and two are submitted and are reviewed by the department, and will be inflated in accordance with (g) of this section, except that the first two fiscal years of data that the clinic has available will be substituted for fiscal years 1999 and 2000; and

(B) to allow payments for each succeeding rural health clinic fiscal year to be established by using the base per visit rate set for the previous clinic fiscal year, and increasing that rate by the percentage increase in the number set out in the first quarter publication of Global Insight's Health-Care Cost Review, Skilled Nursing Facility Total Market Basket; adjustments for that clinic fiscal year will be made to take into account any increase or decrease in the scope of services that the department has approved under (j) of this section, whether the change in the scope of services is proposed for that fiscal year or occurred in the preceding fiscal year.

(m) A rural health clinic may appeal, under 7 AAC 43.704, the final rate set by the department by submitting a written request to the commissioner, so that the commissioner receives the request no later than 30 days after the date that the final rate agreement letter is issued.

(n) The amount, duration, and scope of primary care and ambulatory medical services provided by a rural health clinic are subject to the limits upon covered services under this chapter as applied to other Medicaid recipients.

(o) The department will reimburse a rural health clinic that is outside this state and that provides covered services to a Medicaid recipient eligible under this chapter at the lesser of the

(1) per visit rate established by the agency responsible for Medicaid in the state where the rural health clinic is located; or

(2) the average per visit rate established by the department for rural health clinics in this state.

(p) In this section,

(1) "charity care" means health care services that

(A) a rural health clinic does not expect to result in cash payments;

(B) result from a rural health clinic's policy to provide health care services free of charge to an individual who meets certain financial criteria; and

(C) are provided for by a health care provider, clinician, volunteer, or staff member, and for which the health care provider, clinician, volunteer or staff member does not expect to receive payment; and

(2) "medically necessary and appropriate" means

(A) reasonably calculated to diagnose, correct, cure, alleviate, or prevent the worsening of medical conditions that endanger life, cause suffering or pain, result in illness or infirmity, threaten to cause or aggravate a disability, or cause physical deformity or malfunction; and

(B) used because an equally effective more conservative or substantially less costly course of medical diagnosis or treatment is not available or suitable for the Medicaid recipient requesting the service; for purposes of this subparagraph, "course of treatment" includes mere observation or, if appropriate, no treatment at all.

History: Eff. 8/18/79, Register 71; readopt 8/7/96, Register 139; am 7/11/2002, Register 163; am 5/15/2004, Register 170; am 3/18/2006, Register 177

Authority: AS 47.05.010

Editor's note: Effective 8/7/96, Register 139, the Department of Health and Social Services readopted 7 AAC 43.860 in its entirety, without change, under AS 47.05 and AS 47.07. Executive Order No. 72 transferred certain rate-setting authority to the department.

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