HF 1853

as introduced - 89th Legislature (2015 - 2016) Posted on 03/16/2015 02:56pm

A bill for an act
relating to human services; setting new payment rates for critical access
hospitals; requiring a new payment methodology for disproportionate share
hospital payments; amending Minnesota Statutes 2014, section 256.969,
subdivisions 2b, 9.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2014, section 256.969, subdivision 2b, is amended to read:

Subd. 2b.

Hospital payment rates.

(a) For discharges occurring on or after
November 1, 2014, hospital inpatient services for hospitals located in Minnesota shall be
paid according to the following:

(1) critical access hospitals as defined by Medicare shall be paid using a cost-based
methodology;

(2) long-term hospitals as defined by Medicare shall be paid on a per diem
methodology under subdivision 25;

(3) rehabilitation hospitals or units of hospitals that are recognized as rehabilitation
distinct parts as defined by Medicare shall be paid according to the methodology under
subdivision 12; and

(4) all other hospitals shall be paid on a diagnosis-related group (DRG) methodology.

(b) For the period beginning January 1, 2011, through October 31, 2014, rates shall
not be rebased, except that a Minnesota long-term hospital shall be rebased effective
January 1, 2011, based on its most recent Medicare cost report ending on or before
September 1, 2008, with the provisions under subdivisions 9 and 23, based on the rates
in effect on December 31, 2010. For rate setting periods after November 1, 2014, in
which the base years are updated, a Minnesota long-term hospital's base year shall remain
within the same period as other hospitals.

(c) Effective for discharges occurring on and after November 1, 2014, payment rates
for hospital inpatient services provided by hospitals located in Minnesota or the local trade
area, except for the hospitals paid under the methodologies described in paragraph (a),
clauses (2) and (3), shall be rebased, incorporating cost and payment methodologies in a
manner similar to Medicare. The base year for the rates effective November 1, 2014, shall
be calendar year 2012. The rebasing under this paragraph shall be budget neutral, ensuring
that the total aggregate payments under the rebased system are equal to the total aggregate
payments that were made for the same number and types of services in the base year.
Separate budget neutrality calculations shall be determined for payments made to critical
access hospitals and payments made to hospitals paid under the DRG system. Only the rate
increases or decreases under subdivision 3a or 3c that applied to the hospitals being rebased
during the entire base period shall be incorporated into the budget neutrality calculation.

(d) For discharges occurring on or after November 1, 2014, through June 30, 2016,
the rebased rates under paragraph (c) shall include adjustments to the projected rates that
result in no greater than a five percent increase or decrease from the base year payments
for any hospital. Any adjustments to the rates made by the commissioner under this
paragraph and paragraph (e) shall maintain budget neutrality as described in paragraph (c).

(e) For discharges occurring on or after November 1, 2014, through June 30, 2016,
the commissioner may make additional adjustments to the rebased rates, and when
evaluating whether additional adjustments should be made, the commissioner shall
consider the impact of the rates on the following:

(1) pediatric services;

(2) behavioral health services;

(3) trauma services as defined by the National Uniform Billing Committee;

(4) transplant services;

(5) obstetric services, newborn services, and behavioral health services provided
by hospitals outside the seven-county metropolitan area;

(6) outlier admissions;

(7) low-volume providers; and

(8) services provided by small rural hospitals that are not critical access hospitals.

(f) Hospital payment rates established under paragraph (c) must incorporate the
following:

(1) for hospitals paid under the DRG methodology, the base year payment rate per
admission is standardized by the applicable Medicare wage index and adjusted by the
hospital's disproportionate population adjustment;

(2) for critical access hospitals, interim per diem payment rates shall be based on the
ratio of cost and charges reported on the base year Medicare cost report or reports and
applied to medical assistance utilization data. Final settlement payments for a state fiscal
year must be determined based on a review of the medical assistance cost report required
under subdivision 4b for the applicable state fiscal year;

(3) the cost and charge data used to establish hospital payment rates must only
reflect inpatient services covered by medical assistance; and

(4) in determining hospital payment rates for discharges occurring on or after the
rate year beginning January 1, 2011, through December 31, 2012, the hospital payment
rate per discharge shall be based on the cost-finding methods and allowable costs of the
Medicare program in effect during the base year or years.

(g) The commissioner shall validate the rates effective November 1, 2014, by
applying the rates established under paragraph (c), and any adjustments made to the rates
under paragraph (d) or (e), to hospital claims paid in calendar year 2013 to determine
whether the total aggregate payments for the same number and types of services under the
rebased rates are equal to the total aggregate payments made during calendar year 2013.

(h) Effective for discharges occurring on or after July 1, 2017, and every two
years thereafter, payment rates under this section shall be rebased to reflect only those
changes in hospital costs between the existing base year and the next base year. The
commissioner shall establish the base year for each rebasing period considering the most
recent year for which filed Medicare cost reports are available. The estimated change in
the average payment per hospital discharge resulting from a scheduled rebasing must be
calculated and made available to the legislature by January 15 of each year in which
rebasing is scheduled to occur, and must include by hospital the differential in payment
rates compared to the individual hospital's costs.

new text begin (i) Effective for discharges occurring on or after July 1, 2015, payment rates for
critical access hospitals located in Minnesota or the local trade area shall be determined
using a new cost-based methodology. The commissioner shall establish within the
methodology tiers of payment designed to promote efficiency and cost-effectiveness.
Annual payments to hospitals under this paragraph shall equal the total cost for critical
access hospitals as reflected in base year cost reports. The new cost-based rate shall be
the final rate and shall not be settled to actual incurred costs. The factors used to develop
the new methodology may include but are not limited to:
new text end

new text begin (1) the ratio between the hospital's costs for treating medical assistance patients and
the hospital's charges to the medical assistance program;
new text end

new text begin (2) the ratio between the hospital's costs for treating medical assistance patients and
the hospital's payments received from the medical assistance program for the care of
medical assistance patients;
new text end

new text begin (3) the ratio between the hospital's charges to the medical assistance program and
the hospital's payments received from the medical assistance program for the care of
medical assistance patients;
new text end

new text begin (4) the statewide average increases in the ratios identified in clauses (1), (2), and (3);
new text end

new text begin (5) the proportion of that hospital's costs that are administrative and trends in
administrative costs; and
new text end

new text begin (6) geographic location.
new text end

Sec. 2.

Minnesota Statutes 2014, section 256.969, subdivision 9, is amended to read:

Subd. 9.

Disproportionate numbers of low-income patients served.

(a) For
admissions occurring on or after July 1, 1993, the medical assistance disproportionate
population adjustment shall comply with federal law and shall be paid to a hospital,
excluding regional treatment centers and facilities of the federal Indian Health Service,
with a medical assistance inpatient utilization rate in excess of the arithmetic mean. The
adjustment must be determined as follows:

(1) for a hospital with a medical assistance inpatient utilization rate above the
arithmetic mean for all hospitals excluding regional treatment centers and facilities of the
federal Indian Health Service but less than or equal to one standard deviation above the
mean, the adjustment must be determined by multiplying the total of the operating and
property payment rates by the difference between the hospital's actual medical assistance
inpatient utilization rate and the arithmetic mean for all hospitals excluding regional
treatment centers and facilities of the federal Indian Health Service; and

(2) for a hospital with a medical assistance inpatient utilization rate above one
standard deviation above the mean, the adjustment must be determined by multiplying
the adjustment that would be determined under clause (1) for that hospital by 1.1.
The commissioner may establish a separate disproportionate population payment rate
adjustment for critical access hospitals. The commissioner shall report annually on the
number of hospitals likely to receive the adjustment authorized by this paragraph. The
commissioner shall specifically report on the adjustments received by public hospitals and
public hospital corporations located in cities of the first class.

(b) Certified public expenditures made by Hennepin County Medical Center shall
be considered Medicaid disproportionate share hospital payments. Hennepin County
and Hennepin County Medical Center shall report by June 15, 2007, on payments made
beginning July 1, 2005, or another date specified by the commissioner, that may qualify
for reimbursement under federal law. Based on these reports, the commissioner shall
apply for federal matching funds.

(c) Upon federal approval of the related state plan amendment, paragraph (b) is
effective retroactively from July 1, 2005, or the earliest effective date approved by the
Centers for Medicare and Medicaid Services.

new text begin (d) Effective July 1, 2015, disproportionate share hospital (DSH) payments shall
be paid in accordance with a new methodology. Annual DSH payments made under
this paragraph shall equal the total amount of DSH payments made for 2012. The new
methodology shall take into account a variety of factors, including but not limited to:
new text end

new text begin (1) the medical assistance utilization rate of the hospitals that receive payments
under this subdivision;
new text end

new text begin (2) whether the hospital is located within Minnesota;
new text end

new text begin (3) the difference between a hospital's costs for treating medical assistance patients
and the total amount of payments received from medical assistance;
new text end

new text begin (4) the percentage of uninsured patient days at each qualifying hospital in relation
to the total number of uninsured patient days statewide;
new text end

new text begin (5) the hospital's status as a hospital authorized to make presumptive eligibility
determinations for medical assistance in accordance with section 256B.057, subdivision 12;
new text end

new text begin (6) the hospital's status as a safety net, critical access, children's, rehabilitation, or
long-term hospital;
new text end

new text begin (7) whether the hospital's administrative cost of compiling the necessary DSH
reports exceeds the anticipated value of any calculated DSH payment; and
new text end

new text begin (8) whether the hospital provides specific services designated by the commissioner
to be of particular importance to the medical assistance program.
new text end

new text begin (e) Any payments or portion of payments made to a hospital under this subdivision
that are subsequently returned to the commissioner because the payments are found to
exceed the hospital-specific DSH limit for that hospital shall be redistributed to other
DSH-eligible hospitals in a manner established by the commissioner.
new text end