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    Subdivision 1. Appeals. A hospital may appeal a decision arising from the application of
standards or methods under section 256.9685, 256.9686, or 256.969, if an appeal would result in a
change to the hospital's payment rate or payments. Both overpayments and underpayments that
result from the submission of appeals shall be implemented. Regardless of any appeal outcome,
relative values shall not be recalculated. The appeal shall be heard by an administrative law judge
according to sections 14.57 to 14.62, or upon agreement by both parties, according to a modified
appeals procedure established by the commissioner and the Office of Administrative Hearings. In
any proceeding under this section, the appealing party must demonstrate by a preponderance of
the evidence that the commissioner's determination is incorrect or not according to law.
(a) To appeal a payment rate or payment determination or a determination made from base
year information, the hospital shall file a written appeal request to the commissioner within 60
days of the date the payment rate determination was mailed. The appeal request shall specify: (i)
the disputed items; (ii) the authority in federal or state statute or rule upon which the hospital
relies for each disputed item; and (iii) the name and address of the person to contact regarding
the appeal. Facts to be considered in any appeal of base year information are limited to those in
existence at the time the payment rates of the first rate year were established from the base year
information. In the case of Medicare settled appeals, the 60-day appeal period shall begin on the
mailing date of the notice by the Medicare program or the date the medical assistance payment
rate determination notice is mailed, whichever is later.
(b) To appeal a payment rate or payment change that results from a difference in case mix
between the base year and a rate year, the procedures and requirements of paragraph (a) apply.
However, the appeal must be filed with the commissioner within 120 days after the end of a rate
year. A case mix appeal must apply to the cost of services to all medical assistance patients that
received inpatient services from the hospital during the rate year appealed. For case mix appeals
filed after January 1, 1997, the difference in case mix and the corresponding payment adjustment
must exceed a threshold of five percent.
    Subd. 2. Prohibited practices. (a) Hospitals that have a provider agreement with the
department may not limit medical assistance admissions to percentages of certified capacity
or to quotas unless patients from all payors are limited in the same manner. This requirement
does not apply to certified capacity that is unavailable due to contracts with payors for specific
occupancy levels.
(b) Hospitals may not transfer medical assistance patients to or cause medical assistance
patients to be admitted to other hospitals without the explicit consent of the receiving hospital
when service needs of the patient are available and within the scope of the transferring hospital.
The transferring hospital is liable to the receiving hospital for patient charges and ambulance
services without regard to medical assistance payments plus the receiving hospital's reasonable
attorney fees if found in violation of this prohibition.
    Subd. 3. Transition. Except as provided in section 256.969, subdivision 8, the commissioner
shall establish a transition period for the calculation of payment rates from July 1, 1989, to the
implementation date of the upgrade to the Medicaid management information system or July 1,
1992, whichever is earlier.
During the transition period:
(a) Changes resulting from section 256.969, subdivisions 7, 9, 10, 11, and 13, shall not be
implemented, except as provided in section 256.969, subdivisions 12 and 20.
(b) The beginning of the 1991 rate year shall be delayed and the rates notification
requirement shall not be applicable.
(c) Operating payment rates shall be indexed from the hospital's most recent fiscal year
ending prior to January 1, 1991, by prorating the hospital cost index methodology in effect on
January 1, 1989. For payments made for admissions occurring on or after June 1, 1990, until the
implementation date of the upgrade to the Medicaid management information system the hospital
cost index excluding the technology factor shall not exceed five percent. This hospital cost index
limitation shall not apply to hospitals that meet the requirements of section 256.969, subdivision
, paragraphs (a) and (b).
(d) Property and pass-through payment rates shall be maintained at the most recent payment
rate effective for June 1, 1990. However, all hospitals are subject to the hospital cost index
limitation of subdivision 2c, for two complete fiscal years. Property and pass-through costs shall
be retroactively settled through the transition period. The laws in effect on the day before July
1, 1989, apply to the retroactive settlement.
(e) If the upgrade to the Medicaid management information system has not been completed
by July 1, 1992, the commissioner shall make adjustments for admissions occurring on or after
that date as follows:
(1) provide a ten percent increase to hospitals that meet the requirements of section 256.969,
subdivision 20
, or, upon written request from the hospital to the commissioner, 50 percent of
the rate change that the commissioner estimates will occur after the upgrade to the Medicaid
management information system; and
(2) adjust the Minnesota and local trade area rebased payment rates that are established
after the upgrade to the Medicaid management information system to compensate for a rebasing
effective date of July 1, 1992. The adjustment shall be determined using claim specific payment
changes that result from the rebased rates and revised methodology in effect after the systems
upgrade. Any adjustment that is greater than zero shall be ratably reduced by 20 percent. In
addition, every adjustment shall be reduced for payments under clause (1), and differences in the
hospital cost index. Hospitals shall revise claims so that services provided by rehabilitation units of
hospitals are reported separately. The adjustment shall be in effect until the amount due to or owed
by the hospital is fully paid over a number of admissions that is equal to the number of admissions
under adjustment multiplied by 1.5. The adjustment for admissions occurring from July 1, 1992
to December 31, 1992, shall be based on claims paid as of August 1, 1993, and the adjustment
shall begin with the effective date of rules governing rebasing. The adjustment for admissions
occurring from January 1, 1993, to the effective date of the rules shall be based on claims paid as
of February 1, 1994, and shall begin after the first adjustment period is fully paid. For purposes of
appeals under subdivision 1, the adjustment shall be considered payment at the time of admission.
    Subd. 4. Study. The commissioner shall contract for an evaluation of the inpatient and
outpatient hospital payment systems. The study shall include recommendations concerning:
(1) more effective methods of assigning operating and property payment rates to specific
services or diagnoses;
(2) effective methods of cost control and containment;
(3) fiscal impacts of alternative payment systems;
(4) the relationships of the use of and payment for inpatient and outpatient hospital services;
(5) methods to relate reimbursement levels to the efficient provision of services; and
(6) methods to adjust reimbursement levels to reflect cost differences between geographic
The commissioner shall report the findings to the legislature by January 15, 1991, along
with recommendations for implementation.
    Subd. 5. Rules. The commissioner of human services shall adopt permanent rules to
implement this section and sections 256.9685, 256.9686, and 256.969 under chapter 14, the
Administrative Procedure Act.
History: 1989 c 282 art 3 s 39; 1990 c 568 art 3 s 18,19; 1991 c 292 art 4 s 30,78; 1992 c
513 art 7 s 28; 1993 c 339 s 11,12; 1Sp1993 c 1 art 5 s 26; 1994 c 465 art 3 s 571; 1997 c
203 art 4 s 17

Official Publication of the State of Minnesota
Revisor of Statutes