Determination of Surcharge Liability and Payment

(1) EOHHS will collect a surcharge on certain payments to hospitals and ambulatory surgical centers. The surcharge amount equals the product of: (a) payments subject to the surcharge as defined in 101 CMR 516.03(3); and (b) the assessment percentage as defined in 101 CMR 516.03(4). (2) Payers subject to surcharge: (a) Payers are subject to the surcharge if: 1. the payer is a surcharge payer; and 2. the payer's payments subject to surcharge were $1,000,000 or more during the previous state fiscal year or the most recent state fiscal year for which data is available. (b) The same entity that pays the hospital or ambulatory surgical center for services must pay the surcharge. (c) A payer that pays for hospital or ambulatory surgical center services on behalf of a client plan must pay the surcharge on those services. A payer that administers payments for health care services on behalf of a client plan in exchange for an administrative fee will be deemed to use the client plan's funds to pay for health care services whether the payer pays providers with funds from the client plan, with funds advanced by the payer subject to reimbursement by the client plan, or with funds deposited with the payer by the client plan. (d) In the case of a transfer of ownership, a surcharge payer’s liability to the Fund must be assumed by the successor in interest to the surcharge payer. (3) Payments subject to the surcharge include direct and indirect payments made by surcharge payers in a time period as determined by EOHHS and released annually, to hospitals for the purchase of hospital services; and to ambulatory surgical centers for the purchase of ambulatory surgical center services. (4) EOHHS will determine the surcharge percentage as follows: (a) EOHHS will, on an annual basis, collect the Total Behavioral Health Surcharge Amount by collecting a portion of the total amount from all payers. (b) EOHHS will require each payer to pay a portion of the total behavioral health surcharge amount proportional to their payments subject to surcharge during the most recent period for which data is available. (c) The surcharge percentage is determined by dividing the total amount to be collected determined under 101 CMR 516.03(4)(a) by total payments subject to surcharge determined under 101 CMR 516.03(4)(b). (d) EOHHS may establish the surcharge percentage by administrative bulletin. EOHHS may adjust the surcharge percentage by Administrative Bulletin if an adjustment is necessary to collect the revenue required to be collected. (5) Each payer must determine its surcharge liability in accordance with guidance issued by EOHHS in administrative bulletins. The surcharge liability is the product of the payer's payments subject to the surcharge, as defined in 101 CMR 516.03(3) and the surcharge percentage as defined in 101 CMR 516.03(4)(c). The total amount to be collected may vary depending on the outcome of any administrative review of payments pursuant to 101 CMR 516.04. (6) Payers that pay a global fee or capitation for services that include hospital or ambulatory surgical center services, as well as other services not subject to the surcharge, must develop a reasonable method for allocating the portion of the payment intended to be used for services provided by hospitals or ambulatory surgical centers. Such payers must file this allocation with EOHHS by February 1st of each year. If there is a significant change in the global fee or capitation payment arrangement that necessitates a change in the allocation method, the payer must notify EOHHS and file a new allocation method at least 45 days before the new payment arrangement takes effect. Payers may not change the allocation method later in the year unless there is a significant change in the payment arrangement. (a) EOHHS will review allocation plans within 90 days of receipt. During this review period, EOHHS may require a payer to submit supporting documentation or to make changes in this allocation method if it finds that the method does not reasonably allocate the portion of the global payment or capitation intended to be used for services provided by hospitals or ambulatory surgical centers. (b) A payer must include the portion of the global payment or capitation intended to be used for services provided by hospitals or ambulatory surgical centers, as determined by this allocation method, in its determination of payments subject to the surcharge. (7) A payer must include all payments made as a result of settlements, judgments or audits in its determination of payments subject to the surcharge. A payer may include payments made by Massachusetts hospitals or ambulatory surgical centers to the payer as a result of settlements, judgments or audits as a credit in its determination of payments subject to the surcharge. (8) Each payer must pay its surcharge liability in the first quarter of each calendar year in accordance with a schedule developed and released by the EOHHS through administrative bulletin. (9) Penalties for Non-payment. (a) If a payer does not pay the amount calculated pursuant to 101 CMR 516.03(4)(c), or a specified portion thereof, by the due date established by EOHHS, EOHHS may assess up to a 3% penalty on the outstanding balance. EOHHS will calculate the penalty on the outstanding balance as of the due date. EOHHS may assess up to an additional 3% penalty against the outstanding balance and prior penalties for each month that a payer remains delinquent. EOHHS will credit partial payments from delinquent payers to the current outstanding liability. If any amount remains from the partial payment, EOHHS will then credit such amount to the penalty amount. (b) In determining the penalty amount, EOHHS may consider factors including, but not be limited to, the payer’s payment history, financial situation, and relative share of the payments.