Payments to Acute Hospitals

(1) General Provisions. (a) The Health Safety Net pays acute hospitals based on claims in accordance with the requirements of 101 CMR 613.00: Health Safety Net Eligible Services. The Health Safety Net office monitors the volume of claims submitted and may adjust or withhold payments if it appears that there has been a substantial change in the provider's service delivery patterns and/or billing activity, including, but not limited to, unbundling of services, upcoding, or other billing maximization activities. (b) Payment Types. 1. The Health Safety Net office calculates Health Safety Net payments for each acute hospital service for which the Health Safety Net is the primary or secondary payer in accordance with 101 CMR 614.06(2) through (7). 2. The Health Safety Net office establishes payments for claims which the Health Safety Net is the secondary payer in accordance with 101 CMR 614.06(8). 3. The Health Safety Net office reduces payments by the amount of emergency bad debt recoveries and investment income on free care endowment funds. The Health Safety Net office determines the offset of free care endowment funds by allocating free care endowment income between Massachusetts residents and nonresidents using the best data available and offsetting the Massachusetts portion against Health Safety Net claims. (c) Method of Payment. The Health Safety Net may make payments to acute hospitals for eligible services through a safety net care payment under the Massachusetts Section 1115 Demonstration Waiver, a MassHealth supplemental acute hospital rate payment, or a combination thereof. The Health Safety Net office may limit an acute hospital's payment for eligible services to comply with requirements under the Massachusetts Section 1115 Demonstration Waiver governing safety net care, including cost limits or any other federally required limit on payments under 42 U.S.C. § 1396a(a)(13) or 42 CFR 447. (d) Provider Preventable Conditions. The Health Safety Net does not pay for services related to provider preventable conditions defined in 42 CFR 447.26. The Health Safety Net office may issue administrative bulletins clarifying billing requirements and payment specifications for provider preventable conditions. (e) Serious Reportable Events. The Health Safety Net does not pay for services related to serious reportable events as defined in 105 CMR 130.332(A): Definitions Applicable to 105 CMR 130.332 based on standards by the National Quality Forum. The Health Safety Net office may issue administrative bulletins clarifying billing requirements and payment specifications for such services. (2) Pricing for Inpatient Services. The Health Safety Net office prices acute hospital claims in accordance with the Medicare Inpatient Prospective Payment System (IPPS) for non-psychiatric claims and the Inpatient Psychiatric Facility Prospective Payment System (IPF-PPS) for psychiatric claims for the current fiscal year. Medicare pricing data is published in the Federal Register and pricing methodologies are described in 42 CFR 412. Claims from acute hospitals classified by Medicare as Critical Access Hospitals (CAHs), PPS-exempt hospitals, Medicare dependent rural hospitals, and sole community hospitals are priced in accordance with 101 CMR 614.06(2)(b). (a) Inpatient Medical Pricing - Standard. The Health Safety Net office uses Medicare pricing data and the most current version of the Medicare severity diagnostic related group (MS-DRG) weights to calculate the inpatient medical pricing according to the IPPS for all acute hospitals, except as described under 101 CMR 614.06(2)(b). The Health Safety Net office may update pricing or weight values as needed to conform to changes implemented by the Medicare program during the fiscal year. The pricing calculation includes Medicare adjustments for items such as high-cost outliers, transfer cases, special pay post-acute DRGs, partially Medicare-eligible stays, and participation in the acute hospital inpatient quality reporting program. (b) Inpatient Medical Pricing - Other Acute Hospitals. 1. Critical Access Hospitals and PPS-exempt Hospitals. The Health Safety Net office calculates a per discharge payment for discharges occurring at Medicare Critical Access Hospitals, PPS-exempt cancer and pediatric hospitals, and acute hospitals with fewer than 20 discharges in the source year as follows. a. The Health Safety Net office determines the average charge per discharge using adjudicated and eligible Health Safety Net claims data from the source year that is available at the time of rate calculation. b. The Health Safety Net office determines an average cost per discharge by multiplying the average charge per discharge by an inpatient cost to charge ratio using data as reported on the hospital cost report for the source year. c. The average cost per discharge is increased by a cost adjustment factor determined by the percent change from the IPPS index level for the source year and the IPPS index level forecast for the fiscal year, as calculated by the Health Safety Net office as of October 1st of the fiscal year, and an additional factor of 1%. The product of this calculation is the per discharge payment applicable to all discharges occurring during the current fiscal year, except that partially eligible stays are paid pursuant to 101 CMR 614.06(2)(b)3. d. If the acute hospital has fewer than 20 discharges in the source year, the Health Safety Net office sets a payment on account factor for the acute hospital as described in 101 CMR 614.06(3)(b). e. If a case qualifies as a transfer case under Medicare rules, the Health Safety Net office calculates a per diem rate, capped at the full discharge payment. The per diem rate is the hospital-specific payment calculated under 101 CMR 614.06(2)(b)1., divided by the acute hospital’s average length of stay. 2. Sole Community Hospitals. The Health Safety Net office pays acute hospitals classified as sole community hospitals that do not otherwise qualify for payment according to 101 CMR 614.06(2)(b)1. as follows. The Health Safey Net office calculates a hospital-specific per discharge amount for such sole community hospitals, rather than the adjusted standardized amount. This amount is based on the hospital-specific rate provided by the Medicare fiscal intermediary, adjusted for inflation. The payments may include transfer, outlier, and special pay amounts, using the hospital-specific rate in these calculations, for qualifying cases. 3. Medicare Dependent Rural Hospitals. The Health Safety Net office pays acute hospitals classified by Medicare as Medicare Dependent Rural Hospitals that do not otherwise qualify for payment according to 101 CMR 614.06(2)(b)1. as follows. The Health Safety Net office calculates a blended payment consisting of 75% of a hospital-specific payment and 25% of the Operating DRG Payment for such Medicare Dependent Rural Hospitals. The payments may include transfer, outlier, and special pay amounts, using the hospital-specific blended rate in these calculations, for qualifying cases. (c) Inpatient Psychiatric Pricing. 1. Psychiatric Case. A case is classified as psychiatric if a. the acute hospital has a Medicare psychiatric unit; b. the primary diagnosis is related to a psychiatric disorder; and c. the claim includes psychiatric accommodation charges. 2. Psychiatric Pricing. The Health Safety Net office uses Medicare pricing data to calculate a per diem price according to the IPF-PPS. The Health Safety Net office may update values as needed to conform to changes implemented by the Medicare program during the fiscal year. The pricing calculation includes Medicare adjustments such as a teaching hospital adjustment, electroconvulsive therapy (ECT) adjustment, high-cost outliers, adjustments for participation in the Inpatient Psychiatric Facilities Quality Reporting program, and any other adjustments in accordance with Medicare pricing provisions pursuant to 42 CFR 412.424, including adjustments for specific DRGs, the presence of comorbidities, patient age, and length of stay. (d) Inpatient Rehabilitation Pricing. 1. Rehabilitation Case. A case is classified as rehabilitation if a. the acute hospital has a Medicare rehabilitation unit; and b. the claim includes rehabilitation accommodation charges. 2. Payment. Rehabilitation cases are paid on a per diem basis. The payment is determined using the acute hospital’s most recently filed CMS-2552 Cost Report. The rate is the sum of total rehabilitation PPS payments and reimbursable bad debts, divided by total rehabilitation days, and multiplied by a cost adjustment factor, as calculated under 101 CMR 614.06(2)(b)1.c. (e) Hospital-acquired Conditions. 1. All acute hospitals, including but not limited to PPS-exempt acute hospitals, are required to report the present on admission indicator for all diagnosis codes on inpatient claims. 2. The Health Safety Net office does not assign an inpatient case to a higher paying MS-DRG if a hospital-acquired condition that was not present on admission occurs during the stay. For hospital services paid pursuant to 101 CMR 614.06(2)(a) and (b), the DRG payment is reduced in accordance with Medicare principles. (f) Administrative Days. The Health Safety Net pays administrative days at the per diem rate established by MassHealth pursuant to the Acute Hospital Request for Applications for the current fiscal year when the Health Safety Net is the primary payer. (g) Partially Eligible Days. The Health Safety Net pays only for the uninsured portion of an inpatient stay covered partially by Medicare, Medicaid, or any other payer. (3) Pricing for Outpatient Services. The Health Safety Net pays a per visit amount for each outpatient visit. An outpatient visit includes all outpatient services provided in a single day, excluding hospital-based physician services, dental services, pharmacy services, and vaccine administration services, as described in 101 CMR 614.06(4) through (7). The outpatient per visit amount is determined as follows. (a) For each acute hospital, the Health Safety Net office calculates an average outpatient charge per visit, using such adjudicated and eligible Health Safety Net claims data from the source year. Charges for outpatient visit claims that are $20.00 or below, and charges for outpatient claims within 72 hours of an inpatient admission, or 24 hours of an inpatient admission in the case of a critical access hospital, are excluded. (b) The Health Safety Net office determines a hospital-specific Medicare payment on account factor (PAF), defined as the percent of Medicare outpatient charges that are paid on average. The PAF is calculated using the best available data and subject to review and adjustment by the Health Safety Net Office, including any necessary adjustment in payment for services rendered by hospital licensed health centers that are designated by the federal Health Resources and Services Administration as federally qualified health centers at parity with hospital outpatient services rendered at the acute hospital’s main outpatient campus. (c) Except as described in 101 CMR 614.06(3)(d) through (f), the Health Safety Net Office determines an outpatient payment per visit by multiplying the average outpatient charge per visit by the PAF. This product is further adjusted by a cost adjustment factor as calculated in 101 CMR 614.06(2)(b)1.c. (d) Disproportionate share hospitals and non-teaching acute hospitals receive a transitional add-on of 25% of the outpatient per visit payment rate. (e) The per visit payment for PPS-exempt cancer and pediatric hospitals and Medicare Critical Access Hospitals is determined using the ratio of costs to charges as reported on the hospital cost report for the source year and an additional factor of 1%, rather than the Medicare payment on account factor data. (f) Claims for outpatient visits that are less than or equal to $20.00 are paid by multiplying the Medicare payment on account factor by the billed charges. (g) Claims for outpatient visits within 72 hours of an inpatient admission, or 24 hours of an inpatient admission in the case of a critical access hospital, are not payable. (4) Pricing for Physician Services. The Health Safety Net office prices hospital-based physician service claims based on the Medicare Physician Fee Schedule. (5) Dental Services. The Health Safety Net Office prices claims for outpatient dental services provided at acute hospitals and hospital licensed health centers using the lesser of the allowable charges billed to the HSN, or the fees established in 101 CMR 314.00: Rates for Dental Services. No additional outpatient per visit payment is paid for dental services. (6) Acute Hospital Outpatient Pharmacies. (a) Prescribed Drugs. For acute hospitals with outpatient pharmacies, the Health Safety Net office prices prescribed drugs using rates set forth in 101 CMR 331.00: Prescribed Drugs, less any applicable cost sharing amount. The MassHealth Drug List specifies the drugs payable by the Health Safety Net. Claims are adjudicated by the MassHealth Pharmacy Online Payment System. (b) Part B Covered Services. Medical supplies normally covered by the Medicare Part B program that are dispensed by acute hospital outpatient pharmacies that are not Part B providers are priced at 20% of the rates set forth in 101 CMR 322.00: Rates for Durable Medical Equipment, Oxygen, and Respiratory Therapy Equipment and 101 CMR 331.00: Prescribed Drugs. (7) Vaccine Administration. The Health Safety Net office allows for separate payment for a vaccine administration and an individual medical visit only if the vaccine administration is not occurring on the same day as the office visit. A separate fee for the administration of vaccines is payable only when the sole purpose for a visit is vaccine administration. The fee is priced in accordance with the provisions of 101 CMR 317.00: Rates for Medicine Services. (8) Secondary Payer. The Health Safety Net pays inpatient and outpatient acute hospital claims and community health center claims for which it is not the primary payer as follows. (a) 95% Rule. If a claim billed to the Health Safety Net has a ratio of total billed net charges to total claim charges that is greater than 95%, the Health Safety Net pays the claim in accordance with the applicable primary payment rules. (b) Other Payer as Primary Payer. For any allowable claim for which Health Safety Net is the not the primary payer, and for which 101 CMR 614.06(8)(a) does not apply, the Health Safety Net pays in accordance with 101 CMR 613.03(1). (c) Payment Not to Exceed Primary. Notwithstanding any other provision to the contrary, the Health Safety Net payment for a claim for which it is not the primary payer will not exceed the amount the Health Safety Net Office would have paid if it were the primary payer less the amounts other payers paid for the claim. (d) Administrative Bulletins. The Health Safety Net office may issue administrative bulletins to clarify billing policies and payment specifications for claims for which it is not the primary payer. (9) Bad Debt Pricing. Except as provided at 101 CMR 614.06(9)(a), the Health Safety Net office calculates emergency bad debt payments for inpatient, psychiatric, and outpatient emergency and urgent care services, using the methodology in 101 CMR 614.06(2) and (3), except that: (a) If an acute hospital has fewer than 20 emergency bad debt claims during the source year, the Health Safety Net office sets the emergency bad debt rate as the outpatient primary per visit rate established in 101 CMR 614.06(3), excluding the transitional add-on under 101 CMR 614.06(3)(d). (b) The Health Safety Net office pays hospital licensed health centers 75% of the PPS Rate as published by Medicare for Bad Debt claims for urgent care services. (c) The emergency bad debt outpatient rate does not include the 25% add-on cited in 101 CMR 614.06(3)(d). (d) The Health Safety Net pays acute hospitals only for bad debt claims that are emergency bad debt or bad debt claims for urgent care services. (10) Medical Hardship. The Health Safety Net pays for claims for patients deemed eligible for medical hardship pursuant to 101 CMR 613.00: Health Safety Net Eligible Services. The Health Safety Net office reduces the amount of the billed charges by any applicable third-party payments, third-party contractual discounts, patient payments, and the amount of the medical hardship contribution. If any such adjustments are applicable, the claim is paid as a secondary claim in accordance with the provisions of 101 CMR 614.06(8). If there are no applicable adjustments and the billed charges are not reduced, the Health Safety Net pays the claim as if it were a primary Health Safety Net claim. (11) Other. The Health Safety Net makes an additional payment of $3.85 million to freestanding pediatric hospitals with more than 1,000 Medicaid discharges during the source year for which a standard payment amount per discharge was paid by MassHealth pursuant to the acute hospital request for applications, as determined by paid claims in the Medicaid Management Information System as of June 15, 2016, and for which MassHealth was the primary payer.