Payment for Inpatient Services

(1) General. Payment for inpatient services is equal to the product of the PAF and the hospital's Charge for the service. The PAF shall be applied to all billed Charges that are payable under 114.1 CMR 41.00. Payment is based on the applicable PAF and Charge effective on the date the service is provided. (2) Rate Determination. The Division will determine a Hospital-specific industrial accident Rate Year Payment on Account Factor (PAF) as follows: (a) Calculation of PAF. The rate year PAF equals the lower of 1.0 or the Hospital's base year Private Sector Gross Patient Service Revenue (PSGPSR) minus its base year private sector contractual adjustments divided by its base year Private Sector Gross Patient Service Revenue (PSGPSR). Private sector revenues and contractual adjustments used in this calculation will be those reported in the DHCFP-403 cost report from Industrial Accident, Managed Care and Non-Managed Care payer groups. Rate Year PAF = the lower of 1.0 or Base Year PSGPSR - Base Year Private Sector Contractual Adjustments Base Year PSGPSR (b) Mergers and Consolidations. For any Hospital resulting from a merger, consolidation, or other such arrangement, a single updated PAF will be calculated when merged data and Charges become available. Merged or consolidated Hospitals shall use the PAF approved for the specific site of service until a single updated PAF is calculated and approved by the Division. If there is no individual PAF approved for the site of service, the Acute Median PAF for an Acute Hospital multiplied by the Charges will be used. If the Hospital is a Non- acute Hospital, the Non-acute Median Payment on Account Factor will be used. (c) New Hospitals. For a New Hospital or Hospital for which an approved PAF is not yet determined, payment will be based on the Acute Hospital Median PAF multiplied by Charges if the Hospital is an Acute Hospital. If the Hospital is a Non-acute Hospital the Non-acute Median Payment on Account Factor will be used. (3) Out of State Hospitals. (a) Payment to out of state Acute Hospitals that provide inpatient services is based on the Acute Median Payment on Account Factor. If the Hospital is a Non-acute Hospital the Non- acute Median Payment on Account Factor will be used. (b) Payment is determined by multiplying the applicable PAF by total Charges for services. (4) Payment for Implantable Durable Medical Equipment (DME). The PAF will be applied to implantable DME payable under 114.1 CMR 41.00. A Hospital is not required to submit an invoice for these items.