KRS § 205.640 — KY Code / Title XVII / Chapter 205 / Section 205.640
205.640 Medical Assistance Revolving Trust Fund (MART) -- Distribution of disproportionate share funds -- Authority for administrative regulations -- Duties of hospitals receiving funds from MART
Status: in_force

205.640 Medical Assistance Revolving Trust Fund (MART) -- Distribution of

disproportionate share funds -- Authority for administrative regulations --

Duties of hospitals receiving funds from MART.

(1) The commissioner of Medicaid services shall adopt a disproportionate share

program consistent with the requirements of Title XIX of the Social Security Act

which shall include to the extent possible, but not limited to, the provisions of this

section.

(2) The Medical Assistance Revolving Trust Fund (MART) shall be established in the

State Treasury and all provider tax revenues collected pursuant to KRS 142.301 to

142.363 shall be deposited in the State Treasury and transferred on a quarterly basis

to the Department for Medicaid Services for use as specified in this section. All

investment earnings of the fund shall be credited to the fund. Provider tax revenues

collected in accordance with KRS 142.301 to 142.363 may be used to fund the

provisions of KRS 216.2920 to 216.2929 and to supplement the medical assistance-

related general fund appropriations for fiscal year 1994 and subsequent fiscal years.

Notwithstanding the provisions of KRS 48.500 and 48.600, the MART fund shall

be exempt from any state budget reduction acts.

(3) (a) Beginning in state fiscal year 2000-2001 and continuing annually thereafter,

provider tax revenues and state and federal matching funds shall be used to

fund the disproportionate share program established by administrative

regulations promulgated by the Cabinet for Health and Family Services.

Disproportionate share funds shall be divided into three (3) pools for

distribution as follows:

1. An acute care pool, composed of critical access hospitals,

comprehensive physical rehabilitation hospitals, long-term acute

hospitals, and acute care hospitals that do not qualify as a university

hospital, shall receive an initial and a final allocation determined by

subtracting from the state's total DSH allotment:

a. The allocation required in subparagraph 2. of this paragraph for the

psychiatric pool; and

b. The initial or final, as applicable, DSH payments to be made to

hospitals in the university pool in subparagraph 3. of this

paragraph;

2. A psychiatric pool, composed of private psychiatric hospitals and state

mental hospitals, shall receive the percentage allowable by federal law

pursuant to 42 U.S.C. sec. 1396r-4(h), up to nineteen and eight-

hundredths percent (19.08%) of the total disproportionate share funds,

with the allocation between each respective group of hospitals

established by the biennial budget; except, however, that the allocation

to state mental hospitals shall not exceed ninety-two and three-tenths

percent (92.3%) of the total allotment to the psychiatric pool. If there are

remaining funds within the psychiatric pool after all private psychiatric

hospitals reach their hospital-specific DSH limit, state mental hospitals

may exceed the ninety-two and three-tenths percent (92.3%) limit but

may not exceed their hospital-specific DSH limit;

3. A university hospital pool, composed of university hospitals, shall

receive thirty-seven percent (37%) of the state's DSH allotment; except,

however, that initial and final DSH payments to university hospitals

shall be determined according to paragraph (e) of this subsection and not

exceed the pool's overall allotment;

4. If there are any remaining disproportionate share funds from the

psychiatric pool, fifty-four percent (54%) of those funds shall be

distributed to the acute care pool and forty-six percent (46%) shall be

distributed to the university pool. If the university hospitals are unable to

absorb additional DSH payment dollars, remaining funds shall be

distributed to the acute care pool; and

5. If, in any year, university hospitals fail to provide state matching funds

necessary to secure federal financial participation for the funds allocated

to university hospitals under this subsection, the portion of the funding

allocation that is not matched by university hospitals shall be made

available to the acute care pool.

(b) The MART fund shall be used to compensate acute care hospitals, private

psychiatric hospitals, state mental hospitals, critical access hospitals,

comprehensive physical rehabilitation hospitals, long-term acute care

hospitals, and university hospitals participating in the disproportionate share

program for uncompensated care costs.

(c) An individual hospital shall receive distributions if the hospital meets the

requirements of the disproportionate share program pursuant to 42 U.S.C. sec.

1396r-4.

(d) 1. An individual hospital shall not receive an initial DSH payment unless

the hospital submits a Medicaid DSH survey by the deadline established

by subsection (8)(a) of this section, unless the deadline has been

extended by the commissioner of the department. Extension requests

shall be received at least ten (10) days prior to the deadline. Extensions

shall be limited to rare circumstances which prevent the hospital from

meeting the deadline despite due diligence. Extensions shall be granted

for no more than thirty (30) calendar days from the original due date for

the Medicaid DSH survey. Failure to submit a DSH survey in a timely

manner or other required information for receipt of an initial DSH

payment shall result in an individual hospital's final DSH payment being

reduced by twenty percent (20%).

2. A hospital newly enrolled in the Medicaid program, which does not have

at least six (6) months of cost report information necessary to calculate

an initial DSH payment, may submit a limited DSH survey for the

purpose of determining if the hospital is eligible to receive an initial

DSH payment.

(e) Distributions shall be made as follows:

1. For state fiscal year 2018-2019, the department shall use the examined

state fiscal year 2014-2015 DSH survey to calculate an initial DSH

payment. Providers who did not receive a DSH payment for state fiscal

year 2014-2015 shall be eligible to submit data for the purpose of the

2019 payment, subject to limited review. For state fiscal year 2019-

2020, and each year thereafter, the department shall use the Medicaid

DSH survey covering the hospital's fiscal year ending in the calendar

year preceding July 1 of the applicable state fiscal year to calculate an

initial DSH payment. Using the surveys submitted in accordance with

this subsection, payments shall be made as follows:

a. Each university hospital in the university pool shall receive an

initial DSH payment equal to one hundred percent (100%) of the

hospital's total uncompensated care costs if the total initial DSH

payments to all hospitals in the university pool do not exceed the

maximum allotment to the university pool as set forth in

subsection (3)(a) of this section. If the total uncompensated care

costs for the pool exceed the pool's maximum allotment, the initial

uncompensated care factor for university hospitals shall be

determined by calculating the percentage of each hospital's total

uncompensated care costs toward the sum of the total

uncompensated care costs of all hospitals in the university pool,

and each hospital's initial DSH payment shall be calculated by

multiplying the hospital's initial uncompensated care factor by the

total funds allocated to the university hospital pool;

b. For each private psychiatric and state mental hospital in the

psychiatric pool, the department shall calculate an initial

uncompensated care factor. The initial uncompensated care factor

for a private psychiatric or state mental hospital shall be

determined by calculating the percentage of each hospital's total

uncompensated care costs toward the sum of the total

uncompensated care costs for all private psychiatric or state mental

hospitals in the psychiatric pool, as appropriate. Each hospital's

initial DSH payment shall be calculated by multiplying the

hospital's initial uncompensated care factor by the total funds

allocated to private psychiatric or state mental hospitals in the

psychiatric pool, as appropriate. No individual hospital's initial

DSH payment shall exceed the hospital's hospital-specific DSH

limit;

c. For each hospital in the acute care pool, the department shall make

an initial determination of whether the acute care hospital qualifies

as an essential hospital and calculate an initial uncompensated care

factor for each hospital. The initial uncompensated care factor for

each hospital in the acute care pool shall be determined by

calculating the percentage of each hospital's total uncompensated

care costs toward the sum of the total uncompensated care costs

for all hospitals in the acute care pool except that the initial

uncompensated care factor for an essential hospital shall be

calculated using two hundred percent (200%) of the hospital's total

uncompensated care costs. Each hospital's initial DSH payment

shall be calculated by multiplying the hospital's initial

uncompensated care factor by the total funds allocated to the acute

care pool. No individual hospital's initial DSH payment shall

exceed the hospital's hospital-specific DSH limit;

d. For any hospital that is newly enrolled in the Medicaid program

and lacks at least six (6) months of cost report information, the

department shall calculate a proxy amount for the hospital's

uncompensated care costs. A newly enrolled hospital's

uncompensated care costs proxy amount shall be determined by

first dividing the total uncompensated care costs for all non-newly

enrolled hospitals in the appropriate pool by the total number of

hospital beds, excluding swing beds, reported on the Medicaid cost

reports by those hospitals and then multiplying the resulting

uncompensated care cost per bed by the new hospital's total

number of hospital beds, excluding swing beds. Any

uncompensated care costs proxy amounts calculated for newly

enrolled hospitals shall be used in the determination of initial

uncompensated care factors for all other hospitals in the

appropriate pool;

e. The department may make adjustments to a Medicaid DSH survey

filed by a hospital to correct information that is incomplete or

inaccurate as determined by limited review. If the department

makes adjustments to a hospital's Medicaid DSH survey, the

department shall provide written notice to the hospital;

f. If a hospital has a negative uncompensated care cost, its

uncompensated care costs shall be excluded from the calculation

of any uncompensated care costs proxy amount for newly enrolled

hospitals and uncompensated care factors for the appropriate pool;

g. By September 30 of each year, the department shall calculate an

initial DSH payment pursuant to subparagraph 1. of this paragraph

and shall notify each hospital of their calculation. The notice shall,

at minimum, contain the following for each hospital:

i. Uninsured uncompensated care costs;

ii. Total uncompensated care costs;

iii. The status of the MIUR and LIUR calculations;

iv. The uncompensated care factor; and

v. The estimated initial annual payment amount;

h. Hospitals shall notify the department by October 31 of any

adjustments in the department's initial calculations;

i. The department shall make any necessary adjustments and shall

issue an initial DSH payment to each hospital in one (1) lump-sum

payment on or before November 30, for the disproportionate share

funds available during the corresponding federal fiscal year. If the

federal disproportionate share allotment for the Commonwealth

has not been published through the Federal Register by November

15, the department may pay a portion but no less than ninety

percent (90%) of the expected annual payment prior to the

publication of the annual federal allotment. If a partial initial

payment is made, the remaining amount shall be paid within sixty

(60) days after the date upon which notice of the Commonwealth's

federal allotment is published through the Federal Register; and

j. An initial DSH payment shall not be subject to appeal;

2. a. Each hospital's total initial DSH payment shall be reconciled to a

final DSH payment using the examined Medicaid DSH surveys

and shall correspond to the applicable state fiscal year DSH

payment year.

b. Using the surveys submitted in accordance with subsection (8)(a)

of this section, the department shall make a final determination of

whether an acute care hospital qualifies as a MIUR or as a LIUR

hospital. Any qualifying hospital will be deemed an essential

hospital. Critical access hospital status will also be confirmed to

make a final determination of essential hospital status.

c. The department shall calculate a final DSH payment as follows:

i. Each university hospital shall receive a final DSH payment

equal to one hundred percent (100%) of the hospital's total

uncompensated costs so long as the total final DSH payments

to all university hospitals do not exceed the maximum

allotment to the university pool as set forth in subsection

(3)(a) of this section. If total uncompensated care cost for the

pool exceeds the pool's maximum allotment, the final

uncompensated care factor for university hospitals shall be

determined by calculating the percentage of each hospital's

total uncompensated care costs toward the sum of the total

uncompensated care costs for all hospitals within the

university pool. In this event, each hospital's final DSH

payment shall be calculated by multiplying the hospital's

uncompensated care factor by the total fund allocated to the

hospitals within the respective pool under subsection (3)(a)

of this section;

ii. For hospitals in the acute care pool and the psychiatric pool,

the department shall recalculate each hospital's

uncompensated care factor using examined data. The final

uncompensated care factor for each hospital that qualifies as

an essential hospital shall be computed using two hundred

percent (200%) of the hospital's total uncompensated care

costs using examined data;

iii. If a hospital has a negative uncompensated care cost, their

uncompensated care cost will be excluded in the calculation

of uncompensated care factors; and

iv. The department shall compare each hospital's initial DSH

payment with the hospital's final DSH payment and with the

hospital's hospital-specific DSH limit to determine if any

underpayment or an overpayment exists.

d. By September 30 of the fourth year following the year in which an

initial DSH payment is made, the department shall provide each

hospital with a final DSH reconciliation report which, at a

minimum, shall indicate the following:

i. A hospital's final MIUR and LIUR status;

ii. Final uncompensated care factor and underlying data;

iii. Final DSH payment; and

iv. If applicable, the amount of any overpayment to be paid to

the department and the due date for repayment.

e. If an overpayment is identified, repayment shall be made by

January 31 of the following year, which is five (5) years following

the year in which an initial DSH payment is made.

f. Hospitals shall notify the department by October 31 of any

corrections to the department's calculations.

g. If a hospital's initial DSH payment was less than the hospital's final

DSH payment, the department shall pay the hospital the amount of

the difference. Final DSH payments shall be issued by the

department within sixty (60) days of the due date for the

repayment of funds from hospitals with a DSH overpayment. If all

repayments have not yet been received by the due date, the

department shall distribute the funds collected as of the due date,

and shall issue additional payments on a timely basis upon

collection of all remaining outstanding overpayments.

h. Any funds remaining after the reconciliation process shall be

redistributed pursuant to subparagraph 3. of this paragraph; and

3. Disproportionate share payments remaining after reconciling each

hospital's initial DSH payment with the hospital's final DSH payment

shall be distributed to other hospitals in the acute care pool, university

pool, or to private psychiatric hospitals in the psychiatric pool as

follows:

a. Funds shall first be distributed to all hospitals in the same pool as

the hospitals from which the overpayments were recovered, and

the funds shall be distributed in a proportional manner in relation

to each hospital's remaining total uncompensated care costs in

accordance with the hospital's examined DSH survey for the

applicable DSH year;

b. In the proportional distribution, the distribution factor for each

hospital that qualifies as an essential hospital shall be computed

using two hundred percent (200%) of the hospital's total remaining

uncompensated care costs; and

c. If DSH funds remain after making this distribution to other

hospitals in the same pool, funds shall be distributed

proportionally to hospitals in the acute care pool, university pool,

and private psychiatric hospitals in the psychiatric pool in relation

to each hospital's remaining total uncompensated care costs in

accordance with the hospital's examined Medicaid DSH survey for

the applicable DSH year.

(4) Notwithstanding any other provision to the contrary, total annual disproportionate

share payments made to state mental hospitals, university hospitals, acute care

hospitals, critical access hospitals, comprehensive physical rehabilitation hospitals,

long-term acute care hospitals, and private psychiatric hospitals in each state fiscal

year shall be equal to the maximum amount of disproportionate share payments

established under the Federal Balanced Budget Act of 1997 and any amendments

thereto. Disproportionate share payments made to a hospital shall not exceed the

hospital's total uncompensated costs or the hospital's hospital-specific DSH limit.

(5) The secretary of the Cabinet for Health and Family Services shall promulgate

administrative regulations, pursuant to KRS Chapter 13A, for the administration

and implementation of this section.

(6) All hospitals receiving reimbursement under this section shall display prominently a

sign which reads as follows: "This hospital will accept patients regardless of race,

creed, ethnic background, or ability to pay."

(7) The hospital shall, upon request by the Cabinet for Health and Family Services,

submit any supporting documentation to substantiate compliance with the audit

requirements established by 42 C.F.R. sec. 455.

(8) (a) An in-state hospital participating in the Medicaid Program shall submit a

Medicaid DSH survey corresponding to the hospital's cost reporting period to

the department no later than sixty (60) days following the hospital's

submission of their annual cost report, unless an extension has been granted

by the commissioner. Extension requests shall be received ten (10) days prior

to the deadline. Extensions shall be limited to rare circumstances which

prevent the hospital from meeting the deadline despite its due diligence.

Extensions shall be granted for no more than thirty (30) calendar days from

the original due date. A new in-state hospital lacking six (6) months of cost

report information necessary to calculate an initial DSH payment shall submit

a limited DSH survey to determine eligibility no later than the September 1

immediately prior to the department's initial DSH payment calculation. A

hospital may submit corrections to an applicable Medicaid DSH survey prior

to the scheduled start date of the department's desk review.

(b) The department shall notify each hospital in advance of the desk review of the

opportunity to submit corrections to the Medicaid DSH survey.

(c) The department and each Medicaid managed care organization shall supply a

paid claims listing (PCL) to each hospital within ninety (90) days of the last

day of the hospital's fiscal year end date and a second set of data twelve (12)

months after the hospital's fiscal year end date. The PCL shall include all

claims with discharge dates or service dates, as applicable, within the

hospital's fiscal year that are paid from the first day of the hospital's fiscal year

to ninety (90) days or twelve (12) months, respectively, after the end of the

hospital's fiscal year. For all hospitals, the department and each Medicaid

managed care organization shall provide separate reports for adjudicated

claims associated with both inpatient services and outpatient services provided

to eligible members. If the PCL data is inaccurate or unavailable, providers

shall complete the DSH survey using internal data.

(d) The department shall specify a timetable for hospitals to update DSH audit

survey data.