2023 New York Laws › PBH - Public Health › Article 28 - Hospitals › 2807-C - General Hospital Inpatient Reimbursement for Annual Rate Periods Beginning on or After January First, Nineteen Hundred Eighty-Eight.

§  2807-c.  General  hospital  inpatient reimbursement for annual rate
periods  beginning  on  or  after  January   first,   nineteen   hundred
eighty-eight.  1.  Payor  payments.  Payments  to  general hospitals for
inpatient hospital services provided to persons who are not eligible for
payments as beneficiaries of title XVIII of the federal social  security
act  (medicare)  shall  be  determined  pursuant  to this section. Payor
payments  shall  be  as  follows  unless  an  alternative  reimbursement
methodology  is  authorized  in accordance with paragraph (e), (f), (g),
(h) or (i) of subdivision four of this section.
* (a) Payments to general hospitals  for  reimbursement  of  inpatient
hospital  services  provided  to  patients eligible for payments made by
state governmental agencies for patients  discharged  prior  to  January
first, two thousand and on and after January first, two thousand; or for
patients   discharged   prior   to   January   first,  nineteen  hundred
ninety-seven  provided  in   accordance   with   policies   written   by
corporations   organized   and  operating  in  accordance  with  article
forty-three of the insurance law, or payment by such  a  corporation  on
behalf of subscribers of a foreign corporation as described in paragraph
(d)   of   subdivision   twelve  of  this  section,  which  provide  for
reimbursement on an expense incurred basis; or for  patients  discharged
prior  to  January  first,  nineteen  hundred  ninety-seven  provided to
subscribers of organizations operating in accordance with the provisions
of article forty-four of this chapter, shall be case based payments  per
discharge,  for  each  diagnosis-related group established in accordance
with paragraph (a) of subdivision  three  of  this  section,  and  shall
include:
(i)  a  reimbursable  inpatient operating cost component determined in
accordance with subdivision five of this section;
(ii) capital related inpatient expenses determined in accordance  with
subdivision eight of this section;
(iii) for patients discharged prior to January first, nineteen hundred
ninety-seven  (A)  a  bad  debt and charity care allowance determined in
accordance with subdivision fourteen of  this  section,  (B)  a  general
health care services allowance determined in accordance with subdivision
fourteen-b  of  this  section,  and  (C)  a  bad  debt  and charity care
allowance for financially distressed hospitals determined in  accordance
with subdivision fourteen-c of this section;
(iv)  a  projection  of  reimbursable inpatient operating costs to the
rate year by the trend factor determined in accordance with  subdivision
ten of this section; and
(v)  adjustments for any modifications to the case payments determined
in accordance with paragraph (a), (b), (c) or (d) of subdivision four of
this section.
* NB Effective until December 31, 2026
* (a) Payments to general hospitals  for  reimbursement  of  inpatient
hospital  services  provided  to  patients eligible for payments made by
state governmental agencies; or provided  in  accordance  with  policies
written  by  corporations  organized  and  operating  in accordance with
article  forty-three  of  the  insurance  law,  or  payment  by  such  a
corporation  on  behalf  of  subscribers  of  a  foreign  corporation as
described in paragraph (d) of subdivision twelve of this section,  which
provide  for  reimbursement on an expense incurred basis; or provided to
subscribers of organizations operating in accordance with the provisions
of article forty-four of this chapter, shall be case based payments  per
discharge,  for  each  diagnosis-related group established in accordance
with paragraph (a) of subdivision  three  of  this  section,  and  shall
include:
(i)  a  reimbursable  inpatient operating cost component determined in
accordance with subdivision five of this section;
(ii)  capital related inpatient expenses determined in accordance with
subdivision eight of this section;
(iii) (A)  a  bad  debt  and  charity  care  allowance  determined  in
accordance  with  subdivision  fourteen  of  this section, (B) a general
health care services allowance determined in accordance with subdivision
fourteen-b of this  section,  and  (C)  a  bad  debt  and  charity  care
allowance  for financially distressed hospitals determined in accordance
with subdivision fourteen-c of this section;
(iv) a projection of reimbursable inpatient  operating  costs  to  the
rate  year by the trend factor determined in accordance with subdivision
ten of this section; and
(v) adjustments for any modifications to the case payments  determined
in accordance with paragraph (a), (b), (c) or (d) of subdivision four of
this section.
* NB Effective December 31, 2026
* (a-1)  Payments  made  by  local  governmental  agencies  to general
hospitals for reimbursement of inpatient hospital services  provided  to
incarcerated  individuals of local correctional facilities as defined in
subdivision sixteen of section two of the correction law shall be at the
rates  of  payment  determined  pursuant  to  this  section  for   state
governmental  agencies,  excluding  adjustments  pursuant to subdivision
fourteen-f of this section.
* NB Effective until December 31, 2026
* (a-1) Payments  made  by  local  governmental  agencies  to  general
hospitals  for  reimbursement of inpatient hospital services provided to
incarcerated individuals of local correctional facilities as defined  in
subdivision sixteen of section two of the correction law shall be at the
rates   of  payment  determined  pursuant  to  this  section  for  state
governmental agencies.
* NB Effective December 31, 2026
* (a-2) (i) With the exception of  those  enrollees  covered  under  a
payment  rate  methodology agreement negotiated with a general hospital,
payments for inpatient hospital services provided to  patients  eligible
for  medical  assistance pursuant to title eleven of article five of the
social services law made by organizations operating in  accordance  with
the  provisions  of  article  forty-four  of  this  chapter or by health
maintenance organizations organized and  operating  in  accordance  with
article  forty-three  of the insurance law shall be the rates of payment
that would be paid  for  such  patients  under  the  medical  assistance
program,  (i) determined pursuant to this section, excluding adjustments
pursuant to subdivision fourteen-f of this section, and  (ii)  excluding
medical  education  costs  that  are  reimbursed directly to the general
hospital in accordance with paragraph (a-3) of this subdivision.
(ii) Effective July first, two thousand seven, with the  exception  of
those  enrollees  covered  under  a  payment  rate methodology agreement
negotiated with a  general  hospital,  payment  for  inpatient  hospital
services  provided  to  patients  enrolled in the child health insurance
program pursuant to title one-A of article twenty-five of  this  chapter
made  by  organizations  operating  in accordance with the provisions of
article  forty-four  of  this   chapter   or   by   health   maintenance
organizations   organized  and  operating  in  accordance  with  article
forty-three of the insurance law shall be  the  rates  of  payment  that
would  be  paid under the medical assistance program determined pursuant
to  this  section,  excluding  adjustments   pursuant   to   subdivision
fourteen-f of this section.
* NB Expires December 31, 2026
* (a-3) Notwithstanding any inconsistent provision of law:
(i)  the  commissioner shall establish, subject to the approval of the
director of the budget, discrete rates of payment for general  hospitals
for  the period July first, nineteen hundred ninety-six through December
thirty-first, nineteen hundred ninety-nine  and  periods  on  and  after
January  first,  two  thousand for payments under the medical assistance
program pursuant to title eleven of article five of the social  services
law  for  persons  eligible  for  medical assistance who are enrolled in
health maintenance organizations  and  for  payments  under  the  family
health  plus  program  for  persons  enrolled  in approved organizations
pursuant to title eleven-D of article five of the  social  services  law
based on the components of rates of payment established pursuant to this
section for persons eligible for medical assistance who are not enrolled
in health maintenance organizations for a general hospital for such rate
period  that  reflect the estimated reimbursable costs of direct medical
education expenses  and  indirect  medical  education  expenses  in  the
determination of:
(A)  the  hospital-specific  average  reimbursable inpatient operating
cost per discharge pursuant to subdivision six of this section, and
(B) group category average inpatient reimbursable operating  cost  per
discharge pursuant to subdivision seven of this section, and
(C)  the  operating  cost  component  of  rates of payment pursuant to
paragraphs (f) and (k) of subdivision four of this section, and
(D) the operating cost component of rates  of  payment  in  accordance
with paragraphs (e), (g) and (i) of subdivision four of this section for
general  hospitals or distinct units of general hospitals not reimbursed
on the basis of case based payments per discharge; and
(E) notwithstanding clauses (A) through (D) of this subparagraph,  for
periods  on  and  after December first, two thousand nine, the operating
cost component of rates of payment subject to subdivision thirty-five of
this section, and
(F) notwithstanding clauses (A) through (D) of this subparagraph,  for
periods  on  and  after December first, two thousand nine, the operating
cost component of rates of payment subject to  paragraphs  (e-1),  (e-2)
and  (1)  of  subdivision  four of this section for general hospitals or
distinct units of general hospitals not reimbursed on the basis of  case
based payments per discharge; and
(ii)  such  rates of payment may be established by the commissioner on
any appropriate  payment  basis,  including  a  case  mix  adjusted  per
discharge basis.
* NB Expires December 31, 2026
* (b) For patients discharged prior to January first, nineteen hundred
ninety-seven,   payments  to  general  hospitals  for  reimbursement  of
inpatient hospital services provided to patients eligible  for  payments
pursuant  to  the comprehensive motor vehicle insurance reparations act;
or enrolled in a self-insured  fund  which  provides  for  reimbursement
directly  to  general  hospitals  on an expense incurred basis, with the
exception of those enrollees covered under a  payment  rate  methodology
agreement  in  accordance  with  the  provisions  of  paragraph  (a)  of
subdivision two of this section; or insured under a  commercial  insurer
licensed  to  do business in this state and authorized to write accident
and health  insurance  and  whose  policy  provides  inpatient  hospital
coverage  on  an expense incurred basis; or receiving inpatient hospital
services pursuant to an out-of-plan benefits system authorized  pursuant
to  section four thousand four hundred six of this chapter, except where
such  out-of-plan,  inpatient  hospital  services  are  offered  by   an
organization organized pursuant to the not-for-profit corporation law or
which meets the qualifications of section 501(c) of the internal revenue

code,   shall   be   case   based   payments  per  discharge,  for  each
diagnosis-related group established in accordance with paragraph (a)  of
subdivision  three  of  this  section, and equal to the case payments to
general  hospitals  provided  in  accordance  with paragraph (a) of this
subdivision  for  services  provided  to  subscribers  of   corporations
organized  and  operating  in accordance with article forty-three of the
insurance  law,  adjusted  for  uncovered  services,  and  increased  by
thirteen  percent or, for payments pursuant to the workers' compensation
law, the volunteer firefighters' benefit law and the volunteer ambulance
workers' benefit law, increased by five percent.  Funds  received  by  a
general  hospital  based on the payment differential applied pursuant to
this paragraph shall  be  hospital  funds  for  patient  care  purposes.
Without  due  cause  general hospitals shall not refuse to accept direct
payments from a payor who  would  otherwise  be  eligible  to  reimburse
hospitals  for  inpatient services on a case based payment per discharge
in accordance with this subdivision.
(b-1) (i) For patients discharged on and after January first, nineteen
hundred ninety-seven and prior to January first, two thousand and on and
after January first, two thousand, payments  to  general  hospitals  for
reimbursement  of  inpatient  hospital  services  provided  to  patients
eligible for payments pursuant to the  workers'  compensation  law,  the
volunteer  firefighters'  benefit  law, the volunteer ambulance workers'
benefit law, and the comprehensive motor vehicle  insurance  reparations
act shall be at the rates of payment determined pursuant to this section
for  state  governmental  agencies,  excluding  adjustments  pursuant to
subdivision fourteen-f of this section and subdivision  thirty-three  of
this  section, excluding such further reductions to such payments as are
enacted as part of the state budget for the state fiscal year commencing
April first, two thousand ten and excluding such further  reductions  to
such  payments  as  are  enacted  as  part of the state budget for state
fiscal years commencing on and after April first, two thousand eleven.
(ii) The provisions of paragraph (d) of  subdivision  eleven  of  this
section  shall  continue to apply to such payors for payments determined
pursuant to this paragraph.
(b-2) A payor included in the payor categories specified in  paragraph
(a)  or  (b-1)  of  this subdivision shall not be provided the option of
payment to a general hospital for inpatient services based on the  lower
of  hospital  charges or the case based payment per discharge determined
in accordance with this  section  for  a  patient  or  apportioning  the
appropriate  case based payment per discharge for a patient by excluding
payment for a preexisting condition or acquired condition which  has  to
be  treated  along  with  the reason for the admission or, except as may
affect qualification for payments in accordance with  paragraph  (b)  or
(d) of subdivision four of this section, for days within the inlier stay
determined to be medically unnecessary.
* NB Effective until December 31, 2026
* (b)  Payments  to  general  hospitals for reimbursement of inpatient
hospital services provided to patients eligible for payments pursuant to
the comprehensive motor vehicle insurance reparations act;  or  enrolled
in  a  self-insured  fund  which  provides for reimbursement directly to
general hospitals on an expense incurred basis, with  the  exception  of
those  enrollees  covered  under a payment rate methodology agreement in
accordance with the provisions of paragraph (a) of  subdivision  two  of
this  section;  or  insured  under  a  commercial insurer licensed to do
business in this state and  authorized  to  write  accident  and  health
insurance  and  whose  policy provides inpatient hospital coverage on an
expense  incurred  basis;  or  receiving  inpatient  hospital   services
pursuant  to  an  out-of-plan  benefits  system  authorized  pursuant to

section four thousand four hundred six of  this  chapter,  except  where
such   out-of-plan,  inpatient  hospital  services  are  offered  by  an
organization organized pursuant to the not-for-profit corporation law or
which  meets  the  qualifications  of  section  501  (c) of the internal
revenue code, shall be case  based  payments  per  discharge,  for  each
diagnosis-related  group established in accordance with paragraph (a) of
subdivision three of this section, and equal to  the  case  payments  to
general  hospitals  provided  in  accordance  with paragraph (a) of this
subdivision  for  services  provided  to  subscribers  of   corporations
organized  and  operating  in accordance with article forty-three of the
insurance  law,  adjusted  for  uncovered  services,  and  increased  by
thirteen  percent or, for payments pursuant to the workers' compensation
law, the volunteer firefighters' benefit law and the volunteer ambulance
workers' benefit law, increased by five percent.  Funds  received  by  a
general  hospital  based on the payment differential applied pursuant to
this paragraph shall  be  hospital  funds  for  patient  care  purposes.
Without  due  cause  general hospitals shall not refuse to accept direct
payments from a payor who  would  otherwise  be  eligible  to  reimburse
hospitals  for  inpatient services on a case based payment per discharge
in accordance with this subdivision.  A  payor  included  in  the  payor
categories  specified  in  this  paragraph  or  in paragraph (a) of this
subdivision shall not be provided the option of  payment  to  a  general
hospital  for  inpatient services based on the lower of hospital charges
or the case based payment per discharge determined  in  accordance  with
this  section  for  a patient or apportioning the appropriate case based
payment  per  discharge  for  a  patient  by  excluding  payment  for  a
preexisting  condition  or  acquired  condition  which has to be treated
along with the reason  for  the  admission  or,  except  as  may  affect
qualification  for  payments  in accordance with paragraph (b) or (d) of
subdivision four of this  section,  for  days  within  the  inlier  stay
determined to be medically unnecessary.
* NB Effective December 31, 2026
* (c)  Charge based payments. For patients discharged prior to January
first, nineteen hundred ninety-seven, payments to general hospitals  for
reimbursement  of inpatient hospital services provided to those for whom
a case based payment per discharge system is not authorized by paragraph
(a) or (b) of this  subdivision,  or  who  are  not  covered  under  the
provisions of paragraph (a) of subdivision two of this section, shall be
on  the  basis  of  the hospital's charges; provided, however, for these
patients the definition of a short stay patient  pursuant  to  paragraph
(d)  of  subdivision four of this section shall apply, and reimbursement
to hospitals for  such  patients  shall  be  at  payments  developed  in
accordance  with  paragraph  (d)  of  subdivision  four of this section,
increased by thirteen percent. The maximum amount to be charged  to  any
charge  paying patient for a case shall be one hundred twenty percent of
the case based payment per discharge as determined under  paragraph  (b)
of  this  subdivision  for  the  diagnosis-related  group with which the
patient is identified. Each general hospital shall  establish  a  charge
schedule  and  inpatient  charges  from  this  schedule shall be applied
uniformly for all inpatient charge based  payments  made  in  accordance
with this section.
* NB Effective until December 31, 2026
* (c)  Charge  based  payments.  Payments  to  general  hospitals  for
reimbursement of inpatient hospital services provided to those for  whom
a case based payment per discharge system is not authorized by paragraph
(a)  or  (b)  of  this  subdivision,  or  who  are not covered under the
provisions of paragraph (a) of subdivision two of this section, shall be
on the basis of the hospital's charges;  provided,  however,  for  these

patients  the  definition  of a short stay patient pursuant to paragraph
(d) of subdivision four of this section shall apply,  and  reimbursement
to  hospitals  for  such  patients  shall  be  at  payments developed in
accordance  with  paragraph  (d)  of  subdivision  four of this section,
increased by thirteen percent. The maximum amount to be charged  to  any
charge  paying patient for a case shall be one hundred twenty percent of
the case based payment per discharge as determined under  paragraph  (b)
of  this  subdivision  for  the  diagnosis-related  group with which the
patient is identified. Each general hospital shall  establish  a  charge
schedule  and  inpatient  charges  from  this  schedule shall be applied
uniformly for all inpatient charge based  payments  made  in  accordance
with this section.
* NB Effective December 31, 2026
(d)  The  components of rates of payment calculated in accordance with
this section related to inpatient operating  costs  shall  be  based  on
general   hospital   reimbursable  inpatient  operating  costs  used  in
determining payments  for  services  pursuant  to  section  twenty-eight
hundred  seven-a  of  this article during the rate period January first,
nineteen hundred eighty-seven through  December  thirty-first,  nineteen
hundred  eighty-seven  (or  for  a  distinct  unit of a general hospital
excluded from case based payments pursuant to paragraph (e)  or  (g)  of
subdivision  four  of  this  section  such  distinct  unit  reimbursable
inpatient operating costs), excluding inpatient operating costs  related
to  services  provided  to  beneficiaries  of title XVIII of the federal
social security act (medicare)  in  accordance  with  paragraph  (g)  of
subdivision   eleven  of  this  section  and  adjusted  to  reflect  the
annualized cost impact of rate revisions or adjustments,  including  the
volume  adjustment  and  case  mix  adjustment  for the nineteen hundred
eighty-seven rate period, made with  respect  to  such  services,  which
shall be defined as a general hospital's or distinct unit's reimbursable
inpatient  operating  cost  base;  a  projection to the nineteen hundred
eighty-eight rate period by the trend factor  determined  in  accordance
with subdivision ten of this section; and an increase to reflect special
additional   inpatient  operating  costs  determined  and  allocated  in
accordance with paragraph (e) of this subdivision.
(e) General hospital  special  additional  inpatient  operating  costs
shall  be determined and allocated among general hospitals in accordance
with subparagraphs (i), (iii) and (iv) of this paragraph.  For  purposes
of  computing  group  category  average inpatient reimbursable operating
costs in accordance with paragraph (a)  of  subdivision  seven  of  this
section  and an equivalent cost component for general hospitals that are
excluded from the case based payment per diagnosis-related group  system
in  accordance  with  paragraph  (e)  or (g) of subdivision four of this
section special additional inpatient operating costs  shall  include  an
additional  increase determined and allocated among general hospitals in
accordance with subparagraph (ii) of this paragraph.
(i) The total cost increases pursuant to  this  subparagraph  for  all
general  hospitals  shall in the aggregate be one hundred thirty million
dollars for the nineteen hundred eighty-eight  rate  period  to  reflect
nineteen  hundred  eighty-five  costs  incurred  in  excess of the trend
factor  between  nineteen  hundred  eighty-one  and   nineteen   hundred
eighty-five,  such  cost increases to be projected from nineteen hundred
eighty-eight to subsequent annual rate periods by the  applicable  trend
factor,  and  shall  be  allocated among general hospitals in accordance
with the following methodology:
Five hundred dollars per bed shall  be  allocated  to  costs  of  each
general  hospital  based on the total number of inpatient beds for which
the hospital is certified pursuant to the operating  certificate  issued

for  such  general  hospital  in  accordance  with  section twenty-eight
hundred five of this  article  in  effect  on  January  first,  nineteen
hundred eighty-eight.
A  factor  of  one  quarter  of  one  percent  of a general hospital's
reimbursable inpatient operating cost base as defined in  paragraph  (d)
of  this  subdivision,  trended  through  nineteen hundred eighty-eight,
shall be allocated to costs of general hospitals for technology advances
and a further one  quarter  of  one  percent  of  such  costs  shall  be
allocated to costs of general hospitals for increased activities related
to quality assurance and patient discharge planning.
The  balance of one hundred thirty million dollars after deducting the
dollar value of the per bed cost enhancement and the dollar value of the
percentage cost enhancements shall be  allocated  to  costs  of  general
hospitals based on the ratio of each general hospital's nineteen hundred
eighty-five cost incurred in excess of the trend factor between nineteen
hundred  eighty-one  and  nineteen  hundred eighty-five in the following
discrete areas, summed, to the total sum of such cost over trend of  all
general  hospitals applied to such balance: malpractice insurance costs,
infectious and other waste disposal costs, water charges, direct medical
education expenses, working capital interest  costs  of  hospitals  that
qualified  for  distributions  made  in accordance with paragraph (b) of
subdivision sixteen of section  twenty-eight  hundred  seven-a  of  this
article,  costs  of  distinct psychiatric units excluded from case based
payments per diagnosis-related group, and ambulance costs. For  purposes
of  this  subparagraph,  nineteen  hundred  eighty-five cost incurred in
excess of the trend  factor  between  nineteen  hundred  eighty-one  and
nineteen  hundred eighty-five shall be calculated for each such discrete
area based on a general hospital's inpatient  operating  costs  for  the
fiscal  year  ending  in  nineteen  hundred eighty-five, after excluding
inpatient operating costs related to services provided to  beneficiaries
of  title  XVIII of the federal social security act (medicare), for such
discrete area in  excess  of  the  hospital's  comparable  component  of
reimbursable  inpatient  operating  costs  for its fiscal year ending in
nineteen hundred eighty-one, after excluding inpatient  operating  costs
related  to  services  provided  to  beneficiaries of title XVIII of the
federal social security act (medicare), trended through nineteen hundred
eighty-five by the  appropriate  component  of  the  trend  factors  and
adjusted  to  reflect  approved  decreases  or  increases  in  inpatient
operating costs resulting from all rate adjustments.
(ii) The total additional cost increases pursuant to this subparagraph
for all general hospitals  shall  in  the  aggregate  be  forty  million
dollars   for  the  nineteen  hundred  eighty-eight  rate  period,  such
additional  cost  increases  to  be  projected  from  nineteen   hundred
eighty-eight  to  the  rate period by the applicable trend factor, to be
allocated among general  hospitals  in  accordance  with  the  following
methodology:
The additional increase of forty million dollars shall be allocated to
costs  of  general  hospitals  that  are  included  in  group categories
established pursuant to paragraph  (b)  of  subdivision  seven  of  this
section  based  on  the  ratio  of  the  nineteen  hundred  eighty-eight
intermediate group operating costs of each such general hospital, and to
costs of general hospitals that are excluded from the case based payment
per diagnosis-related group system in accordance with paragraph  (e)  or
(g)  of  subdivision  four  of  this  section  based on the ratio of the
nineteen hundred eighty-eight intermediate operating costs of each  such
general  hospital, to the total sum of such intermediate group operating
costs and intermediate operating costs  applied  to  the  forty  million
dollars. For purposes of this subparagraph, intermediate group operating

costs of a general hospital shall be calculated in accordance with rules
and  regulations adopted by the council and approved by the commissioner
based on the reimbursable inpatient operating cost  base  determined  in
accordance  with  paragraph  (d)  of  this  subdivision  of such general
hospital; adjusted to exclude operating  costs  related  to  specialized
hospital  services for which an alternative reimbursement methodology is
adopted pursuant to paragraph (e)  or  (g)  or,  if  effective,  (i)  of
subdivision  four  of  this section; and trended to the nineteen hundred
eighty-eight rate period by the trend factor  determined  in  accordance
with  subdivision  ten of this section; and increased to reflect special
additional  inpatient  operating  costs  determined  and  allocated   in
accordance  with  subparagraph  (i)  of  this paragraph; and adjusted to
exclude a factor  for  operating  costs  of  patients  who  required  an
alternate  level of care in accordance with paragraph (h) of subdivision
four of this section; and adjusted to  exclude  the  components  of  the
trended reimbursable inpatient operating cost base related to education,
physician,  ambulance services and organ acquisition costs determined in
accordance with subparagraphs (i), (iii) and (iv) of  paragraph  (c)  of
subdivision  seven  of this section and malpractice insurance costs, and
the  components  of  special  additional   inpatient   operating   costs
determined  and  allocated  in  accordance with subparagraph (i) of this
paragraph associated with cost increases in such costs. For purposes  of
this  subparagraph,  intermediate  operating costs of a general hospital
excluded from the case based payment per diagnosis-related group  system
shall  be calculated in accordance with rules and regulations adopted by
the council and approved by the commissioner based on  the  reimbursable
inpatient  operating  cost  base determined in accordance with paragraph
(d) of this  subdivision  of  such  general  hospital;  trended  to  the
nineteen hundred eighty-eight rate period by the trend factor determined
in  accordance  with  subdivision  ten of this section; and increased to
reflect special additional  inpatient  operating  costs  determined  and
allocated  in  accordance  with  subparagraph (i) of this paragraph; and
adjusted to exclude  a  factor  for  operating  costs  of  patients  who
required  an  alternate  level  of  care  developed  consistent with the
provisions of paragraph (h) of subdivision four  of  this  section;  and
adjusted to exclude the components of the trended reimbursable inpatient
operating  cost base related to education, physician, ambulance services
and organ acquisition costs determined consistent with the provisions of
subparagraphs (i), (iii) and (iv) of paragraph (c) of subdivision  seven
of  this  section and malpractice insurance costs, and the components of
special additional inpatient operating costs determined and allocated in
accordance with subparagraph (i) of this paragraph associated with  cost
increases in such costs.
(iii)  Cost  increases pursuant to this subparagraph shall be made for
the nineteen hundred ninety-one rate period to  reflect  cost  increases
incurred  in  excess  of  the trend factor and not included in the costs
used in determining payments in accordance with paragraph  (d)  of  this
subdivision and subparagraphs (i) and (ii) of this paragraph. Such costs
shall  in  the  aggregate  be  three hundred twenty-nine million dollars
exclusive of costs related to  services  provided  to  beneficiaries  of
title  XVIII  of  the federal social security act (medicare). Such costs
increases  shall  be  projected  from  nineteen  hundred  ninety-one  to
subsequent annual rate periods by the applicable trend factor, and shall
be  allocated  among  general  hospitals, except those general hospitals
whose base year for determining payments for services in such facilities
is nineteen hundred  eighty-seven,  in  accordance  with  the  following
methodology:
(A)  Up  to  two hundred twenty-two million dollars shall be allocated
for labor adjustments. If the total of the adjustments is less than  two
hundred  twenty-two million dollars, then the adjustments shall be fully
funded. If the total  of  the  adjustments  is  more  than  two  hundred
twenty-two  million dollars, then the adjustment specified in accordance
with item (II) of this clause shall be funded at  the  lower  of  twenty
percent  of  the  total  amount  allocated  for labor adjustments or its
proportional share of the labor adjustments unless the labor  adjustment
specified  in item (I) of this clause is less than eighty percent of the
total  amount  allocated  for  labor  adjustments  in  which  case   the
adjustment  specified  in item (II) of this clause shall be equal to the
difference between two hundred twenty-two million dollars and the  total
amount of the adjustment specified in item (I) of this clause.
(I)  A  portion of the amount allocated for labor adjustments shall be
for labor cost increases related  to  registered  nurses'  salaries  and
fringes (twenty percent of salaries) and an add-on for the ripple effect
on other health care professionals of at least thirty-five percent. Such
adjustment  shall  cover  both  inpatient  and outpatient cost incurred,
based on costs reported in a survey conducted by the department for  the
period  January  first,  nineteen hundred ninety through June thirtieth,
nineteen hundred ninety on  forms  specified  by  the  commissioner  and
received  by  the  department  no  later  than  November first, nineteen
hundred ninety, annualized, in excess of  nineteen  hundred  eighty-five
labor  costs  related to registered nurses' salaries and fringes trended
to  nineteen  hundred  ninety  and  the  nineteen  hundred  eighty-eight
statewide  nurse salary adjustment trended to nineteen hundred ninety by
the appropriate components of the trend factors adjusted to reflect  the
effect  of  the  annualization  of  nineteen hundred ninety data and the
result trended  to  nineteen  hundred  ninety-one  and  shall  be  based
exclusively  on  regional experience. Such regional adjustment shall not
be less than zero.  Each  individual  hospital  within  a  region  shall
receive  a  portion of the regional adjustment equal to its share of the
total inpatient and outpatient  reimbursable  operating  costs  for  the
region  excluding costs related to services provided to beneficiaries of
title XVIII of the federal social security act (medicare) and  excluding
direct medical education costs.
(II)  A portion of the amount allocated for labor adjustments shall be
for personnel costs other  than  those  related  to  registered  nurses'
salaries  and  fringes  and  the  ripple  effect  on  other  health care
professionals. Such adjustment shall cover both inpatient and outpatient
costs incurred, based on costs reported in a  survey  conducted  by  the
department for the period January first, nineteen hundred ninety through
June  thirtieth,  nineteen  hundred  ninety  on  forms  specified by the
commissioner and received by  the  department  no  later  than  November
first,  nineteen  hundred  ninety,  annualized,  in  excess  of nineteen
hundred eighty-five personnel costs covered by this  adjustment  trended
to  nineteen hundred ninety and the annualized rate adjustments approved
in nineteen hundred eighty-nine for  personnel  costs  covered  by  this
adjustment  for  increased  hospital  costs  to  meet  additional  state
requirements  that  became  effective  July  first,   nineteen   hundred
eighty-nine  trended  to  nineteen  hundred  ninety  by  the appropriate
components of the trend factors adjusted to reflect the  effect  of  the
annualization  of nineteen hundred ninety data and the result trended to
nineteen hundred ninety-one and shall be based exclusively  on  regional
data.
(III)  In  the  event that federal financial participation in payments
made for beneficiaries eligible for medical assistance under  title  XIX
of  the  federal  social  security  act  based  upon  the allocation and

adjustment specified in items (I) and (II) of  this  clause  related  to
outpatient  costs as a component of such payments is not approved by the
federal government then such outpatient costs shall not be considered in
calculating such adjustment.
(C)  Thirty-three  million  dollars  shall be allocated for technology
advances and changes in medical practice. A fixed amount per  bed  shall
be  allocated  to  the costs of each general hospital based on the total
number of inpatient beds for which the  general  hospital  is  certified
pursuant  to  the operating certificate issued for such general hospital
in accordance with section twenty-eight hundred five of this article  in
effect on June thirtieth, nineteen hundred ninety.
(D)  Thirty-four  million  dollars shall be allocated to those general
hospitals providing comprehensive health care to  the  communities  they
serve as determined by the commissioner pursuant to regulations approved
by  the  council.  Comprehensive  health  care includes providing and/or
accommodating patients' health care needs at the appropriate levels  and
settings  of care, and reaches outside of traditional inpatient services
to outpatient and other services. Factors to be considered  in  deciding
which  general hospitals are providing comprehensive health care and the
size of the adjustment shall include but not be limited to:  clinic  and
emergency room volume compared to inpatient volume (measured using total
volume   and/or  volume  related  to  medicaid  and  medically  indigent
patients); number and type of clinic services offered;  availability  of
services;  whether  the  general  hospital is an AIDS designated center,
prenatal care assistance program provider, home  health  care  provider,
trauma center, burn center; whether the general hospital offers neonatal
intensive  care  services,  dialysis  services,  birthing  center backup
agreements, AIDS outpatient programs, specific mental health,  drug  and
alcohol  programs  including outpatient and emergency services and those
designated pursuant to section 9.39  of  the  mental  hygiene  law;  and
whether  the  general  hospital's  emergency room is designated as a 911
receiving hospital. In the event that federal financial participation in
payments made for beneficiaries eligible for  medical  assistance  under
title  XIX  of the federal social security act based upon the adjustment
specified in this clause as a component of such payments is not approved
by the  federal  government  because  of  the  inclusion  of  outpatient
services  then  such  outpatient  services  shall  not  be considered in
calculating such adjustment. If such exclusion results in the allocation
for this adjustment not being spent, then any unspent portion  shall  be
reallocated to further fund the adjustments specified in clauses (D) and
(E)  of  this  subparagraph  in  the  same  proportion as their original
funding.
(E)(I) Twenty-six million dollars shall be allocated to the  costs  of
general hospitals based on the ratio of each general hospital's nineteen
hundred  eighty-nine cost incurred in excess of the trend factor between
nineteen hundred eighty-five and nineteen  hundred  eighty-nine  in  the
certain discrete areas, summed, to the total sum of such cost over trend
of  all  general  hospitals  applied  to  the  total  funds  under  this
allocation. Such discrete cost areas shall include but  not  be  limited
to:  infectious  and  other waste disposal costs, universal precautions,
working capital interest costs, costs for asbestos removal, costs of low
osmolality contrast media, malpractice costs, water and  sewer  charges,
ambulance costs and costs related to designation as a trauma center. For
purposes  of  this clause, nineteen hundred eighty-nine cost incurred in
excess of the trend factor  between  nineteen  hundred  eighty-five  and
nineteen  hundred eighty-nine shall be calculated for each such discrete
area based on a general hospital's inpatient  operating  costs  for  the
fiscal  year  ending  in  nineteen  hundred eighty-nine, after excluding

inpatient operating costs related to services provided to  beneficiaries
of  title  XVIII of the federal social security act (medicare), for such
discrete area in  excess  of  the  hospital's  comparable  component  of
reimbursable  inpatient  operating  costs  for its fiscal year ending in
nineteen hundred eighty-five, after excluding inpatient operating  costs
related  to  services  provided  to  beneficiaries of title XVIII of the
federal social security act (medicare), trended through nineteen hundred
eighty-nine by the  appropriate  component  of  the  trend  factors  and
adjusted  to  reflect  approved  decreases  or  increases  in  inpatient
operating costs resulting from all rate adjustments.
(II) Any  funds  allocated  under  this  clause  and  not  distributed
pursuant  to  item  (I)  of  this  clause  shall  be  allocated  for the
following: to reimburse for a portion of  the  cost  increases  incurred
above  the trend factor between nineteen hundred eighty-one and nineteen
hundred eighty-five for those discrete cost areas specified in the  last
paragraph  of  subparagraph  (i) of paragraph (e) of this subdivision as
added by chapter two of the laws of nineteen  hundred  eighty-eight  and
not  reimbursed  in  accordance with such paragraph. Such funds shall be
allocated to general hospitals in the same manner as specified  in  such
paragraph.
(F)  Seven  million two hundred thousand dollars shall be allocated to
account for the increase in the number of patients admitted through  the
emergency  room  and  the high costs of treating such patients which has
resulted in an increase in severity  within  diagnosis  related  groups.
Such funds shall be allocated to general hospitals based on the nineteen
hundred  eighty-nine  hospital-specific  data  on  increased  admissions
through the emergency room since nineteen hundred eighty-one,  excluding
those admissions related to providing services to beneficiaries of title
XVIII of the federal social security act (medicare).
(G)  Two hundred fifty dollars per bed shall be allocated to the costs
of each general hospital having two hundred or less certified acute care
beds and classified as a rural  hospital  for  purposes  of  determining
payment  for  inpatient acute care services provided to beneficiaries of
title XVIII of the federal social security act (medicare) or under state
regulations, for recruiting and retaining health care  personnel,  based
on  the total number of inpatient acute care beds for which such general
hospital is certified pursuant to the operating certificate  issued  for
such  general  hospital  in accordance with section twenty-eight hundred
five of this article in  effect  on  June  thirtieth,  nineteen  hundred
ninety.
(H) One million dollars shall be allocated to assist general hospitals
involved in a merger, acquisition, or consolidation in meeting the costs
associated  with  such merger, acquisition, or consolidation on or after
January first, nineteen hundred ninety-one. The commissioner shall  make
rate adjustments for such allocations.
(I)   Five   hundred   thousand  dollars  shall  be  allocated  for  a
practitioner placement  program  to  assist  general  hospitals  in  the
placement  of physicians and other health care practitioners to practice
primary health care and/or dentistry in underserved areas, to serve  the
medically  needy, and including services with affiliated community based
providers.  The  commissioner  shall  make  rate  adjustments  for  such
allocations.   Notwithstanding   any   inconsistent  provision  of  this
subdivision, this clause shall not apply in rate periods  commencing  on
or after January first, nineteen hundred ninety-four.
(iv)  Cost  increases  pursuant to this subparagraph shall be made for
the nineteen hundred ninety-four rate period to reflect  cost  increases
incurred  in  excess  of  the trend factor and not included in the costs
used in determining payments in accordance with paragraph  (d)  of  this

subdivision  and  subparagraphs  (i),  (ii) and (iii) of this paragraph.
Such costs shall in the aggregate be one hundred  seventy-three  million
dollars exclusive of costs related to services provided to beneficiaries
of  title XVIII of the federal social security act (medicare). Such cost
increases shall  be  projected  from  nineteen  hundred  ninety-four  to
subsequent annual rate periods by the applicable trend factor, and shall
be  allocated  among  general hospitals in accordance with the following
methodology:
(A) Forty-six million dollars shall  be  allocated  to  the  costs  of
general  hospitals  for  treating  tuberculosis  patients.  Each general
hospital shall receive a portion of this total equal to its share of the
statewide total of inpatient tuberculosis discharges based on  the  most
recent twelve month period for which data is available.
(B)   Sixty-three   million  dollars  shall  be  allocated  for  labor
adjustments in accordance with the following methodology:
(I) Fifty-five million dollars  shall  be  for  labor  cost  increases
incurred  prior  to  June thirtieth, nineteen hundred ninety-three. Each
general hospital shall receive a portion of  this  total  equal  to  its
share  of  the  statewide total of inpatient and outpatient reimbursable
operating costs based on nineteen hundred ninety  data  excluding  costs
related  to  services  provided  to  beneficiaries of title XVIII of the
federal social security act  (medicare)  and  excluding  direct  medical
education costs.
(II)  Eight  million  dollars  of the amount to be allocated for labor
adjustments pursuant to this clause  shall  be  distributed  to  general
hospitals located in the counties of Ulster, Sullivan, Orange, Dutchess,
Putnam,  Rockland,  Columbia,  Delaware  and Westchester, to account for
prior disproportionate  increases  in  unreimbursed  labor  costs.  Each
individual hospital shall receive a portion of the eight million dollars
equal  to  its  share of the total inpatient and outpatient reimbursable
operating costs based on nineteen hundred ninety data for all  hospitals
located  in  the  above-referenced  counties  excluding costs related to
services provided to beneficiaries of title XVIII of the federal  social
security act (medicare) and excluding direct medical education costs.
(C)  Fifty-five  million  dollars  shall  be allocated to the costs of
increased  activities  related  to  regulatory   compliance,   universal
precautions  and  infection  control  related to AIDS, tuberculosis, and
other infectious diseases, including  the  training  of  employees  with
regard to infection control, and for infectious and other waste disposal
costs.  A  fixed  amount per bed shall be allocated to the costs of each
general hospital based on the total number of inpatient beds  for  which
the  general hospital is certified pursuant to the operating certificate
issued for each general hospital in accordance with section twenty-eight
hundred five of this article in effect on August twenty-fourth, nineteen
hundred ninety-three.
(D) Three million dollars shall be allocated as follows:
(I) Two hundred fifty dollars per bed shall be allocated to the  costs
of each general hospital having two hundred or less certified acute care
beds  and  classified  as  a  rural hospital for purposes of determining
payment for inpatient services provided to beneficiaries of title  XVIII
of   the   federal   social  security  act  (medicare)  or  under  state
regulations, in recognition  of  the  unique  costs  incurred  by  these
facilities  in  complying  with  state  regulations,  based on the total
number of inpatient acute care beds for which such general  hospital  is
certified  pursuant to the operating certificate issued for such general
hospital in accordance with section twenty-eight hundred  five  of  this
article   in   effect   on   August   twenty-fourth,   nineteen  hundred
ninety-three.
(II) The remainder shall be allocated on a proportional basis  to  the
costs  of  each  general  hospital  classified  as  a rural hospital for
purposes of determining  payment  for  inpatient  services  provided  to
beneficiaries  of  title  XVIII  of  the  federal  social  security  act
(medicare)  or  under  state  regulations,  in recognition of the unique
costs incurred by these  facilities  to  provide  hospital  services  in
remote   or   sparsely  populated  areas,  according  to  the  following
methodology:
(1) the net income, or the net loss expressed  as  a  negative,  as  a
proportion  of  the net patient revenue, of each such hospital, based on
operating results for the nineteen hundred ninety and  nineteen  hundred
ninety-one  rate years, shall be computed and averaged, and expressed as
a percentage;
(2) each such resulting percentage average shall be multiplied by each
such hospital's number of inpatient beds  for  which  such  hospital  is
certified pursuant to the operating certificate issued for such hospital
in  accordance  with  section  two  thousand  eight hundred five of this
article in effect on June thirtieth, nineteen hundred ninety,  and  such
resulting  products for all such hospitals shall be summed, and such sum
shall be divided by the total of all such beds for all  such  hospitals,
and the resulting quotient shall be the weighted average rural operating
margin expressed as a percentage; and
(3) one percentage point shall be subtracted from each such hospital's
average  net  operating  margin,  and  the resulting difference shall be
divided by the weighted average rural operating margin; and
(4) (a) if the quotient resulting  from  the  computation  in  subitem
three  above is less than zero, then the absolute value of such quotient
shall be multiplied by each such hospital's number of inpatient beds for
which such hospital is certified pursuant to the  operating  certificate
issued  for  such hospital in accordance with section two thousand eight
hundred five of this chapter  in  effect  on  June  thirtieth,  nineteen
hundred  ninety,  such  product shall be multiplied by one hundred fifty
dollars, and such resulting amount shall be such  hospital's  adjustment
pursuant to this clause;
(b)  if  the  quotient resulting from the computation in subitem three
above is zero or greater, such hospital's adjustment  pursuant  to  this
clause shall be zero; and
(c)  provided,  however,  that if the total of all such adjustments so
computed exceeds the amount to be  allocated  in  accordance  with  this
item, each such hospital's adjustment shall be proportionately reduced.
(E)  Three  million  dollars  shall  be  allocated  to  assist general
hospitals involved in a merger, acquisition, or consolidation in meeting
the costs associated with such merger, acquisition, or consolidation  on
or  after  January first, nineteen hundred ninety-four. The commissioner
shall make rate adjustments for such allocations.
(F) (I) One million five hundred thousand dollars shall  be  allocated
for  enhanced  rates  for general hospitals participating within a rural
health network as defined in  subdivision  two  of  section  twenty-nine
hundred  fifty-one  of  this  chapter.  Such  rate enhancements shall be
established only for  inpatient  services  provided  by  such  hospitals
through  the written rural health network agreement, where such services
have  been  approved   for   enhanced   rates   by   the   commissioner.
Notwithstanding  any  inconsistent provision of law, such enhanced rates
shall be subject to the availability of federal financial  participation
pursuant to title XIX of the federal social security act in expenditures
made  for  eligible  patients, including pooling arrangements and volume
adjustments, provided, however that such enhanced rates shall not affect
the calculation for any  other  general  hospital  of  the  group  price

component  calculated  pursuant  to subparagraph (i) of paragraph (a) of
subdivision seven of this section.
(II)  One million five hundred thousand dollars shall be allocated for
enhanced rates for general  hospitals  participating  within  a  central
services  facility  rural health network as defined in subdivision three
of section twenty-nine hundred fifty-one  of  this  chapter.  Such  rate
enhancements  shall  be established only for inpatient services provided
by such hospitals through  the  network  operational  plan,  where  such
services  have  been  approved  for  enhanced rates by the commissioner.
Notwithstanding any inconsistent provision of law, such  enhanced  rates
shall  be subject to the availability of federal financial participation
pursuant to title XIX of the federal social security act in expenditures
made for eligible patients, including pooling  arrangements  and  volume
adjustments, provided, however that such enhanced rates shall not affect
the  calculation  for  any  other  general  hospital  of the group price
component calculated pursuant to subparagraph (i) of  paragraph  (a)  of
subdivision seven of this section.
(f)  The  commissioner  and  the  state  director  of the budget shall
consider  providing  a  supplementary  increase  to   general   hospital
reimbursable  inpatient  operating costs for purposes of computing rates
of payment for annual rate periods beginning on or after January  first,
nineteen  hundred  eighty-nine  in  accordance  with  this  section  for
reasonable  and  necessary  supplementary  cost  increases  in   general
hospital  operating  costs  for  such  rate  period  or periods based on
increased minimum standards and procedures relating to general  hospital
operating  certificates  adopted  by  the  council  and  approved by the
commissioner or state initiatives related to recruitment or  maintenance
of  an appropriate level of personnel providing professional services to
patients. Any such supplementary increase shall be allocated to costs of
general hospitals in accordance with rules and  regulations  adopted  by
the council and approved by the commissioner.
(g)  Hospital discharges for purposes of computing case based payments
per discharge pursuant to this section shall be based on the  number  of
patient  discharges  during the rate period from January first, nineteen
hundred eighty-seven through  December  thirty-first,  nineteen  hundred
eighty-seven excluding discharges of beneficiaries of title XVIII of the
federal  social  security  act  (medicare)  and  adjusted as provided in
specific provisions of this section,  or  the  number  of  such  patient
discharges during a recent twelve month period prior thereto established
by regulation for which data are available subsequently reconciled by an
adjustment to reflect nineteen hundred eighty-seven discharge data.
* (h)  Notwithstanding  any  inconsistent  provision  of this section,
commencing April first, nineteen hundred ninety-five:
(i) rates of payment for patients eligible for payments made by  state
governmental agencies shall be reduced by the commissioner to reflect an
exclusion  from  reimbursable inpatient operating costs commencing April
first, nineteen hundred ninety-five of the special additional  inpatient
operating  costs  determined  and  allocated  among general hospitals in
accordance with clause (C) of  subparagraph  (iii)  and  clause  (C)  of
subparagraph (iv) of paragraph (e) of this subdivision and the factor of
one  quarter of one percent of general hospitals' reimbursable inpatient
operating  cost  base  allocated  to  costs  of  general  hospitals  for
technology advances in accordance with subparagraph (i) of paragraph (e)
of this subdivision; and
(ii)  general hospitals may not request and the commissioner shall not
consider any pending or further appeals for an adjustment  to  rates  of
payment  based  on costs associated with technology advances and changes
in medical practice  and  such  adjustments  to  reimbursable  inpatient

operating costs pursuant to clause (C) of subparagraph (iv) of paragraph
(e) of this subdivision.
(iii)  Notwithstanding  the  foregoing, or any other provision of this
section, the commissioner may establish pass through payments, or  other
appropriate  methodologies, for the period ending December thirty-first,
two thousand three for innovative medical device advances for which  the
federal  centers  for medicare and medicaid services adopts new codes to
the hospital inpatient prospective payment system prior to  the  federal
food and drug administration's approval of such medical device.
* NB Expired March 31, 2011
(i)  For  the rate period July first, two thousand seven through March
thirty-first, two thousand eight and for rates applicable to  the  state
fiscal  year  commencing April first, two thousand eight, and each state
fiscal year thereafter through March thirty-first,  two  thousand  nine,
and  for  the  period  April  first,  two thousand nine through November
thirtieth, two thousand nine, provided, however,  that  for  the  period
April  first, two thousand nine through November thirtieth, two thousand
nine the aggregate rate adjustments calculated pursuant to  subparagraph
(ii)  of  this  paragraph  shall  not  exceed  four million dollars, and
contingent upon the availability of federal financial participation:
(i) The commissioner shall adjust inpatient medical  assistance  rates
of  payment  calculated  pursuant  to  this section for public hospitals
other  than  non-state  public  hospitals  located  in  a  city  with  a
population  of  more  than  one  million persons, that meet the targeted
medicaid discharge percentage in accordance  with  the  methodology  set
forth  in  subparagraph  (ii)  of  this  paragraph. For purposes of this
paragraph, "targeted medicaid discharge percentage" shall mean  that  at
least  seventeen  and  one-half  percent  of  a  public hospital's total
discharges  were  patients  eligible  for  payments  under  the  medical
assistance  program  pursuant  to  title  eleven  of article five of the
social services law, including  those  enrolled  in  health  maintenance
organizations,  and  patients  eligible  for  payments  under the family
health plus program pursuant to title eleven-D of article  five  of  the
social   services  law,  based  on  data  reported  in  such  hospital's
institutional cost report submitted for the two thousand four period and
filed with the department by  November  first,  two  thousand  six.  Any
hospital that meets the filing deadline shall have until June first, two
thousand  seven  to  submit revised and corrected data schedules in such
institutional  cost  report  which  established  eligibility  for   such
adjusted rate.
(ii)  The  aggregate amount of rate adjustments calculated pursuant to
this paragraph shall not  exceed  six  million  dollars  for  each  rate
period.  Such  amount  shall  be  allocated  proportionally based on the
relative numbers of medicaid discharges  among  those  public  hospitals
eligible  for  rate  adjustments  in accordance with subparagraph (i) of
this paragraph based on each such hospital's reported medical assistance
data specified in subparagraph (i) of this paragraph. Such amounts shall
be included as an  add-on  to  medical  assistance  inpatient  rates  of
payment,  excluding  exempt  unit  rates, and shall not be reconciled to
reflect changes in medical assistance utilization between  two  thousand
four and the current rate year.
(j)  For  the rate period July first, two thousand seven through March
thirty-first, two thousand eight and for rates applicable to  the  state
fiscal  year  commencing April first, two thousand eight, and each state
fiscal year thereafter through March thirty-first, two thousand nine and
for  the  period  April  first,  two  thousand  nine  through   November
thirtieth,  two  thousand  nine,  provided, however, that for the period
April first, two thousand nine through November thirtieth, two  thousand

nine  the aggregate rate adjustments calculated pursuant to subparagraph
(ii) of this paragraph shall not exceed  twenty-eight  million  dollars,
and contingent upon the availability of federal financial participation:
(i)  The  commissioner shall adjust inpatient medical assistance rates
of payment calculated pursuant to this section for  voluntary  hospitals
other  than  voluntary  hospitals located in a city with a population of
more than one million persons that meet the targeted medicaid  discharge
percentage  in accordance with the methodology set forth in subparagraph
(ii) of this  paragraph.  For  purposes  of  this  paragraph,  "targeted
Medicaid discharge percentage" shall mean between seventeen and one-half
percent   and  thirty-five  percent  of  a  voluntary  hospital's  total
discharges  were  patients  eligible  for  payments  under  the  medical
assistance  program  pursuant  to  title  eleven  of article five of the
social services law, including  those  enrolled  in  health  maintenance
organizations,  and  patients  eligible  for  payments  under the family
health plus program pursuant to title eleven-D of article  five  of  the
social   services  law,  based  on  data  reported  in  such  hospital's
institutional cost report submitted for the two thousand four period and
filed with the department by  November  first,  two  thousand  six.  Any
hospital that meets the filing deadline shall have until June first, two
thousand  seven  to  submit revised and corrected data schedules in such
institutional  cost  report  which  established  eligibility  for   such
adjusted rate.
(ii)  The  aggregate amount of rate adjustments calculated pursuant to
this paragraph shall not exceed forty-two million dollars for each  rate
period.  Such amount shall be allocated proportionally based on relative
numbers of medicaid discharges among those voluntary hospitals  eligible
for  rate  adjustments  in  accordance  with  subparagraph  (i)  of this
paragraph based on each such hospital's reported medical assistance data
specified in subparagraph (i) of this paragraph. Such amounts  shall  be
included  as an add-on to medical assistance inpatient rates of payment,
excluding exempt unit rates, and shall  not  be  reconciled  to  reflect
changes  in medical assistance utilization between two thousand four and
the rate year.
(k) Subject to the availability of  federal  financial  participation,
the  commissioner shall adjust inpatient rates of payment for non-public
general hospitals located in a city with a population of more  than  one
million  persons  for the following periods and in the following amounts
in order to ensure meaningful access  to  the  hospital's  services  and
reasonable  accommodation for all medicaid patients who require language
assistance:
(i) for the period July first, two  thousand  seven  through  December
thirty-first,  two thousand seven, thirty-eight million dollars shall be
allocated proportionally to such hospitals based  on  fifty  percent  of
each  such  hospital's reported general clinic medicaid visits and fifty
percent on each such hospital's reported medicaid inpatient  discharges,
as  reported  in  each  hospital's  two thousand four institutional cost
report, as submitted to the department  prior  to  November  first,  two
thousand six, to the total of all such general clinic visits reported by
all such hospitals.
(ii)  for  the  period  April  first, two thousand eight through March
thirty-first, two thousand nine, and each state fiscal  year  thereafter
through  November  thirtieth,  two  thousand  nine, thirty-eight million
dollars shall be allocated on an annualized basis for  such  purpose  to
such   hospitals  in  accordance  with  the  methodology  set  forth  in
subparagraph (i) of  this  paragraph,  provided,  however,  that  thirty
percent  of  such  funds shall be allocated proportionally, based on the
number of foreign languages utilized by  one  or  more  percent  of  the

residents  in  each  hospital  total  service area population, provided,
however, that for the period April  first,  two  thousand  nine  through
November  thirtieth, two thousand nine, such allocation shall be reduced
to twenty-five million three hundred thirty-three thousand dollars.
(l)  Effective for periods on and after July first, two thousand seven
through November thirtieth, two thousand nine:
(i) Subject to the availability of  federal  financial  participation,
the  commissioner  shall  adjust  inpatient  medical assistance rates of
payment calculated  pursuant  to  this  section  for  general  hospitals
located  in  the  counties  of Nassau and Suffolk in accordance with the
methodology set forth  in  subparagraph  (ii)  of  this  paragraph.  For
purposes  of  this paragraph, "medicaid inpatient discharges" shall mean
the total  number  of  such  general  hospital's  discharges  where  the
patients were eligible for payments under the medical assistance program
pursuant  to  title  eleven  of article five of the social services law,
including  those  enrolled  in  health  maintenance  organizations,  and
patients  eligible  for  payments  under  the family health plus program
pursuant to title eleven-D of article five of the social  services  law,
based  on  data  reported  in  such hospital's institutional cost report
submitted for the two thousand four period and filed with the department
by November first, two thousand six.
(ii) The amount  of  rate  adjustments  calculated  pursuant  to  this
paragraph  shall  not  exceed  five  million  dollars  in  the aggregate
annually. Such amount shall be allocated  proportionally  based  on  the
relative  numbers  of  medicaid discharges among those general hospitals
eligible for rate adjustments in accordance  with  subparagraph  (i)  of
this paragraph based on each such hospital's reported medical assistance
data specified in subparagraph (i) of this paragraph. Such amounts shall
be  included  as  an  add-on  to  medical  assistance inpatient rates of
payment, excluding exempt unit rates, and shall  not  be  reconciled  to
reflect  changes  in medical assistance utilization between two thousand
four and the current rate year.
2. Special payment rate methodology agreements, negotiated rates.  (a)
Any payment rate methodology agreement negotiated between a self-insured
and  self-administered  fund  and  a  specific  general  hospital or its
successor which was in effect on May first, nineteen hundred eighty-five
shall be permitted to continue with such fund,  or  a  self-insured  and
self-administered  fund related in interest to such fund through merger,
consolidation or  corporate  reorganization  subsequent  to  May  first,
nineteen   hundred   eighty-five,  as  long  as  any  revision  to  such
methodology does not provide more of an economic advantage to  the  fund
than  the  previous  agreement.  A  general  hospital which has any such
agreement shall file with the commissioner  information  regarding  each
such agreement, as may be required by regulations adopted by the council
and approved by the commissioner.
(b)(i)  Nothing  in  this  section shall prohibit the establishment of
special payment  rate  methodologies  in  arrangements  between  general
hospitals  and  health maintenance organizations operating in accordance
with the provisions of article  forty-three  of  the  insurance  law  or
article  forty-four  of this chapter, provided the commissioner has been
notified  of  the  proposed  arrangement,  has  reviewed  such  proposed
arrangement  and has issued his written approval of the arrangement. The
commissioner shall not approve such an arrangement if it would result in
payments to a  general  hospital  for  inpatient  services  provided  to
subscribers  of  health maintenance organizations which in the aggregate
are less than what otherwise would have been paid under  the  provisions
of this section, unless the health maintenance organization demonstrates
that  such  lower  payments  are  justified because the arrangement will

result in  lower  costs  to  the  general  hospital,  and  the  payments
approximate costs. Such arrangements may be approved by the commissioner
to:  integrate  the medical delivery functions of the health maintenance
organization  with  the  medical  delivery  functions  of  the hospital,
including  but  not  limited   to   joint   staffing   arrangements   or
pre-admission  testing  arrangements; or integrate the method of payment
and financial incentives to the hospital with the method of payment  and
financial  incentives  to  physicians  or  other providers in the health
maintenance  organization;  or  integrate  the  method  of  payment  and
financial  incentives  to  the  hospital  with  the  health  maintenance
organization, including, but not limited to, bed leasing  or  capitation
payments.  Notwithstanding  any  inconsistent provision of this section,
for periods beginning  on  or  after  January  first,  nineteen  hundred
ninety-four,    negotiated   agreements   between   health   maintenance
organizations  and  general  hospitals  which  were  approved   by   the
commissioner and which were in effect on December thirty-first, nineteen
hundred ninety-three, may continue.
(ii)  Notwithstanding  any  inconsistent  provisions  of this section,
health  maintenance  organizations  operating  in  accordance  with  the
provisions  of  article  forty-three  of  the  insurance  law or article
forty-four of this chapter,  having  enrollees  eligible  for  inpatient
general hospital payments as beneficiaries of title XVIII of the federal
social  security  act  (medicare)  shall reimburse general hospitals for
inpatient services for these enrollees in accordance with the provisions
contained in title XVIII of the federal social security act (medicare).
(c) Special payment  rate  methodology  agreements  other  than  those
permitted in accordance with the provisions of paragraphs (a) and (b) of
this subdivision shall not be authorized, and no other arrangements with
a  general  hospital  for  inpatient  rates  of payment other than those
established in accordance with this section shall be negotiated.
* (d)  Notwithstanding  any  inconsistent  provision   of   law,   the
provisions  of paragraphs (a), (b) and (c) of this subdivision shall not
apply to payments for patients discharged on  or  after  January  first,
nineteen hundred ninety-seven.
* NB Expires December 31, 2026
3.  Diagnosis-related  groups  and weights. (a) The commissioner shall
establish as a basis for case classification for  case  based  rates  of
payment  the  same system of diagnosis-related groups for classification
of hospital discharges as established for purposes of  reimbursement  of
inpatient hospital service pursuant to title XVIII of the federal social
security  act  (medicare) in effect on the first day of July in the year
preceding the rate period. However, the  council  may  adopt  rules  and
regulations, subject to the approval of the commissioner, to adjust such
diagnosis-related   groups  or  establish  additional  diagnosis-related
groups to reflect subsequent revisions applicable to  reimbursement  for
discharges  of  beneficiaries  of  title  XVIII  of  the  federal social
security act (medicare) effective subsequent to the first day of July in
the year preceding the rate period, or to identify medically appropriate
patterns of health resource use efficiently and  economically  provided.
No  such  regulations,  however,  except  those  to  reflect  subsequent
revisions applicable to reimbursement for discharges of beneficiaries of
title XVIII of the federal social security act (medicare) or for changes
made to diagnosis-related groups for neonatal services and  services  to
acquired  immune  deficiency syndrome (AIDS) patients shall apply to the
rate period beginning January first, nineteen hundred eighty-eight.  For
subsequent   rate  periods  regulations  other  than  those  to  reflect
subsequent revisions  applicable  to  reimbursement  for  discharges  of
beneficiaries  of  title  XVIII  of  the  federal  social  security  act

(medicare) may in addition apply to  changes  to  the  diagnosis-related
groups  for  other  services,  including  but  not limited to, pediatric
services;  provided,  however,  that  psychiatric   and   rehabilitation
services shall not be included.
Notwithstanding section one hundred twelve or one hundred seventy-four
of  the  state  finance  law or any other law, rule or regulation to the
contrary, the commissioner  may  contract  with  a  vendor  for  nominal
consideration   to  develop  the  specifications  for  the  adjusted  or
additional diagnosis-related groups if the commissioner certifies to the
comptroller that such contract is in the best interest of the health  of
the  people of the state. Notwithstanding that such specifications shall
be available pursuant to article six of the public  officers  law,  such
contract  may  provide  that  the  specifications  for  such adjusted or
additional diagnosis-related groups provided  by  the  vendor  shall  be
subject to copyright protection pursuant to federal copyright law.
(b)  The  methodology  for  assignment  of  patient  discharges within
diagnosis-related groups applicable for purposes of determining payments
for discharges of beneficiaries of title XVIII  of  the  federal  social
security  act  (medicare) in effect on the first day of July in the year
preceding the rate period, revised to reflect such adjustments as may be
made to the diagnosis-related group classification  system  pursuant  to
paragraph  (a)  of this subdivision, shall be applied to assign specific
patient  discharges  within  the  diagnosis-related  groups  established
pursuant  to  paragraph  (a)  of this subdivision. The council may adopt
rules and regulations, subject to the approval of the  commissioner,  to
revise the methodology for the assignment of specific patient discharges
within   the  diagnosis-related  groups  to  reflect  revisions  to  the
methodology  applicable  for  purposes  of  determining   payments   for
discharges  of  beneficiaries  of  title  XVIII  of  the  federal social
security act (medicare) effective subsequent to the first day of July in
the year preceding the rate period.
* (c) (i) The commissioner shall determine  an  appropriate  weighting
factor  for  each  diagnosis-related  group  which reflects the relative
general  hospital  resources  used   by   all   patients,   other   than
beneficiaries  of  title  XVIII  of  the  federal  social  security  act
(medicare),  with  respect  to   discharges   classified   within   that
diagnosis-related  group  compared to discharges classified within other
diagnosis-related groups. For rate periods  during  the  period  January
first,  nineteen  hundred  eighty-eight  through  December thirty-first,
nineteen hundred ninety,  the  appropriate  weighting  factor  for  each
diagnosis-related  group  shall  be  determined  using  nineteen hundred
eighty-five costs and statistics for a representative sample of  general
hospitals.  For  rate  periods during the period January first, nineteen
hundred  ninety-one  through  December  thirty-first,  nineteen  hundred
ninety-three,    the    appropriate    weighting    factor    for   each
diagnosis-related group  shall  be  determined  using  nineteen  hundred
eighty-nine  costs and statistics for a representative sample of general
hospitals. For rate periods during the period  January  first,  nineteen
hundred  ninety-four  through  December  thirty-first,  nineteen hundred
ninety-nine and  on  and  after  January  first,  two  thousand  through
December  thirty-first,  two  thousand  seven, the appropriate weighting
factor for  each  diagnosis-related  group  shall  be  determined  using
nineteen  hundred  ninety-two  costs and statistics for a representative
sample of general hospitals. For  rate  periods  on  and  after  January
first,  two  thousand  eight,  the appropriate weighting factor for each
diagnosis-related group shall be  determined  using  two  thousand  four
costs  and  statistics for a representative sample of general hospitals,
and, further, the computation of the  group  average  arithmetic  inlier

length-of-stays   for   each  diagnostic  related  group,  as  otherwise
determined in accordance with applicable regulations, shall utilize  two
thousand  four  data  as  reported to the department, and, be based on a
representative  sample of general hospitals, and further, the short-stay
and long-stay length-of-stay  trimpoints,  as  otherwise  determined  in
accordance  with applicable regulations, shall be computed utilizing two
thousand four data  as  reported  to  the  department  and  based  on  a
representative  sample  of  general hospitals. Provided however, that if
the department does not release updated data and documentation described
in subparagraph (iii) of this paragraph, the effective rate period shall
be April 1, 2008. Discharges and costs related to the exceptions to case
payment provided in accordance with  paragraphs  (e),  (g)  and  (i)  of
subdivision  four of this section shall be eliminated from the costs and
statistics used in determining the appropriate weighting factors,  while
the  cost  factor  related to the exception provided in paragraph (h) of
subdivision four of this section shall be eliminated.    The  costs  and
statistics  for  the  case  payment modifications calculated pursuant to
paragraphs (a), (b), (c) and (d) of subdivision  four  of  this  section
shall  be eliminated in accordance with paragraph (c) of subdivision six
of this  section.  Costs  related  to  education,  physician,  ambulance
services and organ acquisition identified consistent with the provisions
of  paragraph (c) of subdivision seven of this section and costs related
to malpractice insurance shall also be eliminated. The council may adopt
rules and regulations, subject to the approval of the  commissioner,  to
prospectively  adjust  weighting  factors  determined in accordance with
this paragraph to reflect changes in  medical  technology.    After  the
commissioner  issues rate certifications pursuant to subdivision four of
section twenty-eight hundred seven  of  this  article  the  commissioner
shall  expeditiously  make available for inspection by general hospitals
and payors the data, consistent with appropriate  department  procedures
for the release and protection of confidential data, and the methodology
utilized to determine the appropriate weighting factors.
(ii)  Notwithstanding  any  contrary  provision  of  law, the case mix
adjustment to the operating component of per diem rates of payment  paid
to  general hospitals or units of general hospitals that are exempt from
case based payments, as determined in accordance with  subdivision  four
of  this section and as otherwise computed in accordance with applicable
regulations, shall, for periods on and after January first, two thousand
eight, be computed utilizing the diagnosis-related group  classification
system  in  effect  for  the rate year for inpatient case based medicaid
rates of payment and the related per day cost weights  calculated  using
two  thousand  four  data  as  reported to the department and based on a
representative sample of general hospitals.  For  rate  periods  on  and
after  the  two  thousand  eleven  rate period, such case mix adjustment
shall utilize the same base period data as determined in accordance with
paragraph (e) of this subdivision.
(iii) The department shall, by no later than June first, two  thousand
seven,  make  available  to  hospital  industry representatives relevant
updated data and documentation that  the  department  will  utilize,  in
accordance  with  this  paragraph,  in  developing  appropriate  service
intensity weights for each diagnosis-related group for the two  thousand
eight  rate period. The department will thereafter consult with hospital
industry representatives in  developing  regulations  to  implement  the
utilization  of such updated service intensity weight data applicable to
rate  periods  on  and  after  two  thousand  eight.  If  it  is  deemed
appropriate  by the commissioner, in consultation with hospital industry
representatives, such regulations may provide for the  phase-in  over  a
period  of  time  of the application of such updated data in determining

Medicaid rates on and after two thousand eight, provided, however,  that
the  application  of  such updated data shall be fully reflected in such
rates by no later than January first, two thousand ten.
(iv)  By  no  later  than  December  first,  two  thousand  seven, the
commissioner shall issue a report to the governor  and  the  legislature
describing  the  updated data utilization applicable, in accordance with
the provisions of this paragraph, to periods on and after  two  thousand
eight and setting forth the factors considered in developing it.
* NB Effective until December 31, 2026
* (c) The commissioner shall determine an appropriate weighting factor
for  each  diagnosis-related  group  which reflects the relative general
hospital resources used by all patients,  other  than  beneficiaries  of
title  XVIII of the federal social security act (medicare), with respect
to discharges classified within that diagnosis-related group compared to
discharges classified within other diagnosis-related  groups.  For  rate
periods  during  the period January first, nineteen hundred eighty-eight
through December thirty-first, nineteen hundred ninety, the  appropriate
weighting  factor  for  each diagnosis-related group shall be determined
using  nineteen  hundred  eighty-five  costs  and   statistics   for   a
representative  sample of general hospitals. For rate periods during the
period January  first,  nineteen  hundred  ninety-one  through  December
thirty-first,  nineteen  hundred ninety-three, the appropriate weighting
factor for  each  diagnosis-related  group  shall  be  determined  using
nineteen  hundred  eighty-nine costs and statistics for a representative
sample of general hospitals. For rate periods during the period  January
first,  nineteen  hundred  ninety-four  through June thirtieth, nineteen
hundred  ninety-six,  the  appropriate   weighting   factor   for   each
diagnosis-related  group  shall  be  determined  using  nineteen hundred
ninety-two costs and statistics for a representative sample  of  general
hospitals.  Discharges  and  costs  related  to  the  exceptions to case
payment provided in accordance with  paragraphs  (e),  (g)  and  (i)  of
subdivision  four of this section shall be eliminated from the costs and
statistics used in determining the appropriate weighting factors,  while
the  cost  factor  related to the exception provided in paragraph (h) of
subdivision four of this section shall  be  eliminated.  The  costs  and
statistics  for  the  case  payment modifications calculated pursuant to
paragraphs (a), (b), (c) and (d) of subdivision  four  of  this  section
shall  be eliminated in accordance with paragraph (c) of subdivision six
of this  section.  Costs  related  to  education,  physician,  ambulance
services and organ acquisition identified consistent with the provisions
of  paragraph (c) of subdivision seven of this section and costs related
to malpractice insurance shall also be eliminated. The council may adopt
rules and regulations, subject to the approval of the  commissioner,  to
prospectively  adjust  weighting  factors  determined in accordance with
this paragraph to reflect  changes  in  medical  technology.  After  the
commissioner  issues rate certifications pursuant to subdivision four of
section twenty-eight hundred seven  of  this  chapter  the  commissioner
shall  expeditiously  make available for inspection by general hospitals
and payors the data, consistent with appropriate  department  procedures
for the release and protection of confidential data, and the methodology
utilized to determine the appropriate weighting factors.
* NB Effective December 31, 2026
(d)  The  commissioner shall consult with technical advisory groups as
necessary  in  establishing  diagnosis-related  groups  and  weights  in
accordance  with  paragraphs (a), (b) and (c) of this subdivision and in
making  adjustments  in  accordance  with  paragraphs  (b)  and  (c)  of
subdivision six of this section.
(e) The appropriate weighting factor for each diagnosis-related group,
the   group   average   arithmetic   inlier   length-of-stays  for  each
diagnosis-related group, and the short-stay and long-stay length-of-stay
trimpoints shall, by no later than the two thousand eleven rate  period,
be  based  on reported costs and statistics from a representative sample
of general hospitals from a base period no  earlier  than  two  thousand
seven.  Thereafter,  the  base  period  reported  costs  and  statistics
utilized for such purposes shall be  updated  no  less  frequently  than
every four years and the new base periods utilized shall be no more than
four years prior to the applicable rate period.
3-a.   Dispute   resolution   system.  (a)  * The  commissioner  shall
establish, in accordance with  rules  and  regulations  adopted  by  the
council  and  approved by the commissioner, a payment dispute resolution
system to resolve disputes between payors of inpatient hospital services
and general hospitals for patients discharged on or after January first,
nineteen hundred ninety-one and prior to January first, nineteen hundred
ninety-seven. The commissioner shall designate the use of a uniform  set
of   guidelines   for   determining   the   application   of  particular
diagnosis-related group categories  to  particular  patients  which  may
include  guidelines  published  by  associations,  universities or other
organizations. The dispute resolution process shall apply to all  payors
of  hospital  services  described  in  paragraphs  (a),  (b)  and (c) of
subdivision one of this section, including patients or payors which  pay
hospitals' charges or coinsurance, provided, however, such process shall
not   include  payments  made  for  persons  eligible  for  payments  as
beneficiaries  of  title  XVIII  of  the  federal  social  security  act
(medicare)  as  a  patients'  primary payor or payments made pursuant to
title eleven of article five of the social services law,  provided  that
this  exception  shall  not  include  payments  for  medical  assistance
participants in  health  maintenance  organizations  or  prepaid  health
services  plans.  A payor of hospital services included in paragraph (a)
of subdivision one of this section  may  serve  as,  or  designate,  the
review  agent  for  their subscribers, beneficiaries or enrolled members
for an initial review and a reconsideration review but the final step in
such dispute resolution process shall be an independent party  unrelated
to  the payor which party shall be approved by the commissioner pursuant
to this section.
* NB Effective until December 31, 2026
* The commissioner shall  establish,  in  accordance  with  rules  and
regulations  adopted  by the council and approved by the commissioner, a
payment dispute resolution system to resolve disputes between payors  of
inpatient   hospital   services   and  general  hospitals  for  patients
discharged on or after January first, nineteen hundred  ninety-one.  The
commissioner  shall designate the use of a uniform set of guidelines for
determining  the  application  of  particular  diagnosis-related   group
categories to particular patients which may include guidelines published
by  associations,  universities  or  other  organizations.  The  dispute
resolution process shall  apply  to  all  payors  of  hospital  services
described  in  paragraphs  (a),  (b)  and (c) of subdivision one of this
section, including patients or payors which pay  hospitals'  charges  or
coinsurance,  provided, however, such process shall not include payments
made for persons eligible for payments as beneficiaries of  title  XVIII
of  the  federal  social  security act (medicare) as a patients' primary
payor or payments made pursuant to title eleven of article five  of  the
social  services  law,  provided  that  this exception shall not include
payments for  medical  assistance  participants  in  health  maintenance
organizations  or  prepaid  health  services  plans. A payor of hospital
services included in paragraph (a) of subdivision one  of  this  section

may  serve  as,  or  designate,  the review agent for their subscribers,
beneficiaries  or  enrolled  members  for  an  initial  review   and   a
reconsideration  review  but  the  final step in such dispute resolution
process shall be an independent party unrelated to the payor which party
shall be approved by the commissioner pursuant to this section.
* NB Effective December 31, 2026
In  the  event a third party payor or patient desires to challenge the
appropriateness of a bill for hospital services rendered  by  a  general
hospital  for  a  particular patient, or in the event a general hospital
desires to challenge the appropriateness of a payment by a  third  party
payor on behalf of a particular patient, then either the hospital or the
payor  may  submit  the  question  to  the  dispute  resolution  process
established pursuant to this subdivision.   The disputes  submitted  for
resolution  may  include  the  appropriateness  of  the application of a
particular diagnosis-related group category, as described in subdivision
three  of  this  section,  to  a  particular  patient;  the  appropriate
classification  and  payment of an inpatient stay as a modification of a
case payment pursuant to paragraph (a), (b), (c), or (d) of  subdivision
four  of this section, including whether payment for services should be,
based on medical necessity or other reasons, made as a case  payment  or
payment  as  a  modification  of  a case payment; whether payment should
appropriately  be  made  pursuant  to   an   alternative   reimbursement
methodology  authorized  in  accordance  with  paragraph  (e)  or (h) of
subdivision four of this section and  the  payment  for  such  services;
whether  payment  for  services rendered by a general hospital should be
appropriately, based on medical necessity  or  other  reasons,  made  as
payment  for  inpatient  care  or  payment  for  outpatient care and the
payment for such services;  or  whether  the  hospital  stay  should  be
classified  as  a  readmission as defined in accordance with regulations
adopted pursuant to paragraph (l) of subdivision eleven of this  section
and the payment for such stay.
The dispute resolution system established shall provide for an initial
review  and  a reconsideration review. The council shall adopt necessary
rules and regulations, subject to  the  approval  of  the  commissioner,
including  but  not  limited  to  those for determining the parties to a
dispute resolution review and any reconsideration review; the procedures
and  time  limits  to  initiate  a  dispute  resolution  review  or  any
reconsideration  review;  the procedures for notification of all parties
involved in the dispute upon initiation of a dispute  resolution  review
or  any  reconsideration review; time limits for resolving disputes; the
establishment  of  dispute  resolution  and  reconsideration  fees;  and
required  documents  to  be  submitted  including  the  hospital bill in
dispute, a copy of the patient medical record, or so much thereof as may
be required, and a statement of  issues  including  the  basis  for  the
dispute.  During  a  dispute  resolution  review  or any reconsideration
review, a party may present documentation or evidence in support of  its
position  regarding the appropriate diagnosis-related group to which the
patient discharge should be assigned or the proper payment for the case.
The  commissioner  shall  approve   a   statewide   utilization   review
organization  or regional utilization review organization to conduct and
determine such dispute resolution reviews including any  reconsideration
reviews  in  accordance  with  paragraph (b) of this subdivision.  Every
general hospital bill issued  for  a  patient  discharged  on  or  after
January  first, nineteen hundred ninety-one other than for discharges of
patients eligible for medical assistance pursuant  to  title  eleven  of
article  five  of the social services law subject to case based payments
determined pursuant to this section  based  on  diagnosis-related  group
assigned  or  maximum hospital charges for a case determined pursuant to

this section based on diagnosis-related group assigned shall include  or
be  accompanied  by  a  notice of the payment dispute resolution system;
provided, however, that a general hospital issuing bills to a payor  for
twenty-five or more patients per year may send such notice to such payor
on  an  annual  basis.  The  form  and  content  of such notice shall be
determined in accordance with  rules  and  regulations  adopted  by  the
council and approved by the commissioner.
(b)  The  commissioner  shall  approve  a statewide utilization review
organization or regional utilization review organizations to conduct and
determine dispute resolution reviews, including reconsideration reviews,
pursuant to this subdivision. To be approved  as  a  utilization  review
organization  in accordance with this subdivision such organization must
meet the following criteria: the organization shall employ or  otherwise
secure  the services of adequate personnel, including medical personnel,
qualified to review such disputes, the  organization  shall  demonstrate
the  ability  to  render  decisions in a timely manner, the organization
shall agree to provide ready access by the  commissioner  to  all  data,
records  and information it collects and maintains concerning its review
activities under this  subdivision,  the  organization  shall  agree  to
provide  to  the  commissioner such data, information and reports as the
commissioner  determines  necessary  to  evaluate  the  review   process
provided  pursuant  to  this subdivision, the organization shall provide
assurances that review personnel shall not have a conflict  of  interest
in  conducting  a  review  based  on  payor,  hospital  or  professional
affiliation, and the  organization  meets  such  other  performance  and
efficiency  criteria  regarding  the conduct of reviews pursuant to this
subdivision  established  by  the  commissioner.  The  commissioner  may
withdraw  approval  of  a  utilization  review  organization  where such
organization fails to continue to  meet  approval  criteria  established
pursuant  to  this paragraph. A utilization review organization approved
pursuant to this paragraph shall be authorized  to  receive  and  review
patient  medical  records  and  shall  develop and implement appropriate
procedures to maintain confidentiality of such patient medical records.
(c) Upon resolution of a  payment  dispute  in  accordance  with  this
paragraph,  the parties involved in the dispute shall be notified of the
reason for the decision and  the  hospital  bill  in  dispute  shall  be
adjusted to reflect such resolution.
(d)  The  party  initiating a payment dispute resolution review or any
reconsideration  review  must   submit   to   the   utilization   review
organization  a  dispute resolution fee established to recover the costs
related to the conduct of the initial dispute resolution  reviews  or  a
reconsideration  review  fee established to recover the costs related to
the conduct of such reconsideration reviews, except that for  payors  in
paragraph  (a)  of  subdivision  one  of  this section which serve as or
designate the review agent  for  their  subscribers,  beneficiaries,  or
enrolled  members  a fee shall be charged only for the final step in the
dispute resolution process. Upon resolution  of  a  payment  dispute  in
accordance  with  this subdivision in favor of the payor, the amount due
to the hospital by a payor based upon the hospital bill shall be reduced
by the amount of any fee paid pursuant to this paragraph by such  payor.
Upon resolution of a payment dispute in accordance with this subdivision
in  favor  of the general hospital, the amount due to the hospital based
upon the hospital bill shall be increased by the amount of any fee  paid
pursuant to this paragraph by such general hospital.
(e) Nothing herein shall relieve the responsibilities of the payors as
set  forth  in  paragraphs  (a),  (b) and (c) of subdivision one of this
section.
(f)(i) Whenever the amount of payment made by a  payor  to  a  general
hospital  is  less  than  the  amount  of  payment  due  determined by a
utilization review organization in  accordance  with  this  subdivision,
general hospitals in accordance with paragraph (d) of subdivision eleven
of this section may include financing or working capital charges on such
balance owed to the general hospital by a payor.
(ii)  Whenever  the  amount  of  payment  made by a payor to a general
hospital is in excess of the amount  of  payment  due  determined  by  a
utilization  review  organization  in  accordance with this subdivision,
interest shall be due on such excess owed by the general hospital  to  a
payor of two percent for the first thirty days and one percent per month
thereafter  from  the  date  of  payment of such excess amount. Interest
shall not be applied to  excess  amounts  owed  to  third  party  payors
participating in an advance payment system.
(g)  For  payment  amounts  eligible  for  payment  dispute resolution
pursuant to this subdivision,  a  general  hospital  shall  not  bill  a
patient   or  pursue  collection  efforts  against  a  patient  for  the
difference between a hospital bill and the payment made on such bill  by
a  payor  within the payor categories specified in paragraph (a), (b) or
(c) of subdivision one of this section, except for uncovered services by
a payor, deductibles and coinsurance based on maximum  hospital  charges
calculated  based  on  the undisputed amount of the hospital bill, until
final decision of the utilization review organization. Nothing  in  this
subdivision  shall  be  construed  to  prohibit  a general hospital from
issuing an informational bill to a  patient  regarding  such  difference
between  the  hospital  bill and the payment made on such bill to advise
the patient of the amount in dispute.
(h) The formal written decision of a utilization  review  organization
approved by the commissioner to conduct and determine dispute resolution
reviews  in  accordance  with  paragraph  (b) of this subdivision upon a
reconsideration review, or if there is no reconsideration review upon an
initial review,  or  for  a  payor  of  hospital  services  included  in
paragraph  (a)  of  subdivision  one  of this section which serves as or
designates the review agent  for  their  subscribers,  beneficiaries  or
enrolled  members  upon the final step in the dispute resolution process
as to the questions of  the  appropriateness  of  a  bill  for  hospital
services  or  the  calculation  of  the proper payment for such hospital
services shall be admissible in evidence at any  subsequent  trial  upon
the  request  of  any  party  to  the  action. The decision shall not be
binding upon the jury or, in a case tried without a jury, upon the trial
court, but shall be considered prima facie  evidence  to  establish  the
facts resolved by the utilization review organization.
4.  Modifications  and  exceptions  to  case payment rates. Case based
rates of payment shall be modified and per diem or other unit of service
payments shall  be  provided,  or  exceptions  shall  be  made  to  case
payments,  in  accordance  with  rules  and  regulations  adopted by the
council  and  approved   by   the   commissioner,   in   the   following
circumstances:
(a)  where  a  case  that is eligible for payment under the case based
payment system is transferred between general hospitals,  the  receiving
hospital  shall  be  reimbursed  its  total  case payment amount for the
diagnosis-related group (including any payments made in accordance  with
this   subdivision),   and   the  transferring  hospital  shall  receive
reimbursement on a basis consistent with the methodology  developed  for
the   elimination   of   transfer   patient  costs  in  accordance  with
subparagraph (i) of paragraph (c) of subdivision  six  of  this  section
plus  additions  contained  in  subparagraph  (ii)  of  paragraph (a) of
subdivision one of this section on a per diem basis. The  payment  to  a

transferring  general  hospital shall not exceed the case payment amount
for  the  diagnosis-related  group  computed  in  accordance  with  this
section;
(b)  where  the  cost per case for a patient that does not qualify for
payment pursuant to paragraph (a) or  (d)  of  this  subdivision  is  in
excess  of  the  basic case payment rate for the diagnosis-related group
multiplied by two and the overall  hospital-specific  average  cost  per
case  multiplied by six, the payment to the general hospital in addition
to the basic case payment rate will be  one  hundred  percent,  or  such
percentage as computed in accordance with subparagraph (ii) of paragraph
(c)  of  subdivision  six  of this section, multiplied by the difference
between the general hospital's cost for the case and the greater of  the
basic  case  payment  rate for the diagnosis-related group multiplied by
two or the overall hospital-specific cost per case multiplied by six. In
determining whether a case qualifies for payment under  this  paragraph,
prospective  rate  adjustments  made in accordance with paragraph (c) of
subdivision eleven of this section to reflect the retroactive impact  of
an  adjustment on prior rates, shall be excluded. Where a case qualifies
for payment pursuant to both this paragraph and paragraph  (c)  of  this
subdivision then payment shall be made in accordance with this paragraph
if  such  payment  exceeds  that  which would be made in accordance with
paragraph (c) of this subdivision. The general hospital's costs per case
shall be computed by adjusting the general hospital's actual charges for
the case by the general hospital's inpatient cost to charge ratio;
(c) where a patient is identified as a long stay patient,  payment  to
the general hospital in addition to the basic case payment rate shall be
on a basis consistent with the methodology developed for the elimination
of  long  stay  patient  costs  in accordance with subparagraph (iii) of
paragraph (c) of subdivision six of this section. Where a case qualifies
for payment pursuant to both this paragraph and paragraph  (b)  of  this
subdivision  then payment shall be made in accordance with paragraph (b)
of this subdivision if such payment exceeds that which would be made  in
accordance  with  this  paragraph.  A long stay patient is defined as an
inpatient whose hospital stay exceeds the long  stay  outlier  threshold
for the diagnosis-related group;
(d)  where a patient is identified as a short stay patient, payment to
the general hospital shall be on a basis consistent with the methodology
developed for the elimination of short stay patient costs in  accordance
with  subparagraph  (iv)  of  paragraph  (c)  of subdivision six of this
section plus additions contained in subparagraph (ii) of  paragraph  (a)
of  subdivision  one  of  this section on a per diem basis. A short stay
patient is defined as an inpatient discharged from the hospital  on  the
same day of admission, or the day after admission except for those stays
where  the statewide mean length of stay for the diagnosis-related group
is less than three days, or whose hospital  stay  is  not  greater  than
twenty   percent   of   the  statewide  mean  length  of  stay  for  the
diagnosis-related group with which the patient is identified,  excluding
normal newborn cases and normal deliveries;
(e)  in  cases  where a general hospital or distinct unit of a general
hospital is not or would not  have  been  reimbursed  on  a  case  based
payment  per  diagnosis-related group for inpatient services provided on
or before December thirty-first, two thousand one, to  beneficiaries  of
title XVIII of the federal social security act (medicare), reimbursement
shall  be  on  a  per diem basis computed for excluded general hospitals
based on the hospital's reimbursable inpatient operating cost  base,  or
for  excluded  distinct units of general hospitals based on the distinct
unit's  reimbursable  inpatient  operating  cost  base,  determined   in
accordance  with  paragraph  (d)  of  subdivision  one  of this section,

projected to the applicable rate period by the trend  factor  determined
in  accordance  with  subdivision  ten of this section, and increased in
accordance with subparagraphs (i), (iii) and (iv) of  paragraph  (e)  of
subdivision  one of this section to reflect special additional inpatient
operating costs, and adjusted to exclude a factor for operating costs of
patients who required an alternate level of  care  developed  consistent
with  the provisions of paragraph (h) of this subdivision, and increased
for excluded general hospitals to  reflect  the  product  of  the  group
category  percentage amount applicable for purposes of determining group
category average inpatient reimbursable  operating  cost  per  discharge
(price) in the rate period pursuant to paragraph (b) of subdivision five
of this section for general hospitals reimbursed on a case based payment
per  diagnosis-related group applied to such excluded general hospital's
additional cost increases determined  in  accordance  with  subparagraph
(ii)  of  paragraph (e) of subdivision one of this section, and adjusted
on a payor category basis to reflect allocation of malpractice insurance
costs  in  accordance  with  the  methodology  developed   pursuant   to
subparagraph  (ii)  of  paragraph  (h)  of  subdivision  eleven  of this
section, for those patients included in the payor categories pursuant to
the provisions of paragraph (a)  or  (b)  of  subdivision  one  of  this
section;  provided,  however,  for  those patients included in the payor
categories pursuant to the provisions of paragraph  (b)  of  subdivision
one  of  this  section  payment  shall be at the per diem payment to the
hospital or distinct unit of  the  hospital  for  services  provided  to
subscribers  of  corporations organized and operating in accordance with
article  forty-three  of  the  insurance  law,  adjusted  for  uncovered
services,  and  increased by thirteen percent or by five percent, as the
case may be; provided further, however, for those general hospitals that
are not reimbursed on a case-based payment per  diagnosis-related  group
for  inpatient  services provided to beneficiaries of title XVIII of the
federal social security act (medicare) as a result of their  designation
by  the secretary of health and human services as a comprehensive cancer
hospital or as a  result  of  their  status  as  an  acute  care  exempt
children's hospital, the base year for determining payments for services
in  such  facilities  shall  be nineteen hundred eighty-seven, provided,
however, such hospitals shall be allowed adjustments in rates of payment
to reflect costs incurred subsequent to  nineteen  hundred  eighty-seven
but  not  reflected  in  such base. Funds received by a general hospital
based on the payment differential in accordance with  paragraph  (b)  of
subdivision one of this section applied pursuant to this paragraph shall
be  hospital  funds  for  patient  care purposes. For those patients not
covered under the provisions of paragraph (a) or (b) of subdivision  one
of  this  section,  or  who  are  not  covered  under  the provisions of
paragraph (a) of subdivision two of this section, payment  shall  be  on
the  basis  of  the  hospital's  charge schedule, limited to one hundred
twenty percent of the total per diem payment that would have  been  made
if  the  patient  were  included in the payor categories pursuant to the
provisions of paragraph (b) of subdivision one of this section. Rates of
payment for excluded general hospitals and excluded  distinct  units  of
general  hospitals  for  a  rate period shall be increased on a per diem
basis by additions and allowances specified in  subparagraphs  (ii)  and
(iii)  of  paragraph (a) of subdivision one of this section. In adopting
regulations for purposes of determining rates of payment for psychiatric
services pursuant to this paragraph, the council  and  the  commissioner
shall  consider  the advice of the commissioner of mental health and may
include case mix and other adjustments for such rates  of  payment.  The
commissioner  of  mental  health  shall  study and report on alternative
procedures for  the  development  of  rates  of  payment  for  inpatient

psychiatric  care.  Such  report shall be submitted to the governor, the
legislature and the commissioner of health by  January  first,  nineteen
hundred  ninety-three.  Recommendations  for alternative financing shall
take  into consideration methods to improve access to inpatient care for
seriously mentally ill persons.
(e-1) Notwithstanding any inconsistent provision of paragraph  (e)  of
this  subdivision  or any other contrary provision of law and subject to
the availability of federal financial participation, per diem  rates  of
payment  by  governmental  agencies for a general hospital or a distinct
unit of a general hospital for inpatient psychiatric services that would
otherwise be  subject  to  the  provisions  of  paragraph  (e)  of  this
subdivision  shall,  with  regard  to  days  of  service associated with
admissions occurring on and after April first, two thousand ten,  be  in
accordance with the following:
(i)  For  rate  periods on or after April first, two thousand ten, the
commissioner, in consultation with the commissioner  of  the  office  of
mental   health,   shall  promulgate  regulations,  and  may  promulgate
emergency regulations, establishing methodologies  for  determining  the
operating cost components of rates of payments for services described in
this  paragraph.  The  commissioner  may  make  such  adjustments to the
methodology for computing such rates  as  is  necessary  to  achieve  no
aggregate,  net  growth in overall Medicaid expenditures related to such
rates, as compared to such aggregate expenditures from the  prior  year.
In  determining  the  updated  base year to be utilized pursuant to this
subparagraph, the commissioner shall take into  account  the  base  year
determined  in  accordance with paragraph (c) of subdivision thirty-five
of this section.
Furthermore,  the  commissioner  shall   establish   such   rates   in
consultation  with  industry  representatives  to achieve an appropriate
base year update to the operating cost components of  rates  of  payment
for  services  described  in  this paragraph and that takes into account
facility cost, mix of services, and patient specific conditions.
(ii) Rates of payment established pursuant to subparagraph (i) of this
paragraph  shall  reflect  an  aggregate  net  statewide   increase   in
reimbursement  for such services of up to twenty-five million dollars on
an annual basis.
(iii) Capital  cost  reimbursement  for  general  hospitals  otherwise
subject  to the provisions of this paragraph shall remain subject to the
provisions of subdivision eight of this section.
(e-2) Notwithstanding any inconsistent provision of paragraph  (e)  of
this  subdivision  or any other contrary provision of law and subject to
the availability of federal financial participation, per diem  rates  of
payment  by  governmental  agencies for inpatient services provided by a
general hospital or a distinct unit of a general hospital for  services,
as described below, that would otherwise be subject to the provisions of
paragraph (e) of this subdivision, shall, with regard to days of service
occurring  on  and after December first, two thousand nine, be in accord
with the following:
(i) For physical medical  rehabilitation  services  and  for  chemical
dependency rehabilitation services, the operating cost component of such
rates  shall  reflect  the  use of two thousand five operating costs for
each respective category of services as reported by each facility to the
department prior to July first, two thousand nine and  as  adjusted  for
inflation  pursuant to paragraph (c) of subdivision ten of this section,
as otherwise modified by any applicable statute, provided, however, that
such two thousand five  reported  operating  costs,  but  not  including
reported   direct   medical  education  cost,  shall,  for  rate-setting
purposes, be held to a ceiling of one hundred ten percent of the average

of such reported costs in the region in which the facility  is  located,
as  determined  pursuant to clause (E) of subparagraph (iv) of paragraph
(1) of this  subdivision;  and  provided,  further,  that  for  physical
medical  rehabilitation services, the commissioner is authorized to make
adjustments to such rates for  the  purposes  of  reimbursing  pediatric
ventilator services.
(ii)  For  services provided by rural hospitals designated as critical
access hospitals in accordance with title XVIII of  the  federal  social
security  act,  the operating cost component of such rates shall reflect
the use of two  thousand  five  operating  costs  as  reported  by  each
facility to the department prior to July first, two thousand nine and as
adjusted  for  inflation pursuant to paragraph (c) of subdivision ten of
this  section,  as  otherwise  modified  by  any  applicable   statutes,
provided,  however, that such two thousand five reported operating costs
shall, for rate-setting purposes, be held to a ceiling  of  one  hundred
ten  percent  of  the  average  of  such  reported  costs  for  all such
designated hospitals statewide.
(iii) For inpatient services provided by  specialty  long  term  acute
care  hospitals  and for inpatient services provided by cancer hospitals
as so designated as of December thirty-first, two  thousand  eight,  the
operating  cost  component  of  such  rates shall reflect the use of two
thousand five operating costs for each respective category  of  facility
as  reported by each facility to the department prior to July first, two
thousand nine and as adjusted for inflation pursuant to paragraph (c) of
subdivision ten of this section, as otherwise modified by any applicable
statutes.
(iv) For facilities designated by the federal department of health and
human services as exempt acute care children's hospitals as of  December
thirty-first,  two  thousand  eight,  for which a discrete institutional
cost report was filed for the two  thousand  seven  calendar  year,  and
which  has  reported  Medicaid  discharges greater than fifty percent of
total discharges in such cost report, shall be determined in  accordance
with the following:
(A)  The  operating cost component of such rates shall reflect the use
of two thousand seven operating costs as reported by  each  facility  to
the  department  prior  to July first, two thousand nine and as adjusted
for the inflation pursuant to paragraph (c) of subdivision ten  of  this
section,  as  otherwise  modified  by  any  applicable  statutes, and as
further  adjusted  as  the  commissioner  deems  appropriate,  including
transition  adjustments.  Such  rates  shall be determined on a per case
basis or per diem basis, as set forth in regulations promulgated by  the
commissioner.
(B) The operating component of outpatient specialty rates of hospitals
subject to this subparagraph shall reflect the use of two thousand seven
operating  costs  as reported to the department prior to December first,
two  thousand  eight,  and  shall  include  such  adjustments   as   the
commissioner deems appropriate.
(C)  The  base  period  reported  operating  costs  used  to establish
inpatient and outpatient rates determined pursuant to this  subparagraph
shall  be  updated no less frequently than every two years and each such
hospital shall submit such  additional  data  as  the  commissioner  may
require to assist in the development of ambulatory patient groups (APGs)
rates for such hospitals' outpatient specialty services.
(D)  Notwithstanding  any  other provisions of law to the contrary and
subject to the availability of federal financial participation, for  all
rate  periods  on  and  after  April  first,  two thousand fourteen, the
operating component of outpatient specialty rates of  hospitals  subject
to this subparagraph shall be determined by the commissioner pursuant to

regulations,  including  emergency regulations, and in consultation with
such specialty outpatient facilities, provided  however,  that  for  the
period  beginning October first, two thousand thirteen through September
thirtieth, two thousand fourteen, services provided to patients enrolled
in  medicaid  managed  care  shall  be paid by the medicaid managed care
plans at no less than the otherwise applicable medicaid  fee-for-service
rates,  as  computed  in accordance with clause (B) of this subparagraph
for the period beginning October first, two  thousand  thirteen  through
March  thirty-first, two thousand fourteen and as computed in accordance
with this clause for the period  beginning  April  first,  two  thousand
fourteen through September thirtieth, two thousand fourteen.
(E) For facilities subject to the provisions of this subparagraph, the
department  shall examine the feasibility of reimbursing such facilities
for services provided to children eligible for medical assistance  on  a
non-fee-for-service    basis.    For    purposes    of    this   clause,
"non-fee-for-service" shall be defined as an alternative payment  method
to   bundle  certain  services  rendered  by  such  facility,  including
inpatient, outpatient, specialty outpatient and physician  services,  in
amounts determined by the commissioner. The department shall examine:
(a)    what    services    could   be   provided   pursuant   to   the
non-fee-for-service basis;
(b) how to ensure, for children enrolled  in  Medicaid  managed  care,
that  their  health  plans can continue to assist in the coordination of
their care, particularly upon discharge from  inpatient,  outpatient  or
specialty outpatient services; and
(c)  whether  incentives  should  be  incorporated for meeting quality
benchmarks or achieving efficiencies in the delivery and coordination of
care or whether other  means  should  be  considered  to  achieve  these
objectives.
The   department   shall   provide   a  report  of  its  findings  and
recommendations to the governor and  legislature  no  later  than  March
first, two thousand fifteen.
(v)  Rates  established  pursuant to this paragraph shall be deemed as
excluding reimbursement for physician services  for  inpatient  services
and  claims  for  Medicaid  fee payments for such physician services for
such inpatient care  may  be  submitted  separately  from  the  rate  in
accordance with otherwise applicable law.
(vi)  Capital  cost  reimbursement  for  general  hospitals  otherwise
subject to the provisions of this paragraph shall remain subject to  the
provisions of subdivision eight of this section.
(vii) The commissioner may promulgate regulations, including emergency
regulations,   implementing  the  provisions  of  this  paragraph,  and,
further, such regulations may provide for an update  of  the  base  year
costs and statistics used to compute such rates, provided, however, that
such base year update shall take effect no earlier than April first, two
thousand  fifteen,  and provided further, however, that the commissioner
may make such adjustments to such utilization and to the methodology for
computing such rates as is necessary to achieve no aggregate, net growth
in overall Medicaid expenditures related to such rates, as  compared  to
such  aggregate  expenditures  from  the  prior year. In determining the
updated base year to be utilized  pursuant  to  this  subparagraph,  the
commissioner  shall  take  into  account  the  base  year  determined in
accordance  with  paragraph  (c)  of  subdivision  thirty-five  of  this
section.
(viii)  The  operating  cost component of rates of payment pursuant to
this paragraph for a general hospital or  distinct  unit  of  a  general
hospital without adequate cost experience shall be based on the lower of

the  facility's  or  unit's  inpatient budgeted operating costs per day,
adjusted to actual, or the applicable regional ceiling, if any.
(ix)  The operating cost component of inpatient medicaid rates subject
to subparagraphs (i), (ii) and  (iii)  of  this  paragraph  shall,  with
regard  to  alternative  level  of care (ALC) days of care be subject to
computation pursuant to paragraph (h) of this subdivision.
* (f) where a general hospital having two hundred  or  less  certified
acute  care beds, based on the total number of inpatient acute care beds
for which such general hospital is certified pursuant to  the  operating
certificate  issued for such general hospital in accordance with section
twenty-eight hundred five of this article in effect on  June  thirtieth,
nineteen  hundred ninety, is classified as a rural hospital for purposes
of determining payment for inpatient services provided to  beneficiaries
of  title  XVIII  of the federal social security act (medicare) or under
state regulations, such general hospital may  at  its  option  have  its
reimbursable  inpatient  operating cost component of case based rates of
payment per diagnosis-related group based one  hundred  percent  on  the
general  hospital's  hospital-specific  average  reimbursable  inpatient
operating cost per discharge determined in accordance  with  subdivision
six  of this section; provided however, commencing April first, nineteen
hundred ninety-six the reimbursable inpatient operating  cost  component
of  case based rates of payment per diagnosis-related group for patients
eligible for payments made  by  state  governmental  agencies  shall  be
reduced   by   five  percent  to  encourage  improved  productivity  and
efficiency. Such election shall not alter the calculation of  the  group
price component calculated pursuant to subparagraph (i) of paragraph (a)
of subdivision seven of this section;
* NB There are 2 par. (f)'s
* (f)  where  a  general hospital having two hundred or less certified
acute care beds, based on the total number of inpatient acute care  beds
for  which  such general hospital is certified pursuant to the operating
certificate issued for such general hospital in accordance with  section
twenty-eight  hundred  five of this article in effect on June thirtieth,
nineteen hundred ninety, is classified as a rural hospital for  purposes
of  determining payment for inpatient services provided to beneficiaries
of title XVIII of the federal social security act  (medicare)  or  under
state  regulations,  such  general  hospital  may at its option have its
reimbursable inpatient operating cost component of case based  rates  of
payment  per  diagnosis-related  group  based one hundred percent on the
general  hospital's  hospital-specific  average  reimbursable  inpatient
operating  cost  per discharge determined in accordance with subdivision
six of this section; provided however,
(i) commencing April first, nineteen hundred ninety-six  through  July
thirty-first,  nineteen  hundred  ninety-six, the reimbursable inpatient
operating  cost  component  of  case  based   rates   of   payment   per
diagnosis-related group, excluding any operating cost components related
to  direct  and  indirect  expenses  of  graduate medical education, for
patients eligible for payments made by state governmental agencies shall
be reduced by five percent; and
(ii) commencing August  first,  nineteen  hundred  ninety-six  through
March  thirty-first,  nineteen  hundred  ninety-seven,  the reimbursable
inpatient operating cost component of case based rates  of  payment  per
diagnosis-related group, excluding any operating cost components related
to  direct  and  indirect  expenses  of  graduate medical education, for
patients eligible for payments made by state governmental agencies shall
be reduced by two and five-tenths percent; and
(iii) commencing April first, nineteen  hundred  ninety-seven  through
March  thirty-first,  nineteen  hundred  ninety-nine and commencing July

first, nineteen hundred  ninety-nine  through  March  thirty-first,  two
thousand  and  April first, two thousand through March thirty-first, two
thousand five and for periods commencing April first, two thousand  five
through  March thirty-first, two thousand six and for periods commencing
on and after April first, two thousand six through  March  thirty-first,
two thousand seven, and for periods commencing on and after April first,
two  thousand  seven  through March thirty-first, two thousand nine, and
for periods commencing on and  after  April  first,  two  thousand  nine
through  March  thirty-first,  two  thousand  eleven,  the  reimbursable
inpatient operating cost component of case based rates  of  payment  per
diagnosis-related group, excluding any operating cost components related
to  direct  and  indirect  expenses  of  graduate medical education, for
patients eligible for payments made by state governmental agencies shall
be reduced by three and thirty-three  hundredths  percent  to  encourage
improved  productivity and efficiency. Such election shall not alter the
calculation  of  the  group  price  component  calculated  pursuant   to
subparagraph (i) of paragraph (a) of subdivision seven of this section;
* NB Effective until December 31, 2026
* (f)  where  a  general hospital having two hundred or less certified
acute care beds, based on the total number of inpatient acute care  beds
for  which  such general hospital is certified pursuant to the operating
certificate issued for such general hospital in accordance with  section
twenty-eight  hundred  five of this article in effect on June thirtieth,
nineteen hundred ninety, is classified as a rural hospital for  purposes
of  determining payment for inpatient services provided to beneficiaries
of title XVIII of the federal social security act  (medicare)  or  under
state  regulations,  such  general  hospital  may at its option have its
reimbursable inpatient operating cost component of case based  rates  of
payment  per  diagnosis-related  group  based one hundred percent on the
general  hospital's  hospital-specific  average  reimbursable  inpatient
operating  cost  per discharge determined in accordance with subdivision
six of this section; provided however,
(i) commencing April first, nineteen hundred ninety-six  through  July
thirty-first,  nineteen  hundred  ninety-six, the reimbursable inpatient
operating  cost  component  of  case  based   rates   of   payment   per
diagnosis-related group, excluding any operating cost components related
to  direct  and  indirect  expenses  of  graduate medical education, for
patients eligible for payments made by state governmental agencies shall
be reduced by five percent; and
(ii) commencing August  first,  nineteen  hundred  ninety-six  through
March  thirty-first,  nineteen  hundred  ninety-seven,  the reimbursable
inpatient operating cost component of case based rates  of  payment  per
diagnosis-related group, excluding any operating cost components related
to  direct  and  indirect  expenses  of  graduate medical education, for
patients eligible for payments made by state governmental agencies shall
be reduced by two and five-tenths percent; and
(iii) commencing April first, nineteen  hundred  ninety-seven  through
March  thirty-first,  nineteen  hundred  ninety-nine and commencing July
first, nineteen hundred  ninety-nine  through  March  thirty-first,  two
thousand,  the  reimbursable  inpatient operating cost component of case
based rates  of  payment  per  diagnosis-related  group,  excluding  any
operating  cost  components  related  to direct and indirect expenses of
graduate medical education, for patients eligible for payments  made  by
state  governmental  agencies shall be reduced by three and thirty-three
hundredths percent to encourage improved  productivity  and  efficiency.
Such  election  shall  not  alter  the  calculation  of  the group price
component calculated pursuant to subparagraph (i) of  paragraph  (a)  of
subdivision seven of this section;
* NB Effective and expires December 31, 2026
* (f)  where  a  general hospital having two hundred or less certified
acute care beds, based on the total number of inpatient acute care  beds
for  which  such general hospital is certified pursuant to the operating
certificate issued for such general hospital in accordance with  section
twenty-eight  hundred  five of this article in effect on June thirtieth,
nineteen hundred ninety, is classified as a rural hospital for  purposes
of  determining payment for inpatient services provided to beneficiaries
of title XVIII of the federal social security act  (medicare)  or  under
state  regulations,  such  general  hospital  may at its option have its
reimbursable inpatient operating cost component of case based  rates  of
payment  per  diagnosis-related  group  based one hundred percent on the
general  hospital's  hospital-specific  average  reimbursable  inpatient
operating  cost  per discharge determined in accordance with subdivision
six of this section. Such election shall not alter  the  calculation  of
the  group  price  component  calculated pursuant to subparagraph (i) of
paragraph (a) of subdivision seven of this section;
* NB Effective December 31, 2026
* NB There are 2 par (f)'s
(g) in cases where general hospitals  or  distinct  units  of  general
hospitals,  other than those specified in paragraphs (e) and (f) of this
subdivision, may be excluded from case  based  payments  or  receive  an
adjustment to case based payment rates. An exclusion or adjustment shall
be  provided  only  where  the  council,  subject to the approval of the
commissioner, determines that the case based rates of payment determined
in accordance with this section would not reflect medically  appropriate
patterns  of  health  resource  use  for  such general hospital services
efficiently and economically provided. If an exclusion is provided, then
the  reimbursement  provisions  contained  in  paragraph  (e)  of   this
subdivision  shall  apply. The commissioner shall provide to the council
an analysis of the effect  of  case  based  payments  on  rural  general
hospitals  and  the  council,  subject  to  the  above  criteria and the
approval of the commissioner, may exclude for any  of  the  annual  rate
periods   beginning   on   or  after  January  first,  nineteen  hundred
eighty-eight any of these general hospitals from case based payments  or
provide  an  adjustment  to  the case based payments in addition to that
authorized in accordance with paragraph (f) of this subdivision;
(h) where alternate level of care (ALC) days are provided, a factor as
determined in subparagraph (i) of this paragraph for the costs of  these
patients  in  a  general  hospital shall not be included in computations
relating to the determination of general hospital case  based  rates  of
payment  pursuant to this section. Alternate level of care days shall be
days of care provided by a general hospital to a patient for whom it has
been determined that  inpatient  hospital  services  are  not  medically
necessary,  but  that post-hospital extended care services are medically
necessary and are being provided by the general hospital. Separate rates
of payment shall be established for such patients based on the level  of
care  required  and  shall  reflect:  (i)  operating  costs based on the
nineteen hundred eighty-seven regional average operating cost  component
of   rates  of  payment  for  hospital  based  residential  health  care
facilities determined in accordance with  section  twenty-eight  hundred
eight of this article and trended to the rate period, and (ii) additions
contained  in  subparagraph (iii) of paragraph (a) of subdivision one of
this section. In the  event  that  federal  financial  participation  in
payments  made  for  beneficiaries eligible for medical assistance under
title XIX of the federal  social  security  act  based  upon  the  rates
calculated  in  accordance  with  this  paragraph is not approved by the

federal  government,  the  council  subject  to  the  approval  of   the
commissioner shall adopt regulations for such payments;
(i)  if  diagnosis-related  groups  are not adjusted or established in
accordance with paragraph (a) of subdivision three of this  section  for
services  to  acquired  immune deficiency syndrome (AIDS) patients, then
general hospitals shall receive separate  payments  for  these  patients
based  on  regulations  adopted  by  the  council  and  approved  by the
commissioner;
(j) where general hospitals or distinct units of general hospitals are
excluded from or receive  an  adjustment  to  case  based  payments  per
diagnosis-related  group in accordance with paragraph (e), (f) or (g) of
this subdivision, reimbursement  shall  continue  to  be  calculated  in
accordance  with  such  paragraph until the beginning of the rate period
immediately following the date when the general hospital or the distinct
unit of the general hospital is no longer excluded  from  or  no  longer
receives  an  adjustment  to  case  based payments per diagnosis-related
group for inpatient services provided to beneficiaries of title XVIII of
the  federal  social  security  act  (medicare),  or  until  appropriate
diagnosis-related groups have been developed for the specialized service
provided  by  the  general  hospital  or  distinct  unit  of the general
hospital, pursuant  to  paragraph  (a)  of  subdivision  three  of  this
section; and
* (k)  for  facilities  designated by the federal department of health
and human services as an exempt acute care children's hospital,  payment
effective January first, nineteen hundred ninety-four will be based upon
a  hospital specific case payment amount inclusive of high cost and high
length of stay outlier costs. The  nineteen  hundred  eighty-seven  base
year  cost,  trended,  volume  adjusted  and  case  mix  adjusted  where
applicable to nineteen hundred ninety-two, trended will be  utilized  to
determine  the rate of payment effective January first, nineteen hundred
ninety-four. Commencing April first, nineteen  hundred  ninety-six,  the
operating  cost  component of rates of payment for patients eligible for
payments made by a state governmental agency shall be  reduced  by  five
percent  to encourage improved productivity and efficiency. The facility
will be eligible to receive the financial incentives for  the  physician
specialty   weighting   incentive   towards  primary  care  pursuant  to
subparagraph (ii) of paragraph (a) of subdivision  twenty-five  of  this
section.
* NB There are 2 par (k)'s
* (k)  for  facilities  designated by the federal department of health
and human services as an exempt acute care children's hospital,  payment
effective January first, nineteen hundred ninety-four will be based upon
a  hospital specific case payment amount inclusive of high cost and high
length of stay outlier costs. The  nineteen  hundred  eighty-seven  base
year  cost,  trended,  volume  adjusted  and  case  mix  adjusted  where
applicable to nineteen hundred ninety-two, trended will be  utilized  to
determine  the rate of payment effective January first, nineteen hundred
ninety-four.
(i) Commencing April first, nineteen hundred ninety-six  through  July
thirty-first,  nineteen hundred ninety-six, the operating cost component
of rates of payment, excluding any operating cost components related  to
direct and indirect expenses of graduate medical education, for patients
eligible  for  payments  made  by  a  state governmental agency shall be
reduced by five percent; and
(ii) commencing August  first,  nineteen  hundred  ninety-six  through
March  thirty-first,  nineteen  hundred  ninety-seven the operating cost
component of rates of payment, excluding any operating  cost  components
related  to  direct and indirect expenses of graduate medical education,

for patients eligible for payments made by a state  governmental  agency
shall be reduced by two and five-tenths percent; and
(iii)  commencing  April  first, nineteen hundred ninety-seven through
March thirty-first, nineteen hundred  ninety-nine  and  commencing  July
first,  nineteen  hundred  ninety-nine  through  March thirty-first, two
thousand and April first, two thousand through March  thirty-first,  two
thousand  five  and  commencing  April  first, two thousand five through
March thirty-first, two thousand six, and for periods commencing on  and
after  April  first,  two  thousand  six through March thirty-first, two
thousand seven, and for periods commencing on and after April first, two
thousand seven through March thirty-first, two thousand  nine,  and  for
periods  commencing  on and after April first, two thousand nine through
March thirty-first, two thousand eleven, the operating cost component of
rates of payment, excluding any operating  cost  components  related  to
direct and indirect expenses of graduate medical education, for patients
eligible  for  payments  made  by  a  state governmental agency shall be
reduced by  three  and  thirty-three  hundredths  percent  to  encourage
improved  productivity  and efficiency. The facility will be eligible to
receive the financial incentives for the physician  specialty  weighting
incentive   towards  primary  care  pursuant  to  subparagraph  (ii)  of
paragraph (a) of subdivision twenty-five of this section.
* NB Effective until December 31, 2026
* (k) for facilities designated by the federal  department  of  health
and  human services as an exempt acute care children's hospital, payment
effective January first, nineteen hundred ninety-four will be based upon
a hospital specific case payment amount inclusive of high cost and  high
length  of  stay  outlier  costs. The nineteen hundred eighty-seven base
year  cost,  trended,  volume  adjusted  and  case  mix  adjusted  where
applicable  to  nineteen hundred ninety-two, trended will be utilized to
determine the rate of payment effective January first, nineteen  hundred
ninety-four.
(i)  Commencing  April first, nineteen hundred ninety-six through July
thirty-first, nineteen hundred ninety-six, the operating cost  component
of  rates of payment, excluding any operating cost components related to
direct and indirect expenses of graduate medical education for  patients
eligible  for  payments  made  by  a  state governmental agency shall be
reduced by five percent; and
(ii) commencing August  first,  nineteen  hundred  ninety-six  through
March  thirty-first,  nineteen  hundred  ninety-seven the operating cost
component of rates of payment, excluding any operating  cost  components
related  to  direct and indirect expenses of graduate medical education,
for patients eligible for payments made by a state  governmental  agency
shall be reduced by two and five-tenths percent; and
(iii)  commencing  April  first, nineteen hundred ninety-seven through
March thirty-first, nineteen hundred  ninety-nine  and  commencing  July
first,  nineteen  hundred  ninety-nine  through  March thirty-first, two
thousand, the operating cost component of rates  of  payment,  excluding
any operating cost components related to direct and indirect expenses of
graduate medical education, for patients eligible for payments made by a
state  governmental  agency  shall  be reduced by three and thirty-three
hundredths percent to encourage improved  productivity  and  efficiency.
The  facility  will  be eligible to receive the financial incentives for
the  physician  specialty  weighting  incentive  towards  primary   care
pursuant   to   subparagraph   (ii)  of  paragraph  (a)  of  subdivision
twenty-five of this section.
* NB Effective and expires December 31, 2026
* (k) for facilities designated by the federal  department  of  health
and  human services as an exempt acute care children's hospital, payment

effective January first, nineteen hundred ninety-four will be based upon
a hospital specific case payment amount inclusive of high cost and  high
length  of  stay  outlier  costs. The nineteen hundred eighty-seven base
year  cost,  trended,  volume  adjusted  and  case  mix  adjusted  where
applicable to nineteen hundred ninety-two, trended will be  utilized  to
determine  the rate of payment effective January first, nineteen hundred
ninety-four. The facility will be  eligible  to  receive  the  financial
incentives  for  the  physician  specialty  weighting  incentive towards
primary  care  pursuant  to  subparagraph  (ii)  of  paragraph  (a)   of
subdivision twenty-five of this section.
* NB Effective December 31, 2026
* NB There are 2 par (k)'s
(l)  Notwithstanding  any  inconsistent  provision of this section and
subject to the availability of federal financial participation, rates of
payment  by  governmental  agencies  for  general  hospitals  which  are
certified  by  the  office of alcoholism and substance abuse services to
provide inpatient  detoxification  and  withdrawal  services  and,  with
regard  to  inpatient  services  provided  to patients discharged on and
after December first, two thousand eight and who are determined to be in
diagnosis-related groups as defined by the commissioner and published on
the New York state department of health website, shall be made on a  per
diem basis in accordance with the following:
(i)  for  the  period December first, two thousand eight through March
thirty-first, two thousand nine, seventy-five percent of  the  operating
cost  component  of  such  rates of payments shall reflect the operating
cost component of rates of payment effective for December  thirty-first,
two  thousand seven, as adjusted for inflation pursuant to paragraph (c)
of subdivision ten  of  this  section,  as  otherwise  modified  by  any
applicable statutes, and twenty-five percent of such rates shall reflect
the use of two thousand six operating costs as reported by each facility
to  the  department  prior  to  two  thousand  eight  and as computed in
accordance with the provisions of subparagraph (iv) of this paragraph;
(ii) for the period April  first,  two  thousand  nine  through  March
thirty-first,  two thousand ten, thirty-seven and five tenths percent of
the operating cost component of such rates of payment shall reflect  the
operating   cost  component  of  rates  of  payment  effective  December
thirty-first, two thousand seven, as adjusted for inflation pursuant  to
paragraph  (c) of subdivision ten of this section, as otherwise modified
by any applicable statutes, and sixty-two and  five  tenths  percent  of
such  rates  of  payment  shall  reflect  the  use  of  two thousand six
operating costs as reported by each facility to the department prior  to
two  thousand eight and as computed in accordance with the provisions of
subparagraph (iv) of this paragraph;
(iii) for periods on and after April  first,  two  thousand  ten,  one
hundred percent of the operating cost component of such rates of payment
shall reflect the use of two thousand six operating costs as reported to
the department prior to two thousand eight and as computed in accordance
with the provisions of subparagraph (iv) of this paragraph.
(iv)  rates  of payment computed in accordance with this paragraph and
reflecting the use of two thousand six base year operating  costs  shall
be in accord with the following, provided, however that the commissioner
may  establish  criteria  under  which  reimbursement may be provided at
higher percentages and for longer periods.
(A) For each of the regions within the state as  described  in  clause
(E)  of  this  subparagraph the commissioner shall determine the average
per diem cost incurred by general hospitals in that  region  subject  to
the  provisions  of  this  paragraph with regard to inpatients requiring
medically managed detoxification  services,  as  defined  by  applicable

regulations  promulgated by the office of alcoholism and substance abuse
services. In determining such costs the commissioner shall  utilize  two
thousand  six  costs and statistics as reported by such hospitals to the
department prior to two thousand eight.
(B)  Per  diem  payments  for  inpatients  requiring medically managed
inpatient detoxification services shall reflect one hundred  percent  of
the   per   diem  amounts  computed  pursuant  to  clause  (A)  of  this
subparagraph for the applicable region in which the facility is  located
and  as  trended forward to adjust for inflation, provided however, that
such payments shall be reduced by fifty percent for  any  such  services
provided  on or after the sixth day of services through the tenth day of
services, and further provided that no payments shall be  made  for  any
services provided on or after the eleventh day.
(C)  Per  diem  payments for inpatients requiring medically supervised
withdrawal services, as defined by applicable regulations promulgated by
the office of alcoholism and substance abuse services, shall reflect one
hundred percent of the per diem amounts computed pursuant to clause  (A)
of  this subparagraph for the applicable region in which the facility is
located for the period January first, two thousand nine through December
thirty-first, two thousand nine, and as trended forward  to  adjust  for
inflation,  and  shall  reflect  seventy-five  percent  of such per diem
amounts for periods on and after January first,  two  thousand  ten,  as
trended  forward  to  adjust for inflation, provided, however, that such
payments shall be reduced by fifty percent for any services provided  on
or  after  the  sixth day of services through the tenth day of services,
and further provided that no payments shall be  made  for  any  services
provided on and after the eleventh day.
(D)  Per  diem  payments for inpatients placed in observation beds, as
defined  by  applicable  regulations  promulgated  by  the   office   of
alcoholism  and  substance abuse services, shall be at the same level as
would be paid pursuant  to  clause  (A)  of  this  paragraph,  provided,
however,  that  such  payments shall not apply for more than two days of
care, after which payments  for  such  inpatients  shall  reflect  their
designation   as   requiring  either  medically  managed  detoxification
services  or  medically  supervised  withdrawal  services,  and  further
provided  that days of care provided in such observation beds shall, for
reimbursement purposes, be fully reflected in  the  computation  of  the
initial  five  days  of care as set forth in clauses (A) and (B) of this
subparagraph.
(E) For the purposes of this paragraph, the regions of the state shall
be as follows:
(I) New York city, consisting of the  counties  of  Bronx,  New  York,
Kings, Queens and Richmond;
(II) Long Island, consisting of the counties of Nassau and Suffolk;
(III)  Northern  metropolitan, consisting of the counties of Columbia,
Delaware, Dutchess,  Orange,  Putnam,  Rockland,  Sullivan,  Ulster  and
Westchester;
(IV)  Northeast, consisting of the counties of Albany, Clinton, Essex,
Fulton, Greene, Hamilton, Montgomery, Rensselaer, Saratoga, Schenectady,
Schoharie, Warren and Washington;
(V) Utica/Watertown, consisting of the counties of Franklin, Herkimer,
Lewis, Oswego, Otsego, St. Lawrence, Jefferson,  Chenango,  Madison  and
Oneida;
(VI)  Central,  consisting of the counties of Broome, Cayuga, Chemung,
Cortland, Onondaga, Schuyler, Seneca, Steuben, Tioga and Tompkins;
(VII) Rochester, consisting of Monroe, Ontario, Livingston, Wayne  and
Yates;
(VIII)  Western,  consisting of the counties of Allegany, Cattaraugus,
Chautauqua, Erie, Genesee, Niagara, Orleans and Wyoming.
(F) Capital cost reimbursement for general hospitals otherwise subject
to  the  provisions  of  this  paragraph  shall  remain  subject  to the
provisions of subdivision eight of this section.
(v) the commissioner may promulgate regulations,  including  emergency
regulations,  providing  for  an  update  of  the  base  year  costs and
statistics used to compute rates of payment pursuant to this  paragraph,
provided,  however,  that  such  base  year  update shall take effect no
earlier than April first, two thousand fifteen,  and  provided  further,
however,  that  the  commissioner  may  make  such  adjustments  to such
utilization and to the  methodology  for  computing  such  rates  as  is
necessary  to  achieve  no  aggregate,  net  growth  in overall Medicaid
expenditures related to  such  rates,  as  compared  to  such  aggregate
expenditures  from  the prior year. In determining the updated base year
to be utilized pursuant to this  subparagraph,  the  commissioner  shall
take  into account the base year determined in accordance with paragraph
(c) of subdivision thirty-five of this section.
5.  Reimbursable  inpatient  operating   cost   component.   (a)   The
reimbursable  inpatient  operating cost component of case based rates of
payment per  diagnosis-related  group  for  general  hospital  inpatient
hospital  services  shall  be  the  product  of the average reimbursable
inpatient operating cost per discharge  determined  in  accordance  with
paragraph  (b)  of  this subdivision, adjusted by a third-party payor of
hospital  services  for  uncovered  services  by  such  payor,  and  the
weighting  factors  determined  in  accordance  with  paragraph  (c)  of
subdivision three of this section.
(b) (i) For the rate year January first, nineteen hundred eighty-eight
through December thirty-first, nineteen  hundred  eighty-eight,  average
reimbursable inpatient operating cost per discharge shall be a composite
sum   of   no  less  than  ninety  percent  of  the  general  hospital's
hospital-specific average  reimbursable  inpatient  operating  cost  per
discharge determined in accordance with paragraph (a) of subdivision six
of this section and a percentage amount not to exceed ten percent of the
general   hospital's   group  category  average  inpatient  reimbursable
operating cost per  discharge  (price)  determined  in  accordance  with
paragraph  (a)  of  subdivision  seven  of  this  section  such that the
composite sum equals one hundred percent.
(ii) For the rate year  commencing  January  first,  nineteen  hundred
eighty-nine, average reimbursable inpatient operating cost per discharge
shall  be  a  composite  sum of no less than seventy-five percent of the
general  hospital's  hospital-specific  average  reimbursable  inpatient
operating cost per discharge determined in accordance with paragraph (a)
of subdivision six of this section and a percentage amount not to exceed
twenty-five  percent  of  the  general hospital's group category average
inpatient reimbursable operating cost per discharge  (price)  determined
in  accordance  with paragraph (a) of subdivision seven of this section,
such that the composite sum equals one hundred percent.
(iii) Except as provided in  clause  (C)  of  this  subparagraph,  for
annual rate years commencing on or after January first, nineteen hundred
ninety,  average  reimbursable  inpatient  operating  cost per discharge
shall be a composite sum of no  less  than  forty-five  percent  of  the
general  hospital's  hospital-specific  average  reimbursable  inpatient
operating cost per discharge determined in accordance with paragraph (a)
of subdivision six of this section and a percentage amount not to exceed
fifty-five percent of the  general  hospital's  group  category  average
inpatient  reimbursable  operating cost per discharge (price) determined

in accordance with paragraph (a) of subdivision seven of  this  section,
such that the composite sum equals one hundred percent.
** (A)  Except  as  provided  in  clause  (B) of this subparagraph and
subparagraph (iv) of this paragraph, for annual rate years commencing on
or after January first, nineteen hundred  ninety,  average  reimbursable
inpatient  operating  cost  per discharge shall be a composite sum of no
less than forty-five percent of the general hospital's hospital-specific
average reimbursable inpatient operating cost per  discharge  determined
in  accordance with paragraph (a) of subdivision six of this section and
a percentage amount not to exceed  fifty-five  percent  of  the  general
hospital's  group category average inpatient reimbursable operating cost
per discharge (price) determined in accordance  with  paragraph  (a)  of
subdivision  seven  of  this section, such that the composite sum equals
one hundred percent.
** NB There are 2 clause (A)'s
** (A) Except as provided in clauses (B) and (C) of this  subparagraph
and  subparagraphs (iv), (v) and (vi) of this paragraph, for annual rate
years commencing on or after January  first,  nineteen  hundred  ninety,
average  reimbursable  inpatient operating cost per discharge shall be a
composite sum  of  no  less  than  forty-five  percent  of  the  general
hospital's  hospital-specific  average  reimbursable inpatient operating
cost per discharge  determined  in  accordance  with  paragraph  (a)  of
subdivision  six  of  this section and a percentage amount not to exceed
fifty-five percent of the  general  hospital's  group  category  average
inpatient  reimbursable  operating cost per discharge (price) determined
in accordance with paragraph (a) of subdivision seven of  this  section,
such that the composite sum equals one hundred percent.
** NB Effective until December 31, 2026
** (A)  Except  as  provided  in  clause (B) of this subparagraph, for
annual rate years commencing on or after January first, nineteen hundred
ninety, average reimbursable  inpatient  operating  cost  per  discharge
shall  be  a  composite  sum  of  no less than forty-five percent of the
general  hospital's  hospital-specific  average  reimbursable  inpatient
operating cost per discharge determined in accordance with paragraph (a)
of subdivision six of this section and a percentage amount not to exceed
fifty-five  percent  of  the  general  hospital's group category average
inpatient reimbursable operating cost per discharge  (price)  determined
in  accordance  with paragraph (a) of subdivision seven of this section,
such that the composite sum equals one hundred percent.
** NB Effective December 31, 2026
** NB There are 2 clause (A)'s
* (B) For  discharges  on  or  after  April  first,  nineteen  hundred
ninety-five for purposes of reimbursement of inpatient hospital services
for  patients  eligible for payments made by state governmental agencies
assigned to one of the twenty most common diagnosis-related  groups  for
all general hospitals, the average reimbursable inpatient operating cost
per discharge of a general hospital shall be the lower of (I) the amount
determined  in  accordance  with clause (A) of this subparagraph or (II)
the average amount determined in accordance  with  clause  (A)  of  this
subparagraph  for  all  general hospitals in the group category to which
the hospital is  assigned.  The  twenty  most  common  diagnosis-related
groups  shall  be determined using discharge data for the year two years
prior  to  the  rate  year  for   all   general   hospitals,   excluding
beneficiaries  of  title  XVIII  of  the  federal  social  security  act
(medicare) and patients assigned to diagnosis related groups  for  human
immunodeficiency  virus  (HIV)  infection,  acquired  immune  deficiency
syndrome,  alcohol/drug  use  or  alcohol/drug  induced  organic  mental
disorders, and exempt unit or exempt hospital patients.
* NB Expired March 31, 2011
* (C)  (I)  For  discharges  on  or after July first, two thousand six
through December thirty-first, two thousand  six,  and  subject  to  the
availability  of  federal  financial  participation, rates of payment by
state governmental agencies  to  Westchester  medical  center  shall  be
increased  by  an  aggregate  amount  of  twenty-five million dollars to
assist the medical center to  maintain  critically  needed  health  care
services.
(II)  For  discharges  on  or  after January first, two thousand seven
through December thirty-first, two thousand seven, and  subject  to  the
availability  of  federal  financial  participation, rates of payment by
state governmental agencies  to  Westchester  medical  center  shall  be
increased  by  an  aggregate  amount  of  twenty-five million dollars to
assist the medical center to  maintain  critically  needed  health  care
services.
(III)  For  discharges  on  or after January first, two thousand eight
through December thirty-first, two thousand eight, and  subject  to  the
availability  of  federal  financial  participation, rates of payment by
state governmental agencies  to  Westchester  medical  center  shall  be
increased  by  an  aggregate  amount  of  twenty-five million dollars to
assist the medical center to  maintain  critically  needed  health  care
services.
* NB Expired March 31, 2011
* (iv)  for  discharges  on  or  after  April  first, nineteen hundred
ninety-six for purposes of reimbursement of inpatient hospital  services
for  patients eligible for payments made by state governmental agencies,
the average reimbursable inpatient operating cost  per  discharge  of  a
general hospital shall be the sum of:
(A)   the   amount   determined  in  accordance  with  clause  (B)  of
subparagraph (iii) of this paragraph,  excluding  the  value  of  direct
medical  education expenses, as defined in subparagraph (i) of paragraph
(c) of subdivision seven of  this  section,  reflected  in  the  general
hospital's  hospital-specific  average  reimbursable inpatient operating
cost per discharge and group  category  average  inpatient  reimbursable
operating  cost  per  discharge,  and  excluding the value of forty-five
percent of the  indirect  medical  education  expenses,  as  defined  in
subparagraph (ii) of paragraph (c) of subdivision seven of this section,
reflected   in   the   general   hospital's  hospital  specific  average
reimbursable inpatient operating cost per discharge, and  excluding  the
value  of  fifty-five percent of the indirect medical education expenses
reflected in a  general  hospital's  group  category  average  inpatient
reimbursable operating cost per discharge in accordance with subdivision
twenty-five of this section as amended;
(B)  minus  five  percent  of the amount determined in accordance with
clause (A) of this subparagraph;
(C) plus the value of direct medical education expenses, as defined in
subparagraph (i) of paragraph (c) of subdivision seven of this  section,
reflected   in   the   general   hospital's   hospital-specific  average
reimbursable inpatient operating cost per discharge and  group  category
average inpatient reimbursable operating cost per discharge;
(D)  minus  five  percent  of  the  costs of hospital based physicians
reflected  in  the  direct  medical  education  amount   determined   in
accordance with clause (C) of this subparagraph;
(E)  plus  the  value  of  forty-five  percent of the indirect medical
education expenses, as defined in subparagraph (ii) of paragraph (c)  of
subdivision  seven  of this section, reflected in the general hospital's
hospital-specific average  reimbursable  inpatient  operating  cost  per
discharge; and
(F)  plus  the  value  of  fifty-five  percent of the indirect medical
education expenses reflected in the general  hospital's  group  category
average  inpatient  operating  cost  per  discharge  in  accordance with
subdivision twenty-five of this section as amended.
* NB There are 3 subpar (iv)'s
* (iv)  for  discharges  on  or  after  April  first, nineteen hundred
ninety-six for purposes of reimbursement of inpatient hospital  services
for  patients eligible for payments made by state governmental agencies,
the average reimbursable inpatient operating cost  per  discharge  of  a
general hospital shall to encourage improved productivity and efficiency
be the sum of:
(A)   the   amount   determined  in  accordance  with  clause  (B)  of
subparagraph (iii) of this paragraph,  excluding  the  value  of  direct
medical  education expenses, as defined in subparagraph (i) of paragraph
(c) of subdivision seven of  this  section,  reflected  in  the  general
hospital's  hospital-specific  average  reimbursable inpatient operating
cost per discharge and group  category  average  inpatient  reimbursable
operating  cost  per  discharge,  and  excluding the value of forty-five
percent of the  indirect  medical  education  expenses,  as  defined  in
subparagraph (ii) of paragraph (c) of subdivision seven of this section,
reflected   in   the   general   hospital's  hospital  specific  average
reimbursable inpatient operating cost per discharge, and  excluding  the
value  of  fifty-five percent of the indirect medical education expenses
reflected in a  general  hospital's  group  category  average  inpatient
reimbursable operating cost per discharge in accordance with subdivision
twenty-five of this section as amended;
(B)  minus  five  percent  of the amount determined in accordance with
clause (A) of this subparagraph;
(C) plus the value of direct medical education expenses, as defined in
subparagraph (i) of paragraph (c) of subdivision seven of this  section,
reflected   in   the   general   hospital's   hospital-specific  average
reimbursable inpatient operating cost per discharge and  group  category
average inpatient reimbursable operating cost per discharge;
(D)  minus  five  percent  of  the  costs of hospital based physicians
reflected  in  the  direct  medical  education  amount   determined   in
accordance with clause (C) of this subparagraph;
(E)  plus  the  value  of  forty-five  percent of the indirect medical
education expenses, as defined in subparagraph (ii) of paragraph (c)  of
subdivision  seven  of this section, reflected in the general hospital's
hospital-specific average  reimbursable  inpatient  operating  cost  per
discharge; and
(F)  plus  the  value  of  fifty-five  percent of the indirect medical
education expenses reflected in the general  hospital's  group  category
average  inpatient  operating  cost  per  discharge  in  accordance with
subdivision twenty-five of this section as amended.
* NB There are 3 subpar (iv)'s
* (iv) for discharges  on  or  after  April  first,  nineteen  hundred
ninety-six  through  July  thirty-first, nineteen hundred ninety-six for
purposes of reimbursement of inpatient hospital  services  for  patients
eligible  for  payments made by state governmental agencies, the average
reimbursable  inpatient  operating  cost  per  discharge  of  a  general
hospital  shall,  to  encourage improved productivity and efficiency, be
the sum of:
(A)  the  amount  determined  in  accordance  with   clause   (B)   of
subparagraph  (iii)  of  this  paragraph,  excluding the value of direct
medical education expenses, as defined in subparagraph (i) of  paragraph
(c)  of  subdivision  seven  of  this  section, reflected in the general
hospital's hospital-specific average  reimbursable  inpatient  operating

cost  per  discharge  and  group category average inpatient reimbursable
operating cost per discharge, and  excluding  the  value  of  forty-five
percent  of  the  indirect  medical  education  expenses,  as defined in
subparagraph (ii) of paragraph (c) of subdivision seven of this section,
reflected   in   the   general   hospital's  hospital  specific  average
reimbursable inpatient operating cost per discharge, and  excluding  the
value  of  fifty-five percent of the indirect medical education expenses
reflected in a  general  hospital's  group  category  average  inpatient
reimbursable operating cost per discharge in accordance with subdivision
twenty-five of this section as amended;
(B)  minus  five  percent  of the amount determined in accordance with
clause (A) of this subparagraph;
(C) plus the value of direct medical education expenses, as defined in
subparagraph (i) of paragraph (c) of subdivision seven of this  section,
reflected   in   the   general   hospital's   hospital-specific  average
reimbursable inpatient operating cost per discharge and  group  category
average inpatient reimbursable operating cost per discharge;
(D)  minus  five  percent  of  the  costs of hospital based physicians
reflected  in  the  direct  medical  education  amount   determined   in
accordance with clause (C) of this subparagraph;
(E)  plus  the  value  of  forty-five  percent of the indirect medical
education expenses, as defined in subparagraph (ii) of paragraph (c)  of
subdivision  seven  of this section, reflected in the general hospital's
hospital-specific average  reimbursable  inpatient  operating  cost  per
discharge; and
(F)  plus  the  value  of  fifty-five  percent of the indirect medical
education expenses reflected in the general  hospital's  group  category
average  inpatient  operating  cost  per  discharge  in  accordance with
subdivision twenty-five of this section as amended.
* NB Expires December 31, 2026
* NB There are 3 subpar (iv)'s
* (v) for discharges  on  or  after  August  first,  nineteen  hundred
ninety-six through March thirty-first, nineteen hundred ninety-seven for
purposes  of  reimbursement  of inpatient hospital services for patients
eligible for payments made by state governmental agencies,  the  average
reimbursable  inpatient  operating  cost  per  discharge  of  a  general
hospital shall, to encourage improved productivity  and  efficiency,  be
the sum of:
(A)   the   amount   determined  in  accordance  with  clause  (B)  of
subparagraph (iii) of this paragraph,  excluding  the  value  of  direct
medical  education expenses, as defined in subparagraph (i) of paragraph
(c) of subdivision seven of  this  section,  reflected  in  the  general
hospital's  hospital-specific  average  reimbursable inpatient operating
cost per discharge and group  category  average  inpatient  reimbursable
operating  cost  per  discharge,  and  excluding the value of forty-five
percent of the  indirect  medical  education  expenses,  as  defined  in
subparagraph (ii) of paragraph (c) of subdivision seven of this section,
reflected   in   the   general   hospital's  hospital  specific  average
reimbursable inpatient operating cost per discharge, and  excluding  the
value  of  fifty-five percent of the indirect medical education expenses
reflected in a  general  hospital's  group  category  average  inpatient
reimbursable operating cost per discharge in accordance with subdivision
twenty-five of this section as amended;
(B)  minus  two  and  five-tenths  percent of the amount determined in
accordance with clause (A) of this subparagraph;
(C) plus the value of direct medical education expenses, as defined in
subparagraph (i) of paragraph (c) of subdivision seven of this  section,
reflected   in   the   general   hospital's   hospital-specific  average

reimbursable inpatient operating cost per discharge and  group  category
average inpatient reimbursable operating cost per discharge;
(D)  minus  two and five-tenths percent of the costs of hospital based
physicians reflected in the direct medical education  amount  determined
in accordance with clause (C) of this subparagraph;
(E)  plus  the  value  of  forty-five  percent of the indirect medical
education expenses, as defined in subparagraph (ii) of paragraph (c)  of
subdivision  seven  of this section, reflected in the general hospital's
hospital-specific average  reimbursable  inpatient  operating  cost  per
discharge; and
(F)  plus  the  value  of  fifty-five  percent of the indirect medical
education expenses reflected in the general  hospital's  group  category
average  inpatient  operating  cost  per  discharge  in  accordance with
subdivision twenty-five of this section as amended.
* NB Expires December 31, 2026
* (vi) for discharges  on  or  after  April  first,  nineteen  hundred
ninety-seven  through  March  thirty-first, nineteen hundred ninety-nine
and for discharges on or after July first, nineteen hundred  ninety-nine
through  March thirty-first, two thousand and for discharges on or after
April first, two thousand through March thirty-first, two thousand  five
and  for  discharges  on or after April first, two thousand five through
March thirty-first, two thousand six, and for  discharges  on  or  after
April  first,  two thousand six through March thirty-first, two thousand
seven, and for discharges on or after April first,  two  thousand  seven
through  March thirty-first, two thousand nine, and for discharges on or
after April first, two thousand nine  through  March  thirty-first,  two
thousand  eleven,  for  purposes  of reimbursement of inpatient hospital
services for patients eligible for payments made by  state  governmental
agencies,   the   average  reimbursable  inpatient  operating  cost  per
discharge  of  a  general  hospital   shall,   to   encourage   improved
productivity and efficiency, be the sum of:
(A)   the   amount   determined  in  accordance  with  clause  (B)  of
subparagraph (iii) of this paragraph,  excluding  the  value  of  direct
medical  education expenses, as defined in subparagraph (i) of paragraph
(c) of subdivision seven of  this  section,  reflected  in  the  general
hospital's  hospital-specific  average  reimbursable inpatient operating
cost per discharge and group  category  average  inpatient  reimbursable
operating  cost  per  discharge,  and  excluding the value of forty-five
percent of the  indirect  medical  education  expenses,  as  defined  in
subparagraph (ii) of paragraph (c) of subdivision seven of this section,
reflected   in   the   general   hospital's   hospital-specific  average
reimbursable inpatient operating cost per discharge, and  excluding  the
value  of  fifty-five percent of the indirect medical education expenses
reflected in a  general  hospital's  group  category  average  inpatient
reimbursable operating cost per discharge in accordance with subdivision
twenty-five of this section as amended;
(B)  minus  three  and  thirty-three  hundredths percent of the amount
determined in accordance with clause (A) of this subparagraph;
(C) plus the value of direct medical education expenses, as defined in
subparagraph (i) of paragraph (c) of subdivision seven of this  section,
reflected   in   the   general   hospital's   hospital-specific  average
reimbursable inpatient operating cost per discharge and  group  category
average inpatient reimbursable operating cost per discharge;
(D)  minus  three  and thirty-three hundredths percent of the costs of
hospital based physicians reflected  in  the  direct  medical  education
amount determined in accordance with clause (C) of this subparagraph;
(E)  plus  the  value  of  forty-five  percent of the indirect medical
education expenses, as defined in subparagraph (ii) of paragraph (c)  of

subdivision  seven  of this section, reflected in the general hospital's
hospital-specific average  reimbursable  inpatient  operating  cost  per
discharge; and
(F)  plus  the  value  of  fifty-five  percent of the indirect medical
education expenses reflected in the general  hospital's  group  category
average  inpatient  operating  cost  per  discharge  in  accordance with
subdivision twenty-five of this section as amended.
* NB Effective until December 31, 2026
* (vi) for discharges  on  or  after  April  first,  nineteen  hundred
ninety-seven  through  March  thirty-first, nineteen hundred ninety-nine
and for discharges on or after July first, nineteen hundred  ninety-nine
through  March  thirty-first, two thousand for purposes of reimbursement
of inpatient hospital services for patients eligible for  payments  made
by  state  governmental  agencies,  the  average  reimbursable inpatient
operating cost per discharge of a general hospital shall,  to  encourage
improved productivity and efficiency, be the sum of:
(A)   the   amount   determined  in  accordance  with  clause  (B)  of
subparagraph (iii) of this paragraph,  excluding  the  value  of  direct
medical  education expenses, as defined in subparagraph (i) of paragraph
(c) of subdivision seven of  this  section,  reflected  in  the  general
hospital's  hospital-specific  average  reimbursable inpatient operating
cost per discharge and group  category  average  inpatient  reimbursable
operating  cost  per  discharge,  and  excluding the value of forty-five
percent of the  indirect  medical  education  expenses,  as  defined  in
subparagraph (ii) of paragraph (c) of subdivision seven of this section,
reflected   in   the   general   hospital's   hospital-specific  average
reimbursable inpatient operating cost per discharge, and  excluding  the
value  of  fifty-five percent of the indirect medical education expenses
reflected in a  general  hospital's  group  category  average  inpatient
reimbursable operating cost per discharge in accordance with subdivision
twenty-five of this section as amended;
(B)  minus  three  and  thirty-three  hundredths percent of the amount
determined in accordance with clause (A) of this subparagraph;
(C) plus the value of direct medical education expenses, as defined in
subparagraph (i) of paragraph (c) of subdivision seven of this  section,
reflected   in   the   general   hospital's   hospital-specific  average
reimbursable inpatient operating cost per discharge and  group  category
average inpatient reimbursable operating cost per discharge;
(D)  minus  three  and thirty-three hundredths percent of the costs of
hospital based physicians reflected  in  the  direct  medical  education
amount determined in accordance with clause (C) of this subparagraph;
(E)  plus  the  value  of  forty-five  percent of the indirect medical
education expenses, as defined in subparagraph (ii) of paragraph (c)  of
subdivision  seven  of this section, reflected in the general hospital's
hospital-specific average  reimbursable  inpatient  operating  cost  per
discharge; and
(F)  plus  the  value  of  fifty-five  percent of the indirect medical
education expenses reflected in the general  hospital's  group  category
average  inpatient  operating  cost  per  discharge  in  accordance with
subdivision twenty-five of this section as amended.
* NB Effective and expires December 31, 2026
* (c) Notwithstanding any  inconsistent  provision  of  this  section,
commencing   July  first,  nineteen  hundred  ninety-six  through  March
thirty-first, nineteen hundred  ninety-nine  and  July  first,  nineteen
hundred  ninety-nine  through March thirty-first, two thousand and April
first, two thousand through March thirty-first, two  thousand  five  and
for  periods  on  and after April first, two thousand five through March
thirty-first, two thousand six, and  for  periods  on  and  after  April

first,  two thousand six through March thirty-first, two thousand seven,
and for periods on and after April first,  two  thousand  seven  through
March  thirty-first,  two  thousand  nine,  and for periods on and after
April  first, two thousand nine through March thirty-first, two thousand
eleven, rates of payment for a general hospital  for  patients  eligible
for  payments  made  by  state  governmental  agencies  shall be further
reduced by the  commissioner  to  encourage  improved  productivity  and
efficiency by providers by a factor determined as follows:
(i)  an  aggregate  reduction  shall  be  calculated  for each general
hospital commencing July  first,  nineteen  hundred  ninety-six  through
March   thirty-first,  nineteen  hundred  ninety-nine  and  July  first,
nineteen hundred ninety-nine through March  thirty-first,  two  thousand
and  April  first, two thousand through March thirty-first, two thousand
five and for periods on and after April first, two thousand five through
March thirty-first, two thousand six, and for periods on and after April
first, two thousand six through March thirty-first, two thousand  seven,
and  for  periods  on  and after April first, two thousand seven through
March thirty-first, two thousand nine, and  for  periods  on  and  after
April  first, two thousand nine through March thirty-first, two thousand
eleven,  as  the  result  of  (A)  eighty-nine  million  dollars  on  an
annualized  basis  for each year, multiplied by (B) the ratio of patient
days for patients eligible  for  payments  made  by  state  governmental
agencies  provided  in a base year two years prior to the rate year by a
general hospital, divided by the total of such patient days  summed  for
all general hospitals; and
(ii)  (A)  the  result for each general hospital shall be allocated to
units within such hospital exempt from case based rates of payment based
on the ratio of such patient days provided in the  exempt  unit  to  the
total of such patient days provided by the general hospital, and (B) the
result  divided  by such patient days provided in the exempt unit, for a
per diem unit of service reduction in rates of payment for  such  exempt
unit  for  patients  eligible  for  payments  made by state governmental
agencies for such general hospital; and
(iii) any amount not allocated to exempt units  shall  be  divided  by
case  based  discharges (or for exempt hospitals by patient days) in the
base year two years prior to the rate year  for  patients  eligible  for
payments  made  by  state  governmental agencies, for a per case (or for
exempt hospitals a per diem) unit  of  service  reduction  in  rates  of
payment  for  patients  eligible for payments made by state governmental
agencies for such general hospital.
* NB Effective until December 31, 2026
* (c) Notwithstanding any  inconsistent  provision  of  this  section,
commencing   July  first,  nineteen  hundred  ninety-six  through  March
thirty-first, nineteen hundred  ninety-nine  and  July  first,  nineteen
hundred  ninety-nine  through  March thirty-first, two thousand rates of
payment for a general hospital for patients eligible for  payments  made
by   state  governmental  agencies  shall  be  further  reduced  by  the
commissioner  to  encourage  improved  productivity  and  efficiency  by
providers by a factor determined as follows:
(i)  an  aggregate  reduction  shall  be  calculated  for each general
hospital commencing July first,   nineteen  hundred  ninety-six  through
March   thirty-first,  nineteen  hundred  ninety-nine  and  July  first,
nineteen hundred ninety-nine through March thirty-first, two thousand as
the result of (A) eighty-nine million dollars on an annualized basis for
each year, multiplied by (B) the ratio  of  patient  days  for  patients
eligible  for payments made by state governmental agencies provided in a
base year two years prior to  the  rate  year  by  a  general  hospital,

divided  by  the  total  of  such  patient  days  summed for all general
hospitals; and
(ii)  (A)  the  result for each general hospital shall be allocated to
units within such hospital exempt from case based rates of payment based
on the ratio of such patient days provided in the  exempt  unit  to  the
total of such patient days provided by the general hospital, and (B) the
result  divided  by such patient days provided in the exempt unit, for a
per diem unit of service reduction in rates of payment for  such  exempt
unit  for  patients  eligible  for  payments  made by state governmental
agencies for such general hospital; and
(iii) any amount not allocated to exempt units  shall  be  divided  by
case  based  discharges (or for exempt hospitals by patient days) in the
base year two years prior to the rate year  for  patients  eligible  for
payments  made  by  state  governmental agencies, for a per case (or for
exempt hospitals a per diem) unit  of  service  reduction  in  rates  of
payment  for  patients  eligible for payments made by state governmental
agencies for such general hospital.
* NB Effective and expires December 31, 2026
6. Operating costs. (a) A general hospital's hospital-specific average
reimbursable inpatient operating cost per discharge shall be  determined
in  accordance  with  rules  and  regulations adopted by the council and
approved by  the  commissioner  based  on  the  hospital's  reimbursable
inpatient  operating  cost  base determined in accordance with paragraph
(d) of subdivision one of this  section;  adjusted  in  accordance  with
paragraph  (b)  of  this  subdivision  to  reflect  exceptions  to  case
payments; and projected to the applicable rate period by a trend  factor
determined  in  accordance  with  subdivision  ten  of this section; and
increased in accordance  with  subparagraphs  (i),  (iii)  and  (iv)  of
paragraph  (e)  of  subdivision  one  of this section to reflect special
additional inpatient operating costs; and adjusted  in  accordance  with
subparagraphs (i), (ii) and (iv) of paragraph (c) of this subdivision to
reflect  modifications  to  case  payments;  and standardized to reflect
nineteen hundred eighty-seven hospital case mix.  A  general  hospital's
hospital-specific  average  reimbursable  inpatient  operating  cost per
discharge shall be  adjusted  on  a  payor  category  basis  to  reflect
allocation  of  malpractice  insurance  costs  in  accordance  with  the
methodology developed pursuant to subparagraph (ii) of paragraph (h)  of
subdivision eleven of this section.
(b)  In  accordance  with rules and regulations adopted by the council
and  approved  by  the  commissioner,  the  commissioner  shall   adjust
reimbursable   inpatient  operating  costs  and  discharges  to  exclude
operating costs and statistics related to specialized hospital  services
for  which  an alternative reimbursement methodology is adopted pursuant
to paragraph (e) or (g) of subdivision four of this  section,  a  factor
for  operating costs of patients who required an alternate level of care
in accordance with paragraph (h) of subdivision four of this section and
the  operating  costs  and  statistics  of  AIDS  patients  pursuant  to
paragraph (i) of subdivision four of this section if effective.
(c)  In  accordance  with rules and regulations adopted by the council
and  approved  by  the  commissioner,  the  commissioner  shall   adjust
weighting  factors  developed  pursuant  to paragraph (c) of subdivision
three of this section and reimbursable  inpatient  operating  costs  and
statistics  on  which  case payment rates are based to take into account
the provisions for additional payments in accordance with paragraph (a),
(b), (c) or (d) of subdivision four  of  this  section.  The  rules  and
regulations  are  to  be  designed  to identify an estimate of costs and
statistics as if the payment methodology effective  for  the  applicable
rate  period including payment based on the higher of high-cost outliers

or long-stay outliers was in effect during the period used to  establish
such costs and statistics to accomplish the following:
(i)   an   estimate  of  costs  for  inpatient  services  to  patients
transferred to another general hospital  receiving  case  payment  rates
pursuant  to  paragraph (a) of subdivision four of this section shall be
eliminated from reimbursable inpatient  operating  costs  considering  a
transfer  patient  cost  conversion  factor determined based on nineteen
hundred  eighty-five  data  from  a  representative  sample  of  general
hospitals;  a  case  mix  neutral acute care cost component of a general
hospital's reimbursable inpatient operating  cost  base  per  day  after
application  of  the trend factor and the addition of special additional
inpatient operating  costs;  transfer  patient  days  incurred  by  such
general  hospital in nineteen hundred eighty-seven or the number of such
transfer patient days during a recent twelve month period prior  thereto
established  by  regulation  for  which  data are available subsequently
reconciled by an adjustment to  reflect  nineteen  hundred  eighty-seven
data;  and the specific diagnosis-related groups with which the transfer
patients are identified. Such costs shall be  eliminated  in  accordance
with  rules  and  regulations adopted by the council and approved by the
commissioner which shall contain the specific methodology to  adequately
identify  the  costs  related to transfer cases. Transfer cases shall be
eliminated in computing discharges of  the  transferring  hospital.  The
costs  and  discharges  for  transfer  cases  for  each general hospital
participating in the determination of the  weighting  factors  shall  be
removed before calculating the weighting factors;
(ii)  an  estimate  of  costs  for  the  outlier  portion of inpatient
services which would qualify for additional payments as cost outliers in
accordance with paragraph (b) of subdivision four of this section  shall
be  eliminated  from  reimbursable  inpatient operating costs based on a
general hospital's high cost percentage outlier factor,  applied  to  an
acute  care  cost  component  of  such  general  hospital's reimbursable
inpatient operating cost base after application of the trend factor  and
the  addition  of special additional inpatient operating costs. The high
cost  percentage  outlier  factor  shall  be  calculated  based   on   a
determination   of  the  percentage  of  nineteen  hundred  eighty-seven
discharges of patients other than beneficiaries of title  XVIII  of  the
federal  social  security  act (medicare) for which the commissioner has
complete hospital bill submissions or such discharges  during  a  recent
twelve  month  period  prior thereto established by regulation for which
hospital bills are available, as follows, (a) for general hospitals that
have complete hospital bill submissions for at least ninety  percent  of
their  discharges,  a  high cost percentage outlier factor based on such
data, and (b) for general hospitals that  have  complete  hospital  bill
submissions  for at least eighty percent but less than ninety percent of
their discharges, a high cost percentage outlier factor  based  on  such
data  plus an additional one-quarter of one percent, and (c) for general
hospitals that have complete  bill  submissions  for  less  than  eighty
percent  of  their  discharges,  a  high  cost percentage outlier factor
determined  based  on  nineteen  hundred   eighty-five   data   from   a
representative   sample   of   general   hospitals  plus  an  additional
one-quarter of one percent. The calculation of the high cost  percentage
outlier  factor  shall  be  subsequently  reconciled by an adjustment to
reflect the percentage of such complete hospital  bill  submissions  for
such  nineteen  hundred  eighty-seven  discharges  as  submitted  to the
commissioner prior to August first, nineteen hundred eighty-eight.
The minimum percentage threshold applicable pursuant to clause (a)  of
the  first  paragraph of this subparagraph may be increased to "at least
ninety-five percent" and the percentage ceiling applicable  pursuant  to

clause  (b)  of  the  first  paragraph of this subparagraph increased to
"less than  ninety-five  percent"  pursuant  to  rules  and  regulations
adopted  by  the  council  and approved by the commissioner based upon a
study  and  a  report  by  the  commissioner  of  a sample of incomplete
discharge records which showed that there was a  significant  difference
in  the  value  of  high  cost  outlier  cases  potentially reflected in
incomplete records from the value of high cost outlier  cases  reflected
in  records  for  which  the  commissioner  has  complete  hospital bill
submissions.
The maximum amount to be eliminated on  a  statewide  basis  shall  be
three  percent  of the total of nineteen hundred eighty-eight acute care
cost components of general  hospital  reimbursable  inpatient  operating
costs reimbursed on the case payment system. In the event that the total
amount  as  calculated exceeds three percent, the calculated amount will
be reduced to three percent by the application of a percentage  computed
by  dividing expected outlier costs based on the three percent by actual
outlier costs, which shall also be the percentage of outlier costs to be
reimbursed in the payment year. The costs for  the  outlier  portion  of
cost  outliers  for general hospitals participating in the determination
of the weighting factors shall be removed  from  each  diagnosis-related
group before determining the weighting factors;
* (iii) an estimate of inpatient costs which are related to a hospital
stay  in  excess  of  the  long stay threshold for long stay patients as
defined in paragraph (c) of subdivision four of this  section  shall  be
eliminated  from  reimbursable  inpatient operating costs in determining
group  category   average   inpatient   reimbursable   operating   costs
considering  a  long stay patient cost conversion factor, which shall be
established at sixty percent provided, however, such long  stay  patient
cost  conversion  factor  may  be  revised  for an annual rate period or
periods  beginning  on  or  after  January   first,   nineteen   hundred
eighty-nine  in  accordance  with  rules  and regulations adopted by the
council and approved by the commissioner; a case mix neutral acute  care
cost  component of a general hospital's reimbursable inpatient operating
cost base per day after application of the trend factor and the addition
of special additional inpatient operating costs; long stay patient  days
incurred  by  such  general hospital in nineteen hundred eighty-seven or
the number of such long stay patient days during a recent  twelve  month
period  prior  thereto  established  by  regulation  for  which data are
available subsequently reconciled by an adjustment to  reflect  nineteen
hundred  eighty-seven  data;  and  the specific diagnosis-related groups
with which the long stay patients are identified. The long stay  outlier
thresholds shall be determined by adding a sufficient number of standard
deviations  to  the mean length of stay for each diagnosis-related group
such that it is estimated for rates of payment during the period January
first, nineteen  hundred  eighty-eight  through  December  thirty-first,
nineteen  hundred  ninety  based  upon nineteen hundred eighty-five data
from a representative sample of  general  hospitals  and  for  rates  of
payment  during  the  period  January first, nineteen hundred ninety-one
through December thirty-first, nineteen hundred ninety-three based  upon
nineteen  hundred  eighty-nine  data  from  a  representative  sample of
general hospitals and for rates of payment  during  the  period  January
first,  nineteen  hundred  ninety-four  through  December  thirty-first,
nineteen hundred ninety-nine and periods on and after January first, two
thousand  based  upon  nineteen   hundred   ninety-two   data   from   a
representative  sample  of  general  hospitals that the costs associated
with the portion of hospital stays in excess of the  long  stay  outlier
thresholds  do  not  exceed three percent of the total of the acute care
cost components of reimbursable inpatient operating costs related to the

determination of case based rates of payment. The costs associated  with
the  outlier  portion  of  long  stay outliers for each general hospital
participating in the determination of the  weighting  factors  shall  be
removed   from  each  diagnosis-related  group  before  calculating  the
weighting factors;
* NB Effective until December 31, 2026
* (iii) an estimate of inpatient costs which are related to a hospital
stay in excess of the long stay threshold  for  long  stay  patients  as
defined  in  paragraph  (c) of subdivision four of this section shall be
eliminated from reimbursable inpatient operating  costs  in  determining
group   category   average   inpatient   reimbursable   operating  costs
considering a long stay patient cost conversion factor, which  shall  be
established  at  sixty percent provided, however, such long stay patient
cost conversion factor may be revised  for  an  annual  rate  period  or
periods   beginning   on   or  after  January  first,  nineteen  hundred
eighty-nine in accordance with rules  and  regulations  adopted  by  the
council  and approved by the commissioner; a case mix neutral acute care
cost component of a general hospital's reimbursable inpatient  operating
cost base per day after application of the trend factor and the addition
of  special additional inpatient operating costs; long stay patient days
incurred by such general hospital in nineteen  hundred  eighty-seven  or
the  number  of such long stay patient days during a recent twelve month
period prior thereto  established  by  regulation  for  which  data  are
available  subsequently  reconciled by an adjustment to reflect nineteen
hundred eighty-seven data; and  the  specific  diagnosis-related  groups
with  which the long stay patients are identified. The long stay outlier
thresholds shall be determined by adding a sufficient number of standard
deviations to the mean length of stay for each  diagnosis-related  group
such that it is estimated for rates of payment during the period January
first,  nineteen  hundred  eighty-eight  through  December thirty-first,
nineteen hundred ninety based upon  nineteen  hundred  eighty-five  data
from  a  representative  sample  of  general  hospitals and for rates of
payment during the period January  first,  nineteen  hundred  ninety-one
through  December thirty-first, nineteen hundred ninety-three based upon
nineteen hundred  eighty-nine  data  from  a  representative  sample  of
general  hospitals  and  for  rates of payment during the period January
first,  nineteen  hundred  ninety-four  through  December  thirty-first,
nineteen hundred ninety-nine based upon nineteen hundred ninety-two data
from  a  representative  sample  of  general  hospitals  that  the costs
associated with the portion of hospital stays in excess of the long stay
outlier thresholds do not exceed three percent of the total of the acute
care cost components of reimbursable inpatient operating  costs  related
to  the  determination  of  case  based  rates  of  payment.  The  costs
associated with the outlier portion  of  long  stay  outliers  for  each
general  hospital  participating  in  the determination of the weighting
factors shall  be  removed  from  each  diagnosis-related  group  before
calculating the weighting factors;
* NB Effective and expires December 31, 2026
* (iii) an estimate of inpatient costs which are related to a hospital
stay  in  excess  of  the  long stay threshold for long stay patients as
defined in paragraph (c) of subdivision four of this  section  shall  be
eliminated  from  reimbursable  inpatient operating costs in determining
group  category   average   inpatient   reimbursable   operating   costs
considering  a  long stay patient cost conversion factor, which shall be
established at sixty percent provided, however, such long  stay  patient
cost  conversion  factor  may  be  revised  for an annual rate period or
periods  beginning  on  or  after  January   first,   nineteen   hundred
eighty-nine  in  accordance  with  rules  and regulations adopted by the

council and approved by the commissioner; a case mix neutral acute  care
cost  component of a general hospital's reimbursable inpatient operating
cost base per day after application of the trend factor and the addition
of  special additional inpatient operating costs; long stay patient days
incurred by such general hospital in nineteen  hundred  eighty-seven  or
the  number  of such long stay patient days during a recent twelve month
period prior thereto  established  by  regulation  for  which  data  are
available  subsequently  reconciled by an adjustment to reflect nineteen
hundred eighty-seven data; and  the  specific  diagnosis-related  groups
with  which the long stay patients are identified. The long stay outlier
thresholds shall be determined by adding a sufficient number of standard
deviations to the mean length of stay for each  diagnosis-related  group
such that it is estimated for rates of payment during the period January
first,  nineteen  hundred  eighty-eight  through  December thirty-first,
nineteen hundred ninety based upon  nineteen  hundred  eighty-five  data
from  a  representative  sample  of  general  hospitals and for rates of
payment during the period January  first,  nineteen  hundred  ninety-one
through  December thirty-first, nineteen hundred ninety-three based upon
nineteen hundred  eighty-nine  data  from  a  representative  sample  of
general  hospitals  and  for  rates of payment during the period January
first, nineteen hundred ninety-four  through  June  thirtieth,  nineteen
hundred  ninety-six  based  upon nineteen hundred ninety-two data from a
representative sample of general hospitals  that  the  costs  associated
with  the  portion  of hospital stays in excess of the long stay outlier
thresholds do not exceed three percent of the total of  the  acute  care
cost components of reimbursable inpatient operating costs related to the
determination  of case based rates of payment. The costs associated with
the outlier portion of long stay  outliers  for  each  general  hospital
participating  in  the  determination  of the weighting factors shall be
removed  from  each  diagnosis-related  group  before  calculating   the
weighting factors;
* NB Effective December 31, 2026
(iv)  an  estimate  of inpatient costs which are related to short stay
patients as defined in paragraph (d) of subdivision four of this section
shall  be  eliminated  from  reimbursable  inpatient   operating   costs
considering a short stay patient cost conversion factor determined based
on  nineteen  hundred  eighty-five  data from a representative sample of
general hospitals; a case mix neutral acute care  cost  component  of  a
general  hospital's  reimbursable  inpatient operating cost base per day
after application of the  trend  factor  and  the  addition  of  special
additional  inpatient  operating costs; short stay patient days incurred
by such general hospital in nineteen hundred eighty-seven or the  number
of  such  short  stay  patient  days during a recent twelve month period
prior thereto established by regulation for  which  data  are  available
subsequently  reconciled  by  an  adjustment to reflect nineteen hundred
eighty-seven data; and the specific diagnosis-related groups with  which
the  short  stay patients are identified. Such costs shall be eliminated
in accordance with rules and regulations  adopted  by  the  council  and
approved   by   the   commissioner  which  shall  contain  the  specific
methodology to adequately identify  the  costs  related  to  short  stay
patients.  Short  stay cases shall be eliminated in computing discharges
of a general hospital. The costs and discharges for short stay cases for
each  general  hospital  participating  in  the  determination  of   the
weighting  factors  shall  be  removed  before calculating the weighting
factors.
7. Operating cost group component.  (a)  A  general  hospital's  group
category  average  inpatient  reimbursable  operating cost per discharge
(price) shall be a composite factor determined in accordance with  rules

and  regulations adopted by the council and approved by the commissioner
based  on  a  group  price  component  determined  in  accordance   with
subparagraph  (i) of this paragraph, a hospital-specific price component
determined  in  accordance with subparagraph (ii) of this paragraph, and
an adjustment in accordance with subparagraph (iii) of this paragraph.
(i) The group  price  component  shall  be  based  on  the  costs  and
statistics  of  general  hospitals  in  the  group  category established
pursuant to paragraph (b) of this subdivision to which the  hospital  is
assigned  by the commissioner to compute a group based average inpatient
reimbursable operating  cost  per  discharge  for  the  group  category.
General  hospital  costs  and  statistics shall be determined consistent
with the methodology to determine hospital-specific average reimbursable
inpatient operating cost per discharge pursuant to  subdivision  six  of
this   section;   adjusted  to  reflect  additional  cost  increases  in
accordance with subparagraph (ii) of paragraph (e) of subdivision one of
this   section;   and   adjusted   to   exclude   the   components    of
hospital-specific  inpatient  reimbursable  operating  costs  related to
education, physician, ambulance services  and  organ  acquisition  costs
determined  in  accordance  with  paragraph  (c) of this subdivision and
malpractice insurance costs, and the components  of  special  additional
inpatient  operating  costs  determined and allocated in accordance with
subparagraphs (i), (iii) and (iv) of paragraph (e) of subdivision one of
this section associated with cost increases in such costs; and  adjusted
to  exclude  the  components  of  special additional inpatient operating
costs determined and allocated in accordance with clauses (B), (D), (H),
and  (I)  of  subparagraph  (iii)  and  clauses  (A),  (E)  and  (F)  of
subparagraph  (iv)  of paragraph (e) of subdivision one of this section;
and adjusted to reflect additional modifications  to  case  payments  in
accordance  with  subparagraph (iii) of paragraph (c) of subdivision six
of  this  section.  The  group  based  average  inpatient   reimbursable
operating  costs  computed  for  a general hospital shall be adjusted to
reflect  the  hospital-specific   indirect   medical   education   costs
percentage  of  such hospital determined in accordance with subparagraph
(ii) of paragraph (c) of this subdivision.
Hospital  costs  shall  be  standardized   for   comparison   purposes
considering  differences  in wage and wage-related costs levels and such
other economic factors, such as a power equalization factor, as  may  be
determined  in  accordance  with  rules  and  regulations adopted by the
council and approved by the commissioner.
(ii) A hospital-specific price component shall be determined for  each
general  hospital  based on such hospital's hospital-specific education,
physician, ambulance services and organ acquisition costs determined  in
accordance  with  subparagraphs  (i), (iii) and (iv) of paragraph (c) of
this subdivision and malpractice insurance costs, and the components  of
special additional inpatient operating costs determined and allocated in
accordance  with  subparagraphs  (i), (iii) and (iv) of paragraph (e) of
subdivision one of this section associated with cost increases  in  such
costs,  and  special additional inpatient operating costs determined and
allocated  in  accordance  with  clauses  (B),  (D),  (H)  and  (I)   of
subparagraph  (iii) and clauses (A), (E) and (F) of subparagraph (iv) of
paragraph (e) of subdivision one of this section, as  excluded  pursuant
to  subparagraph  (i)  of this paragraph, per discharge, standardized to
reflect nineteen hundred eighty-seven hospital case mix.
(iii)  A  general  hospital's   group   category   average   inpatient
reimbursable  operating  cost per discharge shall be adjusted on a payor
category basis to reflect allocation of malpractice insurance  costs  in
accordance  with the methodology developed pursuant to subparagraph (ii)
of paragraph (h) of subdivision eleven of this section.
(b)  General  hospital  group  categories  shall  be  established   in
accordance  with  rules  and  regulations  adopted  by  the  council and
approved by the commissioner for purposes of  computing  group  category
average inpatient reimbursable operating cost per discharge considering,
but  not  limited  to,  factors  such as hospital size, hospital medical
education activity, teaching status  and  geographic  divisions  of  the
state.
(c)  Education,  physician,  ambulance  services and organ acquisition
costs shall include:
(i) direct medical education expenses,  defined  as  the  reimbursable
costs  of  residents, fellows, and supervising physicians, combined with
the costs of hospital based physicians;
(ii) indirect medical education expenses, defined as  an  estimate  of
the  costs,  other  than  direct  costs,  of  educational  activities in
teaching hospitals attributable to factors including but not limited  to
increased  overhead,  more  severely  ill  patients  and the tendency of
residents to provide more tests than  experienced  licensed  physicians.
For   the   rate   period  beginning  January  first,  nineteen  hundred
eighty-eight  and  ending  December   thirty-first,   nineteen   hundred
eighty-eight,  an  estimate of indirect medical education costs shall be
determined in accordance with the methodology applicable for purposes of
determining  an  estimate  of  indirect  medical  education  costs   for
reimbursement  for inpatient hospital service pursuant to title XVIII of
the federal social security act (medicare) in effect on the first day of
July in the year preceding the rate period. The council may adopt  rules
and  regulations, subject to the approval of the commissioner, to revise
the methodology for the determination of an estimate of indirect medical
education costs to reflect revisions to the methodology  applicable  for
purposes  of  determining  reimbursement  for inpatient hospital service
pursuant to title XVIII of the federal social  security  act  (medicare)
effective  subsequent to the first day of July in the year preceding the
rate period. For annual rate  periods  beginning  on  or  after  January
first,  nineteen  hundred  eighty-nine  an  estimate of indirect medical
education costs  shall  be  determined  in  accordance  with  rules  and
regulations adopted by the council and approved by the commissioner;
(iii)   the   reimbursable   costs   of  schools  of  nursing,  allied
professional programs and ambulance services; and
(iv)  the  reimbursable  costs  of  organ  acquisition  services   not
reimbursed  pursuant  to  the  methodology  applicable  for  purposes of
reimbursement pursuant to title XVIII of the federal social security act
(medicare).
(d) The commissioner shall establish, in  accordance  with  rules  and
regulations adopted by the council and approved by the commissioner, the
methodology to determine the hospital's group category average inpatient
reimbursable  operating  cost  per  discharge (price) and the percentage
amounts, pursuant to subparagraphs (i), (ii) and (iii) of paragraph  (b)
of  subdivision  five  of  this  section,  of the group category average
inpatient reimbursable operating  cost  per  discharge  to  be  used  to
determine  the  inpatient  reimbursable operating cost component of case
based rates for annual rate periods beginning on or after January first,
nineteen hundred eighty-eight.
8. Capital related inpatient expenses.  (a) Capital related  inpatient
expenses  including  but  not  limited  to straight line depreciation on
buildings and non-movable equipment, accelerated depreciation  on  major
movable  equipment if requested by the hospital, rentals and interest on
capital  debt  (or  for   hospitals   financed   pursuant   to   article
twenty-eight-B of this chapter, such expenses, including amortization in
lieu  of  depreciation,  as  determined  pursuant  to  the reimbursement

regulations  promulgated  pursuant   to   such   article   and   article
twenty-eight  of  this  chapter),  shall be included in rates of payment
determined pursuant to this  section  based  on  a  budget  for  capital
related   inpatient  expenses  and  subsequently  reconciled  to  actual
expenses and statistics through appropriate audit procedures.    General
hospitals  shall submit to the commissioner, at least one hundred twenty
days prior to the commencement of  each  year,  a  schedule  of  capital
related  inpatient  expenses  for  the  forthcoming  year.  Any  capital
expenditure which requires or required approval pursuant to this article
must have  received  such  approval  for  any  capital  related  expense
generated  by  such  capital  expenditure  to  be  included  in rates of
payment. The basis for determining capital  related  inpatient  expenses
shall  be  the  lesser  of  actual cost or the final amount specifically
approved for the construction of the capital asset. The submitted budget
may include the capital related  inpatient  expenses  for  all  existing
capital  assets  as  well  as  estimates  of  capital  related inpatient
expenses for capital assets to be acquired or placed in use prior to the
commencement of the rate year or  during  the  rate  year  provided  all
required approvals have been obtained.
The  council  shall  adopt,  with  the  approval  of the commissioner,
regulations to:
(i) identify by type the eligible capital related inpatient expenses;
(ii) safeguard the future financial viability of voluntary, non-profit
general hospitals by requiring  funding  of  inpatient  depreciation  on
building and fixed and movable equipment;
(iii)  provide  authorization  to  adjust inpatient rates by advancing
payment of depreciation as needed, in instances of capital debt  related
financial distress of voluntary, non-profit general hospitals; and
(iv) provide a methodology for the reimbursement treatment of sales.
(b) Capital related inpatient expenses shall be included in case based
payments  based  on  the  hospital's  average  capital related inpatient
expenses per discharge. Adjustments shall be  made  to  capital  related
costs  and  statistics  to  reflect  capital  related inpatient expenses
reimbursed on a per diem basis in accordance with paragraphs  (a),  (d),
(e), (g) and (i) of subdivision four of this section.
* (c)  In  order  to  reconcile  capital  related  inpatient  expenses
included in rates of payment based on a budget to  actual  expenses  and
statistics  for the rate period for a general hospital, rates of payment
for a general hospital shall be adjusted to reflect the dollar value  of
the  difference  between  capital related inpatient expenses included in
the computation of rates of payment for a prior rate period based  on  a
budget and actual capital related inpatient expenses for such prior rate
period,  each  as  determined  in  accordance with paragraph (a) of this
subdivision, adjusted to reflect increases or  decreases  in  volume  of
service  in  such  prior  rate  period compared to statistics applied in
determining the capital related inpatient expenses component of rates of
payment based on  a  budget  for  such  prior  rate  period.  For  rates
effective  April  first, two thousand twenty through March thirty-first,
two thousand twenty-one, the budgeted capital-related expenses add-on as
described in paragraph (a)  of  this  subdivision,  based  on  a  budget
submitted  in  accordance to paragraph (a) of this subdivision, shall be
reduced by five percent relative to the rate in effect on such date; and
the actual capital expenses add-on as described in paragraph (a) of this
subdivision, based on actual expenses and statistics through appropriate
audit procedures in accordance with paragraph (a)  of  this  subdivision
shall  be reduced by five percent relative to the rate in effect on such
date. For rates  effective  on  and  after  April  first,  two  thousand
twenty-one, the budgeted capital-related expenses add-on as described in

paragraph  (a)  of  this  subdivision,  based  on  a budget submitted in
accordance to paragraph (a) of this subdivision, shall be reduced by ten
percent relative to the rate in effect on  such  date;  and  the  actual
capital   expenses   add-on  as  described  in  paragraph  (a)  of  this
subdivision, based on actual expenses and statistics through appropriate
audit procedures in accordance with paragraph (a)  of  this  subdivision
shall  be  reduced by ten percent relative to the rate in effect on such
date. For any rate year, all reconciliation add-on amounts calculated on
and after April first, two thousand  twenty  shall  be  reduced  by  ten
percent,  and  all  reconciliation  recoupment  amounts calculated on or
after April first, two thousand twenty shall increase  by  ten  percent.
Notwithstanding  any  inconsistent  provision  of  subparagraph  (i)  of
paragraph (e) of subdivision  nine  of  this  section,  capital  related
inpatient  expenses of a general hospital included in the computation of
rates of payment based  on  a  budget  shall  not  be  included  in  the
computation  of  a  volume  adjustment  made  in  accordance  with  such
subparagraph. Adjustments to rates of payment  for  a  general  hospital
made  pursuant  to  this  paragraph  shall  be  made  in accordance with
paragraph (c) of subdivision eleven of this  section.  Such  adjustments
shall not be carried forward except for such volume adjustment as may be
authorized  in  accordance  with  subparagraph  (i)  of paragraph (e) of
subdivision nine of this section for such general hospital.
* NB Effective until October 1, 2024
* (c)  In  order  to  reconcile  capital  related  inpatient  expenses
included  in  rates  of payment based on a budget to actual expenses and
statistics for the rate period for a general hospital, rates of  payment
for  a general hospital shall be adjusted to reflect the dollar value of
the difference between capital related inpatient  expenses  included  in
the  computation  of rates of payment for a prior rate period based on a
budget and actual capital related inpatient expenses for such prior rate
period, each as determined in accordance  with  paragraph  (a)  of  this
subdivision,  adjusted  to  reflect  increases or decreases in volume of
service in such prior rate period  compared  to  statistics  applied  in
determining the capital related inpatient expenses component of rates of
payment based on a budget for such prior rate period.
For  rates  effective  April  first, two thousand twenty through March
thirty-first, two  thousand  twenty-one,  the  budgeted  capital-related
expenses add-on as described in paragraph (a) of this subdivision, based
on   a   budget  submitted  in  accordance  to  paragraph  (a)  of  this
subdivision, shall be reduced by five percent relative to  the  rate  in
effect on such date; and the actual capital expenses add-on as described
in  paragraph  (a)  of  this  subdivision,  based on actual expenses and
statistics through  appropriate  audit  procedures  in  accordance  with
paragraph  (a)  of  this  subdivision  shall  be reduced by five percent
relative to the rate in effect on such date.
For rates effective  April  first,  two  thousand  twenty-one  through
September    thirtieth,   two   thousand   twenty-four,   the   budgeted
capital-related expenses add-on as described in paragraph  (a)  of  this
subdivision,  based on a budget submitted in accordance to paragraph (a)
of this subdivision, shall be reduced by ten  percent  relative  to  the
rate  in  effect on such date; and the actual capital expenses add-on as
described in paragraph (a) of this subdivision, based on actual expenses
and statistics through appropriate audit procedures in  accordance  with
paragraph  (a)  of  this  subdivision  shall  be  reduced by ten percent
relative to the rate in effect on such date.
For  rates  effective  on  and  after  October  first,  two   thousand
twenty-four,  the  budgeted capital-related expenses add-on as described
in paragraph (a) of this subdivision, based on  a  budget  submitted  in

accordance  with  paragraph (a) of this subdivision, shall be reduced by
twenty percent relative to the rate in effect  on  such  date;  and  the
actual  capital  expenses  add-on  as described in paragraph (a) of this
subdivision  shall  be reduced by twenty percent relative to the rate in
effect on such date.
For any rate year, all reconciliation add-on  amounts  calculated  for
the  period  of  April  first,  two  thousand  twenty  through September
thirtieth, two thousand twenty-four shall be reduced by ten percent, and
all reconciliation recoupment amounts calculated for the period of April
first, two thousand twenty through  September  thirtieth,  two  thousand
twenty-four shall increase by ten percent.
For any rate year, all reconciliation add-on amounts calculated on and
after October first, two thousand twenty-four shall be reduced by twenty
percent,  and  all  reconciliation  recoupment  amounts calculated on or
after October first, two thousand twenty-four shall increase  by  twenty
percent.
Notwithstanding  any  inconsistent  provision  of  subparagraph (i) of
paragraph (e) of subdivision  nine  of  this  section,  capital  related
inpatient  expenses of a general hospital included in the computation of
rates of payment based  on  a  budget  shall  not  be  included  in  the
computation  of  a  volume  adjustment  made  in  accordance  with  such
subparagraph. Adjustments to rates of payment  for  a  general  hospital
made  pursuant  to  this  paragraph  shall  be  made  in accordance with
paragraph (c) of subdivision eleven of this  section.  Such  adjustments
shall not be carried forward except for such volume adjustment as may be
authorized  in  accordance  with  subparagraph  (i)  of paragraph (e) of
subdivision nine of this section for such general hospital.
* NB Effective October 1, 2024
* (e) Notwithstanding any inconsistent provision of this  subdivision,
commencing  April first, nineteen hundred ninety-five, when a factor for
reconciliation of budgeted capital related inpatient expenses to  actual
capital  related  inpatient expenses for a prior year is included in the
capital related inpatient expenses component of rates of  payment,  such
capital  related  inpatient expenses component of rates of payment shall
be reduced by the commissioner by the difference between the  reconciled
capital   related  inpatient  expenses  included  in  rates  of  payment
determined in accordance with  paragraphs  (a),  (b)  and  (c)  of  this
subdivision  for  such prior year and capital related inpatient expenses
for such prior year calculated based on the hospital's  average  capital
related inpatient expenses computed on a per diem basis.
* NB Effective through March 31, 2025
* (f)  Notwithstanding  any  inconsistent  provision  of this section,
commencing April first, nineteen hundred  ninety-five  for  purposes  of
determining the capital related inpatient expenses component of rates of
payment  for  patients  eligible for payments made by state governmental
agencies for a rate year,  the  submitted  budget  for  capital  related
inpatient  expenses  of  a  general hospital applicable to the rate year
shall be decreased by the commissioner to reflect the percentage  amount
by  which  the budget for the base year two years prior to the rate year
for capital related inpatient expenses of the hospital  exceeded  actual
expenses.
* NB Effective through March 31, 2025
* (g)  Notwithstanding  any  inconsistent  provision  of this article,
commencing April  first,  nineteen  hundred  ninety-five  for  rates  of
payment  for  patients  eligible for payments made by state governmental
agencies, the capital related inpatient expenses component determined in
accordance with paragraph (a) of this subdivision and the  capital  cost
per visit components determined in accordance with subparagraphs (i) and

(ii) of paragraph (g) of subdivision two of section twenty-eight hundred
seven  of  this article shall be adjusted by the commissioner to exclude
such expenses related to:
(i) forty-four percent of the costs of major movable equipment; and
(ii) staff housing.
* NB Effective through March 31, 2025
9.  Adjustments. For annual rate periods beginning on or after January
first, nineteen hundred eighty-eight:
(a) The commissioner shall on his own initiative, or on the basis of a
request from a general hospital, adjust an established rate to reflect:
(i) the reduction of costs related to the  elimination  of  a  general
hospital  inpatient service in instances where the costs of such service
were included in the rate established; and
(ii) the correction of errors or omissions of data or in computation.
(b) General hospitals may request and the commissioner shall  consider
an  adjustment  to  an established rate to reflect increased expenses in
excess of costs reported by the general hospital in the nineteen hundred
eighty-five cost report, after  application  of  the  trend  factor,  or
reconsideration of disallowed expenses based on:
(i)  justification of all or a portion of expenses not included in the
rate resulting from the cost analysis process contained in  subparagraph
(i) of paragraph (a) of this subdivision;
(ii)  additional operational expenses related to approved construction
or service changes;
(iii) the addition  of  costs  related  to  a  state  requirement  for
additional services to be provided or additional costs to be incurred in
meeting state and federal requirements;
(iv)  additional  operational  expenses to permit a more efficient and
economical method of delivering a service;
(v) increased costs determined to be needed to recruit or maintain  an
appropriate  level  of  personnel  providing  professional  services  to
patients; and
(vi) increased costs for compensation of employees.
(c)  In  determining  the  reasonableness  or  justification   of   an
adjustment  to  an  established  rate  related  to  subparagraph (vi) of
paragraph (b) of this subdivision, the commissioner shall consider:
(i) the fiscal capability of the  general  hospital  to  finance  such
increases from its own resources;
(ii)  the  past  history  of  the  general  hospital  with  respect to
compensation increases and allowed compensation trend factors; and
(iii) the economy in  the  area  in  which  the  general  hospital  is
located.
(d)  General hospitals may request and the commissioner shall consider
a change in assignment among the group categories  established  pursuant
to  paragraph  (b)  of  subdivision  seven  of this section to which the
hospital is assigned for purposes of computing  group  category  average
reimbursable inpatient operating cost per discharge.
(e)  (i)  Volume  adjustments  which would result in revisions in case
payment rates shall not be made to reflect  increases  or  decreases  in
discharges  for  other  than beneficiaries of title XVIII of the federal
social security act (medicare) in  rate  years  beginning  on  or  after
January  first,  nineteen hundred eighty-eight, except in those specific
instances  where  a  decrease  in  volume  as  measured  by  discharges,
including discharges of patients for whom reimbursement is provided on a
per diem basis in accordance with paragraph (a) of subdivision eleven of
this  section,  is equal to or greater than one percent of discharges in
nineteen hundred eighty-seven for those  general  hospitals  having  two
hundred  or  less  certified  acute  care beds and classified as a rural

hospital for purposes of  determining  payment  for  inpatient  services
provided  to beneficiaries of title XVIII of the federal social security
act (medicare) or under state regulations, based on the total number  of
inpatient  acute  care beds for which such general hospital is certified
pursuant to the operating certificate issued for such  general  hospital
in  accordance with section twenty-eight hundred five of this article in
effect on June thirtieth,  nineteen  hundred  ninety,  or  equal  to  or
greater  than ten percent of discharges in nineteen hundred eighty-seven
for all other general hospitals, and the failure to make such adjustment
seriously impacts on the financial stability of a needed  hospital,  and
except  in  those  specific  instances  where  an  increase in volume as
measured by discharges is equal  to  or  greater  than  ten  percent  of
discharges  in nineteen hundred eighty-seven. Provided, however, that an
adjustment for  volume  increases  shall  not  apply  to  those  general
hospitals  having  two  hundred  or  less  certified acute care beds and
classified as a rural hospital for purposes of determining  payment  for
inpatient  services  provided  to  beneficiaries  of  title XVIII of the
federal social security act (medicare) or under state regulations, based
on the total number of inpatient acute care beds for which such  general
hospital  is  certified pursuant to the operating certificate issued for
such general hospital in accordance with  section  twenty-eight  hundred
five  of  this  article  in  effect  on June thirtieth, nineteen hundred
ninety. For general hospitals and distinct units  of  general  hospitals
not  reimbursed  on  a  case  based  payment per discharge basis, volume
adjustments may be  made  during  the  above  indicated  rate  years  in
accordance  with  regulations adopted by the council and approved by the
commissioner.
(ii) The  commissioner  shall  adjust  the  rates  for  those  general
hospitals  and  units of general hospitals excluded from case payment in
accordance with paragraph (e) or (g) of subdivision four of this section
for case mix changes for other than beneficiaries of title XVIII of  the
federal social security act (medicare).
(f) General hospitals that did not qualify for a volume adjustment for
the  nineteen  hundred eighty-six and nineteen hundred eighty-seven rate
periods for rates of  payment  determined  in  accordance  with  section
twenty-eight  hundred  seven-a  of  this  article  may  request  and the
commissioner shall consider an adjustment to an established  case  based
rate  of payment for nineteen hundred eighty-eight based on increases in
volume as measured by discharges, based on a comparison between nineteen
hundred  eighty-five  and  nineteen  hundred  eighty-seven   discharges,
excluding   in   such   comparison   discharges   of  patients  who  are
beneficiaries  of  title  XVIII  of  the  federal  social  security  act
(medicare)  and  discharges  related  to  transfer  cases  (transferring
hospital) and short stay cases as defined in this section, provided such
general hospital meets performance criteria  established  in  accordance
with  rules  and  regulations adopted by the council and approved by the
commissioner. Such criteria shall include but need not  be  limited  to:
maintenance  of  like  patient  occupancy  rates  for  the  rate periods
nineteen hundred eighty-five, nineteen hundred eighty-six  and  nineteen
hundred  eighty-seven;  a  reduction in patient length of stay for other
than beneficiaries of title XVIII of the  federal  social  security  act
(medicare) based on a comparison with nineteen hundred eighty-five data;
and  an expanded use of ambulatory surgery by the general hospital based
on a comparison with nineteen hundred eighty-five data. Such  adjustment
shall  consider,  but need not be limited to, the variable costs related
to volume changes in accordance with rules and  regulations  adopted  by
the council and approved by the commissioner.
(g) All appeals shall be submitted to the commissioner, who may submit
a  copy of the appeal to interested parties for the purpose of providing
an opportunity for comment within a specified time period.
(h)  The  commissioner  shall act upon all properly documented appeals
for adjustments concerning base year costs  by  November  first  of  the
calendar  year  for  which  the  rate  is  effective  provided  that all
information necessary to determine whether an adjustment is justified is
submitted by the facility prior to May first of such year. In the  event
such  an  appeal  is  filed  by  May first, but information necessary to
determine whether an adjustment is justified  is  submitted  after  such
date,  the  commissioner shall act on the appeal within six months after
receiving the necessary information.
* 10. Trend factors. (a) The  commissioner,  in  accordance  with  the
methodology  developed  for rate periods through March thirty-first, two
thousand, for rates of  payment  for  state  governmental  agencies  and
through  December thirty-first, nineteen hundred ninety-six for rates of
payment  for  all  other  payors  pursuant  to  paragraph  (b)  of  this
subdivision, shall establish trend factors to project for the effects of
inflation.  The  factors  shall be applied to the appropriate portion of
reimbursable costs. The methodology  for  developing  the  trend  factor
shall  include  the appropriate external price indicators and shall also
include the data from major collective bargaining agreements as reported
quarterly  by  the  federal  department  of  labor,  bureau   of   labor
statistics, for non-supervisory employees.
(b)  The methodology shall be developed for rate periods through March
thirty-first, two thousand, for rates of payment for state  governmental
agencies  and through December thirty-first, nineteen hundred ninety-six
for  rates  of  payment  for  all  other  payors  by  four   independent
consultants   with   expertise  in  health  economics  or  reimbursement
methodologies   for   health-related   services   appointed    by    the
commissioner.    For   nineteen   hundred   ninety-six,   through  March
thirty-first, two thousand, the commissioner shall  apply  the  nineteen
hundred  ninety-five  trend  factor  methodology. The commissioner shall
monitor the actual price movements of  the  external   price  indicators
used  in the methodology for one interim adjustment to the trend factors
to reflect such price movements and one final adjustment  to  the  trend
factors  to  reflect  such price movements. At the same time adjustments
are made to  the  trend  factors  in  accordance  with  this  paragraph,
adjustments  shall be made to all inpatient rates of payment affected by
the adjusted trend factors.
(c) (1) For rate periods on and after April first, two  thousand,  the
commissioner  shall  establish  trend  factors  for rates of payment for
state governmental agencies to project  for  the  effects  of  inflation
except  that  such  trend  factors  shall not be applied to services for
which rates of payment are  established  by  the  commissioners  of  the
department  of  mental  hygiene.  The  factors  shall  be applied to the
appropriate portion of reimbursable costs.
(2) In developing  trend  factors  for  such  rates  of  payment,  the
commissioner  shall  use  the  most  recent  Congressional Budget Office
estimate of the rate year's U.S. Consumer  Price  Index  for  all  urban
consumers  published  in  the  Congressional  Budget Office Economic and
Budget Outlook after June first of the rate year prior to the  year  for
which rates are being developed.
(3)  After  the  final  U.S.  Consumer Price Index (CPI) for all urban
consumers is published by the United States Department of Labor,  Bureau
of  Labor Statistics, for a particular rate year, the commissioner shall
reconcile such final CPI to the projection used in subparagraph  two  of

this  paragraph  and  any difference will be included in the prospective
trend factor for the current year.
(4)  At  the  time  adjustments  are  made  to  the  trend  factors in
accordance with  this  paragraph,  adjustments  shall  be  made  to  all
inpatient rates of payment affected by the trend factor adjustment.
* NB Effective until December 31, 2026
* 10.  Trend  factors.  (a)  The  commissioner, in accordance with the
methodology developed pursuant to paragraph  (b)  of  this  subdivision,
shall  establish  trend factors to project for the effects of inflation.
The factors shall be applied to the appropriate portion of  reimbursable
costs. The methodology for developing the trend factor shall include the
appropriate  external  price  indicators and shall also include the data
from major collective bargaining agreements as reported quarterly by the
federal  department  of  labor,  bureau   of   labor   statistics,   for
non-supervisory employees.
(b) The methodology shall be developed by four independent consultants
with  expertise  in  health economics or reimbursement methodologies for
health-related services appointed  by  the  commissioner.  On  or  about
September  first  of  each  year,  the  consultants shall provide to the
commissioner  and  the  council  a  report  in  writing  detailing   the
methodology to be used to determine the trend factors for the subsequent
twelve  month  period  commencing  January first. The commissioner shall
monitor the actual price movements during this twelve  month  period  of
the  external price indicators used in the methodology, shall report the
results of the monitoring to the consultants  and  shall  implement  the
recommendations  of  the  consultants for one prospective interim annual
adjustment to the trend factors to reflect such price movements  and  to
be  effective  on January first, one year after the initial trend factor
was established and one prospective final annual adjustment to the trend
factors to reflect such price movements and to be effective  on  January
first,  two years after the initial trend factor was established. At the
same time adjustments are made to the trend factors in  accordance  with
this  paragraph,  adjustments  shall  be  made to all inpatient rates of
payment affected by the adjusted trend factors.
* NB Effective December 31, 2026
11. Special provisions. (a) Notwithstanding any inconsistent provision
of this chapter or any other law to the contrary, payment for  inpatient
hospital  services  provided on or after January first, nineteen hundred
eighty-eight to a patient  admitted  to  a  general  hospital  prior  to
January  first,  nineteen  hundred  eighty-eight  otherwise eligible for
payment  on  a  case  based  payment   per   discharge   basis   for   a
diagnosis-related group shall be at the rate of payment for such general
hospital  for such patient in effect for December thirty-first, nineteen
hundred  eighty-seven  provided,  however,  that  the   operating   cost
components  of  such  rates  of  payment for inpatient hospital services
provided on or after January first, nineteen hundred eighty-eight  shall
be  projected  to  the  rate  period  by  the trend factor determined in
accordance with subdivision ten of this  section  and  reconciled  on  a
cumulative  basis  on  or  about  March  thirty-first,  nineteen hundred
eighty-eight and December thirty-first,  nineteen  hundred  eighty-eight
for  payment  of  adjusted  rates  of payment based on such trend factor
adjustment. The  component  of  such  rates  of  payment  based  on  the
allowances  provided  in  accordance  with  paragraphs  (e)  and  (f) of
subdivision eight  of  section  twenty-eight  hundred  seven-a  of  this
article  shall  be  returned  to the applicable regional pool created in
accordance with subdivision fifteen of such section and  distributed  in
accordance  with  subdivision sixteen of such section based on needs for
the financing of losses resulting  from  bad  debts  and  the  costs  of

charity care as determined for purposes of nineteen hundred eighty-seven
distributions.
(b)  The  council  shall  adopt  rules  and regulations subject to the
approval of the commissioner regarding  payor  payment  responsibilities
when  a  patient  has  coverage  with  more  than  one payor for general
hospital inpatient services and during a hospital stay exhausts benefits
available from the primary payor, or receives services not reimbursed by
the primary payor, so  that  the  hospital  shall  be  reimbursed  by  a
secondary  payor  for  services not reimbursed by the primary payor that
are included as a benefit of the secondary payor. A  primary  payor  for
purposes  of this paragraph shall include benefits available pursuant to
title XVIII of the federal social security act (medicare).
* (c)(i) Adjustments to rates made pursuant to this section  for  rate
periods   commencing   on  or  after  January  first,  nineteen  hundred
ninety-seven may be made prospectively or retrospectively  on  the  next
following January or July unless otherwise specifically authorized.
(ii)  The  commissioner  may  further adjust rates retrospectively for
payments by state governmental agencies upon a finding that the  failure
to do so seriously impacts on a general hospital's financial stability.
(iii)  Regardless  of  whether  rates  are  adjusted  prospectively or
retrospectively the authorized dollar value of the adjustment  shall  be
the  same,  calculated  by  including  the  retroactive  impact  of such
adjustment if such  adjustment  is  made  prospectively.  A  prospective
adjustment  to  reflect the retroactive impact of an adjustment shall be
included in the determination of rates of payment for a prospective rate
period based on the methodology applied in accordance with this  section
for  calculation  of  rates of payment for such prospective rate period.
The allowance reflected in payments to a  general  hospital  or  a  pool
related  to  a  prospective  adjustment  which  reflects the retroactive
impact of an  adjustment  shall  be  computed  based  on  the  allowance
percentage in effect during the prospective period such adjustment is in
effect. No recalculation of the basis for distribution of funds from bad
debt  and  charity  care  regional  pools  determined in accordance with
subdivision seventeen of this section shall be made  for  a  prospective
adjustment which reflects the retroactive impact of an adjustment.
* NB Effective until December 31, 2026
* (c)(i)  Adjustments  to rates made pursuant to this section shall be
made  prospectively  on  the  next  following  January  or  July  unless
otherwise specifically authorized provided, however, that adjustments to
rates  of  payment  to  reflect  nineteen  hundred eighty-seven data and
statistics  may  be  made   retrospectively   and   such   retrospective
adjustments  shall,  to  the  extent  practicable,  be cumulated for one
comprehensive adjustment.
(ii) The commissioner may further adjust rates retrospectively upon  a
finding  that  the  failure  to  do  so  seriously  impacts on a general
hospital's financial stability.
(iii) Regardless  of  whether  rates  are  adjusted  prospectively  or
retrospectively  the  authorized dollar value of the adjustment shall be
the same,  calculated  by  including  the  retroactive  impact  of  such
adjustment  if  such  adjustment  is  made  prospectively. A prospective
adjustment to reflect the retroactive impact of an adjustment  shall  be
included in the determination of rates of payment for a prospective rate
period  based on the methodology applied in accordance with this section
for calculation of rates of payment for such  prospective  rate  period,
provided,  however,  that  no recalculation of bad debt and charity care
allowance percentages determined in accordance with subdivision fourteen
of this section  shall  be  made  for  a  prospective  adjustment  which
reflects  the  retroactive  impact  of  an  adjustment. The bad debt and

charity care allowance of a general hospital related  to  a  prospective
adjustment  which reflects the retroactive impact of an adjustment shall
be computed based on the bad debt and charity care allowance  percentage
of such hospital in effect during the prospective period such adjustment
is  in  effect.  No recalculation of the basis for distribution of funds
from bad debt and charity care regional pools determined  in  accordance
with  subdivision  seventeen  of  this  section  shall  be  made  for  a
prospective adjustment which  reflects  the  retroactive  impact  of  an
adjustment.
* NB Effective December 31, 2026
(d)  Working  capital. General hospitals may include as a financing or
working capital charge an addition of two percent of any valid claim not
paid  within  thirty  days  of  submission  or  determination  of  payor
liability,  whichever  is  later,  and one percent per month thereafter.
Financing or working capital charges shall not be  applied  to  hospital
billings  to  third  party  payors  participating  in an advance payment
system. Any payor not participating in  an  advance  payment  system  or
offering  admission  billing  shall  allow interim billing for a patient
whose stay exceeds thirty days.
(e) (i) Except for payments made pursuant to the workers' compensation
law, the volunteer firefighters' benefit law, or the volunteer ambulance
workers' benefit law, a  two  percent  discount  from  general  hospital
payments  shall be available to all payors whose payments are calculated
in accordance with paragraphs (b) and (c) of  subdivision  one  of  this
section  making  payment  in  full  to  a  general  hospital for covered
hospital services within ten calendar days of receipt from the  hospital
by the appropriate payor of a bill for such services.
(ii)  A  three  percentage point reduction in the differential of five
percent for general hospital payments shall be available to  all  payors
whose  payments  are  calculated  in  accordance  with  paragraph (b) of
subdivision one or paragraph (e) of subdivision  four  of  this  section
which are making payments pursuant to the workers' compensation law, the
volunteer firefighters' benefit law, or the volunteer ambulance workers'
benefit  law  when  such payments are made in full to a general hospital
for covered hospital services within ninety  calendar  days  of  receipt
from  the hospital by the appropriate payor of a bill for such services,
and an additional two percentage point reduction shall be available  for
such  payors  if such payment is made within forty-five calendar days of
receipt of such a bill.
(f) (i) * In order to allow for real  increases  in  general  hospital
case  mix  while  limiting the effect of potential case mix changes that
are the result of changes in coding practices rather than  real  changes
in  case  mix,  the commissioner shall annually for rate periods through
December thirty-first, nineteen hundred ninety-six, in  accordance  with
rules  and  regulations  adopted  by  the  council  and  approved by the
commissioner, adjust individual general hospitals'  case  payment  rates
determined  in accordance with paragraphs (a) and (b) of subdivision one
of this section to account for increases in the statewide  average  case
mix,   based   on   increases   in   statewide   average  assignment  to
diagnosis-related groups for all patients other  than  beneficiaries  of
title  XVIII  of the federal social security act (medicare), that exceed
the allowable statewide increase  determined  in  accordance  with  this
subparagraph.  The  commissioner further shall adjust individual general
hospitals' case payment rates determined in accordance with this section
for state governmental agencies for the periods January first,  nineteen
hundred ninety-seven through March thirty-first, two thousand and on and
after  April  first, two thousand, in accordance with clause (G) of this
subparagraph and to account for increases in statewide average case mix,

based on increases in statewide average assignment to  diagnosis-related
groups  based  on  data  only for patients that are eligible for medical
assistance pursuant to title  eleven  of  article  five  of  the  social
services  law,  including  such  patients enrolled in health maintenance
organizations, that exceed the allowable statewide  increase  determined
in accordance with clause (B-1) of this subparagraph.
* NB Effective until December 31, 2026
* In  order  to  allow for real increases in general hospital case mix
while limiting the effect of potential case mix  changes  that  are  the
result  of  changes in coding practices rather than real changes in case
mix, the commissioner shall annually for rate periods  through  December
thirty-first,  nineteen hundred ninety-six, in accordance with rules and
regulations adopted by the council and  approved  by  the  commissioner,
adjust  individual  general  hospitals' case payment rates determined in
accordance with paragraphs (a)  and  (b)  of  subdivision  one  of  this
section  to  account  for  increases  in the statewide average case mix,
based on increases in statewide average assignment to  diagnosis-related
groups  for  all patients other than beneficiaries of title XVIII of the
federal social  security  act  (medicare),  that  exceed  the  allowable
statewide  increase determined in accordance with this subparagraph. The
commissioner further shall adjust  individual  general  hospitals'  case
payment  rates  determined  in  accordance  with  this section for state
governmental agencies for the periods January  first,  nineteen  hundred
ninety-seven through March thirty-first, two thousand in accordance with
clause  (G)  of  this  subparagraph  and  to  account  for  increases in
statewide average case mix, based  on  increases  in  statewide  average
assignment  to  diagnosis-related groups based on data only for patients
that are eligible for medical assistance pursuant  to  title  eleven  of
article  five  of  the  social  services  law,  including  such patients
enrolled in health maintenance organizations, that exceed the  allowable
statewide  increase  determined  in accordance with clause (B-1) of this
subparagraph.
* NB Effective and expires December 31, 2026
* In order to allow for real increases in general  hospital  case  mix
while  limiting  the  effect  of potential case mix changes that are the
result of changes in coding practices rather than real changes  in  case
mix,  the  commissioner  shall  annually,  in  accordance with rules and
regulations adopted by the council and  approved  by  the  commissioner,
adjust  individual  general  hospitals' case payment rates determined in
accordance with paragraphs (a)  and  (b)  of  subdivision  one  of  this
section  to  account  for  increases  in the statewide average case mix,
based on increases in statewide average assignment to  diagnosis-related
groups  for  all patients other than beneficiaries of title XVIII of the
federal social  security  act  (medicare),  that  exceed  the  allowable
statewide increase determined in accordance with this subparagraph.
* NB Effective December 31, 2026
(A)  The  increase  in  the  statewide average case mix in a rate year
during the period January first, nineteen hundred  eighty-eight  through
December  thirty-first,  nineteen hundred ninety-three from the nineteen
hundred eighty-seven statewide average case mix  shall  not  exceed  two
percent  in  nineteen  hundred eighty-eight compared to nineteen hundred
eighty-seven, three percent in nineteen hundred eighty-nine compared  to
nineteen  hundred  eighty-seven, four percent in nineteen hundred ninety
compared to nineteen hundred  eighty-seven,  five  percent  in  nineteen
hundred  ninety-one  compared  to  nineteen  hundred  eighty-seven, and,
notwithstanding any  inconsistent  rule  or  regulation,  for  rates  of
payment  for state governmental agencies six percent in nineteen hundred
ninety-two compared to nineteen hundred eighty-seven and  seven  percent

in   nineteen   hundred   ninety-three   compared  to  nineteen  hundred
eighty-seven, and for rates of  payment  for  payors  other  than  state
governmental  agencies  six and seven-tenths percent in nineteen hundred
ninety-two  compared  to nineteen hundred eighty-seven and seven percent
in  nineteen  hundred  ninety-three   compared   to   nineteen   hundred
eighty-seven.
* (B)  The  increase  in the statewide average case mix in a rate year
during the period January first, nineteen  hundred  ninety-four  through
December  thirty-first,  nineteen  hundred  ninety-six from the nineteen
hundred ninety-two statewide average case mix, plus  adjustments,  shall
not  exceed:  for  rates  of payment for state governmental agencies two
percent in  the  period  January  first,  nineteen  hundred  ninety-four
through    June    thirtieth,   nineteen   hundred   ninety-four,   and,
notwithstanding any inconsistent rule or regulation, six and  two-tenths
percent  in  the period July first, nineteen hundred ninety-four through
December thirty-first, nineteen hundred ninety-four,  three  percent  in
the  period  January  first,  nineteen hundred ninety-five through March
thirty-first, nineteen hundred ninety-five, two percent  in  the  period
April first, nineteen hundred ninety-five through December thirty-first,
nineteen  hundred  ninety-five,  and three percent in the period January
first,  nineteen  hundred  ninety-six  through  December   thirty-first,
nineteen  hundred  ninety-six; and for rates of payment for payors other
than  state  governmental  agencies  two  percent  in  nineteen  hundred
ninety-four,  three  percent  in  nineteen hundred ninety-five, and four
percent in the period January first, nineteen hundred ninety-six through
December thirty-first, nineteen hundred ninety-six. Adjustments  to  the
nineteen  hundred  ninety-two  statewide  average case mix shall mean an
adjustment for any increase in  nineteen  hundred  ninety-two  statewide
average  case  mix  compared  to nineteen hundred eighty-seven statewide
average  case  mix  in  excess  of  six  percent  of  nineteen   hundred
eighty-seven  statewide  average  case  mix  and a further adjustment to
reflect that measurement of case mix increase from the nineteen  hundred
ninety-two  statewide  average case mix rather than the nineteen hundred
eighty-seven  statewide  average  case  mix  reflects  the  increase  in
statewide  average  case  mix  from  nineteen  hundred  eighty-seven  to
nineteen hundred ninety-two in order to maintain the  effective  maximum
rate  of  allowable statewide average case mix increases at a percentage
per year of the nineteen hundred  eighty-seven  statewide  average  case
mix.  Nineteen  hundred ninety-two case mix shall be determined based on
nineteen hundred ninety-two data received by  the  department  by  April
thirtieth, nineteen hundred ninety-three.
* NB Effective until December 31, 2026
* (B)  The  increase  in the statewide average case mix in a rate year
during the period January first, nineteen  hundred  ninety-four  through
June  thirtieth,  nineteen  hundred ninety-six from the nineteen hundred
ninety-two statewide average  case  mix,  plus  adjustments,  shall  not
exceed: for rates of payment for state governmental agencies two percent
in  the  period January first, nineteen hundred ninety-four through June
thirtieth,  nineteen  hundred  ninety-four,  and,  notwithstanding   any
inconsistent  rule  or  regulation,  six  and  two-tenths percent in the
period  July  first,  nineteen  hundred  ninety-four  through   December
thirty-first,  nineteen hundred ninety-four, three percent in the period
January first, nineteen hundred ninety-five through March  thirty-first,
nineteen hundred ninety-five, and two percent in the period April first,
nineteen  hundred  ninety-five  through  December thirty-first, nineteen
hundred ninety-five, and three percent  in  the  period  January  first,
nineteen  hundred  ninety-six  through  June thirtieth, nineteen hundred
ninety-six; and for  rates  of  payment  for  payors  other  than  state

governmental agencies two percent in nineteen hundred ninety-four, three
percent  in nineteen hundred ninety-five, and four percent in the period
January first,  nineteen  hundred  ninety-six  through  June  thirtieth,
nineteen   hundred  ninety-six.  Adjustments  to  the  nineteen  hundred
ninety-two statewide average case mix shall mean an adjustment  for  any
increase  in  nineteen  hundred  ninety-two  statewide  average case mix
compared to nineteen hundred eighty-seven statewide average case mix  in
excess of six percent of nineteen hundred eighty-seven statewide average
case  mix  and  a further adjustment to reflect that measurement of case
mix increase from the nineteen hundred ninety-two statewide average case
mix rather than the nineteen hundred eighty-seven statewide average case
mix reflects the increase in statewide average case  mix  from  nineteen
hundred eighty-seven to nineteen hundred ninety-two in order to maintain
the  effective  maximum  rate  of  allowable  statewide average case mix
increases at a percentage per year of the nineteen hundred  eighty-seven
statewide  average  case mix. Nineteen hundred ninety-two case mix shall
be determined based on nineteen hundred ninety-two data received by  the
department by April thirtieth, nineteen hundred ninety-three.
* NB Effective December 31, 2026
(B-1)  The  increase  in the statewide average case mix in the periods
January first, nineteen hundred ninety-seven through March thirty-first,
two thousand and on and after April first, two  thousand  through  March
thirty-first,  two  thousand  six  and  on  and  after  April first, two
thousand six through March thirty-first, two thousand seven, and on  and
after  April  first,  two thousand seven through March thirty-first, two
thousand nine, and on and after April first, two thousand  nine  through
March thirty-first, two thousand eleven, from the statewide average case
mix  for  the  period January first, nineteen hundred ninety-six through
December thirty-first, nineteen hundred ninety-six shall not exceed  one
percent  for  nineteen  hundred  ninety-seven,  two percent for nineteen
hundred ninety-eight,  three  percent  for  the  period  January  first,
nineteen  hundred  ninety-nine  through  September  thirtieth,  nineteen
hundred ninety-nine, four percent for the period October first, nineteen
hundred ninety-nine  through  December  thirty-first,  nineteen  hundred
ninety-nine,  and  four  percent for two thousand plus an additional one
percent per year thereafter,  based  on  comparison  of  data  only  for
patients  that  are  eligible  for  medical assistance pursuant to title
eleven of article five  of  the  social  services  law,  including  such
patients enrolled in health maintenance organizations.
(C)  Rate  year  case  mix shall be determined based on rate year data
received by the department by April thirtieth next following the end  of
the rate year. Case mix may be determined based on general hospital data
received  or  amended  after  such  due  dates provided, however, that a
general hospital that does not submit the appropriate data in  a  timely
manner  shall  be  subject to the provisions of section twelve-d of this
chapter.
* (D) If in any rate period on an annualized basis the cumulative case
mix increase exceeds the allowable statewide increase, rates of  payment
to  general  hospitals  shall  be  adjusted in accordance with rules and
regulations adopted by the council  and  approved  by  the  commissioner
which  shall  contain the specific methodology to allocate the reduction
among general hospitals, in order to reduce the effect of the  statewide
increase  on  rates  of  payment  to  reflect  the  allowable  increase.
Notwithstanding any  inconsistent  provision  of  this  paragraph,  rate
adjustments  for purposes of this paragraph shall be made on a six month
rate  period  basis  for  the  period  July  first,   nineteen   hundred
ninety-four through December thirty-first, nineteen hundred ninety-four.
The  retroactive  impact  of  adjustments to rates of payment for payors

other than state governmental agencies based on the amendments  to  this
paragraph  effective  July  first, nineteen hundred ninety-four shall be
reflected in a prospective adjustment  to  rates  of  payment  for  such
payors  for  the period July first, nineteen hundred ninety-four through
December thirty-first, nineteen hundred ninety-four.
* NB Effective until December 31, 2026
* (D) If in any rate year the cumulative case mix increase exceeds the
allowable statewide increase, rates  of  payment  to  general  hospitals
shall  be  adjusted  in accordance with rules and regulations adopted by
the council and approved by the commissioner  which  shall  contain  the
specific  methodology to allocate the reduction among general hospitals,
in order to reduce the effect of the  statewide  increase  on  rates  of
payment   to   reflect   the  allowable  increase.  Notwithstanding  any
inconsistent provision of this paragraph, rate adjustments for  purposes
of this paragraph shall be made on a six month rate period basis for the
period   July  first,  nineteen  hundred  ninety-four  through  December
thirty-first, nineteen hundred ninety-four. The  retroactive  impact  of
adjustments to rates of payment for payors other than state governmental
agencies based on the amendments to this paragraph effective July first,
nineteen  hundred  ninety-four  shall  be  reflected  in  a  prospective
adjustment to rates of payment for  such  payors  for  the  period  July
first,  nineteen  hundred  ninety-four  through  December  thirty-first,
nineteen hundred ninety-four.
* NB Effective December 31, 2026
(E) Such methodology shall take into account past trends of individual
general hospitals' case mix changes, and, within the aggregate allowable
statewide increase in case mix, permit general hospitals  to  appeal  to
the  commissioner  their  proposed allocation of a reduction in rates of
payment related to increases in statewide average case mix based on such
factors as changes in hospital service delivery and referral patterns.
(F) Case mix changes  due  to  acquired  immune  deficiency  syndrome,
tuberculosis, epidemics or other catastrophes resulting in extraordinary
hospital utilization shall not be subject to this limitation.
* (G)  Adjustments  determined  in  accordance with clause (B) of this
subparagraph for the period January first, nineteen  hundred  ninety-six
through  December  thirty-first,  nineteen hundred ninety-six on a final
basis, and in accordance with subparagraph (ii) of this paragraph on  an
interim   basis,  shall  be  applied  to  rates  of  payment  for  state
governmental agencies during the period January first, nineteen  hundred
ninety-seven through March thirty-first, two thousand and periods on and
after April first, two thousand.
* NB Expires December 31, 2026
* (G)  Adjustments  determined  in  accordance with clause (B) of this
subparagraph for the period  January first, nineteen hundred  ninety-six
through  December  thirty-first,  nineteen hundred ninety-six on a final
basis, and in accordance with subparagraph (ii) of this paragraph on  an
interim   basis,  shall  be  applied  to  rates  of  payment  for  state
governmental agencies during the period January first, nineteen  hundred
ninety-seven through March thirty-first, two thousand.
* NB Effective and repealed December 31, 2026
* (ii)  (A)  The  commissioner  shall,  in  accordance  with rules and
regulations adopted by the council and approved by the commissioner, for
purposes of  payments  on  an  interim  basis  periodically  compute  an
adjustment to individual general hospitals' case payment rates for prior
periods  for the payor categories specified in paragraphs (a) and (b) of
subdivision one  of  this  section  to  account  for  increases  in  the
statewide  average  case  mix,  based  on increases in statewide average
assignment to diagnosis-related  groups  for  all  patients  other  than

beneficiaries  of  title  XVIII  of  the  federal  social  security  act
(medicare), that exceed the allowable statewide increase.  The  increase
in  the  statewide  average  case  mix  in a rate year during the period
January   first,   nineteen   hundred   eighty-eight   through  December
thirty-first, nineteen hundred ninety-three from  the  nineteen  hundred
eighty-seven  statewide  average  case mix and in a rate year during the
period January first,  nineteen  hundred  ninety-four  through  December
thirty-first,  nineteen  hundred  ninety-six  from the adjusted nineteen
hundred ninety-two statewide average  case  mix  shall  not  exceed  the
allowable   statewide   increase   as   determined  in  accordance  with
subparagraph (i) of  this  paragraph.  Adjustments  may  be  made  on  a
quarterly  basis  consistent  with  this  annual  limitation.  If in any
quarter of the rate year the cumulative case mix increase for  the  rate
year  exceeds the allowable statewide increase, payment rates to general
hospitals shall be adjusted in accordance  with  rules  and  regulations
adopted  by  the  council  and  approved by the commissioner which shall
contain the specific methodology to allocate the reduction among general
hospitals provided,  however,  that  any  funds  to  be  recovered  from
hospitals based on such adjustments for prior periods shall be recovered
by  prospective  adjustment  of  rates  of  payment  in  accordance with
paragraph (c) of this subdivision, in order to reduce the effect of  the
statewide  increase  on  rates  of  payment  to  reflect  the  allowable
increase,  taking  into  consideration  the  effect  of  any  adjustment
applicable in the rate period made in accordance with subparagraph (iii)
of  this  paragraph.  Case mix changes due to acquired immune deficiency
syndrome, tuberculosis, epidemics or  other  catastrophes  resulting  in
extraordinary   hospital  utilization  shall  not  be  subject  to  this
limitation, pursuant to rules and regulations adopted by the council and
approved by the commissioner.
(B) The commissioner further shall for  purposes  of  payments  on  an
interim  basis  periodically compute an adjustment to individual general
hospitals' case payment rates for prior periods  for  payments  made  by
state  governmental  agencies  to account for increases in the statewide
average case mix, based on increases in statewide average assignment  to
diagnosis-related  groups  for  patients  that  are eligible for medical
assistance pursuant to title  eleven  of  article  five  of  the  social
services  law  eligible for payments made by state governmental agencies
or by  health  maintenance  organizations,  that  exceed  the  allowable
statewide  increase  as  determined  in  accordance with clause (B-1) of
subparagraph (i) of this paragraph.
* NB Effective until December 31, 2026
* (ii)  The  commissioner  shall,  in  accordance   with   rules   and
regulations adopted by the council and approved by the commissioner, for
purposes  of  payments  on  an  interim  basis  periodically  compute an
adjustment to individual general hospitals' case payment rates for prior
periods for the payor categories specified in paragraphs (a) and (b)  of
subdivision  one  of  this  section  to  account  for  increases  in the
statewide average case mix, based  on  increases  in  statewide  average
assignment  to  diagnosis-related  groups  for  all  patients other than
beneficiaries  of  title  XVIII  of  the  federal  social  security  act
(medicare),  that  exceed the allowable statewide increase. The increase
in the statewide average case mix in  a  rate  year  during  the  period
January   first,   nineteen   hundred   eighty-eight   through  December
thirty-first, nineteen hundred ninety-three from  the  nineteen  hundred
eighty-seven  statewide  average  case mix and in a rate year during the
period  January  first,  nineteen  hundred  ninety-four   through   June
thirtieth,  nineteen  hundred  ninety-six  from  the  adjusted  nineteen
hundred ninety-two statewide average  case  mix  shall  not  exceed  the

allowable   statewide   increase   as   determined  in  accordance  with
subparagraph (i) of  this  paragraph.  Adjustments  may  be  made  on  a
quarterly  basis  consistent  with  this  annual  limitation.  If in any
quarter  of  the rate year the cumulative case mix increase for the rate
year exceeds the allowable statewide increase, payment rates to  general
hospitals  shall  be  adjusted  in accordance with rules and regulations
adopted by the council and approved  by  the  commissioner  which  shall
contain the specific methodology to allocate the reduction among general
hospitals  provided,  however,  that  any  funds  to  be  recovered from
hospitals based on such adjustments for prior periods shall be recovered
by prospective  adjustment  of  rates  of  payment  in  accordance  with
paragraph  (c) of this subdivision, in order to reduce the effect of the
statewide  increase  on  rates  of  payment  to  reflect  the  allowable
increase,  taking  into  consideration  the  effect  of  any  adjustment
applicable in the rate period made in accordance with subparagraph (iii)
of this paragraph. Case mix changes due to  acquired  immune  deficiency
syndrome,  tuberculosis,  epidemics  or  other catastrophes resulting in
extraordinary  hospital  utilization  shall  not  be  subject  to   this
limitation, pursuant to rules and regulations adopted by the council and
approved by the commissioner.
* NB Effective December 31, 2026
(iii) The commissioner shall, in accordance with rules and regulations
adopted  by  the  council and approved by the commissioner, periodically
prospectively adjust for  purposes  of  payments  on  an  interim  basis
individual   general   hospitals'  case  payment  rates  for  the  payor
categories specified in paragraphs (a) and (b)  of  subdivision  one  of
this section to account for increases in statewide average assignment to
diagnosis-related  groups  which exceed the allowable statewide increase
as determined in accordance with subparagraph (ii) of this paragraph.
(iv) Rates of payment of a  general  hospital  shall  be  adjusted  in
accordance  with  paragraph  (c)  of  this  subdivision  to  reflect the
difference between an individual general hospital's case  payment  rates
adjusted  in  accordance  with  subparagraph (i) of this paragraph for a
rate period and such rates determined in accordance with paragraphs  (a)
and  (b)  of  subdivision one of this section, taking into consideration
any adjustment to case payment rates applicable  for  such  rate  period
made in accordance with subparagraphs (ii) and (iii) and for the periods
beginning  on or after July first, nineteen hundred ninety, subparagraph
(v) of this paragraph.
(v) Notwithstanding any inconsistent provision of law, for the periods
beginning on or after July first, nineteen hundred ninety and subsequent
annual rate periods  beginning  January  first  the  commissioner  shall
reduce,  in  accordance  with  the  methodology  adopted for purposes of
adjustments  pursuant  to  subparagraph  (ii)  of  this  paragraph,  for
purposes  of  payments on an interim basis individual general hospitals'
case payment rates applicable  to  state  governmental  agencies  for  a
prospective  period to reflect an estimate of the cumulative increase in
statewide average  assignment  to  diagnosis-related  groups  for  prior
periods  including  prior  quarters of the rate period which exceeds the
allowable statewide increase  specified  in  subparagraph  (i)  of  this
paragraph  for  the  prospective period. Such adjustment if effected for
less than an annual prospective rate period shall reflect an  annualized
adjustment.
(vi) Notwithstanding any inconsistent provision of law, adjustments to
rates  of  payment  pursuant to this paragraph based on nineteen hundred
ninety-three data that reflects an increase in  statewide  average  case
mix  compared to nineteen hundred eighty-seven that exceeds the increase
based on nineteen hundred ninety-two data in statewide average case  mix

compared to nineteen hundred eighty-seven shall not be implemented until
April   first,   nineteen   hundred   ninety-five   and  shall  be  made
prospectively  for  rates  of  payment  issued  effective  April  first,
nineteen hundred ninety-five including the impact of such adjustment for
the  period  January  first,  nineteen hundred ninety-five through March
thirtieth, nineteen hundred ninety-five.
(g) Notwithstanding any other provisions of this  section,  all  costs
and  statistics  that  are  related  to  inpatient  services provided to
beneficiaries  of  title  XVIII  of  the  federal  social  security  act
(medicare)  shall  not  be  included in the establishment of any payment
rates computed in accordance with the provisions of this section.
(i) Unless provided otherwise in specific provisions included in  this
section,  the  exclusion of costs which are related to routine inpatient
services provided to beneficiaries of title XVIII of the federal  social
security act (medicare) and covered by title XVIII of the federal social
security   act  (medicare)  shall  be  based  on  the  nineteen  hundred
eighty-five inpatient days actually paid on behalf of  beneficiaries  of
title  XVIII of the federal social security act (medicare) plus any days
for such beneficiaries not paid on the basis of a decision by  a  review
agent  that  the  days  were  unnecessary.  Ancillary  costs  related to
inpatient services provided to  beneficiaries  of  title  XVIII  of  the
federal social security act (medicare) and covered by title XVIII of the
federal social security act (medicare) shall be excluded on the basis of
the nineteen hundred eighty-five cost center ratio of hospital ancillary
inpatient  service  charges  related  to  such  beneficiaries  to  total
hospital cost center inpatient ancillary  services  charges  applied  to
cost  center  costs.  Inpatient  malpractice  insurance  costs which are
attributable  to  title  XVIII  of  the  federal  social  security   act
(medicare)  shall be excluded based on the methodology employed by title
XVIII of the federal social security act  (medicare)  to  identify  such
costs.
(ii)  Costs  and  statistics related to inpatient services provided to
beneficiaries  of  title  XVIII  of  the  federal  social  security  act
(medicare)  and  covered  by  a  secondary  payor  shall  be excluded in
accordance with  rules  and  regulations  adopted  by  the  council  and
approved  by the commissioner in the determination of case payment rates
computed in accordance with the provisions of this section.
(h)(i) Any malpractice insurance costs which are the result of general
hospitals having to purchase or  provide  excess  malpractice  insurance
coverage  for  physicians in accordance with section nineteen of chapter
two hundred ninety-four of the laws of nineteen hundred  eighty-five  or
section  eighteen  of  chapter  two  hundred  sixty-six  of  the laws of
nineteen  hundred  eighty-six  as  amended  shall  not  be  included  in
calculating malpractice insurance costs for purposes of paragraph (e) of
subdivision one of this section.
(ii)   The   component  of  general  hospital  reimbursable  inpatient
operating costs based on the general  hospital's  inpatient  malpractice
insurance  costs  plus  the  component  of  special additional inpatient
operating costs determined in  accordance  with  subparagraphs  (i)  and
(iii)  of  paragraph (e) of subdivision one of this section specifically
related to inpatient  malpractice  insurance  costs  used  to  determine
payment  rates  for  annual  rate  periods beginning on or after January
first, nineteen hundred eighty-eight shall be allocated among the payors
in accordance with regulations adopted by the council  and  approved  by
the commissioner.
(i)  For  patients  discharged during the period April first, nineteen
hundred  ninety-two  through  March   thirty-first,   nineteen   hundred
ninety-three  insured under a commercial insurer licensed to do business

in this state and authorized to write accident and health insurance  and
whose policy provides inpatient hospital coverage on an expense incurred
basis,  the  payment  rate shall be increased in addition to the payment
rate  conversion  factor  of thirteen percent by a supplementary payment
rate conversion factor of eleven percent for a total  conversion  factor
of  twenty-four  percent.  This  paragraph  shall  not apply to payments
pursuant to the workers' compensation law, the  volunteer  firefighters'
benefit   law,   the  volunteer  ambulance  workers'  benefit  law,  the
comprehensive motor vehicle insurance reparations act, the terms of  any
personal  injury  liability  insurance  policy, marine and inland marine
insurance policy or marine protections and indemnity insurance policy.
(j) No operating cost  ceilings  or  disallowances  other  than  those
applicable  for  purposes  of  the determination of a general hospital's
reimbursable inpatient operating cost base in accordance with  paragraph
(d)  of  subdivision  one  of  this  section shall be applied to general
hospitals, except for any cost ceilings  or  disallowances  applied  for
purposes   of   subdivision   twenty-four   of  this  section  and  cost
disallowances for general hospitals with rates based on budgeted costs.
(k) Notwithstanding any inconsistent provision of this  section,  case
based  rates  of payment per discharge may, in accordance with rules and
regulations adopted by the council and  approved  by  the  commissioner,
reflect  incorporation  of  severity  of  illness  considerations in the
methodology to determine such rates of payment.
(l)  Notwithstanding  any  inconsistent  provision  of  this  section,
nothing  in  this  section  shall  preclude a modification to case based
rates of payment per discharge in accordance with rules and  regulations
adopted  by  the  council  and  approved  by the commissioner to reflect
readmission of an individual or unnecessary multiple  admissions  of  an
individual to a general hospital or general hospitals.
(m)  Notwithstanding  any  inconsistent  provision  of this section, a
general hospital that exceeded maximum charge limitations as  determined
by  the  commissioner  in  the rate periods nineteen hundred eighty-four
through nineteen hundred eighty-seven may be  authorized  in  accordance
with  rules  and  regulations adopted by the council and approved by the
commissioner to reduce payments determined pursuant to this  section  in
order  to  effect  a  reduction  equivalent to such amount by which such
general hospital exceeded maximum charge limitations.
(n) (i) For a patient discharged from a general hospital on  or  after
August  first,  nineteen  hundred  eighty-eight  and  covered by a payor
included in the payor categories specified in paragraph (a)  or  (b)  of
subdivision   one  of  this  section  that  provides  for  a  percentage
coinsurance responsibility by or on behalf of such patient  for  covered
hospital  services:  (A) the dollar value of such percentage coinsurance
responsibility by or on behalf of such patient shall  be  determined  by
multiplying  such  coinsurance  percentage by the hospital's charges for
such patient, determined in accordance with paragraph (c) of subdivision
one of this section or paragraph (e) of subdivision four of this section
for a general hospital or  distinct  unit  of  a  general  hospital  not
reimbursed  on  case  based  payments,  for  the services covered by the
payor, considering any applicable deductibles, and (B) the  payment  due
to  a  general hospital for reimbursement of inpatient hospital services
by such payor shall  be  determined  by  multiplying  the  payment  rate
determined  in accordance with this section for such patient for covered
hospital services by the coinsurance percentage for which such payor  is
responsible, considering any applicable deductibles.
(ii)  A  patient  covered  by a payor included in the payor categories
specified in paragraph (a) or (b) of subdivision  one  of  this  section
shall  be  deemed  liable  for  the  payment rate for inpatient hospital

services for such patient for covered services determined in  accordance
with this section based on the rate of payment for such payor, provided,
however,  that  for  a  patient discharged from a general hospital on or
after   August   first,   nineteen  hundred  eighty-eight  a  percentage
coinsurance responsibility by or on behalf  of  such  patient  shall  be
deemed  satisfied  by  payment  of  the  dollar value of such percentage
coinsurance responsibility determined in accordance with clause  (A)  of
subparagraph (i) of this paragraph.
(o) No general hospital shall refuse to provide hospital services to a
person  presented  or  proposed  to  be  presented for admission to such
general hospital by a representative of a  correctional  facility  or  a
local  correctional  facility  as  defined  respectively in subdivisions
four, fifteen and sixteen of section two of  the  correction  law  based
solely  on the grounds such person is an incarcerated individual of such
correctional  facility  or  local  correctional  facility.  No   general
hospital may demand or request any charge for hospital services provided
to  such  person  in  addition  to  the  charges  or rates authorized in
accordance with  this  article,  except  for  charges  for  identifiable
additional  hospital  costs  associated  with  or  reasonable additional
charges associated with security arrangements for such person.
(p)(i) Notwithstanding any inconsistent provision of  law,  a  general
hospital  that  provides  an  inpatient  component  of  hospice care for
persons eligible for payments to a hospice by a government  agency  made
in  accordance  with subdivisions two and three of section four thousand
twelve of this chapter shall be reimbursed for such  inpatient  services
by  or on behalf of the hospice at a rate of payment no greater than the
applicable rate of payment determined in  accordance  with  subdivisions
two  and  three of section four thousand twelve of this chapter for such
hospice and no general hospital may charge for such  inpatient  services
rendered an amount in excess of such applicable rate of payment.
(ii)  Notwithstanding  any  inconsistent  provision  of law, a general
hospital that  provides  in  accordance  with  contractual  arrangements
between  a  hospice  and such general hospital an inpatient component of
hospice care for persons who  are  not  eligible  for  payments  to  the
hospice  by a government agency made in accordance with subdivisions two
and three of  section  four  thousand  twelve  of  this  chapter  or  as
beneficiaries  of  title  XVIII  of  the  federal  social  security  act
(medicare) shall be reimbursed for such  inpatient  services  by  or  on
behalf of the hospice in accordance with such contractual arrangements.
(q)  A  third-party  payor  specified  in paragraph (a), (b) or (c) of
subdivision one of this section,  with  the  exception  of  governmental
agencies, shall provide the general hospital with a remittance advice at
the  time payment or adjustment to such payment is made. Such remittance
advice shall include the patient's name, date of service,  admission  or
financial  control  number  if  available  and  diagnosis-related  group
classification number if applicable and if different than that billed by
the hospital. Such remittance advice shall also include (i)  the  amount
or percentage payable under the policy or certificate after deductibles,
co-payments  and  any  other  reduction  of  the amount billed including
deductions for prompt payment; and (ii) a specific  explanation  of  any
denial, reduction, or other reason including any other third-party payor
coverage, for not providing full reimbursement of the amount claimed.
* (r)  Notwithstanding any inconsistent provision of this section, for
purposes of establishing rates of payment by state governmental agencies
for general hospital inpatient services provided for  discharges  on  or
after  April  first, nineteen hundred ninety-five, the reimbursable base
year inpatient administrative and general costs of a  general  hospital,
which  shall  include  but not be limited to reported administrative and

general, data processing, non-patient telephone, purchasing,  admitting,
and  credit  and collection costs, excluding a provider reimbursed on an
initial budget basis, shall not exceed the statewide  average  of  total
reimbursable  base  year inpatient administrative and general costs. For
the purposes of this paragraph, reimbursable  base  year  administrative
and  general costs shall mean those base year administrative and general
costs remaining after application of  all  other  efficiency  standards,
including,  but  not limited to, peer group cost ceilings or guidelines.
The limitation on reimbursement for provider administrative and  general
expenses  provided  by this paragraph shall be expressed as a percentage
reduction of the operating cost component of the rate promulgated by the
commissioner for each general hospital.
* NB Expired March 31, 2011
* (s) Notwithstanding any inconsistent provisions of this section, for
the  period  July  first,  nineteen  hundred  ninety-six  through  March
thirty-first,  nineteen  hundred  ninety-seven,  the  commissioner shall
increase rates of payment for patients eligible  for  payments  made  by
state  governmental  agencies  by  an  amount  not  to exceed forty-five
million dollars in the aggregate to be allocated among  those  voluntary
non-profit and private proprietary general hospitals which qualified for
rate  adjustments pursuant to this paragraph as in effect for the period
July  first,  nineteen  hundred  ninety-five  through  June   thirtieth,
nineteen  hundred  ninety-six  proportionally based on each such general
hospital's proportional share of the total funds allocated  pursuant  to
this  paragraph  as  in  effect  for  the period of July first, nineteen
hundred ninety-five through June thirtieth, nineteen hundred ninety-six.
* NB Expires December 31, 2026
(s-1) To the extent funds are available pursuant to the provisions  of
paragraph  (s-2)  of  this subdivision and otherwise notwithstanding any
inconsistent provision of law to the  contrary,  for  the  rate  periods
September   first,   nineteen   hundred   ninety-seven   through   March
thirty-first, nineteen hundred ninety-eight, and April  first,  nineteen
hundred   ninety-eight  through  March  thirty-first,  nineteen  hundred
ninety-nine, the  commissioner  shall  increase  rates  of  payment  for
patients eligible for payments made by state governmental agencies by an
amount  not  to  exceed forty-eight million dollars in the aggregate for
each such rate period, allocated among those  voluntary  non-profit  and
private   proprietary   general   hospitals  which  qualified  for  rate
adjustments pursuant to paragraph (s) of this subdivision as  in  effect
for  the  period  July  first, nineteen hundred ninety-five through June
thirtieth, nineteen hundred ninety-six proportionally based on each such
general hospital's proportional share of total funds allocated  pursuant
to paragraph (s) of this subdivision as in effect for the period of July
first,  nineteen  hundred  ninety-five  through June thirtieth, nineteen
hundred ninety-six. The rate adjustments calculated in  accordance  with
this  paragraph  shall  be  subject  to  retrospective reconciliation to
ensure that each hospital receives in the  aggregate  its  proportionate
share of the full allocation, to the extent allowable under federal law,
provided  however that the department shall not be required to reconcile
payments made pursuant to paragraph (s) of this  subdivision  applicable
to periods prior to September first, nineteen hundred ninety-seven.
(s-2)  (i)  Notwithstanding  any  inconsistent provision of law to the
contrary, the following  funds  heretofore  or  hereinafter  accumulated
shall  be  transferred by the commissioner and credited to the credit of
the state general fund medical assistance local assistance account in an
aggregate amount equal to the non-federal share of the costs of the rate
adjustments authorized pursuant to paragraph (s-1) of this subdivision:
(A) from pool reserves from statewide and regional  pools  established
pursuant  to sections twenty-eight hundred seven-a, twenty-eight hundred
seven-c, and twenty-eight hundred eight-c of this article;
(B)  from  unobligated  monies  available pursuant to paragraph (b) of
subdivision nineteen of section twenty-eight  hundred  seven-c  of  this
article;
(C)  from  interest  income derived from pools established pursuant to
sections twenty-eight hundred seven-k, twenty-eight hundred seven-l  and
twenty-eight hundred seven-s of this article.
(ii)  To the extent that funds available pursuant to the provisions of
subparagraph  (i)  of  this  paragraph  are  insufficient  to  meet  the
non-federal  share  of  the  costs  of  the  rate adjustments authorized
pursuant to paragraph (s-1) of this  subdivision,  the  following  funds
hereto or hereinafter accumulated may be transferred by the commissioner
to  the  state  general fund medical assistance local assistance account
for the purposes set forth in subparagraph (i) of this paragraph:
(A) from unobligated monies available pursuant to paragraphs  (g)  and
(j)  of  subdivision  1  of section twenty-eight hundred seven-l of this
article;
(B) from unobligated  monies  available  pursuant  to  clause  (D)  of
subparagraph  (ii)  of  paragraph  (b)  of  subdivision  one  of section
twenty-eight hundred seven-l of this article.
(iii)  Notwithstanding  any  inconsistent  provision  of  law  to  the
contrary,  the  commissioner  shall  transfer  up  to  an additional two
million dollars from the funding sources identified in subparagraph  (i)
of  this  paragraph  to  the  state  general  fund. To the extent monies
available from the funding sources identified  in  subparagraph  (i)  of
this  paragraph  total  less  than two million dollars, the commissioner
shall transfer monies from funding sources  identified  in  subparagraph
(ii)  of  this  paragraph  to  the  state general fund so that the total
amount  transferred  pursuant  to  this  provision  equals  two  million
dollars.
(s-3)  To the extent funds are available pursuant to the provisions of
paragraph (s-4) of this subdivision and  otherwise  notwithstanding  any
inconsistent  provision of law to the contrary, for the rate period July
first, nineteen hundred  ninety-nine  through  March  thirty-first,  two
thousand,  the commissioner shall increase rates of payment for patients
eligible for payments made by state governmental agencies by  an  amount
not  to  exceed thirty-six million dollars in the aggregate. Such amount
shall  be  allocated  among  those  voluntary  non-profit  and   private
proprietary  general  hospitals  which  continue  to  provide  inpatient
services as of July first, nineteen hundred ninety-nine under a previous
or new name  and  which  qualified  for  rate  adjustments  pursuant  to
paragraph  (s)  of  this  subdivision  as  in effect for the period July
first, nineteen hundred ninety-five  through  June  thirtieth,  nineteen
hundred  ninety-six proportionally based on each such general hospital's
proportional share of total funds allocated pursuant to paragraph (s) of
this subdivision as in effect for the period  of  July  first,  nineteen
hundred ninety-five through June thirtieth, nineteen hundred ninety-six,
provided  however,  that  amounts  allocable to previously but no longer
qualified hospitals shall be proportionally reallocated to the remaining
qualified hospitals. The rate adjustments calculated in accordance  with
this  paragraph  shall  be  subject  to  retrospective reconciliation to
ensure that each hospital receives in the  aggregate  its  proportionate
share of the full allocation, to the extent allowable under federal law,
provided  however that the department shall not be required to reconcile
payments made pursuant to paragraph (s) of this  subdivision  applicable
to periods prior to September first, nineteen hundred ninety-seven.
(s-4)  Notwithstanding  any  inconsistent  provision  of  law  to  the
contrary, funds available pursuant to section 32-c  of  part  F  of  the
chapter  of  the  laws  of  nineteen hundred ninety-nine which adds this
paragraph shall be transferred by the commissioner and credited  to  the
credit  of  the  state  general fund medical assistance local assistance
account in an aggregate amount equal to the  non-federal  share  of  the
costs  of the rate adjustments authorized pursuant to paragraph (s-3) of
this subdivision.
* (s-5) To the extent funds are available pursuant to paragraph (s) of
subdivision one of section twenty-eight hundred seven-v of this  article
and  otherwise  notwithstanding  any  inconsistent provision of law, for
rate periods April first, two thousand through March  thirty-first,  two
thousand  three,  the  commissioner  shall increase rates of payment for
patients eligible for payments made by state governmental agencies by an
amount not  to  exceed  forty-eight  million  dollars  annually  in  the
aggregate.   Such  amount  shall  be  allocated  among  those  voluntary
non-profit and private proprietary general hospitals which  continue  to
provide   inpatient   services   as  of  July  first,  nineteen  hundred
ninety-nine under a previous or new name and which  qualified  for  rate
adjustments  pursuant  to paragraph (s) of this subdivision as in effect
for the period July first, nineteen  hundred  ninety-five  through  June
thirtieth, nineteen hundred ninety-six proportionally based on each such
general  hospital's proportional share of total funds allocated pursuant
to paragraph (s) of this subdivision as in effect for the period of July
first, nineteen hundred ninety-five  through  June  thirtieth,  nineteen
hundred   ninety-six,   provided  however,  that  amounts  allocable  to
previously but no longer qualified  hospitals  shall  be  proportionally
reallocated  to  the remaining qualified hospitals. The rate adjustments
calculated in  accordance  with  this  paragraph  shall  be  subject  to
retrospective  reconciliation  to  ensure that each hospital receives in
the aggregate its proportionate share of the  full  allocation,  to  the
extent allowable under federal law, provided however that the department
shall  not  be required to reconcile payments made pursuant to paragraph
(s) of this subdivision applicable to periods prior to September  first,
nineteen hundred ninety-seven.
* NB Expires December 31, 2026
(s-6)  To the extent funds are available otherwise notwithstanding any
inconsistent provision of law to the contrary, for  rate  periods  April
first, two thousand three through March thirty-first, two thousand five,
the  commissioner  shall increase rates of payment for patients eligible
for payments made by state governmental agencies by  an  amount  not  to
exceed  forty-eight  million  dollars  annually  in  the aggregate. Such
amount shall be allocated among those voluntary non-profit  and  private
proprietary  general  hospitals  which  continue  to  provide  inpatient
services as of July first, nineteen hundred ninety-nine under a previous
or new name  and  which  qualified  for  rate  adjustments  pursuant  to
paragraph  (s)  of  this  subdivision  as  in effect for the period July
first, nineteen hundred ninety-five  through  June  thirtieth,  nineteen
hundred  ninety-six proportionally based on each such general hospital's
proportional share of total funds allocated pursuant to paragraph (s) of
this subdivision as in effect for the period  of  July  first,  nineteen
hundred ninety-five through June thirtieth, nineteen hundred ninety-six,
provided  however,  that  amounts  allocable to previously but no longer
qualified hospitals shall be proportionally reallocated to the remaining
qualified hospitals. The rate adjustments calculated in accordance  with
this  paragraph  shall  be  subject  to  retrospective reconciliation to
ensure that each hospital receives in the  aggregate  its  proportionate
share of the full allocation, to the extent allowable under federal law,

provided  however that the department shall not be required to reconcile
payments made pursuant to paragraph (s) of this  subdivision  applicable
to  periods  prior  to  September  first, nineteen hundred ninety-seven.
These  payments  may  be  added to rates of payment or made as aggregate
payments to eligible hospitals.
(s-7) To the extent funds are available otherwise notwithstanding  any
inconsistent  provision  of  law to the contrary, for rate periods April
first, two thousand five through March thirty-first, two thousand seven,
the commissioner shall increase rates of payment for  patients  eligible
for  payments  made  by  state governmental agencies by an amount not to
exceed forty-eight million  dollars  annually  in  the  aggregate.  Such
amount  shall  be allocated among those voluntary non-profit and private
proprietary  general  hospitals  which  continue  to  provide  inpatient
services  as  of  April first, two thousand five under a previous or new
name and which qualified for rate adjustments pursuant to paragraph  (s)
of  this  subdivision  as  in effect for the period July first, nineteen
hundred ninety-five through June thirtieth, nineteen hundred  ninety-six
proportionally  based on each such general hospital's proportional share
of total funds allocated pursuant to paragraph (s) of  this  subdivision
as  in effect for the period of July first, nineteen hundred ninety-five
through June thirtieth, nineteen hundred ninety-six,  provided  however,
that  amounts  allocable to previously but no longer qualified hospitals
shall  be  proportionally  reallocated  to   the   remaining   qualified
hospitals.  The  rate  adjustments  calculated  in  accordance with this
paragraph shall be subject to  retrospective  reconciliation  to  ensure
that  each hospital receives in the aggregate its proportionate share of
the full allocation, to the extent allowable under federal law, provided
however that the department shall not be required to reconcile  payments
made pursuant to paragraph (s) of this subdivision applicable to periods
prior to September first, nineteen hundred ninety-seven.
(s-8)  To the extent funds are available and otherwise notwithstanding
any inconsistent provision of law to the contrary, for rate  periods  on
and  after  April  first, two thousand seven through November thirtieth,
two thousand nine, the commissioner shall increase rates of payment  for
patients eligible for payments made by state governmental agencies by an
amount  not  to  exceed sixty million dollars annually in the aggregate.
Such amount shall be allocated among those voluntary non-profit  general
hospitals  which  continue  to  provide  inpatient  services as of April
first, two thousand seven through March thirty-first, two thousand eight
and which have medicaid inpatient discharges  percentages  equal  to  or
greater  than  thirty-five  percent.  This  percentage shall be computed
based upon data reported  to  the  department  in  each  hospital's  two
thousand  four institutional cost report, as submitted to the department
on or before January first, two thousand  seven.  The  rate  adjustments
calculated   in  accordance  with  this  paragraph  shall  be  allocated
proportionally based on each eligible hospital's total reported medicaid
inpatient discharges  in  two  thousand  four,  to  the  total  reported
medicaid  inpatient  discharges  for  all such eligible hospitals in two
thousand four, provided, however, that such rate  adjustments  shall  be
subject  to  reconciliation to ensure that each hospital receives in the
aggregate its proportionate share of the full allocation to  the  extent
allowable  under  federal  law.  Such  payments may be added to rates of
payment or made as aggregate payments to eligible  hospitals,  provided,
however,   that   subject  to  the  availability  of  federal  financial
participation and solely for the period April first, two thousand  seven
through  March  thirty-first, two thousand eight, six million dollars in
the aggregate of this  sixty  million  dollars  shall  be  allocated  to
voluntary  non-profit  hospitals  which  continue  to  provide inpatient

services  as  of  April  first,  two  thousand   seven   through   March
thirty-first,  two  thousand  eight  and  which  have Medicaid inpatient
discharge percentages of less than thirty-five  percent  and  which  had
previously  qualified  for  distributions pursuant to paragraph (s-7) of
this subdivision. The rate adjustment calculated in accordance with this
paragraph shall be allocated proportionally based on the amount of money
the hospital had received in two thousand six.
12.  Provisions for article forty-three insurance law corporations and
article forty-four of this chapter organizations.  Except as provided in
paragraphs (a) and (b) of this subdivision, general hospital charges for
inpatient and outpatient services to  subscribers  or  beneficiaries  of
contracts entered into pursuant to the provisions of article forty-three
of  the  insurance  law or to members of a comprehensive health services
plan operating pursuant to the provisions of article forty-four of  this
chapter  for  patient  services  rendered  shall not exceed the rates of
payment approved by  the  commissioner  for  payments  by  such  article
forty-three   insurance   law   corporations   or   article   forty-four
organizations.  No general hospital may demand or request any charge for
such covered services in addition to the charges or rates authorized  by
this article.
(a) Any general hospital which terminated its contract with an article
nine-c insurance law corporation or a comprehensive health services plan
after  October  first,  nineteen  hundred  seventy-six  and prior to May
first, nineteen hundred seventy-eight, may  not  charge  subscribers  or
beneficiaries  of  contracts  entered into pursuant to the provisions of
article forty-three of the insurance law, or members of a  comprehensive
health  services  plan  operating  pursuant to the provisions of article
forty-four  of  this  chapter,  amounts  in  excess  of   the   payments
established by such hospital for patient services in accordance with the
provisions  of  paragraph  (c) of subdivision one of this section, or in
the  event  the  article  forty-three  insurance  law   corporation   or
comprehensive  health services plan operating pursuant to the provisions
of article forty-four of this chapter provides for reimbursement  on  an
expense  incurred  basis and makes payment directly to such hospital for
patient services for its  subscribers  or  beneficiaries,  such  article
forty-three  insurance  law corporation or comprehensive health services
plan shall be an additional category  of  payor  of  inpatient  hospital
services  whose  rates  of  payment  are  determined  in accordance with
paragraph (b) of subdivision one of this section  based  on  an  imputed
rate   of  payment  determined  in  accordance  with  paragraph  (a)  of
subdivision one of this section for an article forty-three insurance law
corporation, adjusted for uncovered services, and increased by  thirteen
percent.
(b)  Any  general  hospital  which  had notified in writing an article
nine-c corporation or a comprehensive health services plan prior to June
first, nineteen hundred seventy-eight of its intention to terminate  its
contract  with  such corporation or plan in accordance with the terms of
such contract, except a general hospital subject to  the  provisions  of
paragraph  (a)  of  this  subdivision  may  not  charge  a subscriber or
beneficiary of a contract entered into pursuant  to  the  provisions  of
article forty-three of the insurance law, or a member of a comprehensive
health  services  plan  operating  pursuant to the provisions of article
forty-four of this chapter, after the effective date of  termination  of
such  contract,  amounts  in  excess of the payments established by such
hospital for patient services  in  accordance  with  the  provisions  of
paragraph  (c)  of  subdivision one of this section, or in the event the
article forty-three insurance law corporation  or  comprehensive  health
services plan operating pursuant to the provisions of article forty-four

of  this chapter provides for reimbursement on an expense incurred basis
and makes payment directly to such hospital for patient services for its
subscribers or beneficiaries, such  article  forty-three  insurance  law
corporation or comprehensive health services plan shall be an additional
category  of payor of inpatient hospital services whose rates of payment
are determined in accordance with paragraph (b) of  subdivision  one  of
this  section  based  on  an  imputed  rate  of  payment  determined  in
accordance with paragraph (a) of subdivision one of this section for  an
article  forty-three  insurance  law corporation, adjusted for uncovered
services, and increased by thirteen percent.
(c) No general hospital shall refuse to provide  patient  services  to
such  subscribers  or  beneficiaries  solely  on  the  grounds  of  such
subscription or membership.
(d) The provisions of this subdivision shall also apply to payments to
general hospitals by a corporation organized and operating in accordance
with  article  forty-three  of  the  insurance  law  for  inpatient  and
outpatient  services  on  behalf of subscribers of a foreign corporation
which performs similar functions in another state or which belongs to  a
national  association  comprised  of  similar  corporations to which the
article forty-three corporation also  belongs;  provided,  however,  the
foreign  corporation  or  the  laws  of  the  state in which the foreign
corporation is organized extends  to  article  forty-three  corporations
organized  and  operating  in  this state a reciprocal right to have the
foreign corporation make payments to hospitals in that  other  state  on
behalf  of  subscribers  of  the article forty-three corporations at the
same rate of payment as  that  foreign  corporation  pays  for  its  own
subscribers.
* (e)  The  provisions of this subdivision shall not apply to patients
discharged on or after January first, nineteen hundred ninety-seven.
* NB Expires December 31, 2026
13.  Restitution  authorization.  In  enforcing  the   provisions   of
subdivisions  one  and  twelve of this section, the commissioner may, in
addition to the penalties and injunctions set forth in section twelve of
this chapter, order that any general hospital  provide  restitution  for
any  overpayments  made  by any party. Any hospital may request a formal
hearing pursuant to the provisions of section twelve-a of  this  chapter
in  the  event  the  hospital  objects  to any order of the commissioner
hereunder. The commissioner may direct  that  such  a  hearing  be  held
without any request by a hospital.
14.  Bad  debt and charity care allowance. * (a) With the exception of
rates of payment for services provided to beneficiaries of  title  XVIII
of  the  federal  social  security act (medicare), all rates and general
hospital charges, including rates  of  payment  for  state  governmental
agencies  provided  all  federal  approvals necessary by federal law and
regulation for federal financial  participation  in  payments  made  for
beneficiaries  eligible  for  medical  assistance under title XIX of the
federal social security act based upon the allowance provided herein  as
a  component  of such payments are granted, established for rate periods
commencing on or after January first, nineteen hundred eighty-eight  and
prior to January first, nineteen hundred ninety-seven in accordance with
this  section  shall include the allowance specified in paragraph (c) of
this subdivision. The allowance shall be computed on the  basis  of  the
operating and capital related components of such rates after trending of
the  operating  portion.  For  the  purposes  of  this  subdivision  and
subdivision seventeen of this section, major  public  general  hospitals
are  defined  as  all  state  operated  general  hospitals,  all general
hospitals operated by the New York city health and hospitals corporation
as established by chapter one thousand sixteen of the laws  of  nineteen

hundred  sixty-nine  as  amended  and all other public general hospitals
having annual inpatient operating costs in excess of twenty-five million
dollars.
* NB Effective until December 31, 2026
* (a)  With the exception of rates of payment for services provided to
beneficiaries  of  title  XVIII  of  the  federal  social  security  act
(medicare),  all  rates and general hospital charges, including rates of
payment for state governmental agencies provided all  federal  approvals
necessary   by   federal   law  and  regulation  for  federal  financial
participation in payments made for beneficiaries  eligible  for  medical
assistance under title XIX of the federal social security act based upon
the  allowance  provided  herein  as  a  component  of such payments are
granted, established for rate periods commencing  on  or  after  January
first,  nineteen  hundred  eighty-eight  in accordance with this section
shall  include  the  allowance  specified  in  paragraph  (c)  of   this
subdivision.  The  allowance  shall  be  computed  on  the  basis of the
operating and capital related components of such rates after trending of
the  operating  portion.  For  the  purposes  of  this  subdivision  and
subdivision  seventeen  of  this section, major public general hospitals
are defined  as  all  state  operated  general  hospitals,  all  general
hospitals operated by the New York city health and hospitals corporation
as  established  by chapter one thousand sixteen of the laws of nineteen
hundred sixty-nine as amended and all  other  public  general  hospitals
having annual inpatient operating costs in excess of twenty-five million
dollars.
* NB Effective December 31, 2026
(b)  The  allowance shall be a percentage to reflect the needs for the
financing of losses resulting from bad debts and the  costs  of  charity
care  of  general  hospitals  within  article  forty-three insurance law
regions, or such  other  regions  as  adopted  pursuant  to  subdivision
sixteen  of  this  section,  and  within  a  statewide  determination of
financial resources to be committed for this purpose.
Need shall be defined as inpatient losses from bad  debts  reduced  to
cost and the inpatient costs of charity care increased by any deficit of
such  hospital from providing ambulatory services, excluding any portion
of such deficit resulting from governmental payments below average visit
costs, and revenues and expenses related to the  provision  of  referred
ambulatory  services.  Funds  received by major public general hospitals
pursuant to article  forty-one  of  the  mental  hygiene  law  shall  be
considered  to  have been provided for inpatient hospital deficits only.
The council shall adopt rules and regulations, subject to  the  approval
of  the  commissioner,  to  establish  uniform  reporting and accounting
principles  designed  to  enable  hospitals  to  fairly  and  accurately
determine  and  report  losses  from  bad debts and the costs of charity
care.
(c) The regional amounts to be included in rates approved for the rate
year commencing January first, nineteen hundred  eighty-eight  shall  be
equal  to  the  sum of the following two components divided by the total
reimbursable inpatient costs for the general hospitals  located  in  the
region,  excluding  inpatient  costs  related  to beneficiaries of title
XVIII  of  the  federal  social  security  act  (medicare),  and   after
application of the trend factor. The first component shall be the result
of  the  ratio  between  the  total nominal payment amount in dollars as
determined in subparagraph (i) of this paragraph that would be allocated
to  voluntary  non-profit,  private  proprietary  and   public   general
hospitals  other than major public general hospitals in the region based
on a targeted need formula applied in accordance with subparagraphs  (i)
and (ii) of this paragraph and the statewide sum of such nominal payment

amounts  to voluntary non-profit, private proprietary and public general
hospitals other than major public general hospitals applied to the total
statewide resources committed for this purpose to regional pools in  the
rate  year,  excluding  the total statewide amount allocated in the rate
year for this purpose to major public general  hospitals  in  accordance
with subparagraph (iii) of this paragraph. The second component shall be
the  dollar  amount  allocated  to major public general hospitals in the
region in accordance with subparagraph  (iii)  of  this  paragraph.  The
regional  amount to be included in the rates approved for the rate years
commencing on or after January first, nineteen hundred eighty-nine shall
be computed in the same  manner  except  that  the  base  year  for  the
targeted  need  as specified in subparagraph (i) of this paragraph shall
be the calendar year which is two years prior to the rate year. For each
annual rate period  commencing  on  or  after  January  first,  nineteen
hundred  eighty-eight,  the statewide amount to be available in regional
pools for this purpose  shall  equal  five  and  forty-eight  hundredths
percent  of  the  total hospital reimbursable inpatient costs, excluding
inpatient costs related to services provided to beneficiaries  of  title
XVIII  of  the  federal social security act (medicare), computed without
consideration of inpatient uncollectible amounts, and after  application
of the trend factor.
(i)  Targeted need shall be defined as the relationship of need to net
patient service revenue expressed as a percentage. Net  patient  service
revenue  shall  be  defined  as  net  patient  revenue  attributable  to
inpatient  and  outpatient  services   excluding   referred   ambulatory
services.  For  the  rate year beginning January first, nineteen hundred
eighty-eight  and  ending  December   thirty-first,   nineteen   hundred
eighty-eight  the scale specified in subparagraph (ii) of this paragraph
shall be utilized to calculate  individual  hospital's  nominal  payment
amounts  on  the  basis  of  the  percentage  relationship between their
nineteen hundred eighty-six need and  nineteen  hundred  eighty-six  net
patient service revenues. The nominal payment amount shall be defined as
the   sum   of  the  dollars  attributable  to  the  application  of  an
incrementally increasing  proportion  of  reimbursement  for  percentage
increases   in  targeted  need  according  to  the  scale  specified  in
subparagraph (ii) of this paragraph. The  sum  of  the  nominal  payment
amounts  for  all  hospitals  in  a  region  shall be the region's total
nominal payment amount.
(ii) The scale utilized for development  of  each  hospital's  nominal
payment amount shall be as follows:
Percentage of Reimbursement
Attributable to that Portion
 Targeted Need Percentage                     of Targeted Need
0     -1%                                  35%
1+    -2%                                  50%
2+    -3%                                  65%
3+    -4%                                  85%
4+    -5%                                  90%
5%+                                        95%
(iii) The dollar amount allocated to major public general hospitals in
a  region  in  the  rate  years  nineteen hundred eighty-eight, nineteen
hundred eighty-nine and in that portion of the nineteen  hundred  ninety
rate  year beginning on January first and ending on June thirtieth shall
be one hundred two percent and in that portion of the  nineteen  hundred
ninety  rate  year  beginning  on  July  first  and  ending  on December
thirty-first, and in subsequent rate years  shall  be  one  hundred  ten

percent  of  the  result  of  the  application of the ratio of the major
public general hospitals' inpatient reimbursable costs within the region
to total statewide general hospital  inpatient  reimbursable  costs,  as
computed  on  the  basis  of  nineteen hundred eighty-five financial and
statistical  reports  and  excluding  costs  related  to   services   to
beneficiaries  of  title  XVIII  of  the  federal  social  security  act
(medicare), to the statewide resources committed  for  this  purpose  to
regional    pools,   computed   without   consideration   of   inpatient
uncollectible amounts.
(iv) Notwithstanding  any  inconsistent  provision  of  this  section,
commencing  April  first,  nineteen  hundred  ninety-five  the allowance
pursuant to this subdivision  shall  be  a  uniform  regional  allowance
percentage of five and forty-eight hundredths percent for all regions.
(d)  In  the  event  the regional percentage bad debt and charity care
allowances for general hospitals for a  rate  period  commencing  on  or
after   January   first,  nineteen  hundred  ninety-four  determined  in
accordance with paragraph (c) of this subdivision to be submitted to bad
debt and charity care regional pools established pursuant to subdivision
sixteen of this section and deposited  in  accordance  with  subdivision
seventeen  of this section do not qualify for waiver pursuant to federal
law and regulation related to such  regional  allowance  variations,  in
order  for  such allowances to be qualified as a broad-based health care
related tax for purposes of the revenues received by the state from such
allowances not reducing the amount expended  by  the  state  as  medical
assistance  for  purposes  of  federal  financial participation, but the
regional percentage allowances for  the  nineteen  hundred  ninety-three
rate year do so qualify, then the regional percentage allowances for the
regions  for  the  nineteen hundred ninety-three rate year determined in
accordance with paragraph (c)  of  this  subdivision  shall  be  further
continued for such period for such regions.
14-a.   Supplementary  bad  debt  and  charity  care  adjustment.  (a)
Notwithstanding any inconsistent provision of  this  section,  rates  of
payment  for  inpatient  hospital  services  for  persons  eligible  for
payments made by state governmental agencies for the period April first,
nineteen hundred eighty-nine to December thirty-first, nineteen  hundred
eighty-nine  and  for each annual period commencing January first during
the  period  January  first,  nineteen  hundred   ninety   to   December
thirty-first,  nineteen  hundred  ninety-three  applicable  to  patients
eligible for federal financial participation  under  title  XIX  of  the
federal  social  security act in medical assistance provided pursuant to
title eleven of article five of the social services  law  determined  in
accordance  with  this  section  for a major public general hospital, as
defined in paragraph (a) of subdivision fourteen of this section,  shall
include  a supplementary bad debt and charity care adjustment determined
in accordance with paragraph (b) of this subdivision provided the  state
governmental  agency  or  the  county  government  in which such general
hospital is located, or the city of New  York  for  a  general  hospital
operated by the New York city health and hospitals corporation, files in
such time and manner as may be specified by the commissioner an election
for such adjustment for such hospital for each period provided that such
election  is subject to the approval of the state director of the budget
and  provided  all  federal  approvals  necessary  by  federal  law  and
regulation  for  federal  financial  participation  in payments made for
beneficiaries eligible for medical assistance under  title  XIX  of  the
federal social security act based upon the adjustment provided herein as
a component of such payments are granted.
(b)(i)  A  supplementary  bad debt and charity care adjustment for the
period  April  first,   nineteen   hundred   eighty-nine   to   December

thirty-first,  nineteen  hundred  eighty-nine and for each annual period
commencing January first  during  the  period  January  first,  nineteen
hundred  ninety  to December thirty-first, nineteen hundred ninety-three
for  an  eligible  major public general hospital shall be determined for
each period in accordance with rules  and  regulations  adopted  by  the
council   and  approved  by  the  commissioner  based  upon  the  amount
calculated by subtracting the amount projected to be distributed to such
major public general hospital pursuant to paragraph (a)  of  subdivision
seventeen  of  this section for such period from an amount calculated as
the product of the projected bad debt and charity care  nominal  payment
amount  coverage ratio for such period for voluntary non-profit, private
proprietary and public general hospitals other than major public general
hospitals multiplied by the base year bad debt and charity care  imputed
nominal payment amount for such major public general hospital determined
in  accordance  with  the  methodology  provided  in  paragraph  (c)  of
subdivision fourteen of  this  section  for  calculation  of  a  nominal
payment  amount for voluntary non-profit, private proprietary and public
general  hospitals  other  than  major  public  general  hospitals.  The
coverage  ratio  shall  be  computed as the ratio between the sum of the
dollar value of the amount committed to the regional pools in accordance
with paragraph (c) of subdivision fourteen of this section and paragraph
(a) of subdivision nineteen of this section for  the  rate  period  that
would  be  allocated  to  voluntary  non-profit, private proprietary and
public general hospitals other than major public  general  hospitals  in
accordance  with  paragraph (b) of subdivision seventeen of this section
and the base year nominal payment amount for such hospitals.
(ii) A supplementary bad debt and charity care adjustment provided  in
accordance  with subparagraph (i) of this paragraph shall be adjusted to
reflect actual distributions  pursuant  to  paragraph  (a)  and  (b)  of
subdivision seventeen of this section.
* (c)  Notwithstanding any inconsistent provision of this subdivision,
a supplementary bad debt and charity care adjustment shall be determined
and provided for each of  the  nineteen  hundred  ninety-four,  nineteen
hundred  ninety-five  and  nineteen  hundred  ninety-six  rate  periods,
provided that the election pursuant to paragraph (a) of this subdivision
is continued for such period, for a major public general hospital  equal
to  the  higher  of  such adjustment for the nineteen hundred ninety-one
rate period or for the nineteen hundred ninety-three  rate  period.  The
adjustment  may  be made to rates of payment or as aggregate payments to
an eligible hospital.
* NB Effective until December 31, 2026
* (c) Notwithstanding any inconsistent provision of this  subdivision,
a supplementary bad debt and charity care adjustment shall be determined
and  provided  for  each  of  the nineteen hundred ninety-four, nineteen
hundred ninety-five and for the period January first,  nineteen  hundred
ninety-six  through  June  thirtieth,  nineteen  hundred ninety-six rate
periods, provided that the election pursuant to paragraph  (a)  of  this
subdivision  is  continued  for  such period, for a major public general
hospital equal to the higher of such adjustment for the nineteen hundred
ninety-one rate period or for the  nineteen  hundred  ninety-three  rate
period.  The  adjustment may be made to rates of payment or as aggregate
payments to an eligible hospital.
* NB Effective December 31, 2026
* (d)  Notwithstanding  any  inconsistent  provision   of   law,   the
provisions  of paragraphs (a), (b) and (c) of this subdivision shall not
apply to payments for patients discharged on  or  after  January  first,
nineteen hundred ninety-seven.
* NB Expires December 31, 2026
14-b.  General  health care services allowance. (a) With the exception
of rates of payment for services  provided  to  beneficiaries  of  title
XVIII  of  the  federal  social  security  act (medicare), all rates and
general hospital charges established for rate periods commencing  on  or
after January first, nineteen hundred ninety-one in accordance with this
section  shall  include a percentage allowance of the general hospital's
reimbursable inpatient  costs,  excluding  inpatient  costs  related  to
services  provided to beneficiaries of title XVIII of the federal social
security act (medicare), computed  without  consideration  of  inpatient
uncollectible  amounts,  and  after  application of the trend factor, as
follows:
(i) for the nineteen hundred ninety-one, nineteen  hundred  ninety-two
and   nineteen  hundred  ninety-three  rate  periods,  an  allowance  of
twenty-three hundredths of one percent;
(ii) for the nineteen hundred ninety-four rate period, an allowance of
six hundred fourteen thousandths of one percent;
(iii) for the January first, nineteen hundred ninety-five through June
thirtieth, nineteen hundred ninety-five rate period, an allowance of six
hundred thirty-seven thousandths of one percent;
(iv) for the July first, nineteen hundred ninety-five through December
thirty-first, nineteen hundred ninety-five rate period, an allowance  of
one and forty-two hundredths percent; and
* (v)  for  the  January  first,  nineteen  hundred ninety-six through
December thirty-first,  nineteen  hundred  ninety-six  rate  period,  an
allowance of one and nine hundredths percent.
* NB Effective until December 31, 2026
* (v)  for the January first, nineteen hundred ninety-six through June
thirtieth, nineteen hundred ninety-six rate period, an allowance of  one
and nine hundredths percent.
* NB Effective December 31, 2026
(b)  For  rate  periods  beginning on or after January first, nineteen
hundred  ninety-one  but  prior  to  January  first,  nineteen   hundred
ninety-four,  funds  will  be accumulated and made available in regional
pools  created  by  the  commissioner  for  regional  distributions   in
accordance  with  section  twenty-eight hundred seven-bb of this chapter
through the submission by or on  behalf  of  general  hospitals  of  the
allowance included in rates and charges in accordance with paragraph (a)
of this subdivision. Such regions shall be those established pursuant to
paragraph (b) of subdivision sixteen of this section. The regional pools
may  be  administered in accordance with the provisions of paragraph (c)
of subdivision sixteen of  this  section  applicable  to  bad  debt  and
charity  care  regional  pools.  Payments  by  or  on  behalf of general
hospitals to regional pools shall be due and arrearages shall be treated
in accordance with the provisions of subdivision twenty of this  section
applicable to bad debt and charity care regional pools.
(c) If on September thirtieth, nineteen hundred ninety-four, any funds
accumulated  over  the period January first, nineteen hundred ninety-one
through December thirty-first, nineteen hundred ninety-three are  unused
or  uncommitted  for  the  allocations provided for in this subdivision,
such unused or  uncommitted  funds  shall  be  reallocated  for  use  in
accordance with the provisions of subdivision seventeen of this section.
(d)  For  the  rate  periods  commencing  on  or  after January first,
nineteen hundred ninety-four, funds will be accumulated in  a  statewide
pool  created by the commissioner through the submission by or on behalf
of general hospitals of the allowance included in rates and  charges  in
accordance  with paragraph (a) of this subdivision, for distributions in
accordance with subdivision nineteen-a of this section.
(e)  The  commissioner  is  authorized  to  contract   with   a   pool
administrator designated in accordance with paragraph (c) of subdivision
sixteen  of this section or, if not available, such other administrators
as the commissioner shall designate, to  receive  funds  for  the  pools
created  pursuant  to  this  subdivision  and  to  distribute  funds  in
accordance with this subdivision  and  subdivision  nineteen-a  of  this
section.  If  a pool administrator is designated, the commissioner shall
conduct or cause to be conducted an annual  audit  of  the  receipt  and
distribution  of pool funds. The reasonable costs and expenses of a pool
administrator as  approved  by  the  commissioner,  not  to  exceed  for
personnel  services  on  an  annual  basis two hundred thousand dollars,
shall be paid from the pooled funds.
(f) (i) Payments to the pools by or on behalf of general hospitals  of
funds  due  based  on  the  allowances  provided in accordance with this
subdivision  shall  be  due  in  accordance  with  the   provisions   of
subdivision  twenty  of this section in the same manner as applicable to
bad debt and charity care regional pools. Arrearages in payments due may
be collected and interest and penalties due shall be determined and  may
be  collected  by  the commissioner in accordance with the provisions of
subdivision twenty of this section in the same manner as  applicable  to
bad debt and charity care regional pools.
(ii)  Notwithstanding  any  inconsistent provision of this section, as
shall be necessary to obtain federal financial participation in  medical
assistance  expenditures  in  accordance  with  title XIX of the federal
social security  act,  the  allowances  included  in  rates  of  payment
pursuant  to this subdivision on behalf of patients eligible for medical
assistance pursuant to title  eleven  of  article  five  of  the  social
services  law  shall  be  withheld  from  medical assistance payments to
general hospitals and paid to pools on behalf of the  general  hospitals
where a general hospital elects such withholding in such time and manner
as  specified  by  the commissioner, and in the event a general hospital
does not elect such withholding, payments by such general hospital to  a
pool  based  on  an  allowance  received for medical assistance patients
shall be due within five days of receipt of such funds.  Funds  withheld
by  a  payor and paid to a pool on behalf of a general hospital shall be
considered received by such general hospital and paid  to  the  pool  by
such general hospital for all purposes.
(g)  The  allowances  provided  pursuant  to  paragraph  (a)  of  this
subdivision  shall  be  effective  and  implemented  for   purposes   of
determining  rates of payment for state governmental agencies contingent
on receipt  of  all  federal  approvals  necessary  by  federal  law  or
regulations  for  federal  financial  participation in payments made for
beneficiaries eligible for medical assistance under  title  XIX  of  the
federal social security act based upon such allowances as a component of
such  payments.  If  such  federal  approvals  are  not granted for such
allowances  or  components  thereof,  rates   of   payment   for   state
governmental  agencies  shall  be  determined  in  accordance  with  the
provisions of this section without consideration of such  allowances  or
such  components  plus  an  adjustment  not subject to federal financial
participation equal to one-half of the difference between such rates  of
payment   determined   without   consideration  of  such  allowances  or
components and a rate of payment determined based on such allowances  or
components.  The  pools  established  pursuant to this subdivision shall
refund to the state governmental  agency  from  pool  reserves,  current
funds or future receipts any overpayment received based on a retroactive
reduction pursuant to this paragraph in the allowances.
(h)  The  allowances  provided  pursuant  to  paragraph  (a)  of  this
subdivision or components thereof shall be of no force  and  effect  and

shall be deemed to have been null and void as of January first, nineteen
hundred  ninety-four  in  the  event  the secretary of the department of
health and human  services  determines  that  such  allowances  or  such
components  thereof  are  an  impermissible  health care related tax for
purposes  of   the   federal   medicaid   voluntary   contribution   and
provider-specific  tax  amendments  of  nineteen  hundred ninety-one for
purposes of such funds reducing the amount deemed expended by the  state
as medical assistance for purposes of federal financial participation.
14-c.  Bad  debt and charity care allowance for financially distressed
hospitals. * (a) With the exception of rates  of  payment  for  services
provided  to beneficiaries of title XVIII of the federal social security
act (medicare), all rates and general hospital charges  established  for
rate  periods  commencing  on  or  after January first, nineteen hundred
ninety-one but prior to January first, nineteen hundred  ninety-four  in
accordance  with  this section shall include an allowance of two hundred
thirty-five thousandths of one percent; and for the rate periods  during
the  period January first, nineteen hundred ninety-four through December
thirty-first, nineteen hundred ninety-six an allowance of three  hundred
twenty-five  thousandths  of  one  percent  of  the  general  hospital's
reimbursable inpatient  costs,  excluding  inpatient  costs  related  to
services  provided to beneficiaries of title XVIII of the federal social
security act (medicare), computed  without  consideration  of  inpatient
uncollectible amounts, and after application of the trend factor.
* NB Effective until December 31, 2026
* (a)  With the exception of rates of payment for services provided to
beneficiaries  of  title  XVIII  of  the  federal  social  security  act
(medicare),  all rates and general hospital charges established for rate
periods  commencing  on  or  after  January  first,   nineteen   hundred
ninety-one  but  prior to January first, nineteen hundred ninety-four in
accordance with this section shall include an allowance of  two  hundred
thirty-five  thousandths of one percent; and for the rate periods during
the period January first,  nineteen  hundred  ninety-four  through  June
thirtieth,  nineteen  hundred  ninety-six  an allowance of three hundred
twenty-five  thousandths  of  one  percent  of  the  general  hospital's
reimbursable  inpatient  costs,  excluding  inpatient  costs  related to
services provided to beneficiaries of title XVIII of the federal  social
security  act  (medicare),  computed  without consideration of inpatient
uncollectible amounts, and after application of the trend factor.
* NB Effective December 31, 2026
(b) A statewide pool shall be created through the submissions by or on
behalf of general hospitals of  the  allowance  included  in  rates  and
charges  in  accordance  with  paragraph  (a) of this subdivision. Funds
accumulated in the statewide pool, including income from invested funds,
shall be deposited  by  the  commissioner  and  credited  to  a  special
revenue-other  fund  to be established by the comptroller. To the extent
of funds appropriated  therefor,  funds  shall  be  made  available  for
distributions  by or on behalf of the state, as payments under the state
medical assistance program provided pursuant to title eleven of  article
five  of  the  social  services law, from the statewide pool in the same
manner as  distributions  made  in  accordance  with  paragraph  (c)  of
subdivision  nineteen  of  this  section.  The  statewide  pools  may be
administered in accordance with  the  provisions  of  paragraph  (c)  of
subdivision  sixteen  of this section applicable to bad debt and charity
care regional pools. Payments by or on behalf of  general  hospitals  to
statewide  pools  shall  be  due  and arrearages, interest and penalties
shall be treated in accordance with the provisions of subdivision twenty
of this section applicable to bad debt and charity care regional pools.
(c)  Notwithstanding  any   inconsistent   provision   of   law,   the
commissioner  may  allocate  and  distribute  funds  accumulated  in the
statewide  pool  created  pursuant  to  this   subdivision   and   funds
accumulated  in the statewide pool created by the assessments authorized
in  accordance  with  subdivision eighteen of this section and available
for  distribution  in  accordance  with  paragraphs  (c)  and   (d)   of
subdivision  nineteen  of  this  section  for  contracts for independent
management  audits  of  financially  distressed   hospitals,   provided,
however,  that  the  total  amount for audits pursuant to this paragraph
shall not exceed two million five  hundred  thousand  dollars  over  the
period  January  first,  nineteen  hundred  ninety-four through December
thirty-first, nineteen hundred ninety-five.  Copies of management  audit
reports  of  financially  distressed  hospitals shall be provided by the
commissioner to the chairs of the senate and assembly health committees.
14-d.   Supplementary   low   income   patient    adjustment.    * (a)
Notwithstanding  any inconsistent provision of this section, payment for
inpatient hospital services for persons eligible for  payments  made  by
state  governmental  agencies for rate periods during the period January
first,  nineteen  hundred  ninety-one  through  December   thirty-first,
nineteen  hundred ninety-six applicable to patients eligible for federal
financial participation under title XIX of the federal  social  security
act  in  medical assistance provided pursuant to title eleven of article
five of the social services  law  determined  in  accordance  with  this
section shall include for eligible general hospitals a supplementary low
income patient adjustment determined in accordance with paragraph (b) of
this  subdivision,  provided  all federal approvals necessary by federal
law and regulation for federal financial participation in payments  made
for beneficiaries eligible for medical assistance under title XIX of the
federal social security act based upon the adjustment provided herein as
a  component of such payments are granted. The adjustment may be made to
rates of payment or as aggregate payments to an eligible hospital.
* NB Effective until December 31, 2026
* (a) Notwithstanding any  inconsistent  provision  of  this  section,
payment  for  inpatient  hospital  services  for  persons  eligible  for
payments made by state governmental agencies for rate periods during the
period  January  first,  nineteen  hundred   ninety-one   through   June
thirtieth,  nineteen  hundred ninety-six applicable to patients eligible
for federal financial participation  under  title  XIX  of  the  federal
social  security  act  in  medical assistance provided pursuant to title
eleven of  article  five  of  the  social  services  law  determined  in
accordance   with  this  section  shall  include  for  eligible  general
hospitals a supplementary low income patient  adjustment  determined  in
accordance  with paragraph (b) of this subdivision, provided all federal
approvals necessary by federal law and regulation for federal  financial
participation  in  payments  made for beneficiaries eligible for medical
assistance under title XIX of the federal social security act based upon
the adjustment provided herein as  a  component  of  such  payments  are
granted.  The adjustment may be made to rates of payment or as aggregate
payments to an eligible hospital.
* NB Effective December 31, 2026
* (b) A supplementary low income patient  adjustment  for  the  period
January    first,   nineteen   hundred   ninety-one   through   December
thirty-first, nineteen hundred ninety-three shall be determined, subject
to the provisions of subparagraph (iv) of this paragraph,  and  for  the
period  January  first,  nineteen  hundred  ninety-four through December
thirty-first, nineteen hundred ninety-six shall be determined  for  each
eligible hospital according to the scale specified in subparagraph (iii)
of  this  paragraph  based upon the amount calculated by multiplying the

applicable supplemental percentage  coverage  of  need  amount  for  the
hospital  by  the  hospital's  need  as  defined  in  paragraph  (b)  of
subdivision fourteen of this section; provided, however,  that  for  the
period  January  first,  nineteen  hundred  ninety-four through December
thirty-first, nineteen hundred ninety-six if the sum of the  adjustments
pursuant  to  clause  (C)  of subparagraph (iii) of this paragraph would
exceed thirty-six million dollars for a rate year on an annualized basis
the supplemental percentage coverage of need scale  pursuant  to  clause
(C)  of  subparagraph  (iii) of this paragraph shall be reduced on a pro
rata basis so that the sum of such adjustments  provided  for  the  rate
year on an annualized basis shall not exceed thirty-six million dollars.
(i)  The  low income patient percentage of a general hospital shall be
defined as the ratio of the sum  of  inpatient  discharges  of  patients
eligible for medical assistance pursuant to title eleven of article five
of  the  social  services  law  plus  inpatient  discharges  of self-pay
patients plus inpatient discharges of charity care patients  divided  by
total  inpatient  discharges  expressed  as a percentage. For the period
January   first,   nineteen   hundred   ninety-one   through    December
thirty-first,  nineteen  hundred  ninety-three, the percentages shall be
calculated based on base year nineteen hundred eighty-nine, received  by
the  department  no  later than November first, nineteen hundred ninety,
data  from  the  statewide  planning  and  research  cooperative  system
consistent  with  data submitted in accordance with section twenty-eight
hundred five-a of this article. For the period January  first,  nineteen
hundred  ninety-four  through  December  thirty-first,  nineteen hundred
ninety-six, the percentages shall  be  calculated  based  on  base  year
nineteen  hundred  ninety-one,  received by the department no later than
November first, nineteen hundred ninety-three, data from  the  statewide
planning  and research cooperative system consistent with data submitted
in accordance with section twenty-eight hundred five-a of this  article.
In  order to be eligible for an adjustment pursuant to this subdivision,
a hospital must maintain its collection efforts  to  obtain  payment  in
full from self-pay patients.
(ii) For the period January first, nineteen hundred ninety-one through
December  thirty-first,  nineteen  hundred  ninety-three,  hospital need
shall be calculated based on  base  year  nineteen  hundred  eighty-nine
data. For the period January first, nineteen hundred ninety-four through
December  thirty-first, nineteen hundred ninety-six, hospital need shall
be calculated based on base year nineteen hundred ninety-one data.
(iii)(A)  The  scale  utilized  for  development   of   a   hospital's
supplementary  low income patient adjustment shall be as follows for the
period  January  first,  nineteen  hundred   ninety-one   through   June
thirtieth, nineteen hundred ninety-one:
Low Income                 Supplemental Percentage
Patient Percentage                 Coverage of Need
50+  55%                               5%
55+  60%                              10%
60+  65%                              15%
65+  70%                              22.5%
70+  75%                              30%
75+  80%                              37.5%
80+                                   45%
(B)  The  scale utilized for development of a hospital's supplementary
low income adjustment shall be as follows for  the  period  July  first,
nineteen  hundred  ninety-one  for  a  public  general  hospital through
December thirty-first, nineteen hundred ninety-six and for  a  voluntary
non-profit  or  a private proprietary general hospital through September
thirtieth, nineteen hundred ninety-two:
Low Income                   Supplemental Percentage
Patient Percentage                 Coverage of Need
35+  55%                              20%
55+  60%                              25%
60+  65%                              30%
65+  70%                              37.5%
70+                                   45%
(C)  The  scale  utilized for development of a voluntary non-profit or
private proprietary general hospital's supplementary low income  patient
adjustment  shall  be  as follows for the period October first, nineteen
hundred  ninety-two  through  March   thirty-first,   nineteen   hundred
ninety-three   and  for  the  period  January  first,  nineteen  hundred
ninety-four through December thirty-first, nineteen hundred ninety-six:
Low Income                   Supplemental Percentage
Patient Percentage                 Coverage of Need
35+  50%                              10%
50+  55%                              20%
55+  60%                              25%
60+  65%                              30%
65+  70%                              37.5%
70+                                   45%
(D) The scale utilized for development of a  voluntary  non-profit  or
private  proprietary general hospital's supplementary low income patient
adjustment for the period May fifteenth, nineteen  hundred  ninety-three
through December thirty-first, nineteen hundred ninety-three shall be at
one  hundred  twenty  percent of the supplemental percentage coverage of
need scale specified in clause (C) of this subparagraph.
(iv)  A  supplementary  low  income  patient   adjustment   determined
according to the scale specified in subparagraph (iii) of this paragraph
shall  be  limited  for  rate  periods  during the period January first,
nineteen hundred  ninety-one  through  December  thirty-first,  nineteen
hundred  ninety-three  such  that  the  amount of such adjustment for an
eligible hospital, plus the amount committed to the  regional  pools  in
accordance  with  paragraph  (c) of subdivision fourteen of this section
and paragraph (a) of subdivision nineteen of this section for  the  rate
period  that  would  be allocated to such hospital, plus, if applicable,
any distribution for the  rate  period  pursuant  to  paragraph  (d)  of
subdivision  nineteen  of this section for such hospital, and plus for a
major public general hospital the amount of any supplementary  bad  debt
and  charity care adjustment provided pursuant to subdivision fourteen-a
of this section for the rate period shall not exceed ninety  percent  of
need.
(v)  The  provisions  of this subdivision shall not apply to a general
hospital eligible for distributions made pursuant to  paragraph  (c)  of
subdivision nineteen of this section.
* NB Effective until December 31, 2026
* (b)  A  supplementary  low  income patient adjustment for the period
January   first,   nineteen   hundred   ninety-one   through    December
thirty-first, nineteen hundred ninety-three shall be determined, subject
to  the  provisions  of subparagraph (iv) of this paragraph, and for the
period  January  first,  nineteen  hundred  ninety-four   through   June
thirtieth,  nineteen  hundred  ninety-six  shall  be determined for each
eligible hospital according to the scale specified in subparagraph (iii)
of this paragraph based upon the amount calculated  by  multiplying  the
applicable  supplemental  percentage  coverage  of  need  amount for the
hospital  by  the  hospital's  need  as  defined  in  paragraph  (b)  of
subdivision  fourteen  of  this section; provided, however, that for the
period  January  first,  nineteen  hundred  ninety-four   through   June

thirtieth,  nineteen  hundred  ninety-six  if the sum of the adjustments
pursuant to clause (C) of subparagraph (iii)  of  this  paragraph  would
exceed thirty-six million dollars for a rate year on an annualized basis
the  supplemental  percentage  coverage of need scale pursuant to clause
(C) of subparagraph (iii) of this paragraph shall be reduced  on  a  pro
rate  basis  so  that  the sum of such adjustments provided for the rate
year on an annualized basis shall not exceed thirty-six million dollars.
(i) The low income patient percentage of a general hospital  shall  be
defined  as  the  ratio  of  the sum of inpatient discharges of patients
eligible for medical assistance pursuant to title eleven of article five
of the  social  services  law  plus  inpatient  discharges  of  self-pay
patients  plus  inpatient discharges of charity care patients divided by
total inpatient discharges expressed as a  percentage.  For  the  period
January    first,   nineteen   hundred   ninety-one   through   December
thirty-first, nineteen hundred ninety-three, the  percentages  shall  be
calculated  based on base year nineteen hundred eighty-nine, received by
the department no later than November first,  nineteen  hundred  ninety,
data  from  the  statewide  planning  and  research  cooperative  system
consistent with data submitted in accordance with  section  twenty-eight
hundred  five-a  of this article. For the period January first, nineteen
hundred ninety-four through June thirtieth, nineteen hundred ninety-six,
the percentages shall be calculated based on base year nineteen  hundred
ninety-one,  received  by  the  department no later than November first,
nineteen hundred ninety-three, data  from  the  statewide  planning  and
research cooperative system consistent with data submitted in accordance
with section twenty-eight hundred five-a of this article. In order to be
eligible for an adjustment pursuant to this subdivision, a hospital must
maintain  its collection efforts to obtain payment in full from self-pay
patients.
(ii) For the period January first, nineteen hundred ninety-one through
December thirty-first,  nineteen  hundred  ninety-three,  hospital  need
shall  be  calculated  based  on  base year nineteen hundred eighty-nine
data. For the period January first, nineteen hundred ninety-four through
June thirtieth, nineteen hundred  ninety-six,  hospital  need  shall  be
calculated based on base year nineteen hundred ninety-one data.
(iii)(A)   The   scale   utilized  for  development  of  a  hospital's
supplementary low income patient adjustment shall be as follows for  the
period   January   first,   nineteen  hundred  ninety-one  through  June
thirtieth, nineteen hundred ninety-one:
Low Income                   Supplemental Percentage
Patient Percentage                 Coverage of Need
50+  55%                               5%
55+  60%                              10%
60+  65%                              15%
65+  70%                              22.5%
70+  75%                              30%
75+  80%                              37.5%
80+                                   45%
(B) The scale utilized for development of a  hospital's  supplementary
low  income  adjustment  shall  be as follows for the period July first,
nineteen hundred ninety-one for a public general hospital  through  June
thirtieth, nineteen hundred ninety-six and for a voluntary non-profit or
a  private  proprietary  general  hospital  through September thirtieth,
nineteen hundred ninety-two:
Low Income                   Supplemental Percentage
Patient Percentage                 Coverage of Need
35+  55%                              20%
55+  60%                              25%
60+  65%                              30%
65+  70%                              37.5%
70+                                   45%
(C)  The  scale  utilized for development of a voluntary non-profit or
private proprietary general hospital's supplementary low income  patient
adjustment  shall  be  as follows for the period October first, nineteen
hundred  ninety-two  through  March   thirty-first,   nineteen   hundred
ninety-three   and  for  the  period  January  first,  nineteen  hundred
ninety-four through June thirtieth, nineteen hundred ninety-six:
Low Income                   Supplemental Percentage
Patient Percentage                 Coverage of Need
35+  50%                              10%
50+  55%                              20%
55+  60%                              25%
60+  65%                              30%
65+  70%                              37.5%
70+                                   45%
(D) The scale utilized for development of a  voluntary  non-profit  or
private  proprietary general hospital's supplementary low income patient
adjustment for the period May fifteenth, nineteen  hundred  ninety-three
through December thirty-first, nineteen hundred ninety-three shall be at
one  hundred  twenty  percent of the supplemental percentage coverage of
need scale specified in clause (C) of this subparagraph.
(iv)  A  supplementary  low  income  patient   adjustment   determined
according to the scale specified in subparagraph (iii) of this paragraph
shall  be  limited  for  rate  periods  during the period January first,
nineteen hundred  ninety-one  through  December  thirty-first,  nineteen
hundred  ninety-three  such  that  the  amount of such adjustment for an
eligible hospital, plus the amount committed to the  regional  pools  in
accordance  with  paragraph  (c) of subdivision fourteen of this section
and paragraph (a) of subdivision nineteen of this section for  the  rate
period  that  would  be allocated to such hospital, plus, if applicable,
any distribution for the  rate  period  pursuant  to  paragraph  (d)  of
subdivision  nineteen  of this section for such hospital, and plus for a
major public general hospital the amount of any supplementary  bad  debt
and  charity care adjustment provided pursuant to subdivision fourteen-a
of this section for the rate period shall not exceed ninety  percent  of
need.
(v)  The  provisions  of this subdivision shall not apply to a general
hospital eligible for distributions made pursuant to  paragraph  (c)  of
subdivision nineteen of this section.
* NB Effective December 31, 2026
(c)   A  supplementary  low  income  patient  adjustment  provided  in
accordance with this subdivision for  rate  periods  during  the  period
January    first,   nineteen   hundred   ninety-one   through   December
thirty-first, nineteen hundred ninety-three shall be adjusted to reflect
actual distributions pursuant to paragraphs (a) and (b)  of  subdivision
seventeen  of  this section and paragraph (d) of subdivision nineteen of
this section and adjustments provided pursuant to subdivision fourteen-a
of this section.
(d) Notwithstanding any inconsistent provision  of  law,  a  voluntary
non-profit  or proprietary general hospital where the low income patient
percentage,  as  determined  in  accordance  with  provisions  of   this
subdivision,  is  between  thirty-five  and  sixty-five percent shall be
charged an assessment which for the period July first, nineteen  hundred
ninety-one  through  December  thirty-first, nineteen hundred ninety-one
shall equal five percent of the general hospital's bad debt and  charity
care  need as determined in accordance with paragraph (b) of subdivision

fourteen of this section and for  the  period  January  first,  nineteen
hundred   ninety-two   through  September  thirtieth,  nineteen  hundred
ninety-two shall  equal  seven  and  one-half  percent  of  the  general
hospital's  bad  debt  and charity care need as determined in accordance
with paragraph  (b)  of  subdivision  fourteen  of  this  section.  Such
assessment  shall  be  paid to the commissioner or his designee prior to
October first, nineteen hundred ninety-two in accordance with a schedule
established by the commissioner. The assessments may be administered  in
accordance  with  the provisions of paragraph (c) of subdivision sixteen
of this section applicable to bad debt and charity care regional  pools.
Payments of the assessments shall be due and arrearages shall be treated
in  accordance with the provisions of subdivision twenty of this section
applicable  to  bad  debt  and  charity  care  regional   pools.   Funds
accumulated  shall  be deposited by the commissioner and credited to the
department of social services medical assistance program general fund  -
local assistance account appropriation.
* (e)   Notwithstanding   any   inconsistent  provision  of  law,  the
provisions of paragraphs (a) and (b) of this subdivision shall not apply
to payments for patients discharged on or after January first,  nineteen
hundred ninety-seven.
* NB Expires December 31, 2026
* 14-f.    Public   general   hospital   indigent   care   adjustment.
Notwithstanding any inconsistent provision of this section  and  subject
to  the  availability  of  federal  financial participation, payment for
inpatient hospital services for persons eligible for  payments  made  by
state  governmental  agencies  for  the  period  January first, nineteen
hundred ninety-seven through  December  thirty-first,  nineteen  hundred
ninety-nine  and  periods  on  and  after  January  first,  two thousand
applicable to patients  eligible  for  federal  financial  participation
under title XIX of the federal social security act in medical assistance
provided pursuant to title eleven of article five of the social services
law  determined  in  accordance  with  this  section  shall  include for
eligible public general hospitals a  public  general  hospital  indigent
care  adjustment  equal  to  the  aggregate  amount  of  the adjustments
provided for such public general hospital for the period January  first,
nineteen  hundred  ninety-six  through  December  thirty-first, nineteen
hundred ninety-six pursuant to subdivisions fourteen-a and fourteen-d of
this section on an annualized basis, provided, however, that for periods
on and after January first, two thousand thirteen an  annual  amount  of
four hundred twelve million dollars shall be allocated to eligible major
public  hospitals  based  on  each  hospital's  proportionate  share  of
medicaid and uninsured losses to total medicaid and uninsured losses for
all eligible major public hospitals, net of any  disproportionate  share
hospital  payments  received  pursuant  to sections twenty-eight hundred
seven-k and twenty-eight hundred seven-w of this article. The adjustment
may be made to rates of payment or as aggregate payments to an  eligible
hospital.
* NB Effective until December 31, 2026
* 14-f.    Public   general   hospital   indigent   care   adjustment.
Notwithstanding any inconsistent provision of this section, payment  for
inpatient  hospital  services  for persons eligible for payments made by
state governmental agencies  for  the  period  January  first,  nineteen
hundred  ninety-seven  through  December  thirty-first, nineteen hundred
ninety-nine  applicable  to  patients  eligible  for  federal  financial
participation  under  title  XIX  of  the federal social security act in
medical assistance provided pursuant to title eleven of article five  of
the social services law determined in accordance with this section shall
include  for eligible public general hospitals a public general hospital

indigent  care  adjustment  equal  to  the  aggregate  amount   of   the
adjustments  provided  for  such  public general hospital for the period
January   first,   nineteen   hundred   ninety-six   through    December
thirty-first,  nineteen  hundred  ninety-six  pursuant  to  subdivisions
fourteen-a and fourteen-d  of  this  section  on  an  annualized  basis,
provided  all  federal approvals necessary by federal law and regulation
for federal financial participation in payments made  for  beneficiaries
eligible  for  medical  assistance under title XIX of the federal social
security act based upon the adjustment provided herein as a component of
such payments are granted. The  adjustment  may  be  made  to  rates  of
payment or as aggregate payments to an eligible hospital.
* NB Effective and repealed December 31, 2026
15.  Special  provisions for payments by governmental agencies. In the
event  that  federal  financial  participation  in  payments  made   for
beneficiaries  eligible  for  medical  assistance under title XIX of the
federal social security  act  based  upon  the  allowance  specified  in
paragraph  (c) of subdivision fourteen of this section as a component of
such payments is not  approved  by  the  federal  government,  rates  of
payment  by  governmental  agencies  for the operating cost component of
general hospital inpatient services shall be increased for each hospital
by the same percentage allowance as each hospital's federal fiscal  year
nineteen  hundred eighty-seven disproportionate share payment adjustment
factor for revenues received from services provided to beneficiaries  of
title  XVIII of the federal social security act (medicare) as determined
in  accordance  with  the  provisions  of   section   eighteen   hundred
eighty-six-d   of  title  XVIII  of  the  federal  social  security  act
(medicare).  Increased  amounts  received  by   general   hospitals   in
accordance  with  the  provision  of  this  subdivision  shall be offset
against distributions to such hospitals that were made or would be  made
pursuant  to  the  provisions  contained  in  subdivisions seventeen and
nineteen of this section. In the event that distributions had been  made
to  such hospitals pursuant to such subdivisions, the hospital shall, on
a proportional basis, return to the pool from  which  the  distributions
were  made  an amount equal to the increased amounts received under this
subdivision to the extent that such  increased  amounts  do  not  exceed
distributions  made.  Funds  in the statewide pool created in accordance
with  subdivision  sixteen  of  this  section,  which  would  have  been
distributed  in accordance with paragraph (c) of subdivision nineteen of
this section if the provisions of this subdivision were not  in  effect,
less  any amounts not distributed as the result of the offset provisions
of this subdivision shall be distributed to regional pools to the extent
that such funds are available and necessary to  maintain  regional  pool
distributions,  with  consideration  of  the  offset  provisions in this
subdivision, at the levels that  would  be  available  pursuant  to  the
provisions  of subdivision fourteen of this section if the provisions of
this subdivision did not apply.
16. Bad debt and charity care regional pools and bad debt and  charity
care  and  capital  statewide  pool,  general.  (a)  Funds  will be made
available in bad debt and charity care regional  pools  created  by  the
commissioner  for distributions in accordance with subdivision seventeen
of this section through the submissions  by  or  on  behalf  of  general
hospitals  of  the allowance included in rates and charges in accordance
with paragraph (c) of subdivision fourteen of this section  and  through
the  transfer  of funds available from the bad debt and charity care and
capital statewide pool in accordance with paragraph (a)  of  subdivision
nineteen of this section. Funds will be made available for distributions
in  accordance with subdivision nineteen of this section from a bad debt
and charity care and capital statewide pool created by the  commissioner

through  the  submissions  by  general  hospitals  of  the amount of the
assessments authorized in accordance with subdivision eighteen  of  this
section.
(b)  The  regions are established as the article forty-three insurance
plan regions, with the exception  that  the  southern  sixteen  counties
shall  be  divided  into  three regions for the purposes of subdivisions
fourteen and seventeen of this section with separate regions  consisting
of  Richmond,  Manhattan,  Bronx,  Queens and Kings counties; Nassau and
Suffolk counties; and  Delaware,  Columbia,  Ulster,  Sullivan,  Orange,
Dutchess,  Putnam, Rockland and Westchester counties. Such regions shall
be the same regions established and in effect  January  first,  nineteen
hundred  eighty-five.  The council with the approval of the commissioner
may combine regions, with the exception of the above  specified  regions
for  the  southern  sixteen  counties,  upon  application of the article
forty-three insurance  law  plans  involved  and  a  demonstration  that
significant inequities would not occur.
(c)  For  periods  prior  to  January  first,  two  thousand five, the
commissioner and the commissioner of social services are  authorized  to
contract  with  the  article  forty-three insurance law plans, or if not
available  such  other  administrators  as  the  commissioner  and   the
commissioner  of  social  services shall designate, to receive funds for
the bad debt and charity care regional pools and/or  the  bad  debt  and
charity  care  and capital statewide pool and distribute funds from such
pools. In the event contracts with the article forty-three insurance law
plans  or  other   commissioners'   designees   are   effectuated,   the
commissioner  and  the  commissioner  of  social  services shall jointly
conduct or cause to be  conducted  annual  audits  of  the  receipt  and
distribution of the pooled funds. The reasonable costs and expenses of a
pool  administrator as approved by the commissioner and the commissioner
of social services, not to exceed for personnel services  on  an  annual
basis  four  hundred  thousand dollars for all pools, shall be paid from
the pooled funds. Such pool administrator or pool  administrators  shall
be  acting  on  behalf  of the state medical assistance program provided
pursuant to title eleven of article five of the social services  law  in
the  distribution  to  hospitals  pursuant  to  subdivisions fourteen-c,
seventeen and paragraphs (c) and (d) of  subdivision  nineteen  of  this
section of pooled funds.
(d) In order for a general hospital to participate in the distribution
of  funds from the pools, the general hospital must implement collection
policies and procedures approved by the commissioner.
(e) In order for a general hospital to be eligible for distribution of
funds from the pools, such general hospital if it  provides  obstetrical
care and services must agree to participate in a program approved by the
department  for  the  provision of prenatal care to persons eligible for
medical assistance or medically indigent persons if requested by such  a
program.  Nothing  stated  herein  shall  require  a  hospital  to grant
admitting privileges to a physician solely because such person  is  part
of  an  approved  program. The participation of hospitals in an approved
program shall include, but not be limited to:
(i)  arrangements  with  designated  prenatal   care   providers   for
prebooking  pregnant  women for approximate delivery time, and provision
of staff and facilities for the delivery and necessary  postpartum  care
for women and infants involved in such programs;
(ii)  a  system  for  medical  record  transfer  from  a prenatal care
provider to  hospital  staff  participating  in  delivery  and  for  the
transfer of information regarding hospital delivery and care back to the
prenatal care provider for postpartum follow-up; and
(iii)  an  agreement with designated prenatal care providers to accept
the care of high risk patients on a referral  basis  and/or  to  provide
special  tests  and  procedures  which  are  not ordinarily available to
prenatal care clinics if such hospital is capable  of  caring  for  high
risk patients and/or providing special tests and procedures.
(f)  The  council may adopt regulations subject to the approval of the
commissioner to allow advanced  distributions  from  these  pools  to  a
general   hospital  qualifying  for  distributions  in  accordance  with
paragraph (c) of subdivision  nineteen  of  this  section,  based  on  a
demonstration  by  the  hospital  that  there is an inability to finance
current obligations and obtain needed working capital.
* (g)  Notwithstanding  any  inconsistent  provision  of  law  to  the
contrary, from interest heretofore earned or hereinafter earned on funds
in bad debt and charity care regional pools and the bad debt and charity
care  and  capital  statewide pool established pursuant to this section,
such amounts as shall be necessary, within amounts  appropriated,  shall
be  reallocated  to,  and the state comptroller is hereby authorized and
directed to receive for deposit to, the  credit  of  the  department  of
health's  special  revenue  fund  - other, hospital based grants program
account, for purposes  of  services  and  expenses  related  to  general
hospital  based  grant  programs  for  the  period April first, nineteen
hundred ninety-four through June thirtieth, nineteen hundred  ninety-six
and for the period July first, nineteen hundred ninety-six through March
thirty-first, nineteen hundred ninety-seven.
* NB Effective until December 31, 2026
* (g)  Notwithstanding  any  inconsistent  provision  of  law  to  the
contrary, from interest heretofore earned or hereinafter earned on funds
in bad debt and charity care regional pools and the bad debt and charity
care and capital statewide pool established pursuant  to  this  section,
such  amounts  as shall be necessary, within amounts appropriated, shall
be reallocated to, and the state comptroller is  hereby  authorized  and
directed  to  receive  for  deposit  to, the credit of the department of
health's special revenue fund - other,  hospital  based  grants  program
account,  for  purposes  of  services  and  expenses  related to general
hospital based grant programs  for  the  period  April  first,  nineteen
hundred ninety-four through June thirtieth, nineteen hundred ninety-six.
* NB Effective December 31, 2026
16-a. Pool administration, general. (a) If a general hospital fails to
timely file a report with the department of funds due to a regional pool
or   a   statewide  pool  established  pursuant  to  this  section,  the
commissioner may estimate the amount due from  such  hospital  based  on
available  financial  and statistical data and may collect in accordance
with subdivision twenty of this section any amount  due  based  on  such
estimate  as a deficiency in payments to such regional pool or statewide
pool with interest and  penalties.  The  commissioner  shall  provide  a
general  hospital with notice of any estimate of the amount due pursuant
to this  paragraph  at  least  three  days  prior  to  collection  of  a
deficiency  by the commissioner. Such notice shall contain the financial
basis for the commissioner's estimate.
* (b)  Notwithstanding  any  inconsistent  provision  of  section  one
hundred  twelve  or one hundred seventy-four of the state finance law or
any  other  law,  at  the  discretion  of  the  commissioner   and   the
commissioner of social services without a competitive bid or request for
proposal  process,  regional  pool  and  statewide  pool  administration
contracts in effect for rate year nineteen hundred ninety-three  may  be
extended  for  administration  of  regional  pools  and  statewide pools
established for rate years nineteen  hundred  ninety-four  and  nineteen
hundred  ninety-five  and  nineteen  hundred  ninety-six  to  provide an

uninterrupted continuation of services and may  be  amended  as  may  be
necessary.
* NB Effective until December 31, 2026
* (b)  Notwithstanding  any  inconsistent  provision  of  section  one
hundred twelve or one hundred seventy-four of the state finance  law  or
any   other   law,  at  the  discretion  of  the  commissioner  and  the
commissioner of social services without a competitive bid or request for
proposal  process,  regional  pool  and  statewide  pool  administration
contracts  in  effect for rate year nineteen hundred ninety-three may be
extended for  administration  of  regional  pools  and  statewide  pools
established  for  rate  years  nineteen hundred ninety-four and nineteen
hundred ninety-five and for the  rate  period  January  first,  nineteen
hundred  ninety  six through June thirtieth, nineteen hundred ninety-six
to provide an uninterrupted continuation of services and may be  amended
as may be necessary.
* NB Effective December 31, 2026
17.  Bad  debt  and  charity  care  regional pool distributions. Funds
accumulated in bad debt  and  charity  care  regional  pools,  including
income  from  invested  funds, from the allowance specified in paragraph
(c) of subdivision fourteen of this section and funds accumulated in bad
debt and charity care regional pools,  including  income  from  invested
funds,  from  the  transfer  of  funds  available  from the bad debt and
charity care and capital statewide pool in accordance with paragraph (a)
of subdivision nineteen of  this  section  shall  be  deposited  by  the
commissioner  and  credited  to  a  special  revenue-other  fund  to  be
established by the comptroller. To  the  extent  of  funds  appropriated
therefor, funds shall be made available for distribution by or on behalf
of  the  state,  as  payments under the state medical assistance program
provided pursuant to title eleven of article five of the social services
law, from bad debt and charity care regional pools  in  accordance  with
the following methodology and sequence:
(a)   For   the   nineteen   hundred  eighty-eight,  nineteen  hundred
eighty-nine and for that portion of the  nineteen  hundred  ninety  rate
year  beginning  on  January  first  and  ending on June thirtieth, each
eligible major public general hospital shall receive a  portion  of  its
bad  debt  and charity care need equal to one hundred two percent of the
result of the application  of  its  percentage  of  statewide  inpatient
reimbursable  costs  excluding  costs  related  to  services provided to
beneficiaries  of  title  XVIII  of  the  federal  social  security  act
(medicare),  developed  on  the  basis  of  nineteen hundred eighty-five
financial and statistical reports, to the total of all  regional  pools.
For  that  portion of the nineteen hundred ninety rate year beginning on
July first and ending on December thirty-first and in  the  annual  rate
years  beginning on or after January first, nineteen hundred ninety-one,
each eligible major public general hospital shall receive a  portion  of
its  bad  debt and charity care need equal to one hundred ten percent of
the result of the application of its percentage of  statewide  inpatient
reimbursable  costs  excluding  costs  related  to  services provided to
beneficiaries  of  title  XVIII  of  the  federal  social  security  act
(medicare),  developed  on  the  basis  of  nineteen hundred eighty-five
financial and statistical reports, to the total of all regional pools.
(b) (i) Funds remaining in the regional pools  after  distribution  in
accordance  with  paragraph (a) of this subdivision shall be distributed
to  voluntary  non-profit,  private  proprietary  and   public   general
hospitals,  other  than  major public general hospitals, on the basis of
each hospital's targeted need share. For the rate year beginning January
first, nineteen hundred eighty-eight, an individual hospital's  targeted
need  share shall be defined as the relationship between each hospital's

nineteen  hundred  eighty-six  nominal  payment  amount  as  defined  in
subparagraph  (i)  of  paragraph  (c)  of  subdivision  fourteen of this
section to the nineteen hundred eighty-six nominal payment  amounts  for
all  hospitals  in the region other than major public general hospitals.
For annual rate years beginning on  or  after  January  first,  nineteen
hundred  eighty-nine,  the base need shall be the calendar year which is
two years prior to the rate year. The amount of funds to be  distributed
in  accordance with this paragraph and paragraph (a) of this subdivision
shall be limited to the amount of funds accumulated in the pools.
(ii) Notwithstanding  any  inconsistent  provision  of  this  section,
commencing  April first, nineteen hundred ninety-five funds remaining in
the regional pools after distribution in accordance with  paragraph  (a)
of this subdivision shall be aggregated on a statewide basis and treated
as  a  common  pool  for  statewide  distributions  and  distributed  to
voluntary non-profit, private proprietary and public general  hospitals,
other  than  major  public  general  hospitals,  on  the  basis  of each
hospital's targeted need share defined as the relationship between  each
hospital's  base  year nominal payment amount as defined in subparagraph
(i) of paragraph (c) of subdivision fourteen of this section to the base
year nominal payment amounts for  all  hospitals  statewide  other  than
major public general hospitals.
(d)  The  department  may  provide  for  interim  payments  to general
hospitals of  funds  available  for  distribution  from  regional  pools
pursuant  to  this  subdivision,  subject  to  reasonable  retainage for
adjustments,  subsequently  reconciled  to  amounts  due  determined  in
accordance with this subdivision.
(e) Notwithstanding any inconsistent provision of this section, in the
event  funds  available  pursuant  to  paragraph  (b-1)  of  subdivision
nineteen of this section for programs to provide  health  care  coverage
for  uninsured  or  underinsured  children  are  inadequate  to  provide
coverage to all eligible children for whom application for  coverage  is
made in a rate period, such additional amounts not to exceed twenty-five
million  dollars  for nineteen hundred ninety-four as shall be necessary
to provide such coverage shall be reserved by the commissioner from  the
amount  to  be available in bad debt and charity care regional pools for
such rate period for additional  distributions  to  such  programs.  Ten
million  dollars of the amount reserved for nineteen hundred ninety-four
shall not result in a decrease to  disproportionate  share  payments  to
hospitals.
18.  Bad  debt  and  charity  care and capital statewide pool funding.
* The commissioner shall create a bad debt and charity care and  capital
statewide  pool  which  shall be funded by a transfer of funds, which is
hereby authorized,  for  the  period  January  first,  nineteen  hundred
ninety-five through December thirty-first, nineteen hundred ninety-five,
the  period  January  first,  nineteen  hundred  ninety-six through June
thirtieth, nineteen  hundred  ninety-six  and  the  period  July  first,
nineteen  hundred  ninety-six  through  December  thirty-first, nineteen
hundred ninety-six equal to seven million five hundred thousand  dollars
for the nineteen hundred ninety-five period, three million seven hundred
fifty   thousand   dollars  for  the  January  first,  nineteen  hundred
ninety-six through June thirtieth, nineteen  hundred  ninety-six  period
and  three  million  seven  hundred  fifty thousand dollars for the July
first,  nineteen  hundred  ninety-six  through  December   thirty-first,
nineteen  hundred ninety-six period to be submitted to a statewide pool,
as  designated  by  the  commissioner,  from  the  medical   malpractice
insurance  association  pursuant  to  section five thousand five hundred
sixteen-c of the insurance law and through an assessment which shall  be
charged  to  general hospitals. In the event that the transfers of funds

authorized by section  five  thousand  five  hundred  sixteen-c  of  the
insurance   law   do  not  occur  by  January  first,  nineteen  hundred
ninety-five, January  first,  nineteen  hundred  ninety-six  and  August
first,  nineteen  hundred  ninety-six respectively, the commissioner for
each period  for  which  such  transfer  from  the  medical  malpractice
insurance association has not occurred shall transfer seven million five
hundred  thousand  dollars  for the nineteen hundred ninety-five period,
three million seven hundred  fifty  thousand  dollars  for  the  January
first,  nineteen  hundred  ninety-six  through  June thirtieth, nineteen
hundred ninety-six period and three million seven hundred fifty thousand
dollars for the July first, nineteen hundred ninety-six through December
thirty-first,  nineteen  hundred  ninety-six  period  from  regional  or
statewide  pool  reserves for pools established pursuant to this section
and section twenty-eight hundred eight-c or twenty-eight hundred seven-a
of this article to the bad debt and charity care and  capitol  statewide
pool  established pursuant to this subdivision. Such assessment shall be
submitted to a statewide pool as  designated  by  the  commissioner  and
distributed  on a monthly basis in accordance with subdivision twenty of
this section. The assessment shall be:
* NB Effective until December 31, 2026
* The commissioner shall create  a  bad  debt  and  charity  care  and
capital  statewide  pool  which  shall be funded by a transfer of funds,
which is hereby authorized,  for  the  period  January  first,  nineteen
hundred  ninety-five  through  December  thirty-first,  nineteen hundred
ninety-five and the period January first,  nineteen  hundred  ninety-six
through  June  thirtieth,  nineteen  hundred  ninety-six  equal to seven
million  five  hundred  thousand  dollars  for  the   nineteen   hundred
ninety-five  period  and  three  million  seven  hundred  fifty thousand
dollars for the January first, nineteen hundred ninety-six through  June
thirtieth,  nineteen  hundred  ninety-six  period  to  be submitted to a
statewide pool, as designated by  the  commissioner,  from  the  medical
malpractice insurance association pursuant to section five thousand five
hundred  sixteen-c  of the insurance law and through an assessment which
shall be charged to general hospitals. In the event that  the  transfers
of  funds  authorized by section five thousand five hundred sixteen-c of
the insurance law do  not  occur  by  January  first,  nineteen  hundred
ninety-five  and January first nineteen hundred ninety-six respectively,
the commissioner for each  period  for  which  such  transfer  from  the
medical   malpractice  insurance  association  has  not  occurred  shall
transfer seven million five hundred thousand dollars  for  the  nineteen
hundred  ninety-five  period  and  three  million  seven  hundred  fifty
thousand dollars for the  January  first,  nineteen  hundred  ninety-six
through June thirtieth, nineteen hundred ninety-six period from regional
or  statewide  pool  reserves  for  pools  established  pursuant to this
section and section twenty-eight hundred eight-c or twenty-eight hundred
seven-a of this article to the bad debt and  charity  care  and  capital
statewide pool established pursuant to this subdivision. Such assessment
shall be submitted to a statewide pool as designated by the commissioner
and distributed on a monthly basis in accordance with subdivision twenty
of this section. The assessment shall be:
* NB Effective December 31, 2026
* (a)  one  and  seventy-five  thousandths  percent  of  each  general
hospital's  gross  revenue  received  for  inpatient  hospital  services
provided  during the period January first, nineteen hundred eighty-eight
through December thirty-first, nineteen hundred  eighty-eight;  one  and
five  hundredths  percent  of  each  general  hospital's  gross  revenue
received for inpatient hospital  services  provided  during  the  period
January   first,   nineteen   hundred   eighty-nine   through   December

thirty-first, nineteen hundred eighty-nine;  and  one  percent  of  each
general   hospital's  gross  revenue  received  for  inpatient  hospital
services provided during annual periods beginning on  or  after  January
first,  nineteen  hundred ninety through December thirty-first, nineteen
hundred ninety-nine and on or after January first, two thousand,
* NB Effective until December 31, 2026
* (a)  one  and  seventy-five  thousandths  percent  of  each  general
hospital's  gross  revenue  received  for  inpatient  hospital  services
provided during the period January first, nineteen hundred  eighty-eight
through  December  thirty-first,  nineteen hundred eighty-eight; one and
five  hundredths  percent  of  each  general  hospital's  gross  revenue
received  for  inpatient  hospital  services  provided during the period
January   first,   nineteen   hundred   eighty-nine   through   December
thirty-first,  nineteen  hundred  eighty-nine;  and  one percent of each
general  hospital's  gross  revenue  received  for  inpatient   hospital
services  provided  during  annual periods beginning on or after January
first, nineteen hundred ninety through December  thirty-first,  nineteen
hundred ninety-nine,
* NB Effective and expires December 31, 2026
* (a)  one  and  seventy-five  thousandths  percent  of  each  general
hospital's  gross  revenue  received  for  inpatient  hospital  services
provided  during the period January first, nineteen hundred eighty-eight
through December thirty-first, nineteen hundred  eighty-eight;  one  and
five  hundredths  percent  of  each  general  hospital's  gross  revenue
received for inpatient hospital  services  provided  during  the  period
January   first,   nineteen   hundred   eighty-nine   through   December
thirty-first, nineteen hundred eighty-nine;  and  one  percent  of  each
general   hospital's  gross  revenue  received  for  inpatient  hospital
services provided during annual  rate  periods  beginning  on  or  after
January first, nineteen hundred ninety,
* NB Effective December 31, 2026
* (b) provided, however, subject to the provisions of paragraph (e) of
this  subdivision  there  shall be no assessment against those voluntary
non-profit and private proprietary general hospitals which  qualify  for
distributions  made  in  accordance  with  paragraph  (c) of subdivision
nineteen of this section, or for the annual  assessment  period  January
first,  nineteen  hundred  ninety-seven  through  December thirty-first,
nineteen hundred ninety-seven which qualified for distributions made  in
accordance with paragraph (c) of subdivision nineteen of this section as
of December thirty-first, nineteen hundred ninety-five, and
* NB Effective until December 31, 2026
* (b) provided, however, subject to the provisions of paragraph (e) of
this  subdivision  there  shall be no assessment against those voluntary
non-profit and private proprietary general hospitals which  qualify  for
distributions  made  in  accordance  with  paragraph  (c) of subdivision
nineteen of this section, and
* NB Effective December 31, 2026
* (c)  provided  further,  however,  subject  to  the  provisions   of
paragraph (e) of this subdivision the assessment against those voluntary
non-profit and private proprietary general hospitals which qualified for
distributions  made  in  accordance  with  paragraph  (c) of subdivision
nineteen of this section as of December thirty-first,  nineteen  hundred
ninety-five  shall  for  the  annual  assessment  period  January first,
nineteen hundred ninety-eight through  December  thirty-first,  nineteen
hundred  ninety-eight  be  abated in the amount of three-quarters of one
percent of gross revenue received and for the annual  assessment  period
January   first,   nineteen   hundred   ninety-nine   through   December

thirty-first, nineteen hundred ninety-nine be abated in  the  amount  of
one-quarter of one percent of gross revenue received.
* NB Effective until December 31, 2026
* (c)   provided  further,  however,  subject  to  the  provisions  of
paragraph (e) of this subdivision the assessment against those voluntary
non-profit and private proprietary general hospitals which qualified for
distributions made in  accordance  with  paragraph  (b)  of  subdivision
sixteen  of  section twenty-eight hundred seven-a of this article during
the  nineteen  hundred  eighty-seven  rate  period  or   qualified   for
distributions  made  in  accordance  with  paragraph  (c) of subdivision
nineteen of this section during a rate period or rate periods but  which
do  not  continue  to  qualify for distributions made in accordance with
paragraph (c) of subdivision nineteen of  this  section  during  a  rate
period  or  rate periods shall for the initial rate period in which such
general hospital does not continue to qualify for distributions made  in
accordance with paragraph (c) of subdivision nineteen of this section be
abated  in  the  amount  of  two-thirds  of one percent of gross revenue
received and for the next succeeding annual rate period be abated in the
amount of one-third of one percent of gross revenue received.
* NB Effective December 31, 2026
* (d) Gross revenue received shall mean all moneys received for or  on
account  of  inpatient hospital service, provided, however, that subject
to the provisions of paragraph (e) of  this  subdivision  gross  revenue
received  shall not include distributions from bad debt and charity care
regional pools, health care services pools, bad debt  and  charity  care
for  financially  distressed  hospitals statewide pools and bad debt and
charity care and capital statewide pools created in accordance with this
section or distributions from funds allocated in accordance with section
twenty-eight hundred seven-l, twenty-eight hundred seven-k, twenty-eight
hundred seven-v or twenty-eight hundred  seven-w  of  this  article  and
shall  not include the components of rates of payment or charges related
to the allowances provided in  accordance  with  subdivisions  fourteen,
fourteen-b  and  fourteen-c  of this section, the adjustment provided in
accordance with subdivision fourteen-a of this section,  the  adjustment
provided  in accordance with subdivision fourteen-d of this section, the
adjustment  for  health  maintenance  organization  reimbursement  rates
provided  in  accordance  with former subdivision two-a of this section,
payments made pursuant to paragraph (i) of  subdivision  thirty-five  of
this  section  or,  if  effective, the adjustment provided in accordance
with subdivision fifteen of this section,  the  adjustment  provided  in
accordance with section eighteen of chapter two hundred sixty-six of the
laws  of  nineteen  hundred eighty-six as amended, revenue received from
physician practice  or  faculty  practice  plan  discrete  billings  for
private   practicing   physician   services,  revenue  from  affiliation
agreements or contracts with public hospitals for the delivery of health
care  services  at  such   public   hospitals,   revenue   received   as
disproportionate  share  hospital  payments  in  accordance  with  title
nineteen of the federal social security act, or revenue from  government
deficit  financing,  provided,  however,  that funds received as medical
assistance  payments  which  include  state  share  amounts   authorized
pursuant  to  section  twenty-eight hundred seven-v of this article that
are not disproportionate  share  hospital  payments  shall  be  included
within the meaning of gross revenue for purposes of this subdivision.
* NB Effective until December 31, 2026
* (d)  Gross revenue received shall mean all moneys received for or on
account of inpatient hospital service, provided, however,  that  subject
to  the  provisions  of  paragraph (e) of this subdivision gross revenue
received shall not include distributions from bad debt and charity  care

regional  pools,  health  care services pools, bad debt and charity care
for financially distressed hospitals statewide pools and  bad  debt  and
charity care and capital statewide pools created in accordance with this
section  and  shall  not  include  the components of rates of payment or
charges  related  to  the  allowances  provided   in   accordance   with
subdivisions  fourteen,  fourteen-b  and fourteen-c of this section, the
adjustment provided in accordance with subdivision  fourteen-a  of  this
section,   the   adjustment  provided  in  accordance  with  subdivision
fourteen-d of  this  section,  the  adjustment  for  health  maintenance
organization reimbursement rates provided in accordance with subdivision
two-a  of  this  section,  or,  if effective, the adjustment provided in
accordance with subdivision fifteen of this section  or  the  adjustment
provided  in  accordance  with  section  eighteen of chapter two hundred
sixty-six of the laws of nineteen hundred eighty-six as amended.
* NB Effective December 31, 2026
(e) Each exclusion of hospitals or sources of gross  revenue  received
from  the  assessments  effective  on  or  after October first, nineteen
hundred ninety-two established pursuant to  this  subdivision  shall  be
contingent  upon either: (i) qualification of the assessments for waiver
pursuant to federal law and regulation; or, (ii) consistent with federal
law and regulation, not requiring a  waiver  by  the  secretary  of  the
department  of  health  and human services related to such exclusion; in
order for the assessments under  this  section  to  be  qualified  as  a
broad-based  health  care  related  tax  for  purposes  of  the revenues
received by the state pursuant  to  the  assessments  not  reducing  the
amount  expended  by  the  state  as  medical assistance for purposes of
federal financial participation.  The  commissioner  shall  collect  the
assessments  relying  on such exclusions, pending any contrary action by
the secretary of the department of health and  human  services.  In  the
event  the  secretary  of  the  department  of health and human services
determines that the assessments do not so  qualify  based  on  any  such
exclusion, then the exclusion shall be deemed to have been null and void
as  of  October  first, nineteen hundred ninety-two and the commissioner
shall collect any retroactive amount due as a result,  without  interest
or  penalty provided the hospital pays the retroactive amount due within
ninety days of notice from the commissioner to  the  hospital  that  the
exclusion  is  null  and  void. Interest and penalties shall be measured
from the due date of ninety days following notice from the  commissioner
to the hospital.
(f) Payments of assessments and allowances required to be submitted by
general hospitals pursuant to this subdivision and subdivisions fourteen
and  fourteen-b  of this section and paragraph (a) of subdivision two of
section twenty-eight hundred seven-d of this article shall be subject to
audit by the commissioner for a period of six years following the  close
of  the  calendar  year in which such payments are due, after which such
payments shall be deemed final and not subject to further adjustment  or
reconciliation,  including through offset adjustments or reconciliations
made by general hospitals with regard to subsequent payments,  provided,
however,  that  nothing  herein  shall  be  construed  as precluding the
commissioner from  pursuing  collection  of  any  such  assessments  and
allowances  which  are  identified  as  delinquent  within such six year
period, or which are identified as delinquent as a result  of  an  audit
commenced within such six year audit period, or from conducting an audit
of  any  adjustment  or reconciliation made by a general hospital within
such six year period, or from conducting an audit of payments made prior
to such six year period which are found to be commingled  with  payments
which  are  otherwise  subject to timely audit pursuant to this section.
General hospitals which, in the course of such an audit, fail to produce

data or documentation requested in furtherance of such an audit,  within
thirty days of such request may be assessed a civil penalty of up to ten
thousand  dollars  for  each  such failure, provided, however, that such
civil  penalty  shall  not  be imposed if the hospital demonstrates good
cause for such failure. The imposition of such civil penalties shall  be
subject to the provisions of section twelve-a of this chapter.
(g)  If  a  general  hospital  fails  to produce data or documentation
requested in furtherance of an audit for a month to which an  assessment
applies, the commissioner may estimate, based on available financial and
statistical  data  as determined by the commissioner, the amount due for
such month. If the impact of exemptions permitted pursuant to  paragraph
(d)  of  this  subdivision  cannot  be  determined  from  such available
financial  and  statistical  data  the  estimated  amount  due  may   be
calculated  on  the  basis  of  the  general  hospital's aggregate gross
inpatient revenue amount, as determined from  such  available  financial
and  statistical  data  for the year subject to audit. Estimated amounts
due pursuant to this paragraph shall  be  paid  by  a  general  hospital
within  sixty  days or within such other time period as agreed to by the
commissioner and the facility. Thereafter the  commissioner  shall  take
all  necessary steps to collect amounts owed pursuant to this paragraph,
including by offsetting,  or  by  directing  the  state  comptroller  to
offset,  such  amounts  due  from  any  other  payments  made  by  state
governmental agencies to the general hospital pursuant to this  article.
Interest  and  penalties  shall  be  applied  to  such  amounts  due  in
accordance with the provisions of paragraph (c) of subdivision twenty of
this section.
(h) The  commissioner  shall  take  all  necessary  steps  to  collect
delinquent  amounts  owed  pursuant  to  this  subdivision, including by
recoupment or offsetting, or  by  directing  the  state  comptroller  to
offset,  such  amounts  due  from  any  other  payments  made  by  state
governmental agencies to the general hospital pursuant to this  article.
Interest  and  penalties  shall  be  applied  to  such  amounts  due  in
accordance with the provisions of paragraph (c) of subdivision twenty of
this section. Delinquent amounts which have been referred for recoupment
or offset pursuant to this paragraph, or which have been referred to the
office of the attorney general for collection, shall be deemed final and
not subject to further revision or reconciliation  by  the  commissioner
based  on  any  additional reports or other information submitted by the
hospital, provided,  however,  that  such  delinquencies  shall  not  be
referred  for  such recoupment or for such collection based on estimated
amounts unless the hospital has received written  notification  of  such
delinquencies  and  has  been given no less than thirty days in which to
submit delinquent reports.
(i) The commissioner may enter into agreements with general  hospitals
subject  to this subdivision, in regard to which audit findings or prior
settlements have been made pursuant to this subdivision,  extending  and
applying  such audit findings or prior settlements or a portion thereof,
in settlement  and  satisfaction  of  potential  audit  liabilities  for
subsequent  un-audited  periods.  The  commissioner  may reduce or waive
payment  of  interest  and  penalties  otherwise  applicable   to   such
subsequent  un-audited periods when such amounts due as a result of such
agreement, other than reduced or waived penalties and interest, are paid
in full to the commissioner or the commissioner's designee within  sixty
days of execution of such agreement by all parties to the agreement. Any
payments  made  pursuant  to  agreements entered into in accordance with
this paragraph shall be  deemed  to  be  in  full  satisfaction  of  any
liability   arising  under  this  subdivision,  as  referenced  in  such
agreements  and  for  the  time  periods  covered  by  such  agreements,

provided,  however,  that  the commissioner may audit future retroactive
adjustments to payments made for such periods based on reports filed  by
hospitals subsequent to such agreements.
19. Bad debt and charity care and capital statewide pool distribution.
*   Funds  accumulated  in  the statewide pool created by the assessment
authorized in accordance with subdivision eighteen of this  section  for
periods  through  December  thirty-first,  nineteen  hundred ninety-six,
including income from invested funds, shall be distributed  or  retained
in accordance with the following sequence:
* NB Effective until December 31, 2026
* Funds  accumulated  in  the statewide pool created by the assessment
authorized in accordance with  subdivision  eighteen  of  this  section,
including  income  from invested funds, shall be distributed or retained
in accordance with the following sequence:
* NB Effective December 31, 2026
(a) Funds shall be distributed by the commissioner  to  bad  debt  and
charity  care regional pools established pursuant to subdivision sixteen
of this section to provide additional funds for distribution  from  such
bad  debt and charity care regional pools in accordance with subdivision
seventeen of this section equal to the amount computed as the difference
between the amount that would be available in such regional pools  based
on  a  statewide determination of financial resources to be committed to
regional pools  in  each  year  in  accordance  with  paragraph  (c)  of
subdivision  fourteen  of  this  section  based upon a percentage factor
equal to five and ninety-three hundredths percent and the amount  to  be
available  in  such regional pools based on a statewide determination of
financial resources to be committed to regional pools in  each  year  in
accordance  with  paragraph  (c) of subdivision fourteen of this section
based upon a percentage factor equal to five and forty-eight  hundredths
percent.
* (b)  An  amount  not  to  exceed  seventeen  million  dollars  on an
annualized basis from  the  assessment  through  December  thirty-first,
nineteen  hundred  ninety-six  may  annually  be  placed  in a statewide
account in accordance with rules and regulations adopted by the  council
and  approved  by the commissioner for the purpose of securing financing
of capital improvement projects for  general  hospitals  qualifying  for
distributions made in accordance with paragraph (c) of this subdivision.
Any  reserved  funds  available  on  September  first,  nineteen hundred
ninety-seven and not obligated, in accordance  with  section  twelve  of
chapter  nine  hundred  thirty-four  of  the  laws  of  nineteen hundred
eighty-five as amended, for the purpose of securing financing of capital
improvement projects for general hospitals and any reserved  funds  that
thereafter  become  available may be transferred by the commissioner, in
consultation  with  the  director  of  the  budget  and  the   dormitory
authority,   to  the  health  facility  restructuring  pool  established
pursuant to section twenty-eight hundred fifteen of this article  or  to
the  general hospital indigent care pool established pursuant to section
twenty-eight hundred seven-k of this article.
* NB Effective until December 31, 2026
* (b) An amount not to exceed seventeen million dollars  may  annually
be   placed  in  a  statewide  account  in  accordance  with  rules  and
regulations adopted by the council and approved by the commissioner  for
the  purpose  of  securing financing of capital improvement projects for
general hospitals qualifying for distributions made in  accordance  with
paragraph (c) of this subdivision.
* NB Effective December 31, 2026
* (b-1)  An  amount  equal to: twenty million dollars annually for the
period January  first,  nineteen  hundred  ninety-one  through  December

thirty-first,  nineteen hundred ninety-three; thirty million dollars for
the period January first, nineteen hundred ninety-four through  December
thirty-first,  nineteen  hundred  ninety-four; thirty-seven million five
hundred  thousand dollars for the period January first, nineteen hundred
ninety-five through December thirty-first, nineteen hundred ninety-five;
eighteen million seven hundred fifty thousand  dollars  for  the  period
January  first,  nineteen  hundred  ninety-six  through  June thirtieth,
nineteen hundred ninety-six; and eighteen million  seven  hundred  fifty
thousand  dollars for the period July first, nineteen hundred ninety-six
through  December  thirty-first,  nineteen  hundred   ninety-six   shall
annually   be  reserved  and  accumulated  from  year  to  year  by  the
commissioner for  distributions  to  programs  to  provide  health  care
coverage  for uninsured or underinsured children. Such accumulated funds
shall not be used for any other purpose other than those  authorized  in
section  twenty-five  hundred ten and twenty-five hundred eleven of this
chapter. If on March thirty-first, nineteen  hundred  ninety-eight,  any
funds  accumulated  during  the  period  January first, nineteen hundred
ninety-one through December thirty-first, nineteen hundred  ninety-seven
are  unused  or  uncommitted  for  such  distributions,  such  unused or
uncommitted funds shall be immediately transferred by  the  commissioner
to  the  health care initiatives pool established by the commissioner to
provide additional funds for distribution to programs to provide  health
care  coverage  for  uninsured  or  underinsured  children  pursuant  to
sections twenty-five hundred ten and twenty-five hundred eleven of  this
chapter.  For  cash  flow  purposes,  the  commissioner  may borrow from
regional or statewide pool reserves for pools  established  pursuant  to
this  section  such funds as shall be necessary not to exceed the amount
authorized to be reserved annually to meet premium requirements pursuant
to sections twenty-five hundred ten and twenty-five  hundred  eleven  of
this  chapter  for  a  rate  year and shall refund such moneys when pool
funds become available pursuant to this paragraph for such rate year.
* NB Effective until December 31, 2026
* (b-1) An amount equal to: twenty million dollars  annually  for  the
period  January  first,  nineteen  hundred  ninety-one  through December
thirty-first, nineteen hundred ninety-three; thirty million dollars  for
the  period January first, nineteen hundred ninety-four through December
thirty-first, nineteen hundred ninety-four;  thirty-seven  million  five
hundred  thousand dollars for the period January first, nineteen hundred
ninety-five through December thirty-first, nineteen hundred ninety-five;
and eighteen million seven hundred fifty thousand dollars for the period
January first,  nineteen  hundred  ninety-six  through  June  thirtieth,
nineteen  hundred  ninety-six shall annually be reserved and accumulated
from year to year by the commissioner for distributions to  programs  to
provide  health  care  coverage  for uninsured or underinsured children.
Such accumulated funds shall not be used for  any  other  purpose  other
than those authorized in section twenty-five hundred ten and twenty-five
hundred  eleven  of  this  chapter.  If on September thirtieth, nineteen
hundred ninety-seven, any funds accumulated during  the  period  January
first,  nineteen  hundred  ninety-one  through  June thirtieth, nineteen
hundred ninety-six are unused or  uncommitted  for  such  distributions,
such unused or uncommitted funds shall be immediately transferred by the
commissioner  to  bad  debt  and charity care regional pools established
pursuant to subdivision sixteen of this section  to  provide  additional
funds  for  distribution  from  such  bad debt and charity care regional
pools in accordance with subdivision seventeen of this section. For cash
flow purposes, the commissioner may borrow from  regional  or  statewide
pool  reserves for pools established pursuant to this section such funds
as shall be necessary not to exceed the amount authorized to be reserved

annually to meet premium requirements pursuant to  sections  twenty-five
hundred  ten  and  twenty-five hundred eleven of this chapter for a rate
year and shall refund such  moneys  when  pool  funds  become  available
pursuant to this paragraph for such rate year.
* NB Effective December 31, 2026
(b-2)  Funds  available for distribution in accordance with paragraphs
(c) and (d) of this subdivision shall be deposited by  the  commissioner
and  credited  to  a special revenue-other fund to be established by the
comptroller. To the extent of funds appropriated therefor,  funds  shall
be  made  available  for  distributions by or on behalf of the state, as
payments under the state medical assistance program provided pursuant to
title eleven of article five of the social services  law  from  the  bad
debt  and charity care and capital statewide pool pursuant to paragraphs
(c) and (d) of this subdivision.
(c)  Funds  shall  be  made  available  on  a  statewide   basis   for
distribution   by   the   commissioner  in  accordance  with  rules  and
regulations adopted by the council and approved by the  commissioner  to
assist  voluntary  non-profit  and private proprietary general hospitals
experiencing severe fiscal hardship because of insufficient resources to
finance losses resulting from bad debts and the costs of  charity  care.
Amounts  to  be distributed for bad debt and charity care purposes shall
be determined after consideration of  amounts  to  be  distributed  from
regional  pools in accordance with subdivision seventeen of this section
and shall result in up to one hundred percent as  defined  in  paragraph
(b)  of  subdivision  fourteen  of this section being financed for these
general hospitals.
(d)  Funds  shall  be  made  available  on  a  statewide   basis   for
distribution   by   the   commissioner  in  accordance  with  rules  and
regulations adopted by the council and approved by the  commissioner  to
assist  voluntary  non-profit  and private proprietary general hospitals
which qualified for distributions made in accordance with paragraph  (b)
of  subdivision  sixteen of section twenty-eight hundred seven-a of this
article  during  the  nineteen  hundred  eighty-seven  rate  period   or
qualified  for  distributions  made  in accordance with paragraph (c) of
this subdivision during a rate period or rate periods but which  do  not
continue  to qualify for distributions made in accordance with paragraph
(c) of this subdivision during a rate period or rate periods. Amounts to
be distributed to a general hospital pursuant to this paragraph for  the
initial  rate period in which such general hospital does not continue to
qualify for distributions made in accordance with paragraph (c) of  this
subdivision  shall  be  two-thirds  of  the amount such general hospital
would have received in accordance with paragraph (c) of this subdivision
for such initial rate  period  if  the  hospital  had  continued  to  be
eligible  for  such distribution and for the next succeeding annual rate
period one-third of the amount such general hospital would have received
in accordance with paragraph (c) of this subdivision for such succeeding
rate period.
(e) There shall be set  aside  within  a  transition  account  in  the
statewide pool, from accumulated funds, from the total allocation to the
bad  debt  and charity care and capital statewide pool of the assessment
of one and seventy-five thousandths percent of gross revenue received in
accordance with paragraph (a) of subdivision eighteen  of  this  section
for   the   rate  period  commencing  January  first,  nineteen  hundred
eighty-eight and the assessment of one and five  hundredths  percent  of
gross  revenue  received in accordance with paragraph (a) of subdivision
eighteen of this section for the rate period commencing  January  first,
nineteen hundred eighty-nine an amount equal to seventy-five thousandths
of  one  percent  of  gross  revenue received and five hundredths of one

percent of gross revenue received  respectively  to  be  distributed  to
voluntary  non-profit,  private proprietary and public general hospitals
receiving less bad debt and charity care funds under the  provisions  of
this  section  than  if  the  provisions of section twenty-eight hundred
seven-a of this article had applied using the same  base  year  need  as
calculated  in  accordance  with  subdivision  fourteen of this section.
Rules for such distribution shall be those adopted by  the  council  and
approved by the commissioner.
(f)  Any  balance  in  the  statewide  pool  shall  be  distributed in
accordance with the following:
(i) Fifty percent of the balance shall  be  reserved  and  accumulated
from  year  to  year  by  the commissioner for distributions to regional
pilot projects to  provide  health  care  coverage  under  insurance  or
equivalent  mechanisms  for  uninsured  or  underinsured individuals and
families and to provide health care coverage for  catastrophic  expenses
provided  legislation is enacted before July fifteenth, nineteen hundred
eighty-eight authorizing such regional pilot projects and  including  an
authorization  for  such  regional  pilot  projects, notwithstanding any
inconsistent  provision  of  law,  to  negotiate  special  payment  rate
methodologies with general hospitals for inpatient hospital services.
(ii)  * The  remaining  balance shall be reserved and accumulated from
year  to  year  by  the  commissioner  for  priority  distributions   in
accordance  with  rules  and  regulations  adopted  by  the  council and
approved by  the  commissioner:  (A)  to  assist  general  hospitals  in
offsetting  losses  from  bad  debt  and  the  costs  of charity care in
providing existing or expanded priority health services to the medically
indigent or medically underserved in urban and  rural  areas  including,
but  not  limited to, services for pregnant women, services for children
under the age of six, and services related to acquired immune deficiency
syndrome; (B) for quality  assurance  demonstration  projects;  (C)  for
severity  of  illness  measurement  demonstration projects; (D) for cost
analyses and evaluations of  health  care  provider  services;  (E)  for
quality improvement program grants and contracts pursuant to subdivision
fifteen  of  section  two  hundred six of this chapter and department of
health administrative costs related thereto; and (F) for initiatives  to
improve  public  health  and  to  expand the availability of health care
services.
* NB Effective until December 31, 2026
* The remaining balance shall be reserved and accumulated from year to
year by the commissioner for priority distributions in  accordance  with
rules  and  regulations  adopted  by  the  council  and  approved by the
commissioner: (A) to assist general hospitals in offsetting losses  from
bad debt and the costs of charity care in providing existing or expanded
priority   health  services  to  the  medically  indigent  or  medically
underserved in urban and rural areas  including,  but  not  limited  to,
services for pregnant women, services for children under the age of six,
and  services  related  to  acquired immune deficiency syndrome; (B) for
quality assurance demonstration projects; (C) for  severity  of  illness
measurement   demonstration   projects;   (D)   for  cost  analyses  and
evaluations of health  care  provider  services;  and  (E)  for  quality
improvement program grants and contracts pursuant to subdivision fifteen
of  section  two  hundred  six  of this chapter and department of health
administrative costs related thereto.
* NB Effective December 31, 2026
Notwithstanding any provision of law to the contrary,  a  sum  not  to
exceed  three million five hundred thousand dollars from funds available
for distribution pursuant to this  subparagraph  may  be  allocated  and
distributed  to  regional pilot projects to provide health care coverage

under insurance or equivalent mechanisms for uninsured  or  underinsured
individuals  and families pursuant to chapter seven hundred three of the
laws of nineteen hundred eighty-eight.
Notwithstanding  any  inconsistent  provision  of  section one hundred
twelve or one hundred seventy-four of the state finance law or any other
law, funds available for distribution pursuant to this subparagraph  may
be  allocated  and  distributed without a competitive bid or request for
proposal process.
(iii) Any unused funds from the allocations provided for in  paragraph
(b)  and  paragraph (e) of this subdivision and subparagraph (i) of this
paragraph  and  any  funds  contingently  allocated  to  regional  pilot
projects  pursuant  to subparagraph (i) of this paragraph if authorizing
legislation is not enacted as required by  such  subparagraph  shall  be
reallocated  for  use  in accordance with the provisions of subparagraph
(ii) of this paragraph.
(iv) Notwithstanding any inconsistent provision of this  section,  the
commissioner  shall  enter  into  agreements  with  one or more persons,
not-for-profit corporations, or other organizations, other than a  state
employee,  official  or  agency,  for  the  purposes  of  an independent
evaluation of the  implementation  and  effectiveness  of  primary  care
initiatives,  including  preferred  primary  care provider designations,
applicable to general hospitals, diagnostic and  treatment  centers  and
participating  practitioners  and  may  allocate  and  distribute  funds
otherwise available for distribution  in  accordance  with  subparagraph
(ii)  of this paragraph for the costs of such evaluation. The evaluation
shall assess factors including but not limited to:
(A) the overall effect of such primary care initiatives on  access  to
and utilization of health care services;
(B)  the  extent  to  which such initiatives have fostered cooperative
working relationships between various providers of health care services;
(C) the impact  of  such  initiatives  on  the  cost  of  health  care
services.
An initial evaluation pursuant to this subparagraph shall be submitted
to  the  governor and the legislature on or before April first, nineteen
hundred ninety-two and a further evaluation shall be submitted by  April
first, nineteen hundred ninety-three.
* 19-a.  Health  care  services allowance statewide pool distribution.
Funds accumulated  in  the  statewide  pool  created  by  the  allowance
authorized  in accordance with subparagraphs (ii) and (iii) of paragraph
(a) of subdivision fourteen-b of this  section,  including  income  from
invested  funds, shall be distributed or retained in accordance with the
following:
(a) Funds  shall  be  transferred  to  primary  health  care  services
regional  pools  created  by  the  commissioner, and shall be available,
including income from invested funds, for  distributions  in  accordance
with  section  twenty-eight hundred seven-bb of this article. Such funds
shall be transferred to each regional pool so  that  the  regional  pool
receives,   for   the  rate  periods  January  first,  nineteen  hundred
ninety-four through December thirty-first, nineteen hundred  ninety-four
fifty-one  and  five-tenths  percent,  January  first,  nineteen hundred
ninety-five through December thirty-first, nineteen hundred  ninety-five
forty-nine  and  six-tenths percent, and January first, nineteen hundred
ninety-six through December thirty-first,  nineteen  hundred  ninety-six
forty-nine  and  six-tenths percent of the total funds to be accumulated
in the statewide pool from the allowance submitted by or  on  behalf  of
hospitals  in  that  region. Such regions shall be those established for
purposes of section two thousand nine hundred four-b of this chapter.
(b) A fixed percentage of the total funds accumulated in the statewide
pool, including income from  invested  funds,  shall  be  available  for
primary care education and training. For the rate periods January first,
nineteen  hundred  ninety-four  through  December thirty-first, nineteen
hundred  ninety-four,  such percentage shall be twenty-two and one-tenth
percent,  and  January  first,  nineteen  hundred  ninety-five   through
December  thirty-first,  nineteen  hundred  ninety-five, such percentage
shall be twenty and four-tenths percent,  and  January  first,  nineteen
hundred  ninety-six  through  December  thirty-first,  nineteen  hundred
ninety-six such percentage shall  be  twenty  and  four-tenths  percent.
Funds shall be available for distributions as follows:
(i)  up  to  four  million  dollars  annually plus income thereon from
invested funds shall be set aside and reserved  from  accumulated  funds
and  may  be  accumulated for the following year for distribution by the
commissioner  for  primary  care  undergraduate  medical  education   in
accordance with section nine hundred two of this chapter;
(ii)  up  to  four  million  dollars annually plus income thereon from
invested funds shall be set aside and reserved  from  accumulated  funds
and  may  be  accumulated for the following year for distribution by the
commissioner for the primary care physician loan  repayment  program  in
accordance with section nine hundred three of this chapter;
(iii)  up  to  two  million  dollars annually plus income thereon from
invested funds shall be set aside and reserved  from  accumulated  funds
and  may  be  accumulated for the following year for distribution by the
commissioner for the primary care practitioner  scholarship  program  in
accordance with section nine hundred four of this chapter;
(iv)  up  to  two  million  dollars  annually plus income thereon from
invested funds shall be set aside and reserved  from  accumulated  funds
and  may  be  accumulated for the following year for distribution by the
commissioner for the primary  care  practitioner  education  program  in
accordance with section nine hundred five of this chapter;
(v)  the  balance remaining annually plus income thereon from invested
funds shall be set aside and reserved from accumulated funds and may  be
accumulated  from year to year for distributions by the commissioner for
health care development in accordance with section nine hundred  six  of
this chapter; and
(vi)  provided,  however,  that  the  commissioner  in  the absence of
qualified  recipients  within  a  category  may  reallocate  any   funds
remaining  or unallocated within such a category for distribution by the
commissioner for the primary care practitioner  scholarship  program  in
accordance  with  section  nine  hundred  four  of  this chapter and the
primary care practitioner education program in accordance  with  section
nine hundred five of this chapter.
(c) A fixed percentage of the total funds accumulated in the statewide
pool,  including  income  from invested funds, shall be deposited by the
commissioner into the miscellaneous special revenue fund -  339,  health
care  planning  account,  which is established for services and expenses
for health planning, for purposes of: (i) per capita support  of  health
systems  agencies,  provided no health systems agency shall receive less
than two hundred fifty thousand dollars annually  from  the  per  capita
allocation,  and provided further that a health systems agency receiving
the minimum level of funding provided pursuant to a per  capita  formula
shall  also  be  entitled  to  receive  matching  support; (ii) matching
support for other contributions received by health systems agencies from
qualified sources as determined by the commissioner; (iii) five  hundred
thousand  dollars  for global budgeting demonstrations grants authorized
pursuant to section twenty-eight hundred fourteen of this  article;  and
(iv) five hundred thousand dollars for health networks grants authorized

pursuant  to  section twenty-eight hundred fourteen of this article. For
the rate period January  first,  nineteen  hundred  ninety-four  through
December  thirty-first,  nineteen  hundred  ninety-four  such percentage
shall be eight and eight-tenths percent, and for the rate period January
first,  nineteen  hundred  ninety-five  through  December  thirty-first,
nineteen  hundred  ninety-six  such  percentage  shall  be   eight   and
two-tenths percent.
(c-1)  Notwithstanding any other provision of law to the contrary, any
unspent  funds  available  for  programs  and   services   pursuant   to
subparagraphs  (iii) and (iv) of paragraph (c) of this subdivision as of
April first, nineteen  hundred  ninety-five  and  any  additional  funds
available  for programs and services pursuant to subparagraphs (iii) and
(iv) of paragraph (c) of this subdivision for the  period  April  first,
nineteen  hundred  ninety-five  through  December thirty-first, nineteen
hundred  ninety-five  shall  be  transferred  by  the  commissioner  and
deposited  and credited to the medical assistance program general fund -
local assistance account.
(c-2) Notwithstanding any other provision  of  law  to  the  contrary,
funds  accumulated  for  programs and services pursuant to subparagraphs
(i) and (ii) of paragraph (c) of this subdivision for  nineteen  hundred
ninety-five  shall  be transferred by the commissioner and deposited and
credited to the general fund - local assistance account.
(d) A fixed percentage of the total funds accumulated in the statewide
pool, including income from invested funds, shall be  deposited  by  the
commissioner  and  credited  to  the emergency medical services training
account established for purposes of section ninety-seven-q of the  state
finance  law  for  services  and  expenses  related to emergency medical
services training and administration. For the rate period January first,
nineteen hundred ninety-four  through  December  thirty-first,  nineteen
hundred  ninety-four,  such percentage shall be seventeen and six-tenths
percent, for the rate period January first, nineteen hundred ninety-five
through  December  thirty-first,  nineteen  hundred  ninety-five,   such
percentage  shall  be  twenty-one  and eight-tenths percent, and for the
rate period January first, nineteen hundred ninety-six through  December
thirty-first,  nineteen  hundred  ninety-six,  such  percentage shall be
twenty-one and eight-tenths percent.
(f) Distributions from the  pools  created  in  accordance  with  this
subdivision   and  subdivision  fourteen-b  of  this  section,  and  the
components of rates of payment or  charges  related  to  the  allowances
provided in accordance with subdivision fourteen-b of this section shall
not   be  included  in  gross  revenue  received  for  purposes  of  the
assessments pursuant to subdivision eighteen of this section, subject to
the provisions of paragraph (e) of subdivision eighteen of this section,
and shall not be included in gross receipts received for purposes of the
assessments pursuant to section twenty-eight  hundred  seven-d  of  this
article,  subject  to  the  provisions  of subdivision twelve of section
twenty-eight hundred seven-d of this article.
(g)  Notwithstanding  any  inconsistent   provisions   of   law,   the
commissioner  may  borrow  from  regional or statewide pool reserves for
pools established pursuant to  sections  twenty-eight  hundred  eight-c,
twenty-eight  hundred seven-a or this section of this article such funds
as shall be necessary,  not  to  exceed  the  amounts  projected  to  be
available  pursuant  to  paragraph (d) of subdivision fourteen-b of this
section, annually for distributions in accordance with  paragraphs  (a),
(b),  (c),  (d)  and  (h)  of this subdivision for a rate year and shall
refund  such  moneys  when  pool  funds  become  available  pursuant  to
paragraphs  (a), (b), (c), (d) and (h) of this subdivision for such rate
year.
(h) Notwithstanding any inconsistent provision  of  this  subdivision,
prior to allocation of funds in accordance with paragraphs (a), (b), (c)
and  (d)  of  this  subdivision  from  the allowance for the period July
first,  nineteen  hundred  ninety-five  through  December  thirty-first,
nineteen  hundred  ninety-five  and  from  the  allowance for the period
January first,  nineteen  hundred  ninety-six  through  June  thirtieth,
nineteen  hundred  ninety-six, thirty-nine million five hundred thousand
dollars from  the  nineteen  hundred  ninety-five  pool  and  forty-four
million   five  hundred  thousand  dollars  from  the  nineteen  hundred
ninety-six pool respectively shall be reserved by the commissioner  from
the  amount  accumulated  in the statewide pool, proportionally based on
the total amount of funds projected to be accumulated in  the  pool  for
the  year,  for  additional  distributions  in accordance with paragraph
(b-1) of subdivision nineteen of this section  to  programs  to  provide
health  care  coverage  for  uninsured or underinsured children, and the
balance  of  funds  accumulated  in  the   statewide   pool   shall   be
proportionally allocated in accordance with paragraphs (a), (b), (c) and
(d) of this subdivision.
* NB Effective until December 31, 2026
* 19-a.  Health  care  services allowance statewide pool distribution.
Funds accumulated  in  the  statewide  pool  created  by  the  allowance
authorized  in accordance with subparagraphs (ii) and (iii) of paragraph
(a) of subdivision fourteen-b of this  section,  including  income  from
invested  funds, shall be distributed or retained in accordance with the
following:
(a) Funds  shall  be  transferred  to  primary  health  care  services
regional  pools  created  by  the  commissioner, and shall be available,
including income from invested funds, for  distributions  in  accordance
with  section  twenty-eight hundred seven-bb of this article. Such funds
shall be transferred to each regional pool so  that  the  regional  pool
receives,   for   the  rate  periods  January  first,  nineteen  hundred
ninety-four through December thirty-first, nineteen hundred  ninety-four
fifty-one  and  five-tenths  percent,  January  first,  nineteen hundred
ninety-five through December thirty-first, nineteen hundred  ninety-five
forty-nine  and  six-tenths percent, and January first, nineteen hundred
ninety-six  through  June   thirtieth,   nineteen   hundred   ninety-six
forty-nine  and  six tenths percent of the total funds to be accumulated
in the statewide pool from the allowance submitted by or  on  behalf  of
hospitals  in  that  region. Such regions shall be those established for
purposes of section two thousand nine hundred four-b of this chapter.
(b) A fixed percentage of the total funds accumulated in the statewide
pool, including income from  invested  funds,  shall  be  available  for
primary care education and training. For the rate periods January first,
nineteen  hundred  ninety-four  through  December thirty-first, nineteen
hundred ninety-four, such percentage shall be twenty-two  and  one-tenth
percent,  January  first,  nineteen hundred ninety-five through December
thirty-first, nineteen hundred ninety-five,  such  percentage  shall  be
twenty  and  four-tenths  percent,  and  January first, nineteen hundred
ninety-six through June thirtieth,  nineteen  hundred  ninety-six,  such
percentage  shall  be  twenty  and  four-tenths  percent. Funds shall be
available for distributions as follows:
(i) up to four million  dollars  annually  plus  income  thereon  from
invested  funds  shall  be set aside and reserved from accumulated funds
and may be accumulated for the following year for  distribution  by  the
commissioner   for  primary  care  undergraduate  medical  education  in
accordance with section nine hundred two of this chapter;
(ii) up to four million dollars  annually  plus  income  thereon  from
invested  funds  shall  be set aside and reserved from accumulated funds

and may be accumulated for the following year for  distribution  by  the
commissioner  for  the  primary care physician loan repayment program in
accordance with section nine hundred three of this chapter;
(iii)  up  to  two  million  dollars annually plus income thereon from
invested funds shall be set aside and reserved  from  accumulated  funds
and  may  be  accumulated for the following year for distribution by the
commissioner for the primary care practitioner  scholarship  program  in
accordance with section nine hundred four of this chapter;
(iv)  up  to  two  million  dollars  annually plus income thereon from
invested funds shall be set aside and reserved  from  accumulated  funds
and  may  be  accumulated for the following year for distribution by the
commissioner for the primary  care  practitioner  education  program  in
accordance with section nine hundred five of this chapter;
(v)  the  balance remaining annually plus income thereon from invested
funds shall be set aside and reserved from accumulated funds and may  be
accumulated  from year to year for distributions by the commissioner for
health care development in accordance with section nine hundred  six  of
this chapter; and
(vi)  provided,  however,  that  the  commissioner  in  the absence of
qualified  recipients  within  a  category  may  reallocate  any   funds
remaining  or unallocated within such a category for distribution by the
commissioner for the primary care practitioner  scholarship  program  in
accordance  with  section  nine  hundred  four  of  this chapter and the
primary care practitioner education program in accordance  with  section
nine hundred five of this chapter.
(c) A fixed percentage of the total funds accumulated in the statewide
pool  including  income  from  invested funds, shall be deposited by the
commissioner into the miscellaneous special revenue fund -  339,  health
care  planning  account,  which is established for services and expenses
for health planning, for purposes of: (i) per capita support  of  health
systems  agencies,  provided no health systems agency shall receive less
than two hundred fifty thousand dollars annually  from  the  per  capita
allocation,  and provided further that a health systems agency receiving
the minimum level of funding provided pursuant to a per  capita  formula
shall  also  be  entitled  to  receive  matching  support; (ii) matching
support for other contributions received by health systems agencies from
qualified sources as determined by the commissioner; (iii) five  hundred
thousand  dollars  for global budgeting demonstrations grants authorized
pursuant to section twenty-eight hundred fourteen of this  article;  and
(iv) five hundred thousand dollars for health networks grants authorized
pursuant  to  section twenty-eight hundred fourteen of this article. For
the rate period January  first,  nineteen  hundred  ninety-four  through
December  thirty-first,  nineteen  hundred  ninety-four  such percentage
shall be eight and eight-tenths percent, and for the rate period January
first, nineteen hundred ninety-five  through  June  thirtieth,  nineteen
hundred  ninety-six  such  percentage  shall  be  eight  and  two-tenths
percent.
(c-1) Notwithstanding any other provision of law to the contrary,  any
unspent   funds   available   for  programs  and  services  pursuant  to
subparagraphs (iii) and (iv) of paragraph (c) of this subdivision as  of
April  first,  nineteen  hundred  ninety-five  and  any additional funds
available for programs and services pursuant to subparagraphs (iii)  and
(iv)  of  paragraph  (c) of this subdivision for the period April first,
nineteen hundred ninety-five  through  December  thirty-first,  nineteen
hundred  ninety-five  shall  be  transferred  by  the  commissioner  and
deposited and credited to the medical assistance  program  general  fund
local assistance account.
(c-2)  Notwithstanding  any  other  provision  of law to the contrary,
funds accumulated for programs and services  pursuant  to  subparagraphs
(i)  and  (ii) of paragraph (c) of this subdivision for nineteen hundred
ninety-five shall be transferred by the commissioner and  deposited  and
credited to the general fund - local assistance account.
(d) A fixed percentage of the total funds accumulated in the statewide
pool,  including  income  from invested funds, shall be deposited by the
commissioner and credited to the  emergency  medical  services  training
account  established for purposes of section ninety-seven-q of the state
finance law for services  and  expenses  related  to  emergency  medical
services training and administration. For the rate period January first,
nineteen  hundred  ninety-four  through  December thirty-first, nineteen
hundred ninety-four, such percentage shall be seventeen  and  six-tenths
percent, for the rate period January first, nineteen hundred ninety-five
through   December  thirty-first,  nineteen  hundred  ninety-five,  such
percentage shall be twenty-one and eight-tenths  percent,  and  for  the
rate  period  January  first,  nineteen  hundred ninety-six through June
thirtieth,  nineteen  hundred  ninety-six,  such  percentage  shall   be
twenty-one and eight-tenths percent.
(e)  If  on  September  thirtieth,  nineteen hundred ninety-seven, any
funds accumulated  over  the  period  January  first,  nineteen  hundred
ninety-four  through  June thirtieth, nineteen hundred ninety-six in the
regional pools established pursuant to paragraph (a) of this subdivision
are unused or uncommitted for the allocations provided for, such  unused
or uncommitted funds shall be reallocated for use in accordance with the
provisions of subdivision seventeen of this section.
(f)  Distributions  from  the  pools  created  in accordance with this
subdivision  and  subdivision  fourteen-b  of  this  section,  and   the
components  of  rates  of  payment  or charges related to the allowances
provided in accordance with subdivision fourteen-b of this section shall
not  be  included  in  gross  revenue  received  for  purposes  of   the
assessments pursuant to subdivision eighteen of this section, subject to
the provisions of paragraph (e) of subdivision eighteen of this section,
and shall not be included in gross receipts received for purposes of the
assessments  pursuant  to  section  twenty-eight hundred seven-d of this
article, subject to the provisions  of  subdivision  twelve  of  section
twenty-eight hundred seven-d of this article.
(g)   Notwithstanding   any   inconsistent   provisions  of  law,  the
commissioner may borrow from regional or  statewide  pool  reserves  for
pools  established  pursuant  to  sections twenty-eight hundred eight-c,
twenty-eight hundred seven-a or this section of this article such  funds
as  shall  be  necessary,  not  to  exceed  the  amounts projected to be
available pursuant to paragraph (d) of subdivision  fourteen-b  of  this
section,  annually  for distributions in accordance with paragraphs (a),
(b), (c), (d) and (h) of this subdivision for  a  rate  year  and  shall
refund  such  moneys  when  pool  funds  become  available  pursuant  to
paragraphs (a), (b), (c), (d) and (h) of this subdivision for such  rate
year.
(h)  Notwithstanding  any  inconsistent provision of this subdivision,
prior to allocation of funds in accordance with paragraphs (a), (b), (c)
and (d) of this subdivision from  the  allowance  for  the  period  July
first,  nineteen  hundred  ninety-five  through  December  thirty-first,
nineteen hundred ninety-five and  from  the  allowance  for  the  period
January  first,  nineteen  hundred  ninety-six  through  June thirtieth,
nineteen hundred ninety-six, thirty-nine million five  hundred  thousand
dollars  from  the  nineteen  hundred  ninety-five  pool  and twenty-two
million two hundred fifty thousand dollars  from  the  nineteen  hundred
ninety-six  pool respectively shall be reserved by the commissioner from

the amount accumulated in the statewide pool,  proportionally  based  on
the  total  amount  of funds projected to be accumulated in the pool for
the year, for additional  distributions  in  accordance  with  paragraph
(b-1)  of  subdivision  nineteen  of this section to programs to provide
health care coverage for uninsured or  underinsured  children,  and  the
balance   of   funds   accumulated   in  the  statewide  pool  shall  be
proportionally allocated in accordance with paragraphs (a), (b),(c)  and
(d) of this subdivision.
* NB Effective December 31, 2026
* 19-b.  Funds  accumulated  in  the  statewide  pool  created  by the
assessment authorized in accordance with subdivision  eighteen  of  this
section  for  a period during the period January first, nineteen hundred
ninety-seven through December thirty-first, nineteen hundred ninety-nine
and periods on and after January first, two thousand,  including  income
from  invested  funds,  shall  be  transferred  by  the commissioner and
consolidated with funds  accumulated  from  the  allowance  pursuant  to
subdivision  two of section twenty-eight hundred seven-j of this article
for such period and allocated in accordance  with  subdivision  nine  of
section twenty-eight hundred seven-j of this article.
* NB Effective until December 31, 2026
* 19-b.  Funds  accumulated  in  the  statewide  pool  created  by the
assessment authorized in accordance with subdivision  eighteen  of  this
section  for  a period during the period January first, nineteen hundred
ninety-seven   through   December   thirty-first,    nineteen    hundred
ninety-nine,  including income from invested funds, shall be transferred
by the commissioner and consolidated with  funds  accumulated  from  the
allowance  pursuant  to  subdivision two of section twenty-eight hundred
seven-j of this article for such period and allocated in accordance with
subdivision  nine  of  section  twenty-eight  hundred  seven-j  of  this
article.
* NB Effective and repealed December 31, 2026
20.  Payments  to  pools.  (a)  Payments  by  or  on behalf of general
hospitals to bad debt and charity care regional pools of funds due based
on the allowance included  in  rates  and  charges  in  accordance  with
paragraph  (c)  of  subdivision fourteen of this section and to regional
pools created pursuant to paragraph (b) of subdivision fourteen-b and to
a statewide pool  created  pursuant  to  paragraph  (b)  of  subdivision
fourteen-c  of this section shall be made on a time schedule established
by the  council,  subject  to  the  approval  of  the  commissioner,  by
regulation;  provided,  however,  that estimated payments of amounts due
for patients discharged in a  calendar  month  commencing  on  or  after
October  first,  nineteen  hundred  ninety-one must be made within sixty
days of the end of each month unless payments of actual amounts due  for
such  calendar  months have been made within such sixty day time period.
Upon receipt of notification from the commissioner, the comptroller,  or
a  fiscal  intermediary designated by the director of the budget, or the
commissioner  of  social  services,  or  a  corporation  organized   and
operating in accordance with article forty-three of the insurance law or
an  organization operating in accordance with article forty-four of this
chapter shall withhold from the amount of any payment to be made by  the
state  or  such  article  forty-three  corporation or article forty-four
organization to a general hospital the amount of any arrearage resulting
from such general hospital's failure to make a  timely  payment  to  the
pools of funds due based on the allowances included in rates and charges
in  accordance with paragraph (c) of subdivision fourteen, paragraph (a)
of subdivision fourteen-b and paragraph (a) of subdivision fourteen-c of
this section. Upon  withholding  such  amount,  the  comptroller,  or  a
designated  fiscal intermediary, or the commissioner of social services,

or a corporation organized and  operating  in  accordance  with  article
forty-three  of  the  insurance  law  or  an  organization  operating in
accordance with  article  forty-four  of  this  chapter  shall  pay  the
commissioner, or his designee, such amount withheld for deposit into the
applicable  pool. Any general hospital in arrears resulting from failure
to make a timely  payment  to  a  pool  shall  not  be  eligible  for  a
distribution  from  a  bad  debt  and  charity  care  regional  pool  in
accordance  with  subdivision  seventeen  of  this  section  until  such
arrearage is satisfied.
(b)  (i) Payments by or on behalf of general hospitals to the bad debt
and charity care and capital  statewide  pool  of  funds  due  from  the
assessments  pursuant  to  subdivision eighteen of this section shall be
made on a time schedule established  by  the  council,  subject  to  the
approval  of  the  commissioner,  by regulation; provided, however, that
estimated payments of amounts due for patients discharged in a  calendar
month  commencing on or after October first, nineteen hundred ninety-one
must be made within sixty days of the end of each month unless  payments
of  actual  amounts  due  for such calendar months have been made within
such sixty day time  period.  Upon  receipt  of  notification  from  the
commissioner,  the  comptroller,  or a fiscal intermediary designated by
the director of the budget, or a corporation organized and operating  in
accordance   with  article  forty-three  of  the  insurance  law  or  an
organization operating in accordance with  article  forty-four  of  this
chapter  shall withhold from the amount of any payment to be made by the
state or such article  forty-three  corporation  or  article  forty-four
organization to a general hospital the amount of any arrearage resulting
from such general hospital's failure to make a timely payment to the bad
debt  and  charity care and capital statewide pool of funds due from the
assessments.  Upon  withholding  such  amount,  the  comptroller,  or  a
designated fiscal intermediary, or a corporation organized and operating
in  accordance  with  article  forty-three  of  the  insurance law or an
organization operating in accordance with  article  forty-four  of  this
chapter  shall  pay  the  commissioner,  or  his  designee,  such amount
withheld for deposit into the applicable pool. Any general  hospital  in
arrears  resulting from failure to make a timely payment to the bad debt
and charity care and capital statewide pool shall not be eligible for  a
distribution  from  the  bad  debt  and  charity  care regional pools in
accordance with subdivision seventeen of this section or  the  bad  debt
and   charity  care  and  capital  statewide  pool  in  accordance  with
subdivision nineteen of this section until such arrearage is satisfied.
(ii) For periods on  and  after  January  first,  two  thousand  five,
reports  submitted  by general hospitals to implement the assessment set
forth in  subdivision  eighteen  of  this  section  shall  be  submitted
electronically  in  a  form  as  may  be  required  by the commissioner;
provided, however, general hospitals are not prohibited from  submitting
reports  electronically  on  a  voluntary  basis prior to such date, and
provided  further,  however,  that  all  such   electronic   submissions
submitted on and after July first, two thousand twelve shall be verified
with an electronic signature as prescribed by the commissioner.
(c)  (i)  Interest  shall  be due and payable to the commissioner by a
general hospital or by  a  payor  paying  directly  to  a  pool  on  the
difference  between the amount paid to a pool and the amount due to such
pool by the hospital or payor from the day of the month the payment  was
due  until  the  date  of  payment. The rate of interest shall be twelve
percent per annum or at the rate of interest set by the commissioner  of
taxation  and  finance  with respect to underpayments of tax pursuant to
subsection (e) of section one thousand ninety-six of the tax  law  minus
four  percentage points. Interest under this paragraph shall not be paid

if the amount thereof is less than one dollar. Interest may be collected
by the commissioner in the same manner as an arrearage pursuant to  this
subdivision.
(ii)  If a payment by a general hospital or by a payor paying directly
to a pool is less than seventy percent of the amount due to such pool by
the hospital or payor, a  penalty  shall  be  due  and  payable  to  the
commissioner  by the hospital or payor of five percent of the difference
between the amount paid to the pool and the amount due to such pool when
the failure to pay is for a duration of not more than  one  month  after
the  due  date  of  the payment with an additional five percent for each
additional  month  or  fraction  thereof  during  which   such   failure
continues, not exceeding twenty-five percent in the aggregate. A penalty
may  be collected by the commissioner in the same manner as an arrearage
pursuant to this subdivision.
21. Maximum distributions. (a) No  general  hospital  may  receive  in
total  from  the  distributions made in accordance with paragraph (b) of
subdivision fourteen-c, paragraphs (a) and (b) of subdivision  seventeen
and  paragraphs (c), (d) and (e) of subdivision nineteen of this section
an amount which exceeds its need for financing  losses  related  to  bad
debts  and  the  costs  of  charity  care as defined in paragraph (b) of
subdivision fourteen of this section.
* (b)(i)  No  public  general  hospital  may  receive  in  total  from
disproportionate  share  payment  distributions  made in accordance with
subdivision seventeen of this section and adjustments in accordance with
subdivisions fourteen-a and fourteen-d of this section  for  the  period
April first, nineteen hundred ninety-four through December thirty-first,
nineteen  hundred  ninety-four  or  for annual rate periods beginning on
January first on or after January first,  nineteen  hundred  ninety-five
through  December  thirty-first, nineteen hundred ninety-six, or made in
accordance with section twenty-eight hundred seven-k of this article and
adjustments in accordance with subdivision fourteen-f  of  this  section
for  annual  periods  beginning  on  January  first on and after January
first, nineteen  hundred  ninety-seven  through  December  thirty-first,
nineteen  hundred  ninety-nine  and  on  and  after  January  first, two
thousand an amount which exceeds the costs incurred during  such  period
of furnishing inpatient and ambulatory hospital services, net of medical
assistance  payments  pursuant  to  title  eleven of article five of the
social services law, other than disproportionate share payments pursuant
to subdivision twenty-six of this section  or  subdivision  thirteen  of
section  twenty-eight  hundred  seven-k of this article, and payments by
uninsured patients, by  the  hospital  to  individuals  who  either  are
eligible for medical assistance pursuant to title eleven of article five
of  the  social services law or have no health insurance or other source
of third party coverage; provided, however, that the commissioner  shall
make  such  increase  to  such  maximum  or  to  the manner in which the
limitation on  disproportionate  share  payments  is  applied  as  shall
increase  the  maximum  limit  for  a  period  or  part  of  a period as
authorized by  federal  law  or  regulation  or  the  secretary  of  the
department  of  health  and  human  services  for  purposes  of  federal
financial participation pursuant to title  XIX  of  the  federal  social
security  act.  For  purposes  of  this paragraph, payments to a general
hospital for services provided to indigent patients made by the state or
a unit of local government within the state shall not be  considered  to
be a source of third party payment.
(ii)  Reductions  pursuant  to  this  paragraph  shall  be made in the
following sequence:
(A)  for  periods  through  December  thirty-first,  nineteen  hundred
ninety-six,  adjustments  in  accordance  with subdivision fourteen-d of

this section; adjustments in accordance with subdivision  fourteen-a  of
this section; and distributions in accordance with subdivision seventeen
of this section, and
(B)  for  periods  during  the  period January first, nineteen hundred
ninety-seven through December thirty-first, nineteen hundred ninety-nine
and on and after January first, two thousand, adjustments in  accordance
with  subdivision  fourteen-f  of  this  section;  and  distributions in
accordance with section twenty-eight hundred seven-k of this article.
(iii) (A) In the event a reduction pursuant to subparagraphs  (i)  and
(ii) of this paragraph is effective for distributions in accordance with
subdivision  seventeen  of  this  section  for  a general hospital, such
general hospital shall receive a supplementary  distribution  not  as  a
disproportionate  share  payment  and  not  subject to federal financial
participation from funds available pursuant to subdivision seventeen  of
this section for periods through December thirty-first, nineteen hundred
ninety-six equal to one-half of such reduction.
(B) In the event a reduction pursuant to subparagraphs (i) and (ii) of
this paragraph is effective for distributions in accordance with section
twenty-eight  hundred  seven-k  of  this article for a general hospital,
such general hospital shall receive a supplementary distribution not  as
a  disproportionate  share  payment and not subject to federal financial
participation from funds  available  pursuant  to  section  twenty-eight
hundred  seven-k  of  this article for periods during the period January
first, nineteen  hundred  ninety-seven  through  December  thirty-first,
nineteen  hundred  ninety-nine  and  on  and  after  January  first, two
thousand equal to one-half of such reduction.
* NB Effective until December 31, 2026
* (b)(i)  No  public  general  hospital  may  receive  in  total  from
disproportionate  share  payment  distributions  made in accordance with
subdivision seventeen of this section and adjustments in accordance with
subdivisions fourteen-a and fourteen-d of this section  for  the  period
April first, nineteen hundred ninety-four through December thirty-first,
nineteen  hundred  ninety-four  or  for annual rate periods beginning on
January first on or after January first,  nineteen  hundred  ninety-five
through  December  thirty-first, nineteen hundred ninety-six, or made in
accordance with section twenty-eight hundred seven-k of this article and
adjustments in accordance with subdivision fourteen-f  of  this  section
for  annual  periods  beginning  on  January  first on and after January
first, nineteen  hundred  ninety-seven  through  December  thirty-first,
nineteen  hundred ninety-nine an amount which exceeds the costs incurred
during such period  of  furnishing  inpatient  and  ambulatory  hospital
services, net of medical assistance payments pursuant to title eleven of
article  five  of  the  social services law, other than disproportionate
share payments pursuant to subdivision twenty-six  of  this  section  or
subdivision  thirteen  of  section  twenty-eight hundred seven-k of this
article,  and  payments  by  uninsured  patients,  by  the  hospital  to
individuals  who  either are eligible for medical assistance pursuant to
title eleven of article five of the  social  services  law  or  have  no
health  insurance  or  other  source  of third party coverage; provided,
however, that the commissioner shall make such increase to such  maximum
or  to  the  manner  in  which  the limitation on disproportionate share
payments is applied as shall increase the maximum limit for a period  or
part  of  a  period  as  authorized  by federal law or regulation or the
secretary of the department of health and human services for purposes of
federal financial participation pursuant to title  XIX  of  the  federal
social  security  act.  For  purposes  of  this paragraph, payments to a
general hospital for services provided to indigent patients made by  the

state  or  a  unit  of  local  government  within the state shall not be
considered to be a source of third party payment.
(ii)  Reductions  pursuant  to  this  paragraph  shall  be made in the
following sequence:
(A)  for  periods  through  December  thirty-first,  nineteen  hundred
ninety-six,  adjustments  in  accordance  with subdivision fourteen-d of
this section; adjustments in accordance with subdivision  fourteen-a  of
this section; and distributions in accordance with subdivision seventeen
of this section, and
(B)  for  periods  during  the  period January first, nineteen hundred
ninety-seven   through   December   thirty-first,    nineteen    hundred
ninety-nine,  adjustments  in  accordance with subdivision fourteen-f of
this section; and distributions in accordance with section  twenty-eight
hundred seven-k of this article.
(iii)  (A)  In the event a reduction pursuant to subparagraphs (i) and
(ii) of this paragraph is effective for distributions in accordance with
subdivision seventeen of this  section  for  a  general  hospital,  such
general  hospital  shall  receive  a supplementary distribution not as a
disproportionate share payment and  not  subject  to  federal  financial
participation  from funds available pursuant to subdivision seventeen of
this section for periods through December thirty-first, nineteen hundred
ninety-six.
(B) In the event a reduction pursuant to subparagraphs (i) and (ii) of
this paragraph is effective for distributions in accordance with section
twenty-eight hundred seven-k of this article  for  a  general  hospital,
such  general hospital shall receive a supplementary distribution not as
a disproportionate share payment and not subject  to  federal  financial
participation  from  funds  available  pursuant  to section twenty-eight
hundred seven-k of this article for periods during  the  period  January
first,  nineteen  hundred  ninety-seven  through  December thirty-first,
nineteen hundred ninety-nine equal to one-half of such reduction.
* NB Effective and expires December 31, 2026
* (b) (i) No  public  general  hospital  may  receive  in  total  from
disproportionate  share  payment  distributions  made in accordance with
subdivision seventeen of this section and adjustments in accordance with
subdivisions fourteen-a and fourteen-d of this section  for  the  period
April first, nineteen hundred ninety-four through December thirty-first,
nineteen  hundred  ninety-four  or  for  annual rate period beginning on
January first on or after January first, nineteen hundred ninety-five an
amount which exceeds the costs incurred during such period of furnishing
inpatient and ambulatory hospital services, net  of  medical  assistance
payments pursuant to title eleven of article five of the social services
law,  other than disproportionate share payments pursuant to subdivision
twenty-six of this section, and payments by uninsured patients,  by  the
hospital  to  individuals who either are eligible for medical assistance
pursuant to title eleven of article five of the social services  law  or
have  no  health  insurance  or  other  source  of third party coverage;
provided, however, that the commissioner shall  make  such  increase  to
such   maximum   or   to   the   manner   in  which  the  limitation  on
disproportionate share payments is applied as shall increase the maximum
limit for a period or part of a period as authorized by federal  law  or
regulation  or  the  secretary  of  the  department  of health and human
services for purposes of federal  financial  participation  pursuant  to
title  XIX  of  the  federal  social  security act. For purposes of this
paragraph, payments to a  general  hospital  for  services  provided  to
indigent patients made by the state or a unit of local government within
the state shall not be considered to be a source of third party payment.
(ii)  Reductions  pursuant  to  this  paragraph  shall  be made in the
following  sequence:  adjustments   in   accordance   with   subdivision
fourteen-d  of  this section; adjustments in accordance with subdivision
fourteen-a  of  this  section;  and  distributions  in  accordance  with
subdivision seventeen of this section.
(iii)  In the event a reduction pursuant to subparagraphs (i) and (ii)
of this paragraph is effective  for  distributions  in  accordance  with
subdivision  seventeen  of  this  section  for  a general hospital, such
general hospital shall receive a supplementary  distribution  not  as  a
disproportionate  share  payment  and  not  subject to federal financial
participation from funds available pursuant to subdivision seventeen  of
this section equal to one-half of such reduction.
* NB Effective December 31, 2026
* (c)(i)  No general hospital other than a public general hospital may
receive in total from disproportionate share payment distributions  made
in  accordance with paragraph (b) of subdivision fourteen-c, subdivision
seventeen and paragraphs (c) and (d) of  subdivision  nineteen  of  this
section  and  adjustments  in  accordance with subdivision fourteen-d of
this section for the period April first,  nineteen  hundred  ninety-five
through  December  thirty-first, nineteen hundred ninety-five or for the
annual  rate  period  beginning  on  January  first,  nineteen   hundred
ninety-six  through  December thirty-first, nineteen hundred ninety-six,
or made in accordance with section twenty-eight hundred seven-k of  this
article  for  annual  periods  beginning  on  January first on and after
January  first,   nineteen   hundred   ninety-seven   through   December
thirty-first,  nineteen  hundred  ninety-nine  and  on and after January
first, two thousand an amount which exceeds the  costs  incurred  during
such  period  of  furnishing inpatient and ambulatory hospital services,
net of medical assistance payments pursuant to title eleven  of  article
five  of  the  social  services  law,  other than disproportionate share
payments  pursuant  to  subdivision  twenty-six  of  this   section   or
subdivision  thirteen  of  section  twenty-eight hundred seven-k of this
article,  and  payments  by  uninsured  patients,  by  the  hospital  to
individuals  who  either are eligible for medical assistance pursuant to
title eleven of article five of the  social  services  law  or  have  no
health  insurance  or  other  source  of third party coverage; provided,
however, that the commissioner shall  make  such  modifications  to  the
manner  in  which  the  limitation on disproportionate share payments is
applied to such hospitals as shall increase  the  maximum  limit  for  a
period or part of a period as authorized by federal law or regulation or
the  secretary  of  the  department  of  health  and  human services for
purposes of federal financial participation pursuant to title XIX of the
federal social security act. For purposes of this paragraph, payments to
a general hospital for services provided to indigent  patients  made  by
the  state  or  a unit of local government within the state shall not be
considered to be a source of third party payment.
(ii)(A) Reductions pursuant to  this  paragraph  for  periods  through
December  thirty-first, nineteen hundred ninety-six shall be made in the
following  sequence  for  general  hospitals  other   than   financially
distressed   hospitals:   adjustments  in  accordance  with  subdivision
fourteen-d  of  this  section;  and  distributions  in  accordance  with
subdivision seventeen of this section.
(B) Reductions pursuant to this paragraph for periods through December
thirty-first, nineteen hundred ninety-six shall be made in the following
sequence  for  general  hospitals  designated  as financially distressed
hospitals: distributions in accordance with paragraph (b) of subdivision
fourteen-c of this section; distributions in accordance with  paragraphs

(c)  and  (d) of subdivision nineteen of this section; and distributions
in accordance with subdivision seventeen of this section.
(C)  Reductions  pursuant  to  this  paragraph  for periods during the
period January first, nineteen  hundred  ninety-seven  through  December
thirty-first,  nineteen  hundred  ninety-nine  and  on and after January
first, two thousand, shall be made from distributions in accordance with
section twenty-eight hundred seven-k of this article.
(iii) (A) In the event a reduction pursuant to subparagraphs  (i)  and
(ii) of this paragraph is effective for distributions in accordance with
paragraph  (b)  of subdivision fourteen-c of this section, paragraph (c)
or (d) of subdivision nineteen of this section,  subdivision  fourteen-d
of  this  section or subdivision seventeen of this section for a general
hospital,  such  general  hospital   shall   receive   a   supplementary
distribution  not as a disproportionate share payment and not subject to
federal financial participation from funds available  pursuant  to  such
subdivisions  equal  to  one-half  of such reduction for periods through
December thirty-first, nineteen hundred ninety-six.
(B) In the event a reduction pursuant to subparagraphs (i) and (ii) of
this paragraph is effective for distributions in accordance with section
twenty-eight hundred seven-k of this article  for  a  general  hospital,
such  general hospital shall receive a supplementary distribution not as
a disproportionate share payment and not subject  to  federal  financial
participation  from  funds  available  pursuant  to section twenty-eight
hundred seven-k of this article for periods during  the  period  January
first,  nineteen  hundred  ninety-seven  through  December thirty-first,
nineteen hundred  ninety-nine  and  on  and  after  January  first,  two
thousand equal to one-half of such reduction.
* NB Effective until December 31, 2026
* (c)(i)  No general hospital other than a public general hospital may
receive in total from disproportionate share payment distributions  made
in  accordance with paragraph (b) of subdivision fourteen-c, subdivision
seventeen and paragraphs (c) and (d) of  subdivision  nineteen  of  this
section  and  adjustments  in  accordance with subdivision fourteen-d of
this section for the period April first,  nineteen  hundred  ninety-five
through  December  thirty-first, nineteen hundred ninety-five or for the
annual  rate  period  beginning  on  January  first,  nineteen   hundred
ninety-six  through  December thirty-first, nineteen hundred ninety-six,
or made in accordance with section twenty-eight hundred seven-k of  this
article  for  annual  periods  beginning  on  January first on and after
January  first,   nineteen   hundred   ninety-seven   through   December
thirty-first,  nineteen  hundred ninety-nine an amount which exceeds the
costs incurred during such period of furnishing inpatient and ambulatory
hospital services, net of medical assistance payments pursuant to  title
eleven   of  article  five  of  the  social  services  law,  other  than
disproportionate share payments pursuant to  subdivision  twenty-six  of
this  section  or  subdivision  thirteen of section twenty-eight hundred
seven-k of this article, and payments  by  uninsured  patients,  by  the
hospital  to  individuals who either are eligible for medical assistance
pursuant to title eleven of article five of the social services  law  or
have  no  health  insurance  or  other  source  of third party coverage;
provided, however, that the commissioner shall make  such  modifications
to the manner in which the limitation on disproportionate share payments
is  applied  to such hospitals as shall increase the maximum limit for a
period or part of a period as authorized by federal law or regulation or
the secretary of  the  department  of  health  and  human  services  for
purposes of federal financial participation pursuant to title XIX of the
federal social security act. For purposes of this paragraph, payments to
a  general  hospital  for services provided to indigent patients made by

the state or a unit of local government within the state  shall  not  be
considered to be a source of third party payment.
(ii)(A)  Reductions  pursuant  to  this  paragraph for periods through
December thirty-first, nineteen hundred ninety-six shall be made in  the
following   sequence   for  general  hospitals  other  than  financially
distressed  hospitals:  adjustments  in  accordance   with   subdivision
fourteen-d  of  this  section;  and  distributions  in  accordance  with
subdivision seventeen of this section.
(B) Reductions pursuant to this paragraph for periods through December
thirty-first, nineteen hundred ninety-six shall be made in the following
sequence for general  hospitals  designated  as  financially  distressed
hospitals: distributions in accordance with paragraph (b) of subdivision
fourteen-c  of this section; distributions in accordance with paragraphs
(c) and (d) of subdivision nineteen of this section;  and  distributions
in accordance with subdivision seventeen of this section.
(C)  Reductions  pursuant  to  this  paragraph  for periods during the
period January first, nineteen  hundred  ninety-seven  through  December
thirty-first,   nineteen   hundred   ninety-nine,  shall  be  made  from
distributions in accordance with section twenty-eight hundred seven-k of
this article.
(iii) (A) In the event a reduction pursuant to subparagraphs  (i)  and
(ii) of this paragraph is effective for distributions in accordance with
paragraph  (b)  of subdivision fourteen-c of this section, paragraph (c)
or (d) of subdivision nineteen of this section,  subdivision  fourteen-d
of  this  section or subdivision seventeen of this section for a general
hospital,  such  general  hospital   shall   receive   a   supplementary
distribution  not as a disproportionate share payment and not subject to
federal financial participation from funds available  pursuant  to  such
subdivisions  equal  to  one-half  of such reduction for periods through
December thirty-first, nineteen hundred ninety-six.
(B) In the event a reduction pursuant to subparagraphs (i) and (ii) of
this paragraph is effective for distributions in accordance with section
twenty-eight hundred seven-k of this article  for  a  general  hospital,
such  general hospital shall receive a supplementary distribution not as
a disproportionate share payment and not subject  to  federal  financial
participation  from  funds  available  pursuant  to section twenty-eight
hundred seven-k of this article for periods during  the  period  January
first,  nineteen  hundred  ninety-seven  through  December thirty-first,
nineteen hundred ninety-nine equal to one-half of such reduction.
* NB Effective and expires December 31, 2026
* (c) (i) No general hospital other than a public general hospital may
receive in total from disproportionate share payment distributions  made
in  accordance with paragraph (b) of subdivision fourteen-c, subdivision
seventeen and paragraphs (c) and (d) of  subdivision  nineteen  of  this
section  and  adjustments  in  accordance with subdivision fourteen-d of
this section for the period April first,  nineteen  hundred  ninety-five
through  December  thirty-first, nineteen hundred ninety-five or for the
annual  rate  period  beginning  on  January  first,  nineteen   hundred
ninety-six an amount which exceeds the costs incurred during such period
of furnishing inpatient and ambulatory hospital services, net of medical
assistance  payments  pursuant  to  title  eleven of article five of the
social services law, other than disproportionate share payments pursuant
to subdivision twenty-six of this section,  and  payments  by  uninsured
patients,  by  the  hospital  to individuals who either are eligible for
medical assistance pursuant to title  eleven  of  article  five  of  the
social services law or have no health insurance or other source of third
party coverage; provided, however, that the commissioner shall make such
modifications  to the manner in which the limitation on disproportionate

share payments is applied  to  such  hospitals  as  shall  increase  the
maximum  limit for a period or part of a period as authorized by federal
law or regulation or the secretary of the department of health and human
services  for  purposes  of  federal financial participation pursuant to
title XIX of the federal social  security  act.  For  purposes  of  this
paragraph,  payments  to  a  general  hospital  for services provided to
indigent patients made by the state or a unit of local government within
the state shall not be considered to be a source of third party payment.
(ii)(A) Reductions pursuant to this paragraph shall  be  made  in  the
following   sequence   for  general  hospitals  other  than  financially
distressed  hospitals:  adjustments  in  accordance   with   subdivision
fourteen-d  of  this  section;  and  distributions  in  accordance  with
subdivision seventeen of this section.
(B) Reductions pursuant  to  this  paragraph  shall  be  made  in  the
following  sequence  for  general  hospitals  designated  as financially
distressed hospitals: distributions in accordance with paragraph (b)  of
subdivision fourteen-c of this section; distributions in accordance with
paragraphs  (c)  and  (d)  of  subdivision nineteen of this section; and
distributions in accordance with subdivision seventeen of this section.
(iii) In the event a reduction pursuant to subparagraphs (i) and  (ii)
of  this  paragraph  is  effective  for distributions in accordance with
paragraph (b) of subdivision fourteen-c of this section,  paragraph  (c)
or  (d)  of subdivision nineteen of this section, subdivision fourteen-d
of this section or subdivision seventeen of this section for  a  general
hospital,   such   general   hospital   shall  receive  a  supplementary
distribution not as a disproportionate share payment and not subject  to
federal  financial  participation  from funds available pursuant to such
subdivisions equal to one-half of such reduction.
* NB Effective December 31, 2026
* (d)(i) Commencing April  first,  nineteen  hundred  ninety-four,  no
general  hospital  may  be  eligible  to  receive disproportionate share
payments determined in accordance with subdivision  twenty-six  of  this
section through December thirty-first, nineteen hundred ninety-six or in
accordance with section twenty-eight hundred seven-k of this article for
periods  during  the period January first, nineteen hundred ninety-seven
through December thirty-first, nineteen hundred ninety-nine and  on  and
after  January  first, two thousand unless the hospital has an inpatient
utilization rate for patients eligible for payments  pursuant  to  title
eleven  of  article five of the social services law eligible for federal
financial participation pursuant to title nineteen of the federal social
security act of not less than one percent.
(ii) In the event a  general  hospital  is  disqualified  pursuant  to
subparagraph (i) of this paragraph from receiving disproportionate share
payments for a period, such general hospital shall receive distributions
not  as  disproportionate  share  payments  and  not  subject to federal
financial participation from funds  available  pursuant  to  subdivision
seventeen  of  this  section  for periods through December thirty-first,
nineteen  hundred  ninety-six,  and  pursuant  to  section  twenty-eight
hundred  seven-k  of  this article for periods during the period January
first, nineteen  hundred  ninety-seven  through  December  thirty-first,
nineteen  hundred  ninety-nine  and  on  and  after  January  first, two
thousand equal to one-half of the distributions for which  such  general
hospital  would have been qualified pursuant to subdivision seventeen of
this section for periods through December thirty-first, nineteen hundred
ninety-six, and pursuant to section twenty-eight hundred seven-k of this
article for periods during the period January  first,  nineteen  hundred
ninety-seven through December thirty-first, nineteen hundred ninety-nine

and  on  and  after January first, two thousand without consideration of
subparagraph (i) of this paragraph.
* NB Effective until December 31, 2026
* (d)(i)  Commencing  April  first,  nineteen  hundred ninety-four, no
general hospital may  be  eligible  to  receive  disproportionate  share
payments  determined  in  accordance with subdivision twenty-six of this
section through December thirty-first, nineteen hundred ninety-six or in
accordance with section twenty-eight hundred seven-k of this article for
periods during the period January first, nineteen  hundred  ninety-seven
through  December  thirty-first, nineteen hundred ninety-nine unless the
hospital has an inpatient utilization rate  for  patients  eligible  for
payments pursuant to title eleven of article five of the social services
law  eligible  for  federal  financial  participation  pursuant to title
nineteen of the federal  social  security  act  of  not  less  than  one
percent.
(ii)  In  the  event  a  general  hospital is disqualified pursuant to
subparagraph (i) of this paragraph from receiving disproportionate share
payments for a period, such general hospital shall receive distributions
not as disproportionate  share  payments  and  not  subject  to  federal
financial  participation  from  funds  available pursuant to subdivision
seventeen of this section for  periods  through  December  thirty-first,
nineteen  hundred  ninety-six,  and  pursuant  to  section  twenty-eight
hundred seven-k of this article for periods during  the  period  January
first,  nineteen  hundred  ninety-seven  through  December thirty-first,
nineteen hundred ninety-nine equal to one-half of the distributions  for
which  such  general  hospital  would  have  been  qualified pursuant to
subdivision seventeen of  this  section  for  periods  through  December
thirty-first,  nineteen  hundred  ninety-six,  and  pursuant  to section
twenty-eight hundred seven-k of this  article  for  periods  during  the
period  January  first,  nineteen  hundred ninety-seven through December
thirty-first, nineteen  hundred  ninety-nine  without  consideration  of
subparagraph (i) of this paragraph.
* NB Effective and expires December 31, 2026
* (d)(i)  Commencing  April  first,  nineteen  hundred ninety-four, no
general hospital may  be  eligible  to  receive  disproportionate  share
payments  determined  in  accordance with subdivision twenty-six of this
section unless the  hospital  has  an  inpatient  utilization  rate  for
patients  eligible for payments pursuant to title eleven of article five
of the social services law eligible for federal financial  participation
pursuant  to  title  nineteen  of the federal social security act of not
less than one percent.
(ii) In the event a  general  hospital  is  disqualified  pursuant  to
subparagraph (i) of this paragraph from receiving disproportionate share
payments for a period, such general hospital shall receive distributions
not  as  disproportionate  share  payments  and  not  subject to federal
financial participation from funds  available  pursuant  to  subdivision
seventeen  of  this  section  equal to one-half of the distributions for
which such general  hospital  would  have  been  qualified  pursuant  to
subdivision   seventeen   of   this  section  without  consideration  of
subparagraph (i) of this paragraph.
* NB Effective December 31, 2026
* (e) For purposes of calculations pursuant to paragraphs (b) and  (c)
of   this   subdivision   of   maximum  disproportionate  share  payment
distributions for a year or part thereof, costs incurred  of  furnishing
hospital  services  net  of  medical  assistance  payments,  other  than
disproportionate share payments,  and  payments  by  uninsured  patients
shall be determined initially based on base year data and statistics for
the  base year two years immediately preceding the year projected to the

year by the trend factor determined in accordance with  subdivision  ten
of  this  section  and  shall  be subsequently revised to reflect actual
period data and statistics. For purposes  of  calculations  pursuant  to
paragraph   (d)   of   this   subdivision   of  eligibility  to  receive
disproportionate share payments for a year or part thereof, the hospital
inpatient utilization rate  shall  be  determined  based  on  base  year
statistics   in   accordance  with  a  methodology  established  by  the
commissioner, and costs incurred of furnishing hospital  services  shall
be  determined  in  accordance  with  a  methodology  established by the
commissioner consistent  with  requirements  of  the  secretary  of  the
department  of  health  and  human  services  for  purposes  of  federal
financial participation pursuant to title  XIX  of  the  federal  social
security act in disproportionate share payments.
* NB Effective until December 31, 2026
* (e)  For purposes of calculations pursuant to paragraphs (b) and (c)
of  this  subdivision  of   maximum   disproportionate   share   payment
distributions  for  a  rate  year  or  part  thereof,  costs incurred of
furnishing hospital services net of medical assistance  payments,  other
than disproportionate share payments, and payments by uninsured patients
shall be determined initially based on base year data and statistics for
the base year two years immediately preceding the rate year projected to
the  rate  year  by  the  trend  factor  determined  in  accordance with
subdivision ten of this section and shall  be  subsequently  revised  to
reflect  actual  rate  period  data  and  statistics.  For  purposes  of
calculations  pursuant  to  paragraph  (d)  of   this   subdivision   of
eligibility  to  receive disproportionate share payments for a rate year
or part thereof,  the  hospital  inpatient  utilization  rate  shall  be
determined   based   on  base  year  statistics  in  accordance  with  a
methodology established by  the  commissioner,  and  costs  incurred  of
furnishing  hospital  services  shall be determined in accordance with a
methodology established by the commissioner consistent with requirements
of the secretary of the department of  health  and  human  services  for
purposes of federal financial participation pursuant to title XIX of the
federal social security act in disproportionate share payments.
* NB Effective December 31, 2026
(e-1) For periods on and after January first, two thousand eleven, for
purposes  of  calculations  pursuant  to  paragraphs (b) and (c) of this
subdivision of maximum disproportionate share payment distributions  for
a  rate  year  or  part  thereof,  costs incurred of furnishing hospital
services net of medical assistance payments, other than disproportionate
share payments, and payments by uninsured patients  shall  for  the  two
thousand  eleven  calendar  year, shall be determined initially based on
each hospital's submission of  a  fully  completed  two  thousand  eight
disproportionate  share hospital data collection tool, which is required
to be submitted to the department by March  thirty-first,  two  thousand
eleven,  and  shall  be  subsequently revised to reflect each hospital's
submission of a fully completed two thousand nine disproportionate share
hospital data collection tool, which is required to be submitted to  the
department by October first, two thousand eleven.
For  calendar  years  on  and  after two thousand twelve, such initial
determinations shall reflect submission  of  data  as  required  by  the
commissioner  on a specified date. All such initial determinations shall
subsequently  be  revised  to  reflect  actual  rate  period  data   and
statistics.  Indigent care payments will be withheld in instances when a
hospital has  not  submitted  required  information  by  the  due  dates
prescribed  in  this  paragraph,  provided,  however, that such payments
shall be made upon submission of such required  data.  For  purposes  of
calculations   pursuant   to   paragraph  (d)  of  this  subdivision  of

eligibility to receive disproportionate share payments for a  rate  year
or  part  thereof,  the  hospital  inpatient  utilization  rate shall be
determined based on the base year  statistics  in  accordance  with  the
methodology  established  by  the  commissioner,  and  costs incurred of
furnishing hospital services shall be determined in  accordance  with  a
methodology established by the commissioner consistent with requirements
of  the  secretary  of  the  department of health and human services for
purposes of federal financial participation pursuant to the title XIX of
the federal social security act in disproportionate share payments.
(f) The commissioner may recover any amounts paid in excess of maximum
permissible distributions and adjustments determined  pursuant  to  this
subdivision  by retroactive adjustment and recoupment from payments made
for beneficiaries eligible for payments  pursuant  to  title  eleven  of
article five of the social services law.
(g)  Notwithstanding  any  inconsistent provision of this subdivision,
the provision of subparagraph (iii) of paragraph (b), subparagraph (iii)
of  paragraph  (c)  or  subparagraph  (ii)  of  paragraph  (d)  of  this
subdivision  shall be of no force and effect and shall be deemed to have
been null and void as of January first, nineteen hundred ninety-four  in
the  event  the secretary of the department of health and human services
determines that distributions based on such provisions  would  render  a
health  care  related  tax  on general hospitals an impermissible health
care  related  tax  for  purposes  of  the  federal  medicaid  voluntary
contribution  and  provider  specific tax amendments of nineteen hundred
ninety-one for  purposes  of  such  health  care  related  tax  receipts
reducing  the  amount deemed expended by the state as medical assistance
for purposes of federal financial participation.
22. Undistributed funds. Any funds,  including  income  from  invested
funds,  remaining in the bad debt and charity care and capital statewide
pool after distributions in accordance with paragraphs (a), (b),  (b-1),
(c),  (d),  (e) and (f) of subdivision nineteen of this section shall be
distributed proportionately to voluntary non-profit, private proprietary
and public general hospitals, excluding major public general  hospitals,
on the basis of hospital specific assessments submitted to the pool.
23.  Reimbursement  rates.  The  assessments  pursuant  to subdivision
eighteen of  this  section  shall  not  be  an  allowable  cost  in  the
determination  of  general  hospital  inpatient  reimbursement  rates in
accordance with this section and section twenty-eight hundred  seven  of
this article.
24.  Federal  financial participation. The council may adopt rules and
regulations, subject to the approval  of  the  commissioner,  to  adjust
rates of payment by governmental agencies for general hospital inpatient
services determined in accordance with this section as necessary to meet
federal   requirements  for  securing  federal  financial  participation
pursuant to title XIX of the federal social security act  in  the  event
the  state  cannot  provide  assurances satisfactory to the secretary of
health and human services related to a comparison of rates of payment in
the aggregate to maximum aggregate  payments  determined  in  accordance
with federal law and regulation which are substantially the same as such
assurances  as  in  effect  on  October  twenty-sixth,  nineteen hundred
eighty-seven  for  securing  such   federal   financial   participation.
Notwithstanding  any  other  law, the state reserves the right to recoup
any payments by governmental agencies  for  general  hospital  inpatient
services   authorized  by  this  section  for  which  federal  financial
participation has been denied in connection with that  determination  by
the department of health and human services.
25.  Medical  education expenses. (a) Notwithstanding any inconsistent
provision of this section, to encourage the  training  of  more  primary

care  physicians,  for annual rate periods beginning on or after January
first, nineteen hundred ninety-two, indirect medical education expenses,
as defined in subparagraph (ii) of paragraph (c) of subdivision seven of
this section, of a general hospital included in the determination of the
operating cost component of general hospital rates of payment for a rate
period  in accordance with subdivisions six and seven of this section or
in accordance with paragraph (e), (g) or (i) of subdivision four of this
section for general hospitals or distinct units of general hospitals not
reimbursed on the basis of case based payments per  discharge  shall  be
adjusted to reflect the following modifications:
(i)  the  calculation  of  interns  and  residents  to  bed ratios for
purposes of determining indirect reimbursement shall  include  residents
in  non-hospital  ambulatory  settings. The sum in total for all general
hospitals of the indirect medical education expenses shall equal the sum
in total for each general hospital determined as if  the  provisions  of
this   section  were  applied  without  consideration  of  residents  in
non-hospital ambulatory settings; and
(ii) for annual rate periods beginning  on  or  after  January  first,
nineteen  hundred  ninety-two,  residencies shall be weighted to provide
higher weights for  primary  care  and  emergency  medicine  physicians.
Primary  care  residents  specialties  shall  include  family  medicine,
general pediatrics, primary care  internal  medicine  and  primary  care
obstetrics  and  gynecology.  In  determining  whether a residency is in
primary care, the commissioner shall consult with  the  New  York  state
council  on graduate medical education and the state hospital review and
planning council. Reimbursable indirect expenses of medical education of
a general hospital  for  a  rate  period  shall  be  weighted  based  on
projected  medical  education  statistics  for such general hospital for
such rate period, and subsequently reconciled through appropriate  audit
procedures  to actual statistics by a prospective adjustment to rates of
payment. The weighting factors shall be  determined  based  on  nineteen
hundred   ninety   data  and  statistics  and  shall  include  residents
identified in subparagraph (i) of this paragraph not previously included
in such calculations  such  that  the  sum  in  total  for  all  general
hospitals  of  the  results  of  the weighting factors multiplied by the
indirect medical education expenses  for  each  general  hospital  shall
equal,  approximately, the sum in total for all general hospitals of the
indirect medical education expenses for each general hospital determined
as if the provisions of this section were applied without  consideration
of  the  weighting  factors  or  residents  in  non-hospital  ambulatory
settings determined pursuant to this subdivision. Residency positions in
any specialty shall be weighted to equal no  less  than  nine-tenths  of
what such position would have equaled if reimbursement were to have been
calculated  without  regard  to  the  weighting  factors.  If  a general
hospital is reimbursed by this provision in excess of  the  amount  such
hospital  would  have  been  reimbursed  without regard to the weighting
factors, such general hospital shall  apply  such  additional  funds  to
encourage  the  training  of  primary care physicians. The provisions of
this subparagraph shall not apply to those four specialty eye  and  ear,
special surgery and orthopedic and joint disease hospitals, specified by
the  commissioner,  whose  primary  mission  is  to  engage in research,
training, and clinical care in the above-named areas.
(b) Hospitals  shall  furnish  to  the  department  such  reports  and
information  as  may be required by the commissioner to assess the cost,
quality and health system needs for medical education provided.
(c) For purposes  of  determining  how  such  weighting  factors  have
resulted  in  the  increased  training  of  physicians  in  primary care
specialties, the council on graduate medical education shall  prepare  a

report  on  or  before March thirty-first, nineteen hundred ninety-five.
Such report shall include, but shall not be limited to: an evaluation of
the effectiveness such weighting factors  have  had  on  the  number  of
residents  matched in primary care specialties; the degree to which such
weighting factors have impacted  general  hospitals  to  redirect  their
residency  programs  toward  training  primary  care physicians; and the
impact such weighting factors have had  on  graduate  medical  education
within general hospitals. Such report shall also include recommendations
to  the  governor and the legislature on the continuation, expiration or
modification of such weighting factors.
(d) Notwithstanding any inconsistent provision  of  this  section  and
subject to the availability of federal financial participation:
(i)  For  periods  on  and  after  April first, two thousand four, the
commissioner shall adjust inpatient medical assistance rates of  payment
established  pursuant  to  this  section,  including  discrete  rates of
payment calculated pursuant to paragraph a-three of subdivision  one  of
this  section,  for non-public general hospitals, and for periods on and
after April first, two thousand seven, for public and non-public general
hospitals, in accordance with subparagraph (ii) of this  paragraph,  for
purposes  of  reimbursing  graduate medical education costs based on the
following methodology:
(ii) Rate adjustments for each general hospital shall be based on  the
difference  between the graduate medical education component, direct and
indirect, of the two thousand three medical assistance  inpatient  rates
of  payment,  including  exempt  unit per diem rates, and an estimate of
what the graduate medical education component, direct and  indirect,  of
such  medical  assistance  inpatient  rates of payment, including exempt
unit per diem rates would be, stated at two thousand  three  levels  and
calculated as follows:
(A)  Each  general  hospital's total direct medical education costs as
reported in the two thousand one institutional cost report submitted  as
of December thirty-first, two thousand three, and
(B)  An estimate of the total indirect medical education costs for two
thousand one calculated in accordance with  the  methodology  applicable
for  purposes  of  determining an estimate of indirect medical education
costs pursuant to subparagraph (ii)  of  paragraph  (c)  of  subdivision
seven  of this section. The indirect medical education costs shall equal
the product of two thousand one hospital  specific  inpatient  operating
costs,  including  exempt  unit  costs,  and  the indirect teaching cost
percentage determined by the following formula:
1-(1/(1+1.89(((1+r)^.405)-1)))
where r equals the ratio of  residents  and  fellows  to  beds  for  two
thousand  one  adjusted  to  reflect  the  projected  two thousand three
resident counts.
(C) Each hospital's rate adjustment shall be limited  to  seventy-five
percent  of the graduate medical education component included in its two
thousand three medical assistance inpatient rates of payment,  including
exempt  unit  rates.  For periods on and after April first, two thousand
seven, the seventy-five percent limit shall not apply to rate  decreases
calculated pursuant to this paragraph.
(D)  For  the  period  April  first,  two  thousand four through March
thirty-first, two thousand seven,  no  hospital  shall  receive  a  rate
adjustment pursuant to this paragraph if such rate adjustment would be a
negative  amount.  For  periods  on  and after April first, two thousand
seven,  no  public  general  hospital  shall  receive  a  rate  increase
calculated pursuant to this paragraph.
(iii)  If the aggregate amount of rate adjustments calculated pursuant
to this paragraph exceeds the upper payment limit calculated pursuant to

federal  regulations,   such   rate   adjustments   shall   be   reduced
proportionally  by  the  amount  in  excess of the federal upper payment
limit. Such reduction, if applicable, shall be calculated on  an  annual
basis.
(iv)  Such  rate  adjustment shall be included as an add-on to medical
assistance inpatient rates of payment, excluding exempt unit rates,  but
including  inpatient  rates  of  payment  established in accordance with
paragraph a-three of subdivision one of this section. Such  rate  add-on
shall  be  based  on medical assistance data reported in each hospital's
annual cost report submitted for the period two years prior to the  rate
year  and  filed with the department by November first of the year prior
to the rate year. Such  amounts  shall  not  be  reconciled  to  reflect
changes  in  medical  assistance  utilization between the year two years
prior to the rate year and the rate year.
(e) From amounts available pursuant to paragraph (oo)  of  subdivision
one of section twenty-eight hundred seven-v of this article, allocations
shall   be  made  to  non-public  general  hospitals  receiving  a  rate
adjustment pursuant to paragraph (d) of this subdivision when  the  rate
adjustment  pursuant to paragraph (d) of this subdivision results in the
general hospital exceeding its applicable disproportionate share payment
limit in the year in which the adjustment is made and the amount of  the
associated  reduction  in the hospital's disproportionate share payments
would result in the hospital receiving less than its total  distribution
amount  in  that year. A hospital's "total distribution amount" shall be
the amount that the hospital would have received pursuant to  paragraphs
(c) and (d) of subdivision three of section twenty-eight hundred seven-m
of  this  article  prior  to  the  effective  date  of this paragraph. A
hospital's eligible loss for purposes of this  paragraph  shall  be  the
amount  of  the  loss  in  such total distribution amount. Each eligible
hospital's allocation of available  funds  pursuant  to  this  paragraph
within  a  year  shall be determined based on its proportionate share of
the aggregate eligible losses for all such  hospitals,  limited  by  the
amount  of  the  rate  adjustment  pursuant  to  paragraph  (d)  of this
subdivision.
26.  Disproportionate  share  payments.   Distributions   to   general
hospitals  from  bad  debt  and  charity care regional pools pursuant to
subdivision  seventeen  of  this  section,  distributions   to   general
hospitals  from the bad debt and charity care and capital statewide pool
pursuant to paragraphs (c) and  (d)  of  subdivision  nineteen  of  this
section,  distributions  to  general  hospitals  from  the  bad debt and
charity  care  for  financially  distressed  hospitals  statewide   pool
pursuant  to  subdivision  fourteen-c of this section and the adjustment
provided in accordance with subdivision fourteen-a of this  section  and
the  adjustment  provided  in  accordance with subdivision fourteen-d of
this section shall be considered  disproportionate  share  payments  for
inpatient   hospital   services   to   general   hospitals   serving   a
disproportionate number of low income patients with  special  needs  for
purposes  of  providing  assurances to the secretary of health and human
services as necessary to meet federal requirements for securing  federal
financial  participation  pursuant  to  title  XIX of the federal social
security act.
27. Reports. (a) The commissioner of health shall submit a  report  to
the  legislature  and  the council on health care financing on or before
February first, nineteen hundred eighty-eight detailing  the  objective,
impact,  design  and  computation for an inpatient pricing component. In
terms of the design and computation for a  pricing  system  such  report
shall  include  but not be limited to: a description and methodology for
developing  peer  groups,  identification  of  costs  included  in   the

calculation  of  a group average and any adjustments made to such costs,
the  methodology  developed  to  reflect  outliers,  any   teaching   or
disproportionate  share  adjustments  made,  the calculation of wage and
power  equalization  factors, and identification of any adjustments made
to the service intensity weights or diagnosis-related group  categories.
The  commissioner  shall  explore  methodologies  for  the  inclusion of
severity of illness considerations in determining  group  average  costs
and  rates  and  shall include all details of his analysis in the report
required under this subparagraph. If it is determined that a severity of
illness  adjustment  cannot  be  developed  for  incorporation  in   the
computations,  the  report  filed shall include the specific reasons for
this conclusion. With regard to a fiscal  impact  analysis  such  report
shall include but not be limited to the impact on major types of general
hospitals   including  rural,  urban,  teaching,  non-teaching,  plus  a
regional analysis; and should indicate any characteristics which can  be
observed  regarding  general  hospitals  which  would  be  significantly
impacted by the introduction of a pricing  component.  The  commissioner
shall  expeditiously make available for inspection by interested parties
pertinent  data  used  in  the  development  of  the  inpatient  pricing
component  consistent  with  appropriate  department  procedures for the
release and protection of confidential data.
(b) The commissioner shall submit a report to  the  governor  and  the
legislature  on  or  before February first, nineteen hundred ninety-five
regarding the objective, impact, design and implementation of  the  case
based   payment   system   for  inpatient  hospital  services  based  on
diagnosis-related groups created pursuant to this section including,  in
particular, an analysis of the group price component of case based rates
of  payment  and the appropriateness and effectiveness of the provisions
relating to financing of uncompensated care. The reports  shall  include
but not be limited to a fiscal impact analysis of the impact of the case
based  payment  system  on  major  types  of general hospitals including
rural, urban, teaching and non-teaching, plus a regional analysis.  Such
reports  shall  evaluate  the impact of the case based payment system on
general hospital inpatient medical and clinical care and the quality  of
hospital  services.  The  reports shall also include recommendations for
continuation or modification  of  the  case  based  payment  system  for
inpatient hospital services provided on or after January first, nineteen
hundred ninety-six.
** (c)   The  commissioner  shall  report  to  the  governor  and  the
legislature on or before December first, nineteen  hundred  eighty-eight
with  a plan relating to the structure and financing of graduate medical
education.  Such plan shall include an evaluation of and recommendations
for graduate medical education with respect to health services  delivery
and  educational  goals  including  but  not  limited  to the following:
appropriate  supply  and  distribution  of  primary  care  providers  by
geographic area; adequate supply and distribution of medical specialists
according  to  projected  population  needs;  educational  opportunities
representative of current and future practice settings;  the  impact  of
such  plan  on  health  care delivery in currently underserved and rural
areas; and  reimbursement  changes  to  effectuate  the  recommendations
included  in  the  plan.  Such  plan shall be developed with substantial
participation by the  department  of  education,  the  medical  schools,
residency  training  programs,  health  systems  agencies,  health  care
institutions, and physicians.
** NB Inadvertently omitted from 731/93 amendment
* 28. Notwithstanding any inconsistent provision of this section:
(a) the commissioner may adjust, on  a  per  unit  of  service  basis,
general   hospital  inpatient  services  rates  of  payment  established

pursuant  to  this  section  as  in  effect  on  and   before   December
thirty-first, nineteen hundred ninety-six prospectively as an additional
factor to be paid, including the impact of payment differentials as were
in  effect  pursuant  to this section, in addition to, or as a reduction
to, any hospital charges or negotiated rate (the adjustment may  not  be
negotiated by the payor); including, but not limited to, capital related
inpatient  expenses  reconciliation  adjustments pursuant to subdivision
eight of this section, rate adjustments  for  corrections,  appeals  and
volume  changes  pursuant  to  subdivision  nine  of  this section, rate
adjustments to reflect trend factor adjustments pursuant to  subdivision
ten  of  this  section,  maximum case mix change adjustments pursuant to
paragraph (f) of subdivision eleven of  this  section,  and  adjustments
based on audits;
(b) the allowances percentages established pursuant to this article in
effect  for  a  rate  period  shall  be  applied  to hospital charges or
negotiated rates plus the prospectively adjusted  payment  of  rates  of
payment  of  a general hospital in accordance with paragraph (a) of this
subdivision;
(c) no recalculation of the  basis  for  distribution  of  funds  from
regional  or  statewide pools established pursuant to this section shall
be made based on the impact of a  prospective  adjustment  to  rates  of
payment authorized pursuant to this subdivision; and
(d)   prospective   rate   adjustments  authorized  pursuant  to  this
subdivision for a general  hospital  based  on  appeals  approved  after
January  first, nineteen hundred ninety-eight shall be included in rates
of payment as a one hundred percent  facility  specific  adjustment  and
shall not affect the calculation of the group category average inpatient
reimbursable  operating cost per discharge for such retrospective period
for any other general hospital.
* NB Expires December 31, 2026
* 29. Coinsurance and deductibles. (a) If a  general  hospital  and  a
third-party payor agree to a negotiated payment methodology for a period
on  or  after January first, nineteen hundred ninety-seven that is based
on a discount from hospital charges, such discount shall  apply  to  the
calculation  of  the charge basis for deductible and coinsurance amounts
for such period owed for any patient covered by such  third-party  payor
as the primary payor.
(b)  If  a  general  hospital  and  a  third-party  payor  agree  to a
negotiated payment methodology for a period on or after  January  first,
nineteen  hundred  ninety-seven  that  is  not  based on a discount from
hospital charges, excluding capitation arrangements, the maximum  amount
to be charged for deductible and coinsurance amounts for such period for
any patient covered by such third-party payor as the primary payor shall
not  exceed  the  amount  calculated  by  applying  the  deductible  and
coinsurance amounts to the amount due on the basis  of  such  negotiated
payment arrangement.
* NB Expires December 31, 2026
30. General hospital recruitment and retention of health care workers.
Notwithstanding  any  inconsistent provision of this section and subject
to the availability of federal financial participation:
(a) (i) The commissioner shall  adjust  inpatient  medical  assistance
rates  of  payment  established  pursuant to this section for non-public
general hospitals in accordance with subparagraph (ii) of this paragraph
for purposes of recruitment and retention of health care workers in  the
following aggregate amounts for the following periods:
(A) ninety-three million two hundred thousand dollars on an annualized
basis  for  the  period  April  first, two thousand two through December
thirty-first, two thousand two; one hundred eighty-seven  million  eight

hundred  thousand  dollars on an annualized basis for the period January
first, two thousand three through December  thirty-first,  two  thousand
three;  two hundred sixty-two million one hundred thousand dollars on an
annualized basis for the period January first, two thousand four through
December  thirty-first, two thousand six; one hundred thirty-one million
one hundred thousand dollars for the period January first, two  thousand
seven  through  June  thirtieth,  two  thousand  seven,  and two hundred
forty-three million five hundred thousand dollars for  the  period  July
first,  two  thousand  seven  through  March  thirty-first, two thousand
eight, two hundred forty-three million five hundred thousand dollars for
the period April first, two thousand eight through  March  thirty-first,
two   thousand   nine;  one  hundred  sixty-three  million  one  hundred
forty-five thousand dollars for the period  April  first,  two  thousand
nine through November thirtieth, two thousand nine.
(ii)  Such  increases  shall be allocated proportionally based on each
non-public general hospital's reported total  gross  salary  and  fringe
benefit  costs  as reported on exhibit 11 of the 1999 institutional cost
report submitted as of November first, two thousand one to the total  of
such  reported  costs  for  all  non-public general hospitals, provided,
however, that for periods on and after July first, two  thousand  seven,
fifty percent of such increases shall be allocated proportionally, based
on  each  non-public  hospital's  reported total gross salary and fringe
benefit costs, as  reported  on  exhibit  11  of  the  nineteen  hundred
ninety-nine  institutional  cost  report  as submitted to the department
prior to November first, two thousand one, to the total of such reported
costs for all non-public general hospitals, and fifty  percent  of  such
increases   shall  be  allocated  proportionally,  based  on  each  such
hospital's total reported medicaid inpatient discharges, as reported  in
the  two  thousand  four  institutional  cost report as submitted to the
department prior to November first, two thousand six, to  the  total  of
such  reported  medicaid inpatient discharges for all non-public general
hospitals, as weighted proportionally to reflect the  relative  medicaid
case  mix  of  each  such hospital. These amounts shall be included as a
reimbursable cost  add-on  to  medical  assistance  inpatient  rates  of
payment  established  pursuant  to  this  section for non-public general
hospitals  based  on  medical  assistance  utilization  data   in   each
hospital's  annual  cost  report  submitted  two years prior to the rate
year. Such amounts shall be reconciled to  reflect  changes  in  medical
assistance utilization between the year two years prior to the rate year
and  the rate year based on data reported in each hospital's cost report
for the respective rate year. These  amounts  shall  be  included  as  a
reimbursable  cost  add-on  to  medical  assistance  inpatient  rates of
payment established pursuant to  this  section  for  non-public  general
hospitals   based   on  medical  assistance  utilization  data  in  each
facility's annual cost report submitted two  years  prior  to  the  rate
year.  For  rate  adjustments effective May first, two thousand five and
thereafter such amounts  shall  be  reconciled  to  reflect  changes  in
medical  assistance  utilization between the year two years prior to the
rate year and the rate year based upon data reported in each  hospital's
institutional cost report for the respective rate year.
(b)  (i)  Notwithstanding  sections one hundred twelve and one hundred
sixty-three  of  the  state  finance  law  and  any  other  inconsistent
provision  of  law, the commissioner shall make grants to public general
hospitals without a competitive bid or request for proposal process  for
purposes  of  recruitment  and  retention  of health care workers in the
following aggregate amounts for the following periods:
(A) eighteen million five hundred thousand dollars  on  an  annualized
basis  for  the  period  April  first, two thousand two through December

thirty-first,  two  thousand  two;  thirty-seven  million  four  hundred
thousand  dollars  on  an annualized basis for the period January first,
two thousand three through December thirty-first,  two  thousand  three;
fifty-two  million  two  hundred thousand dollars on an annualized basis
for the  period  January  first,  two  thousand  four  through  December
thirty-first,  two thousand six; twenty-six million one hundred thousand
dollars for the period January first, two thousand  seven  through  June
thirtieth, two thousand seven, forty-nine million dollars for the period
July  first, two thousand seven through March thirty-first, two thousand
eight, and forty-nine million dollars for the period  April  first,  two
thousand eight through March thirty-first, two thousand nine.
(ii)  Such  grants  shall  be  allocated  proportionally based on each
public general hospital's reported total gross salary and fringe benefit
costs as reported on exhibit 11 of the 1999  institutional  cost  report
submitted  as  of  November first, two thousand one to the total of such
reported costs for all public general hospitals.
(c) From amounts available pursuant to paragraph (gg)  of  subdivision
one of section twenty-eight hundred seven-v of this article, allocations
shall  be  made  to  non-public  general hospitals whose allocated labor
adjustments pursuant to paragraphs (a) and (e) of this  subdivision  and
adjustment pursuant to subdivision thirty-two of this section results in
the  general  hospital  exceeding  its applicable disproportionate share
payment limit.  Each  such  hospital's  allocation  of  available  funds
pursuant  to  this  paragraph within a year shall be determined based on
its  proportionate  share  of  the  aggregate   reduction   of   federal
disproportionate  share  funding  for  all  such  hospitals for the year
resulting from the allocated labor adjustments  pursuant  to  paragraphs
(a)  and  (e)  of  this  subdivision and from the adjustment pursuant to
subdivision thirty-two of this section.
(d) General hospitals which  have  their  rates  adjusted  or  receive
grants   pursuant  to  paragraphs  (a)  and  (b)  of  this  subdivision,
respectively, shall use such funds for the purpose  of  recruitment  and
retention  of  non-supervisory  workers at health care facilities or any
worker with direct patient care responsibility and are  prohibited  from
using such funds for any other purpose. Funds under this subdivision are
not  intended  to  supplant support provided by a local government. Each
such general hospital shall submit, at a time and  in  a  manner  to  be
determined  by  the commissioner, a written certification attesting that
such funds will be used  solely  for  the  purpose  of  recruitment  and
retention  of  non-supervisory  workers at health care facilities or any
worker with direct patient  care  responsibility.  The  commissioner  is
authorized  to audit each general hospital to ensure compliance with the
written certification required by this paragraph and  shall  recoup  any
funds  determined  to have been used for purposes other than recruitment
and retention of non-supervisory workers at health  care  facilities  or
any  worker  with  direct  patient  care responsibility. Such recoupment
shall be in addition to applicable penalties under sections  twelve  and
twelve-b of this chapter.
(e)(i)  The  commissioner  shall  adjust  inpatient medical assistance
rates of payment  established  pursuant  to  this  section  for  general
hospitals  in  accordance  with  subparagraph (ii) of this paragraph and
shall  establish  discrete  rates  of  payment  for  such  hospitals  in
accordance  with  subparagraph  (iii) of this paragraph, for purposes of
additional support of recruitment and retention of health  care  workers
in the following aggregate amounts for the following periods:
(A)  one  hundred twenty-one million dollars for the period May first,
two thousand five through December thirty-first, two thousand  five  and

one hundred twenty-one million dollars for the period January first, two
thousand six through December thirty-first, two thousand six.
(ii)  Such  increases  shall be allocated proportionally based on each
general hospital's reported gross salary and  fringe  benefit  costs  as
reported  on  exhibit 11 of the 1999 institutional cost report submitted
as of November first, two thousand one to the  total  of  such  reported
costs  for  all  general hospitals. These amounts shall be included as a
reimbursable cost  add-on  to  medical  assistance  inpatient  rates  of
payment established pursuant to this section for general hospitals based
on  medical  assistance  utilization data in each facility's annual cost
report submitted two years prior to the rate year. Such amounts shall be
reconciled to reflect changes in medical assistance utilization  between
the  year  two years prior to the rate year and the rate year based upon
data reported in each  hospital's  institutional  cost  report  for  the
respective rate year.
(iii) The commissioner shall establish, subject to the approval of the
director  of the budget, discrete rates of payment for general hospitals
for payments under the medical assistance  program  pursuant  to  titles
eleven  and  eleven-D  of  article  five  of the social services law for
persons eligible for medical assistance and family health plus  who  are
enrolled  in  health  maintenance organizations based on the calculation
set forth in subparagraph  (ii)  of  this  paragraph  for  such  general
hospitals.  If discrete rates of payment under this subparagraph are not
established, the commissioner shall adjust the  calculation  established
pursuant  to  subparagraph (ii) of this paragraph to account for medical
assistance  utilization  described  under  this  subparagraph  for  such
non-public general hospital.
(iv)  Payment  of  the  non-federal  share  of  the medical assistance
payments made pursuant to this paragraph shall be the responsibility  of
the state and shall not include a local share. Payments made pursuant to
this  paragraph  or pursuant to paragraph (a) of this subdivision may be
added to rates of payment or made  as  aggregate  payments  to  eligible
general hospitals.
(f) In the event that a hospital entitled to an adjustment pursuant to
paragraph (a) or (e) of this subdivision closes or otherwise experiences
a  change  in  status that eliminates its ability to continue to receive
such adjustments, the commissioner shall allocate the amount  determined
under  subparagraph  (ii)  of  paragraph  (a)  and  subparagraph (ii) of
paragraph (e) of this subdivision for such hospital to hospitals in  the
immediate  region  of  the  closing  hospital  based  upon the remaining
hospitals' reported gross salary and fringe benefit costs as reported on
exhibit eleven of  the  two  thousand  four  institutional  cost  report
submitted  as  of November first, two thousand five to the total of such
reported costs for  all  general  hospitals  in  the  region,  provided,
however,  that  for periods on and after July first, two thousand seven,
such allocations shall be based on such  remaining  hospitals'  reported
medicaid  inpatient  discharges,  as  reported  in the two thousand four
institutional cost report submitted to the department prior to  November
first,  two  thousand  six,  to  the  total  of  such  reported medicaid
inpatient discharges for all such remaining hospitals. The  commissioner
shall define the immediate region as the county or counties within which
workers   displaced  from  the  closing  hospital  are  likely  to  seek
re-employment.
31.  Supplemental   general   hospital   recruitment   and   retention
adjustment.
(a)  Notwithstanding  any  law, rule or regulation to the
contrary, the  commissioner  shall,  within  amounts  appropriated,  and
contingent  on the availability of federal financial participation, make
Medicaid rate adjustments for non-public general  hospitals  to  address

extraordinary   costs  associated  with  recruitment  and  retention  of
non-supervisory workers at health care facilities  or  any  worker  with
direct  patient  care responsibility at such general hospitals. Eligible
hospitals   shall   be  selected  by  the  commissioner  pursuant  to  a
competitive process. Requests for proposals for eligible projects  shall
be issued by the commissioner.
(b) Such eligible projects may include:
(i)  an  increase  in  non-supervisory  staff, either facility wide or
targeted at a particular area of care or shift;
(ii)  increased  training  and  education  of  non-supervisory  staff,
including  allowing  non-supervisory  staff  to  increase their level of
licensure relevant to general hospital care;
(iii) efforts to decrease staff turn-over; and
(iv) other  efforts  related  to  the  recruitment  and  retention  of
non-supervisory   staff   or   any   worker  with  direct  patient  care
responsibility that will affect the quality of care at such facility.
(c) The commissioner shall consider, in selecting  eligible  projects,
the  likelihood  that such project will provide needed resources to meet
legal commitments for increased labor costs, the financial need  of  the
facility,  the  existence of a shortage of qualified hospital workers in
the geographic area in which the facility is located, the  existence  of
high  employee  turn-over  at the facility and such other matters as the
commissioner deems appropriate.
(d)  In  implementing   rate   adjustments   authorized   under   this
subdivision,  the  commissioner shall establish, subject to the approval
of the director of the budget, discrete rates of payment for  non-public
general  hospitals  for  payments  under  the medical assistance program
pursuant to titles eleven and eleven-D of article  five  of  the  social
services  law  for  persons  eligible  for medical assistance and family
health plus who are enrolled in health maintenance organizations.
(e) Adjustments to Medicaid rates of payment  made  pursuant  to  this
section shall not be subject to subsequent adjustment or reconciliation.
(f)  Adjustments  to  Medicaid  rates of payment made pursuant to this
section shall not, in aggregate, exceed fifteen million dollars for  the
period  beginning  April  first,  two  thousand  two and ending December
thirty-first, two thousand two and, on an  annualized  basis,  for  each
annual period thereafter beginning January first, two thousand three and
ending  December  thirty-first,  two  thousand  six,  and  shall not, in
aggregate, exceed seven million five hundred thousand  dollars  for  the
period  January  first,  two  thousand seven through June thirtieth, two
thousand seven.
32. Rural hospital supplemental rate adjustment.  Notwithstanding  any
inconsistent provision of this section:
(a)  The  commissioner shall adjust inpatient medical assistance rates
of payment established pursuant to this section for rural  hospitals  as
defined  in  paragraph  (c)  of  subdivision one of section twenty-eight
hundred seven-w of this article in accordance with paragraph (b) of this
subdivision for purposes of supporting  critically  needed  health  care
services  in  rural  areas  in  the  following aggregate amounts for the
following periods:
seven million dollars for the period  May  first,  two  thousand  five
through  December thirty-first, two thousand five, seven million dollars
for  the  period  January  first,  two  thousand  six  through  December
thirty-first,  two  thousand  six,  seven million dollars for the period
April first, two  thousand  seven  through  December  thirty-first,  two
thousand  seven,  seven  million  dollars for calendar year two thousand
eight, and six million four hundred seventeen thousand dollars  for  the

period  January first, two thousand nine through November thirtieth, two
thousand nine.
(b)  Such  increases  shall be allocated proportionately based on each
such rural hospital's total reported medicaid  inpatient  discharges  as
reported  in the two thousand two institutional cost report to the total
of such discharges for all  rural  hospitals.  These  amounts  shall  be
included  as  a reimbursable cost add-on to medical assistance inpatient
rates  of  payment  established  pursuant  to  this  section  for  rural
hospitals   based   on  medical  assistance  utilization  data  in  each
facility's annual cost report submitted two  years  prior  to  the  rate
year.  Such  amounts  shall  be reconciled to reflect changes in medical
assistance utilization between the year two years prior to the rate year
and  the  rate  year  based  upon  data  reported  in  each   hospital's
institutional cost report for the respective rate year.
(c)  Payment  of  the  non-federal  share  of  the  medical assistance
payments made pursuant to this subdivision shall be  the  responsibility
of the state and shall not include a local share. Payments made pursuant
to  this  subdivision  may  be  added  to  rates  of  payment or made as
aggregate payments to eligible general hospitals.
33. Notwithstanding any provision of law which is inconsistent with or
contrary  to  the  structure  established  by   this   subdivision   and
subdivision  two-a of section twenty-eight hundred seven of this article
in order to transition from nineteen hundred eighty-one base year  costs
to  two  thousand  five  base  year  costs  by  no  later  than December
thirty-first, two thousand twelve, and subject to  the  availability  of
federal  financial  participation,  medicaid  per diem and per discharge
rates of payment for general hospital inpatient services for  discharges
and  days  occurring  on  and  after December first, two thousand eight,
shall be computed in accordance with the following:
(a)(i) for the period December first, two thousand eight through March
thirty-first, two thousand nine,  such  rates  shall  be  subject  to  a
uniform  transition  adjustment  which  shall  be  based on each general
hospital's  proportional  share  of  projected   medicaid   reimbursable
inpatient  operating  costs and result in an aggregate reduction in such
rates equal to fifty-one  million  five  hundred  thousand  dollars,  as
determined  by the commissioner, provided, however, that such transition
adjustment shall not apply to rates computed pursuant to  paragraph  (1)
of subdivision four of this section; and
(ii)  for  the  period  April  first,  two thousand nine through March
thirty-first, two thousand ten, such rates shall be revised pursuant  to
a  chapter  of  the  laws  of  two  thousand  nine and as reflecting the
findings and recommendations of the commissioner as issued  pursuant  to
the  provisions of paragraph (b) of this subdivision, provided, however,
that such revisions shall reflect an aggregate reduction in  such  rates
of  no  less  than  one hundred fifty-four million five hundred thousand
dollars, provided further, however, that, notwithstanding  any  contrary
provision  of law, as determined by the commissioner, to the extent that
a chapter of the laws of two thousand nine is not enacted  resulting  in
such  an  aggregate  annual  reduction  of  no  less  than  one  hundred
fifty-four million five hundred thousand  dollars  in  such  rates,  the
commissioner  shall  implement  a  uniform  reduction  of  such rates in
accordance with the methodology described in subparagraph  (i)  of  this
paragraph to the extent necessary, as determined by the commissioner, to
achieve  such  an aggregate reduction in such rates for the state fiscal
year beginning April first, two thousand nine and each state fiscal year
thereafter; and
(iii) for the periods April first,  two  thousand  ten  through  March
thirty-first,  two  thousand twelve, rates shall reflect prior year rate

reductions and such additional reductions as are required  to  establish
rates  based  on  two  thousand  five  reported allowable Medicaid costs
pursuant to a chapter of the laws of two thousand ten.
(b)  In consultation with the chairs of the senate and assembly health
committees, the commissioner shall, by no later  than  July  first,  two
thousand  eight,  establish  a  technical  advisory  committee  for  the
purposes of examining data and  evaluating  rate-setting  methodological
issues,  including the impact on hospitals of different methodologies in
preparation for the phased transition to  the  utilization  of  reported
allowable  two  thousand five operating costs for the purpose of setting
inpatient rates of payment for periods on and  after  April  first,  two
thousand nine, which phased transition shall be authorized in accordance
with  a chapter of the laws of two thousand nine. The technical advisory
committee  shall  consist   of   three   representatives   of   hospital
associations,  two representatives of the health care industry and three
representatives of community providers and consumers  as  determined  by
the commissioner. By no later than August first, two thousand eight, the
commissioner  shall  make  available to the technical advisory committee
updated  data  and  documentation  relevant  to  the  projected   phased
transition  to  utilization  of  reported  allowable  two  thousand five
operating costs for rate-setting purposes. The issues to be examined  by
the  technical  advisory committee shall include, but not be limited to,
hospital  re-basing,  workforce  recruitment  and   retention   funding,
graduate   medical   education   funding,   peer   group  pricing,  wage
equalization factors, case mix and such other related  elements  of  the
general hospital inpatient reimbursement system as deemed appropriate by
the  commissioner.  The  technical advisory committee shall also examine
the scope and volume of hospital out-patient services. By no later  than
November first, two thousand eight the commissioner shall issue a report
setting forth findings and recommendations, including divergent views of
members  of  the  technical  advisory  committee  members concerning the
matters examined by the technical advisory committee and  the  projected
phased transition to utilization of two thousand five base year reported
allowable  operating  costs for inpatient rates of payments on and after
April first, two thousand nine.
(c) Paragraph (a) of this subdivision shall be effective the later of:
(i) December first, two thousand  eight;  (ii)  after  the  commissioner
receives  final  approval of federal financial participation in payments
made for beneficiaries eligible for medical assistance under  title  XIX
of  the federal social security act for the rate methodology established
pursuant to subdivision two-a of section twenty-eight hundred  seven  of
this  article;  or  (iii)  after  the  commissioner  determines that the
department of health has the capability, for payments made  pursuant  to
subdivision two-a of section twenty-eight hundred seven of this article,
to  electronically receive and process claims and transmit payments with
remittance  statements.  Prior  to  the  commissioner  making   such   a
determination,  the  department  shall  provide training sessions on the
rate methodology and  billing  requirements  for  services  pursuant  to
subdivision  two-a of section twenty-eight hundred seven of this article
and opportunity for hospitals to perform end-to-end  testing  on  claims
submission, processing and payment.
34. Enhanced safety net hospital program. (a) For the purposes of this
subdivision, "enhanced safety net hospital" shall mean a hospital which:
(i) in any of the previous three calendar years, has met the following
criteria:
(A)  not  less  than  fifty  percent of the patients it treats receive
medicaid or are medically uninsured;
(B) not less than  forty  percent  of  its  inpatient  discharges  are
covered by medicaid;
(C)  twenty-five  percent  or  less  of  its  discharged  patients are
commercially insured;
(D) not less than three percent of the patients it  provides  services
to are attributed to the care of uninsured patients; and
(E)  provides  care  to  uninsured  patients  in  its  emergency room,
hospital based  clinics  and  community  based  clinics,  including  the
provision  of  important  community  services,  such  as dental care and
prenatal care;
(ii) is a public hospital operated by a county,  municipality,  public
benefit corporation or the state university of New York;
(iii)  is  an  acute  children's  hospital  licensed by the department
primarily for the provision of pediatric and neonatal services for which
a discrete institutional cost  report  was  filed  for  the  past  three
calendar  years,  and  which  has medicaid discharges in excess of fifty
percent of its total discharges;
(iv) is federally designated as a critical access hospital; or
(v) is federally designated as a sole community hospital.
(b) Within amounts appropriated, the commissioner shall adjust medical
assistance rates to enhanced safety net hospitals for  the  purposes  of
supporting  critically  needed  health  care  services and to ensure the
continued maintenance and operation of such hospitals.
(c) Payments made pursuant to this subdivision may be added  to  rates
of payment or made as aggregate payments to eligible general hospitals.
35. Notwithstanding any inconsistent provision of this section, or any
other  contrary  provision  of  law  and  subject to the availability of
federal  financial  participation,  rates  of  payment  by  governmental
agencies   for  general  hospital  inpatient  services  with  regard  to
discharges occurring on and after  December  first,  two  thousand  nine
shall be in accordance with the following:
(a)  For  periods  on  and after December first, two thousand nine the
operating cost component of such rates of payments shall reflect the use
of two thousand five operating costs as reported by each facility to the
department prior to July first,  two  thousand  nine  and  as  otherwise
computed in accordance with the provisions of this subdivision;
(b)  The commissioner shall promulgate regulations, and may promulgate
emergency regulations, establishing methodologies for the computation of
general hospital inpatient rates and such regulations shall include, but
not be limited to, the following:
(i) The computation  of  a  case-mix  neutral  statewide  base  price,
applicable  to  each rate period, but excluding adjustments for graduate
medical education costs, high  cost  outlier  costs,  costs  related  to
patient  transfers,  and other non-comparable costs as determined by the
commissioner, such statewide base prices may be periodically adjusted to
reflect changes in provider coding patterns and case-mix and such  other
factors as may be determined by the commissioner;
(ii)  Only those two thousand five base year costs which relate to the
cost of services provided to Medicaid inpatients, as determined  by  the
applicable  ratio of costs to charges methodology, shall be utilized for
rate-setting purposes, provided,  however,  that  the  commissioner  may
utilize   updated   Medicaid  inpatient  related  base  year  costs  and
statistics as necessary to adjust inpatient  rates  in  accordance  with
clause (C) of subparagraph (x) of this paragraph;
(iii)  Such  rates  shall reflect the application of hospital specific
wage equalization factors reflecting differences in wage rates;
(iv) Such rates shall reflect  the  utilization  of  the  all  patient
refined  (APR) case mix methodology, utilizing diagnostic related groups

with assigned weights that incorporate differing levels of  severity  of
patient  condition  and  the associated risk of mortality, and as may be
periodically updated by the commissioner;
* (iv-a)  Effective  April  first, two thousand twenty, such rates for
public general hospitals or public  health  systems,  other  than  those
operated  by  the state of New York or the state university of New York,
located in a city having a population  of  one  million  or  more  shall
include  a  rate  add-on  that  reflects reimbursement for costs, to the
extent  permitted  under  42  CFR  447.272(b)(1)  and  based  on  actual
utilization  of  services.  Such  rate  add-on  shall be contingent upon
federal financial participation and approval, and subject to  the  terms
of a binding memorandum of understanding executed between the department
of  health  and  the  public  general  hospital  or public health system
receiving the rate add-on. If payment of such rate add-on  is  projected
to  cause Medicaid disbursements for such period to exceed the projected
department  of  health  Medicaid  state  funds  in  the  enacted  budget
financial  plan pursuant to subdivision three of section twenty-three of
the state finance law, as determined by the director of the  budget,  or
memorandum  of  understanding  is  not  executed  or  is  breached,  the
commissioner, in consultation with the director of  budget,  may  either
cancel  or reduce payment of such rate add-on to achieve compliance with
the enacted budget financial plan.
* NB Repealed March 31, 2026
(v) such  regulations  shall  incorporate  quality  related  measures,
including,  but  not  limited  to, potentially preventable re-admissions
(PPRs) and provide for rate adjustments or payment disallowances related
to PPRs and other potentially  preventable  negative  outcomes  (PPNOs),
which shall be calculated in accordance with methodologies as determined
by the commissioner, provided, however, that such methodologies shall be
based on a comparison of the actual and risk adjusted expected number of
PPRs and other PPNOs in a given hospital and with benchmarks established
by  the  commissioner and provided further that such rate adjustments or
payment disallowances shall result in an aggregate reduction in Medicaid
payments of no less than thirty-five million dollars for the period July
first, two thousand ten through March thirty-first, two thousand  eleven
and  no less than fifty-one million dollars for annual periods beginning
April  first,  two  thousand  eleven  through  March  thirty-first,  two
thousand  fifteen, provided further that such aggregate reductions shall
be offset by Medicaid  payment  reductions  occurring  as  a  result  of
decreased  PPRs  during  the period July first, two thousand ten through
March thirty-first, two thousand eleven and the period April first,  two
thousand  eleven through March thirty-first, two thousand fifteen and as
a result of decreased PPNOs during the period April first, two  thousand
eleven  through  March  thirty-first, two thousand fifteen; and provided
further that for the period July first, two thousand ten  through  March
thirty-first,  two  thousand  fifteen,  such rate adjustments or payment
disallowances  shall  not  apply  to  behavioral  health  PPRs;  or   to
readmissions  that  occur  on or after fifteen days following an initial
admission. By  no  later  than  July  first,  two  thousand  eleven  the
commissioner  shall enter into consultations with representatives of the
health care facilities  subject  to  this  section  regarding  potential
prospective  revisions  to  applicable  methodologies and benchmarks set
forth in regulations issued pursuant to this subparagraph;
(vi) Such regulations shall address adjustments based on the costs  of
high cost outlier patients;
(vii) Such rates shall continue to reflect trend factor adjustments as
otherwise provided in paragraph (c) of subdivision ten of this section;
(viii)  Such  rates  shall  not  include  any  adjustments pursuant to
subdivision nine of this section;
(ix) Rates for non-public, not for profit general hospitals which have
not,  as  of  the  effective  date  of  this  subdivision,  published an
ancillary charges schedule as provided in paragraph (j)  of  subdivision
one  of  section  twenty-eight  hundred three of this article shall have
their inlier payments increased by an amount equal  to  the  average  of
cost  outlier payments for comparable hospitals or by a methodology that
uses a statewide or  regional  ratio  of  cost  to  charges  applied  to
statewide  or  regional comparable charges for those cases determined by
the commissioner;
(x) Such regulations shall provide for  administrative  rate  appeals,
but  only  with regard to: (A) the correction of computational errors or
omissions of data,  including  with  regard  to  the  hospital  specific
computations pertaining to graduate medical education, wage equalization
factor  adjustments, (B) capital cost reimbursement, and, (C) changes to
the base year statistics and costs used  to  determine  the  direct  and
indirect  graduate medical education components of the rates as a result
of new teaching programs at new teaching hospitals and/or as a result of
residents displaced and transferred as a  result  of  teaching  hospital
closures;
(xi)  Rates for teaching general hospitals shall include reimbursement
for direct and  indirect  graduate  medical  education  as  defined  and
calculated  pursuant  to such regulations. In addition, such regulations
shall specify the reports and information required by  the  commissioner
to  assess  the  cost,  quality  and  health  system  needs  for medical
education provided;
(xii)  Such  regulations  may  incorporate  quality  related  measures
pertaining  to  the  inappropriate  use  of  certain medical procedures,
including, but not limited  to,  cesarean  deliveries,  coronary  artery
bypass grafts and percutaneous coronary interventions;
(xiii)   Such  regulations  may  impose  a  fee  on  general  hospital
sufficient to cover the costs of auditing the institutional cost reports
submitted by general hospitals, which shall be deposited in  the  Health
Care Reform Act (HCRA) resources account.
(c)  1.  The  base  period  reported  costs  and  statistics  used for
rate-setting  for  operating  cost  components,  including  the  weights
assigned  to  diagnostic  related  groups,  shall  be  updated  no  less
frequently than every four years and the new base  period  shall  be  no
more  than  four  years  prior  to the first applicable rate period that
utilizes such new base period provided, however, that the first  updated
base  period shall begin on or after April first, two thousand fourteen,
but no later  than  July  first,  two  thousand  fourteen;  and  further
provided  that  the  updated  base  period subsequent to July first, two
thousand eighteen shall begin on or after January  first,  two  thousand
twenty-four.
2. In the event of a declaration of a federal public health emergency,
as  defined  in 42 USC § 247d, or a state disaster emergency, as defined
in section twenty of the executive law, that  severely  impacts  general
hospitals  within the state, the department may exclude, for purposes of
this paragraph, the audited reported costs and  statistics  during  such
declaration.
(d) Capital cost reimbursement for general hospitals otherwise subject
to  the  provisions  of  this  subdivision  shall  remain subject to the
provisions of subdivision eight of this section.
(e) The provisions of  this  subdivision  shall  not  apply  to  those
general hospitals or distinct units of general hospitals whose inpatient
reimbursement  does  not,  as  of November thirtieth, two thousand nine,

reflect  case  based  payment  per  diagnosis-related  group  or   whose
inpatient  reimbursement  is,  for  periods on and after July first, two
thousand nine, governed by the provisions of paragraphs (e-1)  or  (e-2)
of subdivision four of this section.
(f)   Notwithstanding  section  one  hundred  twelve  or  one  hundred
sixty-three of  the  state  finance  law  or  any  other  law,  rule  or
regulation  to the contrary, the commissioner may contract with a vendor
for   consideration   to   develop   the    specifications    for    the
diagnosis-related  groups  methodology  as  provided  for in regulations
promulgated pursuant  to  paragraph  (b)  of  this  subdivision  if  the
commissioner  certifies  to the comptroller that such contract is in the
best interest of the health of the people of the state.  Notwithstanding
that  such  specifications shall be available pursuant to article six of
the  public  officers  law,  such  contract   may   provide   that   the
specifications  for such adjusted or additional diagnosis-related groups
provided by the vendor shall be subject to copyright protection pursuant
to federal copyright law.
(g) Notwithstanding any inconsistent provision of this subdivision  or
any  other  contrary  provision  of  law, the commissioner may, for rate
periods on and after December first, two thousand nine  and  subject  to
the  availability  of  federal  financial participation, make additional
adjustments to the  inpatient  rates  of  payment  of  eligible  general
hospitals,   to  facilitate  improvements  in  hospital  operations  and
finances, in accordance with the following:
(i) General hospitals eligible  for  distributions  pursuant  to  this
paragraph  shall  be those non public hospitals with Medicaid discharges
equal to or greater than seventeen and one-half percent for two thousand
seven.
(ii) Funds distributed pursuant to this paragraph shall  be  allocated
to  eligible hospitals pursuant to a formula such that, to the extent of
funds available, no hospital's reduction in Medicaid  inpatient  revenue
as  a  result of the application of the provisions of paragraphs (a) and
(b) of this subdivision exceeds a percentage reduction as determined  by
the commissioner.
(iii)  Funding  pursuant  to this paragraph shall be available for the
following periods and in the following amounts:
(A) for the period December first, two  thousand  nine  through  March
thirty-first,  two thousand ten, up to thirty-three million five hundred
thousand dollars;
(B) for the  period  April  first,  two  thousand  ten  through  March
thirty-first,  two  thousand eleven, up to seventy-five million dollars,
provided, however,  that,  notwithstanding  subparagraph  (ii)  of  this
paragraph,  no  facility shall receive an amount pursuant to this clause
that is less than such facility received pursuant to clause (A) of  this
subparagraph;
(C)  for  the  period  April  first, two thousand eleven through March
thirty-first, two thousand twelve, up to fifty million dollars;
(D) for the period April first,  two  thousand  twelve  through  March
thirty-first, two thousand thirteen, up to twenty-five million dollars.
(iv)  Payments made pursuant to this paragraph shall be added to rates
of  payments  and  not  be  subject   to   retroactive   adjustment   or
reconciliation.
(v) Each hospital receiving funds pursuant to this paragraph shall, as
a  condition  for  eligibility for such funds, adopt a resolution of the
board of directors of each  such  hospital  setting  forth  its  current
financial  condition  and  a  plan  for  reforming  and  improving  such
financial condition, including ongoing board oversight, and shall, after
two years, issue a report as adopted by each  such  board  of  directors

setting   forth   what   progress   has  been  achieved  regarding  such
improvement, provided, however, if such report is not issued and adopted
by each such board of directors, or if such report fails  to  set  forth
adequate  progress,  as determined by the commissioner, the commissioner
may deem such facility ineligible for further distributions pursuant  to
this  paragraph and may redistribute such further distributions to other
eligible facilities in accordance with the provisions of this paragraph.
The commissioner shall be provided with copies of all  such  resolutions
and reports.
(h) Inpatient rate adjustments made pursuant to paragraphs (a) through
(f)  of  this  subdivision  after  application of adjustments authorized
pursuant to subdivision thirty-three of this section shall result  in  a
net  statewide  decrease  in aggregate Medicaid payments of no less than
seventy-five million dollars for the period December first, two thousand
nine through March thirty-first, two thousand ten, and no less than  two
hundred  twenty-five  million  dollars  for  the period April first, two
thousand ten through March thirty-first, two thousand  eleven  and  each
state  fiscal  year  thereafter, provided, however, that such reductions
shall be in addition to the reductions required pursuant to subparagraph
(ii) of paragraph (a) of subdivision thirty-three of this section.
(i)  (i)  * Notwithstanding  any  inconsistent   provision   of   this
subdivision  or  any  other contrary provision of law and subject to the
availability of federal financial participation,  for  the  period  July
first, two thousand ten through March thirty-first, two thousand eleven,
and  each  state  fiscal  year period thereafter, the commissioner shall
make additional inpatient hospital payments up to  the  aggregate  upper
payment  limit  for  inpatient hospital services after all other medical
assistance payments, but not to exceed two hundred  thirty-five  million
five  hundred  thousand  dollars for the period July first, two thousand
ten through March  thirty-first,  two  thousand  eleven,  three  hundred
fourteen  million  dollars  for  each  state fiscal year beginning April
first, two thousand eleven, through  March  thirty-first,  two  thousand
thirteen, and no less than three hundred thirty-nine million dollars for
each  state  fiscal  year  thereafter,  to general hospitals, other than
major public general hospitals, providing emergency  room  services  and
including  safety  net  hospitals,  which shall, for the purpose of this
paragraph, be defined as  having  either:  a  Medicaid  share  of  total
inpatient hospital discharges of at least thirty-five percent, including
both  fee-for-service  and  managed care discharges for acute and exempt
services; or a Medicaid share of total discharges  of  at  least  thirty
percent,  including both fee-for-service and managed care discharges for
acute and exempt services,  and  also  providing  obstetrical  services.
Eligibility  to  receive such additional payments shall be based on data
from the period two years prior to the rate year,  as  reported  on  the
institutional  cost  report  submitted  to  the department as of October
first of the prior rate year. Such payments shall  be  made  as  medical
assistance  payments  for  fee-for-service  inpatient  hospital services
pursuant to title eleven of article five of the social services law  for
patients eligible for federal financial participation under title XIX of
the federal social security act and in accordance with the following:
* NB Effective until January 1, 2025
* Notwithstanding  any  inconsistent  provision of this subdivision or
any other contrary provision of law and subject to the  availability  of
federal  financial  participation,  for each state fiscal year from July
first, two thousand ten  through  December  thirty-first,  two  thousand
twenty-four;  and  for  the  calendar  year  January first, two thousand
twenty-five through December thirty-first, two thousand twenty-five; and
for  each  calendar  year  thereafter,  the  commissioner   shall   make

additional inpatient hospital payments up to the aggregate upper payment
limit for inpatient hospital services after all other medical assistance
payments, but not to exceed two hundred thirty-five million five hundred
thousand  dollars  for  the  period July first, two thousand ten through
March thirty-first, two thousand eleven, three hundred fourteen  million
dollars  for  each state fiscal year beginning April first, two thousand
eleven, through March thirty-first, two thousand thirteen, and  no  less
than  three  hundred  thirty-nine  million dollars for each state fiscal
year until December thirty-first, two  thousand  twenty-four;  and  then
from  calendar  year  January  first,  two  thousand twenty-five through
December thirty-first, two thousand twenty-five; and for  each  calendar
year  thereafter,  to general hospitals, other than major public general
hospitals, providing emergency room services and  including  safety  net
hospitals, which shall, for the purpose of this paragraph, be defined as
having  either:  a Medicaid share of total inpatient hospital discharges
of at least thirty-five  percent,  including  both  fee-for-service  and
managed  care  discharges  for  acute and exempt services; or a Medicaid
share of total discharges of at least  thirty  percent,  including  both
fee-for-service  and  managed  care  discharges  for  acute  and  exempt
services,  and  also  providing  obstetrical  services.  Eligibility  to
receive  such additional payments shall be based on data from the period
two years prior to the rate year, as reported on the institutional  cost
report submitted to the department as of October first of the prior rate
year.  Such  payments  shall  be made as medical assistance payments for
fee-for-service inpatient hospital services pursuant to title eleven  of
article  five  of  the  social  services  law  for patients eligible for
federal financial participation under title XIX of  the  federal  social
security act and in accordance with the following:
* NB Effective January 1, 2025
(A)  Thirty  percent of such payments shall be allocated to safety net
hospitals based on each eligible hospital's proportionate share  of  all
eligible   safety  net  hospitals'  Medicaid  discharges  for  inpatient
hospital services, including both Medicaid fee-for-service  and  managed
care  discharges  for  acute and exempt services, based on data from the
period  two  years  prior  to  the  rate  year,  as  reported   on   the
institutional  cost  report  submitted  to  the department as of October
first of the prior rate year;
(B) Seventy percent of such payments shall be  allocated  to  eligible
general  hospitals  based on each such hospital's proportionate share of
all eligible  hospitals'  Medicaid  discharges  for  inpatient  hospital
services,  including  both  Medicaid  fee-for-service  and  managed care
discharges for acute and exempt services, based on data from the  period
two  years prior to the rate year, as reported on the institutional cost
report submitted to the department as of October first of the prior rate
year;
(C) No eligible general hospital's annual payment amount  pursuant  to
this  paragraph  shall exceed the lower of the sum of the annual amounts
due that hospital pursuant to section twenty-eight hundred  seven-k  and
section  twenty-eight hundred seven-w of this article; or the hospital's
facility specific  projected  disproportionate  share  hospital  payment
ceiling  established  pursuant  to  federal law, provided, however, that
payment amounts to eligible hospitals pursuant to clauses (A) and (B) of
this subparagraph in excess of the lower of such sum or payment  ceiling
shall  be  reallocated  to  eligible  hospitals  that do not have excess
payment amounts. Such reallocations shall be proportional to  each  such
hospital's  aggregate  payment amount pursuant to clauses (A) and (B) of
this subparagraph to the total of all payment amounts for such  eligible
hospitals;
(D)  Subject  to  the availability of federal financial participation,
the payment methodology set forth in this subparagraph  may  be  further
revised  by  the commissioner on an annual basis pursuant to regulations
issued pursuant to this subdivision  for  periods  on  and  after  April
first, two thousand eleven; and
(E) Subject to the availability of federal financial participation and
in  conformance  with  all  applicable federal statutes and regulations,
such payments shall  be  made  as  upper  payment  limit  payments  and,
further,  such  payments  shall be made as aggregate monthly payments to
eligible general hospitals.
(ii) In the  event  that  the  commissioner  determines  that  federal
financial  participation  will  not  be available for aggregate payments
made  in  accordance  with  clause  (E)  of  subparagraph  (i)  of  this
paragraph, payments pursuant to this paragraph shall be included as rate
add-ons  to  medical  assistance  inpatient rates of payment established
pursuant to this subdivision based on data from  the  period  two  years
prior  to  the  rate  year, as reported on the institutional cost report
submitted to the department as of October first of the prior rate  year,
provided,  however,  that if such payments are made as rate add-ons, the
commissioner shall establish a procedure to reconcile payment amounts to
reflect changes in medical assistance utilization from  the  period  two
years  prior  to the rate year and the actual rate year based on data as
reported on each hospital's annual institutional  cost  report  for  the
respective rate year, as submitted to the department as of October first
of the year following the rate year.
(iii)  Notwithstanding  any  other  law,  rule  or  regulation  to the
contrary, projections of each general hospital's disproportionate  share
limitations  as  computed  by  the  commissioner  pursuant to applicable
regulations shall be adjusted to reflect any additional revenue received
or anticipated to be received by each such general hospital pursuant  to
this paragraph.
(j)  Notwithstanding  any  contrary  provision  of law, with regard to
inpatient and outpatient Medicaid rates of payment for general  hospital
services,  the  commissioner may make such adjustments to such rates and
to the methodology for computing such rates as is necessary  to  achieve
no  aggregate, net increase or decrease in overall Medicaid expenditures
related to the implementation of  the  International  Classification  of
Diseases  Version  10  (ICD-10) coding system on or about October first,
two thousand fourteen, as compared to such aggregate  expenditures  from
the twelve-month period immediately prior to such implementation.