2023 New York Laws › PBH - Public Health › Article 28 - Hospitals › 2808-C - Reimbursement of General Hospital Inpatient Services.

*  §  2808-c. Reimbursement of general hospital inpatient services. 1.
General  hospital  rates  and  inpatient  revenue  cap.  In  determining
payments  from  all  sources for general hospital inpatient services for
the rate year commencing on January first, nineteen hundred eighty-three
and ending on December thirty-first, nineteen hundred eighty-three,  the
allowances  set  forth  in  subdivision  four  of  this section shall be
included. Effective January first,  nineteen  hundred  eighty-four,  the
commissioner  shall establish, in accordance with regulations adopted by
the council and approved by the  commissioner,  the  maximum  amount  of
inpatient  revenue  a general hospital will be authorized to receive for
services during a designated period not to exceed twelve months from all
payors for the provision of inpatient services. This maximum amount will
be known as the inpatient revenue cap and shall be established for  each
general   hospital  possessing  a  valid  operating  certificate  issued
pursuant to section twenty-eight  hundred  five  of  this  article.  The
inpatient  revenue cap shall be established by projecting to anticipated
expense  levels  the  reimbursable  historical  inpatient  expenses  and
financial  needs  as  defined  in subdivision four of this section, of a
general  hospital  approved  for  financing  through  inpatient  service
revenues.  Expenses  included  in  the  inpatient  revenue cap are those
determined to be allowable and reasonable in the provision of authorized
inpatient services.
The inpatient  revenue  caps  for  the  rate  years  nineteen  hundred
eighty-four  and  nineteen  hundred  eighty-five  shall be determined by
computing an imputed revenue cap for the period beginning January first,
nineteen hundred eighty-three and ending December thirty-first, nineteen
hundred eighty-three, which has been based on the cost analysis pursuant
to paragraphs (a) and  (b)  of  subdivision  two  of  this  section  and
adjusted each year to reflect the trend factors developed and applied in
accordance  with  paragraph  (e)  of  subdivision  two  of this section,
capital related expenses in accordance with paragraph (c) of subdivision
two of this section, redetermination of additional  financial  needs  or
revenue requirements in accordance with paragraph (d) of subdivision two
of this section, adjustments made in accordance with subdivision five of
this section and adjustments to reflect audit findings.
Hospital  inpatient  services to patients who are not beneficiaries or
subscribers of corporations organized and operating in  accordance  with
article  forty-three  of  the  insurance  law,  subchapter  XVIII of the
federal social security act (medicare), eligible for  payments  made  by
state  governmental  agencies,  enrolled  in  organizations operating in
accordance with the provisions of article forty-four of this chapter, or
enrolled in a self-insured and self administered group covered under the
provisions of subdivision six  of  this  section  shall  be  at  charges
established  by  the  hospital  in  accordance  with  the  provisions of
subdivision six of this section with the exception that for  the  period
from  January  first,  nineteen  hundred  eighty-three  through December
thirty-first, nineteen hundred eighty-three rates of payment pursuant to
the provisions of the workers' compensation law, the volunteer firemen's
benefit law and the comprehensive automobile insurance  reparations  act
shall  be  established  at one hundred twelve percent of trended average
per  diem  reimbursable  cost  including  allowances  as  specified   in
subdivision four of this section.
Amounts  prospectively  established  for payments for general hospital
inpatient services provided in rate years subsequent to nineteen hundred
eighty-three made on behalf of subscribers of corporations organized and
operating in accordance with article forty-three of the  insurance  law,
beneficiaries  of  subchapter  XVIII  of the federal social security act
(medicare), eligibles for payments made by state  governmental  agencies

and  those  enrolled  in  organizations operating in accordance with the
provisions of article forty-four of this chapter shall be based on  that
portion  of  the prospectively established inpatient revenue cap that is
related  to the utilization of inpatient services by the above programs,
provided, however, that that share of the cost of bad debt  and  charity
care  to  be  paid under subchapter XVIII of the federal social security
act shall be based upon the ratio of subchapter XVIII inpatient  charges
to total inpatient and outpatient charges, except for hospitals using an
all  inclusive  rate,  in which case the subchapter XVIII share shall be
based upon the  ratio  of  subchapter  XVIII  inpatient  cost  to  total
inpatient  and  outpatient  hospital  costs.  After  reducing the dollar
amount  liability  of  all  payors  by  subtracting  the  dollar  amount
liability  of the subchapter XVIII payor, all other payors shall pay the
remaining liability  in  proportion  to  the  ratio  of  their  hospital
inpatient   charges   to  total  hospital  inpatient  charges  less  the
subchapter XVIII inpatient charges. These proportions shall be  computed
on the basis of costs for hospitals using an all inclusive rate.
Any  adjustments  in  the  overall  revenue  cap  in  accordance  with
subdivision five of this section shall be reflected  in  an  appropriate
adjustment  to  this  portion  of  the revenue cap and payment levels by
these programs. The year end adjustment as provided for in paragraph (d)
of subdivision five of this section which is based on data contained  in
the financial and statistical report filed for the effective year of the
revenue  cap  may be further adjusted within the revenue cap when actual
data indicates a change in  payor  utilization  and  cost  apportionment
between  and  among  the  above specified programs and all other payors.
After  such  adjustments  the  portion  of  the  revenue  cap  initially
established,  or  as adjusted, that is related to the actual utilization
of covered inpatient services of the  above  programs  shall  constitute
guaranteed  revenue  to  the  general  hospital. Nothing in this section
shall prohibit  the  negotiation  by  health  maintenance  organizations
operating  in  accordance  with the provisions of article forty-three of
the insurance law or article forty-four of this chapter,  of  agreements
with  general  hospitals  for rates of payment other than those provided
herein. Such contracts shall require approval by  the  commissioner  and
must  include provision for special benefit packages or arrangements for
providing inpatient services to encourage  patient  management  behavior
that will minimize the length of patient stay, such as special admission
arrangements, bed leasing or other inpatient capitation arrangements.
2. The inpatient revenue cap established shall include:
(a)  allowable  historical  inpatient  operational  expenses which are
comparable in nature and can reasonably be expected to be comparable  in
amount   to  other  general  hospitals  with  similar  cost  influencing
characteristics (adjusted for comparison  purposes  for  differences  in
wage  and  fringe  benefit  levels)  and which are equal to or less than
reasonable reimbursable operational cost  ceilings  developed  from  the
average   allowable  cost  per  unadjusted  (except  for  newborn  days)
appropriate unit of service of all hospitals in  the  comparison  group.
The  comparison group shall consist of general hospitals sharing similar
cost influencing  characteristics  and  classified  in  accordance  with
variables defined in regulation;
(b)  allowable  historical  inpatient operational expenses, other than
capital related  expenses  as  defined  in  subdivision  three  of  this
section,  and  other  than costs included in paragraph (a) hereof, which
may be subject to reasonable reimbursable cost standards adopted by  the
council and approved by the commissioner;
(c) capital related expenses determined in accordance with subdivision
three of this section;
(d)  additional  financial needs or revenue requirements in accordance
with subdivision four of this section;
(e)   projection  of  reimbursable  expenses  identified  through  the
application of paragraphs (a) and (b) of this  subdivision  by  a  trend
factor   established  by  the  panel  of  economists  as  set  forth  in
subdivision eight of this section; and
(f) an amount to reflect  anticipated  additional  revenues  resulting
from  the  implementation  of  the  gross  charge  determination formula
provided by the commissioner in accordance with subdivision six of  this
section.
The  establishment  of  separate  rates  of  payment  for patients who
require different levels or types of care shall require  a  reallocation
of  costs to insure that the total hospital inpatient revenue cap (or in
the case of the period January one,  nineteen  hundred  eighty-three  to
December  thirty-one,  nineteen hundred eighty-three the imputed revenue
cap), which shall include the revenue for different levels or  types  of
care,  established  under this subdivision remains unchanged except that
adjustments  may  be  made  based  on  the  cost  analysis  pursuant  to
paragraphs (a) and (b) of this subdivision.
Effective   January   first,  nineteen  hundred  eighty-three  through
December  thirty-first,   nineteen   hundred   eighty-five,   the   cost
limitations,  utilization standards and limits on disallowances shall be
computed in accordance with the  methodology  approved  by  the  federal
government  to  permit  the  determination of all payments for inpatient
services provided by general hospitals to be made in accordance with the
amendments made to sections twenty-eight hundred seven and  twenty-eight
hundred  seven-a of this chapter by sections three and four of a chapter
of the laws of nineteen hundred eighty-two.  Specialty  hospitals  shall
not   be   included  in  any  computations  relating  to  disallowances,
limitations or ceilings pursuant to this  paragraph  but  shall  receive
reimbursement  in  accordance  with rules and regulations adopted by the
state  hospital  review  and  planning  council  and  approved  by   the
commissioner.  In  order  to  provide  for  a  transition period for the
application of reimbursable  cost  limitations  to  payments  authorized
under  subchapter XVIII of the federal social security act, a reasonable
phase-in over a three year period is to be implemented.
3.  Capital  related  inpatient  expenses.  Effective  for  the   year
beginning  January  first,  nineteen hundred eighty-four and thereafter,
capital  related  inpatient  expenses  including  but  not  limited   to
depreciation,  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  that
article  and  article  twenty-eight  of  this  chapter,  in  the case of
payments on behalf of other than beneficiaries under subchapter XVIII of
the federal social security act), shall be included in the  revenue  cap
on  a  budget  basis,  and  subsequently  reconciled  to actual expenses
through appropriate audit procedures. General hospitals shall submit  to
the  commissioner,  at  least  one  hundred  twenty  days  prior  to the
commencement of each revenue cap year, a  schedule  of  capital  related
inpatient  expenses  for  the  forthcoming  year.  Any  capital  related
inpatient expense generated by a capital expenditure which  requires  or
required  approval  pursuant  to  this  article, must have received such
approval for the capital related expense to be included in  the  revenue
cap.  The  submitted  budget  may  include the capital related inpatient
expenses of 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 revenue cap  year.  Any  capital

related  expense  generated by a capital asset acquired or placed in use
during a revenue cap year, provided all required approvals  pursuant  to
this  article  have  been  obtained,  shall  be  carried  forward to the
subsequent  revenue  cap  year.   In instances where such approvals have
been obtained, the budget may  include  estimates  for  capital  related
inpatient  expenses. 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
council shall adopt, with the approval of the commissioner,  regulations
to:
(a) identify by type the eligible capital related inpatient expenses;
(b)  safeguard the future financial viability of voluntary, non-profit
general hospitals by requiring  funding  of  inpatient  depreciation  on
building and fixed and movable equipment;
(c)  provide  authorization  to  adjust  the  inpatient revenue cap by
advancing payment of depreciation as needed,  in  instances  of  capital
debt  related  financial  distress  of  a  voluntary, non-profit general
hospital; and
(d) provide a methodology for the reimbursement treatment of sales.
4. Allowances.  Inpatient  revenue  caps  established,  or  rates  for
general  hospital  inpatient services, shall include for the three years
commencing  on  January  first,  nineteen  hundred   eighty-three,   the
allowances  specified  below in paragraphs (a), (b), (c), (d) and (e) of
this subdivision. For the period from January  first,  nineteen  hundred
eighty-three    through    December   thirty-first,   nineteen   hundred
eighty-three the allowances shall  be  computed  on  the  basis  of  the
general hospital's reimbursable inpatient costs after application of the
trend  factor.  Any additional allowances for the periods January first,
nineteen hundred eighty-four  through  December  thirty-first,  nineteen
hundred eighty-four and from January first, nineteen hundred eighty-five
through  December  thirty-first,  nineteen  hundred eighty-five shall be
included in the certified inpatient revenue caps  after  application  of
the  trend factor and such adjustments as may be appropriate pursuant to
subdivision two of this section. For the purposes  of  this  subdivision
and subdivision nine 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.
(a)  For  the period from January first, nineteen hundred eighty-three
through December thirty-first, nineteen hundred eighty-five an allowance
of one percent of the general hospital's reimbursable inpatient costs to
provide funds to be used at the discretion of hospital governing boards.
(b) For public general hospitals an additional allowance of up to  one
percent  for  the second year and up to a further additional one percent
in the third year of the three year  period  commencing  January  first,
nineteen hundred eighty-three subject to the provisions of paragraph (d)
of this subdivision.
(c) For voluntary non-profit and private proprietary general hospitals
an  additional allowance of up to one percent for the second year of the
three  year  period   commencing   January   first,   nineteen   hundred
eighty-three  and  continued for the third year of the three year period
subject to the provisions of paragraph (d) of this subdivision.
(d) The additional allowances  in  paragraphs  (b)  and  (c)  of  this
subdivision  shall  be available to general hospitals receiving approval
from the commissioner as to the acceptable use of  the  allowance  which

uses  shall  include  but  be  not  limited  to retirement of short term
non-capital debt, meeting costs related to bad debts  and  charity  care
not  met  by the regional pool distributions as specified in subdivision
nine  of  this  section,  offsetting  reductions  in anticipated revenue
resulting from charge limits substantially below those applicable to the
particular hospital immediately prior to the  enactment  of  subdivision
six  of this section and needed improvement of current ratio. Allowances
authorized in paragraphs (b) and (c) of this subdivision are not  to  be
considered  as  a  substitute  for  operational funds that are otherwise
reimbursable or subject to appeal.
(e) 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 nine of this section,
and within a  statewide  determination  of  financial  resources  to  be
committed  for  this purpose. Regional needs shall be equal to the total
of inpatient losses from bad debts reduced to  cost  and  the  inpatient
costs of charity care increased by any deficit of general hospitals 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. The regional amount to be included in rates approved  for  the
year  commencing January first, nineteen hundred eighty-three and in the
inpatient revenue caps established in subsequent years for each  general
hospital in the region will be equal to the result of the application of
the  percentage  of  statewide  need  for  voluntary non-profit, private
proprietary and  public  general  hospitals,  other  than  major  public
general  hospitals  that  can  be  met from available resources computed
without consideration of inpatient uncollectible amounts to the regional
need for voluntary non-profit, private proprietary  and  public  general
hospitals,  other  than  major  public  general  hospitals  expressed in
dollars plus the dollar amount resulting from  the  application  of  the
ratio  of  major  public  general hospitals inpatient reimbursable costs
within the region to total statewide general inpatient reimbursable cost
(as computed on the basis of nineteen hundred eighty-one  financial  and
statistical  reports)  to  the  statewide  resources  committed for this
purpose  computed  without  consideration  of  inpatient   uncollectible
amounts  and  the  ratio  of  these  total dollars to the total regional
reimbursable inpatient cost after application of the trend  factor.  For
the  three  year  period  commencing  on January first, nineteen hundred
eighty-three and  ending  on  December  thirty-first,  nineteen  hundred
eighty-five,  the  percentage  allowances  for this purpose shall not be
less than an average  three  percent  of  the  total  statewide  general
hospital  reimbursable  inpatient  cost  after  application of the trend
factor. The allocation of resources made available under this paragraph,
as specified in subdivision nine of this section, may be changed only as
follows: An annual review shall  be  conducted  pursuant  to  rules  and
regulations adopted by the council and approved by the commissioner with
respect   to  bad  debt  and  charity  care  need  within  each  article
forty-three insurance law region or such other regions  as  are  adopted
pursuant  to  subdivision  nine of this section. If within such a region
there is a definitive finding as a result of such review that there  has
been  a change in the proportional amounts of bad debts and charity care
provided by (i)  major  public  general  hospitals  and  (ii)  voluntary
non-profit, private proprietary and public general hospitals, other than
major  public  general  hospitals,  the  allocation  of  resources  made
available under this paragraph shall be adjusted pursuant to  the  rules

and regulations adopted pursuant to this paragraph so as to reflect this
change.
(f)  An  additional  allowance  of  one-fourth of one percent shall be
included in each rate or revenue  cap  established  for  each  voluntary
non-profit  and private proprietary general hospital to be returned to a
regional pool and  distributed  in  accordance  with  paragraph  (c)  of
subdivision nine of this section.
(g)  An  additional  allowance  of  one-third  of one percent shall be
included  in  each  rate  or  revenue  cap  established  for   voluntary
non-profit and private proprietary general hospitals to be returned to a
regional  pool  and  distributed  in  accordance  with  paragraph (d) of
subdivision nine of this section.
5. Adjustments. (a) The commissioner shall, on his own initiative,  or
on the basis of a request from a general hospital, adjust an established
inpatient revenue cap 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 basis of the inpatient revenue cap established; and
(ii) the correction of errors or omissions of data or in computations.
(b)  General hospitals may request and the commissioner shall consider
an adjustment  to  an  established  revenue  cap  to  reflect  increased
expenses or reconsideration of disallowed expenses based on:
(i)  justification of all or a portion of expenses not included in the
inpatient revenue cap resulting from the cost analysis process contained
in subparagraph (i) of paragraph (a) of this subdivision;
(ii)  additional  operational  expenses  related  to  construction  or
service  changes.  These  changes  if  applicable must be approved under
section twenty-eight hundred two of this article;
(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 or federal requirements;
(iv)  additional  expenses  to  permit a more efficient and economical
method of delivering a service; and
(v) increased costs for compensation of employees.
(c)  In  determining  the  reasonableness  or  justification   of   an
adjustment  to  an  established inpatient revenue cap based on a request
related to subparagraph (v) 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)  The  commissioner  shall  adjust  a   prospectively   established
inpatient  revenue cap on the basis of subsequent data that demonstrates
a significant cost influencing  change  in  patient  mix  or  volume  of
service.    Such  adjustment will be made in conformity with regulations
adopted by the council as approved by the commissioner.
(e) 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.
(f)  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 revenue cap 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.
(g)  The  commissioner  shall  consider  an adjustment to a hospital's
reported base year costs in instances  where  it  is  demonstrated  that
recurring  costs resulting from multi-year commitments beginning late in
a base year should be calculated on an annual basis  in  establishing  a
revenue  cap in order to avoid a significant inequity. In making such an
adjustment the commissioner shall consider the offset  of  non-recurring
base year costs.
6. Hospital charge schedules. Effective for the year beginning January
first,   nineteen  hundred  eighty-four  and  thereafter,  each  general
hospital shall establish a charge schedule for available and  authorized
services  in  accordance  with  a  gross  charge  determination  formula
provided by the commissioner which shall:
(a) Establish gross  charges  sufficient  to  generate  the  inpatient
revenue authorized by the revenue cap; and
(b)  Establish gross charges such that (i) the payment rate to be made
on behalf of subscribers of  corporations  organized  and  operating  in
accordance  with  article forty-three of the insurance law, adjusted for
uncovered services, shall be at a  specified  discount  from  the  gross
charge  rate  billed  to  or  on  behalf of charge paying patients; (ii)
permit the continuation of negotiated payment rate determination systems
between self-insured and self-administered groups  and  hospitals  which
were  in effect on May first, nineteen hundred eighty-two; and (iii) for
general hospitals subject to the provisions of paragraph (a) or  (b)  of
subdivision  twelve of this section, the costs (including all allowances
specified in subdivision four of this section) of services  provided  to
charge  paying  patients shall be at a specified discount from the gross
charge rate billed to or on behalf of charge paying patients.
During the period January first, nineteen hundred eighty-four  through
December   thirty-first,  nineteen  hundred  eighty-five,  the  discount
referred to in subparagraphs (i) and (iii)  of  paragraph  (b)  of  this
subdivision  shall  not  exceed twelve percent for those hospitals which
had a discount of less than twelve percent  during  the  previous  year,
shall be no greater than the discount in effect during the previous year
for  those  hospitals  whose previous year's discount was between twelve
and fifteen percent and shall not exceed fifteen percent for all others.
Self-insured and self-administered negotiated systems  as  described  in
subparagraph  (ii)  of  paragraph  (b) of this subdivision may remain in
effect  for  the  period  commencing  January  first,  nineteen  hundred
eighty-three  and  ending  on  December  thirty-first,  nineteen hundred
eighty-five  and  shall  be  incorporated  in  the  formula  methodology
provided by the commissioner.
The  commissioner shall effectuate direct repayment or adjustment of a
subsequent inpatient revenue cap to reflect  actual  inpatient  revenues
received  for  inpatient  services  provided  by a general hospital that
exceed the inpatient revenue cap initially established  or  adjusted  in
accordance  with  provisions of this section. Revenue received in excess
of the revenue cap established  as  the  result  of  the  provisions  of
subchapter  XVIII of the federal social security act (medicare) phase-in
policies or from charges authorized  under  subdivision  seven  of  this
section shall not be included in the adjustment.
7.  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.
Revenues received from such financing or working capital  charges  shall

not  be  included  in  a revenue cap established or considered as a cost
offset. Financing or working capital charges shall  not  be  applied  to
hospital  billings  to  third  party  payors participating in a periodic
interim payment system.
8.  Trend  factor. (a) The commissioner in accordance with the method-
ology developed by the consultants 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
charge   levels   and  reimbursement  rates  in  effect  until  December
thirty-first, nineteen hundred eighty-three and the appropriate  portion
of  the  inpatient  revenue cap in subsequent years. 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 appointed by the commissioner. Not
later than September first of each year, the consultants  shall  provide
to  the  commissioner  and  the  council,  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 movement 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,  semi-annually,  the
recommendations  of  the consultants for adjustments to the trend factor
provided, however, that adjustments, except for the final adjustment  in
the  trend  factor  shall  not  be required unless such adjustment would
result in the weighted average of the operating cost  component  of  the
rates  or  charge  limits differing by more than one-half of one percent
from that which was previously determined.
9.  Bad  debt,  charity  care  and  transition  pool.  Regional  pools
consisting  of  funds  made  available  within  each  region through the
allowances specified in paragraphs (e), (f) and (g) of subdivision  four
of  this  section  shall  be created. The regions are established as the
article forty-three insurance law plan regions, with the exception  that
the southern sixteen counties will be divided into three regions for the
purposes  of  this subdivision and subdivision four 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.  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. The commissioner is authorized to contract
with the article forty-three insurance law plans to  receive  funds  for
the  pools  and  distribute  such funds. In the event contracts with the
article  forty-three  insurance   law   plans   are   effectuated,   the
commissioner shall conduct annual audits of the receipt and distribution
of  pooled  funds  and  issue  an  annual  report  on  the  receipt  and
distribution of the pooled funds. In  order  for  general  hospitals  to
participate  in  the  distribution  of  funds  from the pool the general
hospital must implement collection policies and procedures  approved  by
the  commissioner.  Funds  available  in  each  regional  pool  shall be
distributed or retained in the following sequence:
(a)  Each  eligible  major  public  general  hospital  as  defined  in
subdivision  four  of  this section shall receive from its regional pool
created by the allowance in paragraph (e) of subdivision  four  of  this

section  a  portion  of  its bad debt and charity care need equal to the
result of the application  of  its  percentage  of  statewide  inpatient
reimbursable costs developed on the basis of nineteen hundred eighty-one
financial and statistical reports to the total of all regional pools.
(b)  Funds  remaining in the regional pool created by the allowance in
paragraph (e) of subdivision four of this section, after distribution in
accordance with paragraph (a) of this subdivision, shall be  distributed
proportionately  to voluntary non-profit, private proprietary and public
general hospitals, other than major  public  general  hospitals  on  the
basis  of  need  within  the  region  as  determined  in accordance with
paragraph (e) of subdivision four, with the exception that any funds  in
a  regional  pool  that were allocated to major public general hospitals
and not distributed shall be distributed to each major third party payor
on the basis of its percentage of major third party payor liability  for
bad  debt  and  charity  care  as  described  in subdivision one of this
section,  in  the  specific  major  public  general  hospital  to  which
distribution was not made.
(c)  Funds in regional pools created by the allowance in paragraph (f)
of subdivision four of this section shall not be available for immediate
distribution from the regional pool but shall be retained  in  the  pool
for distribution by the commissioner in accordance with rules adopted by
the  state  hospital review and planning council to assist in offsetting
losses from bad debts  and  the  costs  of  charity  care  of  voluntary
non-profit and private proprietary general hospitals experiencing severe
fiscal hardship because of insufficient resources to finance such losses
or costs.
(d)  Funds in regional pools created by the allowance in paragraph (g)
of subdivision four of this section shall be  distributed  by  including
one-fourth  of such funds with the funds to be distributed in accordance
with paragraph (c) of this subdivision and three-quarters of such  funds
to  be  distributed  to  voluntary  non-profit  and  private proprietary
general  hospitals  within  the  region  that  are  severely  negatively
impacted by the inclusion of title XVIII (medicare) patients, or changes
in   the   determination   of   payor   liability,  resulting  from  the
implementation of the reimbursement provisions in  this  section.  Rules
for such distribution will be those adopted by the state hospital review
and planning council and approved by the commissioner.
(e)  Any  balance  in  the  portion  of  regional pools created by the
allowance in paragraph (e) of subdivision four of  this  section,  after
distribution  in  accordance  with  paragraph  (b)  of this subdivision,
including income from invested funds, shall be distributed to  voluntary
non-profit,  private proprietary and public general hospitals other than
major public general hospitals within the region on a basis  related  to
specific hospital need as defined for regional purposes in paragraph (e)
of  subdivision  four  of  this  section.  Any balance in the portion of
regional pools created by the allowance in paragraph (f) of  subdivision
four  of this section and the distribution specified in paragraph (d) of
this subdivision after distribution in accordance with paragraph (c)  of
this  subdivision,  including  income  from  invested  funds,  shall  be
distributed to voluntary  non-profit  and  private  proprietary  general
hospitals within the region on a basis related to specific hospital need
as defined for regional purposes in paragraph (e) of subdivision four of
this  section.  Any  balance in the portion of regional pools created by
the allowance in paragraph (g) of subdivision four of this section after
distribution in accordance with this paragraph and paragraph (d) of this
subdivision, including income from invested funds, shall be returned  to
voluntary  non-profit  and  private proprietary general hospitals on the
basis of the reimbursable costs of those hospitals within the region.
10. Unit of service. The unit of general hospital inpatient service on
which payment shall be based should be uniform for all payors and  shall
best identify the cost of services provided.
11.  The  commissioner  shall  provide  to  fiscal  intermediaries for
subchapter XVIII of the  federal  social  security  act  (medicare)  and
article forty-three of the insurance law plans, the information required
to  effectuate  the provisions of this section, exclusive of adjustments
for uncovered services.
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 superintendent of financial services or approved
or certified by the commissioner, whichever is applicable  and  required
by  this section, 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
forty-three 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 schedule of charges
established  by  such  hospital  for  patient  services in effect on May
first, nineteen  hundred  seventy-eight,  adjusted  for  the  rate  year
nineteen  hundred  eighty-three  in  accordance  with  the provisions of
subdivision thirteen of this section, and adjusted for  the  rate  years
thereafter  in accordance with the provisions of subdivision six of this
section.
(b) Any general hospital which has  notified  in  writing  an  article
forty-three 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 schedule of charges  established
by  such  hospital for patient services in effect on May first, nineteen
hundred seventy-eight, adjusted  for  the  rate  year  nineteen  hundred
eighty-three  in  accordance with the provisions of subdivision thirteen
of  this  section,  and  adjusted  for  the  rate  years  thereafter  in
accordance with the provisions of subdivision six of this section.
(c)  No  general  hospital shall refuse to provide patient services to
such  subscribers  or  beneficiaries  solely  on  the  grounds  of  such
subscription or membership.
13.  Charge  control.  For  the period January first, nineteen hundred
eighty-three, and until January first, nineteen hundred eighty-four:
(a) No general hospital shall establish charges for inpatient services
in excess of those permitted by law immediately prior to  the  effective
date of this section adjusted by the applicable trend factor.
(b)  The  commissioner  shall  establish  an  appeals board within the
department to consider and recommend action in writing on an appeal by a
general hospital of the inpatient charge limits established pursuant  to
this  subdivision. The board and the commissioner may only consider, and
appeals shall be limited to, changes in the base charge or the allowable
limits because of the (i) establishment  of  an  approved  new  hospital
service, (ii) substantial changes in the volume of services provided, or
(iii)  substantial and adverse changes in the relationship between total
accrued inpatient revenues and total inpatient costs due to such factors
as significant increases in cost from labor settlements or increases  in
bad debts. Expenditures resulting from such changes must be essential to
assure  the  continuance  of  quality  medical  care.  In  the  event  a
determination on such appeal is not  made  by  the  commissioner  within
ninety  days  of  receipt  of  a  complete  request as determined by the
commissioner,  the  hospital  may  increase  its  inpatient  charges  in
conformance  with  such  request.  If  the  commissioner shall determine
thereafter that all or a portion  of  such  increase  is  not  warranted
hereunder,  the  hospital on notice of such determination shall promptly
reduce its inpatient charges in conformance therewith. In no event shall
the hospital bear any liability to any payor for such interim increase.
(c) In any proceeding under this subdivision the recognized collective
bargaining agent shall be entitled to submit any relevant data. All data
submitted hereunder  shall  be  agency  records  under  the  freedom  of
information law. All proceedings and appeals hereunder shall be meetings
of public bodies under the open meetings law.
(d)  No  provision  of  this subdivision or subdivision twelve of this
section  shall  be  construed  to  prohibit  a  general  hospital   from
continuing  the  amount  of  inpatient  charges  in effect on May first,
nineteen hundred seventy-eight.
14.  Restitution  authorization.  In  enforcing  the   provisions   of
subdivisions  twelve and thirteen 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  does  not  consent  to  any  order  of  the
commissioner  hereunder. The commissioner may direct that such a hearing
be held without any request by a hospital.
* NB Expired January 1, 1986