Texas Administrative Code › Title 1 - ADMINISTRATION › Part 15 - TEXAS HEALTH AND HUMAN SERVICES COMMISSION › Chapter 355 - REIMBURSEMENT RATES › Subchapter J - PURCHASED HEALTH SERVICES › Division 4 - MEDICAID HOSPITAL SERVICES › Section 355.8052 - Inpatient Hospital Reimbursement

Current through Reg. 49, No. 28; July 12, 2024
(a) Introduction.
					 The Texas Health and Human Services Commission (HHSC) uses the methodology
					 described in this section to calculate reimbursement for a covered inpatient
					 hospital service.
(b) Definitions.
(1) Add-on--An amount that is added to the
					 base Standard Dollar Amount (SDA) to reflect high-cost functions and services
					 or regional cost differences.
(2)
					 Adjudicated--The approval or denial of an inpatient hospital claim by
					 HHSC.
(3) Base standard dollar
					 amount (base SDA)--A standardized payment amount calculated by HHSC, as
					 described in subsections (c) and (d) of this section, for the costs incurred by
					 prospectively paid hospitals in Texas for furnishing covered inpatient hospital
					 services.
(4) Base year--For the
					 purpose of this section, the base year is a state fiscal year (September
					 through August) to be determined by HHSC.
(5) Base year claims--For the purposes of
					 rate setting (including Diagnosis-related group (DRG) relative weights, Mean
					 length of stay (MLOS) and Days Thresholds, and rebasing or realignment of base
					 rates) effective September 1, 2021, and after HHSC includes Medicaid inpatient
					 fee-for-service (FFS) and Managed Care Organization (MCO) encounters that meet
					 the criteria in subparagraphs (A) - (F) of this paragraph in the Base Year
					 claims data. For base rates set prior to September 1, 2021, individual sets of
					 base year claims are compiled for children's hospitals and urban hospitals for
					 the purposes of rate setting and realignment. All Medicaid inpatient
					 fee-for-service (FFS) and Primary Care Case Management (PCCM) inpatient
					 hospital claims for reimbursement filed by an urban or children's hospital
					 that:
(A) had a date of admission occurring
					 within the base year;
(B) were
					 adjudicated and approved for payment during the base year and the six-month
					 grace period that immediately followed the base year, except for such claims
					 that had zero inpatient days;
(C)
					 were not claims for patients who are covered by Medicare;
(D) were not Medicaid spend-down
					 claims;
(E) were not claims
					 associated with military hospitals, out-of-state hospitals, state-owned
					 teaching hospitals, and freestanding psychiatric hospitals; and
(F) individual sets of base year claims are
					 compiled for children's hospitals and urban hospitals for the purposes of rate
					 setting and rebasing.
(6)
					 Children's hospital--A Medicaid hospital designated by Medicare as a children's
					 hospital and exempted by Centers for Medicare and Medicaid Services (CMS) from
					 the Medicare prospective payment system.
(7) Cost outlier payment adjustment--A
					 payment adjustment for a claim with extraordinarily high costs.
(8) Cost outlier threshold--One factor used
					 in determining the cost outlier payment adjustment.
(9) Day outlier payment adjustment--A payment
					 adjustment for a claim with an extended length of stay.
(10) Day outlier threshold--One factor used
					 in determining the day outlier payment adjustment.
(11) Diagnosis-related group (DRG)--The
					 classification of medical diagnoses as defined in the 3MT All Patient Refined
					 Diagnosis Related Group (APR-DRG) system or as otherwise specified by HHSC.
					 Each DRG has four digits. The last digit of the Diagnosis-Related Group is the
					 Severity of Illness (SOI). SOI indicates the seriousness of the condition on a
					 scale of one to four: minor, moderate, major, or extreme. SOI may increase if
					 secondary diagnoses are present, in addition to the primary
					 diagnosis.
(12) Final
					 settlement--Reconciliation of Medicaid cost in the CMS form 2552-10 hospital
					 fiscal year end cost report performed by HHSC within six months after HHSC
					 receives the cost report audited by a Medicare intermediary, or HHSC.
(13) Final standard dollar amount (final
					 SDA)--The rate assigned to a hospital after HHSC applies the add-ons and other
					 adjustments described in this section.
(14) Geographic wage add-on--An adjustment to
					 a hospital's base SDA to reflect geographical differences in hospital wage
					 levels. Hospital geographical areas correspond to the Core-Based Statistical
					 Areas (CBSAs) established by the federal Office of Management and Budget in
					 2003.
(15) HHSC--The Texas Health
					 and Human Services Commission, or its designee.
(16) Impact file--The Inpatient Prospective
					 Payment System (IPPS) Final Rule Impact File that contains data elements by
					 provider used by the CMS in calculating Medicare rates and impacts. The impact
					 file is publicly available on the CMS website.
(17) Inflation update factor--Cost of living
					 index based on the annual CMS Prospective Payment System Hospital Market Basket
					 Index.
(18) Inpatient Ratio of
					 cost-to-charge (RCC)--A ratio that covers all applicable Medicaid hospital
					 costs and charges relating to inpatient care.
(19) In-state children's hospital--A hospital
					 located within Texas that is recognized by Medicare as a children's hospital
					 and is exempted by Medicare from the Medicare prospective payment
					 system.
(20) Interim payment--An
					 initial payment made to a hospital that is later settled to Medicaid-allowable
					 costs, for hospitals reimbursed under methods and procedures in the Tax Equity
					 and Fiscal Responsibility Act of 1982 (TEFRA).
(21) Interim rate--The ratio of Medicaid
					 allowed inpatient costs to Medicaid allowed inpatient charges filed on a
					 hospital's cost report, expressed as a percentage. The interim rate established
					 during a cost report settlement for an urban hospital or a rural hospital
					 reimbursed under this section excludes the application of TEFRA target caps and
					 the resulting incentive and penalty payments.
(22) Managed Care Organization (MCO)
					 Adjustment Factor--Factor used to estimate managed care premium tax, risk
					 margin, and administrative costs related to contracting with HHSC. The
					 estimated amounts are subtracted from appropriations.
(23) Mean length of stay (MLOS)--One factor
					 used in determining the payment amount calculated for each DRG; the average
					 number of inpatient days per DRG.
(24) Medical education add-on--An adjustment
					 to the base SDA for an urban teaching hospital to reflect higher patient care
					 costs relative to non-teaching urban hospitals.
(25) Military hospital--A hospital operated
					 by the armed forces of the United States.
(26) New Hospital--A hospital that was
					 enrolled as a Medicaid provider after the end of the base year and has no base
					 year claims data.
(27) Out-of-state
					 children's hospital--A hospital located outside of Texas that is recognized by
					 Medicare as a children's hospital and is exempted by Medicare from the Medicare
					 prospective payment system.
(28)
					 Realignment--Recalculation of the base SDA and add-ons using current RCCs,
					 inflation factors, and base year claims as specified by HHSC, or its designee,
					 for one or more hospital types. Realignment will occur based on legislative
					 direction.
(29)
					 Rebasing--Calculation of all SDAs and add-ons, DRG relative weights, MLOS, and
					 day outlier thresholds for all hospitals using a base period as specified by
					 HHSC, or its designee. Rebasing will occur based on legislative
					 direction.
(30) Relative
					 weight--The weighting factor HHSC assigns to a DRG representing the time and
					 resources associated with providing services for that DRG.
(31) Rural base year stays--An individual set
					 of base year stays is compiled for rural hospitals for the purposes of rate
					 setting and realignment. All inpatient FFS claims and inpatient managed care
					 encounters for reimbursement filed by a rural hospital that:
(A) had a date of admission occurring within
					 the base year;
(B) were adjudicated
					 and approved for payment during the base year or the six-month period that
					 immediately followed the base year, except for such stays that had zero
					 inpatient days;
(C) were not stays
					 for patients who are covered by Medicare; and
(D) were not Medicaid spend-down stays; and
					 were not stays associated with military hospitals, out-of-state hospitals,
					 state-owned teaching hospitals, and freestanding psychiatric
					 hospitals.
(32) Rural
					 hospital--A hospital enrolled as a Medicaid provider that:
(A) is located in a county with 68,750 or
					 fewer persons according to the 2020 U.S. Census;
(B) is designated by Medicare as a Critical
					 Access Hospital (CAH), a Sole Community Hospital (SCH), or a Rural Referral
					 Center (RRC) that is not located in a Metropolitan Statistical Area (MSA), as
					 defined by the U.S. Office of Management and Budget; or
(C) meets all of the following:
(i) has 100 or fewer beds;
(ii) is designated by Medicare as a CAH, a
					 SCH, or a RRC; and
(iii) is located
					 in an MSA.
(33)
					 Safety-Net add-on--An adjustment to the base SDA for a safety-net hospital to
					 reflect the higher costs of providing Medicaid inpatient services in a hospital
					 that provides a significant percentage of its services to Medicaid and/or
					 uninsured patients.
(34) Safety-Net
					 hospital--An urban or children's hospital that meets the eligibility and
					 qualification requirements described in §355.8065 of this division
					 (relating to Disproportionate Share Hospital Reimbursement Methodology) for the
					 most recent federal fiscal year for which such eligibility and qualification
					 determinations have been made.
(35)
					 Standard Dollar Amount (SDA)--A standardized payment amount calculated by HHSC
					 for the costs incurred by prospectively-paid hospitals in Texas for furnishing
					 covered inpatient hospital services.
(36) State-owned teaching hospital--Acute
					 care hospitals owned and operated by the state of Texas.
(37) Teaching hospital--A hospital for which
					 CMS has calculated and assigned a percentage Medicare education adjustment
					 factor under 42 CFR §
													412.105.
(38) Teaching medical education add-on--An
					 adjustment to the base SDA for a children's teaching hospital with a program
					 approved by the Accreditation Council for Graduate Medical Education (ACGME) to
					 reflect higher patient care costs relative to non-teaching children's
					 hospitals.
(39) TEFRA target cap--A
					 limit set under the Social Security Act §1886(b) (42 U.S.C. §
													1395ww(b)) and applied to a
					 hospital's cost settlement under methods and procedures in the Tax Equity and
					 Fiscal Responsibility Act of 1982 (TEFRA). TEFRA target cap is not applied to
					 services provided to patients under age 21, and incentive and penalty payments
					 associated with this limit are not applicable to those services.
(40) Tentative settlement--Reconciliation of
					 cost in the Medicare/Medicaid hospital fiscal year-end cost report performed by
					 HHSC within six months after HHSC receives an acceptable cost report filed by a
					 hospital.
(41) Texas provider
					 identifier (TPI)--A unique number assigned to a provider of Medicaid services
					 in Texas.
(42) Trauma add-on--An
					 adjustment to the base SDA for a trauma hospital to reflect the higher costs of
					 obtaining and maintaining a trauma facility designation, as well as the direct
					 costs of providing trauma services, relative to non-trauma hospitals or to
					 hospitals with lower trauma facility designations. To be eligible for the
					 trauma add-on, a hospital must be eligible to receive an allocation from the
					 trauma facilities and emergency medical services account under Texas Health and
					 Safety Code Chapter 780.
(43)
					 Trauma hospital--An inpatient hospital that meets the Texas Department of State
					 Health Services criteria for a Level I, II, III, or IV trauma facility
					 designation under 25 Texas Administrative Code §
												157.125(relating to Requirements
					 for Trauma Facility Designation).
(44) Universal mean--Average base year cost
					 per claim for all urban hospitals.
(45) Urban hospital--Hospital located in a
					 metropolitan statistical area and not fitting the definition of rural
					 hospitals, children's hospitals, state-owned teaching hospitals, or
					 freestanding psychiatric hospitals.