West Virginia Code of State Rules › Agency 65 - Health Care Authority › Title 65 - LEGISLATIVE RULE HEALTH CARE AUTHORITY › Series 65-05 - Hospital Cost-Based Rate Review System › Section 65-5-4 - Overview

Current through Register Vol. XLI, No. 28, July 12, 2024
This is an overview of the Hospital Cost-Based Rate Review
				  System that the Health Care Cost Review Authority (hereinafter "Authority")
				  proposes to implement July 1, 1992. The focus of this new system will be the
				  determination of revenues which determine the rates to be charged to
				  nongovernmental payors. The Authority will utilize rate application request
				  forms, to be developed, as the primary source of information in setting
				  prospective rates. The Authority will also utilize the audited financial
				  statements, the Uniform Reporting System Financial Report, the Medicare Cost
				  Report, the hospital's trial balance, and UB-82 discharge bills as additional
				  sources of data. The audited financial statement, the Uniform Financial Report
				  and the Medicare Cost Report will be compared to information in the rate
				  application to determine that the data contained in the rate application is
				  consistent in all material respects. UB-82 information will also be used to
				  compare discharges and case mix indices. The case mix index for each hospital
				  will be determined from DRG weights in effect during that hospital's fiscal
				  year. Initially the DRG weights will be the Medicare weights, however, the
				  Authority will work toward development of West Virginia specific weights for
				  use in future years.
Initially the Authority will use fiscal years which end in
				  the calendar years 1990 and 1991 as the base years because they are the most
				  recent years for which the Authority has consistent data available for each
				  hospital. The base years shall apply to hospitals with fiscal years ended June
				  30, 1990 and 1991; August 31, 1990 and 1991; September 30, 1990 and 1991;
				  October 31, 1990 and 1991; and December 31, 1990 and 1991. Inflation and volume
				  adjustments will be made to a hospital's base year to arrive at an appropriate
				  level of costs to evaluate the reasonableness of the hospital's budgeted rate
				  request. The inflation factor after the initial filing will be applied to the
				  lower of actual costs or the approved rates.
Volume changes (increases or decreases) up to the hospital's
				  most recent fiscal year filing under the new methodology will also be taken
				  into consideration, as well as a technology factor to be developed by the
				  Authority. The technology factor may be based on the review hospital's case mix
				  or its relationship to the peer group.
The base year Medicare Cost Report may be unaudited at the
				  time it is utilized. However, adjustments to future year rates may be necessary
				  to reflect the impact of significant differences that arise as a result of
				  Medicare Cost Report audit adjustments. No adjustments will be made to the base
				  year as the result of Medicare audit adjustments unless the hospital or its
				  independent accountant are required to make such adjustments because of
				  significant changes by the Medicare Intermediary that result in a refiling of
				  the cost report.
Standards will be developed by the Authority which will allow
				  for a comparison of an applicant hospital to a peer group of hospitals. The
				  base operating expenses per discharge of the hospital requesting a rate
				  increase will be compared to the same base operating expenses per discharge in
				  the peer group. The Authority shall establish standards of variance to be
				  applied to these base operating expenses to be used to determine efficient or
				  inefficient hospitals and to provide for incentives and penalties, where
				  practicable.
This rule is directed at acute care hospital costs unless
				  otherwise specified.