Title 907 | Chapter 010 | Regulation 015REG
PROPOSED
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PREVIOUS VERSION
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CABINET FOR HEALTH AND FAMILY SERVICES
Department for Medicaid Services
Division of Fiscal Management
(Amendment)
907 KAR 10:015.Payments for outpatient hospital services.
Section 1.
Definitions.(1)
"Critical access hospital" or "CAH" means a hospital meeting the licensure requirements established in 906 KAR 1:110 and KRS 216.380.(2)
"Department" means the Department for Medicaid Services or its designee.(3)
"Emergency medical condition" is defined by 42 U.S.C. 1395dd(e)(1).(4)
"Federal financial participation" is defined in 42 C.F.R. 400.203.(5)
"Finalized" means approved or final as determined by the Centers for Medicare and Medicaid Services (CMS).(6)
"Flat rate" means a set and final rate representing reimbursement in entirety with no subsequent cost settling.(7)
"Lock-in recipient" means a recipient enrolled in the department's lock-in program pursuant to 907 KAR 1:677.(8)
"Lock-in recipient's designated hospital" means the hospital designated to provide nonemergency care for a lock-in recipient pursuant to 907 KAR 1:677.(9)
"Nonemergency" means that a condition or situation does not require an emergency service pursuant to 42 C.F.R. 438.114(10)
"Outpatient cost-to-charge ratio" means the ratio determined by dividing the costs reported on Supplemental Worksheet E-3, Part III, Page 12 column 2, line 27 of the cost report by the charges reported on column 2, line 20 of the same schedule.(11)
"Recipient" is defined by KRS 205.8451(9).Section 2.
In-State Outpatient Hospital Service Reimbursement.(1)
(a)
Except for critical access hospital services, outpatient hospital laboratory services, or a service referenced in subsection (6) of this section, the department shall reimburse on an interim basis for in-state outpatient hospital services at a facility specific outpatient cost-to-charge ratio based on the facility's most recently filed cost report.(b)
An outpatient cost-to-charge ratio shall be expressed as a percent of the hospital's charges.(2)
Except as established in subsection (6) of this section, a facility specific outpatient cost-to-charge ratio paid during the course of a hospital's fiscal year shall be designed to result in reimbursement, at the hospital's fiscal year end, equaling ninety-five (95) percent of a facility's total outpatient costs incurred during the hospital's fiscal year.(3)
Except as established in subsections (4) and (6) of this section:(a)
Upon reviewing an in-state outpatient hospital's as submitted cost report for the hospital's fiscal year, the department shall preliminarily settle reimbursement to the facility equal to ninety-five (95) percent of the facility's total outpatient costs, excluding laboratory services, incurred in the corresponding fiscal year; and(b)
Upon receiving and reviewing an in-state outpatient hospital's finalized cost report for the hospital's fiscal year, the department shall settle final reimbursement, excluding laboratory services, to the facility equal to ninety-five (95) percent of the facility's total outpatient costs incurred in the corresponding fiscal year.(4)
(a)
The department's total reimbursement for outpatient hospital services shall not exceed the aggregate limit established in 42 C.F.R. 447.321.(b)
If projections indicate for a given state fiscal year that reimbursing for outpatient hospital services at ninety-five (95) percent of costs would result in the department's total outpatient hospital service reimbursement exceeding the aggregate limit established in 42 C.F.R. 447.321, the department shall proportionately reduce the final outpatient hospital service reimbursement for each hospital to equal a percent of costs which shall result in the total outpatient hospital reimbursement equaling the aggregate limit established in 42 C.F.R. 447.321.(5)
In accordance with 42 U.S.C. 1396r-8(a)(7), a hospital shall include the corresponding healthcare common procedure coding (HCPC) code if billing a revenue code of 250 through 261 or 634 through 636 for an outpatient hospital service.(6)
(a)
Except for a critical access hospital, the department shall reimburse a flat rate of twenty-five (25) dollars for a screening of a lock-in recipient to determine if an emergency medical condition exists.(b)
A hospital shall use revenue code 451 to bill for a service referenced in paragraph (a) of this subsection.(c)
A service or reimbursement for a service referenced in paragraph (a) of this subsection, shall not be included:1.
With a hospital's costs for reimbursement purposes; and2.
In any cost settlement between the department and hospital.(7)
In accordance with 907 KAR 10:014:(a)
Except for a service referenced in subsection (6) of this section, the department shall not reimburse for a nonemergency service, other than a screening in accordance with 907 KAR 10:014, Section 2(6)(a), provided to a lock-in recipient if provided by a hospital other than the lock-in recipient's designated hospital.(b)
The department shall not reimburse for a nonemergency service provided to a lock-in recipient in an emergency department of a hospital.Section 3.
Out-of-State Outpatient Hospital Service Reimbursement. Excluding services provided in a critical access hospital and laboratory services, reimbursement for an outpatient hospital service provided by an out-of-state hospital shall be ninety-five (95) percent of the average in-state outpatient hospital cost-to-charge ratio.Section 4.
Critical Access Hospital Outpatient Service Reimbursement.(1)
The department shall reimburse for outpatient hospital services in a critical access hospital as established in 42 C.F.R. 413.70(b) through (d).(2)
A critical access hospital shall comply with the cost reporting requirements established in Section 6 of this administrative regulation.Section 5.
Outpatient Hospital Laboratory Service Reimbursement.(1)
The department shall reimburse for an in-state or out-of-state outpatient hospital laboratory service:(a)
At the Medicare-established technical component rate for the service in accordance with 907 KAR 1:028 if a Medicare-established component rate exists for the service; or(b)
By multiplying the facility's current outpatient cost-to-charge ratio by its billed laboratory charges if no Medicare rate exists for the service.(2)
Laboratory service reimbursement, in accordance with subsection (1) of this section, shall be:(a)
Final; and(b)
Not settled to cost.(3)
An outpatient laboratory hospital laboratory service shall be reimbursed in accordance with this section regardless of whether the service is performed in an emergency room setting or in a nonemergency room setting.Section 6.
Direct Graduate Medical Education Costs at In-State Hospitals with Graduate Medical Education Programs.(1)
If federal financial participation for outpatient direct graduate medical education (DGME) costs is not provided to the department, the department shall not reimburse eligible in-state hospitals for outpatient DGME costs.(2)
If federal financial participation for outpatient DGME costs is provided to the department, the department shall:(a)
Provide a supplemental outpatient DGME payment to in-state hospitals for the outpatient direct costs of a graduate medical education program approved by Medicare as established in this subsection.1.
Effective for the state fiscal year beginning July 1, 2024, the department shall make an annual outpatient DGME supplemental payment for the direct costs of graduate medical education incurred by in-state hospitals with a graduate medical education program approved by Medicare.2.
A supplemental DGME payment shall be made:a.
Separately from the per visit and cost settlement payment methodologies;b.
On an annual basis; andc.
Using the hospital's cost report period ending in the calendar year one (1) year prior to the beginning of the state fiscal year. For example, for the state fiscal year beginning July 1, 2024, the cost report period ending in calendar year 2023 shall be utilized.(b)
The annual supplemental DGME payment shall equal the difference between the supplemental DGME amount minus any DGME payments received through outpatient cost settlements and any outpatient DGME payments received from managed care organizations.(c)
The department shall determine a supplemental DGME amount equal to the product of:1.
Total DGME costs, obtained from Worksheet B, Part 1, Line 118, Columns 21 and 22 of the hospital's Medicare cost report; and2.
The hospital's Medicaid outpatient net revenue, including both fee-for-service and managed care, divided by net revenue from Medicaid, obtained from Worksheet S-10, line 2 of the hospital's Medicare cost report.Section 7.
Indirect Medical Education Payments at In-State Hospitals with Graduate Medical Education Programs.(1)
If federal financial participation for outpatient indirect medical education (IME) costs is not provided to the department, the department shall not reimburse eligible in-state hospitals for outpatient IME costs.(2)
If federal financial participation for outpatient IME costs is provided to the department, the department shall:(a)
As established in this subsection, provide a supplemental outpatient IME payment to a hospital that is owned or operated by a state university or a state university related party organization, with a state university affiliated graduate medical education program approved by Medicare.(b)
Effective for the state fiscal year beginning July 1, 2024, make an annual IME payment to state university teaching hospitals equal to:1.
The total of all outpatient hospital base payments received from fee-for-service Medicaid during the previous year multiplied by the sum of one (1) and the adjusted hospital specific IME factor determined in accordance with subparagraph 4.; plus2.
The total of all outpatient hospital base payments received from managed care organizations in the previous year multiplied by the sum of one (1) and the adjusted hospital specific IME factor in accordance with subparagraph 4., minus3.
IME payments, if any, included in the outpatient cost settlement.4.
The adjusted hospital-specific IME factor shall be calculated pursuant to 42 C.F.R. § 412.105(d), except that the count of FTE residents reported on worksheet E Part A, Lines 10 and 11, Column 1 of the Medicare cost report shall be substituted for the numerator of the ratio of full-time equivalent residents to beds described in paragraph (d)(1) therein.5.
The annual calculation described in this subsection shall utilize the hospital's cost report period ending in the calendar year one (1) year prior to the beginning of the state fiscal year. For example, for the state fiscal year beginning July 1, 2024, the cost report period ending in calendar year 2023 shall be utilized.Section 8.
Cost Reporting Requirements.(1)
An in-state outpatient hospital participating in the Medicaid Program shall submit to the department a copy of the Medicare cost report it submits to CMS, an electronic cost report file (ECR), the Supplemental Medicaid Schedule KMAP-1, the Supplemental Medicaid Schedule KMAP-4 and the Supplemental Medicaid Schedule KMAP-6.(a)
A cost report shall be submitted:1.
For the fiscal year used by the hospital; and2.
Within five (5) months after the close of the hospital's fiscal year.(b)
Except as provided in subparagraph 1 or 2 of this paragraph, the department shall not grant a cost report submittal extension.1.
The department shall grant an extension if an extension has been granted by Medicare. If an extension has been granted by Medicare, when the facility submits its cost report to Medicare, it shall simultaneously submit a copy of the cost report to the department.2.
If a catastrophic circumstance exists, as determined by the department (for example flood, fire, or other equivalent occurrence), the department shall grant a thirty (30) day extension.(2)
If a cost report submittal date lapses and no extension has been granted, the department shall immediately suspend all payment to the hospital until a complete cost report is received.(3)
If a cost report indicates payment is due by a hospital to the department, the hospital shall submit the amount due or submit a payment plan request with the cost report.(4)
If a cost report indicates a payment is due by the hospital to the department and the hospital fails to remit the amount due or request a payment plan, the department shall suspend future payment to the hospital until the hospital remits the payment or submits a request for a payment plan.(5)
An estimated payment shall not be considered payment-in-full until a final determination of cost has been made by the department.(6)
A cost report submitted by a hospital to the department shall be subject to departmental audit and review.(7)
Within seventy (70) days of receipt from the Medicare intermediary, a hospital shall submit to the department a printed copy of the final Medicare-audited cost report including adjustments.(8)
(a)
If it is determined that an additional payment is due by a hospital after a final determination of cost has been made by the department, the additional payment shall be due by a hospital to the department within sixty (60) days after notification.(b)
If a hospital does not submit the additional payment within sixty (60) days, the department shall withhold future payment to the hospital until the department has collected in full the amount owed by the hospital to the department.Section 9.Section 7.
Federal Financial Participation. A provision established in this administrative regulation shall be null and void if the Centers for Medicare and Medicaid Services:(1)
Denies federal financial participation for the provision; or(2)
Disapproves the provision.Section 10.Section 8.
Appeals. A hospital may appeal a decision by the department regarding the application of this administrative regulation in accordance with 907 KAR 1:671.Section 11.Section 9.
Incorporation by Reference.(1)
The following material is incorporated by reference:(a)
"Supplemental Worksheet E-3, Part III, Page 12", May 2004 edition(b)
"Supplemental Medicaid Schedule KMAP-1", January 2007 edition;(c)
"Supplemental Medicaid Schedule KMAP-4", January 2007 edition; and(d)
"Supplemental Medicaid Schedule KMAP-6", January 2007 edition.(2)
This material may be inspected, copied, or obtained, subject to applicable copyright law, at the Department for Medicaid Services, 275 East Main Street, Frankfort, Kentucky 40601, Monday through Friday, 8 a.m. to 4:30 p.m., or online, https://www.chfs.ky.gov/agencies/dms/Pages/default.aspx.LISA D. LEE, Commissioner
ERIC C. FRIEDLANDER, Secretary
APPROVED BY AGENCY: August 8, 2024
FILED WITH LRC: August 14, 2024 at 2:10 p.m.
PUBLIC HEARING AND COMMENT PERIOD: A public hearing on this administrative regulation shall, if requested, be held on October 21, 2024, at 9:00 a.m. using the CHFS Office of Legislative and Regulatory Affairs Zoom meeting room. The Zoom invitation will be emailed to each requestor the week prior to the scheduled hearing. Individuals interested in attending this virtual hearing shall notify this agency in writing by October 14, 2024, five (5) workdays prior to the hearing, of their intent to attend. If no notification of intent to attend the hearing is received by that date, the hearing may be canceled. This hearing is open to the public. Any person who attends virtually will be given an opportunity to comment on the proposed administrative regulation. A transcript of the public hearing will not be made unless a written request for a transcript is made. If you do not wish to be heard at the public hearing, you may submit written comments on this proposed administrative regulation until October 31, 2024. Send written notification of intent to attend the public hearing or written comments on the proposed administrative regulation to the contact person. Pursuant to KRS 13A.280(8), copies of the statement of consideration and, if applicable, the amended after comments version of the administrative regulation shall be made available upon request.
CONTACT PERSON: Krista Quarles, Policy Analyst, Office of Legislative and Regulatory Affairs, 275 East Main Street 5 W-A, Frankfort, Kentucky 40621; phone 502-564-7476; fax 502-564-7091; email CHFSregs@ky.gov.
REGULATORY IMPACT ANALYSIS AND TIERING STATEMENT
Contact Person:
Jonathan Scott or Krista Quarles
(1) Provide a brief summary of:
(a) What this administrative regulation does:
This administrative regulation establishes payment requirements and processes for outpatient services provided within a hospital setting.
(b) The necessity of this administrative regulation:
This administrative regulation is necessary to establish requirements and processes for reimbursing outpatient hospital services.
(c) How this administrative regulation conforms to the content of the authorizing statutes:
This administrative regulation conforms to the content of the authorizing statutes by providing processes to reimburse for hospital outpatient services.
(d) How this administrative regulation currently assists or will assist in the effective administration of the statutes:
This administrative regulation will assist in the effective administration of the authorizing statutes by establishing payment requirements for outpatient services.
(2) If this is an amendment to an existing administrative regulation, provide a brief summary of:
(a) How the amendment will change this existing administrative regulation:
The amendments to this administrative regulation establish direct and indirect graduate medical education reimbursement requirements. A process – requiring federal approval – is established to allow for hospitals to receive reimbursement for direct costs of graduate medical education expenses incurred by in-state hospitals with graduate medical education programs. A separate process establishes a method for in-state hospitals to receive a supplemental outpatient payment for indirect medical education costs. A requirement for both processes is established to utilize a cost report that is for the period that is one year prior to the state fiscal year for which a payment is provided.
(b) The necessity of the amendment to this administrative regulation:
The amendments serve to expand payments available to hospitals who provide graduate medical education programs. These amendments are for outpatient services and are appropriately located in this administrative regulation.
(c) How the amendment conforms to the content of the authorizing statutes:
The amendment conforms to the content of the authorizing statutes by establishing clear processes to seek federal approval and establish reimbursement procedures for hospitals that are providing this type of education.
(d) How the amendment will assist in the effective administration of the statutes:
The amendment will assist in the effective administration of the authorizing statutes by allowing hospitals to seek reimbursement for costs associated with providing medical education.
(3) List the type and number of individuals, businesses, organizations, or state and local governments affected by this administrative regulation:
There are approximately 93 hospitals in Kentucky who may be eligible for one of these payments.
(4) Provide an analysis of how the entities identified in question (3) will be impacted by either the implementation of this administrative regulation, if new, or by the change, if it is an amendment, including:
(a) List the actions that each of the regulated entities identified in question (3) will have to take to comply with this administrative regulation or amendment:
Hospitals with the appropriate educational program will need to utilize the processes in the regulation to apply for reimbursement.
(b) In complying with this administrative regulation or amendment, how much will it cost each of the entities identified in question (3):
There is no cost to the entity. The Medicaid program will reimburse if federal approval is granted and the hospital demonstrates costs as established in the administrative regulation.
(c) As a result of compliance, what benefits will accrue to the entities identified in question (3):
Hospitals will be able to provide graduate education programs on a more sustainable basis. This will benefit the hospital in having additional providers in the community.
(5) Provide an estimate of how much it will cost the administrative body to implement this administrative regulation:
(a) Initially:
DMS does not anticipate additional costs as a result of this amendment. The amendment will serve to address a cumulative $4.4 million in direct and indirect costs in training prospective medical professionals
(b) On a continuing basis:
DMS continues to not anticipate additional costs as a result of this amendment. The amendment will serve to address a cumulative $4.4 million in direct and indirect costs in training prospective medical professionals
(6) What is the source of the funding to be used for the implementation and enforcement of this administrative regulation:
Sources of funding to be used for the implementation and enforcement of this administrative regulation are federal funds authorized under Title XIX and Title XXI of the Social Security Act, and state matching funds of general and agency appropriations.
(7) Provide an assessment of whether an increase in fees or funding will be necessary to implement this administrative regulation, if new, or by the change if it is an amendment:
At this time, DMS does not assess that an increase in fees or funding is necessary to implement this administrative regulation.
(8) State whether or not this administrative regulation establishes any fees or directly or indirectly increases any fees:
This administrative regulation neither establishes nor increases any fees.
(9) TIERING: Is tiering applied?
Tiering is not applied as the policies apply equally to the regulated entities.
FISCAL IMPACT STATEMENT
(1) Identify each state statute, federal statute, or federal regulation that requires or authorizes the action taken by the administrative regulation.
KRS 194A.030(2), 194A.050(1), 205.520(3), 205.560, 205.637(3), 205.6310, 205.8453, 42 U.S.C. 1396a, 1396b, 1396d
(2) Identify the promulgating agency and any other affected state units, parts, or divisions:
The Department for Medicaid Services, Division of Health Policy
(a) Estimate the following for the first year:
Expenditures:
DMS does not anticipate additional costs as a result of this amendment. The amendment will serve to address a cumulative $4.4 million in direct and indirect costs in training prospective medical professionals
Revenues:
This administrative regulation is not expected to generate revenue to DMS.
Cost Savings:
There are no expected cost savings to DMS.
(b) How will expenditures, revenues, or cost savings differ in subsequent years?
DMS continues to not anticipate additional costs as a result of this amendment. The amendment will serve to address a cumulative $4.4 million in direct and indirect costs in training prospective medical professionals.
(3) Identify affected local entities (for example: cities, counties, fire departments, school districts):
N/A this regulation will not affect local entities.
(a) Estimate the following for the first year:
Expenditures:
N/A there is no impact on local entities
Revenues:
N/A there is no impact on local entities
Cost Savings:
N/A there is no impact on local entities
(b) How will expenditures, revenues, or cost savings differ in subsequent years?
The department does not anticipate that this administrative regulation will have a fiscal impact on local entities.
(4) Identify additional regulated entities not listed in questions (2) or (3):
Hospitals that provide graduate medical education residency slots.
(a) Estimate the following for the first year:
Expenditures:
N/A - the regulation will address additional uncompensated costs for these entities.
Revenues:
The 93 identified hospitals will collectively receive reimbursement to address a cumulative $4.4 million in direct and indirect costs in training prospective medical professionals.
Cost Savings:
The 93 identified hospitals will collectively receive reimbursement to address a cumulative $4.4 million in direct and indirect costs in training prospective medical professionals.
(b) How will expenditures, revenues, or cost savings differ in subsequent years?
The Department anticipates that this amendment will continue to address direct and indirect hospital training costs for training prospective medical professionals.
(5) Provide a narrative to explain the:
(a) Fiscal impact of this administrative regulation:
The amendment will serve to address a cumulative $4.4 million in direct and indirect costs in training prospective medical professionals
(b) Methodology and resources used to determine the fiscal impact:
The department has completed an actuarial analysis and fiscal impact statement when designing and evaluating needs within the graduate medical education space. This proposal has also been evaluated by some impacted hospitals and third-party consultants.
(6) Explain:
(a) Whether this administrative regulation will have an overall negative or adverse major economic impact to the entities identified in questions (2) - (4). ($500,000 or more, in aggregate)
This administrative regulation will not have a major economic impact – as defined by KRS 13A.010 – on regulated entities.
(b) The methodology and resources used to reach this conclusion:
The department has completed an actuarial analysis and fiscal impact statement when designing and evaluating needs within the graduate medical education space. This proposal has also been evaluated by some impacted hospitals and third-party consultants.
FEDERAL MANDATE ANALYSIS COMPARISON
(1) Federal statute or regulation constituting the federal mandate.
42 C.F.R. 413.75
(2) State compliance standards.
KRS 205.520(3) states: “Further, it is the policy of the Commonwealth to take advantage of all federal funds that may be available for medical assistance. To qualify for federal funds the secretary for health and family services may by regulation comply with any requirement that may be imposed or opportunity that may be presented by federal law. Nothing in KRS 205.510 to 205.630 is intended to limit the secretary's power in this respect.”
(3) Minimum or uniform standards contained in the federal mandate.
42C.F.R. 413.75 establishes general requirements for direct graduate medical education payments.
(4) Will this administrative regulation impose stricter requirements, or additional or different responsibilities or requirements, than those required by the federal mandate?
The administrative regulation does not impose stricter than federal requirements.
(5) Justification for the imposition of the stricter standard, or additional or different responsibilities or requirements.
The administrative regulation does not impose stricter than federal requirements.
CABINET FOR HEALTH AND FAMILY SERVICES
Department for Medicaid Services
Division of Fiscal Management
(Amendment)
907 KAR 10:015.Payments for outpatient hospital services.
Section 1.
Definitions.(1)
"Critical access hospital" or "CAH" means a hospital meeting the licensure requirements established in 906 KAR 1:110 and KRS 216.380.(2)
"Department" means the Department for Medicaid Services or its designee.(3)
"Emergency medical condition" is defined by 42 U.S.C. 1395dd(e)(1).(4)
"Federal financial participation" is defined in 42 C.F.R. 400.203.(5)
"Finalized" means approved or final as determined by the Centers for Medicare and Medicaid Services (CMS).(6)
"Flat rate" means a set and final rate representing reimbursement in entirety with no subsequent cost settling.(7)
"Lock-in recipient" means a recipient enrolled in the department's lock-in program pursuant to 907 KAR 1:677.(8)
"Lock-in recipient's designated hospital" means the hospital designated to provide nonemergency care for a lock-in recipient pursuant to 907 KAR 1:677.(9)
"Nonemergency" means that a condition or situation does not require an emergency service pursuant to 42 C.F.R. 438.114.(10)
"Outpatient cost-to-charge ratio" means the ratio determined by dividing the costs reported on Supplemental Worksheet E-3, Part III, Page 12 column 2, line 27 of the cost report by the charges reported on column 2, line 20 of the same schedule.(11)
"Recipient" is defined by KRS 205.8451(9).Section 2.
In-State Outpatient Hospital Service Reimbursement.(1)
(a)
Except for critical access hospital services, outpatient hospital laboratory services, or a service referenced in subsection (6) of this section, the department shall reimburse on an interim basis for in-state outpatient hospital services at a facility specific outpatient cost-to-charge ratio based on the facility's most recently filed cost report.(b)
An outpatient cost-to-charge ratio shall be expressed as a percent of the hospital's charges.(2)
Except as established in subsection (6) of this section, a facility specific outpatient cost-to-charge ratio paid during the course of a hospital's fiscal year shall be designed to result in reimbursement, at the hospital's fiscal year end, equaling ninety-five (95) percent of a facility's total outpatient costs incurred during the hospital's fiscal year.(3)
Except as established in subsections (4) and (6) of this section:(a)
Upon reviewing an in-state outpatient hospital's as submitted cost report for the hospital's fiscal year, the department shall preliminarily settle reimbursement to the facility equal to ninety-five (95) percent of the facility's total outpatient costs, excluding laboratory services, incurred in the corresponding fiscal year; and(b)
Upon receiving and reviewing an in-state outpatient hospital's finalized cost report for the hospital's fiscal year, the department shall settle final reimbursement, excluding laboratory services, to the facility equal to ninety-five (95) percent of the facility's total outpatient costs incurred in the corresponding fiscal year.(4)
(a)
The department's total reimbursement for outpatient hospital services shall not exceed the aggregate limit established in 42 C.F.R. 447.321.(b)
If projections indicate for a given state fiscal year that reimbursing for outpatient hospital services at ninety-five (95) percent of costs would result in the department's total outpatient hospital service reimbursement exceeding the aggregate limit established in 42 C.F.R. 447.321, the department shall proportionately reduce the final outpatient hospital service reimbursement for each hospital to equal a percent of costs which shall result in the total outpatient hospital reimbursement equaling the aggregate limit established in 42 C.F.R. 447.321.(5)
In accordance with 42 U.S.C. 1396r-8(a)(7), a hospital shall include the corresponding healthcare common procedure coding (HCPC) code if billing a revenue code of 250 through 261 or 634 through 636 for an outpatient hospital service.(6)
(a)
Except for a critical access hospital, the department shall reimburse a flat rate of twenty-five (25) dollars for a screening of a lock-in recipient to determine if an emergency medical condition exists.(b)
A hospital shall use revenue code 451 to bill for a service referenced in paragraph (a) of this subsection.(c)
A service or reimbursement for a service referenced in paragraph (a) of this subsection, shall not be included:1.
With a hospital's costs for reimbursement purposes; and2.
In any cost settlement between the department and hospital.(7)
In accordance with 907 KAR 10:014:(a)
Except for a service referenced in subsection (6) of this section, the department shall not reimburse for a nonemergency service, other than a screening in accordance with 907 KAR 10:014, Section 2(6)(a), provided to a lock-in recipient if provided by a hospital other than the lock-in recipient's designated hospital.(b)
The department shall not reimburse for a nonemergency service provided to a lock-in recipient in an emergency department of a hospital.Section 3.
Out-of-State Outpatient Hospital Service Reimbursement. Excluding services provided in a critical access hospital and laboratory services, reimbursement for an outpatient hospital service provided by an out-of-state hospital shall be ninety-five (95) percent of the average in-state outpatient hospital cost-to-charge ratio.Section 4.
Critical Access Hospital Outpatient Service Reimbursement.(1)
The department shall reimburse for outpatient hospital services in a critical access hospital as established in 42 C.F.R. 413.70(b) through (d).(2)
A critical access hospital shall comply with the cost reporting requirements established in Section 6 of this administrative regulation.Section 5.
Outpatient Hospital Laboratory Service Reimbursement.(1)
The department shall reimburse for an in-state or out-of-state outpatient hospital laboratory service:(a)
At the Medicare-established technical component rate for the service in accordance with 907 KAR 1:028 if a Medicare-established component rate exists for the service; or(b)
By multiplying the facility's current outpatient cost-to-charge ratio by its billed laboratory charges if no Medicare rate exists for the service.(2)
Laboratory service reimbursement, in accordance with subsection (1) of this section, shall be:(a)
Final; and(b)
Not settled to cost.(3)
An outpatient laboratory hospital laboratory service shall be reimbursed in accordance with this section regardless of whether the service is performed in an emergency room setting or in a nonemergency room setting.Section 6.
Direct Graduate Medical Education Costs at In-State Hospitals with Graduate Medical Education Programs.(1)
If federal financial participation for outpatient direct graduate medical education (DGME) costs is not provided to the department, the department shall not reimburse eligible in-state hospitals for outpatient DGME costs.(2)
If federal financial participation for outpatient DGME costs is provided to the department, the department shall:(a)
Provide a supplemental outpatient DGME payment to in-state hospitals for the outpatient direct costs of a graduate medical education program approved by Medicare as established in this subsection.1.
Effective for the state fiscal year beginning July 1, 2024, the department shall make an annual outpatient DGME supplemental payment for the direct costs of graduate medical education incurred by in-state hospitals with a graduate medical education program approved by Medicare.2.
A supplemental DGME payment shall be made:a.
Separately from the per visit and cost settlement payment methodologies;b.
On an annual basis; andc.
Using the hospital's cost report period ending in the calendar year one (1) year prior to the beginning of the state fiscal year. For example, for the state fiscal year beginning July 1, 2024, the cost report period ending in calendar year 2023 shall be utilized.(b)
The annual supplemental DGME payment shall equal the difference between the supplemental DGME amount minus any DGME payments received through outpatient cost settlements and any outpatient DGME payments received from managed care organizations.(c)
The department shall determine a supplemental DGME amount equal to the product of:1.
Total DGME costs, obtained from Worksheet B, Part 1, Line 118, Columns 21 and 22 of the hospital's Medicare cost report; and2.
The hospital's Medicaid outpatient net revenue, including both fee-for-service and managed care, divided by net revenue from Medicaid, obtained from Worksheet S-10, line 2 of the hospital's Medicare cost report.Section 7.
Indirect Medical Education Payments at In-State Hospitals with Graduate Medical Education Programs.(1)
If federal financial participation for outpatient indirect medical education (IME) costs is not provided to the department, the department shall not reimburse eligible in-state hospitals for outpatient IME costs.(2)
If federal financial participation for outpatient IME costs is provided to the department, the department shall:(a)
As established in this subsection, provide a supplemental outpatient IME payment to a hospital that is owned or operated by a state university or a state university related party organization, with a state university affiliated graduate medical education program approved by Medicare.(b)
Effective for the state fiscal year beginning July 1, 2024, make an annual IME payment to state university teaching hospitals equal to:1.
The total of all outpatient hospital base payments received from fee-for-service Medicaid during the previous year multiplied by the sum of one (1) and the adjusted hospital specific IME factor determined in accordance with subparagraph 4.; plus2.
The total of all outpatient hospital base payments received from managed care organizations in the previous year multiplied by the sum of one (1) and the adjusted hospital specific IME factor in accordance with subparagraph 4., minus3.
IME payments, if any, included in the outpatient cost settlement.4.
The adjusted hospital-specific IME factor shall be calculated pursuant to 42 C.F.R. § 412.105(d), except that the count of FTE residents reported on worksheet E Part A, Lines 10 and 11, Column 1 of the Medicare cost report shall be substituted for the numerator of the ratio of full-time equivalent residents to beds described in paragraph (d)(1) therein.5.
The annual calculation described in this subsection shall utilize the hospital's cost report period ending in the calendar year one (1) year prior to the beginning of the state fiscal year. For example, for the state fiscal year beginning July 1, 2024, the cost report period ending in calendar year 2023 shall be utilized.Section 8.
Cost Reporting Requirements.(1)
An in-state outpatient hospital participating in the Medicaid Program shall submit to the department a copy of the Medicare cost report it submits to CMS, an electronic cost report file (ECR), the Supplemental Medicaid Schedule KMAP-1, the Supplemental Medicaid Schedule KMAP-4 and the Supplemental Medicaid Schedule KMAP-6.(a)
A cost report shall be submitted:1.
For the fiscal year used by the hospital; and2.
Within five (5) months after the close of the hospital's fiscal year.(b)
Except as provided in subparagraph 1 or 2 of this paragraph, the department shall not grant a cost report submittal extension.1.
The department shall grant an extension if an extension has been granted by Medicare. If an extension has been granted by Medicare, when the facility submits its cost report to Medicare, it shall simultaneously submit a copy of the cost report to the department.2.
If a catastrophic circumstance exists, as determined by the department (for example flood, fire, or other equivalent occurrence), the department shall grant a thirty (30) day extension.(2)
If a cost report submittal date lapses and no extension has been granted, the department shall immediately suspend all payment to the hospital until a complete cost report is received.(3)
If a cost report indicates payment is due by a hospital to the department, the hospital shall submit the amount due or submit a payment plan request with the cost report.(4)
If a cost report indicates a payment is due by the hospital to the department and the hospital fails to remit the amount due or request a payment plan, the department shall suspend future payment to the hospital until the hospital remits the payment or submits a request for a payment plan.(5)
An estimated payment shall not be considered payment-in-full until a final determination of cost has been made by the department.(6)
A cost report submitted by a hospital to the department shall be subject to departmental audit and review.(7)
Within seventy (70) days of receipt from the Medicare intermediary, a hospital shall submit to the department a printed copy of the final Medicare-audited cost report including adjustments.(8)
(a)
If it is determined that an additional payment is due by a hospital after a final determination of cost has been made by the department, the additional payment shall be due by a hospital to the department within sixty (60) days after notification.(b)
If a hospital does not submit the additional payment within sixty (60) days, the department shall withhold future payment to the hospital until the department has collected in full the amount owed by the hospital to the department.Section 9.
Federal Financial Participation. A provision established in this administrative regulation shall be null and void if the Centers for Medicare and Medicaid Services:(1)
Denies federal financial participation for the provision; or(2)
Disapproves the provision.Section 10.
Appeals. A hospital may appeal a decision by the department regarding the application of this administrative regulation in accordance with 907 KAR 1:671.Section 11.
Incorporation by Reference.(1)
The following material is incorporated by reference:(a)
"Supplemental Worksheet E-3, Part III, Page 12", May 2004 edition;(b)
"Supplemental Medicaid Schedule KMAP-1", January 2007 edition;(c)
"Supplemental Medicaid Schedule KMAP-4", January 2007 edition; and(d)
"Supplemental Medicaid Schedule KMAP-6", January 2007 edition.(2)
This material may be inspected, copied, or obtained, subject to applicable copyright law, at the Department for Medicaid Services, 275 East Main Street, Frankfort, Kentucky 40601, Monday through Friday, 8 a.m. to 4:30 p.m., or online, https://www.chfs.ky.gov/agencies/dms/Pages/default.aspx.LISA D. LEE, Commissioner
ERIC C. FRIEDLANDER, Secretary
APPROVED BY AGENCY: August 8, 2024
FILED WITH LRC: August 14, 2024 at 2:10 p.m.
PUBLIC HEARING AND COMMENT PERIOD: A public hearing on this administrative regulation shall, if requested, be held on October 21, 2024, at 9:00 a.m. using the CHFS Office of Legislative and Regulatory Affairs Zoom meeting room. The Zoom invitation will be emailed to each requestor the week prior to the scheduled hearing. Individuals interested in attending this virtual hearing shall notify this agency in writing by October 14, 2024, five (5) workdays prior to the hearing, of their intent to attend. If no notification of intent to attend the hearing is received by that date, the hearing may be canceled. This hearing is open to the public. Any person who attends virtually will be given an opportunity to comment on the proposed administrative regulation. A transcript of the public hearing will not be made unless a written request for a transcript is made. If you do not wish to be heard at the public hearing, you may submit written comments on this proposed administrative regulation until October 31, 2024. Send written notification of intent to attend the public hearing or written comments on the proposed administrative regulation to the contact person. Pursuant to KRS 13A.280(8), copies of the statement of consideration and, if applicable, the amended after comments version of the administrative regulation shall be made available upon request.
CONTACT PERSON: Krista Quarles, Policy Analyst, Office of Legislative and Regulatory Affairs, 275 East Main Street 5 W-A, Frankfort, Kentucky 40621; phone 502-564-7476; fax 502-564-7091; email CHFSregs@ky.gov.
REGULATORY IMPACT ANALYSIS AND TIERING STATEMENT
Contact Person:
Jonathan Scott or Krista Quarles
(1) Provide a brief summary of:
(a) What this administrative regulation does:
This administrative regulation establishes payment requirements and processes for outpatient services provided within a hospital setting.
(b) The necessity of this administrative regulation:
This administrative regulation is necessary to establish requirements and processes for reimbursing outpatient hospital services.
(c) How this administrative regulation conforms to the content of the authorizing statutes:
This administrative regulation conforms to the content of the authorizing statutes by providing processes to reimburse for hospital outpatient services.
(d) How this administrative regulation currently assists or will assist in the effective administration of the statutes:
This administrative regulation will assist in the effective administration of the authorizing statutes by establishing payment requirements for outpatient services.
(2) If this is an amendment to an existing administrative regulation, provide a brief summary of:
(a) How the amendment will change this existing administrative regulation:
The amendments to this administrative regulation establish direct and indirect graduate medical education reimbursement requirements. A process – requiring federal approval – is established to allow for hospitals to receive reimbursement for direct costs of graduate medical education expenses incurred by in-state hospitals with graduate medical education programs. A separate process establishes a method for in-state hospitals to receive a supplemental outpatient payment for indirect medical education costs. A requirement for both processes is established to utilize a cost report that is for the period that is one year prior to the state fiscal year for which a payment is provided.
(b) The necessity of the amendment to this administrative regulation:
The amendments serve to expand payments available to hospitals who provide graduate medical education programs. These amendments are for outpatient services and are appropriately located in this administrative regulation.
(c) How the amendment conforms to the content of the authorizing statutes:
The amendment conforms to the content of the authorizing statutes by establishing clear processes to seek federal approval and establish reimbursement procedures for hospitals that are providing this type of education.
(d) How the amendment will assist in the effective administration of the statutes:
The amendment will assist in the effective administration of the authorizing statutes by allowing hospitals to seek reimbursement for costs associated with providing medical education.
(3) List the type and number of individuals, businesses, organizations, or state and local governments affected by this administrative regulation:
There are approximately 93 hospitals in Kentucky who may be eligible for one of these payments.
(4) Provide an analysis of how the entities identified in question (3) will be impacted by either the implementation of this administrative regulation, if new, or by the change, if it is an amendment, including:
(a) List the actions that each of the regulated entities identified in question (3) will have to take to comply with this administrative regulation or amendment:
Hospitals with the appropriate educational program will need to utilize the processes in the regulation to apply for reimbursement.
(b) In complying with this administrative regulation or amendment, how much will it cost each of the entities identified in question (3):
There is no cost to the entity. The Medicaid program will reimburse if federal approval is granted and the hospital demonstrates costs as established in the administrative regulation.
(c) As a result of compliance, what benefits will accrue to the entities identified in question (3):
Hospitals will be able to provide graduate education programs on a more sustainable basis. This will benefit the hospital in having additional providers in the community.
(5) Provide an estimate of how much it will cost the administrative body to implement this administrative regulation:
(a) Initially:
DMS does not anticipate additional costs as a result of this amendment. The amendment will serve to address a cumulative $4.4 million in direct and indirect costs in training prospective medical professionals
(b) On a continuing basis:
DMS continues to not anticipate additional costs as a result of this amendment. The amendment will serve to address a cumulative $4.4 million in direct and indirect costs in training prospective medical professionals
(6) What is the source of the funding to be used for the implementation and enforcement of this administrative regulation:
Sources of funding to be used for the implementation and enforcement of this administrative regulation are federal funds authorized under Title XIX and Title XXI of the Social Security Act, and state matching funds of general and agency appropriations.
(7) Provide an assessment of whether an increase in fees or funding will be necessary to implement this administrative regulation, if new, or by the change if it is an amendment:
At this time, DMS does not assess that an increase in fees or funding is necessary to implement this administrative regulation.
(8) State whether or not this administrative regulation establishes any fees or directly or indirectly increases any fees:
This administrative regulation neither establishes nor increases any fees.
(9) TIERING: Is tiering applied?
Tiering is not applied as the policies apply equally to the regulated entities.
FISCAL IMPACT STATEMENT
(1) Identify each state statute, federal statute, or federal regulation that requires or authorizes the action taken by the administrative regulation.
KRS 194A.030(2), 194A.050(1), 205.520(3), 205.560, 205.637(3), 205.6310, 205.8453, 42 U.S.C. 1396a, 1396b, 1396d
(2) Identify the promulgating agency and any other affected state units, parts, or divisions:
The Department for Medicaid Services, Division of Health Policy
(a) Estimate the following for the first year:
Expenditures:
DMS does not anticipate additional costs as a result of this amendment. The amendment will serve to address a cumulative $4.4 million in direct and indirect costs in training prospective medical professionals
Revenues:
This administrative regulation is not expected to generate revenue to DMS.
Cost Savings:
There are no expected cost savings to DMS.
(b) How will expenditures, revenues, or cost savings differ in subsequent years?
DMS continues to not anticipate additional costs as a result of this amendment. The amendment will serve to address a cumulative $4.4 million in direct and indirect costs in training prospective medical professionals.
(3) Identify affected local entities (for example: cities, counties, fire departments, school districts):
N/A this regulation will not affect local entities.
(a) Estimate the following for the first year:
Expenditures:
N/A there is no impact on local entities
Revenues:
N/A there is no impact on local entities
Cost Savings:
N/A there is no impact on local entities
(b) How will expenditures, revenues, or cost savings differ in subsequent years?
The department does not anticipate that this administrative regulation will have a fiscal impact on local entities.
(4) Identify additional regulated entities not listed in questions (2) or (3):
Hospitals that provide graduate medical education residency slots.
(a) Estimate the following for the first year:
Expenditures:
N/A - the regulation will address additional uncompensated costs for these entities.
Revenues:
The 93 identified hospitals will collectively receive reimbursement to address a cumulative $4.4 million in direct and indirect costs in training prospective medical professionals.
Cost Savings:
The 93 identified hospitals will collectively receive reimbursement to address a cumulative $4.4 million in direct and indirect costs in training prospective medical professionals.
(b) How will expenditures, revenues, or cost savings differ in subsequent years?
The Department anticipates that this amendment will continue to address direct and indirect hospital training costs for training prospective medical professionals.
(5) Provide a narrative to explain the:
(a) Fiscal impact of this administrative regulation:
The amendment will serve to address a cumulative $4.4 million in direct and indirect costs in training prospective medical professionals
(b) Methodology and resources used to determine the fiscal impact:
The department has completed an actuarial analysis and fiscal impact statement when designing and evaluating needs within the graduate medical education space. This proposal has also been evaluated by some impacted hospitals and third-party consultants.
(6) Explain:
(a) Whether this administrative regulation will have an overall negative or adverse major economic impact to the entities identified in questions (2) - (4). ($500,000 or more, in aggregate)
This administrative regulation will not have a major economic impact – as defined by KRS 13A.010 – on regulated entities.
(b) The methodology and resources used to reach this conclusion:
The department has completed an actuarial analysis and fiscal impact statement when designing and evaluating needs within the graduate medical education space. This proposal has also been evaluated by some impacted hospitals and third-party consultants.
FEDERAL MANDATE ANALYSIS COMPARISON
(1) Federal statute or regulation constituting the federal mandate.
42 C.F.R. 413.75
(2) State compliance standards.
KRS 205.520(3) states: “Further, it is the policy of the Commonwealth to take advantage of all federal funds that may be available for medical assistance. To qualify for federal funds the secretary for health and family services may by regulation comply with any requirement that may be imposed or opportunity that may be presented by federal law. Nothing in KRS 205.510 to 205.630 is intended to limit the secretary's power in this respect.”
(3) Minimum or uniform standards contained in the federal mandate.
42C.F.R. 413.75 establishes general requirements for direct graduate medical education payments.
(4) Will this administrative regulation impose stricter requirements, or additional or different responsibilities or requirements, than those required by the federal mandate?
The administrative regulation does not impose stricter than federal requirements.
(5) Justification for the imposition of the stricter standard, or additional or different responsibilities or requirements.
The administrative regulation does not impose stricter than federal requirements.