10 Colo. Code Regs. § 2505-10-8.300.5
Current through Register Vol. 47, No. 10, May 30, 2024
Section 10 CCR 2505-10-8.300.5 - [Effective 8/10/2024] Payment for Inpatient Hospital Services8.300.5.APayments to DRG Hospitals for Inpatient Hospital Services1. Peer Groups For the purposes of Inpatient reimbursement, DRG Hospitals are assigned to one of the following peer groups. Hospitals which do not fall into the peer groups described in a and b shall default to the peer groups described in c and d based on geographic location.:
2. Base Payment and Outlier Payment DRG Hospitals shall be reimbursed for Inpatient Hospital Services based on a system of DRGs and a hospital-specific Medicaid Inpatient base rate. The reimbursement for Inpatient Hospital Services shall be referred to as the DRG base payment.
a. The DRG base payment shall be equal to the DRG Relative Weight multiplied by the Medicaid Inpatient base rate as calculated in Section 8.300.5.A.3-6.b. Outlier days shall be reimbursed at 80% of the DRG per diem rate. The DRG per diem rate shall be the DRG base payment divided by the DRG average length of stay.c. The DRG base payment plus any corresponding outlier payment is considered the full reimbursement for an Inpatient Hospital stay where the client was Medicaid-eligible for the entire stay.d. When a client was not Medicaid-eligible for an entire Inpatient Hospital stay, reimbursement shall be equal to the DRG per diem rate for every eligible day, with payment up to the full DRG base payment. If applicable, the Hospital shall receive outlier reimbursement.3. Medicaid Inpatient Base Rate for In-network Colorado DRG Hospitals a. Calculation of the Starting Point for the Medicaid Inpatient Base Rate For in-state Colorado DRG Hospitals (both PPS and non-PPS), the starting point shall be the hospital-specific Medicare Federal base rate with the specific adjustments listed. The Operating Federal Portion and Federal Capital Rate (source: CMS Tables 1A-1B & IE) will be adjusted by the Wage Index and Geographic Adjustment Factor (GAF) from the CMS IMPACT File. For CAH and Pediatric hospitals (non-PPS Medicare hospitals), both adjustment factors as listed above will be set to 1.0 and the corresponding labor and non-labor related amounts will be applied because these factors are not available from CMS. Additionally, the Quality and Meaningful Electronic Health Records (EHR) User adjustments will be applied to all PPS hospitals as indicated on the CMS corrected IMPACT file, while all non-PPS hospitals are assumed to have submitted Quality Data and be meaningful EHR users since no data exists for them. The corrected Medicare base rate IMPACT File shall be used to set the Federal Base Rate and other adjustments detailed above effective on October 1 of the previous fiscal year.
b. Policy Adjustments Indirect Medical Education (IME) / Value Based Purchasing Adjustment (VBP) Factor / Readmission Adjustment Factor and Hospital Acquired Conditions (HAC) Reduction:
1) For PPS hospitals, Operating IME% will be multiplied by Adjusted Operating Federal Portion and the Capital IME% will be multiplied by the Adjusted Federal Capital Rate. The VBP Adjustment Factor and Readmission Adjustment Factor taken from CMS Final Rule Correcting Amendment Tables 16B and 15 respectively will be multiplied by the Adjusted Operating Federal Portion. The Hospital Acquired Conditions Reduction taken from the most recent CMS.gov Data Set as of January 1 will be applied against the Medicare Federal Base Rate with Wage Index/GAF Adjustments. 2) For non-PPS hospitals, Operating & Capital IME % are not calculated in the IMPACT File so the Department's Contractor will compute their Operating and Capital IME using the most recently available cost report as of January 1 in rebasing years and will require that hospitals have a CMS approved teaching program as detailed in Section 8.300.5.A.3.e. Additionally, non-PPS Hospitals will have the opportunity to review their calculated Operating and Capital IME percent during a 30-day review period and request changes if necessary. The VBP Adjustment Factor, Readmission Adjustment Factor and HAC Reduction will not be applied to non-PPS hospitals since they are not calculated by CMS.c. Mutually Exclusive Medicaid Add-ons: Four Add-ons will be mutually exclusive and applied as described here and will be applied as a percentage against the Medicare Federal Base Rate w/Wage Index/GAF Adjustments as detailed below.
1) Critical Access Hospital (CAH) Add-on will be set at 25% and is only open to those hospitals categorized as CAH by Medicare, 2) Sole Community Hospital (SCH)/Medicare Dependent Hospital (MDH) will be set at 20% and is only open those hospitals categorized as SCH/MDH in section 8.300.1.K, 3) Low Discharge Add-on based on the average of up to three years of Total Discharges of most recently available cost reports on HCRIS as of January 1 of rebasing years and excludes hospitals that are classified as Pediatric, SCH/MDH or CAH. For hospitals with subunits of Psychiatric, Rehabilitation and other subunits discharges in those subunits with be added to total discharges. The percentage add-on is set at 10% and distributed on a sliding scale with a ceiling of 2,500 and floor of 500 discharges,4) The Pediatric Add-on is open only to hospitals defined as Pediatric in Section 8.300.1.K.3 and the percentage add-on is set at 25%. d. Remaining Medicaid Add-ons: The remaining add-ons are open to all hospitals who qualify and are applied as a percentage of the Medicare Federal Base Rate with Wage Index/GAF Adjustments and distributed on a sliding scale between the respective ceiling and floor.
1. Payer Mix Add-on is based on the percentage of Medicaid patient days treated at the hospital using up to three years of the most recently available cost reports. The add-on is set at up to 10% with a ceiling and floor of 50% and 35% respectively. For hospitals with subunits of Psychiatric, Rehabilitation and other subunits Payer Mix utilization in those subunits with be added to the calculations. 2. Operating Cash Flow Margin Percent Add-on (also known as the solvency metric) is set at 20% with a ceiling of 8% and floor of 0%. The source for this data is up to 3 years of Hospital Transparency Data that is generated by each hospital and sent into the Department. The Operating Cash Flow Margin Percent Add-on is calculated for all hospitals and is based on the maximum of the hospital or the hospital system's operating cash flow margin percent. System hospital list can be found on the Department's website. Operating Cash Flow Margin Percent is calculated by taking (Total Operating Net Income + Depreciation Expense) / Total Operating Revenue.e. Application of Graduate Medical Education (GME) Cost Add-on to Determine Medicaid Inpatient Base Rate: 1) The Medicaid Inpatient base rate shall be equal to the rate as calculated in Sections 8.300.5.A.3.a -b plus the GME Medicaid hospital-specific cost add-on. The GME Medicaid hospital-specific cost add-on is calculated from the most recently available Medicare/Medicaid cost report (CMS 2552) worksheet B, Part I. Partial year cost reports shall not be used to calculate the GME cost add-on. The GME cost add-on shall not be applied to the Medicaid Inpatient base rates for State University Teaching Hospitals. State University Teaching Hospitals shall receive reimbursement for GME costs as described in Section 8.300.9.B. The GME Medicaid hospital-specific cost add-on shall be an estimate of the cost per discharge for GME based on: Medicare approved GME program where legitimate GME expenses have been reported in accordance with Medicare's rules detailed in 42 C.F.R. § 413.75, et. seq. GME will be calculated when the following two criteria are met:
i. Hospitals that appear on the most recent list as of January 1 of CMS qualified teaching hospitals on the CMS Open Payments website or the hospital will need to provide documentation to the State by proving Medicare approval of the GME program.ii. Have countable GME costs in the most recent cost report available as of January 1 of rebasing years in worksheet B, part 1 and discharges from worksheet S-3, part I. 2) Ten percent of the GME Medicaid hospital-specific cost add-on shall be applied.f. Application of Adjustment Based on General Assembly Funding In rebasing years, for all in-state, Colorado DRG Hospitals (both PPS and non-PPS), the starting point for the Medicaid Inpatient base rate, as determined in Section 8.300.5.A.3.a - e, shall be adjusted by an equal percentage. This percentage shall be determined by the Department as required by the available funds appropriated by the General Assembly. Additionally, a 10% corridor has been implemented to prevent any hospital's inpatient base rate from increasing or decreasing more than 10% each rebasing year.
g. Annual Adjustments The Medicaid Inpatient base rates are rebased every other year as described in Section 8.300.5.A.3.a -f and are effective each July 1. In non-rebasing years, the Medicaid Inpatient base rates will be adjusted by the State Budget Action as set by Legislature and are effective each July 1. The Medicaid base rate shall be adjusted during the fiscal year, if necessary, based on appropriations available to the Department and/or adjustments necessary to balance the DRG payment equation.
4. Medicaid Inpatient Base Rate for New In-State Colorado DRG Hospitals The Medicaid Inpatient base rate for new in-state Colorado DRG Hospitals shall be the average Colorado Medicaid Inpatient base rate for their corresponding peer group. A Hospital is considered "new" until the next Inpatient rate rebasing year after the Hospital's contract effective date. For the next Inpatient rate rebasing year, the Hospital's Medicaid Inpatient base rate shall be equal to the rate as determined in Section 8.300.5.A.3 -6. If the Hospital does not have a Medicare Inpatient base rate or a full year Medicare/Medicaid cost report to compute a starting point as described in Section 8.300.5.A.3.a, their initial rate shall be equal to the average Colorado Medicaid Inpatient base rate for their corresponding peer group.
5. Medicaid Inpatient Base Rate for Border-state Hospitals The Medicaid Inpatient base rate for border-state Hospitals shall be equal to the average Medicaid Inpatient base rate for the corresponding peer group.
6. Medicaid Inpatient Base Rate for Out-of-state Hospitals a. The Medicaid Inpatient base rate for out of state Hospitals shall be equal to 90% of the average Medicaid Inpatient base rate for the corresponding peer group.b. The Department may reimburse an out-of-state Hospital for non-emergent services at an amount higher than the DRG base payment when the needed services are not available in a Colorado Hospital. Reimbursement to the out-of-state Hospital shall be made at a rate mutually agreed upon by the parties involved.7. Reimbursement for Inpatient Hospital claims that (a) include serious reportable events identified by the Department in the Provider Bulletin with (b) discharge dates on or after October 1, 2009, may be adjusted by the Department.8.300.5.BAbbreviated Client Stays1. DRG Hospitals shall receive the DRG base payment and any corresponding outlier payment for Abbreviated Client Stays. The DRG base payment and outlier payment shall be subject to any necessary reduction for ineligible days.8.300.5.CTransfer Pricing1. Reimbursement for a client who is transferred from one DRG Hospital to another DRG Hospital is calculated at a DRG per diem rate for each Hospital with payment up to the DRG base payment to each DRG Hospital. If applicable, both Hospitals may receive outlier reimbursement.2. Reimbursement for a client who is transferred from one DRG Hospital to a Non-DRG Hospital, or the reverse, is calculated at the DRG per diem rate for the DRG Hospital with payment up to the DRG base payment. Reimbursement for the Non-DRG Hospital shall be calculated based on the assigned per diem rate. If applicable, the DRG Hospital may receive outlier reimbursement.3. For transfers within the DRG Hospital, the Hospital is required to submit one claim for the entire stay, regardless of whether or not the client has been transferred to different parts of the Hospital. Since the Colorado Medicaid program does not recognize distinct part units, Hospitals may not submit two claims for a client who is admitted to the Hospital and then transferred to the distinct part unit or vice versa.8.300.5.DAPR-DRG Payment Methodology Exclusions1. Long-acting reversible contraceptives (LARC) devices, inserted following a delivery, are excluded from the DRG Relative Weight calculation and are paid according to the Department's fee schedule.2. Pursuant to § 25.5-5-509, C.R.S. opiate antagonists identified by the Department shall be paid according to the Department's fee schedule when dispensed to a medical assistance recipient upon discharge.3. Effective January 1, 2024, for services meeting the criteria of an Inpatient Hospital Specialty Drug that would have otherwise been compensated through the APR-DRG methodology, a hospital must submit a request for authorization to the Department prior to administration of the drug. If the request is approved, then the payment will be negotiated between the Department and the hospital on a case-by-case basis.8.300.5.EPayments to Non-DRG Hospitals for Inpatient Services1. Payments to Psychiatric Hospitals a. The Department shall reimburse Psychiatric Hospitals for inpatient services provided to Medicaid clients on a per diem basis. The per diem rates shall follow a step-down methodology. Each step has a corresponding per diem rate based on historical Medicaid payment rates and evaluation of Hospital data concerning the relationship between Hospital costs and client length of stay. Criteria for each step are described below: i Step 1: Day 1 through Day 7ii Step 2: Day 8 through remainder of care at acute levelb. Hospital rates may be adjusted annually on July 1 to account for changes in funding by the General Assembly and inflationary adjustments as determined by the Medicare Economic Index.2. Payment to State-Owned Psychiatric Hospitals The Department shall reimburse State-Owned Psychiatric Hospitals on an interim basis according to a per diem rate. The Department will determine the per diem rate based on an estimate of 100% of Medicaid costs from the Hospital's Medicare cost report. Periodically, the Department will audit actual costs and may require a cost settlement to insure reimbursement is 100% of actual audited Medicaid costs.
3. Payments to Long-Term Care and Rehabilitation Hospitals (excludes distinct part units and satellite locations as defined under Section 8.300) shall be divided into three (3) subgroups: Long-Term Care Hospital, Rehabilitation Hospital and Spine/Brain Injury Treatment Specialty Hospital. The Department shall reimburse Long-Term Care, Rehabilitation, and Spine/Brain Injury Treatment Specialist Hospitals for inpatient services provided to Medicaid patients on a per diem basis. The per diem rates shall follow a step-down methodology based on length of stay, with a decrease of five (5) percent with each step. Each step shall be assigned a corresponding per diem rate based on historical Medicaid payment rates and evaluation of Hospital data concerning the relationship between Hospital costs and client length of stay. The Department may adjust hospital rates annually on July 1 to account for changes in funding by the General Assembly. The criteria for each of the steps are described below:
a. Payments to Long-Term Care Hospitals: i. Step 1: Day 1 through Day 21ii. Step 2: Day 22 through Day 35iii. Step 3: Day 36 through Day 56iv. Step 4: Day 57 through remainder of stayb. Payments to Rehabilitation Hospitals: i. Step 1: Day 1 through Day 6ii. Step 2: Day 7 through Day 10iii. Step 3: Day 11 through Day 14iv. Step 4: Day 14 through remainder of stayc. Payments to Spine/Brain Injury Treatment Specialty Hospitals: i. Step 1: Day 1 through Day 28ii. Step 2: Day 29 through Day 49iii. Step 3: Day 50 through Day 77iv. Step 4: Day 78 through remainder of stayd. The Classification-specific per diem for 2019, the year of this methodology implementation shall be calculated using the following method: i. The Department shall assign the claims submitted by each hospital for fiscal year 2017 to one of the following peer groups:1) Long-Term Care Hospital2) Rehabilitation Hospital3) Spine/Brain Injury Treatment Specialty Hospitalii. The Department shall process Medicaid inpatient hospital claims from state fiscal year 2017 through the methodology described in Section 8.300.5.D.3 a-c. This will create per diems that are budget neutral to fiscal year 2017.iii. The Department shall adjust the per diems annually to reflect budget changes. For state fiscal year 2018, rates shall be increased 1.4%. For state fiscal year 2019, rates shall be increased 1%. The Department shall adjust rates in subsequent years by the percentage changes in the budget as appropriated by the General Assembly.8.300.5.E[Emergency rule expired 04/10/2021]8.300.5.F Payment for Inpatient Subacute Care1. Inpatient Subacute Care days shall be paid at a rate equal to the estimated adjusted State-wide average rate per patient-day paid for services provided in skilled nursing facilities under the State plan approved by the Centers for Medicare and Medicaid Services (CMS), for the State in which such hospital is located.8.300.5.GPayment for High Acuity In-State Services1. The Department may negotiate a higher reimbursement rate for in-state inpatient hospital services up to, but no greater than, 100% of the costs anticipated by the hospital-which must be demonstrated by evidence, including but not limited to an anticipated cost report submitted to the Department for review-where, as determined by the Department, all of the following conditions are fulfilled: a. The in-state inpatient payment methodology insufficiently accounts for the level of acuity;b. All other placement options have been exhausted; andc. The services have been reviewed and authorized by the Medical Director for the Department.42 CR 03, February 10, 2019, effective 3/2/201942 CR 09, May 10, 2019, effective 5/30/201943 CR 07, April 10, 2020, effective 4/30/202044 CR 11, June 10, 2021, effective 6/30/202144 CR 18, September 25, 2021, effective 10/30/202145 CR 09, May 10, 2022, effective 5/30/202245 CR 22, November 25, 2022, effective 10/14/202245 CR 22, November 25, 2022, effective 12/15/202246 CR 01, January 10, 2023, effective 1/1/202346 CR 06, March 25, 2023, effective 2/10/202346 CR 07, April 10, 2023, effective 3/10/202346 CR 07, April 10, 2023, effective 4/30/202346 CR 11, June 10, 2023, effective 6/30/202347 CR 01, January 10, 2024, effective 1/1/2024, exp. 4/6/2024 (Emergency)47 CR 05, March 10, 2024, effective 3/30/202447 CR 09, May 10, 2024, effective 4/12/2024, exp. 8/10/2024 (Emergency)