The Texas Health and Human Services Commission (HHSC) proposes to amend 1 TAC §355.8066, concerning Hospital-Specific Limit (HSL) Methodology. The HHSC Council meeting on February 28, 2014, will function as a public hearing to receive public comment on this proposed amendment.
Section 355.8066 describes the methodology used to calculate the HSL for each Medicaid hospital participating in either the Disproportionate Share Hospital (DSH) program or in the Uncompensated Care (UC) program under the Texas Healthcare Transformation and Quality Improvement Program.
The federal Centers for Medicare and Medicaid Services (CMS) directed states to offset both Medicaid and third-party revenue associated with a Medicaid-eligible day against costs in the calculation of the HSL. In compliance with CMS direction, HHSC began offsetting third-party revenue associated with a Medicaid-eligible day when calculating a hospital's HSL in federal fiscal year 2011.
In 2012, some hospitals negatively impacted by the revised methodology initiated efforts to reverse CMS' position on the treatment of third-party payments in the HSL calculation or to minimize the negative impact to their DSH payments. The Legislature determined that a change in state law was necessary because state law did not already authorize HHSC to exclude third-party commercial payments in the HSL calculation. In 2013, the Legislature enacted Senate Bill (S.B.) 7, 83R, which amended the Human Resources Code by adding §32.0284.
The methodology described in §32.0284 of the Human Resources Code is inconsistent with the guidance provided by CMS. For that reason, HHSC determined that in order to ensure that federal matching funds will continue to be available for payments to hospitals participating in the DSH and UC programs, it is necessary to obtain federal approval to implement the methodology.
On January 13, 2014, HHSC submitted a State Plan amendment (SPA) to CMS requesting authorization for this change in the calculation of HSLs. CMS has 90 days to consider and approve or disapprove the SPA; if CMS does not act by the 90th day, the SPA is automatically approved. CMS has yet to approve or disapprove.
HHSC proposes to amend §355.8066 by adding subsection (c)(1)(B)(i)(III) to indicate that, contingent upon the approval of a corresponding Medicaid SPA by CMS, to the extent that third-party commercial payment exceeds the Medicaid allowable cost of a service provided to a recipient and for which reimbursement was not paid under the medical assistance program, the payment is not considered a medical assistance payment for purposes of calculating the HSL. The amended rule describes an alternate methodology in the event the SPA is not approved by CMS. Should that occur, HHSC intends to implement the methodology in a manner consistent with the CMS guidance, which is that the full amount of the third-party commercial payment will be considered a medical assistance payment and will be included in the HSL calculation.
By proposing both methodologies – that described in §32.0284 and that currently directed by CMS – HHSC intends to minimize any delay in payment of DSH and UC funds that might otherwise result if CMS disapproves the SPA.
The HHSC Council meeting on February 28, 2014, will function as a public hearing to receive public comment on this proposed amendment. Written comments on the proposal may be submitted to Pam McDonald in the Rate Analysis Department, Texas Health and Human Services Commission, Mail Code H-400, P.O. Box 85200, Austin, Texas 78708-5200, by fax to (512) 491-1436, or by e-mail to pam.mcdonald@hhsc.state.tx.us by March 14. The earliest possible date of adoption is March 16, 2014.
