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PA Bulletin, Doc. No. 99-559


Public Notice of the Department's Intent to Amend the Medicaid State Plan for Exceptional Capital Payments Made to Hospitals

[29 Pa.B. 1792]

   The purpose of this announcement is to provide prior public notice of the Department of Public Welfare's (Department) intent to amend the Medicaid State Plan to eliminate exceptional capital payments to acute care hospitals.

   The Department intends to discontinue the capital exceptional reimbursement method which allows certain hospitals to apply for additional reimbursement of its capital costs. A hospital's eligibility for capital exceptional treatment is dependent on its volume of Medical Assistance (MA) business during the base year, Fiscal Year (FY) 1984-85. Once eligible, a hospital is entitled to apply for and receive additional capital payments for any fiscal year in which it experiences exceptionally high capital costs. A hospital incurs exceptionally high capital costs when its ratio of MA allowable acute inpatient costs to its MA allowable acute inpatient operating costs exceeds the Statewide ratio of capital costs to operating costs.

   In 1986, the Department changed its method of reimbursing capital costs for acute care hospitals to a prospective method. At the same time, it established the capital exceptional payment system to assist those hospitals that may have been vulnerable to serious financial difficulties with the transition to a prospective capital payment system. Hospitals now have had a sufficient amount of time to adjust to the prospective capital reimbursement system. Additionally, all hospitals that are eligible for capital exceptional payments have waived their right to receive the payments. Accordingly, the capital exceptional reimbursement method is no longer necessary.

   The Department's prospective capital reimbursement system remains unchanged. The Department will continue to pay for depreciation and interest (capital) costs as an add-on to the DRG prospective payment rate. The percentage add-on is the Statewide average ratio of capital to operating costs in a base year. Effective July 1, 1996, the add-on is 5.92% as derived from data from FY 1992-93 base year.

Fiscal Impact

   For FY 1998-99, the fiscal impact as a result of eliminating these payments will be a savings of $0.405 million in total funds ($0.208 million in State General funds and $0.242 million in Federal funds).

Contact Person

   A copy of this notice is available for review at local County Assistance Offices. Interested persons are invited to submit written comments to this notice within 30 days of this publication. These comments should be sent to the Department of Public Welfare, Office of Medical Assistance Programs, Deputy Secretary's Office, Attention: Regulations Coordinator, Room 515 Health and Welfare Building, Harrisburg, PA 17120.

   Persons with a disability may use the AT&T Relay Service by calling (800) 654-5984 (TDD users) or (800) 654-5988 (Voice users). Persons who require an alternate format should contact Thomas Vracarich at (717) 783-2209.


   Fiscal Note:  14-NOT-195. No fiscal impact; (8) recommends adoption.

[Pa.B. Doc. No. 99-559. Filed for public inspection April 2, 1999, 9:00 a.m.]

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