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PA Bulletin, Doc. No. 13-1172


Inpatient Hospital Services

[43 Pa.B. 3582]
[Saturday, June 29, 2013]

 The Department of Public Welfare (Department) is announcing its intent to continue its Medical Assistance (MA) payment methodology for inpatient hospital services provided on a fee-for-service basis in acute care general hospitals, which was adopted with an effective date of July 1, 2010. The Department is also announcing its intent to establish an observation rate for hospital cases for which an inpatient admission is not medically necessary but medical observation of a patient is required.


 Effective July 1, 2010, the Department revised its fee-for-service payment methodology for inpatient hospital services provided in an acute care general hospital for the MA Program. The new methodology included adoption of the All Patient Refined-Diagnosis Related Groups (APR-DRG) patient classification system, implementation of APR-DRG relative weights based on relative weights developed by the New York Medicaid program, adoption of a new methodology for calculating acute care hospitals' base payment rates, revision of the Department's outlier payment policy and adoption of a case-mix monitoring process. The Department implemented a second change to its outlier policy by adoption of a low cost outlier policy effective July 1, 2011.

 The revised payment methodology was implemented for an initial 3-year period which will end June 30, 2013, unless reauthorized. With this notice, the Department is announcing its intent to continue this payment methodology beyond June 30, 2013, subject to legislative authorization.

Proposed Changes

 The Department is proposing no changes to the payment methodology for inpatient acute care services under the fee-for-service program at this time and is only proposing to continue the current methodology. Therefore, for acute care general hospitals, the Department will continue to use the same patient classification system, relative weights, base payment rates, outlier policies and monitoring process currently in place. The Department intends to modify its State Plan to remove the June 30, 2013, end date for the payment methodology for inpatient acute care services, to add case-mix index target ranges for subsequent fiscal years and to clarify the language in the State Plan describing the case mix monitoring process. The Department is not proposing the implementation of any substantive change to the payment methodology.

Payment for Observation Services

 The Department is considering the establishment of an observation rate for hospital cases for which an inpatient admission is not medically necessary but medical observation of a patient is required. The Department is currently considering developing criteria under which observation services provided by a hospital may be compensable under the MA Program. The Department intends to establish a comprehensive rate to cover observation services determined to be compensable under the Program.

Fiscal Impact

 This change will result in an estimated annual payment of $161.588 million in total funds ($74.789 million in State funds) in Fiscal Year 2013-2014.

Public Comment

 Interested persons are invited to submit written comments regarding these proposed changes to the Department of Public Welfare, Office of Medical Assistance Programs, c/o Regulations Coordinator, Room 515, Health and Welfare Building, Harrisburg, PA 17120. Comments received within 30 days will be reviewed and considered for any subsequent revision of the notice.

 Persons with a disability who require an auxiliary aid or service may submit comments using the Pennsylvania AT&T Relay Service at (800) 654-5984 (TDD users) or (800) 654-5988 (voice users).

Acting Secretary

Fiscal Note: 14-NOT-830. (1) General Fund; (2) Implementing Year 2013-14 is $74,789,000; (3) 1st Succeeding Year 2014-15 is $0; 2nd Succeeding Year 2015-16 is $0; 3rd Succeeding Year 2016-17 is $0; 4th Succeeding Year 2017-18 is $0; 5th Succeeding Year 2018-19 is $0; (4) 2012-13 Program—$204,667,000; 2011-12 Program—$325,685,000; 2010-11 Program—$243,809,000; (7) MA—Inpatient; (8) recommends adoption. Funds have been included in the budget to cover this increase.

[Pa.B. Doc. No. 13-1172. Filed for public inspection June 28, 2013, 9:00 a.m.]

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