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PA Bulletin, Doc. No. 14-1054



Inpatient Hospital Services

[44 Pa.B. 2947]
[Saturday, May 17, 2014]

 The Department of Public Welfare (Department) is providing final notice of its continuation of its Medical Assistance (MA) payment methodology for inpatient hospital services provided on a fee-for-service (FFS) basis in acute care general hospitals, which was originally adopted with an effective date of July 1, 2010.


 Effective July 1, 2010, the Department revised its FFS payment methodology for inpatient hospital services provided in an acute care general hospital for the MA Program. This 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, but was reauthorized under the act of July 9, 2013 (P. L. 369, No. 55), effective for an additional 3-year period ending June 30, 2016.


 The Department proposed no substantive changes to the payment methodology for inpatient acute care services under the FFS program and is continuing the existing methodology. For acute care general hospitals, the Department is continuing to use the same patient classification system, base payment rates, outlier policies and relative weight and case mix monitoring process currently in place. The Department modified 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 published notice of its intent to continue its MA payment methodology for inpatient hospital services at 43 Pa.B. 3582 (June 29, 2013). The Department received no comments concerning the continuation of the current FFS methodology for acute care general hospitals.

 The Department also announced 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. The Department received multiple public comments concerning an intended observation rate. At this time, the Department plans to develop a payment policy and rates for observation services and will provide an opportunity for public comment in a future notice of intent. The Department is implementing all other changes as described in its notice of intent.

Fiscal Impact

 This change results in an annual payment of $161.567 million in total funds ($74.789 million in State funds) in Fiscal Year 2013-2014.


Fiscal Note: 14-NOT-864. (1) General Fund; (2) Implementing Year 2013-14 is $74,789,000; (3) 1st Succeeding Year 2014-15 is $77,156,000; 2nd Succeeding Year 2015-16 is $77,156,000; 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—$268,112,000; 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. 14-1054. Filed for public inspection May 16, 2014, 9:00 a.m.]

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