AN ACT CONCERNING DISPROPORTIONATE SHARE PAYMENTS TO HOSPITALS.

This bill changes the formula that the Department of Social Services (DSS) uses to calculate which hospitals receive additional Medicaid reimbursement for serving a disproportionate share of indigent patients. It requires the DSS commissioner, when making this determination, to determine if it is a “disproportionate share hospital” and if so, reflect that status in the rate. By doing so, the bill potentially increases the number of hospitals receiving these additional payments.

The bill requires the commissioner, by January 1, 2010, to review and adjust, as he deems appropriate, the Medicaid rate the state pays to all disproportionate share hospitals. (Although the bill does not specify it, presumably his review and adjustment must be in accordance with the bill's new formula. )

The bill defines a disproportionate share hospital as one that (1) has a Medicaid inpatient utilization rate of at least the mean Medicaid inpatient utilization rate for hospitals that receive Medicaid reimbursements or (2) a low-income utilization rate higher than 25%.

The bill specifies that the terms “Medicaid inpatient utilization rate” and “low-income utilization rate” have the same meaning as under federal law.

Federal law defines the first term as a ratio of the hospital's number of inpatient days attributable to Medicaid-eligible patients to the total number of hospital's inpatient days.

“Low-income utilization rate” is the sum of two ratios. The first is the ratio of the sum of (1) total revenue paid for Medicaid plus the amount of cash subsidies for patient services the hospital receives directly from state or local governments to (2) the total amount of hospital revenue for patient services, including the subsidies, during this period. The second is the ratio of the total amount of the hospital's charges for inpatient services attributable to charity care in a period minus the portion of any cash subsidies in the period reasonably attributable to inpatient services to the total amount of the hospital's charges for inpatient services.

Under current law, the Medicaid rate DSS pays acute care hospitals is based upon the lowest of the reasonable cost to the hospital or the charge to the general public. But it pays a greater amount, as the commissioner determines, when the hospital serves a disproportionate share of indigent patients (called a DSH payment). A disproportionate share hospital is not defined in state law but it is in federal law.

Currently, hospitals qualify for a DSH adjustment to their Medicaid rate if (1) their Medicaid inpatient utilization rate (for both fee-for-serve and managed care) is at least one standard deviation above the mean state-wide Medicaid inpatient utilization percentage or (2) their low income utilization rate exceeds 25%. The bill requires a DSH adjustment for hospitals that have a Medicaid inpatient utilization rate of at least the mean statewide Medicaid inpatient utilization rate. (Federal law requires states to pay the add-on to any hospital that is at least one standard deviation above the mean but states can go beyond this minimum. ) The standard deviation is a statistical measure of the dispersion of hospital utilization rates around the average. The use of this measure identifies hospitals whose Medicaid utilization is unusually high.

Under federal law, to be deemed to be serving a disproportionate share of indigent patients, a hospital must also have at least two obstetricians who have (1) staff privileges at the hospital and (2) agreed to provide obstetric services to Medicaid-eligible women.

Yea

Nay

(03/10/2009)