[Federal Register Volume 61, Number 185 (Monday, September 23, 1996)]
[Notices]
[Pages 49781-49785]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-24229]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
[MB-100-N]
RIN 0938-AH44
Medicaid Program; Final Limitations on Aggregate Payments to
Disproportionate Share Hospitals: Federal Fiscal Year 1996
AGENCY: Health Care Financing Administration (HCFA), HHS.
ACTION: Notice.
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SUMMARY: This notice announces the final Federal fiscal year (FFY) 1996
national target and individual State allotments for Medicaid payment
adjustments made to hospitals that serve a disproportionate number of
Medicaid recipients and low-income patients with special needs. We are
publishing this notice in accordance with the provisions of section
1923(f)(1)(C) of the Social Security Act and implementing regulations
at 42 CFR 447.297 through 447.299. The final FFY 1996 State DSH
allotments published in this notice supersede the preliminary FFY 1996
DSH allotments that were published in the Federal Register on May 9,
1996.
EFFECTIVE DATE: The final DSH payment adjustment expenditure limits
included in this notice apply to Medicaid DSH payment adjustments for
FFY 1996.
FOR FURTHER INFORMATION CONTACT: Richard Strauss, (410) 786-2019.
SUPPLEMENTARY INFORMATION:
I. Background
Section 1902(a)(13)(A) of the Social Security Act (the Act)
requires States to ensure that their Medicaid payment rates include
payment adjustments for Medicaid-participating hospitals that serve a
large number of Medicaid recipients and other low-income individuals
with special needs (referred to as disproportionate share hospitals
(DSH)). The DSH payment adjustments are calculated on the basis of
formulas specified in section 1923 of the Act.
Section 1923(f) of the Act and implementing Medicaid regulations at
42 CFR 447.297 through 447.299 require us to estimate and publish in
the Federal Register the national target and each State's allotment for
DSH payments for each Federal fiscal year (FFY). The implementing
regulations provide that the national aggregate DSH
[[Page 49782]]
limit for a FFY specified in the Act is a target rather than an
absolute cap when determining the amount that can be allocated for DSH
payments. The national DSH target is 12 percent of the total amount of
medical assistance expenditures (excluding total administrative costs)
that are projected to be made under approved Medicaid State plans
during the FFY. (Note: Whenever the phrases ``total medical assistance
expenditures'' or ``total administrative costs'' are used in this
notice, they mean both the State and Federal share of expenditures or
costs.)
In addition to the national DSH target, there is a specific State
DSH limit for each State for each FFY. The State DSH limit is a
specified amount of DSH payment adjustments applicable to a FFY above
which FFP will not be available. This is called the ``State DSH
allotment.''
Each State's DSH allotment for FFY 1996 is calculated by first
determining whether the State is a ``high-DSH State'' or a ``low-DSH
State.'' This is determined by using the State's ``base allotment.'' A
State's base allotment is the greater of the following amounts: (1) The
total amount of the State's actual and projected DSH payment
adjustments made under the State's approved State plan applicable to
FFY 1992, as adjusted by HCFA; or (2) $1,000,000.
A State whose base allotment exceeds 12 percent of the State's
total medical assistance expenditures (excluding administrative costs)
projected to be made in FFY 1996 is referred to as a ``high-DSH State''
for FFY 1996. The FFY 1996 State DSH allotment for a high-DSH State is
limited to the State's base allotment.
A State whose base allotment is equal to or less than 12 percent of
the State's total medical assistance expenditures (excluding
administrative costs) projected to be made in FFY 1996 is referred to
as a ``low-DSH State.'' The FFY 1996 State DSH allotment for a low-DSH
State is equal to the State's DSH allotment for FFY 1995 increased by
growth amounts and supplemental amounts, if any. However, the FFY 1996
DSH allotment for a low-DSH State cannot exceed 12 percent of the
State's total medical assistance expenditures for FFY 1996 (excluding
administrative costs).
The growth amount for FFY 1996 is equal to the projected percentage
increase (the growth factor) in a low- DSH State's total Medicaid
program expenditures between FFY 1995 and FFY 1996 multiplied by the
State's final DSH allotment for FFY 1995. Because the national DSH
limit is considered a target, low-DSH States whose programs grow from
one year to the next can receive a growth amount that would not be
permitted if the national limit was viewed as an absolute cap.
There is no growth factor and no growth amount for any low-DSH
State whose Medicaid program does not grow (that is, stayed the same or
declined) between FFY 1995 and FFY 1996. Furthermore, because a low-DSH
State's FFY 1996 DSH allotment cannot exceed 12 percent of the State's
total medical assistance expenditures, it is possible for its FFY 1996
DSH allotment to be lower than its FFY 1995 DSH allotment. This occurs
when the State experiences a decrease in its program expenditures
between years and its prior FFY DSH allotment is greater than 12
percent of the total projected medical assistance expenditures for the
current FFY. For FFY 1996, no States' final State DSH allotments are
lower than their final FFY 1995 State DSH allotments.
There is no supplemental amount available for redistribution for
FFY 1996. The supplemental amount, if any, is equal to a low-DSH
State's proportional share of a pool of funds (the redistribution
pool). The redistribution pool is equal to the national 12-percent DSH
target reduced by the total of the base allotments for high-DSH States,
the total of the State DSH allotments for the previous FFY for low-DSH
States, and the total of the low-DSH State growth amounts. Since the
sum of these amounts is above the projected FFY 1996 national 12-
percent DSH target, there is no redistribution pool and, therefore, no
supplemental amounts for FFY 1996.
As prescribed in the law and regulations, no State's DSH allotment
will be below a minimum of $1,000,000.
As an exception to the above requirements, under section
1923(f)(1)(A)(i)(II) of the Act and regulations at 42 CFR 447.296(b)(5)
and 447.298(f), a State may make DSH payments for a FFY in accordance
with the minimum payment adjustments required by Medicare methodology
described in section 1923(c)(1) of the Act. The final FFY 1996 State
DSH allotment for the District of Columbia, Iowa, and Nebraska has been
determined in accordance with this exception. We have also redetermined
the State DSH allotments for FFYs 1993, 1994, and 1995 for the District
of Columbia and the State DSH allotment for FFY 1995 for Iowa in
accordance with the provisions of section 1923(c)(1) of the Act.
We are publishing in this notice the final FFY 1996 national DSH
target and State DSH allotments based on the best available data we
received to date from the States, as adjusted by HCFA. These data are
taken from each State's actual Medicaid expenditures for FFY 1995 as
reported on the State's quarterly expenditure report Form HCFA-64
submissions and the FFY 1996 projected Medicaid expenditures as
reported on the February 1996 Form HCFA-37 submission. All data are
adjusted as necessary.
II. Calculations of the Final FFY 1996 DSH Limits
The total of the final State DSH allotments for FFY 1996 is equal
to the sum of the base allotments for all high-DSH States, the FFY 1995
State DSH allotments for all low-DSH States, and the growth amounts for
all low-DSH States. A State-by-State breakdown is presented in section
III of this notice.
We classified States as high-DSH or low-DSH States. If a State's
base allotment exceeded 12 percent of its total unadjusted medical
assistance expenditures (excluding administrative costs) projected to
be made under the State's approved plan in FFY 1996, we classified that
State as a ``high-DSH'' State. If a State's base allotment was 12
percent or less of its total unadjusted medical assistance expenditures
projected to be made under the State's approved State plan under title
XIX of the Act in FFY 1996, we classified that State as a ``low-DSH''
State. Based on this classification, there are 35 low-DSH States and 15
high-DSH States for FFY 1996.
Using the most recent data from the States' February 1996 budget
projections (Form HCFA-37), we estimate the States' FFY 1996 national
total medical assistance expenditures to be $159,875,082,000. Thus, the
overall final national FFY 1996 DSH expenditure target is
$19,185,010,000 (12 percent of $159,875,082,000).
In the final FFY 1996 State DSH allotments, we provide a total of
$368,619,000 ($213,827,000 Federal share) in growth amounts for the 35
low-DSH States. The growth factor percentage for each of the low-DSH
States was determined by calculating the Medicaid program growth
percentage for each low-DSH State between FFY 1995 and FFY 1996. To
compute this percentage, we first ascertained each low-DSH State's
total FFY 1995 actual medical assistance and administrative
expenditures as reported on the State's four quarterly Medicaid
expenditure reports (Form HCFA-64) for FFY 1995. Next, we compared
those expenditures to each low-DSH State's total estimated unadjusted
FFY 1996 medical assistance and administrative
[[Page 49783]]
expenditures as reported to HCFA on the State's February 15, 1996
submission of the Medicaid Budget Report (Form HCFA-37).
The growth factor percentage was multiplied by the low-DSH State's
final FFY 1995 DSH allotment amount to establish the State's final
growth amount for FFY 1996.
Since the sum of the total of the base allotments for high-DSH
States, the total of the State DSH allotments for the previous FFY for
low-DSH States, and the growth for low-DSH States ($19,467,072,000) is
greater than the final FFY 1996 national target ($19,185,010,000),
there is no final FFY 1996 redistribution pool.
The low-DSH State's growth amount was then added to the low-DSH
State's final FFY 1995 DSH allotment amount to establish the final
total low-DSH State DSH allotment for FFY 1996. If a State's growth
amount, when added to its final FFY 1995 DSH allotment amount, exceeds
12 percent of its FFY 1996 estimated medical assistance expenditures,
the State only receives a partial growth amount that, when added to its
final FFY 1995 allotment, limits its total State DSH allotment for FFY
1996 to 12 percent of its estimated FFY 1996 medical assistance
expenditures. For this reason, five of the low-DSH States received
partial growth amounts, and two low-DSH States received no growth
amount.
Also, in accordance with the minimum payment adjustments required
by Medicare methodology, the final FFY 1996 State DSH allotments for
the District of Columbia, Iowa, and Nebraska are $61,854,000,
$15,735,000, and $12,031,000, respectively. In addition in accordance
with this provision, we have redetermined the State DSH allotments for
FFYs 1993, 1994, and 1995 for the District of Columbia to be
$47,849,689, $50,669,700, and $52,219,263, respectively, and the State
DSH allotment for FFY 1995 for Iowa to be $14,620,261.
In summary, the total of all final State DSH allotments for FFY
1996 is $19,467,072,000 ($11,049,723,000 Federal share). This total is
composed of the prior FFY's final State DSH allotments
($19,098,453,000) plus growth amounts for all low-DSH States
($368,619,000), plus supplemental amounts for low-DSH States ($0). The
total of all final FFY 1996 State DSH allotments is 12.2 percent of the
total medical assistance expenditures (excluding administrative costs)
projected to be made by these States in FFY 1996. The total of all
final DSH allotments for FFY 1996 is $282,062,000 over the FFY 1996
national target amount of $19,185,010,000.
Each State should monitor and make any necessary adjustments to its
DSH spending during FFY 1996 to ensure that its actual FFY 1996 DSH
payment adjustment expenditures do not exceed its final State DSH
allotment for FFY 1996 published in this notice. As the ongoing
reconciliation between actual FFY 1996 DSH payment adjustment
expenditures and the FFY 1996 DSH allotments takes place, each State
should amend its plan as may be necessary to make any adjustments to
its FFY 1996 DSH payment adjustment expenditure patterns so that the
State will not exceed its FFY 1996 DSH allotment.
The FFY 1996 reconciliation of DSH allotments to actual
expenditures will take place on an ongoing basis as States file
expenditure reports with HCFA for DSH payment adjustment expenditures
applicable to FFY 1996. Additional DSH payment adjustment expenditures
made in succeeding FFYs that are applicable to FFY 1996 will continue
to be reconciled with each State's FFY 1996 DSH allotment as additional
expenditure reports are submitted to ensure that the FFY 1996 DSH
allotment is not exceeded. As a result, any DSH payment adjustment
expenditures for FFY 1996 in excess of the FFY 1996 DSH allotment will
be disallowed, and therefore, subject to the normal Medicaid
disallowance procedures.
III. Final FFY 1996 DSH Allotments Under Public Law 102-234
Key to Chart:
Column and Description
Column A=Name of State
Column B=Final FFY 1995 DSH Allotments for All States. For a high-DSH
State, this is the State's base allotment, which is the greater of the
State's FFY 1992 allowable DSH payment adjustment expenditures
applicable to FFY 1992, or $1,000,000. For a low-DSH State, this is
equal to the final DSH allotment for FFY 1995, which was published in
the Federal Register on September 8, 1995.
Column C=Growth Amounts for Low-DSH States. This is an increase in a
low-DSH State's final FFY 1995 DSH allotment to the extent that the
State's Medicaid program grew between FFY 1995 and FFY 1996.
Column D=Final FFY 1996 State DSH Allotments. For high-DSH States, this
is equal to the base allotment from column B. For low-DSH States, this
is equal to the final State DSH allotments for FFY 1995 from column B
plus the growth amounts from column C and the supplemental amounts, if
any, from column D.
Column E=High or Low DSH State Designation for FFY 1996. ``High''
indicates the State is a high-DSH State and ``Low'' indicates the State
is a low-DSH State.
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IV. Regulatory Impact
In accordance with the provisions of Executive Order 12866, this
notice was reviewed by the Office of Management and Budget.
This is not a major rule as defined at 5 U.S.C. 804(2).
(Catalog of Federal Assistance Program No. 93.778, Medical
Assistance Program)
Dated: June 26, 1996.
Bruce C. Vladeck,
Administrator, Health Care Financing Administration.
Dated: August 16, 1996.
Donna E. Shalala,
Secretary.
[FR Doc. 96-24229 Filed 9-20-96; 8:45 am]
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