[Federal Register Volume 63, Number 195 (Thursday, October 8, 1998)]
[Notices]
[Pages 54142-54148]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-26930]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Health Care Financing Administration
[HCFA-2012-N]
RIN 0938-AI66


Medicaid Program; Disproportionate Share Hospital Payments-
Institutions for Mental Disease

AGENCY: Health Care Financing Administration (HCFA), HHS.

ACTION: Notice.

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SUMMARY: This notice announces the Federal share disproportionate share 
hospital (DSH) allotments for Federal fiscal years (FFYs) 1998 through 
2002. This notice also describes the methodology for calculating the 
Federal share DSH allotments for FFY 2003 and thereafter, and announces 
the FFY 1998 and FFY 1999 limitations on aggregate DSH payments States 
may make to institutions for mental disease (IMD) and other mental 
health facilities. In addition, it clarifies the DSH reporting 
requirements required by the Balanced Budget Act of 1997 (BBA '97).

EFFECTIVE DATE: The Federal DSH allotments apply to FFYs beginning 
October 1, 1997 and thereafter. The IMD limitations published in this 
notice apply to Medicaid DSH payments made in FFY 1998 and 1999.

FOR FURTHER INFORMATION CONTACT: Miles McDermott, (410) 786-3722, 
Christine Hinds, (410) 786-4578.

SUPPLEMENTARY INFORMATION:

I. Background

    Section 4721(c) of the Balanced Budget Act of 1997 (BBA '97), 
Public Law 105-33, added section 1923(a)(2)(D) of the Social Security 
Act (the Act) to require States to submit to HCFA, by October 1, 1998, 
a description of the methodology used by the State to identify and make 
payments to DSHs, including children's hospitals, on the basis of the 
proportion of low-income and Medicaid patients served by such 
hospitals. If a title XIX State plan does not specify this methodology 
by October 1, 1998, it is not in compliance with section 
1902(a)(13)(A)(iv) of the Act. The State is also required to submit an 
annual report to HCFA describing the DSH payments made to each 
disproportionate share hospital.
    Section 4721(a) of the BBA '97 amended section 1923(f) of the Act 
to require that Federal Medicaid DSH expenditures be limited to 
statutorily defined Federal share DSH allotments. These Federal share 
DSH allotments are listed in the statute for FFYs 1998 through 2002. 
For FFY 2003 and thereafter, a State's Federal share DSH allotment will 
be equal to the State's prior FFY Federal share DSH allotment, if the 
prior FFY Federal share DSH allotment is greater than 12 percent of 
Federal medical assistance expenditures for the current Federal fiscal 
year. If the prior year Federal DSH allotment is less than 12 percent 
of the Federal share of medical assistance expenditures for the current 
year, the prior FFY Federal share DSH allotment will be increased by 
the Consumer Price Index for all Urban Consumers (CPI-U) for the 
previous FFY, capped at 12 percent of the State's current FFY Federal 
medical assistance expenditures.
    In addition, section 4721(b) of the BBA '97 added section 1923(h) 
to the Act to provide that Federal financial participation (FFP) is not 
available for DSH payments to IMDs and other mental health facilities 
that are in excess of a State-specific aggregate limit. Section 1923(h) 
of the Act could be read to set the State-specific IMD limit at the 
lesser of the 1995 Federal mental health DSH payments applicable to the 
1995 DSH allotment (as reported on the Form HCFA-64 as of January 1, 
1997), or a percentage of 1995 Federal mental health DSH payments. This 
reading, which compares an amount with a decreased percentage of that 
amount, results in a meaningless comparison because a percentage of a 
number is always less than that number. We do not believe Congress 
intended a reading that would render the comparison meaningless. 
Furthermore, such an

[[Page 54143]]

interpretation would impose a severely restrictive limitation that does 
not appear to be consistent with congressional intent. This being the 
case, HCFA has interpreted the aggregate limit to be the lesser of a 
State's FFY 1995 total computable (State and Federal share) IMD and 
other mental health facility DSH expenditures applicable to the State's 
FFY 1995 DSH allotment (as reported to HCFA on the Form HCFA-64 as of 
January 1, 1997), or the amount equal to the product of the State's 
current year total computable DSH allotment and the applicable 
percentage.
    Each State's limit on DSH payments to IMDs and other mental health 
facilities is calculated by first determining the State's total 
computable DSH expenditures attributable to the FFY 1995 DSH allotment 
for mental health facilities and inpatient hospitals. This is based 
upon the total computable DSH expenditures reported by the State on the 
Form HCFA-64 as mental health DSH and inpatient hospital as of January 
1, 1997.
    Once we determine the total computable amount of DSH expenditures 
applicable to the FFY 1995 DSH allotment, we then calculate the 
applicable percentage. The applicable percentage for FFYs 1998, 1999, 
and 2000 is calculated by dividing the total computable amount of IMD 
and mental health DSH expenditures applicable to the State's FFY 1995 
DSH allotment by the total computable amount of all DSH expenditures 
(mental health facility plus inpatient hospital) applicable to the FFY 
1995 DSH allotment. For FFY 2001 and thereafter, the applicable 
percentage is defined as the lesser of the applicable percentage as 
calculated above or 50 percent for fiscal year 2001; 40 percent for 
fiscal year 2002; and 33 percent for each succeeding year.
    The applicable percentage is then applied to each State's total 
computable FFY DSH allotment for the current FFY. The State's total 
computable FFY DSH allotment is calculated by dividing the State's 
Federal share DSH allotment for the FFY by the State's Federal medical 
assistance percentage (FMAP) for that FFY.
    In the final step of the calculation, the State's total computable 
IMD DSH limit for the FFY is set at the lesser of the product of a 
State's current year total computable DSH allotment and the applicable 
percentage, or the State's FFY 1995 total computable IMD and other 
mental health facility DSH expenditures applicable to the State's FFY 
1995 DSH allotment as reported on the Form HCFA-64.

II. Calculation of the Annual Federal Share State DSH Allotments

    Section 1923(f) of the Act contains a State specific chart which 
provides the annual FFY limit on the amount of Federal share DSH 
expenditures available for FFYs 1998 through 2002. This chart is 
reproduced below. In addition, section 601 and 602 of Public Law 105-78 
(enacted November 11, 1997) amended the Federal share DSH allotments 
for FFY 1998 only for Minnesota and Wyoming. Those numbers are 
reflected in the chart.

                                                  DSH Allotment
                                            [In millions of dollars]
----------------------------------------------------------------------------------------------------------------
                  State or district                      FY 98       FY 99       FY 00       FY 01       FY 02
----------------------------------------------------------------------------------------------------------------
Alabama.............................................         293         269         248         246         246
Alaska..............................................          10          10          10           9           9
Arizona.............................................          81          81          81          81          81
Arkansas............................................           2           2           2           2           2
California..........................................       1,085       1,068         986         931         877
Colorado............................................          93          85          79          74          74
Connecticut.........................................         200         194         164         160         160
Delaware............................................           4           4           4           4           4
District of Columbia................................          23          23          23          23          23
Florida.............................................         207         203         197         188         160
Georgia.............................................         253         248         241         228         215
Hawaii..............................................           0           0           0           0           0
Idaho...............................................           1           1           1           1           1
Illinois............................................         203         199         193         182         172
Indiana.............................................         201         197         191         181         171
Iowa................................................           8           8           8           8           8
Kansas..............................................          51          49          42          36          33
Kentucky............................................         137         134         130         123         116
Louisiana...........................................         880         795         713         658         631
Maine...............................................         103          99          84          84          84
Maryland............................................          72          70          68          64          61
Massachusetts.......................................         288         282         273         259         244
Michigan............................................         249         244         237         224         212
Minnesota...........................................          33          16          16          16          16
Mississippi.........................................         143         141         136         129         122
Missouri............................................         436         423         379         379         379
Montana.............................................         0.2         0.2         0.2         0.2         0.2
Nebraska............................................           5           5           5           5           5
Nevada..............................................          37          37          37          37          37
New Hampshire.......................................         140         136         130         130         130
New Jersey..........................................         600         582         515         515         515
New Mexico..........................................           5           5           5           5           5
New York............................................       1,512       1,482       1,436       1,361       1,285
North Carolina......................................         278         272         264         250         236
North Dakota........................................           1           1           1           1           1
Ohio................................................         382         374         363         344         325
Oklahoma............................................          16          16          16          16          16
Oregon..............................................          20          20          20          20          20
Pennsylvania........................................         529         518         502         476         449

[[Page 54144]]

Rhode Island........................................          62          60          58          55          52
South Carolina......................................         313         303         262         262         262
South Dakota........................................           1           1           1           1           1
Tennessee...........................................           0           0           0           0           0
Texas...............................................         979         950         806         765         765
Utah................................................           3           3           3           3           3
Vermont.............................................          18          18          18          18          18
Virginia............................................          70          68          66          63          59
Washington..........................................         174         171         166         157         148
West Virginia.......................................          64          63          61          58          54
Wisconsin...........................................           7           7           7           7           7
Wyoming.............................................       0.067           0           0           0           0
----------------------------------------------------------------------------------------------------------------

    For FFY 2003 and each succeeding fiscal year, a State's Federal 
share DSH allotment for the current FFY will be equal to the State's 
prior FFY Federal share DSH allotment, if this amount is greater than 
12 percent of the State's current FFY Federal share of medical 
assistance expenditures. If the State's prior FFY Federal share DSH 
allotment is less than 12 percent of the State's current FFY Federal 
share of medical assistance expenditures, the State's prior FFY Federal 
DSH allotment will be increased by the CPI-U for the previous FFY, 
capped at 12 percent of the State's current FFY Federal share of 
medical assistance expenditures.

III. Calculation of the FFY 1998 and 1999 IMD/DSH Limitations

    Section 1923(h) of the Act specifies the methodology to be used to 
establish the limits on the amount of DSH payments that a State can 
make to IMD and other mental health facilities. FFP is not available 
for IMD DSH payments that exceed the lesser of the State's FFY 1995 
total computable mental health DSH expenditures applicable to the 
State's FFY 1995 DSH allotment as reported to HCFA on the Form HCFA-64 
as of January 1, 1997; or the amount equal to the product of the 
State's current FFY total computable DSH allotment and the applicable 
percentage.
    For FFYs 1998 through 2000, the applicable percentage is computed 
as the ratio of (1) the State's FFY 1995 total computable (Federal and 
State share) mental health DSH payments applicable to the State's FFY 
1995 DSH allotment and as reported on the Form HCFA-64 as of January 1, 
1997 to (2) the State's FFY 1995 total computable amount of all DSH 
expenditures (mental health facility and inpatient hospital) applicable 
to the State's FFY 1995 DSH allotment as reported on the Form HCFA-64 
as of January 1, 1997. For FFYs 2001 and thereafter, the applicable 
percentage is defined as the lesser of the applicable percentage as 
calculated above, or 50 percent for fiscal year 2001; 40 percent for 
fiscal year 2002; and 33 percent for each succeeding year.
    Once the applicable percentage is calculated, it is applied each 
FFY to the State's current FFY total computable DSH allotment. (A 
State's total computable FFY DSH allotment is calculated by dividing 
the State's Federal share DSH allotment for the applicable FFY by the 
State's Federal medical assistance percentage for that FFY). This 
result is then compared to the State's FFY 1995 total computable mental 
health DSH expenditures applicable to the State's FFY 1995 DSH 
allotment as reported on the Form HCFA-64 as of January 1, 1997. The 
lesser of these two amounts is the State's limitation on total 
computable IMD DSH expenditures for the FFY.
    The following charts detail each State's IMD DSH limitation for FFY 
1998 and 1999.
Key to IMD Limitation Chart for FFY 1998
Columns/Description
Column A--Name of State
Column B--Total computable FFY 1995 inpatient hospital DSH expenditures 
as reported on the Form HCFA-64.
Column C--Total computable FFY 1995 mental health facility DSH 
expenditures as reported on the Form HCFA-64 as of January 1, 1997.
Column D--Total computable of all inpatient hospital DSH expenditures 
and mental health facility DSH expenditures for FFY 1995 as reported on 
the Form HCFA-64 as of January 1, 1997 (Column B + Column C)
Column E--Applicable percentage is total computable FFY 1995 mental 
health facility DSH expenditures divided by total computable all 
inpatient hospital and mental health facility DSH expenditures for FFY 
1995 (Column C/Column D)
Column F--FFY 1998 Federal share DSH allotment
Column G--FFY 1998 Federal Medical Assistance Percentage (FMAP)
Column H--FFY 1998 Total Computable DSH allotment (Column F/Column G)
Column I--Applicable Percent of FFY 1998 Total computable DSH allotment 
(Column E * Column H)
Column J--IMD DSH Limit = the lesser of Column I or C.
Column K--IMD DSH Limit converted to Federal share (Column J * Column 
G)

[[Page 54145]]



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                                                                   D (B + C) total                                                                I (E * H)
                                 B Inpatient    C IMD and mental  inpatient mental    E (C/D)    F FY 98 Federal   G FY 98     H (F/G) FY 98      Applicable      J (Lessor of   K (J * G) FY 98
          A   State               hospital       health services   health & IMD FY  applicable      share DSH        FMAP      DSH allotment    percent of FY   CORI) FY 98 IMD   IMD DSH limit
                               services FY 95    FY 95 DSH total    95 DSH total      percent       allotment     (percent)     total comp.         98 DSH      DSH limit total   federal share
                                 total comp.          comp.             comp.                                                                     allotment          comp.
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Alabama.....................       413,006,229         4,451,770       417,457,999       1.07        293,000,000       9.32       422,677,438        4,507,430        4,451,770        3,085,967
Alaska......................         2,508,827        17,611,765        20,118,592      87.54         10,000,000      59.80        16,722,408       14,638,754       14,638,754        8,753,975
Arizona.....................        93,916,100        28,474,900       122,391,000      23.27         81,000,000      65.33       123,985,918       28,845,966       28,474,900       18,602,652
Arkansas....................         3,242,000                 0         3,242,000       0.00          2,000,000      72.84         2,745,744                0                0                0
California..................     2,191,435,462                 0     2,191,435,462       0.00      1,085,000,000      51.23     2,117,899,668                0                0                0
Colorado....................       173,900,441           594,776       174,495,217       0.34         93,000,000      51.97       178,949,394          609,958          594,776          309,105
Connecticut.................       303,359,275       105,573,725       408,933,000      25.82        200,000,000      50.00       400,000,000      103,267,503      103,267,503       51,633,752
Delaware....................         7,069,000                 0         7,069,000       0.00          4,000,000      50.00         8,000,000                0                0                0
District of Columbia........        39,532,234         6,545,136        46,077,370      14.20         23,000,000      70.00        32,857,143        4,667,247        4,667,247        3,267,073
Florida.....................       184,468,014       149,714,986       334,183,000      44.80        207,000,000      55.65       371,967,655      166,642,625      149,714,986       83,316,390
Georgia.....................       407,343,557                 0       407,343,557       0.00        253,000,000      60.84       415,844,839                0                0                0
Hawaii......................                 0                 0                 0       0.00                  0      50.00                 0                0                0                0
Idaho.......................         2,081,429                 0         2,081,429       0.00          1,000,000      69.59         1,436,988                0                0                0
Illinois....................       315,868,508        89,408,276       405,276,784      22.06        203,000,000      50.00       406,000,000       89,567,825       89,408,276       44,704,138
Indiana.....................        79,960,783       153,566,302       233,527,085      65.76        201,000,000      61.41       327,308,256      215,236,355      153,566,302       94,305,066
Iowa........................        12,011,250                 0        12,011,250       0.00          8,000,000      63.75        12,549,020                0                0                0
Kansas......................        11,587,208        76,663,508        88,250,716      86.87         51,000,000      59.71        85,412,829       74,198,232       74,198,232       44,303,764
Kentucky....................       161,480,654        34,767,327       196,247,981      17.72        137,000,000      70.37       194,685,235       34,490,471       34,490,471       24,270,944
Louisiana...................     1,085,314,215       126,115,103     1,211,429,318      10.41        880,000,000      70.03     1,256,604,312      130,818,018      126,115,103       88,318,407
Maine.......................        99,957,958        60,958,342       160,916,300      37.88        103,000,000      66.04       155,966,081       59,083,099       59,083,099       39,018,479
Maryland....................        22,226,467       120,873,531       143,099,998      84.47         72,000,000      50.00       144,000,000      121,633,744      120,873,531       60,436,768
Massachusetts...............       469,653,946       105,635,054       575,289,000      18.36        288,000,000      50.00       576,000,000      105,765,608      105,635,054       52,817,527
Michigan....................       133,258,800       304,765,552       438,024,352      69.58        249,000,000      53.58       464,725,644      323,343,592      304,765,552      163,293,383
Minnesota...................        24,240,000         5,257,214        29,497,214      17.82         33,000,000      52.14        63,291,139       11,280,220        5,257,214        2,741,111
Mississippi.................       182,608,033                 0       182,608,033       0.00        143,000,000      77.09       185,497,470                0                0                0
Missouri....................       521,946,524       207,234,618       729,181,142      28.42        436,000,000      60,68       718,523,401      204,205,669      204,205,669      123,912,000
Montana.....................           237,048                 0           237,048       0.00            200,000      70.56           283,447                0                0                0
Nebraska....................         6,449,102         1,811,337         8,260,439      21.93          5,000,000      61.17         8,173,941        1,792,370        1,792,370        1,096,393
Nevada......................        73,560,000                 0        73,560,000       0.00         37,000,000      50.00        74,000,000                0                0                0
New Hampshire...............        92,675,916        94,753,948       187,424,864      50.58        140,000,000      50.00       280,000,000      141,555,954       94,753,948       47,376,974
New Jersey..................       842,664,980       357,370,461     1,200,035,441      29.78        600,000,000      50.00     1,200,000,000      357,359,907      357,359,907      178,679,953
New Mexico..................         6,744,801                 0         6,744,801       0.00          5,000,000      72.61         6,886,104                0                0                0
New York....................     2,418,869,368       605,000,000     3,023,869,368      20.01      1,512,000,000      50.00     3,024,000,000      605,026,136      605,000,000      302,500,000
North Carolina..............       193,201,966       236,072,627       429,274,593      54.99        278,000,000      63.09       440,640,355      242,323,044      236,072,627      148,938,220
North Dakota................           214,523           988,478         1,203,001      82.17          1,000,000      70.43         1,419,849        1,166,657          988,478          696,185
Ohio........................       535,731,956        93,432,758       629,164,714      14.85        382,000,000      58.14       657,034,744       97,571,537       93,432,758       54,321,806
Oklahoma....................        20,019,969         3,273,248        23,293,217      14.05         16,000,000      70.51        22,691,817        3,188,737        3,188,737        2,248,378
Oregon......................        11,437,908        19,975,092        31,413,000      63.59         20,000,000      61.46        32,541,490       20,692,683       19,975,092       12,276,692
Pennsylvania................       417,946,827       556,161,443       974,108,270      57.09        529,000,000      53.39       990,822,251      565,704,193      556,161,443      296,934,594
Rhode Island................       108,503,167         2,397,833       110,901,000       2.16         62,000,000      53.17       116,607,109        2,521,207        2,397,833        1,274,928
South Carolina..............       366,681,364        72,076,341       438,757,705      16.43        313,000,000      70.23       445,678,485       73,213,243       72,076,341       50,619,214
South Dakota................           321,120           751,299         1,072,419      70.65          1,000,000      67.75         1,476,015        1,034,044          751,299          509,005
Tennessee...................                 0                 0                 0       0.00                  0      63.36                 0                0                0                0
Texas.......................     1,220,515,401       292,513,592     1,513,028,993      19.33        979,000,000      62.28     1,571,933,205      303,901,531      292,513,592      182,177,465
Utah........................         3,621,116           934,586         4,555,702      20.51          3,000,000      72.58         4,133,370          847,946          847,946          615,439
Vermont.....................        19,979,252         9,071,297        29,050,549      31.23         18,000,000      62.18        28,948,215        9,039,342        9,039,342        5,620,663
Virginia....................       129,313,480         7,770,268       137,083,748       5.67         70,000,000      51.49       135,948,728        7,705,932        7,705,932        3,967,784
Washington..................       171,725,815       163,836,435       335,562,250      48.82        174,000,000      52.15       333,652,924      162,904,217      162,904,217       84,954,549
West Virginia...............        66,962,606        18,887,045        85,849,651      22.00         64,000,000      73.67        86,873,897       19,112,381       18,887,045       13,914,086
Wisconsin...................         6,609,524         4,492,011        11,101,535      40.46          7,000,000      58.84        11,896,669        4,813,746        4,492,011        2,643,099
Wyoming.....................                 0                 0                 0       0.00             67,000      63.02           106,315                0                0                0
                             -------------------------------------------------------------------------------------------------------------------------------------------------------------------
  Total.....................    13,655,962,123     4,139,781,984    17,795,739,107  ..........    10,272,267,000  .........    18,159,399,514    4,314,277,124    4,123,749,357    2,298,455,927
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 54146]]

Key to IMD Limitation Chart for FFY 1999
Columns/Description
Column A--Name of State
Column B--Total computable FFY 1995 inpatient hospital DSH expenditures 
as reported on the Form HCFA-64.
Column C--Total computable FFY 1995 mental health facility DSH 
expenditures as reported on the Form HCFA-64 as of January 1, 1997.
Column D--Total computable of all inpatient hospital DSH expenditures 
and mental health facility DSH expenditures for FFY 1995 as reported on 
the Form HCFA-64 as of January 1, 1997 (Column B + Column C)
Column E--Applicable percentage is total computable FFY 1995 mental 
health facility DSH expenditures divided by total computable all 
inpatient hospital and mental health facility DSH expenditures for FFY 
1995 (Column C/Column D)
Column F--FFY 1999 Federal share DSH allotment
Column G--FFY 1999 Federal Medical Assistance Percentage (FMAP)
Column H--FFY 1999 Total Computable DSH allotment (Column F/Column G)
Column I--Applicable Percent of FFY 1999 Total computable DSH allotment 
(Column E * Column H)
Column J--IMD DSH Limit = the lessor of Column I or C.
Column K--IMD DSH Limit converted to Federal share (Column J * Column 
G)

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                          D (B+C) total                                                               I (E*H)
                                          B Inpatient       C IMD and    inpatient IMD &    E (C/D)       F FY 99      G FY 99    H (F/G) FY 99     applicable    J (LESSOR OF C   K (J*G) FY 99
               A   State                 hospital FY 98   mental health   mental health   applicable   federal share    FM AP     DSH allotment    percent of FY    OR I) FT 99    IMD DSH limit
                                        DSH total comp.     FY 95 DSH    FY 95 DSH total    percent    DSH allotment  (percent)    total comp.        99 DSH       IMD DSH limit   federal share
                                                           total comp.      computable                                                               allotment      total comp.
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Alabama...............................      413,006,229       4,451,770      417,457,999       1.07      269,000,000       69.2      388,335,499       4,141,208       4,141,208       2,868,615
Alaska................................        2,506,827      17,611,765       20,118,592       87.5       10,000,000      59.80       16,722,408      14,638,754      14,638,754       8,753,975
Arizona...............................       93,916,100      28,474,900      122,391,000      23.27       81,000,000      65.50      123,664,122      28,771,098      28,474,900      18,651,060
Arkansas..............................        3,242,000               0        3,242,000       0.00        2,000,000      72.96        2,741,228               0               0               0
California............................    2,191,435,462               0    2,191,435,462       0.00    1,068,000,000      51.55    2,071,774,976               0               0               0
Colorado..............................      173,900,441         594,776      174,495,217       0.34       85,000,000      50.59      168,017,395         572,696         572,696         289,727
Connecticut...........................      303,359,275     105,573,725      408,933,000      25.82      194,000,000      50.00      388,000,000     100,169,478     100,169,478      50,084,739
Delaware..............................        7,069,000               0        7,069,000       0.00        4,000,000      50.00        8,000,000               0               0               0
District of Columbia..................       39,532,234       6,545,136       46,077,370      14.20       23,000,000      70.00       32,857,143       4,667,247       4,667,247       3,267,073
Florida...............................      184,468,014     149,714,986      334,183,000      44.80      203,000,000      55.82      363,668,936     162,924,774     149,714,986      83,570,905
Georgia...............................      407,343,557               0      407,343,557       0.00      248,000,000      60.47      410,120,721               0               0               0
Hawaii................................                0               0                0       0.00                0      50.00                0               0               0               0
Idaho.................................        2,081,429               0        2,081,429       0.00        1,000,000      69.85        1,431,639               0               0               0
Illinois..............................      315,868,508      89,408,276      405,276,784      22.06      199,000,000      50.00      398,000,000      87,802,942      87,802,942      43,901,471
Indiana...............................       79,960,783     153,566,302      233,527,085      65.76      197,000,000      61.01      322,897,886     212,336,116     153,566,302      93,690,801
Iowa..................................       12,011,250               0       12,011,250       0.00        8,000,000      63.32       12,634,239               0               0               0
Kansas................................       11,587,208      76,663,508       88,250,716      86.87       49,000,000      60.05       81,598,668      70,884,865      70,884,865      42,566,362
Kentucky..............................      161,480,654      34,767,327      196,247,981      17.72      134,000,000      70.53      189,990,075      33,658,675      33,658,675      23,739,464
Louisiana.............................    1,085,314,215     126,115,103    1,211,429,318      10.41      795,000,000      70.37    1,129,742,788     117,611,177     117,611,177      82,762,985
Maine.................................       99,957,958      60,958,342      160,916,300      37.88       99,000,000      66.40      149,096,386      56,480,720      56,480,720      37,503,198
Maryland..............................       22,226,467     120,873,531      143,099,998      84.47       70,000,000      50.00      140,000,000     118,255,028     118,255,028      59,127,514
Massachusetts.........................      469,653,946     105,635,054      575,289,000      18.36      282,000,000      50.00      564,000,000     103,562,158     103,562,158      51,781,079
Michigan..............................      133,258,800     304,765,552      438,024,352      69.58      244,000,000      52.72      462,822,458     322,019,407     304,765,552     160,672,399
Minnesota.............................       24,240,000       5,257,214       29,497,214      17.82       16,000,000      51.50       31,067,961       5,537,164       5,257,214       2,707,465
Mississippi...........................      182,608,033               0      182,608,033       0.00      141,000,000      76.78      183,641,573               0               0               0
Missouri..............................      521,946,524     207,234,618      729,181,142      28.42      423,000,000      60.24      702,191,235     199,564,037     199,564,037     120,217,376
Montana...............................          237,048               0          237,048       0.00          200,000      71.73          278,823               0               0               0
Nebraska..............................        6,449,102       1,811,337        8,260,439      21.93        5,000,000      61.46        8,135,373       1,783,913       1,783,913       1,096,393
Nevada................................       73,560,000               0       73,560,000       0.00       37,000,000      50.00       74,000,000               0               0               0
New Hampshire.........................       92,675,916      94,753,948      187,429,864      50.55      136,000,000      50.00      272,000,000     137,507,830      94,753,948      47,376,974
New Jersey............................      842,664,980     357,370,461    1,200,035,441      29.78      582,000,000      50.00    1,164,000,000     346,639,109     346,639,109     173,319,555
New Mexico............................        6,744,801               0        6,744,801       0.00        5,000,000      72.98        6,851,192               0               0               0
New York..............................    2,418,869,368     605,000,000    3,023,869,368      20.01    1,482,000,000      50.00    2,964,000,000     593,021,649     593,021,649     296,510,825
North Carolina........................      193,201,966     236,072,627      429,274,593      54.99      272,000,000      63.07      431,266,846     237,168,235     236,072,627     148,891,006
North Dakota..........................          214,523         988,478        1,203,001      82.17        1,000,000      69.94        1,429,797       1,174,831         988,478         691,342
Ohio..................................      535,731,956      93,432,758      629,164,714      14.85      374,000,000      58.26      641,949,880      95,331,392      93,432,758      54,433,925
Oklahoma..............................       20,019,969       3,273,248       23,293,217      14.05       16,000,000      70.84       22,586,110       3,173,883       3,173,883       2,248,378
Oregon................................       11,437,908      19,975,092       31,413,000      63.59       20,000,000      60.55       33,030,553      21,003,672      19,975,092      12,094,918
Pennsylvania..........................      417,946,827     556,161,443      974,108,270      57.09      518,000,000      53.77      963,362,470     550,026,191     550,026,191     295,749,083
Rhode Island..........................      108,503,167       2,397,833      110,901,000       2.16       60,000,000      54.05      111,008,326       2,400,154       2,397,833       1,296,029
South Carolina........................      366,681,364      72,076,341      438,757,705      16.43      303,000,000      69.85      433,786,686      71,259,733      71,259,733      49,774,924
South Dakota..........................          321,120         751,299        1,072,419      70.06        1,000,000      68.16        1,467,136       1,027,824         751,299         512,085
Tennessee.............................                0               0                0       0.00                0      63.09                0               0               0               0
Texas.................................    1,220,515,401     292,513,592    1,513,028,993      19.33      950,000,000      62.45    1,521,216,974     294,096,573     292,513,592     182,674,738
Utah..................................        3,621,116         934,586        4,555,702      20.51        3,000,000      71.78        4,179,437         857,397         857,397         615,439
Vermont...............................       19,979,252       9,071,297       29,050,549      31.23       18,000,000      61.97       29,046,313       9,069,974       9,069,974       5,620,663
Virginia..............................      129,313,480       7,770,268      137,083,748       5.67       68,000,000      51.60      131,782,946       7,469,805       7,469,805       3,854,419
Washington............................      171,725,815     163,836,435      335,562,250      48.82      171,000,000      52.50      325,714,286     159,028,220     159,028,220      83,489,816
West Virginia.........................       66,962,606      18,887,045       85,849,651      22.00       63,000,000      74.47       84,597,825      18,611,641      18,611,641      13,860,089
Wisconsin.............................        6,609,524       4,492,011       11,101,535      40.46        7,000,000      58.85       11,894,647       4,812,928       4,492,011       2,643,548
Wyoming...............................                0               0                0       0.00                0      64.08                0               0               0               0
                                       ---------------------------------------------------------------------------------------------------------------------------------------------------------
    Total.............................   13,655,962,123   4,139,781,984   17,795,744,107  ..........   9,937,200,000  .........   17,580,602,954   4,199,062,498   4,060,107,094   2,262,910,356
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

IV. Annual Reporting Requirements

    Section 1923(a)(2)(D) of the Act requires the State to provide a 
description of the methodology it uses to identify and make payments to 
DSH hospitals. The methodology provided in the State plan must clarify 
that payments to hospitals are made on the basis of the proportion of 
low-income and Medicaid patients served by such hospitals.
    HCFA believes that the majority of States' current DSH 
methodologies contained in their State plan satisfies the methodology 
requirements in this section. If a State does not specify a methodology 
that makes payments to hospitals on the basis of the proportion of low-
income and Medicaid patients served in its State plan, the State is 
required to submit an amendment to its State plan by October 1, 1998 
clarifying their DSH methodology.
    This section of the law also requires States to submit an annual 
report to the Secretary describing the DSH payments made to each 
hospital. HCFA recommends that a State submit hospital specific data 
(name of hospital,

[[Page 54147]]

type of hospital, for example, children, psychiatric, public vs. 
private, and annual payment) to their HCFA regional office at the close 
of the first quarter of the Federal fiscal year following the fiscal 
year in which the DSH was paid. For example, for FFY 1998, the State 
submits to HCFA the hospital specific data by December 31, 1998. HCFA 
also recommends that this be a separate report from the Form HCFA-64, 
and preferably prepared using a spreadsheet application (for example 
Excel).
    HCFA will take into consideration any public comments received 
regarding this notice's annual reporting requirements when drafting 
future DSH/IMD notices.

V. Collection of Information Requirements

Emergency Clearance: Public Information Collection Requirements 
Submitted to the Office of Management and Budget (OMB)

    In compliance with the requirement of section 3506(c)(2)(A) of the 
Paperwork Reduction Act of 1995, the Health Care Financing 
Administration (HCFA), Department of Health and Human Services (DHHS), 
has submitted to the Office of Management and Budget (OMB) the 
following request for Emergency review. We are requesting an emergency 
review because the collection of this information is needed prior to 
the expiration of the normal time limits under OMB's regulations at 5 
CFR, Part 1320. The Agency cannot reasonably comply with the normal 
clearance procedures because of the statutory requirement to implement 
section 4721(c) of Balanced Budget Act of 1997.
    HCFA is requesting OMB review and approval of this collection 
within 16 working days, with a 180-day approval period. Written 
comments and recommendations will be accepted from the public if 
received by the individual designated below, within 15 working days of 
publication of this notice in the Federal Register.
    During this 180-day period HCFA will pursue OMB clearance of this 
collection as stipulated by 5 CFR 1320.5.
    In order to fairly evaluate whether an information collection 
should be approved by OMB, section 3506(c)(2)(A) of the PRA requires 
that we solicit comment on the following issues:
     The need for the information collection and its usefulness 
in carrying out the proper functions of our agency.
     The accuracy of our estimate of the information collection 
burden.
     The quality, utility, and clarity of the information to be 
collected.
     Recommendations to minimize the information collection 
burden on the affected public, including automated collection 
techniques.
    Therefore, we are soliciting public comment on each of these issues 
for the information collection requirements summarized and discussed 
below.
    States are required by section 1923(a)(2)(D) of the Act to provide 
a description of the methodology it uses to identify and make payments 
to DSH hospitals. The methodology provided in the State plan must 
clarify that payments to hospitals are made on the basis of the 
proportion of low-income and Medicaid patients served by such 
hospitals. HCFA believes that the current DSH methodologies contained 
in most State plans will satisfy the methodology requirements in this 
section. As such, HCFA also believes that this requirement is exempt 
from the PRA, since less then ten States will have to amend their State 
plan.
    This notice also discusses the statutory requirement for States to 
submit an annual report to the Secretary describing the DSH payments 
made to each hospital. In the annual report, HCFA recommends that a 
State submit hospital specific data (name of hospital, type of 
hospital, for example, children, psychiatric, public vs. private, and 
annual payment) to their HCFA regional office at the close of the first 
quarter of the Federal fiscal year following the fiscal year in which 
the DSH was paid. For example, for FY 1998, the State submits to HCFA 
the hospital specific data by December 31, 1998. HCFA also recommends 
that this be a separate report from the Form HCFA-64, and preferably 
prepared using a spreadsheet application (for example Excel).
    The burden associated with this requirement is the time and effort 
to prepare and submit the annual report. It is estimated that it will 
take 54 States including territories, 40 hours to comply with this 
reporting requirement, for a total annual burden of 2,160 hours.
    We have submitted a copy of this notice to OMB for its review of 
the information collection requirements above. To obtain copies of the 
supporting statement and any related forms for the proposed paperwork 
collections referenced above, E-mail your request, including your 
address, phone number and HCFA regulation identifier HCFA-2012-N, to 
P[email protected], or call the Reports Clearance Office on (410) 786-
1326.
    As noted above, comments on these information collection and record 
keeping requirements must be mailed or faxed to the designee referenced 
below, within 15 working days of publication of this collection in the 
Federal Register:

Health Care Financing Administration, Office of Information Services, 
Standards and Security Group, Division of HCFA Enterprise Standards, 
Room N2-14-26, 7500 Security Boulevard, Baltimore, MD 21244-1850. Attn: 
John Burke HCFA-2012-N. Fax Number: (410) 786-0262 and,
Office of Information and Regulatory Affairs, Office of Management and 
Budget, Room 10236, New Executive Office Building, Washington, DC 
20503, Attn: Laura Oliven, HCFA Desk Officer. Fax Number: (202) 395-
6974 or (202) 395-5167.

VI. Impact Statement

    The Regulatory Flexibility Act, 5 U.S.C. 601 through 612, requires 
a regulatory flexibility analysis for every rule subject to proposed 
rulemaking procedures under the Administrative Procedure Act, 5 U.S.C. 
552, unless we certify that the rule will not have a significant 
economic impact on a substantial number of small entities. For purposes 
of a RFA, States and individuals are not considered small entities. 
However, providers are considered small entities. Additionally, section 
1102(b) of the Act requires us to prepare a regulatory impact analysis 
if a notice may have a significant impact on the operations of a 
substantial number of small rural hospitals. Such an analysis must 
conform to the provisions of section 604 of the RFA. For purposes of 
section 1102(b) of the Act, we define a small rural hospital as a 
hospital that is located outside of a Metropolitan Statistical Area and 
has fewer than 50 beds.
    The BBA'97 replaces the current DSH allotment methodology with 
statutorily defined Federal DSH allotments. This notice announces the 
annual FFY limit on the amount of Federal share DSH expenditures 
available for FFYs 1998 through 2002. This notice also describes the 
methodology for calculating the Federal share DSH allotments for FFY 
2003 and thereafter. We estimate the impact of the provisions of the 
BBA'97 will result in the following savings to the Federal Government:

                       Federal Savings in Billions
------------------------------------------------------------------------
   FY 1999        FY 2000        FY 2001        FY 2002        FY 2003
------------------------------------------------------------------------
$0.7.........        $1.9           $2.8           $3.5          $4.0
------------------------------------------------------------------------

    Based on these findings, the limits imposed by the BBA '97 will 
negatively impact the availability of FFP to States,

[[Page 54148]]

thus negatively impacting the availability of Medicaid expenditures to 
hospitals, especially IMDs.
    While the statue mandates the reductions in DSH payments, we do not 
believe that this notice will have a significant economic impact on a 
substantial number of small entities because it reflects no new 
policies or procedures, and should have an overall positive impact on 
payments to DSHs by informing States of the extent to which DSH 
payments may be increased without violating statutory limitations.
    The Unfunded Mandate Reform Act of 1995 requires (in section 202) 
that agencies prepare an assessment of anticipated costs and benefits 
for any rule that may result in an annual expenditure by State, local, 
and tribal governments, in the aggregate, or by both the private 
sector, of $100 million. The notice has no consequential effect on 
State, local, tribal governments, or the private sector and will not 
create an unfunded mandate.
    In accordance with the provisions of Executive Order 12866, this 
notice was reviewed by the Office of Management and Budget.

    Authority: Section 1923(a)(2), (f), (h), and of the Social 
Security Act (42 U.S.C. 1396r-4(a), (f), (h), and) and Public Law 
105-33.

(Catalog of Federal Assistance Program No. 93.778, Medical 
Assistance Program)

    Dated: February 24, 1998.
Nancy-Ann Min Deparle,
Administrator, Health Care Financing Administration.

    Dated: September 17, 1998.
Donna E. Shalala,
Secretary.
[FR Doc. 98-26930 Filed 10-7-98; 8:45 am]
BILLING CODE 4212-01-P