[Federal Register Volume 69, Number 59 (Friday, March 26, 2004)]
[Notices]
[Pages 15850-15884]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-6834]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

[CMS-2062-N]
RIN 0938-AJ74


Medicaid Program; Disproportionate Share Hospital Payments

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Notice.

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SUMMARY: This notice announces the final Federal share disproportionate 
share hospital (DSH) allotments for Federal fiscal years (FFYs) 2001 
and 2002, and the preliminary Federal share DSH allotments for FFYs 
2003 and 2004. It also announces the final FFYs 2000, 2001, and 2002, 
and the preliminary FFYs 2003 and 2004, limitations on aggregate DSH 
payments that States may make to institutions for mental disease (IMDs) 
and other mental health facilities. In addition, this notice describes 
the methodologies for determining the amounts of States' FFY DSH 
allotments for FFY 2001 and thereafter. It also republishes the Federal 
share DSH allotments for FFYs 1998 through 2000, and the final FFYs 
1998 and 1999 limitations on aggregate DSH payments that States may 
make to IMDs and other mental health facilities. Additionally, the 
notice specifies a format to be used by States when submitting their 
annual DSH report to ensure that Federal funds provided for DSH 
adjustments are made in accordance with the Medicaid statutory 
requirements.

FOR FURTHER INFORMATION CONTACT: Richard Strauss, (410) 786-2019 (DSH 
Allotments and IMD DSH Limits); Jonas Eberly, (410) 786-6232 (Annual 
DSH report for DSH payments).

SUPPLEMENTARY INFORMATION:

I. Background

A. DSH Allotments and IMD DSH Limits Published in October 8, 1998 
Federal Register.

    We published a notice in the October 8, 1998 Federal Register (63 
FR 54142) that announced the Federal share DSH allotments for FFYs 1998 
through 2002 and the IMD DSH limits for FFYs 1998 and 1999. The DSH 
allotments and IMD DSH limits published in that notice specified and 
were determined in accordance with the sections 1923(f) and (1923(h) of 
the Social Security Act (the Act), as amended by the Balanced Budget 
Act of 1997 (BBA) (Pub. L. 105-33, enacted on August 5, 1997). The 
notice also reflected the FFY 1998 DSH allotment for one State, 
specified in accordance with section 601 of Pub. L. 105-78 (enacted on 
November 13, 1997).
    Additional legislative changes relating to the amounts or 
methodologies for calculating the States' DSH allotments or IMD DSH 
limits have been made to the Act since the publication of the October 
8, 1998 notice. In this section and in Section II of this notice, we 
describe each of the legislative changes related to the DSH allotments 
and IMD DSH limits for fiscal years that were not included in the 
October 8, 1998 notice.

B. DSH Allotments For FFYs 1998 Through 2000

    Section 4721(a) of the BBA amended section 1923(f) of the Act to 
require that Federal Medicaid DSH expenditures be limited by the 
statutorily defined Federal share DSH allotments for FFYs 1998 through 
2002 specified in a chart in section 1923(f)(2) of the Act. Section 601 
of Pub. L. 105-78 amended the DSH allotment contained in this chart for 
the State of Minnesota for FFY 1998. The October 8, 1998 notice 
published the statutorily prescribed DSH allotments for all States for 
FFYs 1998 through 2002, in accordance with the amounts specified in the 
chart at section 1923(f)(2) of the Act, as established by the BBA and 
as amended by Pub. L. 105-78. Subsequent to the publication of the DSH 
allotments for these years, a number of legislative actions revised the 
DSH allotments specified in the chart at section 1923(f)(2) of the Act, 
for certain States. Specifically, sections 702, 703, and 704 of Pub. L. 
105-277 (enacted on October 21, 1998) amended the FFY 1999 DSH 
allotments for Minnesota, New Mexico, and Wyoming, respectively, and 
section 601(a) of the Medicare, Medicaid, SCHIP Balanced Budget 
Refinement Act of 1999 (BBRA) (Pub. L. 106-113, enacted on November 29, 
1999) amended the FFYs 2000, 2001, and 2002 DSH allotments for the 
District of Columbia, Minnesota, New Mexico, and Wyoming.

C. DSH Allotments For FFYs 2001 and 2002

    Section 701(a) of the Benefits Improvement and Protection Act of 
2000 (BIPA) (Pub. L. 106-554, enacted on December 21, 2000) added a new 
section 1923(f)(4) of the Act that provided for a ``Special Rule For 
Fiscal Years 2001 and 2002,'' under which States' DSH allotments for 
FFY 2001 and 2002 would be determined through the application of a 
methodology. The DSH allotments for these fiscal years, calculated 
under this methodology, supercede the DSH allotments for the years that 
are specified in the chart at section 1923(f)(2) of the Act. Under 
section 1923(f)(4) of the Act, the DSH allotments for FFY 2001 and FFY 
2002 are determined by increasing the States' prior FFY DSH allotments 
by the Consumer Price Index for all Urban Consumers (CPI-U) for the 
prior fiscal year, subject to the limitation that an increase to a 
State's DSH allotment for a fiscal year could not result in the DSH 
allotment exceeding 12 percent of the State's total Federal medical 
assistance expenditures for the allotment year (referred to as the 12-
percent limit). The application of this special rule for FFY 2001 and 
FFY 2002 had the effect of increasing States' DSH allotments for those 
years, as compared to the allotments they would have received under the 
chart at section 1923(f)(2) of the Act. In fact, the chart contained at 
section 1923(f)(2) of the Act would have provided for a decrease in 
States' DSH allotments over the fiscal years.
    The BIPA also added a new section 1923(f)(5) of the Act, which 
established a ``Special Rule For Extremely Low DSH States.'' Under this 
rule, States with FFY 1999 DSH expenditures that were

[[Page 15851]]

greater than zero percent and less than 1 percent of the States' FFY 
1999 total medical assistance expenditures were considered to be ``low-
DSH States.'' Under section 1923(f)(5) of the Act, the Low-DSH States' 
FFY 2001 DSH allotments were increased to 1 percent of the States' 
total FFY 2001 medical assistance expenditures. The Low-DSH States' 
increased FFY 2001 DSH allotments were the basis for calculating the 
States' FFY 2002 DSH allotments. That is, similar to the methodology 
applied for determining the other (non-Low-DSH) States' allotments, the 
Low-DSH States' FFY 2002 allotments were determined by increasing their 
FFY 2001 allotment (as determined under the Low-DSH provision at 
section 1923(f)(5) of the Act) by the CPI-U for the prior fiscal year, 
subject to the 12-percent limit.

D. DSH Allotments for FFY 2003

    Section 1923(f)(3) of the Act, as established by the BBA and 
amended by the BIPA, provides that the States' FFY 2003 DSH allotments 
are calculated by increasing their FFY 2002 allotments (as specified in 
the chart in Section 1923(f)(2) of the Act) by the CPI-U for the prior 
fiscal year, subject to the 12-percent limit. That is, the FFY 2003 
allotments were not based on the FFY 2002 DSH allotments as were 
determined under section 1923(f)(4) of the Act. Since the FFY 2002 DSH 
allotments specified in the chart in section 1923(f)(2) of the Act are 
lower than the actual FFY 2002 DSH allotments (determined under section 
1923(f)(4) of the Act), in general, States' FFY 2003 DSH allotments are 
lower than their FFY 2002 allotments. The exception to this, are the 
FFY 2003 DSH allotments for the Low-DSH States. Under the Low-DSH State 
provision, the Low-DSH States' FFY 2003 allotments are determined by 
increasing their actual FFY 2002 DSH allotments (not their FFY 2002 
allotments specified in the chart in section 1923(f)(2) of the Act) by 
the CPI-U for the previous fiscal year. Therefore, Low-DSH States' DSH 
allotments increase (in general by the CPI-U) from FFY 2002 to FFY 
2003.

E. DSH Allotments for FFY 2004

    Section 1001(a) of the Medicare Prescription Drug, Improvement, and 
Modernization Act of 2003 (MMA) (enacted on December 8, 2003) amended 
section 1923(f)(3) of the Act to provide for a ``Special, Temporary 
Increase In Allotments On A One-Time, Non-Cumulative Basis.'' Under 
this provision, States' FFY 2004 DSH allotments are determined by 
increasing their FFY 2003 allotments by 16 percent, and the fiscal year 
DSH allotment amounts so determined are not subject to the 12-percent 
limit.

F. DSH Allotments for FFY 2005, and Thereafter

    Under the MMA amendments to section 1923(f) of the Act, each 
State's DSH allotment for FFY 2005 and for subsequent fiscal years is 
equal to the State's DSH allotment for FFY 2004, subject to the 12-
percent limit. Furthermore, in the first fiscal year for which the 
Secretary estimates that a State's DSH allotment equals (or no longer 
exceeds) the DSH allotment as would have been determined under the 
statute in effect prior to the enactment of MMA, the allotment for that 
fiscal year will be calculated by increasing the State's DSH allotment 
for the previous fiscal year by the CPI-U for the prior fiscal year, 
subject to the 12-percent limit. The following example illustrates how 
the fiscal year DSH allotment would be calculated for fiscal years 
after FFY 2004.
    Example--A State's FFY 2003 DSH allotment is $100 million. Under 
the MMA, the State's FFY 2004 DSH allotment would be $116 million ($100 
million increased by 16 percent). The State's DSH allotment continues 
to $116 million for fiscal years following FFY 2004. However, for each 
fiscal year after FFY 2004, CMS would calculate the DSH allotments for 
the State in accordance with the statute in effect prior to the 
enactment of MMA. Under this methodology, the State's DSH allotment is 
determined by increasing the State's DSH allotment for the previous 
fiscal year by the CPI-U for the previous fiscal year. For purposes of 
this example, in accordance with this methodology the State's FFY 2007 
DSH allotment is determined to be $115 million and the CPI-U for FFY 
2007 is 2 percent. Therefore, under the prior law methodology, the 
State's FFY 2008 DSH allotment would be $117.3 million, calculated as 
$115 million increased by the 2 percent CPI-U for FFY 2007. Since 
$117.3 is greater than $116 million (the FFY 2004 DSH allotment 
calculated under MMA), the State's FFY 2008 DSH allotment would be 
$118.32 million, calculated as $116 million increased by 2 percent (the 
CPI-U for FFY 2007, the previous fiscal year). For FFY 2009 and 
thereafter, the State's DSH allotment would be calculated by increasing 
the previous fiscal year's DSH allotment by the CPI-U. Note, in each of 
the FFYs 2005 and thereafter, the DSH allotment would be subject to the 
12-percent limit (in this example, that is not an issue).

G. DSH Allotments For Low-DSH States for FFYs 2004 and Thereafter

    The MMA also amended section 1923(f)(5) of the Act regarding the 
calculation of the DSH allotments for Low-DSH States for FFY 2004 and 
subsequent fiscal years. Under section 1923(f)(5)(B) of the Act, as 
amended by MMA, new criteria are applied for determining whether a 
State is a Low-DSH State beginning with FFY 2004. Specifically, under 
section 1923(f)(5)(B) of the Act, as amended by MMA, a State is 
considered a Low-DSH State for FFY 2004 if its total DSH payments under 
its State plan for FFY 2000 (including Federal and State shares) as 
reported to us as of August 31, 2003, is greater than 0 percent and 
less than 3 percent of the State's total FFY 2000 expenditures under 
its State plan for medical assistance. For States, that meet the new 
Low-DSH criteria, their FFY 2004 DSH allotments are calculated by 
increasing their FFY 2003 DSH allotments by 16 percent. Furthermore, 
the DSH allotments for FFYs 2005 through 2008 for the States meeting 
this Low-DSH criteria would be determined by increasing the previous 
fiscal year's allotment by 16 percent. The Low-DSH States' DSH 
allotments for FFYs 2004 through 2008 would not be subject to the 12-
percent limit. The Low-DSH States' DSH allotments for FFYs 2009 and 
thereafter would be calculated by increasing such States' DSH 
allotments for the prior fiscal year by the CPI-U for that prior fiscal 
year. For FFYs 2009 and thereafter, the DSH allotments so determined 
would be subject to the 12-percent limit.

H. IMD DSH Limits for FFYs 1998 and Thereafter

    Section 4721(b) of the BBA added section 1923(h) to the Act to 
provide that Federal financial participation (FFP) is not available for 
DSH payments to institutions for mental disease (IMD) and other mental 
health facilities that are in excess of a State-specific aggregate 
limit.
    In the October 8, 1998 Federal Register notice, we interpreted the 
aggregate limit of IMD and other mental health facilities 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 on the Form CMS-64 as of 
January 1, 1997), or the amount equal to the product of the State's s 
current year total computable DSH allotment and the applicable 
percentage.

[[Page 15852]]

    Each State's IMD 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 on 
the total computable DSH expenditures reported by the State on the Form 
CMS-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 an 
``applicable percentage.'' The applicable percentage for FFY 1998 
through FFY 2000 (1995 IMD DSH percentage) 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 (for FFYs 1998 through 
2001) or 50 percent for FFY 2001; 40 percent for FFY 2002; and 33 
percent for each subsequent FFY.
    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 fiscal year total computable DSH allotment and the 
applicable percentage for that fiscal year, 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 CMS-64.

I. Preliminary and Final DSH Allotments and IMD DSH Limits

    In general, we initially determines States' DSH allotments and IMD 
DSH limits for a fiscal year using estimates of medical assistance 
expenditures, including DSH expenditures in their Medicaid programs. 
These estimates are provided by States each year on the August 
quarterly Medicaid budget reports (Form CMS-37) prior to the Federal 
fiscal year for which the DSH allotments and IMD DSH limits are being 
determined. The DSH allotments and IMD DSH limits determined using 
these estimates are referred to as ``preliminary.'' Only after we 
receive States'' reports of the actual related medical assistance 
expenditures through the quarterly expenditure report (Form CMS-64), 
are the ``final'' DSH Allotments and IMD DSH limits determined. In this 
regard, the DSH allotments for FFY 1998 through FFY 2000, as published 
in the October 8, 1998 Federal Register notice were considered as final 
since these allotments were prescribed in the chart in section 
1923(f)(2) of the Act. Similarly, the FFY 1998 and FFY 1999 IMD DSH 
limits published in the October 8, 1998 Federal Register were also 
considered as final, since these limits were based on the actual 
expenditures from FFY 1995 and the final FFY 1998 and FFY 1999 DSH 
allotments. This notice also announces the final FFY 2001 and 2002 DSH 
allotments (since they are based on the actual related expenditures), 
the preliminary FFY 2003 and 2004 DSH allotments (based on estimated 
expenditures), the final FFY 2000 through 2002 IMD DSH limits (based on 
the final DSH allotments for those fiscal years), and the preliminary 
FFY 2003 and 2004 IMD DSH limits (based on the preliminary DSH 
allotments for those years).

J. Annual Reporting of DSH Payments

    Section 4721(c) of the BBA added section 1923(a)(2)(D) of the Act 
to require that States submit an annual report to us describing the DSH 
payments made to each disproportionate share hospital. This notice 
describes the contents of the DSH report for FFY 2004.

II. Calculation of the Final FFY 2001 Federal Share State DSH 
Allotments, the Final FFY 2002 Federal Share State DSH Allotments, the 
Preliminary FFY 2003 Federal Share State DSH Allotments, and the 
Preliminary FFY 2004 Federal Share State DSH Allotments

    Section 701(a)(1)(A) of BIPA, amended section 1923(f)(4) of the 
Act, to revise the formula for computing the Federal share DSH 
allotments for FFY 2001 and FFY 2002. For FFY 2001 and FFY 2002, a 
State's Federal share DSH allotment increased from the prior year 
allotment by the (CPI-U) to the extent that the current year DSH 
allotment or the increased allotment does not exceed 12 percent of the 
Federal share of the State's total medical assistance expenditures 
(including DSH) for the current year.
    Section 701(a)(2)(A) of BIPA, amended section 1923(f)(5) of the 
Act, to provide for calculating the DSH allotment under a ``special 
rule for extremely low DSH States.'' The special rule applies to States 
whose FFY 1999 total DSH expenditures are greater than zero percent, 
but less than one percent, of their total FFY 1999 medical assistance 
expenditures (including DSH) as reported to us as of August 31, 2000. 
Under the special rule, the DSH allotments for FFY 2001 for these 
extremely Low-DSH States will be increased to 1 percent of the State's 
total amount of medical assistance expenditures (including DSH) under 
their plan for FFY 2001. However, application of the special rule 
cannot result in a decrease in the extremely Low-DSH State FFY 2001 
allotments from an amount as would be calculated by application of the 
provisions of section 1923(f)(4) of the Act, as amended by BIPA. For 
subsequent fiscal years, the allotments for extremely Low-DSH States 
will be equal to their allotment for the previous FFY, increased by the 
percentage change in the CPI-U for the previous year, to the extent 
that the DSH allotment for that year does not exceed 12 percent of the 
Federal Share of the State's total medical assistance expenditures 
(including DSH) for the year.
    Chart 1 of Addendum A to this notice represents a republication for 
the States' FFY 1998 through FFY 2000 DSH allotments; these amounts 
were previously published in the Federal Register on October 8, 1998, 
in a chart which reflected the DSH allotments in section 1923(f)(2) of 
the Act, as amended through the provisions of section 601 of Pub. L. 
105-78. Chart 1 updates the chart published in the Federal Register on 
October 8, 1998 for certain States to reflect the further amendments 
made to the DSH allotments for FFY 1998 through FFY 2000 in section 
1923(f)(2) of the Act, as amended by BBRA.
    Charts 2 and 3 of Addendum A to this notice provides the States' 
final FFY 2001 and FFY 2002 DSH allotments, respectively.
    Charts 4 and 5 of Addendum A to this notice provides the States' 
``preliminary'' FFY 2003 and FFY 2004 DSH allotments. These preliminary 
allotments for each State were computed using the August 2002 and 
August 2003 estimates submitted by the States on the Form CMS-37. We 
will publish the final FFY 2003 and FFY 2004 DSH allotments for each 
State following receipt of, the States' four quarterly Medicaid 
expenditure reports

[[Page 15853]]

(Form CMS-64) for FFY 2003 and FFY 2004.
    Chart 6 of Addendum A to this notice provides the determination of 
the Low-DSH States in accordance with the 1-percent test established by 
BIPA for determining State FY 2001 DSH allotments.
    Chart 7 of Addendum A to this notice provides the determination of 
the Low-DSH States in accordance with the 3-percent test established by 
MMA for determining State FY 2004 DSH allotments.

III. Calculation of the FFYs 2000 through 2004 IMD DSH Limits

    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 IMDs 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 us on the Form CMS-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. The amounts of the limits on IMD DSH expenditures were made 
available to the States as part of their CMS-64 report. We are 
publishing these limits along with an explanation of the calculation of 
these limits in the Federal Register notice as a courtesy to providers 
and the general public.
    For FFY 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 CMS-64 as of January 1, 1997
    (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 CMS-64 as 
of January 1, 1997.
    For FFY 2000, the applicable percentage is calculated and applied 
to the State's FFY 2000 total computable DSH allotment. A State's total 
computable FFY 2000 DSH allotment is calculated by dividing the State's 
Federal share DSH allotment for FFY 2000 by the State's Federal medical 
assistance percentage (FMAP) for FFY 2000. 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 CMS-64 as of January 1, 1997. The lesser of these two amounts is 
the State's limitation on total computable IMD/DSH expenditures for FFY 
2000.
    For FFY 2001, the applicable percentage is the lesser of 50 percent 
or the 1995 DSH IMD percentage of the amount computed for FFY 2000. 
This percentage is applied to the State's FFY 2001 total computable DSH 
allotment. 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 CMS-64 as of January 1, 
1997. The lesser of these two amounts is the State's limitation on 
total computable IMD/DSH expenditures for FFY 2001.
    For FFY 2002, the applicable percentage is the lesser of 40 percent 
or the 1995 DSH IMD percentage of the amount computed for FFY 2000. 
This percentage is applied to the State's FFY 2002 total computable DSH 
allotment. 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 CMS-64 as of January 1, 
1997. The lesser of these two amounts is the State's limitation on 
total computable IMD/DSH expenditures for FFY 2002.
    For FFY 2003, the applicable percentage is the lesser of 33 percent 
or the 1995 DSH IMD percentage of the amount computed for FFY 2000. 
This percentage is applied to the State's FFY 2003 total computable DSH 
allotment. 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 CMS-64 as of January 1, 
1997. The lesser of these two amounts is the State's limitation on 
total computable IMD/DSH expenditures for FFY 2003.
    For FFY 2004, the applicable percentage is the lesser of 33 percent 
or the 1995 DSH IMD percentage of the amount computed for FFY 2000. 
This percentage is applied to the State's FFY 2004 total computable DSH 
allotment. 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 CMS-64 as of January 1, 
1997. The lesser of these two amounts is the State's limitation on 
total computable IMD/DSH expenditures for FFY 2004.
    Charts 8 and 9 of Addendum A to this notice represents a 
republication of the detail of each States' IMD/DSH limitation for FFY 
1998 and FFY 1999; these amounts were previously published in the 
Federal Register on October 8, 1998, in a chart which reflected the IMD 
DSH limits in section 1923(h) of the Act, as amended through the 
provisions of section 601 of Pub. L. 105-78. Charts 8 and 9 updates the 
chart published in the Federal Register on October 8, 1998 for certain 
States to reflect the further amendments made to the DSH allotments for 
FFY 1998 through FFY 2000 in section 1923(f)(2) of the Act (which are 
used in the determination of the IMD DSH limits), as amended BBRA.
    Charts 10 through 14 of Addendum A to this notice detail each 
State's IMD/DSH limitation for FFYs 2000 through 2004, respectively, in 
accordance with section 1923(h) of the Act. We will address future 
payments in subsequent issuances.

IV. Annual Reporting Requirements

    Section 4721(a) of Pub. L. 105-33, amended section 1923(a) of the 
Act requiring States to provide an annual report to the Secretary 
describing the disproportionate share payments to each DSH.
    In the October 8, 1998 Federal Register (63 FR 54142), we published 
a notice that addressed the annual reporting requirements. In that 
notice, we recommended that a State submit hospital-specific data (name 
of hospital, type of hospital--for example, children's, psychiatric, 
public versus private--and annual payment) to its CMS regional office 
at the close of the first quarter of the FFY following the FFY in which 
the DSH was paid. We requested comments from the public regarding the 
format and the data that would be collected in this report.
    In response to the October 8, 1998 notice, we received several 
comments regarding the content and the availability of this report. 
Many comments indicated that the reports should include more specific 
details including the formula the State uses for qualifying the 
hospital for the DSH payment, and the components used to calculate the 
hospital-specific DSH payments.
    In addition to these comments requesting that more detailed data 
would be required on the DSH annual report, the Office of the Inspector 
General (OIG) made recommendations about States' DSH programs based on 
the findings from their State audits. The BIPA provided that the 175 
percent hospital specific DSH limit would apply to qualifying public 
hospitals in all States. The limit, allowing DSH payments of up to 175 
percent of each hospital's cost of unreimbursed care, would apply for 
two State fiscal years

[[Page 15854]]

beginning on the first day of the State fiscal year that begins after 
September 30, 2002 and ends on the last day of the succeeding State 
fiscal year.
    The OIG has begun to monitor States' disproportionate share 
hospital payments to determine whether the results from their reviews 
of uncompensated care claimed by hospitals at selected States and their 
review of enhanced payments and intergovernmental transfer of funds by 
public hospitals to the States would support the need for increased DSH 
reimbursements. To date, they have completed or are in the process of 
completing audits in several States.
    Based on current audit results, the OIG believes that DSH payments 
presently are not always being retained and used by the public 
hospitals and the DSH payments received are not always correctly 
calculated.
    Based upon the statutory requirement that States provide an annual 
report to the Secretary describing the disproportionate share hospital 
payments, each State must submit DSH expenditure information utilizing 
an Excel format containing the mandatory requirements listed in 
Addendum B.
    States may submit their annual report electronically to 
[email protected]. These reports must be submitted by the end of the 
first quarter of the FFY following the reporting FFY. Therefore, by 
December 31, 2004, all FFY 2004 DSH reports must be sent to the CMS 
Central Office at the following address: National Institutional 
Reimbursement Team, CMS, CMSO, Mailstop: S3-13-15, 7500 Security 
Boulevard, Baltimore, Maryland 21244-1850.

V. Collection of Information Requirements

    Under the Paperwork Reduction Act of 1995 (PRA), we are required to 
provide 60-day notice in the Federal Register and solicit public 
comment before a collection of information requirement is submitted to 
the Office of Management and Budget (OMB) for review and approval. In 
order to fairly evaluate whether OMB approves an information 
collection, 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.
    The requirements associated with this notice are currently approved 
under OMB approval number 0938-0746 (CMS-R-0266, Medicaid 
Disproportionate Share Annual Report for Hospitals and Institutions), 
with a current expiration date of October 30, 2005. However, as 
reflected in this notice, we are proposing to modify the currently 
approved requirements by providing a structured format for State 
reporting and refining the currently approved collection requirements. 
The format will not impose any additional burden.
    If you comment on these information collection and recordkeeping 
requirements, please mail copies directly to the following:

Centers for Medicare & Medicaid Services, Office of Strategic 
Operations and Regulatory Affairs, Attn: John Burke (CMS-2062-N), Room 
C5-13-28, 7500 Security Boulevard, Baltimore, MD 21244-1850;
 and
Office of Information and Regulatory Affairs, Office of Management and 
Budget, Room 10235, New Executive Office Building, Washington, DC 
20503, Attn: Brenda Aguilar, CMS Desk Officer (CMS-2062-N).

VI. Impact Statement

    The Regulatory Flexibility Act (RFA), 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. 553, unless we certify that the rule will not have a 
significant economic impact on a substantial number of small entities. 
For purposes of the RFA, States and individuals are not considered 
small entities. However, providers with receipts ranging from less than 
$5 million to less than $25 million depending on their provider type 
are considered small entities (65 FR 69432, November 17, 2000). Due to 
the various controlling statutes, the effects on providers are not a 
result of any independent regulatory impact and not this notice. The 
purpose of the notice is to simply announce the latest distributions as 
required by the statute.
    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 100 beds.
    The BBA and the BBRA set statutorily defined limits on the amount 
of Federal share DSH expenditures available for FFYs 1998 through 2002. 
The BIPA amended sections of the Act that set forth these statutorily 
defined Federal DSH allotments. The following table displays our 
estimates of the impact of changes to the Federal DSH allotments as a 
result of BBA, BBRA, and BIPA.

                                             Federal Cost (Savings)
                                            [in billions of dollars]
----------------------------------------------------------------------------------------------------------------
                  Fiscal year                        2001         2002         2003         2004         2005
----------------------------------------------------------------------------------------------------------------
BBA............................................         -2.8         -3.5         -4.0         -4.5         -5.0
BBRA...........................................            *            *            *            *            *
BIPA...........................................          0.2          0.7          0.0          0.0          0.0
                                                --------------
    Total......................................         -2.6         -2.8         -4.0         -4.5        -5.0
----------------------------------------------------------------------------------------------------------------
* = < $50 million.

    Based on these findings, the limits initially imposed by the BBA 
and the BBRA will negatively impact the availability of FFP to States, 
thus potentially negatively impacting the availability of Medicaid 
expenditures to hospitals, especially IMDs. However, the BIPA reduces 
the Federal savings, thus increasing the amount of Federal funding 
available to States under the DSH program. While overall, the statute 
still mandates some reduction in DSH

[[Page 15855]]

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.
    In section 202 of the Unfunded Mandates Reform Act requires that 
agencies prepare an assessment of anticipated costs and benefits for 
any rule that may result in an annual expenditure by State, local, or 
tribal governments, in the aggregate, or by the private sector, of $110 
million or more. This notice has no consequential effect on State, 
local, or 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 (OMB).
    We have reviewed this notice under the threshold criteria of 
Executive Order 13132, Federalism. We have determined that it does not 
significantly affect the rights, roles, and responsibilities of States.

Addendum A

    This addendum contains the charts 1 through 6 (including 
associated keys) that are referred to in the preamble of this 
notice.

   Chart 1.--DSH Allotments for FY 1998 Through FY 2000--From Section
                  1902(f)(2) of the Social Security Act
       [Key to Chart of the FFY 1998 Through 2000 DSH Allotments]
------------------------------------------------------------------------
            Column                            Description
------------------------------------------------------------------------
Column A.....................  STATE.
Column B.....................  FY 1998 DSH ALLOTMENTS Federal Share.
                                This column contains the FFY 1998 DSH
                                allotments from section 1923(f)(2) of
                                the Act, as amended.
Column C.....................  FY 1999 DSH ALLOTMENTS Federal Share.
                                This column contains the FFY 1999 DSH
                                allotments from section 1923(f)(2) of
                                the Act, as amended.
Column D.....................  FY 2000 DSH ALLOTMENTS Federal Share.
                                This column contains the FFY 1999 DSH
                                allotments from section 1923(f)(2) of
                                the Act, as amended.
------------------------------------------------------------------------


       DSH Allotments for FY 1998 Through FY 2000--From Section 1902(f)(2) of the Social Security Act \*\
----------------------------------------------------------------------------------------------------------------
                  A                               B                        C                        D
----------------------------------------------------------------------------------------------------------------
                                        FY 1998 DSH allotments   TY 1999 DSH allotments   FY 2000 DSH allotments
                State                       Federal share            Federal share            Federal share
----------------------------------------------------------------------------------------------------------------
Alabama..............................             $293,000,000              269,000,000              248,000,000
Alaska...............................               10,000,000               10,000,000               10,000,000
Arizona..............................               81,000,000               81,000,000               81,000,000
Arkansas.............................                2,000,000                2,000,000                2,000,000
California...........................            1,085,000,000            1,068,000,000              986,000,000
Colorado.............................               93,000,000               85,000,000               79,000,000
Connecticut..........................              200,000,000              194,000,000              164,000,000
Delaware.............................                4,000,000                4,000,000                4,000,000
District of Columbia.................               23,000,000               23,000,000               32,000,000
Florida..............................              207,000,000              203,000,000              197,000,000
Georgia..............................              253,000,000              248,000,000              241,000,000
Hawaii...............................                        0                        0                        0
Idaho................................                1,000,000                1,000,000                1,000,000
Illinois.............................              203,000,000              199,000,000              193,000,000
Indiana..............................              201,000,000              197,000,000              191,000,000
Iowa.................................                8,000,000                8,000,000                8,000,000
Kansas...............................               51,000,000               49,000,000               42,000,000
Kentucky.............................              137,000,000              134,000,000              130,000,000
Louisiana............................              880,000,000              795,000,000              713,000,000
Maine................................              103,000,000               99,000,000               84,000,000
Maryland.............................               72,000,000               70,000,000               68,000,000
Massachusetts........................              288,000,000              282,000,000              273,000,000
Michigan.............................              249,000,000              244,000,000              237,000,000
Minnesota............................               33,000,000               33,000,000               33,000,000
Mississippi..........................              143,000,000              141,000,000              136,000,000
Missouri.............................              436,000,000              423,000,000              379,000,000
Montana..............................                  200,000                  200,000                  200,000
Nebraska.............................                5,000,000                5,000,000                5,000,000
Nevada...............................               37,000,000               37,000,000               37,000,000
New Hampshire........................              140,000,000              136,000,000              130,000,000
New Jersey...........................              600,000,000              582,000,000              515,000,000
New Mexico...........................                5,000,000                9,000,000                9,000,000
New York.............................            1,512,000,000            1,482,000,000            1,436,000,000
North Carolina.......................              278,000,000              272,000,000              264,000,000
North Dakota.........................                1,000,000                1,000,000                1,000,000
Ohio.................................              382,000,000              374,000,000              363,000,000
Oklahoma.............................               16,000,000               16,000,000               16,000,000
Oregon...............................               20,000,000               20,000,000               20,000,000
Pennsylvania.........................              529,000,000              518,000,000              502,000,000
Rhode Island.........................               62,000,000               60,000,000               58,000,000
South Carolina.......................              313,000,000              303,000,000              262,000,000

[[Page 15856]]

 
South Dakota.........................                1,000,000                1,000,000                1,000,000
Tennessee............................                        0                        0                        0
Texas................................              979,000,000              950,000,000              806,000,000
Utah.................................                3,000,000                3,000,000                3,000,000
Vermont..............................               18,000,000               18,000,000               18,000,000
Virginia.............................               70,000,000               68,000,000               66,000,000
Washington...........................              174,000,000              171,000,000              166,000,000
West Virginia........................               64,000,000               63,000,000               61,000,000
Wisconsin............................                7,000,000                7,000,000                7,000,000
                                      ==========================
Wyoming..............................                   67,000                   95,000                  100,000
    Total............................           10,272,267,000            9,958,295,000           9,278,300,000
----------------------------------------------------------------------------------------------------------------
* DSH Allotments in section 1923(f)(2) of the Act as initially enacted by section 4721 of Public Law 105-33 and
  amended as follows:
Section 601 of Public Law 105-78, for FY 1998 for MN
Sections 702-704 of Public Law 105-277, for FY 1999 for MN, NM, and WY, respectively.
Sections 601(a)(1)-(4) of Public Law 106-113, for FYs 2000-2002 for D.C., MN, NM, and WY, respectively.


                 Chart 2.--Final FY 2001 DSH Allotments
           [Key to Chart of the FFY 2001 Final DSH Allotments]
------------------------------------------------------------------------
            Column                            Description
------------------------------------------------------------------------
Column A.....................  STATE.
Column B.....................  FY 2001 FEDERAL MEDICAL ASSISTANCE
                                PERCENTAGE (FMAP).
Column C.....................  FY 2000 FEDERAL SHARE DSH ALLOTMENT
                                (FINAL). This column contains the Final
                                FFY 2000 DSH allotments from section
                                1923(f)(2) of the Act.
Column D.....................  FFY 2000 DSH Allotment INCR. BY CPIU.
                                This column contains the FFY 2000 DSH
                                allotments in Column C increased by the
                                CPIU for that fiscal year.
Column E.....................  ACTUAL TOTAL MAP FOR FY 2001. This column
                                contains the total computable medical
                                assistance expenditures, including DSH
                                expenditures for FFY 2001.
Column F.....................  DSH TOTAL EXPENDITURES FOR FY 2001. This
                                column contains the actual total
                                computable DSH expenditures for FFY
                                2001.
Column G.....................  ACTUAL TOTAL MAP NET OF DSH FY 2001. This
                                column contains the total computable
                                medical assistance expenditures, net of
                                DSH expenditures, for FFY 2001.
Column H.....................  12 PERCENT LIMIT (In FS). This column
                                contains the 12 Percent Limit; this is a
                                Federal share amount.
Column I.....................  GREATER OF COL H OR COL C. This column
                                contains amount which is the greater of
                                Column H (the 12-percent limit) or
                                Column C (the Federal share FFY 2000 DSH
                                allotment).
Column J.....................  LESSER OF COL I OR COL D. This column
                                contains the lesser of Column I or
                                Column D (the Federal share DSH
                                allotment for FFY 2000).
Column K.....................  LOW-DSH STATES. This column indicates
                                ``Special Rule'' for those States that
                                meet the Low-DSH criteria in determining
                                the FFY 2001 allotments, as contained in
                                section 1923(f)(5) of the Act.
Column L.....................  LOW-DSH RULE STATES FY 2001 AMOUNT. This
                                column contains the FFY 2001 allotment
                                amounts for Low-DSH States; this amount
                                is equal to 1 percent of the State's
                                Total Medical Assistance expenditures
                                for 2001.
Column M.....................  FY 2001 FS DSH ALLOTMENT (=GREATER OF COL
                                J OF COL L). The amount in this column
                                is equal to the greater of Column J or
                                Column L and represents the final
                                Federal Share DSH allotment.
------------------------------------------------------------------------


[[Page 15857]]

[GRAPHIC] [TIFF OMITTED] TN26MR04.027


[[Page 15858]]


                Chart 3.--Final 2002 Final DSH Allotments
         [Key to the Chart of the Final FFY 2002 DSH Allotments]
------------------------------------------------------------------------
            Column                            Description
------------------------------------------------------------------------
Column A.....................  State.
Column B.....................  FY 2002 FEDERAL MEDICAL ASSISTANCE
                                PERCENTAGE (FMAP).
Column C.....................  FY 2001 FEDERAL SHARE DSH ALLOTMENT
                                (FINAL). This column contains the FFY
                                2001 DSH allotments from section
                                1923(f)(2) of the Act.
Column D.....................  FFY 2001 DSH Allotment INCR. BY CPIU.
                                This column contains the FFY 2001 DSH
                                allotments in Column C increased by the
                                CPIU for that fiscal year.
Column E.....................  ACTUAL TOTAL MAP FOR FY 2002. This column
                                contains the total computable medical
                                assistance expenditures, including DSH
                                expenditures for FFY 2002.
Column F.....................  DSH TOTAL EXPENDITURES FOR FY 2002. This
                                column contains the actual total
                                computable DSH expenditures for FFY
                                2002.
Column G.....................  ACTUAL TOTAL MAP NET OF DSH FY 2002. This
                                column contains the total computable
                                medical assistance expenditures, net of
                                DSH expenditures, for FFY 2001.
Column H.....................  12 PERCENT LIMIT (In FS). This column
                                contains the 12 Percent Limit; this is a
                                Federal share amount.
Column I.....................  GREATER OF COL H OR COL C. This column
                                contains amount which is the greater of
                                Column H (the 12-percent limit) or
                                Column C (the Federal share FFY 2001 DSH
                                allotment).
Column J.....................  LESSER OF COL I OR COL D. This column
                                contains the lesser of Column I or
                                Column D.
Column K.....................  FY 2002 FS DSH ALLOTMENT (=COL J). The
                                amount in this column represents the
                                final Federal Share DSH allotment for
                                FFY 2002, and is equal to Column J.
------------------------------------------------------------------------


[[Page 15859]]

[GRAPHIC] [TIFF OMITTED] TN26MR04.028


[[Page 15860]]


              Chart 4.--Preliminary FY 2003 DSH Allotments
      [Key to the Chart of the Preliminary FFY 2003 DSH Allotments]
------------------------------------------------------------------------
            Column                            Description
------------------------------------------------------------------------
Column A.....................  STATE.
Column B.....................  FY 2003 FEDERAL MEDICAL ASSISTANCE
                                PERCENTAGE (FMAP).
Column C.....................  FY 2002 FEDERAL SHARE DSH ALLOTMENT
                                (FINAL). This column contains the FFY
                                2002 DSH allotments from the chart in
                                section 1923(f)(2) of the Act.
Column D.....................  FFY 2002 DSH Allotment INCR. BY CPIU.
                                This column contains the FFY 2002 DSH
                                allotments in Column C increased by the
                                CPIU for that fiscal year.
Column E.....................  08/15/02 EST. OF TC MAP EXP. INCLUDING
                                DSH FOR FY 2003. This column contains
                                the August 2002 estimates of total
                                computable medical assistance
                                expenditures, including DSH expenditures
                                for FFY 2003.
Column F.....................  08/15/02 EST. OF TC DSH EXPENDITURES FOR
                                FY 2003. This column contains the August
                                2002 estimates of the total computable
                                DSH expenditures for FFY 2003.
Column G.....................  08/15/02 EST. OF TC MAP EXP. NET OF DSH
                                FY 2003. This column contains the total
                                computable medical assistance
                                expenditures, net of DSH expenditures,
                                for FFY 2003.
Column H.....................  12 PERCENT LIMIT (In FS). This column
                                contains the 12 Percent Limit; this is a
                                Federal share amount.
Column I.....................  GREATER OF COL. H OR COL. C. This column
                                contains amount which is the greater of
                                Column H (the 12-percent limit) or
                                Column C (the Federal share FFY 2001 DSH
                                allotment).
Column J.....................  LESSER OF COL. I OR COL. D. This column
                                contains the lesser of Column I or
                                Column D.
Column K.....................  FY 2003 FS DSH ALLOTMENT (=COL. J). The
                                amount in this column represents the
                                preliminary Federal Share DSH allotment
                                for FFY 2003, and is equal to Column J.
------------------------------------------------------------------------


[[Page 15861]]

[GRAPHIC] [TIFF OMITTED] TN26MR04.029


[[Page 15862]]


              Chart 5.--Preliminary FY 2004 DSH Allotments
      [Key to the Chart of the Preliminary FFY 2004 DSH Allotments]
------------------------------------------------------------------------
            Column                            Description
------------------------------------------------------------------------
Column A.....................  STATE.
Column B.....................  FY 2004 FEDERAL MEDICAL ASSISTANCE
                                PERCENTAGE (FMAP).
Column C.....................  FY 2003 FEDERAL SHARE DSH ALLOTMENT. This
                                column contains the preliminary FFY 2003
                                DSH allotments.
Column D.....................  FY 2004 FS DSH ALLOTMENT = COL. C x 1.16.
                                This column contains the FFY 2003 DSH
                                allotments in Column C increased by 16
                                percent.
------------------------------------------------------------------------


[[Page 15863]]

[GRAPHIC] [TIFF OMITTED] TN26MR04.030


[[Page 15864]]


 Chart 6.--FY 1999 DSH Payments as Reported as of August 31, 2000--Low-
                   DSH States Using ``1 Percent Test''
            [Key to the Chart of the Low-DSH Determinations]
------------------------------------------------------------------------
            Column                            Description
------------------------------------------------------------------------
Column A.....................  STATE.
Column B.....................  FY 1999 I/P HOSPITAL DSH Total
                                Computable. This column contains the
                                States' total computable FFY 1999
                                inpatient hospital DSH expenditures as
                                reported on the Form CMS-64 as reported
                                on the Form CMS-64 as of August 31,
                                2000.
Column C.....................  FY 1999 MENTAL HEALTH DSH Total
                                Computable. This column contains the
                                total computable FFY 1999 mental health
                                facility DSH expenditures as reported on
                                the Form CMS-64 as of August 31, 2000.
Column D.....................  TOTAL FY 1999 DSH Total Computable Col B
                                + C. This column contains the total FFY
                                1999 DSH payments as reported on the
                                Form CMS-64 as of August 31, 2000
                                (calculated as the sum of Column B and
                                Column C).
Column E.....................  FY 1999 MAP EXPENDITURES Total
                                Computable. This column contains the FFY
                                1999 total computable medical assistance
                                expenditures, including DSH payments.
Column F.....................  TC DSH AS A PERCENT OF TC MAP Col D/E.
                                This column present the total computable
                                FFY 1999 DSH as a percentage of the FFY
                                1999 total computable medical assistance
                                expenditures, calculated as Column D
                                divided by Column E.
Column G.....................  LOW-DSH STATES. (0 < Col F, Col F <
                                1%)FFY. This columns presents the Low-
                                DSH States. Low-DSH States are those
                                with a percentage entry in this column.
                                States that are not determined to be a
                                Low-DSH States are indicated by an ``N/
                                A'' entry in this column. Low-DSH States
                                are those whose entry in Column F is
                                greater than 0 but less than 1 percent.
------------------------------------------------------------------------


[[Page 15865]]

[GRAPHIC] [TIFF OMITTED] TN26MR04.031


[[Page 15866]]


 Chart 7.--FY 2000 DSH Payments as Reported as of August 31, 2003--Low-
                   DSH States Using ``3 Percent Test''
            [Key to the Chart of the Low-DSH Determinations]
------------------------------------------------------------------------
            Column                            Description
------------------------------------------------------------------------
Column A.....................  STATE.
Column B.....................  FY 2000 I/P HOSPITAL DSH Total
                                Computable. This column contains the
                                States' total computable FFY 2000
                                inpatient hospital DSH expenditures as
                                reported on the Form CMS-64 as reported
                                on the Form CMS-64 as of August 31,
                                2003.
Column C.....................  FY 2000 MENTAL HEALTH DSH Total
                                Computable. This column contains the
                                total computable FFY 2000 mental health
                                facility DSH expenditures as reported on
                                the Form CMS-64 as of August 31, 2003.
Column D.....................  TOTAL FY 2000 DSH Total Computable Col. B
                                + C. This column contains the total FFY
                                2000 DSH payments as reported on the
                                Form CMS-64 as of August 31, 2003
                                (calculated as the sum of Column B and
                                Column C).
Column E.....................  FY 2000 MAP EXPENDITURES Total
                                Computable. This column contains the FFY
                                2000 total computable medical assistance
                                expenditures, including DSH payments.
Column F.....................  TC DSH AS A PERCENT OF TC MAP Col. D/E.
                                This column presents the total
                                computable FFY 2000 DSH as a percentage
                                of the FFY 2000 total computable medical
                                assistance expenditures, calculated as
                                Column D divided by Column E.
Column G.....................  LOW-DSH STATES. (0 < Col. F, Col. F < 3%)
                                FFY. This columns presents the Low-DSH
                                States. Low-DSH States are those with a
                                percentage entry in this column. States
                                that are not determined to be Low-DSH
                                States are indicated by an ``N/A'' entry
                                in this column. Low-DSH States are those
                                whose entry in Column F is greater than
                                0 but less than 3 percent.
------------------------------------------------------------------------


[[Page 15867]]

[GRAPHIC] [TIFF OMITTED] TN26MR04.032


[[Page 15868]]


                 Chart 8.--Final FY 1998 IMD DSH Limits
           [Key to the Chart of the FFY 1998 IMD Limitations]
------------------------------------------------------------------------
            Column                            Description
------------------------------------------------------------------------
Column A.....................  STATE.
Column B.....................  INPATIENT HOSPITAL SERVICES FY 95 DSH
                                TOTAL COMPUTABLE. This column contains
                                the States' total computable FFY 1995
                                inpatient hospital DSH expenditures as
                                reported on the Form CMS-64.
Column C.....................  IMD AND MENTAL HEALTH SERVICES FY 95 DSH
                                TOTAL COMPUTABLE. This column contains
                                the total computable FFY 1995 mental
                                health facility DSH expenditures as
                                reported on the Form CMS-64 as of
                                January 1, 1997.
Column D.....................  TOTAL INPATIENT & IMD & MENTAL HEALTH FY
                                95 DSH TOTAL COMPUTABLE, Col. B + C.
                                This column contains the total
                                computation of all inpatient hospital
                                DSH expenditures and mental health
                                facility DSH expenditures for FFY 1995
                                as reported on the Form CMS-64 as of
                                January 1, 1997 (representing the sum of
                                Column B and Column C).
Column E.....................  APPLICABLE PERCENTAGE Col. C/D. This
                                column contains the ``applicable
                                percentage'' representing the 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 (the amount in
                                Column C divided by the amount in Column
                                D).
Column F.....................  FY 1998 FEDERAL SHARE DSH ALLOTMENT. This
                                column contains the States' final FFY
                                2002 DSH allotments.
Column G.....................  FFY 1998 FMAP.
Column H.....................  FY 1998 DSH ALLOTMENT TOTAL COMPUTABLE
                                Col. F/G. This column contains FFY 1998
                                total computable DSH allotment
                                (determined as Column F/Column G).
Column I.....................  APPLICABLE PERCENT OF FY 1998 DSH
                                ALLOTMENT. Col. E x H. This column
                                contains the applicable percent of FFY
                                1998 total computable DSH allotment
                                (calculated as Column E x Column H).
Column J.....................  FY 1998 IMD DSH LIMIT TOTAL COMPUTABLE
                                Lesser of Col. C or I. The column
                                contains the lesser of the lesser of
                                Column I or C.
Column K.....................  FY 1998 IMD DSH LIMIT FEDERAL SHARE. This
                                column contains the total computable IMD
                                DSH Limit from Col. J and converts that
                                amount into a Federal share (calculated
                                as Col. G x Col. J).
------------------------------------------------------------------------


[[Page 15869]]

[GRAPHIC] [TIFF OMITTED] TN26MR04.040


[[Page 15870]]


                 Chart 9.--Final FY 1999 IMD DSH Limits
           [Key to the Chart of the FFY 1999 IMD Limitations]
------------------------------------------------------------------------
            Column                            Description
------------------------------------------------------------------------
Column A.....................  STATE.
Column B.....................  INPATIENT HOSPITAL SERVICES FY 95 DSH
                                TOTAL COMPUTABLE. This column contains
                                the States' total computable FFY 1995
                                inpatient hospital DSH expenditures as
                                reported on the Form CMS-64.
Column C.....................  IMD AND MENTAL HEALTH SERVICES FY 95 DSH
                                TOTAL COMPUTABLE. This column contains
                                the total computable FFY 1995 mental
                                health facility DSH expenditures as
                                reported on the Form CMS-64 as of
                                January 1, 1997.
Column D.....................  TOTAL INPATIENT & IMD & MENTAL HEALTH FY
                                95 DSH TOTAL COMPUTABLE, Col. B + C.
                                This column contains the total
                                computation of all inpatient hospital
                                DSH expenditures and mental health
                                facility DSH expenditures for FFY 1995
                                as reported on the Form CMS-64 as of
                                January 1, 1997 (representing the sum of
                                Column B and Column C).
Column E.....................  APPLICABLE PERCENTAGE Col. C/D. This
                                column contains the ``applicable
                                percentage'' representing the 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 (the amount in
                                Column C divided by the amount in Column
                                D).
Column F.....................  FY 1999 FEDERAL SHARE DSH ALLOTMENT. This
                                column contains the States' final FFY
                                1999 DSH allotments.
Column G.....................  FFY 1999 FMAP.
Column H.....................  FY 1999 DSH ALLOTMENT TOTAL COMPUTABLE
                                Col. F/G. This column contains FFY 1999
                                total computable DSH allotment
                                (determined as Column F/Column G).
Column I.....................  APPLICABLE PERCENT OF FY 1999 DSH
                                ALLOTMENT. Col. E x H. This column
                                contains the applicable percent of FFY
                                1999 total computable DSH allotment
                                (calculated as Column E x Column H).
Column J.....................  FY 1999 IMD DSH LIMIT TOTAL COMPUTABLE
                                Lesser of Col. C or I. The column
                                contains the lesser of the lesser of
                                Column I or C.
Column K.....................  FY 1999 IMD DSH LIMIT FEDERAL SHARE. This
                                column contains the total computable IMD
                                DSH Limit from Col. J and converts that
                                amount into a Federal share (calculated
                                as Col. G x Col. J).
------------------------------------------------------------------------


[[Page 15871]]

[GRAPHIC] [TIFF OMITTED] TN26MR04.033


[[Page 15872]]


                 Chart 10.--Final FY 2000 IMD DSH Limits
           [Key to the Chart of the FFY 2000 IMD Limitations]
------------------------------------------------------------------------
            Column                            Description
------------------------------------------------------------------------
Column A.....................  STATE.
Column B.....................  INPATIENT HOSPITAL SERVICES FY 95 DSH
                                TOTAL COMPUTABLE. This column contains
                                the States' total computable FFY 1995
                                inpatient hospital DSH expenditures as
                                reported on the Form CMS-64.
Column C.....................  IMD AND MENTAL HEALTH SERVICES FY 95 DSH
                                TOTAL COMPUTABLE. This column contains
                                the total computable FFY 1995 mental
                                health facility DSH expenditures as
                                reported on the Form CMS-64 as of
                                January 1, 1997.
Column D.....................  TOTAL INPATIENT & IMD & MENTAL HEALTH FY
                                95 DSH TOTAL COMPUTABLE, Col. B + C.
                                This column contains the total
                                computation of all inpatient hospital
                                DSH expenditures and mental health
                                facility DSH expenditures for FFY 1995
                                as reported on the Form CMS-64 as of
                                January 1, 1997 (representing the sum of
                                Column B and Column C).
Column E.....................  APPLICABLE PERCENTAGE Col. C/D. This
                                column contains the ``applicable
                                percentage'' representing the 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 (the amount in
                                Column C divided by the amount in Column
                                D).
Column F.....................  FY 2000 FEDERAL SHARE DSH ALLOTMENT. This
                                column contains the States' final FFY
                                2000 DSH allotments.
Column G.....................  FFY 2000 FMAP.
Column H.....................  FY 2000 DSH ALLOTMENT TOTAL COMPUTABLE
                                Col. F/G. This column contains FFY 2000
                                total computable DSH allotment
                                (determined as Column F/Column G).
Column I.....................  APPLICABLE PERCENT OF FY 2000 DSH
                                ALLOTMENT. Col. E x H. This column
                                contains the applicable percent of FFY
                                2000 total computable DSH allotment
                                (calculated as Column E x Column H).
Column J.....................  FY 2000 IMD DSH LIMIT TOTAL COMPUTABLE
                                Lesser of Col. C or I. The column
                                contains the lesser of the lesser of
                                Column I or C.
Column K.....................  FY 2000 IMD DSH LIMIT FEDERAL SHARE. This
                                column contains the total computable IMD
                                DSH Limit from Col. J and converts that
                                amount into a Federal share (calculated
                                as Col. G x Col. J).
------------------------------------------------------------------------


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[[Page 15874]]


                 Chart 11.--Final FY 2001 IMD DSH Limits
           [Key to the Chart of the FFY 2001 IMD Limitations]
------------------------------------------------------------------------
            Column                            Description
------------------------------------------------------------------------
Column A.....................  STATE.
Column B.....................  INPATIENT HOSPITAL SERVICES FY 95 DSH
                                TOTAL COMPUTABLE. This Column contains
                                the States' total computable FFY 1995
                                inpatient hospital DSH expenditures as
                                reported on the Form CMS-64.
Column C.....................  IMD AND MENTAL HEALTH SERVICES FY 95 DSH
                                TOTAL COMPUTABLE. This Column contains
                                the total computable FFY 1995 mental
                                health facility DSH expenditures as
                                reported on the Form CMS-64 as of
                                January 1, 1997.
Column D.....................  TOTAL INPATIENT & IMD & MENTAL HEALTH FY
                                95 DSH TOTAL COMPUTABLE, Col. B + C.
                                This Column contains the total
                                computation of all inpatient hospital
                                DSH expenditures and mental health
                                facility DSH expenditures for FFY 1995
                                as reported on the Form CMS-64 as of
                                January 1, 1997 (representing the sum of
                                Column B and Column C).
Column E.....................  APPLICABLE PERCENTAGE Col. C/D. This
                                Column contains the ``applicable
                                percentage'' representing the 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 (the amount in
                                Column C divided by the amount in Column
                                D).
Column F.....................  FY 2001 FEDERAL SHARE DSH ALLOTMENT. This
                                Column contains the States' final FFY
                                2001 DSH allotments.
Column G.....................  FFY 2001 FMAP.
Column H.....................  FY 2001 DSH ALLOTMENT TOTAL COMPUTABLE
                                Col. F/G. This Column contains FFY 2001
                                total computable DSH allotment
                                (determined as Column F/Column G).
Column I.....................  APPLICABLE PERCENT OF FY 2001 DSH
                                ALLOTMENT. Col. E x H. This Column
                                contains the applicable percent of FFY
                                2001 total computable DSH allotment
                                (calculated as Column E x Column H).
Column J.....................  FY 2001 IMD DSH LIMIT TOTAL COMPUTABLE
                                Lesser of Col. C or I. The Column
                                contains the lesser of the lesser of
                                Column I or C.
Column K.....................  FY 2001 IMD DSH LIMIT FEDERAL SHARE, Col.
                                G x J. This Column contains the total
                                computable IMD DSH Limit from Col. J and
                                converts that amount into a Federal
                                share (calculated as Col. G x Col. J).
------------------------------------------------------------------------


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[[Page 15876]]


                Chart 12.--Final FFY 2002 IMD DSH Limits
           [Key to the Chart of the FFY 2002 IMD Limitations]
------------------------------------------------------------------------
            Column                            Description
------------------------------------------------------------------------
Column A.....................  STATE.
Column B.....................  INPATIENT HOSPITAL SERVICES FY 95 DSH
                                TOTAL COMPUTABLE. This column contains
                                the States' total computable FFY 1995
                                inpatient hospital DSH expenditures as
                                reported on the Form CMS-64.
Column C.....................  IMD AND MENTAL HEALTH SERVICES FY 95 DSH
                                TOTAL COMPUTABLE. This column contains
                                the total computable FFY 1995 mental
                                health facility DSH expenditures as
                                reported on the Form CMS-64 as of
                                January 1, 1997.
Column D.....................  TOTAL INPATIENT & IMD & MENTAL HEALTH FY
                                95 DSH TOTAL COMPUTABLE, Col. B + C.
                                This column contains the total
                                computation of all inpatient hospital
                                DSH expenditures and mental health
                                facility DSH expenditures for FFY 1995
                                as reported on the Form CMS-64 as of
                                January 1, 1997 (representing the sum of
                                Column B and Column C).
Column E.....................  APPLICABLE PERCENTAGE Col. C/D. This
                                column contains the ``applicable
                                percentage'' representing the 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 (the amount in
                                Column C divided by the amount in Column
                                D).
Column F.....................  FY 2002 FEDERAL SHARE DSH ALLOTMENT. This
                                column contains the States' final FFY
                                2002 DSH allotments.
Column G.....................  FFY 2002 FMAP.
Column H.....................  FY 2002 DSH ALLOTMENT TOTAL COMPUTABLE
                                Col. F/G. This column contains FFY 2002
                                total computable DSH allotment
                                (determined as Column F/Column G).
Column I.....................  APPLICABLE PERCENT OF FY 2002 DSH
                                ALLOTMENT. Col. E x H. This column
                                contains the applicable percent of FFY
                                2002 total computable DSH allotment
                                (calculated as Column E x Column H).
Column J.....................  FY 2002 IMD DSH LIMIT TOTAL COMPUTABLE
                                Lesser of Col. C or I. The column
                                contains the lesser of the lesser of
                                Column I or C.
Column K.....................  FY 2002 IMD DSH LIMIT FEDERAL SHARE, Col.
                                G x J. This column contains the total
                                computable IMD DSH Limit from Col. J and
                                converts that amount into a Federal
                                share (calculated as Col. G x Col. J).
------------------------------------------------------------------------


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[[Page 15878]]


              Chart 13.--Preliminary FY 2003 IMD DSH Limits
           [Key to the Chart of the FFY 2003 IMD Limitations]
------------------------------------------------------------------------
            Column                            Description
------------------------------------------------------------------------
Column A.....................  STATE.
Column B.....................  INPATIENT HOSPITAL SERVICES FY 95 DSH
                                TOTAL COMPUTABLE. This column contains
                                the States' total computable FFY 1995
                                inpatient hospital DSH expenditures as
                                reported on the Form CMS-64.
Column C.....................  IMD AND MENTAL HEALTH SERVICES FY 95 DSH
                                TOTAL COMPUTABLE. This column contains
                                the total computable FFY 1995 mental
                                health facility DSH expenditures as
                                reported on the Form CMS-64 as of
                                January 1, 1997.
Column D.....................  TOTAL INPATIENT & IMD & MENTAL HEALTH FY
                                95 DSH TOTAL COMPUTABLE, Col. B + C.
                                This column contains the total
                                computation of all inpatient hospital
                                DSH expenditures and mental health
                                facility DSH expenditures for FFY 1995
                                as reported on the Form CMS-64 as of
                                January 1, 1997 (representing the sum of
                                Column B and Column C).
Column E.....................  APPLICABLE PERCENTAGE Col. C/D. This
                                column contains the ``applicable
                                percentage'' representing the 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 (the amount in
                                Column C divided by the amount in Column
                                D).
Column F.....................  FY 2003 FEDERAL SHARE DSH ALLOTMENT. This
                                column contains the States' preliminary
                                FFY 2003 DSH allotments.
Column G.....................  FFY 2003 FMAP.
Column H.....................  FY 2003 DSH ALLOTMENT TOTAL COMPUTABLE
                                Col. F/G. This column contains FFY 2003
                                total computable DSH allotment
                                (determined as Column F/Column G).
Column I.....................  APPLICABLE PERCENT OF FY 2003 DSH
                                ALLOTMENT. Col. E x H. This column
                                contains the applicable percent of FFY
                                2003 total computable DSH allotment
                                (calculated as Column E x Column H).
Column J.....................  FY 2003 IMD DSH LIMIT TOTAL COMPUTABLE
                                Lesser of Col. C or I. The column
                                contains the lesser of Column I or C.
Column K.....................  FY 2003 IMD DSH LIMIT FEDERAL SHARE, Col.
                                G x J. This column contains the total
                                computable IMD DSH Limit from Col. J and
                                converts that amount into a Federal
                                share (calculated as Col. G x Col. J).
------------------------------------------------------------------------


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[[Page 15880]]


              Chart 14.--Preliminary FY 2004 IMD DSH Limits
           [Key to the Chart of the FFY 2004 IMD Limitations]
------------------------------------------------------------------------
            Column                            Description
------------------------------------------------------------------------
Column A.....................  STATE.
Column B.....................  INPATIENT HOSPITAL SERVICES FY 95 DSH
                                TOTAL COMPUTABLE. This column contains
                                the States' total computable FFY 1995
                                inpatient hospital DSH expenditures as
                                reported on the Form CMS-64.
Column C.....................  IMD AND MENTAL HEALTH SERVICES FY 95 DSH
                                TOTAL COMPUTABLE. This column contains
                                the total computable FFY 1995 mental
                                health facility DSH expenditures as
                                reported on the Form CMS-64 as of
                                January 1, 1997.
Column D.....................  TOTAL INPATIENT & IMD & MENTAL HEALTH FY
                                95 DSH TOTAL COMPUTABLE, Col. B + C.
                                This column contains the total
                                computation of all inpatient hospital
                                DSH expenditures and mental health
                                facility DSH expenditures for FFY 1995
                                as reported on the Form CMS-64 as of
                                January 1, 1997 (representing the sum of
                                Column B and Column C).
Column E.....................  APPLICABLE PERCENTAGE Col. C/D. This
                                column contains the ``applicable
                                percentage'' representing the 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 (the amount in
                                Column C divided by the amount in Column
                                D).
Column F.....................  FY 2004 FEDERAL SHARE DSH ALLOTMENT. This
                                column contains the States' preliminary
                                FFY 2004 DSH allotments.
Column G.....................  FFY 2004 FMAP.
Column H.....................  FY 2004 DSH ALLOTMENT TOTAL COMPUTABLE
                                Col. F/G. This column contains FFY 2004
                                total computable DSH allotment
                                (determined as Column F/Column G).
Column I.....................  APPLICABLE PERCENT OF FY 2004 DSH
                                ALLOTMENT. Col. E x H. This column
                                contains the applicable percent of FFY
                                2004 total computable DSH allotment
                                (calculated as Column E x Column H).
Column J.....................  FY 2004 IMD DSH LIMIT TOTAL COMPUTABLE
                                Lesser of Col. C or I. The column
                                contains the lesser of the lesser of
                                Column I or C.
Column K.....................  FY 2004 IMD DSH LIMIT FEDERAL SHARE, Col.
                                G x J. This column contains the total
                                computable IMD DSH Limit from Col. J and
                                converts that amount into a Federal
                                share (calculated as Col. G x Col. J).
------------------------------------------------------------------------


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[[Page 15882]]

Addendum B: General Instructions and Mandatory Hospital DSH Reporting 
Requirements

    States are required to submit, at least annually, DSH 
expenditure information by December 31 of each year for the prior 
Federal fiscal year (FFY). For example, FFY 2004 reports should be 
submitted electronically to CMS central office no later than 
December 31, 2004. Total DSH expenditures reported on this form must 
reflect the total DSH expenditures reported on the form CMS 64-9D 
for that year. States must use an Excel spreadsheet format, as 
specified in Addendum C.

------------------------------------------------------------------------
            Column                            Description
------------------------------------------------------------------------
Column A.....................  Hospital Name/City Location.
Column B.....................  Medicaid Provider Number.
Column C.....................  Type of Hospital. Indicate if it is an
                                acute, psychiatric, teaching,
                                children's, rehabilitative or other. If
                                other, specify type.
Column D.....................  Type of Hospital Ownership. Indicate
                                whether it is a privately owned and
                                operated facility, State government
                                owned or operated facility, non-State
                                government owned or operated facility or
                                a facility owned or operated by the IHS
                                or tribal government.
Column E.....................  Total Uncompensated Care. Indicate the
                                total of the cost of services to
                                Medicaid patients, less the amount paid
                                by the State under the non-DSH payment
                                provisions of the State plan and the
                                cost of services to uninsured patients,
                                less any cash payments made by them for
                                the FFY being reported.
Column F.....................  Total Medicaid Revenue. Indicate the
                                total Medicaid revenue paid to the
                                hospital for regular Medicaid payments,
                                DSH payments and supplemental payments
                                for the FFY being reported.
------------------------------------------------------------------------


(Please see Addendum C for spreadsheet format and a sample 
spreadsheet.)

Addendum C: The Formatting Requirements for Submission of the Annual 
DSH Report

Excel Spreadsheet Format Requirements and Sample Spreadsheet

    The following is the format for and a sample of the DSH report 
that States must submit beginning with FFY 2004:

Part I. Definition of Uncompensated Care

     Indicate the components and methodology used 
by the State to calculate uncompensated care.

Part II. FFY (Insert Year Reported)


------------------------------------------------------------------------
            Column                            Description
------------------------------------------------------------------------
Column A.....................  Hospital Name/City Location.
Column B.....................  Medicaid Provider Number.
Column C.....................  Type of Hospital. Indicate if it is an
                                acute, psychiatric, teaching,
                                children's, rehabilitative or other. If
                                other, specify type.
Column D.....................  Type of Hospital Ownership. Indicate
                                whether it is a privately owned and
                                operated facility, State government
                                owned or operated facility, non-State
                                government owned or operated facility or
                                a facility owned or operated by the IHS
                                or tribal government.
Column E.....................  Total Uncompensated Care. Indicate the
                                total of the cost of services to
                                Medicaid patients, less the amount paid
                                by the State under the non-DSH payment
                                provisions of the State plan and the
                                cost of services to uninsured patients,
                                less any cash payments made by them for
                                the FFY being reported.
Column F.....................  Total Medicaid Revenue. Indicate the
                                total Medicaid revenue paid to the
                                hospital for regular Medicaid payments,
                                DSH payments and supplemental payments
                                for the FFY being reported.
Column F1....................  Regular Service Payment. Indicate the
                                regular Medicaid payments paid to the
                                hospital, not including any DSH or
                                supplemental payments for the FFY being
                                reported.
Column F2....................  DSH Payment. Indicate the total DSH
                                payments paid to the hospital for the
                                FFY being reported. The payments and
                                prior period adjustments.
Column F3....................  Non-DSH Supplemental Payment. Indicate
                                any Medicaid supplemental payments paid
                                to the Sample Excel Spreadsheet.
------------------------------------------------------------------------


[[Page 15883]]

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[[Page 15884]]

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

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

    Dated: December 28, 2002.
Thomas A. Scully,
Acting Administrator, Center for Medicare and Medicaid Services.
    Dated: December 2, 2003.
Tommy G. Thompson,
Secretary.

[FR Doc. 04-6834 Filed 3-25-04; 8:45 am]
BILLING CODE 4120-01-P