[Federal Register Volume 62, Number 21 (Friday, January 31, 1997)]
[Notices]
[Pages 4772-4776]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-2381]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
[MB-104-N]
Medicaid Program; Preliminary Limitations on Aggregate Payments
to Disproportionate Share Hospitals: Federal Fiscal Year 1997
AGENCY: Health Care Financing Administration (HCFA), HHS.
ACTION: Notice.
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SUMMARY: This notice announces the preliminary Federal fiscal year
(FFY) 1997 national target and individual State allotments for Medicaid
payment adjustments made to hospitals that serve a disproportionate
number of Medicaid recipients and low-income patients with special
needs. We are publishing this notice in accordance with the provisions
of section 1923(f)(1)(C) of the Social Security Act and implementing
regulations at 42 CFR 447.297 through 447.299. The preliminary FFY 1997
[[Page 4773]]
State DSH allotments published in this notice will be superseded by the
final FFY 1997 DSH allotments that we intend to publish in the Federal
Register about April 1997.
EFFECTIVE DATE: The preliminary DSH payment adjustment expenditure
limits included in this notice apply to Medicaid DSH payment
adjustments for FFY 1997.
FOR FURTHER INFORMATION CONTACT: Richard Strauss, (410) 786-2019.
SUPPLEMENTARY INFORMATION:
I. Background
Section 1902(a)(13)(A) of the Social Security Act (the Act)
requires States to ensure that their Medicaid payment rates include
payment adjustments for Medicaid-participating hospitals that serve a
large number of Medicaid recipients and other low-income individuals
with special needs (referred to as disproportionate share hospitals
(DSH)). The DSH payment adjustments are calculated on the basis of
formulas specified in section 1923 of the Act.
Section 1923(f) of the Act and implementing Medicaid regulations at
42 CFR 447.297 through 447.299 require us to estimate and publish in
the Federal Register a national aggregate target and each State's
allotment for DSH payments for each Federal fiscal year (FFY). The
implementing regulations provide that the national DSH payment limit
for a FFY specified in the Act is a target rather than an absolute cap
when determining the amount that can be allocated for DSH payments. The
national DSH payment target is 12 percent of the total amount of
medical assistance expenditures (excluding total administrative costs)
that are projected to be made under approved Medicaid State plans
during the FFY. (Note: Whenever the phrases ``total medical assistance
expenditures'' or ``total administrative costs'' are used in this
notice, they mean both the State and Federal share of expenditures or
costs.)
In addition to the national DSH payment target, there is a specific
State DSH limit for each State for each FFY. The State DSH limit is a
specified amount of DSH payment adjustments applicable to a FFY above
which FFP will not be available. This is called the ``State DSH
allotment.''
Each State's DSH allotment for FFY 1997 is calculated by first
determining whether the State is a ``high-DSH State'' or a ``low-DSH
State.'' This is determined by using the State's ``base allotment.'' A
State's base allotment is the greater of the following amounts: (1) the
total amount of the State's actual and projected DSH payment
adjustments made under the State's approved State plan applicable to
FFY 1992, as adjusted by HCFA; or (2) $1,000,000.
A State whose base allotment exceeds 12 percent of the State's
total medical assistance expenditures (excluding administrative costs)
projected to be made in FFY 1997 is referred to as a ``high-DSH State''
for FFY 1997. The FFY 1997 State DSH allotment for a high-DSH State is
limited to the State's base allotment.
A State whose base allotment is equal to or less than 12 percent of
the State's total medical assistance expenditures (excluding
administrative costs) projected to be made in FFY 1997 is referred to
as a ``low-DSH State.'' The FFY 1997 State DSH allotment for a low-DSH
State is equal to the State's DSH allotment for FFY 1996 increased by
growth amounts and supplemental amounts, if any. However, the FFY 1997
DSH allotment for a low-DSH State cannot exceed 12 percent of the
State's total medical assistance expenditures for FFY 1997 (excluding
administrative costs).
The growth amount for FFY 1997 is equal to the projected percentage
increase (the growth factor) in a low-DSH State's total Medicaid
program expenditures between FFY 1996 and FFY 1997 multiplied by the
State's final DSH allotment for FFY 1996. Because the national DSH
payment limit is considered a target, low-DSH States whose programs
grow from one year to the next can receive a growth amount that would
not be permitted if the national DSH payment limit was viewed as an
absolute cap.
There is no growth factor and no growth amount for any low-DSH
State whose Medicaid program does not grow (that is, stayed the same or
declined) between FFY 1996 and FFY 1997. Furthermore, because a low-DSH
State's FFY 1996 DSH allotment cannot exceed 12 percent of the State's
total medical assistance expenditures, it is possible for its FFY 1997
DSH allotment to be lower than its FFY 1996 DSH allotment. This occurs
when the State experiences a decrease in its program expenditures
between years and its prior FFY DSH allotment is greater than 12
percent of the total projected medical assistance expenditures for the
current FFY. For FFY 1997, no State has a State DSH allotment that is
lower than its final FFY 1996 State DSH allotment.
For the first time since we began publishing the DSH allotments,
there are State supplemental amounts available for redistribution to
low-DSH States for FFY 1997. Under section 1923(f)(3) of the Act and
implementing regulations at 42 CFR 447.298(e), the State supplemental
amount, if any, is equal to a low-DSH State's relative share of a pool
of funds (the redistribution pool). The redistribution pool is equal to
the national 12-percent DSH payment target reduced by the sum of the
total of the base allotments for high-DSH States, the total of the
State DSH allotments for the previous FFY for low-DSH States, and the
total of the low-DSH State growth amounts. Since the projected FFY 1997
national 12-percent DSH payment target is greater than the sum of these
amounts, there is a redistribution pool and supplemental amounts are
available for low-DSH States for FFY 1997.
In accordance with section 1923(f)(3) of the Act and 42 CFR
447.298(e), we determine each low-DSH State's supplemental amount by
determining the State's relative share of the national redistribution
pool on the basis of the State's total medical assistance expenditures
for FFY 1997 compared to the sum of the medical assistance expenditures
for the year for all low-DSH States. However, we will not provide any
low-DSH State with a supplemental amount that would result in the
State's total DSH allotment exceeding 12 percent of the State's
projected medical assistance expenditures. Any supplemental amounts
that cannot be allocated to a low-DSH State because of this limitation
will be reallocated to other low-DSH States whose allotment does not
exceed this 12-percent limit.
As prescribed in the law and regulations, no State's DSH allotment
will be below a minimum of $1,000,000.
As an exception to the above requirements, under section
1923(f)(1)(A)(i)(II) of the Act and regulations at 42 CFR 447.296(b)(5)
and 447.298(f), a State may make DSH payments for a FFY in accordance
with the minimum payment adjustments required by Medicare methodology
described in section 1923(c)(1) of the Act. The preliminary FFY 1997
State DSH allotments for the District of Columbia, Iowa, and Nebraska
have been determined in accordance with this exception.
We are publishing in this notice the preliminary FFY 1997 national
DSH payment target and State DSH allotments based on the best available
data we received to date from the States, as adjusted by HCFA. These
data are taken from each State's FFY 1996 and FFY 1997 projected
Medicaid expenditures as reported on the August 15, 1996 Medicaid
Budget Report (Form
[[Page 4774]]
HCFA-37) submission. All data are adjusted as necessary.
II. Calculations of the Preliminary FFY 1997 DSH Limits
The total of the preliminary State DSH allotments for FFY 1997 is
equal to the sum of the base allotments for all high-DSH States, the
FFY 1996 State DSH allotments for all low-DSH States, the growth
amounts for all low-DSH States, and the supplemental amounts for all
low-DSH States. A State-by-State breakdown is presented in section III
of this notice.
We classified States as high-DSH or low-DSH States. If a State's
base allotment exceeded 12 percent of its total unadjusted medical
assistance expenditures (excluding administrative costs) projected to
be made under the State's approved plan under title XIX of the Act in
FFY 1997, we classified that State as a ``high-DSH'' State. If a
State's base allotment was 12 percent or less of its total unadjusted
medical assistance expenditures projected to be made under the State's
approved plan under title XIX of the Act in FFY 1997, we classified
that State as a ``low-DSH'' State. Based on this classification, there
are 37 low-DSH States and 13 high-DSH States for FFY 1997.
Using the most recent data from the States' August 1996 budget
projections (Form HCFA-37), we estimate the States' FFY 1997 national
total medical assistance expenditures to be $171,499,434,000. Thus, the
overall preliminary FFY 1997 national DSH payment target is
$20,579,932,000 (12 percent of $171,499,434,000).
In the preliminary FFY 1997 State DSH allotments, we provide a
total of $977,126,000 ($522,321,000 Federal share) in growth amounts
for the 37 low-DSH States. The growth factor percentage for each of the
low-DSH States was determined by calculating the Medicaid program
growth percentage for each low-DSH State between FFY 1996 and FFY 1997.
To compute this percentage, we first ascertained each low-DSH State's
total FFY 1996 projected medical assistance and administrative
expenditures as reported on the State's August 15, 1996 Form HCFA-37.
Next, we compared those expenditures to each low-DSH State's total
estimated unadjusted FFY 1997 medical assistance and administrative
expenditures, also as reported to HCFA on the State's August 15, 1996
Form HCFA-37 through the ``cutoff'' date of September 10, 1996. The
cutoff date is the date through which the State's budget estimates
reported on the August 15, 1996 Form HCFA-37 are accepted and applied
in preparing the State's Medicaid grant award for the upcoming quarter
(in this case, October through December 1996). The growth factor is the
percentage increase in the projected expenditures from FFY 1996 to FFY
1997.
The growth factor percentage for each State was multiplied by the
low-DSH State's final FFY 1996 DSH allotment amount to establish the
State's preliminary growth amount for FFY 1997.
Since the preliminary FFY 1997 national DSH payment target of
$20,579,932,000 is greater than $20,444,198,000, representing the sum
of the total of the base allotments for high-DSH States
($7,375,265,000), the total of the State DSH allotments for the
previous FFY for low-DSH States ($12,091,807,000), and the growth
amounts for low DSH States ($977,126,000), there is a preliminary FFY
1997 redistribution pool in the amount of the excess ($135,734,000).
The supplemental amount for each low-DSH State is the low-DSH State's
relative share of the redistribution pool, determined by allocating the
redistribution pool on the basis of the low-DSH State's medical
assistance expenditures compared to the national total medical
assistance expenditures for low-DSH States.
The low-DSH State's growth amount and supplemental amounts are
added to the low-DSH State's final FFY 1996 DSH allotment amount to
establish the preliminary total low-DSH State DSH allotment for FFY
1997. If a low-DSH State's growth amount, when added to its final FFY
1996 DSH allotment amount, exceeds 12 percent of its FFY 1997 estimated
medical assistance expenditures, the State only receives a partial
growth amount that, when added to its final FFY 1996 allotment, limits
its total State DSH allotment for FFY 1997 to 12 percent of its
estimated FFY 1997 medical assistance expenditures. For this reason,
seven of the low-DSH States received partial growth amounts, and two
low-DSH States received no growth amounts. Similarly, a low-DSH State's
supplemental amounts are limited by the State's 12-percent limit.
Also, in accordance with the minimum payment adjustments required
by Medicare methodology, the preliminary FFY 1997 State DSH allotments
for the District of Columbia, Iowa, and Nebraska are $63,461,000,
$19,575,000, and $14,550,000, respectively.
In summary, the total of all preliminary State DSH allotments for
FFY 1997 is $20,579,932,000 ($11,615,775,000 Federal share). This total
is composed of the high-DSH States' base allotments ($7,375,265,000),
the low-DSH States' prior FFY's final State DSH allotments
($12,091,807,000), plus growth amounts for all low-DSH States
($977,126,000), plus supplemental amounts for low-DSH States
($135,734,000). The total of all preliminary FFY 1997 State DSH
allotments is 12 percent of the total medical assistance expenditures
(excluding administrative costs) projected to be made by these States
in FFY 1997. That is, the total of all preliminary DSH allotments for
FFY 1997, including supplemental amounts, is equal to the FFY 1997
national 12 percent DSH payment target amount of $20,579,932,000.
Each State should monitor and make any necessary adjustments to its
DSH spending during FFY 1997 to ensure that its actual FFY 1997 DSH
payment adjustment expenditures do not exceed its State DSH allotment
for FFY 1997 published in this notice. As the ongoing reconciliation
between actual FFY 1997 DSH payment adjustment expenditures and the FFY
1997 DSH allotments takes place, each State should amend its plan as
may be necessary to make any adjustments to its FFY 1997 DSH payment
adjustment expenditure patterns so that the State will not exceed its
FFY 1997 DSH allotment.
The FFY 1997 reconciliation of DSH allotments to actual
expenditures will take place on an ongoing basis as States file
expenditure reports with HCFA for DSH payment adjustment expenditures
applicable to FFY 1997. Additional DSH payment adjustment expenditures
made in succeeding FFYs that are applicable to FFY 1997 will continue
to be reconciled with each State's FFY 1997 DSH allotment as additional
expenditure reports are submitted to ensure that the FFY 1997 DSH
allotment is not exceeded. As a result, any DSH payment adjustment
expenditures for FFY 1997 in excess of the FFY 1997 DSH allotment will
be disallowed, and therefore, subject to the normal Medicaid
disallowance procedures.
III. Preliminary FFY 1997 DSH Allotments
Key to Chart
Column and Description
Column A = Name of State.
Column B = High or Low DSH State Designation for FFY 1997. ``High''
indicates the State is a high-DSH State and ``Low'' indicates the State
is a low-DSH State.
Column C = Final FFY 1996 DSH Allotments for All States. These were
published in the Federal Register on September 23, 1996 (61 FR 49781).
[[Page 4775]]
Column D = Base Allotments for High-DSH States. The base allotment is
the greater of the high-DSH State's FFY 1992 allowable DSH payment
adjustment expenditures applicable to FFY 1992, or $1,000,000. ``NA,
LOW DSH'' entries in this column refer to low-DSH States.
Column E = Growth Amounts for Low-DSH States. The growth amount is an
increase in a low-DSH State's final FFY 1996 DSH allotment to the
extent that the State's Medicaid program grew between FFY 1996 and FFY
1997. ``NA, HIGH DSH'' entries in this column refer to high-DSH States,
which receive no growth. ``NONE, NO GROWTH'' entries in this column
refer to low-DSH States whose Medicaid program had no increase or a
decrease from FFY 1996 to FFY 1997.
Column F = Supplemental Amounts for Low-DSH States. The supplemental
amount is the low-DSH State's relative share of the national
redistribution pool. ``NA, HIGH DSH'' entries in this column refer to
high-DSH States, which do not receive supplemental amounts. ``NONE, LOW
AT 12%'' entries in this column refer to low-DSH States which do not
receive any supplemental amounts because their DSH allotments are
already at the State specific 12 percent limit.
Column G = Preliminary FFY 1997 State DSH Allotments. For a high-DSH
State, this is equal to the base allotment from column D. For a low-DSH
State, this is equal to the final State DSH allotment for FFY 1996 from
column C plus, if any, the growth amount from column E and the
supplemental amount from column F.
Preliminary Federal Fiscal Year 1997 Disproportionate Share Hospital Allotments Under Public Law 102-234 Amounts Are State and Federal Shares
[Dollars Are in Thousands (000)]
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A B C D E F G
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Final FFY 1996 Supplemental pool Preliminary
State FFY 1997 High or low DSH allotments Base allotments for Growth amounts for low distribution for low FFY 1997 state
DSH state designation for all states high DSH states DSH states (1) DSH states DSH allotments
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AL..................... HIGH................... $417,458 $417,458.............. NA, HIGH DSH.......... NA, HIGH DSH.......... $417,458
AK..................... LOW.................... 21,700 NA, LOW DSH........... $1,949................ $699.................. 24,348
AR..................... LOW.................... 3,605 NA, LOW DSH........... $163.................. $2,636................ 6,403
CA..................... LOW.................... 2,191,451 NA, LOW DSH........... $10,852............... NONE, LOW AT 12%...... 2,202,303
CO..................... HIGH................... 302,014 $302,014.............. NA, HIGH DSH.......... NA, HIGH DSH.......... 302,014
CT..................... HIGH................... 408,933 $408,933.............. NA, HIGH DSH.......... NA, HIGH DSH.......... 408,933
DE..................... LOW.................... 8,613 NA, LOW DSH........... $434.................. $833.................. 9,880
DC (2)................. LOW.................... 61,854 NA, LOW DSH........... NONE, NO GROWTH....... $1,606................ 63,461
FL..................... LOW.................... 340,018 NA, LOW DSH........... $27,934............... $12,930............... 380,882
GA..................... LOW.................... 426,717 NA, LOW DSH........... $21,751............... $7,557................ 456,025
HI..................... LOW.................... 82,686 NA, LOW DSH........... $4,738................ $1,513................ 88,937
ID..................... LOW.................... 2,382 NA, LOW DSH........... $259.................. $787.................. 3,428
IL..................... LOW.................... 542,225 NA, LOW DSH........... $43,695............... $13,925............... 599,845
IN..................... LOW.................... 342,139 NA, LOW DSH........... $4,762................ NONE, LOW AT 12%...... 346,900
IA (2)................. LOW.................... 15,735 NA, LOW DSH........... $1,275................ $2,564................ 19,575
KS..................... HIGH................... 188,935 $188,935.............. NA, HIGH DSH.......... NA, HIGH DSH.......... 188,935
KY..................... LOW.................... 284,863 NA, LOW DSH........... $10,668............... NONE, LOW AT 12%...... 295,531
LA..................... HIGH................... 1,217,636 $1,217,636............ NA, HIGH DSH.......... NA, HIGH DSH.......... 1,217,636
ME..................... HIGH................... 165,317 165,317............... NA, HIGH DSH.......... NA, HIGH DSH.......... 165,317
MD..................... LOW.................... 150,952 NA, LOW DSH........... $18,103............... $5,632................ 174,688
MA..................... LOW.................... 575,289 NA, LOW DSH........... $10,734............... NONE, LOW AT 12%...... 586,023
MI..................... LOW.................... 686,478 NA, LOW DSH........... $35,623............... NONE, LOW AT 12%...... 722,101
MN..................... LOW.................... 63,890 NA, LOW DSH........... $4,821................ $6,254................ 74,965
MS..................... LOW.................... 200,912 NA, LOW DSH........... $19,357............... NONE, LOW AT 12%...... 220,269
MO..................... HIGH................... 731,894 $731,894.............. NA, HIGH DSH.......... NA, HIGH DSH.......... 731,894
MT..................... LOW.................... 1,417 NA, LOW DSH........... $75................... $797.................. 2,289
NE (2)................. LOW.................... 12,031 NA, LOW DSH........... $997.................. $1,522................ 14,550
NV..................... HIGH................... 73,560 $73,560............... NA, HIGH DSH.......... NA, HIGH DSH.......... 73,560
NH..................... HIGH................... 392,006 $392,006.............. NA, HIGH DSH.......... NA, HIGH DSH.......... 392,006
NJ..................... HIGH................... 1,094,113 $1,094,113............ NA, HIGH DSH.......... NA, HIGH DSH.......... 1,094,113
NM..................... LOW.................... 20,272 NA, LOW DSH........... $1,965................ $2,030................ 24,267
NY..................... LOW.................... 3,047,528 NA, LOW DSH........... $523,632.............. $21,922............... 3,593,082
NC..................... LOW.................... 458,975 NA, LOW DSH........... $74,792............... $9,632................ 543,399
ND..................... LOW.................... 1,262 NA, LOW DSH........... $67................... $651.................. 1,981
OH..................... LOW.................... 651,596 NA, LOW DSH........... $62,471............... $13,872............... 727,939
OK..................... LOW.................... 25,021 NA, LOW DSH........... $542.................. $2,348................ 27,912
OR..................... LOW.................... 33,118 NA, LOW DSH........... $946.................. $3,011................ 37,074
PA..................... LOW.................... 967,407 NA, LOW DSH........... $49,593............... NONE, LOW AT 12%...... 1,017,000
RI..................... LOW.................... 111,480 NA, LOW DSH........... $2,354................ $894.................. 114,728
SC..................... HIGH................... 439,759 $439,759.............. NA, HIGH DSH.......... NA, HIGH DSH.......... 439,759
SD..................... LOW.................... 1,555 NA, LOW DSH........... $178.................. $726.................. 2,459
TN..................... HIGH................... 430,611 $430,611.............. NA, HIGH DSH.......... NA, HIGH DSH.......... 430,611
TX..................... HIGH................... 1,513,029 $1,513,029............ NA, HIGH DSH.......... NA, HIGH DSH.......... 1,513,029
UT..................... LOW.................... 6,307 NA, LOW DSH........... $369.................. $1,278................ 7,955
VT..................... LOW.................... 31,740 NA, LOW DSH........... $3,375................ $796.................. 35,911
VA..................... LOW.................... 222,005 NA, LOW DSH........... $16,713............... $4,753................ 243,471
WA..................... LOW.................... 352,800 NA, LOW DSH........... $21,117............... $6,387................ 380,304
[[Page 4776]]
WV..................... LOW.................... 132,415 NA, LOW DSH........... NONE, NO GROWTH....... $2,600................ 135,015
WI..................... LOW.................... 11,746 NA, LOW DSH........... $726.................. $5,204................ 17,676
WY..................... LOW.................... 1,623 NA, LOW DSH........... $97................... $376.................. 2,096
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TOTAL.............. ....................... 19,467,072 $7,375,265............ $977,126.............. $135,734.............. 20,579,932
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Notes:
(1) THERE WERE 2 LOW DSH STATES WITH NO GROWTH AND 7 LOW DSH STATES WITH PARTIAL GROWTH UP TO 12% OF FFY 97 MAP.
(2) ALLOTMENT BASED UPON MINIMUM PAYMENT ADJUSTMENT AMOUNT.
IV. Regulatory Impact Statement
The Regulatory Flexibility Act, 5 U.S.C. 601 through 612, requires
a regulatory flexibility analysis for every rule subject to proposed
rulemaking procedures under the Administrative Procedure Act, 5 U.S.C.
552, unless we certify that the rule will not have a significant
economic impact on a substantial number of small entities. For purposes
of a RFA, States and individuals are not considered small entities.
However, providers are considered small entities. Additionally, section
1102(b) of the Act requires us to prepare a regulatory impact analysis
if a notice may have a significant impact on the operations of a
substantial number of small rural hospitals. Such an analysis must
conform to the provisions of section 604 of the RFA. For purposes of
section 1102(b) of the Act, we define a small rural hospital as a
hospital that is located outside of a Metropolitan Statistical Area and
has fewer than 50 beds.
We do not believe that this notice will have a significant economic
impact on a substantial number of small entities because it reflects no
new policies or procedures, and should have an overall positive impact
on payments to DSHs by informing States of the extent to which DSH
payments may be increased without violating statutory limitations. This
notice sets forth no changes in our regulations; rather, it reflects
the DSH allotments for each State as determined in accordance with 42
CFR 447.297 through 447.299.
We have discussed the method of calculating the preliminary FFY
1997 national DSH payment target and the preliminary FFY 1997
individual State DSH allotments in the previous sections of this
preamble. These calculations should have a positive impact on payments
to DSHs. Allotments will not be reduced for high-DSH States since we
interpret the 12-percent limit as a target. Low-DSH States'' allotments
are equal to their prior FFY DSH allotments plus their growth and
supplemental amounts, if any.
In accordance with the provisions of Executive Order 12866, this
notice was reviewed by the Office of Management and Budget.
(Catalog of Federal Assistance Program No. 93.778, Medical
Assistance Program)
Dated: November 21, 1996.
Bruce C. Vladeck,
Administrator, Health Care Financing Administration.
Dated: December 20, 1996.
Donna E. Shalala,
Secretary.
[FR Doc. 97-2381 Filed 1-30-97; 8:45 am]
BILLING CODE 4120-01-P
