2023-07927. Medicaid Program; Final FY 2020, Final FY 2021, Preliminary FY 2022, and Preliminary FY 2023 Disproportionate Share Hospital Allotments, and Final FY 2020, Final FY 2021, Preliminary FY 2022, and Preliminary FY 2023 Institutions for ...

AGENCY:

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

ACTION:

Notice.

SUMMARY:

This notice announces the final Federal share (FS) disproportionate share hospital (DSH) allotments for Federal fiscal year (FY) 2020 and FY 2021, and the preliminary FS DSH allotments for FY 2022 and FY 2023. This notice also announces the final FY 2020 and FY 2021 and the preliminary FY 2022 and FY 2023 limitations on aggregate DSH payments that States may make to institutions for mental disease and other mental health facilities. In addition, this notice includes background information describing the methodology for determining the amounts of States' FY DSH allotments.

DATES:

The allotments announced in this notice are effective May 15, 2023. The final allotments and limitations set forth in this notice are applicable for the fiscal years specified.

FOR FURTHER INFORMATION CONTACT:

Stuart Goldstein, (410) 786–0694 and Richard Cuno, (410) 786–1111.

SUPPLEMENTARY INFORMATION:

I. Background

A. Fiscal Year DSH Allotments

A State's Federal fiscal year (FY) disproportionate share hospital (DSH) allotment represents the aggregate limit on the Federal share (FS) amount of the State's DSH payments to DSH hospitals in the State for the FY. The amount of such allotment is determined in accordance with the provisions of section 1923(f) of the Social Security Act (the Act), with some State-specific exceptions as specified in section 1923(f) of the Act. Under such provisions, in general, a State's FY DSH allotment is calculated by increasing the amount of its DSH allotment for the preceding FY by the percentage change in the Consumer Price Index for all Urban Consumers (CPI–U) for the previous FY.

The Patient Protection and Affordable Care Act of 2010 (Pub. L. 111–148), as amended by the Health Care and Education Reconciliation Act of 2010 (Pub. L. 111–152) (collectively, the Affordable Care Act), amended Medicaid DSH provisions, adding section 1923(f)(7) of the Act. Section 1923(f)(7) of the Act would have required reductions to States' FY DSH allotments from FY 2014 through FY 2020, the calculation of which was described in the Disproportionate Share Hospital Payment Reduction final rule published in the September 18, 2013 Federal Register (78 FR 57293). Subsequent legislation, most recently the Consolidated Appropriations Act, 2021 (Pub. L. 116–260, enacted December 27, 2020), delayed the start of these reductions until FY 2024. The final rule delineating a revised methodology for the calculation of DSH allotment reductions beginning in 2020 (subsequently delayed by further statutory enactment) was published in the September 25, 2019 Federal Register (82 FR 50308).

Because there are no reductions to DSH allotments for FY 2018 through FY 2023 under section 1923(f)(7) of the Act, as amended, this notice contains only the State-specific final FY 2020 and FY 2021 DSH allotments and preliminary FY 2022 and FY 2023 DSH allotments, as calculated under the statute without application of the reductions that would have been imposed beginning as early as FY 2014 under prior versions of section 1923(f)(7) of the Act. This notice also provides information on the calculation of the FY DSH allotments, the calculation of the States' institution for mental diseases (IMD) DSH limits, and the amounts of States' final FY 2020 and FY 2021 IMD DSH limits and preliminary FY 2022 and FY 2023 IMD DSH limits.

B. Determination of Fiscal Year DSH Allotments

Generally, in accordance with the methodology specified under section 1923(f)(3) of the Act, a State's FY DSH allotment is calculated by increasing the amount of its DSH allotment for the preceding FY by the percentage change in the CPI–U for the previous FY. Also, in accordance with section 1923(f)(3) of the Act, a State's DSH allotment for a FY is subject to the limitation that an increase to a State's DSH allotment for a FY cannot result in the DSH allotment exceeding the greater of the State's DSH allotment for the previous FY or 12 percent of the State's total medical assistance expenditures for the allotment year (this is referred to as the 12 percent limit).

Furthermore, under section 1923(h) of the Act, Federal financial participation (FFP) for DSH payments to IMDs and other mental health facilities is limited to State-specific aggregate amounts. Under this provision, the aggregate limit for DSH payments to IMDs and other mental health facilities is the lesser of a State's FY 1995 total computable (State and FS) IMD and other mental health facility DSH expenditures applicable to the State's FY 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 current year total computable DSH allotment and the applicable percentage specified in section 1923(h) of the Act.

C. Determination of Fiscal Year DSH Allotments for FY 2020, FY 2021, FY 2022, and FY 2023

The Families First Coronavirus Response Act's (FFCRA) (Pub. L. 116–127, enacted March 18, 2020) temporary Federal medical assistance percentage (FMAP) increase went into effect on January 1, 2020 for eligible States, as provided in section 6008 of the FFCRA. All DSH allotment amounts listed in this notice assume that all States qualify for the temporary FMAP increase under section 6008 of the FFCRA for the period of January 1, 2020 through March 31, 2023, during which time the FMAP increase available under the FFCRA is 6.2 percentage points. Section 5131 of the Consolidated Appropriations Act, 2023 (CAA, 2023) (Pub. L. 117–328, enacted December 29, 2022) amended section 6008 of the FFCRA such that the FMAP increase is phased down beginning on April 1, 2023, and ends on December 31, 2023. As a result, qualifying States will receive a temporary FMAP increase for FY 2023 of 5 percentage points for the period of April 1, 2023, through June 30, 2023 and 2.5 percentage points for the period July 1, 2023, through September 30, 2023. The CAA, 2023 provides for a 1.5 percentage point FMAP increase for the period of October 1, 2023, through December 31, 2023, but this period is not applicable to the FY 2023 DSH allotment.

As relevant to this notice, the 6.2 percentage point FMAP increase applies to eligible Medicaid expenditures including DSH payments for FY 2020 (with the exception of the 1st quarter, from October 1, 2019, through December 31, 2019), FY 2021, FY 2022, and FY 2023 (with respect only to the 1st and 2nd quarters, from October 1, 2022, through March 31, 2023). All States currently are receiving the temporary 6.2 percent FFCRA FMAP increase. Thereafter, qualifying States will receive a temporary FMAP increase for FY 2023 of 5 percentage points for the period of April 1, 2023, through June 30, 2023 and 2.5 percentage points for the period of July 1, 2023, through September 30, 2023. Please note that not all States may qualify for the temporary FMAP increase, for one or more quarters, under section 6008 of the FFCRA, as amended by section 5131 of the CAA, 2023. States will be subject to the applicable FMAP rate in effect at the time when DSH payments are made to providers, dependent on each State's qualifying status with respect to any FMAP increase that may be available under section 6008 of the FFCRA, as amended.

For States that exhaust their entire DSH allotment, the FFCRA FMAP increase would effectively reduce the amount of total computable (TC) DSH payments that such States could pay to qualifying providers. To avoid this reduction in TC DSH allotments, section 9819 of the American Rescue Plan Act of 2021 (ARP) (Pub. L. 117–2, enacted March 11, 2021) added section 1923(f)(3)(F) of the Act, adjusting FS DSH allotments during periods when and for States where the temporary FMAP increase under section 6008 of the FFCRA is in effect. As directed by the ARP, we are required to recalculate FS DSH allotments to equal an amount that will allow States to make the same amount of TC DSH payments as they would have been otherwise able to make in the absence of the FFCRA FMAP increase.

In accordance with section 1923(f)(3)(B) of the Act, a State's DSH allotment for a FY is subject to the limitation that an increase to a State's DSH allotment for a FY cannot result in the DSH allotment exceeding the greater of the State's DSH allotment for the previous FY or 12 percent of the State's total medical assistance expenditures for the allotment year. Because States incur medical assistance expenditures throughout the fiscal year, the calculations for the 12 percent limit under section 1923(f)(3)(B)(ii) of the Act were performed using a prorated FMAP for FY 2020. To arrive at the stated limits, we prorated each State's FY 2020 FMAP rate because the temporary 6.2 percentage point FMAP increase under section 6008 of the FFCRA does not apply to the 1st quarter of FY 2020 (that is, October 1, 2019, through December 31, 2020). For FY 2023, we prorated each State's FY 2023 FMAP rate because the temporary 6.2 percentage point FMAP increase under section 6008 of the FFCRA only applies to the 1st and 2nd quarters of FY 2023, whereas the FMAP rate, for qualifying States, is 5 percentage points for the 3rd quarter and 2.5 percentage points for the 4th quarter of FY 2023, respectively. Please note that these calculations are subject to change based upon each State's qualifying status under section 6008 of the FFCRA, as amended. For the calculation of the 12 percent limit for FY 2021 and FY 2022, we used the FFCRA FMAP rate (that is, the otherwise applicable FMAP rate plus the temporary 6.2 percentage point FFCRA FMAP increase that was in effect in both FYs), because the 6.2 percentage point FFCRA FMAP rate applies to both entire FYs for qualifying States, and medical assistance expenditures are made throughout the year.

Section 1923(f)(3)(F)(i) of the Act requires us to recalculate the annual DSH allotment, including the DSH allotment specified under paragraph (6)(A)(vi), to ensure that the total DSH payments (including both Federal and State shares) that a State may make related to a fiscal year is equal to the total DSH payments that the State could have made for such fiscal year without such FMAP increase. To meet the statutory requirement to enable States to make the same amount of TC DSH payments as if the FFCRA FMAP increase were not in effect, we have used the full (non-prorated) FFCRA-increased FMAP rate in the calculation of the increased final FY 2020 and FY 2021 FS DSH allotments and preliminary FY 2022 and FY 2023 FS DSH allotments. We used the 6.2 percentage point FFCRA-increased FMAP rate rather than a prorated FMAP rate for the FY 2020 and FY 2023 calculations, despite it not being applicable to either full FY, to ensure this provision applies to all States consistent with the statutory requirement. For instance, a State may have made all DSH payments for FY 2020 in quarters other than the first fiscal quarter of that FY or may make all of its DSH payments for FY 2023 in the first two fiscal quarters of that FY. While States may qualify for the FFCRA temporary FMAP increase of 5 percentage points for the 3rd quarter and 2.5 percentage points for the 4th quarter of FY 2023, respectively, the FY 2023 DSH allotments must reflect the 6.2 percentage point temporary FMAP increase in order to ensure States may make the same amount of TC DSH payments as they would have been otherwise able to make in the absence of the FFCRA temporary FMAP increase, regardless of which FY 2023 quarter in which the State makes DSH payments.

While States have distinct payment methodologies that specify when DSH payments are made to providers, States may not claim TC DSH payments in excess of the amount they would have otherwise been able to claim without the application of the temporary FFCRA FMAP increase. This is regardless of whether a portion of unspent FS DSH allotment as adjusted to account for section 1923(f)(3)(F) of the Act, as added by section 9819 of the ARP, remains. For example, if the State made all DSH payments for FY 2020 during the first quarter of that FY, then no increase to the State's DSH allotment is available for that year, since the temporary FMAP increase under section 6008 of the FFCRA was not available for that quarter and section 1923(f)(3)(F) therefore has no effect. Similarly, for FY 2023, only the increase to the State's DSH allotment associated with the FFCRA temporary FMAP increase (in the amount that applies to each quarter of FY 2023) will be available for qualifying States making DSH payments in the 3rd and 4th fiscal quarters of FY 2023. We will monitor both the FS and TC DSH allotments to ensure that States do not exceed statutory authority to claim DSH payments. Consistent with previous guidance provided by CMS during the public health emergency, States should follow existing Federal requirements regarding the applicability of a particular match rate available for a given quarter, including reporting prior period adjustments.

For calculation of the FY 2020 through FY 2023 IMD limits determined under section 1923(h) of the Act, we used the ARP-adjusted DSH allotments and the associated non-prorated FFCRA-increased FMAP rates for each respective FY, to reflect the maximum DSH allotment amount and IMD limit that might be available to a State, for FY 2020 and FY 2023, depending on the State's timing of DSH payments.

In general, we determine States' DSH allotments for a FY and the IMD DSH limits for the same FY using the most recent available estimates of or actual medical assistance expenditures, including DSH expenditures and the most recent available CPI–U data for the FY in accordance with the methodology prescribed in the statute. The indicated estimated or actual expenditures are obtained from States for each relevant FY from the most recent available quarterly Medicaid budget reports (Form CMS–37) or quarterly Medicaid expenditure reports (Form CMS–64), respectively, submitted by the States. For example, as part of the initial determination of a State's FY DSH allotment (referred to as the preliminary DSH allotments) that is determined before the beginning of the FY for which the DSH allotments and IMD DSH limits are being determined, we use estimated expenditures for the FY obtained from the August submission of the CMS–37 submitted by States prior to the beginning of the FY; such estimated expenditures are subject to update and revision during the FY before actual expenditure data become available. We also use the most recent available estimated CPI–U percentage change that is available before the beginning of the FY for determining the States' preliminary FY DSH allotments; such estimated CPI–U percentage change is subject to update and revision during the FY before the actual CPI–U percentage change becomes available. In determining the final DSH allotments and IMD DSH limits for a FY we use the actual expenditures for the FY and actual CPI–U percentage change for the previous FY.

II. Provisions of the Notice

A. Calculation of the Final FY 2020 and FY 2021 FS State DSH Allotments and the Preliminary FY 2022 and FY 2023 FS State DSH Allotments

1. Final FY 2020 FS State DSH Allotments

Addendum 1 to this notice provides the States' final FY 2020 DSH allotments determined in accordance with section 1923(f)(3) of the Act. As described in the background section, in general, the DSH allotment for a FY is calculated by increasing the FY DSH allotment for the preceding FY by the CPI–U increase for the previous fiscal year. For purposes of calculating the States' final FY 2020 DSH allotments, the preceding final fiscal year DSH allotments (for FY 2019) were published in the March 16, 2022 Federal Register (87 FR 14858). For purposes of calculating the States' final FY 2020 DSH allotments we are using the actual Medicaid expenditures for FY 2020. Finally, for purposes of calculating the States' final FY 2020 DSH allotments, the applicable historical percentage change in the CPI–U for the previous FY (FY 2019) was 1.9 percent; we note that this is the same as the estimated 1.9 percentage change in the CPI–U for FY 2019 that was available and used in the calculation of the preliminary FY 2020 DSH allotments which were published in the March 16, 2022 Federal Register (87 FR 14858). We then used each State's FS DSH allotment divided by its respective regular FMAP rate to determine the TC amount of DSH payments each State would have otherwise been able to make without application of the FFCRA-increased FMAP rate. We then multiplied each State's TC DSH payment amount by its respective FFCRA-increased FMAP rate to calculate the increased FY 2020 DSH allotment.

2. Final FY 2021 FS State DSH Allotments

Addendum 2 to this notice provides the States' final FY 2021 DSH allotments determined in accordance with section 1923(f)(3) of the Act. As described in the background section, in general, the DSH allotment for a FY is calculated by increasing the FY DSH allotment for the preceding FY by the CPI–U increase for the previous fiscal year. For purposes of calculating the States' final FY 2021 DSH allotments, the preceding final fiscal year DSH allotments (for FY 2020) are being published in this notice. For purposes of calculating the States' final FY 2021 DSH allotments we are using the actual Medicaid expenditures for FY 2021. Finally, for purposes of calculating the States' final FY 2021 DSH allotments, the applicable historical percentage change in the CPI–U for the previous FY (FY 2020) was 1.5 percent; we note that this is the same as the estimated 1.5 percentage change in the CPI–U for FY 2020 that was available and used in the calculation of the preliminary FY 2021 DSH allotments which were published in the March 16, 2022 Federal Register (87 FR 14858). We then used each State's FS DSH allotment divided by its respective regular FMAP rate to determine the TC amount of DSH payments each State would have otherwise been able to make without application of the FFCRA-increased FMAP rate. We then multiplied each State's TC DSH payment amount by its respective FFCRA-increased FMAP rate to calculate the increased FY 2021 DSH allotment.

3. Calculation of the Preliminary FY 2022 FS State DSH Allotments

Addendum 3 to this notice provides the preliminary FY 2022 DSH allotments determined in accordance with section 1923(f)(3) of the Act. The preliminary FY 2022 DSH allotments contained in this notice were determined based on the most recent available estimates from States of their FY 2022 total computable Medicaid expenditures and by increasing the preliminary FY 2021 DSH allotments. The applicable historical percentage change in the CPI–U for FY 2021 was 3.3 percent (we originally published the preliminary FY 2021 DSH allotments in the March 16, 2022 Federal Register (87 FR 14858)). We then used each State's FS DSH allotment divided by its respective regular FMAP rate to determine the TC amount of DSH payments each State would have otherwise been able to make without application of the FFCRA-increased FMAP rate. We then multiplied each State's TC DSH payment amount by its respective FFCRA-increased FMAP rate to calculate the increased FY 2022 DSH allotment.

We will publish States' final FY 2022 DSH allotments in a future notice based on the States' four quarterly Medicaid expenditure reports (Form CMS–64) for FY 2022 available following the end of FY 2022 utilizing the actual change in the CPI–U for FY 2021.

4. Calculation of the Preliminary FY 2023 FS State DSH Allotments

Addendum 4 to this notice provides the preliminary FY 2023 DSH allotments determined in accordance with section 1923(f)(3) of the Act. The preliminary FY 2023 DSH allotments contained in this notice were determined based on the most recent available estimates from States of their FY 2023 total computable Medicaid expenditures and by increasing the preliminary FY 2022 DSH allotments calculated prior to the application of the ARP adjustment. The applicable historical percentage change in the CPI–U for FY 2022 was 7.6 percent (we are publishing the preliminary FY 2022 DSH allotments in this notice). We then used each State's FS DSH allotment divided by its respective regular FMAP rate to determine the TC amount of DSH payments each State would have otherwise been able to make without application of the FFCRA-increased FMAP rate. We then multiplied each State's TC DSH payment amount by its respective FFCRA-increased FMAP rate to calculate the ARP-adjusted FY 2023 DSH allotment.

We will publish States' final FY 2023 DSH allotments in a future notice based on the States' four quarterly Medicaid expenditure reports (Form CMS–64) for FY 2023 available following the end of FY 2023.

B. Calculation of the Final FY 2020 and FY 2021 and Preliminary FY 2022 and FY 2023 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 DSH payments to IMDs or other mental health facilities that exceed the IMD DSH limits. In this notice, we are publishing the final FY 2020 and FY 2021 and the preliminary FY 2022 and FY 2023 IMD DSH limits determined in accordance with the provisions discussed above.

Addendums 5 through 8 to this notice detail each State's final FY 2020 and FY 2021 and preliminary FY 2022 and FY 2023 IMD DSH limits, respectively, determined in accordance with section 1923(h) of the Act.

III. Collection of Information Requirements

As it relates to the Paperwork Reduction Act of 1995 (PRA; 44 U.S.C. 3501 et seq.), this notice does not impose any new or revised “collection of information” requirements or burden. For the PRA and this section of the preamble, collection of information is defined under 5 CFR 1320.3(c) of the PRA's implementing regulations. While discussed in sections I.B., I.C., II.A.3., II.A.4., and in Addendums 1 through 8 of this notice, the currently approved requirements and burden associated with form CMS–37 and form CMS–64 are unaffected by this notice. They are approved by the Office of Management and Budget (OMB) under control number 0938–1265. Since this notice will not impose any new or revised collection of information requirements/burden, the notice is not subject to the requirements of the PRA.

IV. Regulatory Impact Analysis

We have examined the impact of this notice as required by Executive Order 12866 on Regulatory Planning and Review (September 1993), the Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96–354), section 1102(b) of the Act, section 202 of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104–4; enacted on March 22, 1995) (UMRA `95), Executive Order 13132 on Federalism (August 4, 1999) and the Congressional Review Act (5 U.S.C. 804(2)).

Executive Order 12866 directs agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). A regulatory impact analysis (RIA) must be prepared for major rules with economically significant effects ($100 million or more in any 1 year). This notice reaches the $100 million economic threshold and thus has been designated a major rule under the Congressional Review Act by the Office of Information and Regulatory Affairs.

The final FY 2020 DSH allotments being published in this notice are equal to the preliminary FY 2020 DSH allotments published in the March 16, 2022 Federal Register (87 FR 14858). This is due to the actual percentage change in the CPI–U for FY 2019 used in the calculation of the final FY 2020 allotments (1.9 percent) being equal to the estimated percentage change in the CPI–U for FY 2019 used in the calculation of the preliminary FY 2020 allotments (1.9 percent). The final FY 2020 IMD DSH limits being published in this notice are also equal to the preliminary FY 2020 IMD DSH limits published in the March 16, 2022 Federal Register (87 FR 14858). Since the final FY 2020 DSH allotments were the same as the preliminary FY 2020 DSH allotments, the associated FY 2020 IMD DSH limits also remained the same.

The final FY 2021 DSH allotments being published in this notice are equal to the preliminary FY 2021 DSH allotments published in the March 16, 2022 Federal Register (87 FR 14858). This is due to the actual percentage change in the CPI–U for FY 2020 used in the calculation of the final FY 2021 allotments (1.5 percent) being equal to the estimated percentage change in the CPI–U for FY 2020 used in the calculation of the preliminary FY 2021 allotments (1.5 percent). The final FY 2021 IMD DSH limits being published in this notice are also equal to the preliminary FY 2021 IMD DSH limits published in the March 16, 2022 Federal Register (87 FR 14858). Since the final FY 2021 DSH allotments were the same as the preliminary FY 2021 DSH allotments, the associated FY 2021 IMD DSH limits also remained the same.

The preliminary FY 2022 DSH allotments (before application of the ARP adjustment) being published in this notice are approximately $428 million more than the preliminary FY 2021 DSH allotments published in the March 16, 2022 Federal Register (87 FR 14858). The increase in the DSH allotments is due to the application of the statutory formula for calculating DSH allotments under which the prior fiscal year allotments are increased by the percentage increase in the CPI–U for the prior fiscal year. The applicable historical percentage change in the CPI–U for FY 2021 was 3.3 percent. The preliminary FY 2022 DSH allotments were increased by approximately $1.5 billion to comply with the statutory provisions of the ARP requiring us to recalculate FS DSH allotments to an amount that will allow States to make the same amount of TC DSH payments as they would have been otherwise able to make in the absence of the FFCRA temporary FMAP increase.

The preliminary FY 2022 IMD DSH limits being published in this notice are approximately $29 million more than the preliminary FY 2021 IMD DSH limits published in the March 16, 2022 Federal Register (87 FR 14858). The increases in the IMD DSH limits are because the DSH allotment for a FY is a factor in the determination of the IMD DSH limit for the FY. Since the preliminary FY 2022 DSH allotments are greater than the preliminary FY 2021 DSH allotments, the associated preliminary FY 2022 IMD DSH limits for some States also increased.

The preliminary FY 2023 DSH allotments (before application of the ARP adjustment) being published in this notice are approximately $1 billion more than the preliminary FY 2022 DSH allotments published in this notice. The increase in the DSH allotments is due to the application of the statutory formula for calculating DSH allotments under which the prior fiscal year allotments are increased by the percentage increase in the CPI–U for the prior fiscal year. The applicable historical percentage change in the CPI–U for FY 2022 was 7.6 percent. The preliminary FY 2023 DSH allotments were increased by approximately $1.6 billion to comply with the statutory provisions of the ARP requiring us to recalculate FS DSH allotments to an amount that will allow States to make the same amount of TC DSH payments as they would have been otherwise able to make in the absence of the FFCRA temporary FMAP increase.

The preliminary FY 2023 IMD DSH limits being published in this notice are approximately $57 million more than the preliminary FY 2022 IMD DSH limits published in this notice. The increases in the IMD DSH limits are because the DSH allotment for a FY is a factor in the determination of the IMD DSH limit for the FY. Since the preliminary FY 2023 DSH allotments are greater than the preliminary FY 2022 DSH allotments, the associated preliminary FY 2023 IMD DSH limits for some States also increased.

The RFA requires agencies to analyze options for regulatory relief of small businesses, if a rule has a significant impact on a substantial number of small entities. For purposes of the RFA, small entities include small businesses, nonprofit organizations, and small governmental jurisdictions. Most hospitals and most other providers and suppliers are small entities, either by nonprofit status or by having revenues of less than $8.0 million to $41.5 million in any 1 year. Individuals and States are not included in the definition of a small entity. We are not preparing an analysis for the RFA because the Secretary has determined that this notice will not have significant economic impact on a substantial number of small entities. Specifically, any impact on providers is due to the effect of the various controlling statutes; providers are not impacted as a result of the independent regulatory action in publishing this notice. The purpose of the notice is to announce the latest DSH allotments and IMD DSH limits, as required by the statute.

In addition, section 1102(b) of the Act requires us to prepare a regulatory impact analysis if a rule may have a significant impact on the operations of a substantial number of small rural hospitals. This 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 Core-Based Statistical Area for Medicaid payment regulations and has fewer than 100 beds. We are not preparing analysis for section 1102(b) of the Act because the Secretary has determined that this notice will not have a significant impact on the operations of a substantial number of small rural hospitals.

The Medicaid statute specifies the methodology for determining the amounts of States' DSH allotments and IMD DSH limits; and as described previously, the application of the methodology specified in statute results in the decreases or increases in States' DSH allotments and IMD DSH limits for the applicable FYs. The statute applicable to these allotments and limits does not apply to the determination of the amounts of DSH payments made to specific DSH hospitals; rather, these allotments and limits represent an overall limit on the total of such DSH payments. For this reason, we do not believe that this notice will have a significant economic impact on a substantial number of small entities.

Section 202 of the Unfunded Mandates Reform Act of 1995 also requires that agencies assess anticipated costs and benefits before issuing any rule whose mandates require spending in any 1 year of $100 million in 1995 dollars, updated annually for inflation. In 2022, that threshold is approximately $165 million. This notice will have no consequential effect on spending by State, local, or tribal governments, in the aggregate, or on the private sector.

Executive Order 13132 establishes certain requirements that an agency must meet when it issues a proposed rule (and subsequent final rule) that imposes substantial direct requirement costs on State and local governments, preempts State law, or otherwise has Federalism implications. Since this notice does not impose any costs on State or local governments or otherwise have Federalism implications, the requirements of E.O. 13132 are not applicable.

A. Alternatives Considered

Because the FFCRA temporary FMAP increase of 6.2 percentage points was not applicable to the 1st quarter of FY 2020 and the phased down FMAP rates are applicable to the 3rd and 4th quarters of FY 2023, we considered utilizing prorated FMAP rates in the calculation of the ARP-adjusted final FY 2020 and preliminary FY 2023 DSH allotments. However, this could have been contrary to the statutory language at section 1923(f)(3)(F) of the Act requiring us to recalculate FS DSH allotments to an amount to allow for States to make the same amount of TC DSH payments as they would have been otherwise able to make in the absence of the FFCRA temporary FMAP increase, depending on States' timing of their DSH payments to eligible providers. The methodologies for determining the States' fiscal year DSH allotments and IMD DSH limits, as reflected in this notice, were established in accordance with the methodologies and formula for determining States' allotments and limits as specified in statute. This notice does not put forward any further discretionary administrative policies for determining such allotments and limits, or otherwise.

B. Accounting Statement

As required by OMB Circular A–4 (available at http://www.whitehouse.gov/​omb/​circulars/​a004/​a-4.pdf), in Tables 1 and 2, we have prepared an accounting statement showing the classification of the estimated expenditures associated with the provisions of this notice. Table 1 provides our best estimate of the change (decrease) in the FS of States' Medicaid DSH payments resulting from the application of the provisions of the Medicaid statute relating to the calculation of States' FY DSH allotments and the increase in the FY DSH allotments from FY 2021 to FY 2022. Table 2 provides our best estimate of the change (decrease) in the FS of States' Medicaid DSH payments resulting from the application of the provisions of the Medicaid statute relating to the calculation of States' FY DSH allotments and the increase in the FY DSH allotments from FY 2022 to FY 2023.

Table 1—Accounting Statement: Classification of Estimated Expenditures, From the FY 2021 to FY 2022

[In millions]

Category	Transfers
Annualized Monetized Transfers	$428.
From Whom To Whom?	Federal Government to States.

Table 2—Accounting Statement: Classification of Estimated Expenditures, From the FY 2022 to FY 2023

[In millions]

Category	Transfers
Annualized Monetized Transfers	$1,018.
From Whom To Whom?	Federal Government to States.

C. Congressional Review Act

This proposed regulation is subject to the Congressional Review Act provisions of the Small Business Regulatory Enforcement Fairness Act of 1996 (5 U.S.C. 801 et seq.) and has been transmitted to the Congress and the Comptroller General for review.

In accordance with the provisions of Executive Order 12866, this notice was reviewed by the Office of Management and Budget.

Chiquita Brooks-LaSure, Administrator of the Centers for Medicare & Medicaid Services, approved this document on March 22, 2023.

Dated: April 11, 2023.

Xavier Becerra,

Secretary, Department of Health and Human Services.