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U.S. Code as of:
01/19/04
Section 1396r-4. Adjustment in payment for inpatient hospital services furnished by disproportionate share hospitals
(a) Implementation of requirement
(1) A State plan under this subchapter shall not be considered to
meet the requirement of section 1396a(a)(13)(A)(iv) of this title
(insofar as it requires payments to hospitals to take into account
the situation of hospitals which serve a disproportionate number of
low income patients with special needs), as of July 1, 1988, unless
the State has submitted to the Secretary, by not later than such
date, an amendment to such plan that -
(A) specifically defines the hospitals so described (and
includes in such definition any disproportionate share hospital
described in subsection (b)(1) of this section which meets the
requirements of subsection (d) of this section), and
(B) provides, effective for inpatient hospital services
provided not later than July 1, 1988, for an appropriate increase
in the rate or amount of payment for such services provided by
such hospitals, consistent with subsection (c) of this section.
(2)(A) In order to be considered to have met such requirement of
section 1396a(a)(13)(A) of this title as of July 1, 1989, the State
must submit to the Secretary by not later than April 1, 1989, the
State plan amendment described in paragraph (1), consistent with
subsection (c) of this section, effective for inpatient hospital
services provided on or after July 1, 1989.
(B) In order to be considered to have met such requirement of
section 1396a(a)(13)(A) of this title as of July 1, 1990, the State
must submit to the Secretary by not later than April 1, 1990, the
State plan amendment described in paragraph (1), consistent with
subsections (c) and (f) of this section, effective for inpatient
hospital services provided on or after July 1, 1990.
(C) If a State plan under this subchapter provides for payments
for inpatient hospital services on a prospective basis (whether per
diem, per case, or otherwise), in order for the plan to be
considered to have met such requirement of section 1396a(a)(13)(A)
of this title as of July 1, 1989, the State must submit to the
Secretary by not later than April 1, 1989, a State plan amendment
that provides, in the case of hospitals defined by the State as
disproportionate share hospitals under paragraph (1)(A), for an
outlier adjustment in payment amounts for medically necessary
inpatient hospital services provided on or after July 1, 1989,
involving exceptionally high costs or exceptionally long lengths of
stay for individuals under one year of age.
(D) A State plan under this subchapter shall not be considered to
meet the requirements of section 1396a(a)(13)(A)(iv) of this title
(insofar as it requires payments to hospitals to take into account
the situation of hospitals that serve a disproportionate number of
low-income patients with special needs), as of October 1, 1998,
unless the State has submitted to the Secretary by such date a
description of the methodology used by the State to identify and to
make payments to disproportionate share hospitals, including
children's hospitals, on the basis of the proportion of low-income
and medicaid patients (including such patients who receive benefits
through a managed care entity) served by such hospitals. The State
shall provide an annual report to the Secretary describing the
disproportionate share payments to each such disproportionate share
hospital.
(3) The Secretary shall, not later than 90 days after the date a
State submits an amendment under this subsection, review each such
amendment for compliance with such requirement and by such date
shall approve or disapprove each such amendment. If the Secretary
disapproves such an amendment, the State shall immediately submit a
revised amendment which meets such requirement.
(4) The requirement of this subsection may not be waived under
section 1396n(b)(4) of this title.
(b) Hospitals deemed disproportionate share
(1) For purposes of subsection (a)(1) of this section, a hospital
which meets the requirements of subsection (d) of this section is
deemed to be a disproportionate share hospital if -
(A) the hospital's medicaid inpatient utilization rate (as
defined in paragraph (2)) is at least one standard deviation
above the mean medicaid inpatient utilization rate for hospitals
receiving medicaid payments in the State; or
(B) the hospital's low-income utilization rate (as defined in
paragraph (3)) exceeds 25 percent.
(2) For purposes of paragraph (1)(A), the term "medicaid
inpatient utilization rate" means, for a hospital, a fraction
(expressed as a percentage), the numerator of which is the
hospital's number of inpatient days attributable to patients who
(for such days) were eligible for medical assistance under a State
plan approved under this subchapter in a period (regardless of
whether such patients receive medical assistance on a
fee-for-service basis or through a managed care entity), and the
denominator of which is the total number of the hospital's
inpatient days in that period. In this paragraph, the term
"inpatient day" includes each day in which an individual (including
a newborn) is an inpatient in the hospital, whether or not the
individual is in a specialized ward and whether or not the
individual remains in the hospital for lack of suitable placement
elsewhere.
(3) For purposes of paragraph (1)(B), the term "low-income
utilization rate" means, for a hospital, the sum of -
(A) the fraction (expressed as a percentage) -
(i) the numerator of which is the sum (for a period) of (I)
the total revenues paid the hospital for patient services under
a State plan under this subchapter (regardless of whether the
services were furnished on a fee-for-service basis or through a
managed care entity) and (II) the amount of the cash subsidies
for patient services received directly from State and local
governments, and
(ii) the denominator of which is the total amount of revenues
of the hospital for patient services (including the amount of
such cash subsidies) in the period; and
(B) a fraction (expressed as a percentage) -
(i) the numerator of which is the total amount of the
hospital's charges for inpatient hospital services which are
attributable to charity care in a period, less the portion of
any cash subsidies described in clause (i)(II) of subparagraph
(A) in the period reasonably attributable to inpatient hospital
services, and
(ii) the denominator of which is the total amount of the
hospital's charges for inpatient hospital services in the
hospital in the period.
The numerator under subparagraph (B)(i) shall not include
contractual allowances and discounts (other than for indigent
patients not eligible for medical assistance under a State plan
approved under this subchapter).
(4) The Secretary may not restrict a State's authority to
designate hospitals as disproportionate share hospitals under this
section. The previous sentence shall not be construed to affect the
authority of the Secretary to reduce payments pursuant to section
1396b(w)(1)(A)(iii) of this title if the Secretary determines that,
as a result of such designations, there is in effect a hold
harmless provision described in section 1396b(w)(4) of this title.
(c) Payment adjustment
Subject to subsections (f) and (g) of this section, in order to
be consistent with this subsection, a payment adjustment for a
disproportionate share hospital must either -
(1) be in an amount equal to at least the product of (A) the
amount paid under the State plan to the hospital for operating
costs for inpatient hospital services (of the kind described in
section 1395ww(a)(4) of this title), and (B) the hospital's
disproportionate share adjustment percentage (established under
section 1395ww(d)(5)(F)(iv) of this title);
(2) provide for a minimum specified additional payment amount
(or increased percentage payment) and (without regard to whether
the hospital is described in subparagraph (A) or (B) of
subsection (b)(1) of this section) for an increase in such a
payment amount (or percentage payment) in proportion to the
percentage by which the hospital's medicaid utilization rate (as
defined in subsection (b)(2) of this section) exceeds one
standard deviation above the mean medicaid inpatient utilization
rate for hospitals receiving medicaid payments in the State or
the hospital's low-income utilization rate (as defined in
paragraph )1(! (b)(3) of this section); or
(3) provide for a minimum specified additional payment amount
(or increased percentage payment) that varies according to type
of hospital under a methodology that -
(A) applies equally to all hospitals of each type; and
(B) results in an adjustment for each type of hospital that
is reasonably related to the costs, volume, or proportion of
services provided to patients eligible for medical assistance
under a State plan approved under this subchapter or to
low-income patients,
except that, for purposes of paragraphs (1)(B) and (2)(A) of
subsection (a) of this section, the payment adjustment for a
disproportionate share hospital is consistent with this subsection
if the appropriate increase in the rate or amount of payment is
equal to at least one-third of the increase otherwise applicable
under this subsection (in the case of such paragraph (1)(B)) and at
least two-thirds of such increase (in the case of paragraph
(2)(A)). In the case of a hospital described in subsection
(d)(2)(A)(i) of this section (relating to children's hospitals), in
computing the hospital's disproportionate share adjustment
percentage for purposes of paragraph (1)(B) of this subsection, the
disproportionate patient percentage (defined in section
1395ww(d)(5)(F)(vi) of this title) shall be computed by
substituting for the fraction described in subclause (I) of such
section the fraction described in subclause (II) of that section.
If a State elects in a State plan amendment under subsection (a) of
this section to provide the payment adjustment described in
paragraph (2), the State must include in the amendment a detailed
description of the specific methodology to be used in determining
the specified additional payment amount (or increased percentage
payment) to be made to each hospital qualifying for such a payment
adjustment and must publish at least annually the name of each
hospital qualifying for such a payment adjustment and the amount of
such payment adjustment made for each such hospital.
(d) Requirements to qualify as disproportionate share hospital
(1) Except as provided in paragraph (2), no hospital may be
defined or deemed as a disproportionate share hospital under a
State plan under this subchapter or under subsection (b) of this
section unless the hospital has at least 2 obstetricians who have
staff privileges at the hospital and who have agreed to provide
obstetric services to individuals who are entitled to medical
assistance for such services under such State plan.
(2)(A) Paragraph (1) shall not apply to a hospital -
(i) the inpatients of which are predominantly individuals under
18 years of age; or
(ii) which does not offer nonemergency obstetric services to
the general population as of December 22, 1987.
(B) In the case of a hospital located in a rural area (as defined
for purposes of section 1395ww of this title), in paragraph (1) the
term "obstetrician" includes any physician with staff privileges at
the hospital to perform nonemergency obstetric procedures.
(3) No hospital may be defined or deemed as a disproportionate
share hospital under a State plan under this subchapter or under
subsection (b) or (e) of this section unless the hospital has a
medicaid inpatient utilization rate (as defined in subsection
(b)(2) of this section) of not less than 1 percent.
(e) Special rule
(1) A State plan shall be considered to meet the requirement of
section 1396a(a)(13)(A)(iv) of this title (insofar as it requires
payments to hospitals to take into account the situation of
hospitals which serve a disproportionate number of low income
patients with special needs) without regard to the requirement of
subsection (a) of this section if (A)(i) the plan provided for
payment adjustments based on a pooling arrangement involving a
majority of the hospitals participating under the plan for
disproportionate share hospitals as of January 1, 1984, or (ii) the
plan as of January 1, 1987, provided for payment adjustments based
on a statewide pooling arrangement involving all acute care
hospitals and the arrangement provides for reimbursement of the
total amount of uncompensated care provided by each participating
hospital, (B) the aggregate amount of the payment adjustments under
the plan for such hospitals is not less than the aggregate amount
of such adjustments otherwise required to be made under such
subsection, and (C) the plan meets the requirement of subsection
(d)(3) of this section and such payment adjustments are made
consistent with the last sentence of subsection (c) of this
section.
(2) In the case of a State that used a health insuring
organization before January 1, 1986, to administer a portion of its
plan on a statewide basis, beginning on July 1, 1988 -
(A) the requirements of subsections (b) and (c) of this section
(other than the last sentence of subsection (c) of this section)
shall not apply if the aggregate amount of the payment
adjustments under the plan for disproportionate share hospitals
(as defined under the State plan) is not less than the aggregate
amount of payment adjustments otherwise required to be made if
such subsections applied,
(B) subsection (d)(2)(B) of this section shall apply to
hospitals located in urban areas, as well as in rural areas,
(C) subsection (d)(3) of this section shall apply, and
(D) subsection (g) of this section shall apply.
(f) Limitation on Federal financial participation
(1) In general
Payment under section 1396b(a) of this title shall not be made
to a State with respect to any payment adjustment made under this
section for hospitals in a State for quarters in a fiscal year in
excess of the disproportionate share hospital (in this subsection
referred to as "DSH") allotment for the State for the fiscal
year, as specified in paragraphs (2) and (3).
(2) State DSH allotments for fiscal years 1998 through 2002
Subject to paragraph (4), the DSH allotment for a State for
each fiscal year during the period beginning with fiscal year
1998 and ending with fiscal year 2002 is determined in accordance
with the following table:
State or District DSH Allotment (in millions of dollars)
FY 98 FY 99 FY 00 FY 01 FY 02
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Alabama 293 269 248 246 246
Alaska 10 10 10 9 9
Arizona 81 81 81 81 81
Arkansas 2 2 2 2 2
California 1,085 1,068 986 931 877
Colorado 93 85 79 74 74
Connecticut 200 194 164 160 160
Delaware 4 4 4 4 4
District of Columbia 23 23 32 32 32
Florida 207 203 197 188 160
Georgia 253 248 241 228 215
Hawaii 0 0 0 0 0
Idaho 1 1 1 1 1
Illinois 203 199 193 182 172
Indiana 201 197 191 181 171
Iowa 8 8 8 8 8
Kansas 51 49 42 36 33
Kentucky 137 134 130 123 116
Louisiana 880 795 713 658 631
Maine 103 99 84 84 84
Maryland 72 70 68 64 61
Massachusetts 288 282 273 259 244
Michigan 249 244 237 224 212
Minnesota 16 16 33 33 33
Mississippi 143 141 136 129 122
Missouri 436 423 379 379 379
Montana 0.2 0.2 0.2 0.2 0.2
Nebraska 5 5 5 5 5
Nevada 37 37 37 37 37
New Hampshire 140 136 130 130 130
New Jersey 600 582 515 515 515
New Mexico 5 5 9 9 9
New York 1,512 1,482 1,436 1,361 1,285
North Carolina 278 272 264 250 236
North Dakota 1 1 1 1 1
Ohio 382 374 363 344 325
Oklahoma 16 16 16 16 16
Oregon 20 20 20 20 20
Pennsylvania 529 518 502 476 449
Rhode Island 62 60 58 55 52
South Carolina 313 303 262 262 262
South Dakota 1 1 1 1 1
Tennessee 0 0 0 0 0
Texas 979 950 806 765 765
Utah 3 3 3 3 3
Vermont 18 18 18 18 18
Virginia 70 68 66 63 59
Washington 174 171 166 157 148
West Virginia 64 63 61 58 54
Wisconsin 7 7 7 7 7
Wyoming 0 0 0.1 0.1 0.1.
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(3) State DSH allotments for fiscal year 2003 and thereafter
(A) In general
Except as provided in paragraph (6), the DSH allotment for
any State for fiscal year 2003 and each succeeding fiscal year
is equal to the DSH allotment for the State for the preceding
fiscal year under paragraph (2) or this paragraph, increased,
subject to subparagraphs (B) and (C) and paragraph (5) by the
percentage change in the consumer price index for all urban
consumers (all items; U.S. city average), for the previous
fiscal year.
(B) Limitation
The DSH allotment for a State shall not be increased under
subparagraph (A) for a fiscal year to the extent that such an
increase would result in the DSH allotment for the year
exceeding the greater of -
(i) the DSH allotment for the previous year, or
(ii) 12 percent of the total amount of expenditures under
the State plan for medical assistance during the fiscal year.
(C) Special, temporary increase in allotments on a one-time,
non-cumulative basis
The DSH allotment for any State (other than a State with a
DSH allotment determined under paragraph (5)) -
(i) for fiscal year 2004 is equal to 116 percent of the DSH
allotment for the State for fiscal year 2003 under this
paragraph, notwithstanding subparagraph (B); and
(ii) for each succeeding fiscal year is equal to the DSH
allotment for the State for fiscal year 2004 or, in the case
of fiscal years beginning with the fiscal year specified in
subparagraph (D) for that State, the DSH allotment for the
State for the previous fiscal year increased by the
percentage change in the consumer price index for all urban
consumers (all items; U.S. city average), for the previous
fiscal year.
(D) Fiscal year specified
For purposes of subparagraph (C)(ii), the fiscal year
specified in this subparagraph for a State is the first fiscal
year for which the Secretary estimates that the DSH allotment
for that State will equal (or no longer exceed) the DSH
allotment for that State under the law as in effect before
December 8, 2003.
(4) Special rule for fiscal years 2001 and 2002
(A) In general
Notwithstanding paragraph (2), the DSH allotment for any
State for -
(i) fiscal year 2001, shall be the DSH allotment determined
under paragraph (2) for fiscal year 2000 increased, subject
to subparagraph (B) and paragraph (5), by the percentage
change in the consumer price index for all urban consumers
(all items; U.S. city average) for fiscal year 2000; and
(ii) fiscal year 2002, shall be the DSH allotment
determined under clause (i) increased, subject to
subparagraph (B) and paragraph (5), by the percentage change
in the consumer price index for all urban consumers (all
items; U.S. city average) for fiscal year 2001.
(B) Limitation
Subparagraph (B) of paragraph (3) shall apply to subparagraph
(A) of this paragraph in the same manner as that subparagraph
(B) applies to paragraph (3)(A).
(C) No application to allotments after fiscal year 2002
The DSH allotment for any State for fiscal year 2003 or any
succeeding fiscal year shall be determined under paragraph (3)
without regard to the DSH allotments determined under
subparagraph (A) of this paragraph.
(5) Special rule for low DSH States
(A) For fiscal years 2001 through 2003 for extremely low DSH
States
In the case of a State in which the total expenditures under
the State plan (including Federal and State shares) for
disproportionate share hospital adjustments under this section
for fiscal year 1999, as reported to the Administrator of the
Health Care Financing Administration as of August 31, 2000, is
greater than 0 but less than 1 percent of the State's total
amount of expenditures under the State plan for medical
assistance during the fiscal year, the DSH allotment for fiscal
year 2001 shall be increased to 1 percent of the State's total
amount of expenditures under such plan for such assistance
during such fiscal year. In subsequent fiscal years before
fiscal year 2004, such increased allotment is subject to an
increase for inflation as provided in paragraph (3)(A).
(B) For fiscal year 2004 and subsequent fiscal years
In the case of a State in which the total expenditures under
the State plan (including Federal and State shares) for
disproportionate share hospital adjustments under this section
for fiscal year 2000, as reported to the Administrator of the
Centers for Medicare & Medicaid Services as of August 31, 2003,
is greater than 0 but less than 3 percent of the State's total
amount of expenditures under the State plan for medical
assistance during the fiscal year, the DSH allotment for the
State with respect to -
(i) fiscal year 2004 shall be the DSH allotment for the
State for fiscal year 2003 increased by 16 percent;
(ii) each succeeding fiscal year before fiscal year 2009
shall be the DSH allotment for the State for the previous
fiscal year increased by 16 percent; and
(iii) fiscal year 2009 and any subsequent fiscal year,
shall be the DSH allotment for the State for the previous
year subject to an increase for inflation as provided in
paragraph (3)(A).
(6) Allotment adjustment
Only with respect to fiscal year 2004 or 2005, if a statewide
waiver under section 1315 of this title is revoked or terminated
before the end of either such fiscal year and there is no DSH
allotment for the State, the Secretary shall -
(A) permit the State whose waiver was revoked or terminated
to submit an amendment to its State plan that would describe
the methodology to be used by the State (after the effective
date of such revocation or termination) to identify and make
payments to disproportionate share hospitals, including
children's hospitals and institutions for mental diseases or
other mental health facilities (other than State-owned
institutions or facilities), on the basis of the proportion of
patients served by such hospitals that are low-income patients
with special needs; and
(B) provide for purposes of this subsection for computation
of an appropriate DSH allotment for the State for fiscal year
2004 or 2005 (or both) that would not exceed the amount allowed
under paragraph (3)(B)(ii) and that does not result in greater
expenditures under this subchapter than would have been made if
such waiver had not been revoked or terminated.
In determining the amount of an appropriate DSH allotment under
subparagraph (B) for a State, the Secretary shall take into
account the level of DSH expenditures for the State for the
fiscal year preceding the fiscal year in which the waiver
commenced.
(7) "State" defined
In this subsection, the term "State" means the 50 States and
the District of Columbia.
(g) Limit on amount of payment to hospital
(1) Amount of adjustment subject to uncompensated costs
(A) In general
A payment adjustment during a fiscal year shall not be
considered to be consistent with subsection (c) of this section
with respect to a hospital if the payment adjustment exceeds
the costs incurred during the year of furnishing hospital
services (as determined by the Secretary and net of payments
under this subchapter, other than under this section, and by
uninsured patients) by the hospital to individuals who either
are eligible for medical assistance under the State plan or
have no health insurance (or other source of third party
coverage) for services provided during the year. For purposes
of the preceding sentence, payments made to a hospital for
services provided to indigent patients made by a State or a
unit of local government within a State shall not be considered
to be a source of third party payment.
(B) Limit to public hospitals during transition period
With respect to payment adjustments during a State fiscal
year that begins before January 1, 1995, subparagraph (A) shall
apply only to hospitals owned or operated by a State (or by an
instrumentality or a unit of government within a State).
(C) Modifications for private hospitals
With respect to hospitals that are not owned or operated by a
State (or by an instrumentality or a unit of government within
a State), the Secretary may make such modifications to the
manner in which the limitation on payment adjustments is
applied to such hospitals as the Secretary considers
appropriate.
(2) Additional amount during transition period for certain
hospitals with high disproportionate share
(A) In general
In the case of a hospital with high disproportionate share
(as defined in subparagraph (B)), a payment adjustment during a
State fiscal year that begins before January 1, 1995, shall be
considered consistent with subsection (c) of this section if
the payment adjustment does not exceed 200 percent of the costs
of furnishing hospital services described in paragraph (1)(A)
during the year, but only if the Governor of the State
certifies to the satisfaction of the Secretary that the
hospital's applicable minimum amount is used for health
services during the year. In determining the amount that is
used for such services during a year, there shall be excluded
any amounts received under the Public Health Service Act [42
U.S.C. 201 et seq.], subchapter V of this chapter, subchapter
XVIII of this chapter, or from third party payors (not
including the State plan under this subchapter) that are used
for providing such services during the year.
(B) "Hospital with high disproportionate share" defined
In subparagraph (A), a hospital is a "hospital with high
disproportionate share" if -
(i) the hospital is owned or operated by a State (or by an
instrumentality or a unit of government within a State); and
(ii) the hospital -
(I) meets the requirement described in subsection
(b)(1)(A) of this section, or
(II) has the largest number of inpatient days
attributable to individuals entitled to benefits under the
State plan of any hospital in such State for the previous
State fiscal year.
(C) "Applicable minimum amount" defined
In subparagraph (A), the "applicable minimum amount" for a
hospital for a fiscal year is equal to the difference between
the amount of the hospital's payment adjustment for the fiscal
year and the costs to the hospital of furnishing hospital
services described in paragraph (1)(A) during the fiscal year.
(h) Limitation on certain State DSH expenditures
(1) In general
Payment under section 1396b(a) of this title shall not be made
to a State with respect to any payment adjustments made under
this section for quarters in a fiscal year (beginning with fiscal
year 1998) to institutions for mental diseases or other mental
health facilities, to the extent the aggregate of such
adjustments in the fiscal year exceeds the lesser of the
following:
(A) 1995 IMD DSH payment adjustments
The total State DSH expenditures that are attributable to
fiscal year 1995 for payments to institutions for mental
diseases and other mental health facilities (based on reporting
data specified by the State on HCFA Form 64 as mental health
DSH, and as approved by the Secretary).
(B) Applicable percentage of 1995 total DSH payment allotment
The amount of such payment adjustments which are equal to the
applicable percentage of the Federal share of payment
adjustments made to hospitals in the State under subsection (c)
of this section that are attributable to the 1995 DSH allotment
for the State for payments to institutions for mental diseases
and other mental health facilities (based on reporting data
specified by the State on HCFA Form 64 as mental health DSH,
and as approved by the Secretary).
(2) Applicable percentage
(A) In general
For purposes of paragraph (1), the applicable percentage with
respect to -
(i) each of fiscal years 1998, 1999, and 2000, is the
percentage determined under subparagraph (B); or
(ii) a succeeding fiscal year is the lesser of the
percentage determined under subparagraph (B) or the following
percentage:
(I) For fiscal year 2001, 50 percent.
(II) For fiscal year 2002, 40 percent.
(III) For each succeeding fiscal year, 33 percent.
(B) 1995 percentage
The percentage determined under this subparagraph is the
ratio (determined as a percentage) of -
(i) the Federal share of payment adjustments made to
hospitals in the State under subsection (c) of this section
that are attributable to the 1995 DSH allotment for the State
(as reported by the State not later than January 1, 1997, on
HCFA Form 64, and as approved by the Secretary) for payments
to institutions for mental diseases and other mental health
facilities, to
(ii) the State 1995 DSH spending amount.
(C) State 1995 DSH spending amount
For purposes of subparagraph (B)(ii), the "State 1995 DSH
spending amount", with respect to a State, is the Federal
medical assistance percentage (for fiscal year 1995) of the
payment adjustments made under subsection (c) of this section
under the State plan that are attributable to the fiscal year
1995 DSH allotment for the State (as reported by the State not
later than January 1, 1997, on HCFA Form 64, and as approved by
the Secretary).
(i) Requirement for direct payment
(1) In general
No payment may be made under section 1396b(a)(1) of this title
with respect to a payment adjustment made under this section, for
services furnished by a hospital on or after October 1, 1997,
with respect to individuals eligible for medical assistance under
the State plan who are enrolled with a managed care entity (as
defined in section 1396u-2(a)(1)(B) of this title) or under any
other managed care arrangement unless a payment, equal to the
amount of the payment adjustment -
(A) is made directly to the hospital by the State; and
(B) is not used to determine the amount of a prepaid
capitation payment under the State plan to the entity or
arrangement with respect to such individuals.
(2) Exception for current arrangements
Paragraph (1) shall not apply to a payment adjustment provided
pursuant to a payment arrangement in effect on July 1, 1997.
(j) Annual reports and other requirements regarding payment
adjustments
With respect to fiscal year 2004 and each fiscal year thereafter,
the Secretary shall require a State, as a condition of receiving a
payment under section 1396b(a)(1) of this title with respect to a
payment adjustment made under this section, to do the following:
(1) Report
The State shall submit an annual report that includes the
following:
(A) An identification of each disproportionate share hospital
that received a payment adjustment under this section for the
preceding fiscal year and the amount of the payment adjustment
made to such hospital for the preceding fiscal year.
(B) Such other information as the Secretary determines
necessary to ensure the appropriateness of the payment
adjustments made under this section for the preceding fiscal
year.
(2) Independent certified audit
The State shall annually submit to the Secretary an independent
certified audit that verifies each of the following:
(A) The extent to which hospitals in the State have reduced
their uncompensated care costs to reflect the total amount of
claimed expenditures made under this section.
(B) Payments under this section to hospitals that comply with
the requirements of subsection (g) of this section.
(C) Only the uncompensated care costs of providing inpatient
hospital and outpatient hospital services to individuals
described in paragraph (1)(A) of such subsection are included
in the calculation of the hospital-specific limits under such
subsection.
(D) The State included all payments under this subchapter,
including supplemental payments, in the calculation of such
hospital-specific limits.
(E) The State has separately documented and retained a record
of all of its costs under this subchapter, claimed expenditures
under this subchapter, uninsured costs in determining payment
adjustments under this section, and any payments made on behalf
of the uninsured from payment adjustments under this section.
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