Section 41.03 - Hospital Inpatient Rates(1)Acute Hospitals.(a)Determination of Industrial Accident Inpatient Rates of Payment for Massachusetts Acute Hospitals. Payment for any eligible inpatient service, and outpatient or observation stay as defined in 114. 1 CMR 4.04(2) provided to an industrial accident patient by an acute hospital shall be equal to the product of the industrial accident PAF and the published charge for the service. The Division will determine the hospital-specific industrial accident Rate Year Payment on Account Factor (PAF) calculated as follows: 1. The rate year PAF equals the lower of 1.0 or the hospital's base year Private Sector Gross Patient Service Revenue (PSGPSR) minus its base year private sector contractual adjustments divided by its base year Private Sector Gross Patient Service Revenue (PSGPSR). Private sector revenues and contractual adjustments used in this calculation will be those reported on the DHCFP-403 Schedule V-A cost report from Industrial Accident, Managed Care and Non-Managed Care payer groups. Rate Year PAF = the lower of 1.0 or Base Year PSGPSR - Base Year Private Sector Contractual Adjustments
Base Year PSGPSR
2. The percentage equal to the lower of 1.00 or the total hospital's total base year Gross Patient Service Revenue (GPSR) minus its base year total hospital contractual adjustments divided by its base year total hospital GPSR3. For any hospital resulting from a merger, consolidation, or other such arrangement, a single updated PAF will be calculated when merged data and charges become available. Merged or consolidated hospitals shall utilize the PAF approved for the specific site of service until a single updated PAF is calculated and approved by the Division. In the event that there is no individual PAF approved for the site of service, the median PAF multiplied by charges shall be payment for all eligible inpatient and emergency department services rendered.4. For a new hospital or hospital for which an approved PAF is not yet determined, the acute hospital median PAF multiplied by charges shall be payment for any eligible inpatient service, and outpatient or overnight observation stay rendered as defined in 114. 1 CMR 40.04(2).(b)Annual Update of Industrial Accident Inpatient Rates of Payment. Industrial Accident rates of payment may increase by no more than the rate of inflation, as measured by the Centers for Medicare and Medicaid Services's (CMS) Hospital Market Basket Prospective Payment System (PPS) Index. 1. The Division will conduct the following analysis to determine whether it must update a hospital's PAF. The Division will determine the actual increase in private sector charges by dividing the average charge percase-mixad justed discharge (CMAD) for the most recent year for which case-mix data are available by the average charge per case-mix adjusted discharge in the base year. For simplicity, the Division will refer to the most recent year for which case-mix data are available as the "update year". If the result of this division is greater than one plus the CMS Hospital Market Basket Index for the period from the base year to the update year then the Division will update the hospital's PAF. If the result of this division is less than or equal to one plus the CMS Hospital Market Basket Index for the period from the base year to the update year, no further action will be taken and the hospital shall maintain its current PAF during the new rate year.2. The Division will conduct the following analysis If the percentage increase as determined by 114. 1 CMR 41.03(1)(b)1. is greater than one plus the CMS Hospital Market Basket Index, the updated PAF will be determined as follows. The Division will multiply the base year PAF by one plus the CMS Hospital Market Basket Index and divide by the actual percentage increase as determined pursuant to 114. 1 CMR 41.03(1)(b)1. This calculation is expressed algebraically by the following formula:
((Base Year PAF * (1+CMS Hospital Market Basket Index)) / Update Year Average Charge per CMAD)) / Base Year Charge per CMAD)
3. The PAF ratio established in 114. 1 CMR 41.03(1) shall not exceed 1.00.(c)Determination of Industrial Accident Inpatient Rates of Payment for Out of State Acute Hospitals.1. On an annual basis, the Division shall establish a PAF for out of state acute hospitals that pro vide inpatient services or outpatient care in accordance with 114. 1 CMR 41.01(3) to industrial accident patients as follows. The Division shall group the PAFs for all acute care hospitals in the Commonwealth as determined in 114. 1 CMR 41.03(1), and calculate the median PAF. The median acute hospital PAF shall be established as the PAF for reimbursement of out of state acute hospitals.2. The industrial accident inpatient rate of payment for out of state acute hospitals will be determined by multiplying the gross charges for services rendered by the PAF for out of state acute hospitals calculated pursuant to 114. 1 CMR 41.03(1)(c)1.(d)Timing of Rate Determination. 1. The Division will update the inpatient PAF annually on a prospective basis.2. Industrial accident rates of payment established pursuant to 114. 1 CMR 41.03 shall remain in effect until an update review is conducted and an adjusted PAF is calculated in accordance with 114. 1 CMR 41.03(1)(b).(e)Data Sources for the Calculation of the PAF and Yearly Update. 1. The Division shall use the data sources cited in 114. 1 CMR 41.03(1)(b) in its calculation of the industrial accident rates of payment unless the specified data source is unavailable or inaccurate. In either of these two cases, the Division shall use the most comparable available data source. In the event that the Division uses a comparable data source, the Division will consider a hospital's request to submit additional data.2. The Division shall use the base year DHCFP-403 cost report to calculate the rate year PAF.3. For purposes of calculating the updated PAF, the Division shall use the most recent four quarters of the merged billing and discharge tapes (case-mix data) submitted pursuant to 114. 1 CMR 17.00. The Division shall utilize the New York All Patient-Diagnosis Related Groups, Version 15, and the New York weights, for the appropriate year when calculating the updated PAF.(2)Non-acute Hospitals.(a)Determination of Industrial Accident Inpatient Rates of Payment for Massachusetts Non-acute Hospitals. Payment for any eligible inpatient service, and outpatient or overnight observation stay as defined in 114. 1 CMR 40.04(2) provided to an industrial accident patient by a non-acute hospital shall be equal to the product of the industrial accident PAF and the published charge for the service. The Division will determine the hospital-specific industrial accident Rate Year Payment on Account Factor (PAF) calculated as follows: 1. The rate year PAF equals the lower of 1.0 or the hospital's base year Private Sector Gross Patient Service Revenue (PSGPSR) minus its base year private sector contractual adjustments divided by its base year Private Sector Gross Patient Service Revenue (PSGPSR). Private sector revenues and contractual adjustments used in this calculation will be those reported on the DHCFP-403 Schedule V cost report from Blue Cross, Industrial Accident, Commercial and HMO payer groups. If the specified data source is unavailable or inaccurate, the Division shall use the most comparable data source. In the event that the Division uses a comparable data source, the Division will consider a hospital's request to submit additional data. Rate Year PAF = the lower of 1.0 or
Base Year PSGPSR - Base Year Private Sector Contractual Adjustments
Base Year PSGPSR
2. The percentage equal to the lower of 1.00 or the total hospital's total base year Gross Patient Service Revenue (GPSR) minus its base year total hospital contractual adjustments divided by its total hospital GPSR3. For any hospital resulting from a merger, consolidation, or other such arrangement, a single updated PAF will be calculated when merged data and charges become available. Merged or consolidated hospitals shall utilize the PAF approved for the specific site of service until a single updated PAF is calculated and approved by the Division. In the event that there is no individual PAF approved for the site of service, the median PAF multiplied by charges shall be payment for all eligible inpatient and emergency department services rendered.4. For a new hospital or hospital for which an approved PAF is not yet determined, the non-acute hospital median PAF multiplied by charges shall be payment for any eligible inpatient service, and outpatient or overnight observation stay rendered as defined in 114. 1 CMR 40.04(2).(b)Determination of Industrial Accident Inpatient Rates of payment for Out of State Non-acute Hospitals. 1. On an annual basis, the Division shall establish a PAF for out of state non-acute hospitals that provide care and services to industrial accident patients as follows. The Division shall group the approved PAFs for those non-acute care hospitals in the Commonwealth as determined in 114. 1 CMR 41.03(2)(a), and calculate the median PAF. The median non-acute hospital PAF shall be established as the PAF for reimbursement of out of state non-acute hospitals.2. The industrial accident inpatient rate of payment for out of state non-acute hospitals will be determined by multiplying the gross charges for services rendered by the PAF for out of state non-acute hospitals calculated pursuant to 114. 1 CMR 41.03(2)(b)1.(c)Timing of Rate Determination.1. The Division will update the non-acute inpatient PAF on a prospective basis annually in accordance with 114. 1 CMR 41.03(2)(a).2. Industrial accident rates of payment established pursuant to 114. 1 CMR 41.03 shall remain in effect until an update review is conducted and an adjusted PAF is calculated in accordance with 114. 1 CMR 41.03(2)(a).