(b) To qualify for additional payments under this section as a DSH, a hospital must meet the following criteria for each qualifying year:

1. (1) the hospital must be a general acute care hospital, a critical access hospital, a specialty hospital, or an inpatient psychiatric hospital;
2. (2) unless it qualifies for the exception set out in 42 U.S.C. 1396r-4(d)(2), the hospital must meet the obstetrical staffing requirements of 42 U.S.C. 1396r-4(d), and must provide the names and Medicaid provider numbers of at least two obstetricians who meet the requirements of that section;
3. (3) the hospital must have a minimum Medicaid utilization rate of not less than one percent for the qualifying year; for purposes of this paragraph, the Medicaid utilization rate is calculated by dividing the hospital's number of Medicaid-eligible inpatient days by the hospital's total number of inpatient days provided to all patients;

4. (4) not later than October 1 of the calendar year that precedes the payment period, the hospital must submit to the department the following forms and documentation:

   1. (A) the Medicare cost report filed for the qualifying year;
   2. (B) Medicaid reporting forms for the qualifying year from the Medicaid Hospital and Long-Term Care Facility Reporting Manual, adopted by reference in 7 AAC 160.900, including the audited financial statements for the facility;

   3. (C) an uninsured care log for the qualifying year for each patient having uninsured care; the log must be prepared and submitted in electronic spreadsheet format using the Medicaid Log of Uninsured Care Reporting Form, adopted by reference in 7 AAC 160.900; the hospital must certify the log as accurate in an electronic attachment with the submission of the uninsured care log; with respect to uninsured care, the log must specify, in sufficient detail for the department to verify the information,

      1. (i) total charges;
      2. (ii) each admission date;
      3. (iii) the number of patient days;
      4. (iv) any payments made by the patient, or on behalf of the patient by a third party, for services;
      5. (v) each discharge date;
      6. (vi) each service type;
      7. (vii) each payment designation; and
      8. (viii) each date service was provided for outpatient hospital services.

(c) When making a DSH classification under (d) of this section, the department will use the following data sources as applicable:

1. (1) for determination of Medicaid covered inpatient days, Medicaid charges, Medicaid payments, and Medicaid non-covered inpatient days, the MR-0-14 report for the qualifying year that is available at least six months after the end of the hospital's fiscal year at the time the calculation is performed;
2. (2) for determination and calculation of total hospital allowable costs, total inpatient hospital costs, Medicaid allowable costs, and physician costs, the Medicare cost report filed for the qualifying year and forms required by (b)(4)(A) of this section;
3. (3) for total hospital days, total hospital revenues, cash subsidies, and patient revenues, the forms required by (b)(4)(B) of this section;
4. (4) the log required by (b)(4)(C) of this section;
5. (5) if the department determines that a piece of data or a data source listed in (1) - (4) of this subsection is unavailable, an alternate data source that the department determines to include the same information as the sources in (1) - (4) of this subsection.

(d) A qualifying hospital may receive disproportionate share payments allocated to one or more of the following DSH classifications, if that hospital meets any additional criteria applicable to that classification, and subject to the limitations set out in (e) of this section:

1. (1) payments allocated to each Medicaid inpatient utilization DSH (MIU DSH), if the qualifying hospital has a state Medicaid inpatient utilization rate at least one standard deviation above the mean of state Medicaid inpatient utilization rates for all hospitals in this state; for purposes of this paragraph,

   1. (A) the state Medicaid inpatient utilization rate is a fraction, expressed as a percentage, of which the numerator is the hospital's number of Medicaid-eligible inpatient days in this state for the hospital's qualifying year and the denominator is the total number of the hospital's inpatient days for its qualifying year; and
   2. (B) the mean of Medicaid inpatient utilization rates for all hospitals in the state is the fraction, expressed as a percentage, of which the numerator is the total number of Medicaid-eligible inpatient days for all hospitals in this state for their qualifying year and the denominator is the total number of inpatient days for all hospitals in this state for their qualifying year;

2. (2) payments allocated to each low-income DSH (LI DSH), if the qualifying hospital has a low-income utilization rate exceeding 25 percent; for purposes of this paragraph, the low-income utilization rate is calculated as the sum of

   1. (A) the fraction, expressed as a percentage, of which the numerator is the sum of the total Medicaid hospital revenue paid to the qualifying hospital for patient services provided to Medicaid-eligible patients in this state in the hospital's qualifying year and the amount of cash subsidies received directly from the state or from local governments for patient services provided in this state in the hospital's qualifying year, and the denominator is the total amount of hospital revenue for services, including the amount of cash subsidies specified in this subparagraph for that hospital's qualifying year; and
   2. (B) the fraction, expressed as a percentage, of which the numerator is the total amount of the qualifying hospital's charges for inpatient hospital services attributable to charity care for the hospital's qualifying year, less the portion of any cash subsidies received directly from the state or from local governments for inpatient hospital services, and the denominator is the total amount of the hospital's charges for inpatient services for the hospital's qualifying year; for a state-owned qualifying hospital that does not have a charge structure, the hospital's charges for charity care are equal to the cash subsidies received by the hospital from the state or from local governments;

3. (3) payments allocated to each designated evaluation and treatment DSH (DET DSH), if the qualifying hospital

   1. (A) is designated as an evaluation and treatment facility as required by 7 AAC 72;
   2. (B) enters into an agreement with the department to provide designated evaluation and treatment services and complies with the requirements of that agreement; and
   3. (C) not later than 60 days after the end of each payment period, provides documentation to the department of the qualifying patients as defined in the agreement made under (B) of this paragraph; that documentation must include the number of encounters, the crisis category, the diagnosis at discharge, the provider and location of referral after discharge, and payment source information;

4. (4) payments allocated to each designated evaluation and stabilization DSH (DES DSH) if the qualifying hospital

   1. (A) is designated as an evaluation and stabilization facility as required by 7 AAC 72;
   2. (B) enters into an agreement with the department to provide designated evaluation and stabilization treatment services and complies with the requirements of that agreement; and
   3. (C) not later than 60 days after the end of each payment period, provides documentation to the department of the qualifying patients as defined in the agreement made under (B) of this paragraph; that documentation must include the number of encounters, the crisis category, the diagnosis at discharge, the provider and location of referral after discharge, and payment source information;

5. (5) payments allocated to each single-point-of-entry psychiatric DSH (SPEP DSH), if the qualifying hospital

   1. (A) enters into an agreement with the department to provide single-point-of-entry psychiatric services and complies with the requirements of that agreement; and
   2. (B) not later than 60 days after the end of each payment period, provides documentation to the department of the qualifying patients as defined in the agreement made under (A) of this paragraph; that documentation must include the number of encounters, the crisis category, the diagnosis at discharge, the provider and location of referral after discharge, and payment source information;
6. (6) payments allocated to each institution for mental disease DSH (IMD DSH), if the IMD has been designated under 7 AAC 72 to receive involuntary commitments under AS 47.30.700 - 47.30.815;

7. (7) payments allocated to each children's medical care DSH (CMC DSH), if the qualifying hospital

   1. (A) enters into an agreement with the department for medical and hospital care expenses for children in custody who are not Medicaid-eligible, and complies with the requirements of that agreement; and
   2. (B) not later than 60 days after the end of each payment period, provides documentation to the department of the qualifying patients as defined in the agreement made under (A) of this paragraph; that documentation must include the number of encounters;

8. (8) payments allocated to each institutional community health care DSH (ICHC DSH), if the qualifying hospital

   1. (A) enters into an agreement with the department for medical and hospital care expenses for individuals in institutions who are not Medicaid-eligible, and complies with the requirements of that agreement; and
   2. (B) not later than 60 days after the end of each payment period, provides documentation to the department of the qualifying patients as defined in the agreement made under (A) of this paragraph; that documentation must include the number of encounters;

9. (9) payments allocated to each rural hospital clinic assistance DSH (RHCA DSH), if the qualifying hospital

   1. (A) enters into an agreement with the department to provide support services to a clinic; the support services that the hospital provides must include

      1. (i) services by hospital professional employees at the clinic site; the hospital may include, as services, the services of a primary care provider, nurse midwife services, obstetrical services, and pediatrician's services; and
      2. (ii) assistance in arranging safe transport for those who require emergency transport and services;
   2. (B) complies with the requirements of the agreement made under (A) of this paragraph; and
   3. (C) not later than 60 days after the end of each payment period, provides documentation to the department of the qualifying patients as defined in the agreement made under (A) of this paragraph; that documentation must include the number of encounters that the hospital provided at the clinic, and the support services as described in (A)(i) and (ii) of this paragraph;

10. (10) payments allocated to each mental health clinic assistance DSH (MHCA DSH), if the qualifying hospital

    1. (A) enters into an agreement with the department to provide mental health services to a mental health clinic;
    2. (B) complies with the requirements of the agreement made under (A) of this paragraph; and
    3. (C) not later than 60 days after the end of each payment period, provides documentation to the department of the qualifying patients as defined in the agreement made under (A) of this paragraph; that documentation must include the number of mental health encounters that the hospital provided at the mental health clinic;

11. (11) payments allocated to each substance abuse treatment provider DSH (SATP DSH), if the qualifying hospital

    1. (A) enters into an agreement with the department to provide substance abuse treatment services to a substance abuse treatment provider;
    2. (B) complies with the requirements of the agreement made under (A) of this paragraph; and
    3. (C) not later than 60 days after the end of each payment period, provides documentation to the department of the qualifying patients as defined in the agreement made under (A) of this paragraph; that documentation must include the number of substance abuse treatment encounters that the hospital provided through the substance abuse treatment provider.

(e) The department will determine, as of the qualification date, a hospital's eligibility for additional Medicaid payments under each classification in (d) of this section for the hospital's qualifying year, in the following manner:

1. (1) for the MIU or LI DSH classification, a disproportionate share payment to each qualifying hospital will be made annually; for any other DSH classification, a disproportionate share payment to each qualifying hospital will be made in accordance with the agreement required for that classification;
2. (2) a disproportionate share payment is subject to the availability of appropriations from the legislature;
3. (3) the total annual disproportionate share payment for each qualifying hospital is subject to a facility-specific limit calculated under this paragraph and the federal requirements in 42 U.S.C. 1396r-4(g); for the hospital's qualifying year, the limit is the cost of services provided to Medicaid patients, less the amount paid to the hospital under provisions of this chapter other than this section, plus the cost of services provided to patients without health insurance or another source of third-party payments that applied to services rendered during the qualifying year, less any payments made by those patients without insurance or another source of third-party payment for those services; the hospital's cost of services for this calculation is the total hospital allowable costs, as determined in 7 AAC 150.160 and 7 AAC 150.170, divided by the hospital's total adjusted inpatient days; this result is multiplied by the total of the hospital's adjusted inpatient days not covered by insurance or third-party payment and Medicaid adjusted inpatient days; the cost of services includes the cost of excluded services under an insurance policy; the cost of services does not include amounts that were not paid to the hospital by the patient's health insurance or other source of third-party payments because of per diem maximums, coverage limitations, or unpaid patient co-payments or deductibles; for purposes of this paragraph, third-party payments do not include state payments to hospitals paid under 7 AAC 47 (general relief medical assistance) or 7 AAC 48.500 - 7 AAC 48.900 (chronic and acute medical assistance);
4. (4) a disproportionate share payment is not subject to the payment limitations in 7 AAC 150.160(b)(8), (c)(3), or (m);
5. (5) the disproportionate share payment is not used in calculating the hospital's future years' Medicaid payment rates or future disproportionate share payments;
6. (6) in addition to the general facility-specific limit set out in (3) of this subsection, the total disproportionate share payment amount to institutions for mental disease (IMDs) may not exceed the federal IMD disproportionate share cap in effect for the applicable fiscal year; by the qualification date each year, the department will prepare an estimate of the federal IMD disproportionate share allotment to the state and compare that estimate with the department's estimated total payment amounts to the qualifying hospitals under this section for the next federal fiscal year; if the department's estimated total payment amounts exceed the department's estimate of the federal IMD disproportionate share allotment, the disproportionate share payment amounts to each qualifying hospital for the next federal fiscal year will be adjusted downward on a prorated basis until the total amount of the disproportionate share payments for all qualifying hospitals combined is equal to the total federal IMD disproportionate share allotment to the state for the next federal fiscal year; the federal IMD disproportionate share allotment is subject to recalculation, reallocation, and recoupment, as set out in (j) of this section for the disproportionate share allotment;

7. (7) the department will allocate the federal disproportionate share hospital allotment as follows:

   1. (A) for the IMD DSH classification, the department will distribute the maximum allowed under the federal IMD disproportionate share cap and the federal IMD disproportionate share allotment;
   2. (B) the department will allocate to the MIU DSH classification one percent of the remaining disproportionate share allotment after the allocation to the IMD DSH classification is determined;
   3. (C) the department will allocate to the LI DSH classification one percent of the remaining disproportionate share allotment after the allocation to the IMD DSH classification is determined;
   4. (D) the department will allocate to the DET DSH classification at least one percent but not more than 30 percent of the remaining disproportionate share allotment after deducting the allocation under (A) - (C) of this paragraph;
   5. (E) the department will allocate to the DES DSH classification at least one percent but not more than 30 percent of the remaining disproportionate share allotment after deducting the allocation under (A) - (C) of this paragraph;
   6. (F) the department will allocate to the SPEP DSH classification at least one percent but not more than 20 percent of the remaining disproportionate share allotment after deducting the allocations under (A) - (C) of this paragraph;
   7. (G) the department may allocate to the CMC DSH classification from zero to 20 percent of the remaining disproportionate share allotment after deducting the allocation under (A) - (F) of this paragraph;
   8. (H) the department may allocate to the ICHC DSH classification from zero to 10 percent of the remaining disproportionate share allotment after deducting the allocation under (A) - (F) of this paragraph;
   9. (I) the department may allocate to the RHCA DSH classification from zero to 35 percent of the remaining disproportionate share allotment after deducting the allocation under (A) - (F) of this paragraph;
   10. (J) each disproportionate share payment for the MIU DSH classification will be calculated based on the qualifying hospital's SDM, divided by the sum of the SDMs of all qualifying MIU DSHs in the qualifying year; the resulting percentage will be multiplied by the allocation amount calculated in (B) of this paragraph;
   11. (K) each disproportionate share payment for the LI DSH classification will be calculated based on the qualifying hospital's LUR, divided by the sum of the LURs of all qualifying LI DSHs in the qualifying year; the resulting percentage will be multiplied by the allocation amount calculated in (C) of this paragraph;
   12. (L) each disproportionate share payment for the DET DSH, DES DSH, SPEP DSH, CMC DSH, ICHC DSH, RHCA DSH, MHCA DSH, and SATP DSH classifications will be based on the number of encounters to be performed by the qualifying hospital for that classification, as calculated in (D) - (I) and (M) and (N) of this paragraph;
   13. (M) the department may allocate to the MHCA DSH classification from zero to 35 percent of the remaining disproportionate share allotment after deducting the allocation under (A) - (F) of this paragraph;
   14. (N) the department may allocate to the SATP DSH classification from zero to 15 percent of the remaining disproportionate share allotment after deducting the allocation under (A) - (F) of this paragraph;

   15. (O) the department may allocate a percentage greater than the maximum percentage in (D) - (I) and (M) and (N) of this paragraph only if the combined allocation under (D) - (I) and (M) and (N) of this paragraph does not exceed 100 percent of the remaining disproportionate share allotment after deducting the allocation under (A) - (D) of this paragraph and the department determines that the final allocation among all classifications will promote the availability of efficient and economic access to health care services; in making that determination, the department will consider these factors:

       1. (i) the distribution of medical services and resources in the communities of the state;
       2. (ii) the availability of health services to the general population in the same geographic area.

(f) The department will make to each qualifying hospital within the MIU DSH classification and to each qualifying hospital within the LI DSH classification a minimum payment of $10,000 per payment period and per classification, subject to the facility-specific limit calculated under (e)(3) of this section, the federal IMD disproportionate share cap in effect for the next federal fiscal year, and the amount of appropriations from the legislature. During a payment period, the department will not make total annual disproportionate share payments that exceed the total amount allowed under the state's federal disproportionate share allotment for the applicable federal fiscal years. An eligible hospital choosing to participate must notify the department of the hospital's choice to participate in writing before the qualification date of the hospital's choice to participate and include one or more DSH classifications for which the hospital chooses to participate. The department's determination regarding participation by an eligible hospital is contingent upon the hospital's submission of a certified log of uninsured care for the qualifying year and a departmental determination that the hospital's facility-specific limit permits the receipt of DSH payments. The department's determination under this subsection is the department's final administrative action, unless a request for reconsideration is filed

1. (1) under (g) of this section, regarding whether a hospital is a qualifying hospital; or
2. (2) under (h) of this section, regarding the amount of a qualifying hospital's disproportionate share payment under this section.

(j) The department will recalculate and reallocate the disproportionate share eligibility and payments for all hospitals and will recoup payments from all hospitals on a prorated basis if the

1. (1) disproportionate share eligibility and payment for any hospital will be recalculated as a result of a decision under (g) or (h) of this section or of a court decision; or
2. (2) outcome of a decision under (g) or (h) of this section or of a court decision would cause the total disproportionate share payments to exceed the federal allotment for the federal fiscal year in which the payment rate was in effect.

(k) A hospital that receives a Medicaid payment as a DSH

1. (1) is subject to an independent certified audit under 42 U.S.C. 1396r-4(j)(2) and 42 C.F.R. 455.300 - 455.304 three years after the payment year to determine if an overpayment occurred; and
2. (2) shall furnish, in addition to other information and documents required under this chapter, any additional information and documents necessary for completion of the audit.

(m) In this section,

1. (1) "adjusted inpatient days" means patient days calculated as the product of patient days multiplied by total hospital inpatient and outpatient charges, divided by hospital inpatient charges;
2. (2) "admission" means admission to a hospital for inpatient care;
3. (3) "encounter" means a unit of service, visit, or face-to-face contact that is a covered service under an agreement with the department as required under (d)(3), (4), (5), (7), (8), (9), (10), or (11) of this section;

4. (4) "inpatient days" means patient days at licensed hospitals that are calculated

   1. (A) to include patient days related to a hospitalization for acute treatment of the following:

      1. (i) injured, disabled, or sick patients;
      2. (ii) substance abuse patients who are hospitalized for substance abuse detoxification;
      3. (iii) swing-bed patients whose hospital level of care is reduced to nursing facility level without a physical move of the patient;
      4. (iv) patients hospitalized for rehabilitation services for the rehabilitation of injured, disabled, or sick persons;
      5. (v) patients in a hospital receiving psychiatric services for the diagnosis and treatment of mental illness;
      6. (vi) newborn infants in hospital nurseries; and

   2. (B) not to include patient days related to the treatment of patients

      1. (i) at licensed nursing facilities;
      2. (ii) in a residential treatment bed;
      3. (iii) on a leave of absence from a hospital beginning with the day the patient begins a leave of absence;
      4. (iv) who are in a hospital for observation to determine the need for inpatient admission; or
      5. (v) who receive services at a hospital during the day but are not housed there at midnight;

5. (5) "Medicaid-eligible inpatient days" means patient days at licensed hospitals that are calculated

   1. (A) to include Medicaid-covered and Medicaid-noncovered days related to a hospitalization for acute treatment of the following:

      1. (i) injured, disabled, or sick patients;
      2. (ii) substance abuse patients who are hospitalized for substance abuse detoxification;
      3. (iii) swing-bed patients whose hospital level of care is reduced to nursing facility level without a physical move of the patient;
      4. (iv) patients hospitalized for rehabilitation services for the rehabilitation of injured, disabled, or sick persons;
      5. (v) patients in a hospital receiving psychiatric services for the diagnosis and treatment of mental illness;
      6. (vi) newborn infants in hospital nurseries; and

   2. (B) not to include Medicaid covered and Medicaid non-covered patient days related to the treatment of patients

      1. (i) at licensed nursing facilities;
      2. (ii) in a residential treatment bed;
      3. (iii) on a leave of absence from a hospital beginning with the day the patient begins a leave of absence;
      4. (iv) who are in a hospital for observation to determine the need for inpatient admission; or
      5. (v) who receive services at a hospital during the day but are not housed there at midnight;
6. (6) "payment designation" means a designation related to the source of reported payments;
7. (7) "payment period" means the state fiscal year plus 90 days;
8. (8) "qualification date" means July 1 of each year;
9. (9) "qualifying hospital" means a hospital that qualifies as a DSH under this section;

10. (10) "qualifying year" means the hospital's fiscal year ending

    1. (A) at least 11 but not later than 23 months before the beginning of the state fiscal year in which the disproportionate share payment is made; and
    2. (B) during the most recent 12-month reporting cycle in which all facilities have filed a complete year-end report with the department;
11. (11) "service type" means a descriptor for the type of service provided during an inpatient stay or an outpatient visit;
12. (12) "uninsured care" means an inpatient or outpatient hospital service furnished by a hospital to an individual who has no health insurance or other source of third-party coverage in effect at the time the service was rendered.