PURPOSE: This regulation defines the specific procedures used to calculate the final or amended settlements for hospital providers. These settlements are authorized in 13 CSR 70-15.010.

PUBLISHER’S NOTE: The secretary of state has determined that the publication of the entire text of the material which is incorporated by reference as a portion of this rule would be unduly cumbersome or expensive. Therefore, the material which is so incorporated is on file with the agency who filed this rule, and with the Office of the Secretary of State. Any interested person may view this material at either agency’s headquarters or the same will be made available at the Office of the Secretary of State at a cost not to exceed actual cost of copy reproduction. The entire text of the rule is printed here. This note refers only to the incorporated by reference material.

1. (1) General. This regulation defines the specific procedures used to calculate inpatient and outpatient settlements for Missouri instate hospitals participating in the Missouri Medicaid program. Although inpatient and outpatient settlements are calculated at the same time, an overpayment for outpatient services shall not be offset against an underpayment for inpatient services. Outpatient settlement shall not be determined for cost reports periods ending after December 31, 1998 except for recently closed hospitals, new hospitals, and nominal charge providers as provided for in paragraph (4)(E)4. and hospitals that had a change in ownership or merged operation in paragraph (4)(E)5. and elect to stay under the retrospective payment system.

   1. (A) The hospital’s settlement will be determined after the division receives a Medicare/Medicaid cost report from the Medicare fiscal intermediary with a Notice of Provider Reimbursement (NPR). The cost report used for the settlement shall be the one with the latest NPR at the time the settlement is calculated. The data used, except for Medicaid data, shall be as reported in the cost report unless adjusted by this regulation. The current version of the cost report is HCFA 2552-92, and references in this regulation are from this cost report. However, the division will use the version of the report received from the fiscal intermediary, which may change the references.
   2. (B) The Medicaid data used in the final settlements will be from the division’s paid claims history. This data includes only claims on which Medicaid made payment.

2. (2) Definitions.

   1. (A) Reimbursable cost. Reimbursable costs are the costs which are identified as reimbursable in 13 CSR 70-15.010 and the Hospital Provider Manual.
   2. (B) Labor/delivery room day. A labor/delivery room day is a day where the mother enters the hospital prior to the census hour but is not admitted to the hospital until the next day after she delivers.
   3. (C) Medicaid payments. Medicaid payments included in the settlement include actual Medicaid claims payments, partial insurance payments on claims, patient liability amounts for coinsurance and deductibles and outlier claim payments. If the insurance payments exceed the Medicaid liability, the claim will not be considered a Medicaid claim.
   4. (D) Inpatient service costs. The reimbursable costs for inpatient services or costs which will be included in the final settlement are those services or costs which are provided to the Medicaid beneficiary after being admitted to the hospital. Services or costs provided prior to admission as an inpatient should be billed as outpatient services, except for cost associated with labor and delivery room days.
   5. (E) Outpatient services/cost. Reimbursable outpatient services or costs are services or costs that are provided prior to the patient being admitted to the hospital. Only outpatient services or cost which are reimbursed on a percentage of charge as defined in 13 CSR 70-15.160 will be included in the final settlement, unless they are excluded elsewhere in this regulation.
   6. (F) Routine cost center. A routine cost center is an adult and peds unit, subprovider unit, nursery unit or special care unit.
   7. (G) Special care unit. A special care unit is a hospital unit that furnishes services to critically ill inpatients. Examples are Intensive Care Units (ICU), Coronary Care Unit (CCU), or Neonatal Care Unit. The ICU unit may be for only one (1) type of patient or for all critically ill patients.
   8. (H) Paid days. Paid days are the actual number of days paid for inpatient services on claims with the first date of service within the fiscal period of the cost report.
   9. (I) Routine charges. Routine charges are the charges billed by the hospital for the care provided to the patient in a routine care center. These services are normally provided to all patients in the hospital.
   10. (J) Ancillary charges. Ancillary charges are the charges billed by the hospital for services that are not routinely provided in the routine care center and are not provided to all patients.
   11. (K) Private room day. A private room day is a day when due to the patient’s medical condition it is determined that the patient should be alone in a room.

   12. (L) Incorporation by Reference. This rule adopts and incorporates by reference the provisions of the—

       1. 1. Current Medicare/Medicaid cost re-

port forms that have a Notice of Provider Reimbursement (NPR) from the Medicare fiscal intermediary; and

1. 2. Missouri Medicaid Institutional (Hos-

pital) Manual.

1. (3) Inpatient settlements will be calculated based on paid day hospital services after the Medicare/Medicaid cost report is received from the fiscal intermediary. Based on this settlement the division shall make any recoupments necessary to ensure that Title XIX Medicaid payments for inpatient services do not exceed the allowable inpatient Medicaid charges. This settlement shall not result in additional payment to the hospital if its cost exceeds its payments. This settlement will be determined in the following manner:

   1. (A) Data will be gathered from the Medicaid inpatient claim history for paid days by routine cost center; private room days; routine charges; charges for each ancillary cost center; and inpatient payments for claims with first date of service in the cost report period;

   2. (B) The division will extract the following data from the cost report received from the fiscal intermediary:

      1. 1. The total patient days from worksheet

S-3 for each routine cost center and observation bed days. The total patient days for adults and peds may be adjusted for labor and delivery room days reported on questionnaire, if not included on worksheet S-3;

1. 2. The total cost from worksheet D-1 for

adults and peds, after removing swing-beds and private room cost differential, and if the hospital has a subprovider, the total cost from worksheet D-1 for the subprovider after removing the private room cost differential. These costs are before the Respiratory Therapy/Physical Therapy (RT/PT) limit and Reasonable Compensation Equivalent (RCE) disallowance;

1. 3. The total cost from worksheet D-1 for

special care units and nursery unit. These costs are before RT/PT limit adjustment and RCE disallowance;

1. 4. The cost-to-charge ratio for each cov-

ered ancillary service from worksheet C Part I column 7;

1. 5. The Direct Graduate Medical Educa-

tion (GME) amount reported on worksheet E- 3 Part IV line 3;

1. 6. If the hospital is proprietary, the equi-

ty ratio from worksheet F-5 Part I line 4 column 1; and

1. 7. The private room cost differential per

diem from worksheet D-1 for adults and peds and subproviders, if provided;

1. (C) The inpatient Medicaid reimbursable cost will be determined as follows:

   1. 1. The Medicaid routine cost for adults

and peds and subprovider units will be calculated by taking the total routine cost from paragraph (3)(B)2. From this cost will be removed the cost of observation bed days from subparagraph (3)(C)1.A. This total cost will be divided by the total patient days for adults and peds not including observation days (adjusted for labor and delivery room days if not included on worksheet S-3) plus patient days for any subprovider unit. This cost per day will be multiplied by the Medicaid paid days for adults and peds and subprovider units to determine Medicaid routine adult and peds cost. The cost of private room days will be added to this cost.

1. A. Observation cost will be deter-

mined by dividing the routine cost for adults and peds from paragraph (3)(C)2., by adult and peds days, adjusted by labor and delivery room days if not included, plus observation bed days. This cost per day is multiplied by the observation bed days reported on worksheet S-3 column 6 line 19 to determine the observation cost.

1. B. If the hospital reports medically

necessary Medicaid private room days on worksheet D-1 line 14 and the data from the division’s paid claim history reports private room days, the private room cost will be calculated by multiplying the private room cost differential per diem from worksheet D-1 line 35 by the lower of Medicaid private room days from the division’s claims data or the private room days reported on worksheet D- 1;

1. 2. The routine inpatient cost for each

special care unit will be determined by divid- 13 CSR 70-15

ing the routine cost for the special care unit by the total patient days for that special care unit to determine the unit’s cost per day. This cost per day will be multiplied by Medicaid paid days for that special care unit from the division’s paid claim history to determine Medicaid cost (If the hospital has more than one (1) ICU unit with Medicaid days reported on the cost report, the Medicaid patient days for ICU from the division’s records will be prorated based on the Medicaid days reported on the cost report.);

1. 3. The routine cost for the nursery unit

will be determined by dividing total nursery cost by total nursery days to determine the nursery cost per day. This cost per day will be multiplied by the Medicaid paid days to determine Medicaid nursery cost (Nursery days will not be prorated between nursery and neonatal. The hospital must use the proper room accommodation revenue code to bill neonatal days.);

1. 4. The ancillary cost for each ancillary

cost center will be determined by multiplying the Medicaid ancillary cost center’s charges by its cost-to-charge ratio from paragraph (3)(B)4. (Based on the information in the cost report and in the division’s data some ancillary accounts on the division’s data may be combined.);

1. 5. The Medicaid inpatient portion of the

GME will be determined using the methodology on worksheet E-3 part IV from the Medicare/Medicaid cost report by substituting Medicaid data in place of the Medicare data;

1. 6. If the hospital is a proprietary hospi-

tal it may be entitled to a return on equity. This cost would be determined by multiplying the equity ratio from paragraph (3)(B)6., by the Medicaid cost in paragraphs (3)(C)1.–4.; and

1. (D) Comparison of Inpatient Medicaid Cost to Inpatient Medicaid Payments.

   1. 1. The total inpatient Medicaid cost will

be determined as the sum of the cost in paragraphs (3)(C)1.–6.

1. 2. The Medicaid inpatient payments

include the following amounts:

1. A. Partial payments made by third

party payers (that is, insurance companies, HMO, etc);

1. B. Coinsurance and deductibles,

which are the responsibility of the patient whether or not they were actually collected;

1. C. Inpatient claims payments made by

the Medicaid program; and

1. D. Outlier claim payments with ser-

vice dates within the cost report period.

1. 3. The total payments from subpara-

graph (3)(D)2.A.–D., will be subtracted from the lesser of the total cost in paragraph (3)(D)1., or the Medicaid charges from subsection (3)(A) (except hospitals identified by Medicare as a nominal charge provider for that fiscal year shall have their settlements based on cost). If the lesser of cost or charge exceeds the payment, no additional payment is due the hospital. (The inpatient settlement is zero (0) under the prospective payment plan.) If these payments exceed the charges the difference will result in an overpayment which will be due from the hospital (Disproportionate share payments are waived from the overpayment determination).

1. (4) Outpatient Hospital Settlements, Provider Based Rural Health Clinic (PBRHC) settlements or Provider Based Federally Qualified Health Centers (PBFQHC) settlements will be calculated after the division receives the Medicare/Medicaid cost report with a NPR from the hospital fiscal intermediary.

   1. (A) The Division of Medical Services shall adjust the hospital’s outpatient Medicaid payments, PBRHC or PBFQHC Medicaid payments to conform with the percent of cost paid on an interim basis under 13 CSR 70- 15.160 for the appropriate time period (except for those hospitals that qualify under subsection (4)(B), whose payments will be based on the percent of cost in paragraph (4)(A)1., 2., or 3.) for—

      1. 1. Services prior to January 5, 1994, the

lower of eighty percent (80%) of the outpatient share of the costs from subsection (4)(D), or eighty percent (80%) of the outpatient charges from paragraph (4)(C)1.;

1. 2. Services after January 4, 1994 and

prior to April 1, 1998, the lower of ninety percent (90%) of the outpatient share of the cost from subsection (4)(D), or ninety percent (90%) of the outpatient charge from paragraph (4)(C)1.;

1. 3. Services after March 31, 1998,

included in cost reports ending prior to January 1, 1999, the lower of one hundred percent (100%) of the outpatient share of the cost from subsection (4)(D), or one hundred percent (100%) of the outpatient charge from paragraph (4)(C)1.; and

1. 4. PBRHC and PBFQHC shall be reim-

bursed one hundred percent (100%) of its share of the cost in paragraph (4)(E)2.

1. (B) A facility that meets the Medicare criteria of nominal charge provider for the fiscal period shall have its net cost reimbursement based on its cost in paragraph (4)(A)1., 2., or 3.

2. (C) The Medicaid charges used to determine the cost, and the payments used to determine the settlement will be—

   1. 1. For outpatient services the charges

and payments extracted from the Medicaid outpatient claims history for reimbursable services paid on a percentage basis under 13 CSR 70-15.160.

1. 2. For PBRHC and PBFQHC the

charges and payments will be for services billed under 13 CSR 70-94.020.

1. (D) The Medicaid hospital’s outpatient, cost will be determined by multiplying the overall outpatient cost-to-charge ratio, determined in accordance with paragraph (4)(D)1., by the Medicaid charges from paragraph (4)(C)1. To this product will be added the Medicaid outpatient share of GME. The GME will be determined using the methodology on worksheet E-3 part IV from the Medicare/Medicaid cost report (HCFA 2552- 92) by substituting Medicaid data in place of Medicare data.

   1. 1. The overall outpatient cost-to-charge

ratio will be determined by multiplying the reported total outpatient charges for each ancillary cost center, excluding PBRHC or PBFQHC, on the supplemental worksheet C column 10 (HCFA 2552-83) or substitute schedule by the appropriate cost-to-charge ratio from worksheet C (HCFA 2552-92) column 7 part I of the fiscal intermediary’s audited Medicare/Medicaid cost report to determine the outpatient cost for each cost center reimbursed on a percentage of charge basis by Medicaid under 13 CSR 70-15.160. Total the outpatient costs from each cost center and total the outpatient charges from each cost center. Divide the total outpatient costs by the total outpatient charges to arrive at the overall outpatient cost-to-charge ratio.

1. (E) The Medicaid outpatient final settlement for cost reports ending prior to January 1, 1999, unless the hospital closed or had a change in ownership or merger prior to July 1, 2002, will determine either an overpayment or an underpayment for the hospital’s outpatient services.

   1. 1. The outpatient Medicaid cost deter-

mined in subsection (4)(D) is multiplied by the percent of cost allowed in paragraph (4)(A)1., 2., or 3., to determine the reimbursable cost for outpatient services. (If a cost report covers both periods the outpatient Medicaid charges will be split to determine the reimbursable cost for each time period.) From this cost subtract the outpatient payments made on a percentage of charge basis under 13 CSR 70-15.010 for the time period. (Medicaid payments include the actual payment by Medicaid, third party payments, coinsurance and deductibles.) The difference is either an overpayment (negative amount) due from provider or underpayment (positive amount) due to provider;

1. 2. Closed facilities. Hospitals which

closed after January 1, 1999 but before July 1, 2002 will have final settlements for cost reports ending during this time period calculated in accordance with 13 CSR 70- 15.040(4)(E)1.;

1. 3. New hospitals which do not have a

fourth, fifth, and sixth prior year cost report necessary for establishment of a prospective rate will have final settlement calculated for their initial three (3) cost report periods;

1. 4. Hospitals who qualify as nominal

charge providers in accordance with 42 CFR 413.13(f) will have final settlements calculated for all cost report periods; and

1. 5. Hospitals which had a change in own-

ership or merged with another hospital between January 1, 1997 and June 30, 2002 will have a final settlement calculated in accordance with this regulation for the first three (3) cost report periods after the change in ownership or merger after which it will be reimbursed under the prospective outpatient hospital reimbursement methodology unless it elects to be reimbursed under the prospective payment methodology starting July 1, 2002.

1. (F) The Medicaid PBRHC or PBFQHC final settlement will determine either an overpayment or an underpayment for the hospital’s PBRHC or PBFQHC services. For PBRHC or PBFQHC services multiply the PBRHC or PBFQHC Medicaid charges from paragraph (4)(C)2., by the cost center’s costto-charge ratio to determine PBRHC or PBFQHC cost. From this cost, the PBRHC or PBFQHC payments associated with charges from paragraph (4)(C)2., are subtracted. The difference is either an overpayment (negative amount) due from provider or an underpayment (positive amount) due to provider.

1. (5) Reopened cost reports received after the division has completed a final settlement will be calculated in the same manner as the original settlement. The division will not reopen any cost report when the amended NPR is received more than five (5) years after the hospital’s fiscal year end unless the reopening is due to the provider submitting false or fraudulent information to its cost report. If the amended cost report changes the previous settlement by less than one hundred dollars ($100) the cost report will not be reopened. If the prior settlement(s) resulted in an overpayment on the inpatient side, then an underpayment, up to the amount of the net inpatient recoupment, may be made.

AUTHORITY: sections 208.152, 208.153, 208.201, RSMo 2000 and 208.471, RSMo Supp. 2001.* Original rule filed June 2, 1994, effective Dec. 30, 1994. Amended: Filed June 3, 1997, effective Dec. 30, 1997. Amended: Filed May 14, 1999, effective Nov. 30, 1999. Amended: Filed June 15, 1999, effective Dec. 30, 1999. Amended: Filed Aug. 24, 2001, effective March 30, 2002. Emergency amendment filed June 20, 2002, effective July 1, 2002, expired Feb. 27, 2003. Amended: Filed June 14, 2002, effective Jan. 30, 2003. *Original authority: 208.152, RSMo 1967, amended 1969, 1971, 1972, 1973, 1975, 1977, 1978, 1981, 1986, 1988, 1990, 1992, 1993; 208.153, RSMo 1967, amended 1973, 1989, 1990, 1991; 208.201, RSMo 1987; and 208.471, RSMo 1992, 2001.