(a) Physical medical rehabilitation inpatient services shall qualify for reimbursement pursuant to section 2807-c(4)(e-2) of the Public Health Law for periods on and after December 1, 2009, only if such services are provided in a hospital specializing in such services or in a distinct unit within a general hospital designated for such services and only if:

1. (1) such hospital or such unit qualified for exempt unit status for purposes of reimbursement under the Federal Medicare prospective payment system as of December 31, 2001; or

2. (2) on or before July 1, 2009, the hospital submitted a written request to the department for exempt status providing assurances acceptable to the department that the hospital or unit within the hospital meets the exempt status criteria set forth in section 2807-c(4)(e) of the Public Health Law for 2009 for periods prior to December 1, 2009.

   1. (i) For periods on and after January 1, 2010, a hospital seeking exempt status for a hospital or a distinct unit within the hospital not previously recognized by the department as exempt for reimbursement purposes shall submit a written request to the department for such exempt status and shall provide assurances and supporting documentation acceptable to the department that the hospital or unit meets qualifying exempt status criteria in effect at the time such written request is submitted. Approval by the department of such exempt status shall, for reimbursement purposes, be effective on the January 1st following such approval, provided that the request for such exempt unit status was received at least 120 days prior to such date.
   2. (ii) For days of service occurring on and after December 1, 2009, the operating component of rates of payment for inpatient services, other than physician services, for facilities subject to this subdivision shall be a per diem amount reflecting the facility's reported 2005 operating costs, excluding physician costs, as submitted to the department prior to July 1, 2009, not including reported direct medical education costs and physician costs, and held to a ceiling of 110 percent of the average of such costs in the region in which the facility is located, as described in subdivision (i) of this section. Such rates shall reflect trend adjustments in accordance with the applicable provisions of section 2807-c(10) of the Public Health Law.

(b) Chemical dependency rehabilitation inpatient services shall qualify for reimbursement pursuant to section 2807-c(4)(e-2) of the Public Health Law for periods on and after December 1, 2009, only if such services are provided in a hospital specializing in such services or in a distinct unit within a general hospital designated for such services and only if:

1. (1) the services provided in such hospital or unit are limited to chemical dependency rehabilitation care and do not include chemical dependency related inpatient detoxification and/or withdrawal services; or

2. (2) such hospital or unit is licensed to provide such services pursuant to both the Public Health Law and the Mental Hygiene Law and meets the applicable alcohol and/or substance abuse rehabilitation standards set forth in regulations.

   1. (i) Any such unit within a hospital must be in a designated area and consist of designated beds providing only chemical dependency rehabilitation inpatient services with adequate adjoining supporting spaces and assigned personnel qualified by training and/or by experience to provide such services and in accordance with any applicable criteria regarding the provision of such services issued by the New York State Office of Alcohol and Substance Abuse Services.

   2. (ii) For days of service occurring on and after December 1, 2009, the operating component of rates of payment for inpatient services, other than physician services, for facilities subject to this subdivision shall be a per diem amount reflecting the facility's reported 2005 operating costs, excluding physician costs, as submitted to the department prior to July 1, 2009, not including reported direct medical education costs and physician costs, and held to a ceiling of 110 percent of the average of such costs in the region in which the facility is located, as described in subdivision (i) of this section. Such rates shall reflect trend adjustments in accordance with the applicable provisions of section 2807-c(10) of the Public Health Law.

      (c) Critical access hospitals.

3. (1) Rural hospitals shall qualify for inpatient reimbursement as critical access hospitals pursuant to section 2807-c(4)(e-2) of the Public Health Law for periods on and after December 1, 2009, only if such hospitals are designated as critical access hospitals in accordance with the provisions of title XVIII (Medicare) of the Federal Social Security Act.

4. (2) For days of service occurring on and after December 1, 2009, the operating component of rates of payment for inpatient services, other than physician services, for facilities subject to this subdivision shall be a per diem amount reflecting the facility's reported 2005 operating costs, excluding physician costs, as submitted to the department prior to July 1, 2009, and held to a ceiling of 110 percent of the average of such costs for all such designated hospitals statewide. Such rates shall reflect trend factor adjustments in accordance with the applicable provisions of section 2807-c(10) of the Public Health Law.

   (d) Cancer hospitals.

5. (1) Hospitals shall qualify for inpatient reimbursement as cancer hospitals pursuant to section 2807-c(4)(e-2) of the Public Health Law for periods on and after December 1, 2009, only if such hospitals were, as of December 31, 2008, designated as comprehensive cancer hospitals in accordance with the provisions of title XVIII (Medicare) of the Federal Social Security Act.

6. (2) For days of service occurring on and after December 1, 2009, the operating component of rates of payment for inpatient services, other than physician services, for facilities subject to this subdivision shall be a per diem amount reflecting the facility's reported 2005 operating costs, excluding physician costs, as submitted to the department prior to July 1, 2009. Such rates shall reflect trend factor adjustments in accordance with the applicable provisions of section 2807-c(10) of the Public Health Law.

   (e) Specialty long term acute care hospital.

7. (1) Hospitals shall qualify for inpatient reimbursement as specialty long term acute care hospitals pursuant to section 2807-c(4)(e-2) of the Public Health Law for periods on and after December 1, 2009, only if such hospitals were, as of December 31, 2008, designated as specialty long term acute care hospitals in accordance with the provisions of title XVIII (Medicare) of the Federal Social Security Act.
8. (2) For days of service occurring on and after December 1, 2009, the operating component of rates of payment for inpatient services, other than physician services, for facilities subject to this subdivision shall be a per diem amount reflecting the facility's reported 2005 operating costs, excluding physician costs, as submitted to the department prior to July 1, 2009. Such rates shall reflect trend factor adjustments in accordance with the applicable provisions of section 2807-c(10) of the Public Health Law.

9. (3) For dates of service occurring on or after April 1, 2020 through December 31, 2020, and each calendar year thereafter, an upper payment limit (UPL) payment per diem shall be added to the specialty long term acute care hospital rates (hereinafter add-ons). Such add-ons shall only apply to eligible public general hospitals or public health systems, other than those operated by the state of New York or the state university of New York, located in a city having a population of 1,000,000 or more and shall be in lieu of any aggregate UPL payment. Such add-ons shall be calculated for each hospital by dividing the hospital’s latest approved UPL demonstration payment, by its Medicaid fee-for-service specialty hospital days, as reported in its most recently submitted institutional cost report. Each hospital’s rate add-on shall be subject to and contingent upon the terms of a binding memorandum of understanding executed between the Department of Health and the public general hospital or public health system receiving an add-on, and shall be subject to termination or adjustment based on the terms of that agreement. The total amount paid for the add-on shall be included in the applicable annual UPL demonstration. If the annual UPL demonstration yields an amount that is more or less than the aggregate amount paid for the add-on, the add-on shall be adjusted to reflect the demonstration amount.

   (f) Acute care children's hospitals.

   Hospitals shall qualify for inpatient and outpatient reimbursement as acute care children's hospitals pursuant to section 2807-c(4)(e-2) of the Public Health Law for periods on and after December 1, 2009, only if:

10. (1) Such hospitals were, as of December 31, 2008, designated as acute care children's hospitals in accordance with the provisions of title XVIII (Medicare) of the Federal Social Security Act; and

11. (2) Such hospitals filed a discrete 2007 institutional cost report reflecting reported Medicaid discharges of greater than 50 percent of total discharges.

    1. (i) For days of service occurring on and after December 1, 2009, the operating component of rates of payment for inpatient services, other than physician services, for facilities subject to this subdivision shall be a per diem amount reflecting the facility's reported 2007 operating costs, excluding physician costs, as submitted to the department prior to July 1, 2009. Such rates shall reflect trend factor adjustments in accordance with the applicable provisions of section 2807-c(10) of the Public Health Law.

       (g) Substance abuse detoxification inpatient services.

       For patients discharged on and after December 1, 2008, rates of payment for general hospitals which are certified by the Office of Alcoholism and Substance Abuse Services (OASAS) to provide services to patients determined to be in the diagnostic category of substance abuse (MDC 20, DRGs 743 through 751) will be made on a per diem basis. This includes inpatient detoxification, withdrawal, and observation services. Medically managed detoxification services are for patients who are acutely ill from alcohol and/or substance related addictions or dependence, including the need or risk for the need of medical management of severe withdrawal, and/or are at risk of acute physical or psychiatric co-morbid conditions. Medically supervised withdrawal services are for patients at a mild or moderate level of withdrawal, or are at risk for such, as well as patients with sub-acute physical or psychiatric complications related to alcohol and/or substance related dependence, are intoxicated, or have mild withdrawal with a situational crisis, or are unable to abstain yet have no past withdrawal complications. The per diem rates for inpatient detoxification, withdrawal, and observation services will be determined as follows:

12. (1) The operating cost component of the per diem rates will be computed using 2006 costs and statistics, excluding physician costs, as reported to the department by general hospitals prior to 2008, adjusted for inflation. The inflation factor will be calculated in accordance with the trend factor methodology described in this Subpart. The average operating cost per diem for the region in which the hospital is located will be calculated using costs incurred for patients requiring detoxification services. The operating cost component of the per diem rates will be transitioned to 2006 as follows:

    1. (i) for the period December 1, 2008 through March 31, 2009, 75 percent of the operating cost component will reflect the operating cost component of rates effective for December 31, 2007, adjusted for inflation, and 25 percent will reflect 2006 operating costs in accordance with paragraphs (2) through (6) of this subdivision.
    2. (ii) for April 1, 2009 through March 31, 2010, 37.5 percent of the operating cost component will reflect the December 31, 2007 operating cost component, adjusted for inflation, and 62.5 percent will reflect 2006 operating costs in accordance with paragraphs (2) through (6) of this subdivision.
    3. (iii) for periods on and after April 1, 2010, 100 percent of the operating cost component will reflect 2006 operating costs in accordance with paragraphs (2) through (6) of this subdivision.

13. (2) For purposes of establishing the average operating cost per diem by region for medically managed detoxification and medically supervised withdrawal services, the regions of the state are defined as follows:

    1. (i) New York City - Bronx, New York, Kings, Queens and Richmond Counties;
    2. (ii) Long Island - Nassau and Suffolk Counties;
    3. (iii) Northern Metropolitan - Columbia, Delaware, Dutchess, Orange, Putnam, Rockland, Sullivan, Ulster and Westchester Counties;
    4. (iv) Northeast - Albany, Clinton, Essex, Fulton, Greene, Hamilton, Montgomery, Rensselaer, Saratoga, Schenectady, Schoharie, Warren and Washington Counties;
    5. (v) Utica/Watertown - Franklin, Herkimer, Lewis, Oswego, Otsego, St. Lawrence, Jefferson, Chenango, Madison and Oneida Counties;
    6. (vi) Central - Broome, Cayuga, Chemung, Cortland, Onondaga, Schuyler, Seneca, Steuben, Tioga and Tompkins Counties;
    7. (vii) Rochester - Monroe, Ontario, Livingston, Wayne and Yates Counties; and
    8. (viii) Western - Allegany, Cattaraugus, Chautauqua, Erie, Genesee, Niagara, Orleans and Wyoming Counties.
14. (3) For each of the regions, the 2006 operating costs incurred by general hospitals in such region for providing care to inpatients requiring detoxification services, as defined by OASAS, and reported in the 2006 ICR submitted to the department prior to 2008, are adjusted by a length of stay (LOS) factor. This LOS factor reflects the loss of revenue due to the reduction of payments for services over the 5th day of stay. The total adjusted operating costs for each region, divided by the total regional days, is the average operating cost per diem for the region.
15. (4) The per diem rates for inpatients requiring medically managed detoxification services will reflect 100 percent of the average operating cost per diem for the region in which the hospital is located, adjusted for inflation, for the first five days of service. However, such payments will be reduced by 50 percent for services provided on the 6th through 10th day of service. No payments will be made for any services provided on and after the 11th day.
16. (5) Per diem rates for inpatients requiring medically supervised withdrawal services, will reflect 100 percent of the average operating cost per diem for the region in which the hospital is located, adjusted for inflation, for the period January 1, 2009 through December 31, 2009. For periods on and after January 1, 2010, the per diem rates for withdrawal services will reflect 75 percent of the average operating cost per diem for the region, adjusted for inflation, and will be reduced by 50 percent for care provided on the 6th through 10th day of service. No payments will be made for any services provided on and after the 11th day.
17. (6) Per diem rates for inpatients placed in observation beds, as defined by OASAS, will reflect 100 percent of the average operating cost per diem for the region in which the hospital is located, adjusted for inflation, and will be paid for no more than two days of care. After two days of care the payments will reflect the patient's diagnosis as requiring either detoxification or withdrawal services. The days of care in the observation beds will be included in the determination of days of care for either detoxification or withdrawal services. Furthermore, days of care provided in observation beds will, for reimbursement purposes, be fully reflected in the computation of the initial five days of care.
18. (7) Capital cost reimbursement for the general hospitals which are certified by OASAS to provide substance abuse services will be based on the current reimbursement methodology for determining allowable capital for exempt unit per diem rates. Such capital cost will be added to the applicable operating cost component as a per diem amount to establish the per diem rate for each service.

(j) Rates of payment for inpatient services described in subdivisions (a) and (b) of this section which utilize regional averages for determining a cost ceiling shall utilize regions of the State set forth in section 2807-c(4)(l)(iii)(E) of the Public Health Law and this subdivision, except that if the otherwise applicable region has less than five exempt hospitals or units in the service, facilities located in the nearest regions will be used to establish a minimum of five hospital or units for the purpose of determining ceilings. Such regions are as follows:

1. (1) New York City, consisting of the Counties of Bronx, New York, Kings, Queens and Richmond;
2. (2) Long Island, consisting of the Counties of Nassau and Suffolk;
3. (3) Northern Metropolitan, consisting of the Counties of Columbia, Delaware, Dutchess, Orange, Putnam, Rockland, Sullivan, Ulster and Westchester;
4. (4) Northeast, consisting of the Counties of Albany, Clinton, Essex, Fulton, Greene, Hamilton, Montgomery, Rensselaer, Saratoga, Schenectady, Schoharie, Warren and Washington;
5. (5) Utica / Watertown, consisting of the Counties of Franklin, Herkimer, Lewis, Oswego, Otsego, St. Lawrence, Jefferson, Chenango, Madison and Oneida;
6. (6) Central, consisting of the Counties of Broome, Cayuga, Chemung, Cortland, Onondaga, Schuyler, Seneca, Steuben, Tioga and Tompkins;
7. (7) Rochester, consisting of the Counties of Monroe, Ontario, Livingston, Wayne and Yates;
8. (8) Western, consisting of the Counties of Allegany, Cattaraugus, Chautauqua, Erie, Genesee, Niagara, Orleans and Wyoming.

(k) Capital cost components of per diem rates determined pursuant to this section shall be computed on the basis of budgeted capital costs allocated to the exempt hospital or distinct unit of a hospital pursuant to the provisions of section 86-1.25 of this Subpart divided by exempt hospital or unit patient days reconciled to actual total expense.

(l) New hospitals and new hospital units.

The operating cost component of rates of payment for new hospitals, or hospital units, without adequate cost experience shall be computed based on either budgeted cost projections, subsequently reconciled to actual reported cost data, or the regional ceiling calculated in accordance with subdivision (i) of this section, whichever is lower. The capital cost component of such rates shall be calculated in accordance with section 86-1.25 of this Subpart.