PURSUANT TO THE PROVISIONS OF THE State Administrative Procedure Act, NOTICE is hereby given of the following action:
Action taken:
Amendment of section 86-1.31 of Title 10 NYCRR.
Statutory authority:
Public Health Law, section 2807-c(35)
Finding of necessity for emergency rule:
Preservation of public health.
Specific reasons underlying the finding of necessity:
Paragraph (b) of subdivision 35 of section 2807-c of the Public Health Law (as added by Section 2 of Part C of Chapter 58 of the Laws of 2009) specifically provides the Commissioner of Health with authority, effective for periods on and after December 1, 2009, to issue emergency regulations in order to compute hospital inpatient rates as authorized in accordance with the provisions of such subdivision 35.
Subject:
Hospital Temporary Rate Adjustments.
Purpose:
No longer require that a merger, acquisition or consolidation needs to occur on or after the year the rate is based upon.
Text of emergency rule:
Paragraph (1) of subdivision (b) of section 86-1.31 is amended to read as follows:
(1) The commissioner may grant approval of a temporary adjustment to rates calculated pursuant to this section for hospitals subject to mergers, acquisitions or consolidations [occurring on or after the year the rate is based upon,] provided such hospitals demonstrate through submission of a written proposal that the merger, acquisition or consolidation will result in an improvement to:
(i) cost effectiveness of service delivery;
(ii) quality of care; and
(iii) factors deemed appropriate by the commissioner.
Such written proposal shall be submitted to the department 60 days prior to the requested effective date of the temporary rate adjustment. The temporary rate adjustment shall consist of the various operating rate components of [the surviving entity] that portion of the facility originally associated with the surviving provider number and shall be in effect for a specified period of time as approved by the commissioner. At the end of the specified timeframe, the hospital will be reimbursed in accordance with the statewide methodology set forth in this Subpart. The commissioner may establish, as a condition of receiving such a temporary rate adjustment, benchmarks and goals to be achieved as a result of the ongoing consolidation efforts and may also require that the hospital submit such periodic reports concerning the achievement of such benchmarks and goals as the commissioner deems necessary. Failure to achieve satisfactory progress, as determined by the commissioner, in accomplishing such benchmarks and goals shall be a basis for ending the hospital's temporary rate adjustment prior to the end of the specified timeframe.
This notice is intended
to serve only as a notice of emergency adoption. This agency intends to adopt this emergency rule as a permanent rule and will publish a notice of proposed rule making in the State Register at some future date. The emergency rule will expire November 23, 2011.
Text of rule and any required statements and analyses may be obtained from:
Katherine Ceroalo, DOH, Bureau of House Counsel, Reg. Affairs Unit, Room 2438, ESP Tower Building, Albany, NY 12237, (518) 473-7488, email: regsqna@health.state.ny.us
Regulatory Impact Statement
Statutory Authority:
The statutory authority for this regulation is contained in Section 2807-c(35)(b) of the Public Health Law (PHL) which authorizes the Commissioner to promulgate regulations, including emergency regulations, with regard to Medicaid reimbursement rates for general hospital inpatient services. Such inpatient rate regulations are set forth in Subpart 86-1 of Title 10 (Health) of the Official Compilation of Codes, Rules, and Regulation of the State of New York.
Legislative Objectives:
Subpart 86-1 of Title 10 (Health) of the Official Compilation of Codes, Rules and Regulation of the State of New York, Paragraph (1) of subdivision (b) of section 1.31 will be amended to eliminate the requirement that the merger, acquisition or consolidation needs to occur on or after the year the rate is based upon. The current base year for hospital inpatient rate purposes is 2005, as required pursuant to PHL § 2807-c(35)(a). Thus, the proposed amendment will permit temporary rate adjustments in connection regard to mergers, acquisitions and/or consolidations that occurred prior to 2005, provided that the hospital is engaged in an ongoing process of consolidation and/ restructuring related to such merger, acquisition and/or consolidation. The temporary rate adjustment will also be revised to consist of the operating rate components of that portion of the facility originally associated with the surviving provider number and shall be in effect for a specified period of time as approved by the Commissioner. This regulation is necessary in order to provide needed relief to providers who meet the criteria.
The existing section 86-1.31(b) requires hospitals seeking temporary rate adjustments to submit a written proposal demonstrating how the temporary additional reimbursement will be utilized to enhance the facility's long-term efficiency and quality of care. The proposed amendments permits the Commissioner to establish benchmarks and goals concerning the facility's implementation of its proposal as a condition for receipt of the temporary rate adjustment. Such hospitals may also be required to submit such periodic reports concerning the achieving of such benchmarks and goals as the Commissioner deems necessary. Failure to achieve satisfactory progress, as determined by the Commissioner, in accomplishing such benchmarks and goals shall be a basis for ending the hospital's temporary rate adjustment prior to the end of the specified timeframe.
Needs and Benefits:
This regulation can promote the elimination of underutilized services or the consolidation of others. Hospitals can identify the persistent inefficiencies and resource limitations within their system so that scarce health care dollars are not at risk. Teaching programs can be integrated to better serve patients. The combination hospitals licensed under Article 28, where such a combination is consistent with the public need, could create a new, more economical entity and may result in the potential reduction of excess beds and/or improved service delivery. The additional reimbursement provided by this adjustment can support any resulting hospital in achieving these goals, thus improving quality while reducing health care costs.
Costs:
Costs to Private Regulated Parties:
There will be no additional costs to private regulated parties. Hospitals are currently required to file annual certified cost reports and submit claim forms for Medicaid reimbursement. The only additional data requested from providers would be periodic reports demonstrating progress against benchmarks and goals.
Costs to State Government:
The estimated net aggregate increase in gross Medicaid expenditures attributable to this proposed initiative for State fiscal year 2010/2011 is $2.6 million, which on a full annual basis would increase to $7.9 million. This estimate is based on current cost projections concerning existing mergers, acquisitions and/or consolidations which may qualify for a temporary rate adjustment in accordance with the specified criteria.
Costs to Local Government:
Local districts' share of Medicaid costs is statutorily capped; therefore, there will be no additional costs to local governments as a result of this proposed regulation.
Costs to the Department of Health:
There will be no additional costs to the Department of Health as a result of this proposed regulation.
Local Government Mandates:
The proposed regulation does not impose any new programs, services, duties or responsibilities upon any county, city, town, village, school district, fire district or other special district.
Paperwork:
Since meeting benchmarks and goals is required in order to receive this temporary rate adjustment, a hospital is required to submit periodic reports, as determined by the Commissioner, concerning the achievement of such benchmarks and goals.
Duplication:
This is an amendment to an existing State regulation and does not duplicate any existing federal, state or local regulations.
Alternatives:
No significant alternatives are available. Any potential hospital projects that would otherwise qualify for funding pursuant to the revised regulation would, in the absence of this amendment, either not go forward or would have to be attempted with existing facility resources.
Federal Standards:
The proposed regulation does not exceed any minimum standards of the federal government for the same or similar subject area.
Compliance Schedule:
The proposed regulation provides the Commissioner of Health the authority to grant approval of temporary adjustments to rates calculated for hospitals subject to mergers, acquisitions or consolidations for inpatient payment rates for rate periods on and after December 2, 2010.
Regulatory Flexibility Analysis
Effect of Rule:
For the purpose of this regulatory flexibility analysis, small businesses were considered to be general hospitals with 100 or fewer full time equivalents. Based on recent financial and statistical data extracted from the Institutional Cost Report, seven hospitals were identified as employing fewer than 100 employees.
No health care providers subject to this regulation will see a decrease in average per discharge Medicaid funding as a result of this regulation.
This rule will have no direct effect on local governments.
Compliance Requirements:
Hospitals that receive the temporary rate adjustment under this regulation will be required to submit periodic reports demonstrating their progress against benchmarks and goals established by the Commissioner.
The rule will have no direct effect on local governments.
Professional Services:
No new or additional professional services are required in order to comply with the proposed amendments.
Compliance Costs:
No initial capital costs will be imposed as a result of this rule, nor will there be an annual cost of compliance.
Economic and Technological Feasibility:
Small businesses will be able to comply with the economic and technological aspects of this rule. The proposed amendments are technologically feasible because it requires the use of existing technology. The overall economic impact to comply with the requirements of this regulation is expected to be minimal.
Minimizing Adverse Impact:
This regulation provides needed relief to eligible providers, thus a positive impact for small businesses that are eligible and no impact for the remainder. In addition, local districts' share of Medicaid costs is statutorily capped; therefore, there will be no adverse impact to local governments as a result of this proposal.
Small Business and Local Government Participation:
The State filed a Federal Public Notice, published in the State Register, prior to the effective date of the change. The Notice provided a summary of the action to be taken and instructions as to where the public, including small businesses and local governments, could locate copies of the corresponding proposed State plan amendment. The Notice further invited the public to review and comment on the related proposed State plan amendment. In addition, contact information for the Department of Health was provided for anyone interested in further information.
Rural Area Flexibility Analysis
Effect on Rural Areas:
Rural areas are defined as counties with populations less than 200,000 and, for counties with populations greater than 200,000, includes towns with population densities of 150 persons or less per square mile. The following 43 counties have populations of less than 200,000:
Allegany
Hamilton
Schenectady
Cattaraugus
Herkimer
Schoharie
Cayuga
Jefferson
Schuyler
Chautauqua
Lewis
Seneca
Chemung
Livingston
Steuben
Chenango
Madison
Sullivan
Clinton
Montgomery
Tioga
Columbia
Ontario
Tompkins
Cortland
Orleans
Ulster
Delaware
Oswego
Warren
Essex
Otsego
Washington
Franklin
Putnam
Wayne
Fulton
Rensselaer
Wyoming
Genesee
St. Lawrence
Yates
Greene
The following nine counties have certain townships with population densities of 150 persons or less per square mile:
Albany
Erie
Oneida
Broome
Monroe
Onondaga
Dutchess
Niagara
Orange
Compliance Requirements:
For hospitals that receive the temporary rate adjustment, periodic reports must be submitted which demonstrate the achievement of benchmarks and goals set by the Commissioner.
Professional Services:
No new additional professional services are required in order for providers in rural areas to comply with the proposed amendments.
Compliance Costs:
No initial capital costs will be imposed as a result of this rule, nor is there an annual cost of compliance.
Minimizing Adverse Impact:
This regulation provides needed relief to eligible providers, thus a positive impact for small businesses that are eligible and no impact for the remainder. In addition, local districts' share of Medicaid costs is statutorily capped; therefore, there will be no adverse impact to local governments as a result of this proposal.
Rural Area Participation:
Draft regulations, prior to filing with the Secretary of State, were shared with the industry associations representing hospitals and comments were solicited from all affected parties. Such associations include members from rural areas.
Job Impact Statement
A Job Impact Statement is not required pursuant to Section 201-a(2)(a) of the State Administrative Procedure Act. It is apparent, from the nature and purpose of the proposed rule, that it will not have a substantial adverse impact on jobs or employment opportunities. The proposed regulation eliminates the requirement that a merger, acquisition or consolidation needs to occur on or after the year the rate is based upon in such cases where a hospital receives a temporary adjustment to rates as a result of a merger, acquisition or consolidation. The proposed regulation has no implications for job opportunities.
