Industry Insights

Missouri Medicaid DSH Update – Part II – SFY 2017

January 2016

Earlier this month, BKD published an Alert outlining changes to the Missouri Medicaid disproportionate share hospital (DSH) survey that’s currently underway. However, there also are changes in the methodology and manner in which these surveys will be used.

Historically, hospitals have been required to complete two surveys each year—one for the DSH examination and one to determine the interim DSH payment. The methodology has changed; hospitals now will complete just one survey annually that covers both purposes, under new state regulation 13 CSR 70-15.220. The final regulation states a hospital must submit its DSH survey to the contractor by March 1 or lose eligibility to receive interim DSH payments for that state fiscal year (SFY).

The new regulation didn’t change eligibility requirements; hospitals will continue to qualify for Medicaid DSH payments as long as they meet the obstetric requirement (or exemption) and have a Medicaid Inpatient Utilization Rate (MIUR) greater than 1 percent. These are the minimum thresholds under the federal DSH rules.

Hospitals that qualify and are determined to have uncompensated care costs (net of any out-of-state Medicaid DSH payments) will be included in the interim Medicaid DSH payment calculation. A percentage is calculated by dividing the available state DSH allotment by the total statewide uncompensated care cost eligible for payment. This percentage then is applied to each hospital’s uncompensated care cost to determine its interim DSH payment. In addition, the regulations state that “hospitals that do not contribute through a plan that is approved by the director of the Department of Health and Senior Services to support the state’s poison control center and the Primary Care Resource Initiative for Missouri (PRIMO) and Patient Safety Initiative” will see a 1 percent reduction in the DSH payment allocated to them.

Historically, hospitals have had significant leeway in requesting revisions to their interim DSH payments, but the final regulations are more restrictive in this area. Two key changes in the regulations relate to extraordinary circumstances and interim DSH payment adjustments. 

Once a hospital receives notification of the DSH examination, it has 14 days to request consideration for extraordinary circumstances, which can include an act of nature, war, civil disturbance or unavailable data due to a change of ownership. The extraordinary circumstance must have occurred during or after the cost report period under review. It’s important to note that a change in operations for a hospital isn’t considered an extraordinary circumstance. 

Under the final regulations, MO HealthNet can process interim DSH payment adjustments once a year. For a hospital to be considered for an adjustment, it must submit a request by December 31 of the SFY for which the DSH payment is being paid. The submission must include a completed DSH survey using data from the most recent full-year cost report filed with MO HealthNet and an explanation of the reason for the change request. The current regulation states that the revised survey must show the hospital’s uncompensated care cost is a minimum of 80 percent greater than the uncompensated care cost initially calculated.

A complete copy of the final regulation can be found on the Missouri Secretary of State website. The state is filing a proposed amendment to modify items outlined in the new regulation. The proposal will be published in the Missouri Register and include a 30-day comment period. It’s unclear if the proposal will be effective for SFY 2017.

If you have additional questions or would like more information on this matter, contact your BKD advisor.

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