Section 148.270  Determination of Alternate Cost Per Diem Rates For All Hospitals; Payment Rates for Certain Exempt Hospital Units; and Payment Rates for Certain Other Hospitals

a)         Calculation of Alternate Cost Per Diem Rates for All Hospitals

For all hospitals, regardless of the hospital's reimbursement methodology, the Department shall first calculate the hospital's alternate cost per diem rate, as calculated under Section 148.260, derived from the provider's base period cost reports, as described in Section 148.25(g)(1).

b)         Calculation of Payment Rates for Certain Exempt Hospital Units

1)         For admissions occurring within the rate period described in Section 148.25(g)(2)(A):

A)        In the case of a distinct part unit, as described in 89 Ill. Adm. Code 149.50(d), the Department shall divide the hospital's Medicaid charges per diem (identified on adjudicated claims submitted by the provider during the most recently completed fiscal year for which complete data are available) related to the distinct part unit by the hospital's total charge per diem for all claims for the same time period.

B)        The resulting quotient, as calculated in subsection (b)(1)(A), shall be multiplied by the hospital's total operating cost per diem, as calculated in Section 148.260(a)(1)(B).

C)        The capital related cost per diem, as calculated in Section 148.260(a)(2), is then added to the resulting product calculated in subsection (b)(1)(B), subject to the inflation adjustment described in Section 148.260(c)(1).

D)        Subject to the provisions of subsections (b)(1)(E) and (b)(1)(F), the final distinct part unit payment rate shall be the lower of:

i)          The result of the calculations described in subsections (b)(1)(A) through (b)(1)(B); or

ii)         The hospital's alternate cost per diem rate, as calculated in subsection (a) of this Section.

E)         In no case shall the hospital's final distinct part unit payment rate be greater than three standard deviations above the mean distinct part unit payment rate.

F)         In the case of a new distinct part unit for which the Department has insufficient adjudicated claims history data available, the Department shall utilize the average payment rate calculated under this subsection (b)(1) for like distinct part units.

2)         For admissions occurring within a rate period described in Section 148.25(g)(2)(B), the distinct part unit payment rate shall be the distinct part unit payment rate in effect on June 30, 1993, as calculated under subsection (b)(1), updated to the midpoint of the current rate period, using the TEFRA price inflation factor.

c)         In the case of a new hospital (not previously owned or operated), a hospital that has significantly changed its case-mix profile (e.g., a general acute care hospital changing its case-mix to reflect a predominance of long term care patients), or an out-of-state non cost-reporting hospital, reimbursement for inpatient services shall be as follows:

1)         For general acute-care hospitals, reimbursement for inpatient services:

A)        provided by Illinois general acute care hospitals prior to July 1, 2007 shall be at the average payment rate calculated under subsection (a) or (b), as applicable, for those hospitals that would otherwise be reimbursed under 89 Ill. Adm. Code 149.

B)        provided by Illinois general acute care hospitals on or after July 1, 2007 shall be reimbursed at either of the following:

i)          utilizing the payment methodologies described in 89 Ill. Adm. Code 149 that will only reflect the federal/regional blended rate described in 89 Ill. Adm. Code 149.100.  No other payments described in Part 149 will be reimbursed; or

ii)         at the average payment rate calculated under subsection (a) or (b), as applicable, for those hospitals that would otherwise be reimbursed under 89 Ill. Adm. Code 149.

C)        provided by out of state general acute care hospitals shall be at the average payment rate calculated under subsection (a) or (b), as applicable, for those hospitals that would otherwise be reimbursed under 89 Ill. Adm. Code 149.

2)         For psychiatric hospitals, as defined in 89 Ill. Adm. Code 149.50(c)(1), reimbursement for inpatient psychiatric services shall be at the average rate calculated under Section 148.260 for those hospitals defined in 89 Ill. Adm. Code 149.50(c)(1).

3)         For rehabilitation hospitals, as defined in 89 Ill. Adm. Code 149.50(c)(2), reimbursement for inpatient rehabilitation services shall be at the average rate calculated under Section 148.260 for those hospitals defined in 89 Ill. Adm. Code 149.50(c)(2).

4)         For long term stay hospitals, as defined in 89 Ill. Adm. Code 149.50(c)(4), reimbursement for inpatient services shall be at the average rate calculated under Section 148.260 for those hospitals defined in 89 Ill. Adm. Code 149.50(c)(4).

5)         For children's hospitals, as defined in 89 Ill. Adm. Code 149.50(c)(3), reimbursement for inpatient services:

A)        provided before August 1, 1998, shall be at the average rate calculated under subsection (a) for those hospitals defined in 89 Ill. Adm. Code 149.50(c)(3);

B)        provided on or after August 1, 1998, for a children's hospital that was licensed as such by a municipality after June 30, 1995, shall be equal to the average rate calculated in Section 148.280 for children's hospitals in existence before June 30, 1995, with an average length of stay that was less than 14 days as determined from the hospital's fiscal year 1994 cost report.

(Source:  Amended at 31 Ill. Reg. 11688, effective August 1, 2007)