Section 149.50  Hospital Services Subject to and Excluded from the DRG Prospective Payment System

a)         Hospital Services Subject to the DRG Prospective Payment System

1)         Except for services described in Section 149.25(a)(4) and subsection (b)(2) below, all covered inpatient hospital services furnished to persons receiving coverage under the Medicaid Program are paid for under the DRG PPS.

2)         Inpatient hospital services will not be paid for under the DRG PPS under any of the following circumstances:

A)        The services are furnished by a hospital (or distinct part hospital unit) explicitly excluded from the DRG PPS under subsections (c) through (d) below.

B)        The services are furnished by a nonparticipating out-of-state hospital (as described in subsection (c)(5) below).

C)        The services are furnished by a hospital that elects to be reimbursed under special arrangements (as described in subsection (c)(6) below) in the transition period of DRG PPS implementation.

D)        The services are furnished by a sole community hospital (as defined in Section 149.125(b)) that has elected to be exempted from the DRG PPS in accordance with subsection (c)(7) below.

E)         The payment for services is covered by a health maintenance organization (HMO).

b)         Excluded and Exempted Hospitals and Hospital Units:  General Rules

1)         Criteria.  A hospital will be excluded from the DRG PPS if it meets the criteria for one or more of the classifications described in subsection (c) below.

2)         Alternate Reimbursement System.  All excluded hospitals (and excluded distinct part hospital units, as described in subsection (d) below) are reimbursed under the Alternate Reimbursement Systems set forth in 89 Ill. Adm. Code 148.250 through 148.300 with the exception of those hospitals described in subsection (c)(8) below.  The hospitals described in subsection (c)(8) below are reimbursed in accordance with 89 Ill. Adm. Code 148.160 or 148.170, as appropriate.

c)         Excluded Hospitals:  Classifications.  Hospitals that meet the requirements for the classifications set forth in this Section may not be reimbursed under the DRG Prospective Payment System.

1)         Psychiatric Hospitals.  A psychiatric hospital must:

A)        Be primarily engaged in providing, by or under the supervision of a psychiatrist, psychiatric services for the diagnosis and treatment of mentally ill persons; and

B)        Be enrolled with the Department as a psychiatric hospital to provide inpatient psychiatric services (category of service 21) and have a Provider Agreement to participate in the Medicaid Program.

2)         Rehabilitation Hospitals.  A rehabilitation hospital must:

A)        Hold a valid license as a physical rehabilitation hospital; and

B)        Be enrolled with the Department as a rehabilitation hospital to provide inpatient rehabilitation services (category of service 22) and have a Provider Agreement to participate in the Medicaid Program.

3)         Children's Hospitals.  To qualify as a children's hospital, the facility must have a Provider Agreement to participate in the Medicaid program and be either:

A)        A hospital devoted exclusively to caring for children; or

B)        A general care hospital which includes a facility devoted exclusively to caring for children that meets one of the following definitions:

i)          A facility that is separately licensed as a hospital by a municipality prior to September 30, 1998.  Such hospitals shall be reimbursed for all inpatient and outpatient services rendered to persons who are under 18 years of age, with the exception of obstetric, normal newborn nursery, psychiatric and rehabilitation, regardless of the physical location within the hospital complex where the care is rendered; or

ii)         A facility that has been designated by the State as a Level III perinatal care facility, has a Medicaid Inpatient Utilization Rate, as defined at 89 Ill. Adm. Code 148.12(k)(5), greater than 55 percent for the rate year 2003 disproportionate share determination, and has more than 10,000 qualified children days.  Qualified children days means the number of hospital inpatient days for recipients under 18 years of age who are eligible under Medicaid, excluding days for normal newborn, obstetrical, psychiatric, Medicare crossover, and rehabilitation services, as determined from the Department's claims data for days occurring in State fiscal year 2001 that were adjudicated by the Department through June 30, 2002.  Such hospitals shall be reimbursed for all inpatient and outpatient services rendered to persons who are under 18 years of age, with the exception of obstetric, normal newborn nursery, psychiatric and rehabilitation, regardless of the physical location within the hospital complex where the care is rendered.

4)         Long Term Stay Hospitals.  A long term stay hospital must:

A)        Not be a psychiatric hospital, as described in subsection (c)(1) above, a rehabilitation hospital as described in subsection (c)(2) above, or a children's hospital as described in subsection (c)(3) above and must have an average length of inpatient stay greater than 25 days:  as computed by dividing the number of total inpatient days (less leave or pass days) by the number of total discharges for the most recent State fiscal year for which complete information is available; and

B)        Have a Provider Agreement to participate in the Medicaid Program.

5)         Hospitals Outside of Illinois that are Exempt from Cost Reporting Requirements.  A hospital is excluded from the DRG PPS if it meets the following definition:  a nonparticipating out-of-state hospital is an out-of-state hospital that provides fewer than 100 Illinois Medicaid days annually, that does not elect to be reimbursed under this Part (the DRG Prospective Payment System), and that does not file an Illinois Medicaid cost report.

6)         Hospitals Reimbursed Under Special Arrangements.  Hospitals that, on August 31, 1991, had a contract with the Department under the ICARE Program, pursuant to Section 3-4 of the Illinois Health Finance Reform Act, may elect to continue to be reimbursed at rates stated in such contracts for general and specialty care for services provided on or after September 1, 1991, subject to the limitations described in 89 Ill. Adm. Code 148.40(f) through 148.40(h).

7)         Sole Community Hospitals.  Hospitals described in Section 149.125(b), which have elected to be exempted from the DRG PPS, subject to the limitations described in 89 Ill. Adm. Code 148.40(f) through 148.40(h).

8)         County-Owned Hospitals and Hospitals Organized Under the University of Illinois Hospital Act.  County-owned hospitals located in an Illinois county with a population greater than three million and hospitals organized under the University of Illinois Hospital Act are excluded from the DRG system and are reimbursed under unique hospital-specific reimbursement methodologies as described in 89 Ill. Adm. Code 148.160 and 148.170.

d)         Excluded Distinct Part Hospital Units

1)         Distinct Part Psychiatric Units.  With the exception of those hospitals described in subsections (c)(1) through (c)(8) above, a hospital enrolled with the Department to provide inpatient psychiatric services (category of service 21) shall be excluded from the DRG PPS for the reimbursement of such inpatient psychiatric services and shall be reimbursed in accordance with 89 Ill. Adm. Code 148.270(b).

2)         Distinct Part Rehabilitation Units.  With the exception of those hospitals described in subsections (c)(1) through (c)(8) above, a hospital enrolled with the Department to provide inpatient rehabilitation services (category of service 22) shall be excluded from the DRG PPS for the reimbursement of such inpatient rehabilitation services and shall be reimbursed in accordance with 89 Ill. Adm. Code 148.270(b).

(Source:  Amended at 27 Ill. Reg. 18872, effective November 26, 2003)