Notice of MaineCare Reimbursement Methodology Change, MaineCare Benefits Manual, Section 45, Hospital Services

Notice of MaineCare Reimbursement Methodology Change

AGENCY:  Department of Health and Human Services, Office of MaineCare Services

SERVICES INCLUDED:  Chapter 101, MaineCare Benefits Manual, Section 45, Hospital Services

NATURE OF PROPOSED CHANGES: The Department is issuing the following clarification to the  June 28, 2024 notice regarding  plans to address changes in hospital reimbursement:

• General Provisions:
  • Adds annual inflation adjustments for all Acute Care and rehabilitation hospital inpatient base reimbursement rates, outlier payment thresholds, and Graduate Medical Education (GME) add-on rates.
  • Adds payment limitation requirements for any instances where payments exceed CMS Upper Payment Limits (UPL).
  • Adds a Prospective Interim Payment (PIP) floor so that the total payment to all hospitals receiving a PIP is not less than seventy percent (70%) of the calculated amount of the total PIPs for the State Fiscal Year.
  • Establishes Acute Care Hospitals Converting from Acute Care Critical Access Hospital Reimbursement to Acute Care Non-Critical Access Hospital Reimbursement as a new category of hospital and eliminates Hospital Reclassified to a Wage Area Outside Maine by the Medicare Geographic Classification Review Board as a category of hospital.

• Supplemental Payments:
  • Eliminates, effective December 31, 2024, Critical Access Hospital supplemental pool payments.
  • Adds an eight million dollar annual supplemental payment, ending June 30, 2029, for any Acute Care hospital previously reimbursed by the federal Medicare program as a prospective payment system hospital and reimbursed by the MaineCare program like a Critical Access Hospital for inpatient and outpatient services on or before January 1, 2024.Adds an eight-million-dollar annual supplemental payment, ending June 30, 2029, for any Acute Care hospital previously reimbursed by the federal Medicare program as a prospective payment system hospital and reimbursed by the MaineCare program like a Critical Access Hospital for inpatient and outpatient services on or before January 1, 2024.

• Acute Care Non-Critical Access Hospital Inpatient Services:
  • Updates the DRG-based reimbursement methodology by moving from a hospital-specific base rate to three Maine Base Rates assigned by peer group (Acute Care, Rehabilitation, and Non-State Government-Owned), which are inclusive of capital and operating costs.
  • Ends cost settlement for Diagnosis Related Group (DRG)-based discharge rates.
  • Introduces Graduate Medical Education (GME) add-on rates for teaching hospitals. The Department will assign each teaching hospital a custom GME add-on rate inclusive of direct and indirect medical education costs. This add-on is determined by utilization (discharge) and cost data from a hospital’s Fiscal Year 2022 As-Filed Medicare Cost Report. Adjustments equal to one hundred percent (100%) of MaineCare’s share of these GME costs are applied as an add-on to the Maine Base Rate.
  • Adopts CMS’s Medicare Severity Diagnosis Related Groups (MS-DRG) Grouper and Medicare’s relative DRG weights.
  • Introduces a new DRG-based outlier payment methodology in two phases. Each phase will observe updates to hospital-specific Cost-to-Charge Ratios (CCRs) and fixed reimbursement percentages, as well as introduce standard outlier thresholds for all eligible hospitals.
    • Phase 1 (July 1, 2024 through December 31, 2024): Reimburse 90% of estimated costs based on charges that exceed an updated and standard charge threshold amount of $150,000.
    • Phase 2 (January 1, 2025 onward): Reimburse 90% of costs that exceed DRG reimbursement by a standard cost threshold amount of $50,000, updated annually for inflation

• • Establishes a new, final DRG payment formula using the hospital’s assigned Maine Base Rate plus the GME add-on rate (for teaching hospitals) multiplied by the Medicare DRG relative weight. The resulting value equals the hospital’s DRG payment.

                   (Maine Base Rate + GME) × Medicare DRG Relative Weight + applicable outlier payment = Hospital’s DRG payment

• • Updates, effective August 9, 2024, criteria for readmission penalties by extending the readmissions penalty window from 14 to 30 days, assessing readmission penalties on the basis of being “clinically related” instead of an exact DRG match, adding an exemption from this policy for obstetric and newborn readmissions, removing broad behavioral health exclusions, and adding additional detail for other operational exclusion/inclusion criteria.
  • Changes the end date for cost settlement of capital costs for distinct psychiatric units and substance use disorder units from July 1, 2025 to September 1, 2024.
  • Establishes physician service reimbursement at 100% of cost for any Acute Care Hospital converting from Critical Access Hospital reimbursement methodology to Acute Care Non-Critical Access Hospital reimbursement methodology

• Acute Care Non-Critical Access Hospital Outpatient Services:
  • Increases the percentage of Medicare Ambulatory Payment Classification (APC) rates MaineCare reimburses Acute Care Hospitals to 109%.
  • Increases the percentage of the Medicare rate MaineCare applies to the outpatient outlier payment adjustment to 109%.
  • Reintroduces a “days awaiting placement” provision with an increased annual cap of $1,500,000, which provides reimbursement at 75% of the statewide average per diem nursing facility rate. Additionally, extends coverage to members awaiting placement in a Community Residence for Persons with Mental Illness (PNMI Appendix E), effective January 1, 2025.
  • Aligns reimbursement methodology for off-campus Provider-Based Departments (PBDs) with Medicare effective August 9, 2024.

• Acute Care Critical Access Hospital Reimbursement:
  • Decreases the percentage of cost reimbursement for both inpatient and outpatient services to 104.5% effective January 1, 2025.

• Non-State, Government-Owned Hospitals:
  • Transitions reimbursement methodology for outpatient services, including laboratory and imaging, for public Acute Care Non-Critical Access Hospitals from cost settlement to the same prospective payment methodology used with private Acute Care Non-Critical Access Hospitals.
  • Clarifies that non-state, government-owned hospitals are a distinct peer group and are subject to a separate UPL.

• Rehabilitation Hospitals:
  • Aligns reimbursement methodology for rehabilitation hospitals to the prospective payment approach used for Acute Care Non-Critical Access Hospitals.