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

Date posted:

Attachment(s):

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 plans to address the following changes in hospital reimbursement:

  • General Provisions:
    • Adds annual inflation adjustments for all acute care and rehabilitation hospital inpatient base reimbursement rates.
    • Adds payment limitation requirements for any instances where payments exceed CMS Upper Payment Limits (UPL).
    • Adds a Prospective Interim Payment (PIP) floor that establishes 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.
  • Supplemental Payments:
    • Eliminates, effective December 31, 2024, critical access hospital supplemental pool payments.
    • Adds a time-limited supplemental payment, until June 30, 2029, totaling eight million dollars annually, for any acute care hospital previously reimbursed by the federal Medicare program as a prospective payment system hospital and reimbursed by the MaineCare program as a critical access hospital for 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 (private acute care, rehabilitation, and Non-State Government-Owned). Maine Base Rates are inclusive of capital and operating costs.
    • 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 adjustment (if applicable) 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.
  • Acute Care Non-Critical Access Hospital Outpatient Services:
    • Increases the percentage of Medicare Ambulatory Payment Classification (APC) rates MaineCare reimburses.
    • Increases the percentage of the Medicare rate MaineCare applies to the outpatient outlier payment adjustment.
    • Reintroduces a “days awaiting placement” provision with an increased annual cap, which provides reimbursement at a percentage 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.
  • Acute Care Critical Access Hospital Reimbursement:
    • Decreases the percentage of cost reimbursement for both inpatient and outpatient services 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.

REASON FOR PROPOSED CHANGES: All changes are pursuant to Maine P.L. 2023, ch. 643, An Act to Make Supplemental Appropriations and Allocations for the Expenditures of State Government, General Fund and Other Funds and to Change Certain Provisions of the Law Necessary to the Proper Operations of State Government for the Fiscal Years Ending June 30, 2024 and June 30, 2025

ESTIMATE OF ANY EXPECTED INCREASE OR DECREASE IN ANNUAL AGGREGATE EXPENDITURES: The Department anticipates that this change will cost $28,266,536 in federal fiscal year 2024 which includes $19,495,417 in federal funds and $8,771,119 in state funds. $118,266,536 in federal fiscal year 2025 which includes $84,502,561 in federal funds and $33,763,975 in state funds.

ACCESS TO PROPOSED CHANGES AND COMMENTS TO PROPOSED CHANGES:  The public may review the proposed methodology changes and written comments at any Maine DHHS office in every Maine county. To find out where the Maine DHHS offices are located, call 1-800-452-1926. The Department will hold a hearing for the proposed rulemaking and will be publishing a notice which includes information on the hearing date and location.

CONTACT INFORMATION FOR RECEIPT OF COMMENTS: Kristin Merrill  

                                                                                                       Kristin.Merrill@maine.gov

AGENCY NAME:                                                Office of MaineCare Services

ADDRESS:                                                          109 Capitol Street, 11 State House Station

                                                                             Augusta, Maine 04333-0011

TELEPHONE:(207) 624-4006 FAX: (207) 287-6106

                                                               TTY: 711 Maine Relay (Deaf or Hard of Hearing)

See http://www.maine.gov/dhhs/oms/rules/index.shtml for rules and related rulemaking documents.

Office: MaineCare Services

Comment deadline:

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