Montana Administrative Register Notice 37-506 No. 12   06/24/2010    
Prev Next






In the matter of the amendment of ARM 37.86.2801, 37.86.2803, 37.86.2806, 37.86.2820, 37.86.2901, 37.86.2902, 37.86.2903, 37.86.2904, 37.86.2905, 37.86.2907, 37.86.2912, 37.86.2916, 37.86.2918, 37.86.2920, 37.86.2921, 37.86.2925, 37.86.2928, and 37.86.2947 and repeal of ARM 37.86.2810 and 37.86.2910 pertaining to Medicaid inpatient and outpatient hospital services














TO:  All Concerned Persons


1.  On April 29, 2010, the Department of Public Health and Human Services published MAR Notice No. 37-506 pertaining to the public hearing on the proposed amendment and repeal of the above-stated rules at page 1002 of the 2010 Montana Administrative Register, Issue Number 8.


            2.  The department has amended ARM 37.86.2801, 37.86.2803, 37.86.2806, 37.86.2820, 37.86.2902, 37.86.2903, 37.86.2904, 37.86.2905, 37.86.2907, 37.86.2912, 37.86.2916, 37.86.2918, 37.86.2920, 37.86.2921, 37.86.2925, 37.86.2928, and 37.86.2947 and repealed ARM 37.86.2810 and 37.86.2910 as proposed.


            3.  The department has amended the following rule as proposed, but with the following changes from the original proposal, new matter underlined, deleted matter interlined:


            37.86.2901  INPATIENT HOSPITAL SERVICES, DEFINITIONS  (1) through (23) remain as proposed.

            (24)  "Inpatient hospital services" means services that are ordinarily furnished in an acute care hospital for the care and treatment of an inpatient under the direction of a physician, dentist, or other practitioner as permitted by federal law, and that are furnished in an institution that:

            (a) and (b) remain as proposed.

            (c)  provides inpatient acute care psychiatric hospital services as defined in this rule for individuals under age 21 pursuant to ARM 37.88.1410.

            (25) through (42) remain as proposed.


AUTH:  53-2-201, 53-6-113, MCA

IMP:  53-2-201, 53-6-101, 53-6-111, 53-6-113, 53-6-141, 53-6-149, MCA

            4.  The department has thoroughly considered the comments and testimony received.  A summary of the comments received and the department's responses are as follows:


COMMENT #1:  Please maintain the text of ARM 37.86.2901(20)(d) as is, without deleting or in any way changing the reference to Title 37, chapter 88, subchapter 11.


RESPONSE #1:  ARM Title 37, chapter 88, subchapter 11 was repealed in January, 2009.  ARM 37.86.2901(20)(d) has now been renumbered to ARM 37.86.2901(24)(c) and has been amended to read as follows:


            "(c)  provides acute care psychiatric hospital services as defined in this rule for individuals under age 21."


COMMENT #2:  The department proposes to reduce per case payment by about 2.6%.  The department is moving to reduce hospital payments by more than $2 million over the current year.


RESPONSE #2:  Each year, the department must stay within the appropriation amount allocated by the Legislature.  Inpatient expenditures in state fiscal year 2009 exceed the budgeted amount by over $4 million.  The department had to make adjustments to the inpatient reimbursement system to stay within legislative appropriation for state fiscal year 2011.  As part of the department's spending reduction plan approved by the Governor, appropriated provider rate increases for state fiscal year 2011 will not be implemented.


COMMENT #3:  The department plans to boost payments to certain hospitals located outside of Montana by nearly 10%.  Other factors have been manipulated to reduce reimbursement levels to in-state hospitals and to transfer those savings to increased reimbursement levels for out-of-state hospitals.  MHA, an Association of Montana Health Care Providers, recommends that the department limit payments to out-of-state hospitals at the 2009 amount.  The savings from this action should be plowed back into in-state payments in order to ease the budget impact of the proposal.


RESPONSE #3:  The department agrees that some out-of-state facilities that provide services which are currently not available in Montana will see payment increases.  There are also in-state facilities which will see payment increases as well.  However, it is important to note that when the All Patient Refined Diagnosis Related Groups (APR-DRG) payment methodology was implemented in October 2008, payments to in-state hospital facilities increased by 18%.  This increase was made possible because payments to out-of-state facilities were significantly decreased allowing the department to allocate more monies to in-state facilities.  The department denies that it "manipulated other factors" in order to reduce reimbursement levels to in-state hospitals.  The rebase process was identical to that used for the October 2008 APR-DRG implementation with the exception of the higher base price for distinct part rehabilitation units and long term care (LTC) facilities.  This will be explained further in response #5.  In-state and out-of-state hospitals are reimbursed by the same methodology.  Reimbursement to out-of-state hospitals must remain at a level to insure access to services which are currently not available in-state.  Out-of-state hospital costs cannot be recouped through the disproportionate share hospital (DSH) payment; whereas, in-state hospitals are eligible to recoup costs through DSH payments.


COMMENT #4:  Section 5 of the administrative rule is not an adequate analysis of proposed changes to the rule.  The department has not assessed the impacts of the proposed rule on the provider community or the Medicaid beneficiaries.


RESPONSE #4:  The department assumes the commenter is referring to ARM 37.86.2907(1)(c).  The department is not proposing an increase or decrease in base rates.  Some APR-DRGs will increase and others will decrease, some hospital reimbursement amounts will increase and others will decrease; but overall, the proposed changes will expend all Medicaid appropriations allocated by the 2009 Legislature.  The department does not anticipate an access problem due to the new reimbursement rates and, therefore, does not anticipate an impact to clients.


COMMENT #5:  Our request to the department is for a display of the national data used this year that resulted in the rebasing of the Montana APR-DRGs.  This reduction is being implemented without any contact or discussion with the industry.


RESPONSE #5:  The criteria used when the APR-DRG payment methodology was first implemented in 2008 was also used in rebasing the APR-DRG payment methodology for state fiscal year 2011.  Considerable input was received from providers during the initial planning and implementation phases of the APR-DRG project.  The national relative weights were recentered based on Montana Medicaid data and the same policy adjustors and age adjustors were used.  This recentering did not change the relativity of the APR-DRG system, but adjusted all weights to a Montana Medicaid average case mix.  The only difference from 2008 was that two base prices were used instead of three.  The higher base price for distinct part rehabilitation units and LTC facilities was eliminated.  Since the same criteria was used for rebasing the base rates for state fiscal year 2011 and 2008, the department did not feel additional input from providers was needed at this time.  The proposed relative weights, average length of stays, and cost outlier thresholds for each APR-DRG were sent to each in-state prospective payment system (PPS) hospital.


The national relative weights used for the rebase regarding the APR-DRG payment methodology may be accessed by visiting 3M's web site at www.3MCustomerCare.com.  Providers may also contact the department for a copy of the national relative weights.


COMMENT #6:  This payment reduction is being implemented without any contact or discussion with the industry.  Factors other than the base rate that dramatically impact hospital reimbursements are buried in tables not displayed in the notice and not available until the day of the public meeting.


RESPONSE #6:  The department will continue to make information available related to these changes as soon as it is compiled and to respond to questions from the public.  We regret that the information could not be accessed earlier.


COMMENT #7:  In regards to ARM 37.86.2907(1)(c) the department proposes to reduce inpatient rehabilitation services by 48.5%.  The following comments were noted: one hospital can expect payments for rehab unit care to drop by 60%; another can expect payment cuts of 59% for rehabilitation care; and a third hospital's rehabilitation payments will drop by 55%.


RESPONSE #7:  The department is proposing to eliminate the higher base rate for in-state and out-of-state distinct part rehabilitation units and LTC facilities.  The department feels that under the APR-DRG reimbursement methodology, rehabilitation services would be appropriately reimbursed using the base rate described in ARM 37.86.2907(1)(c).  The current APR-DRG reimbursement methodology reflects relative costs more accurately and efficiently than the former DRG payment system.


COMMENT #8:  The department proposes to reduce adult psychiatric care by more than 11%, and children's psychiatric care by 10%.


RESPONSE #8:  Changes in the national relative values indicate that initial weight for these services may have been set too high.  National relative values for these services have, therefore, been reduced to more accurately reflect the cost of these services.  The age adjustor used in the original APR development for pediatric mental health services is still in effect.


COMMENT #9:  We are concerned about the impact these Medicaid payment reductions and changes will have on Montana's commercial insurance market.  Our state's hospitals must recover the unpaid costs that occur when Medicaid reduces its payments.


RESPONSE #9:  The department does not feel that hospitals will need to recover any unpaid costs due to the reduction in Medicaid payments because most unpaid costs will be paid through the distribution of the DSH payment.  Out-of-state facilities do not benefit from the DSH payment.


            5.  The department intends to apply these rules effective July 1, 2010. 



/s/  John Koch                                                /s/  Anna Whiting Sorrell                              

Rule Reviewer                                               Anna Whiting Sorrell, Director

                                                                        Public Health and Human Services


Certified to the Secretary of State June 14, 2010.


Home  |   Search  |   About Us  |   Contact Us  |   Help  |   Disclaimer  |   Privacy & Security