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S.F. No. 1335 - Hospital Rate and Reimbursement Provisions Modifications
 
Author: Senator Michelle R. Benson
 
Prepared By: Liam Monahan, Senate Analyst (651/296-1791)
 
Date: March 21, 2017



 

SF 1335 modifies the rebasing of hospital payment rates scheduled under current law for July 1, 2017.  SF 1335 is identical to the majority of the Governor’s “Provider Payment Modernization” proposal found in SF 781. 

Section 1 (256.9686, subdivision 8) modifies the definition of “rate year” to correspond with the state fiscal year.

Section 2 (256.969, subdivision 1) permits expressly authorized automatic annual inflation adjustments for hospital payment rates.  Under current law and since 1993, all automatic annual inflation adjustments for hospital payment rates are prohibited.

Section 3 (256.969, subdivision 2b) paragraph (a) extends the commissioner’s authority to make additional adjustments to the rebased rates through the rebasing period currently scheduled for July 1, 2019.

Paragraph (f) extends to all subsequent base years the current methodology for determining per-discharge rates. 

Paragraph (h) clarifies how the change in costs between base years will be calculated beginning with the July 1, 2017, rebasing.  The change in costs between base years will be equal to the lower of (1) the costs in the base year multiplied by the percent change in the hospital cost index, or (2) the costs in the base year multiplied by the percent change in the case-mix-adjusted cost per claim.

Paragraph (i) clarifies that the new cost-based payment rate methodology for critical access hospital only applies to inpatient payment rates.

Section 4 (256.969, subdivision 3a) deletes an obsolete cross-reference and specifies that statutory rate reductions for inpatient services provided at long-term hospitals must be incorporated into rates and not applied to each claim.

Section 5 (256.969, subdivision 3c) specifies that the readmission rate adjustments for long-term hospitals must be incorporated into rates and not applied to each claim.

Section 6 (256.969, subdivision 4b) requires licensed children’s hospitals to submit annual cost reports.

Sections 7 and 8 (256.969, subdivision 8, and 256.969, subdivision 8c) modify the language concerning payment rates for long-term hospital patients, and for hospital residents who reside in a hospital for more than 180 days.  Section 8 sunsets the methodology for hospital residents and applies the methodology for long-term hospital patients to hospital residents.

Section 9 (256.969, subdivision 9) makes a grammatical correction.

Section 10 (256.969, subdivision 12) requires rehabilitation hospitals to be paid according to a diagnosis-related group (DRG) methodology beginning July 1, 2017.

Section 11 (256.75) specifies how, beginning in 2017, outpatient hospital services rates for critical access hospitals will be calculated based on Medicare cost reports from two years prior.

 
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