5160-2-30 Hospital franchise fee program.

 

 

 

Rule Summary and Fiscal Analysis (Part A)

 

Ohio Department of Medicaid

Agency Name

 

Tommi Potter

Division                                                                  Contact

 

50 West Town Street Suite 400 Columbus OH 43218-2709

614-752-3877        614-995-1301

Agency Mailing Address (Plus Zip)                                       Phone                     Fax

[e-mail]

Email

5160-2-30

Rule Number

AMENDMENT

TYPE of rule filing

Rule Title/Tag Line              Hospital franchise fee program.

RULE SUMMARY

1.  Is the rule being filed for five year review (FYR)? Yes

2.  Are you proposing this rule as a result of recent legislation? Yes

Bill Number: HB64                 General Assembly: 131           Sponsor: Representative R.

Smith

3.  Statute prescribing the procedure in accordance with the agency is required to adopt the rule: 119.03

4.  Statute(s) authorizing agency to adopt the rule: 5164.02, 5168.26

5.  Statute(s) the rule, as filed, amplifies or implements: 5168.20, 5168.21, 5168.22, 5168.23, 5168.24, 5168.25, 5168.26, 5168.27, 5168.28

6.  State the reason(s) for proposing (i.e., why are you filing,) this rule:

To update the assessment rates and payment schedule for the current and future program years of the Hospital Franchise Fee Program and to comply with Ohio's five year rule review requirement.

7.  If the rule is an AMENDMENT, then summarize the changes and the content of the proposed rule; If the rule type is RESCISSION, NEW or NO CHANGE, then summarize the content of the rule:

This rule sets forth the assessment rates and payment schedule for the Hospital Franchise Fee Program (October 1, 2015 - September 30, 2016). This rule has been amended to establish the assessment rate and remove the payment schedule for the 2016 program year and each program year thereafter. Paragraph (B) has been amended to establish an assessment rate of 2.66% of a hospital's modified adjusted total facility costs. Paragraph (C) has been removed from the rule as the schedule is provided for in R.C. 5168.23.

8.  If the rule incorporates a text or other material by reference and the agency claims the incorporation by reference is exempt from compliance with sections

121.71 to 121.74 of the Revised Code because the text or other material is generally available to persons who reasonably can be expected to be affected by the rule, provide an explanation of how the text or other material is generally available to those persons:

This rule incorporates one or more references to the Ohio Revised Code. This question is not applicable to any incorporation by reference to the Ohio Revised Code because such reference is exempt from compliance with RC 121.71 to 121.74 pursuant to RC 121.76(A)(1).

This rule incorporates one or more references to a federal form. The cited federal forms were submitted to the Department by persons affected by this rule for purposes of filing that year's cost report with the Department. The text of the rule dictates the appropriate version of the form to be used by each hospital for their respective cost reporting period. Each cited form is generally available to persons affected by this rule via the Centers for Medicare and Medicaid Service web site http://cms.hhs.gov/.

9.  If the rule incorporates a text or other material by reference, and it was infeasible for the agency to file the text or other material electronically, provide an explanation of why filing the text or other material electronically was infeasible:

Not Applicable.

10.  If the rule is being rescinded and incorporates a text or other material by reference, and it was infeasible for the agency to file the text or other material, provide an explanation of why filing the text or other material was infeasible:

Not Applicable.

11.  If revising or refiling this rule, identify changes made from the previously filed version of this rule; if none, please state so. If applicable, indicate each specific paragraph of the rule that has been modified:

The revised filed version of the rule has the text 'and payment schedule' stricken from the introductory paragraph, which is consistent with the deletion of the former paragraph C which detailed the payment schedule. The version of the rule that was originally filed did not have this text stricken.

12.  Five Year Review (FYR) Date: 1/12/2016

(If the rule is not exempt and you answered NO to question No. 1, provide the scheduled review date. If you answered YES to No. 1, the review date for this rule is the filing date.)

NOTE: If the rule is not exempt at the time of final filing, two dates are required: the current review date plus a date not to exceed 5 years from the effective date for Amended rules or a date not to exceed 5 years from the review date for No Change rules.

FISCAL ANALYSIS

13.  Estimate the total amount by which this proposed rule would increase/ decrease either revenues/ expenditures for the agency during the current biennium (in dollars): Explain the net impact of the proposed changes to the budget of your agency/department.

This will increase revenues. 575,275,027.80

The total assessment revenues are approximately $575,275,027.80 for the 2016 program year and this amount is collected during SFY 2016.

14.  Identify the appropriation (by line item etc.) that authorizes each expenditure necessitated by the proposed rule:

No expenditures are necessitated by this rule.

15.  Provide a summary of the estimated cost of compliance with the rule to all directly affected persons. When appropriate, please include the source for your

information/estimated costs, e.g. industry, CFR, internal/agency:

The Hospital Franchise Fee is continued by Am. Sub. H.B. 64 of the 131st General Assembly. Funds from the Hospital Franchise Fee will be used to support the Medicaid program, Supplemental Upper Payment Limit Program and the Medicaid Managed Care Incentive Program. Hospitals will be assessed a total of $575.2 million. It is estimated that the hospital industry as a whole will receive a greater benefit than the amount assessed. However, there will be some hospitals that will not receive funds that exceed their individual assessment.

16.  Does this rule have a fiscal effect on school districts, counties, townships, or municipal corporations? Yes

You must complete Part B of the Rule Summary and Fiscal Analysis in order to comply with Am. Sub. S.B. 33 of the 120th General Assembly.

17.  Does this rule deal with environmental protection or contain a component dealing with environmental protection as defined in R. C. 121.39? No

S.B. 2 (129th General Assembly) Questions

18.  Has this rule been filed with the Common Sense Initiative Office pursuant to

R.C. 121.82? Yes

19.  Specific to this rule, answer the following:

A.) Does this rule require a license, permit, or any other prior authorization to engage in or operate a line of business? No

B.) Does this rule impose a criminal penalty, a civil penalty, or another sanction, or create a cause of action, for failure to comply with its terms? No

C.) Does this rule require specific expenditures or the report of information as a condition of compliance? Yes

This rule requires hospitals operating in Ohio to pay a franchise fee and submit a copy of its medicare cost report or, under certain circumstances, their audited financial statements. This documentation will already be prepared by the hospital for other purposes and is used by the department to calculate the hospital's assessment.

                                                                                                                                             

Page B-1                                                                                     Rule Number: 5160-2-30

Rule Summary and Fiscal Analysis (Part B)

1.  Does the Proposed rule have a fiscal effect on any of the following?

(a)  School Districts

(b)    Counties                                 (c) Townships           (d) Municipal

Corporations

No                                Yes                              Yes                              Yes

2.  Please provide an estimate in dollars of the cost of compliance with the proposed rule for school districts, counties, townships, or municipal corporations. If you are unable to provide an estimate in dollars, please provide a written explanation of why it is not possible to provide such an estimate.

All hospitals, including those owned by counties, townships and municipal corporations, are required to participate in the hospital franchise fee program. We have indicated "yes" due to the fact that some of the hospitals that will be impacted by this rule are owned by government entities other than the state. Hospitals that are owned by a government entity will pay approximately $23.4 million in assessments. However, the benefits they will receive from the Medicaid Managed Care Incentive Program and additional supplemental payments will out-weigh the assessment fees.

3.  If the proposed rule is the result of a federal requirement, does the proposed rule exceed the scope and intent of the federal requirement? No

4.  If the proposed rule exceeds the minimum necessary federal requirement, please provide an estimate of, and justification for, the excess costs that exceed the cost of the federal requirement. In particular, please provide an estimate of the excess costs that exceed the cost of the federal requirement for (a) school districts, (b) counties, (c) townships, and (d) municipal corporations.

Not Applicable.

5.  Please provide a comprehensive cost estimate for the proposed rule that includes the procedure and method used for calculating the cost of compliance. This comprehensive cost estimate should identify all of the major cost categories including, but not limited to, (a) personnel costs, (b) new equipment or other capital costs, (c) operating costs, and (d) any indirect central service costs.

All hospitals, including those owned by counties, townships and municipal

corporations, are required to participate in the hospital franchise fee program. Some of the hospitals that will be impacted by this rule are owned by government entities other than the state. Hospitals that are owned by a government entity will pay approximately $23.4 million in assessments. Financial data reported by hospitals to the Ohio Department of Medicaid on their Cost Reports (ODM 02930) is used to develop the assessment rate and fee basis. However, we are uncertain as to how operations from these government owned hospitals impact the operations of the government entity that owns them.

(a)  Personnel Costs

Not Applicable.

(b)  New Equipment or Other Capital Costs

Not Applicable.

(c)  Operating Costs

Not Applicable.

(d)  Any Indirect Central Service Costs

Not Applicable.

(e)  Other Costs

Not Applicable.

6.  Please provide a written explanation of the agency's and the local government's ability to pay for the new requirements imposed by the proposed rule.

There are no new requirements imposed by the proposed rule. The rule implements the hospital franchise fee program, which was continued by Am. Sub. H.B. 64 of the 131st General Assembly. All hospitals, including those owned by counties, townships and municipal corporations, are required to participate in the hospital franchise fee program. On the whole, government hospitals will receive more revenue via the reimbursement programs supported by the franchise fee program.

7.  Please provide a statement on the proposed rule's impact on economic

development.

The assessment enables Ohio Medicaid to draw down federal dollars to support the funding of various hospital payment programs that benefit Ohio hospitals, and the additional funding has a positive effect on economic development as the aggregate return to hospitals through the programs supported by the hospital franchise fee on the whole exceeds the amount assessed.