Section R9-22-712. Reimbursement: General

A.      Inpatient and outpatient discounts and penalties. If a claim is pended for additional documentation required under A.R.S. § 36-2903.01(G)(4), the period during which the claim is pended is not used in the calculation of the quick-pay discounts and slow-pay penalties under A.R.S. § 36-2903.01(G)(5).

B.       Inpatient and outpatient in-state or out-of-state hospital pay- ments.

1.        Payment for inpatient out-of-state hospital services for claims with discharge dates on or before September 30, 2014. In the absence of a contract with an out-of-state hospital that specifies payment rates, AHCCCS shall reimburse out-of-state hospitals for covered inpatient ser- vices by multiplying covered charges by the most recent statewide urban cost-to-charge ratio as determined in R9- 22-712.01(6)(d).

2.        Payment for inpatient in-state hospital services for claims with discharge dates on or before September 30, 2014. AHCCCS shall reimburse an in-state provider of inpa- tient hospital services rendered with a discharge date on or before September 30, 2014, at the prospective tiered- per-diem amount in A.R.S. § 36-2903.01 and this Article.

Arizona Health Care Cost Containment System - Administration

3.        Payment for inpatient in-state or out-of-state hospital ser- vices for claims with discharge dates on and after October 1, 2014 regardless of admission date. Subject to R9-22- 718 and A.R.S. § 36-2905.01 regarding urban hospitals, a contractor shall reimburse an in-state or out-of-state pro- vider of inpatient hospital services, at either a rate speci- fied by subcontract or, in the absence of a subcontract, the DRG rate established by the Administration and this Arti- cle. Subcontract rates, terms, and conditions are subject to review and approval or disapproval under A.R.S. § 36- 2904 and R9-22-715.

4.        Outpatient out-of-state hospital payments. In the absence of a contract with an out-of-state hospital that specifies payment rates, AHCCCS shall reimburse an out-of-state hospital for covered outpatient services by applying the methodology described in R9-22-712.10 through R9-22-

712.50. If the outpatient procedure is not assigned a fee schedule amount, the Administration shall pay the claim by multiplying the covered charges for the outpatient ser- vices by the statewide outpatient cost-to-charge ratio.

5.        Outpatient in-state hospital payments. A contractor shall reimburse an in-state provider of outpatient hospital ser- vices rendered on or after July 1, 2005, at either a rate specified by a subcontract or, in absence of a subcontract, as provided under R9-22-712.10, A.R.S. § 36-2903.01 and other sections of this Article. The terms of the sub- contract are subject to review and approval or disapproval under A.R.S. § 36-2904 and R9-22-715.

C.      Access to records. Subcontracting and noncontracting provid- ers of outpatient or inpatient hospital services shall allow the Administration access to medical records regarding eligible persons and shall in all other ways fully cooperate with the Administration or the Administration’s designated representa- tive in performance of the Administration’s utilization control activities. The Administration shall deny a claim for failure to cooperate.

D.      Prior authorization. The Administration or contractor may deny a claim if a provider fails to obtain prior authorization as required under R9-22-210.

E.       Review of claims. Regardless of prior authorization or concur- rent review activities, the Administration may subject all hos- pital claims, including outliers, to prepayment medical review or post-payment review, or both. The Administration shall conduct post-payment reviews consistent with A.R.S. § 36-

2903.01 and may recoup erroneously paid claims.

F.       Claim receipt.

1.        The Administration’s date of receipt of inpatient or outpa- tient hospital claims is the date the claim is received by the Administration as indicated by the date stamp on the claim and the system-generated claim reference number or system-generated date-specific number.

2.        Hospital claims are considered paid on the date indicated on disbursement checks.

3.        A denied claim is considered adjudicated on the date the claim is denied.

4.        Claims that are denied and are resubmitted are assigned new receipt dates.

5.        For a claim that is pending for additional supporting doc- umentation specified in A.R.S. § 36-2903.01 or 36-2904, the Administration shall assign a new date of receipt upon receipt of the additional documentation.

6.        For a claim that is pending for documentation other than the minimum required documentation specified in either

A.R.S. § 36-2903.01 or 36-2904, the Administration shall not assign a new date of receipt.

G.      Outpatient hospital reimbursement. The Administration shall pay for covered outpatient hospital services provided to eligi- ble persons with dates of service from March 1, 1993 through June 30, 2005, at the AHCCCS outpatient hospital cost-to- charge ratio, multiplied by the amount of the covered charges.

1.        Computation of outpatient hospital reimbursement. The Administration shall compute the cost-to-charge ratio on a hospital-specific basis by determining the covered charges and costs associated with treating eligible per- sons in an outpatient setting at each hospital. Outpatient operating and capital costs are included in the computa- tion but outpatient medical education costs that are included in the inpatient medical education component are excluded. To calculate the outpatient hospital cost-to- charge ratio annually for each hospital, the Administra- tion shall use each hospital’s Medicare Cost Reports and a database consisting of outpatient hospital claims paid and encounters processed by the Administration for each hospital, subjecting both to the data requirements speci- fied in R9-22-712.01. The Administration shall use the following methodology to establish the outpatient hospi- tal cost-to-charge ratios:

a.         Cost-to-charge ratios. The Administration shall cal- culate the costs of the claims and encounters for out- patient hospital services by multiplying the ancillary line item cost-to-charge ratios by the covered charges for corresponding revenue codes on the claims and encounters. Each hospital shall provide the Administration with information on how the rev- enue codes used by the hospital to categorize charges on claims and encounters correspond to the ancillary line items on the hospital’s Medicare Cost Report. The Administration shall then compute the overall outpatient hospital cost-to-charge ratio for each hospital by taking the average of the ancillary line items cost-to-charge ratios for each revenue code weighted by the covered charges.

b.        Cost-to-charge limit. To comply with 42 CFR 447.325, the Administration may limit cost-to- charge ratios to 1.00 for each ancillary line item from the Medicare Cost Report. The Administration shall remove ancillary line items that are non-cov- ered or not applicable to outpatient hospital services from the Medicare Cost Report data for purposes of computing the overall outpatient hospital cost-to- charge ratio.

2.        New hospitals. The Administration shall reimburse new hospitals at the weighted statewide average outpatient hospital cost-to-charge ratio multiplied by covered charges. The Administration shall continue to use the statewide average outpatient hospital cost-to-charge ratio for a new hospital until the Administration rebases the outpatient hospital cost-to-charge ratios and the new hos- pital has a Medicare Cost Report for the fiscal year being used in the rebasing.

3.        Specialty outpatient services. The Administration may negotiate, at any time, reimbursement rates for outpatient hospital services in a specialty facility.

4.        Reimbursement requirements. To receive payment from the Administration, a hospital shall submit claims that are legible, accurate, error free, and have a covered charge greater than zero. The Administration shall not reimburse hospitals for emergency room treatment, observation hours or days, or other outpatient hospital services per- formed on an outpatient basis, if the eligible person is admitted as an inpatient to the same hospital directly from

the emergency room, observation area, or other outpatient department. Services provided in the emergency room, observation area, and other outpatient hospital services provided before the hospital admission are included in the tiered per diem payment.

5.        Rebasing. The Administration shall rebase the out- patient hospital cost-to-charge ratios at least every four years but no more than once a year using updated Medicare Cost Reports and claim and encounter data.

6.        If a hospital files an increase in its charge master for an existing outpatient service provided on or after July 1, 2004, and on or before June 30, 2005, which represents an aggregate increase in charges of more than 4.7%, the Administration shall adjust the hospi- tal-specific cost-to-charge ratio as calculated under subsection (G)(1) through (5) by applying the fol- lowing formula:

CCR*[1.047/(1+% increase)]

Where “CCR” means the hospital-specific cost-to- charge ratio as calculated under subsection (G)(1) through (5) and “% increase” means the aggregate percentage increase in charges for outpatient ser- vices shown on the hospital charge master.

“Charge master” means the schedule of rates and charges as described under A.R.S. § 36-436 and the rules that relate to those rates and charges that are filed with the Director of the Arizona Department of Health Services.

Historical Note

Adopted as an emergency effective February 23, 1983 pursuant to A.R.S. § 41-1003, valid for only 90 days (Supp. 83-1). Adopted as a permanent rule effective May 16, 1983; text of adopted rule identical to emergency (Supp. 83-3). Former Section R9-22-712 repealed, new Section R9-22-712 adopted effective October 1, 1983 (Supp. 83-5). Former Section R9-22-712 renumbered and amended as Section R9-22-1001 effective October 1, 1985 (Supp. 85-5). New Section R9-22-712 adopted under an exemption from the provisions of the Adminis- trative Procedure Act, effective March 1, 1993 (Supp. 93- 1). Amended under an exemption from the provisions of the Administrative Procedure Act, effective July 1, 1993 (Supp. 93-3). Amended effective January 14, 1997 (Supp.

97-1). Amended by exempt rulemaking at 10 A.A.R. 3831, effective August 25, 2004 (Supp. 04-3). Amended by exempt rulemaking at 11 A.A.R. 2297, effective July 1, 2005 (Supp. 05-2). Amended by final rulemaking at 11

A.A.R. 3231, effective October 1, 2005 (Supp. 05-3). Amended by final rulemaking at 14 A.A.R. 1439, effec- tive May 31, 2008 (Supp. 08-2). Amended by exempt rulemaking at 17 A.A.R. 1337, effective October 1, 2011 (Supp. 11-3). Amended by final rulemaking at 17 A.A.R. 1658, effective August 2, 2011 (Supp. 11-3). Amended

by final rulemaking at 20 A.A.R. 1956, September 6,

2014 (Supp. 14-3).