Section R9-22-730. Hospital Assessment

A.      For purposes of this Section, the following terms are defined as provided below unless the context specifically requires another meaning:

1.        “2011 Medicare Cost Report” means:

a.       The Medicare Cost Report for the hospital fiscal year ending in calendar year 2011 as reported in the CMS Healthcare Provider Cost Reporting Informa- tion System (HCRIS) release dated December 31, 2012; or

b.       For hospitals not included in that CMS HCRIS report, the “as filed” Medicare Cost Report for the hospital fiscal year ending in calendar year 2011 submitted by the hospital to the Administration.

2.        “2011 Uniform Accounting Report” means the Uniform Accounting Report submitted to the Arizona Department of Health Services as of December 19, 2012.

3.        “2012 Uniform Accounting Report” means the Uniform Accounting Report submitted to the Arizona Department of Health Services as of August 2, 2013.

4.        “Quarter” means the three month period beginning Janu- ary 1, April 1, July 1, and October 1 of each year.

B.       Beginning January 1, 2014, for each Arizona licensed hospital not excluded under subsection (I) shall be subject to an assess- ment payable on a quarterly basis. The assessment shall be levied against the legal owner of each hospital as of the first day of the quarter, and except as otherwise required by subsec- tions (D), (E) and (F). For the period beginning July 1, 2015, the assessment shall be calculated by multiplying the number of discharges reported on the hospital’s 2011 Medicare Cost Report, excluding discharges reported on the Medicare Cost Report as “Other Long Term Care Discharges” by the follow- ing rates based on the hospital’s peer group:

1.        $416.00 per discharge for hospitals located in a county with a population less than 500,000 that are designated as type: hospital, subtype: short-term.

2.        $416.00 per discharge for hospitals designated as type: hospital, subtype: critical access hospital.

3.        $104.00 per discharge for hospitals designated as type: hospital, subtype: long term.

4.        $104.00 per discharge for hospitals designated as type: hospital, subtype: psychiatric, that reported 2,500 or more discharges on the 2011 Medicare Cost Report.

5.        $332.75 per discharge for hospitals designated as type: hospital, subtype: short-term with 20% of total licensed beds licensed as pediatric, pediatric intensive care and neonatal intensive care as reported in the hospital’s 2012 Uniform Accounting Report.

6.        $374.50 per discharge for hospitals designated as type: hospital, subtype: short-term with at least 10% but less than 20% of total licensed beds licensed as pediatric, pediatric intensive care and neonatal intensive care as reported in the hospital’s 2012 Uniform Accounting Report.

7.        $416.00 per discharge for hospitals designated as type: hospital, subtype: short-term not included in another peer group.

C.      Peer groups for the four quarters beginning July 1 of each year are established based on hospital license type and subtype des- ignated in the Provider & Facility Database for Arizona Medi- cal Facilities posted by the Arizona Department of Health Services Division of Licensing Services on its website April 2, 2015.

D.      Notwithstanding subsection (B), psychiatric discharges from a hospital that reported having a psychiatric sub-provider in the hospital’s 2011 Medicare Cost Report, are assessed a rate of

$104.00 for each discharge from the psychiatric sub-provider as reported in the 2011 Medicare Cost Report. All discharges other than those reported as discharges from the psychiatric sub-provider are assessed at the rate required by subsection (B).

E.       Notwithstanding subsection (B), rehabilitative discharges from a hospital that reported having a rehabilitative sub-provider in the hospital’s 2011 Medicare Cost Report, are assessed a rate of $0 for each discharge from the rehabilitative sub-provider as reported in the 2011 Medicare Cost Report. All discharges other than those reported as discharges from the rehabilitative sub-provider are assessed at the rate required by subsection (B).

F.       Notwithstanding subsection (B), for any hospital that reported more than 28,900 discharges on the hospital’s 2011 Medicare Cost Report, discharges in excess of 28,900 are assessed a rate of $41.50 for each discharge in excess of 28,900. The initial 28,900 discharges are assessed at the rate required by subsec- tion (B).

G.      Assessment notice. On or before the 15th day of the first month of the quarter or upon CMS approval, whichever is later, the Administration shall send to each hospital a notifica- tion that the assessment invoice is available to be viewed on a secure website. The invoice shall include the hospital’s peer group assignment and the assessment due for the quarter.

H.      Assessment due date. The assessment must be received by the Administration no later than:

1.        The 15th day of the second month of the quarter or

2.        In the event CMS approves the assessment after the 15th day of the first month of the quarter, 30 days after notifi- cation by the Administration that the assessment invoice is available.

I.        Excluded hospitals. The following hospitals are excluded from the assessment based on the hospital’s 2011 Medicare Cost Report and Provider & Facility Database for Arizona Medical Facilities posted by the Arizona Department of Health Ser- vices Division of Licensing Services on its website for April 2, 2015:

1.        Hospitals owned and operated by the state, the United States, or an Indian tribe.

2.        Hospitals designated as type: hospital, subtype: short- term that have a license number beginning “SH”.

3.        Hospitals designated as type: hospital, subtype: psychiat- ric that reported fewer than 2,500 discharges on the 2011 Medicare Cost Report.

4.        Hospitals designated as type: hospital, subtype; rehabili- tation.

5.        Hospitals designated as type: hospital, subtype: chil- dren’s.

6.        Hospitals designated as type: med-hospital, subtype: spe- cial hospitals.

7.        Hospitals designated as type: hospital, subtype: short- term located in a city with a population greater than one million, which on average have at least 15 percent of inpatient days for patients who reside outside of Arizona, and at least 50 percent of discharges as reported on the 2011 Medicare Cost Report are reimbursed by Medicare.

J.        New hospitals. For hospitals that did not file a 2011 Medicare Cost Report because of the date the hospital began operations:

1.        If the hospital was open on the April 1 preceding the July assessment start date, the hospital assessment will begin on July 1 following the date the hospital began operating.

2.        If the hospital began operating between April 2 and June 30, the assessment will begin on July 1 of the following calendar year.

3.        A hospital is not considered a new hospital based on a change in ownership.

4.        Until the first full year of data is available, the assessment will be based on the annualized number of discharges from the date hospital operations began through April 30 preceding the July assessment start date. The hospital shall submit the discharge data and all other data requested by the Administration necessary to determine the appropriate assessment to the Administration no later than May 15 preceding the assessment start date for the new hospitals. Thereafter, the assessment will be based on the discharges reported in the hospital’s first Medicare Cost Report and Uniform Accounting Report which includes 12 months worth of data; however, when a new hospital shares a Medicare Identification Number with an existing hospital, the assessment amount will be based on self reported data from the new hospital instead of the Medicare Cost Report. The data shall include the number of discharges and all other data requested by the Admin- istration necessary to determine the appropriate assess- ment.

5.        For hospitals providing self-reported data:

a.         Psychiatric discharges will be annualized to deter- mine if subsections (B)(4) or  (I)(3) apply  to  the assessment amount.

b.        Discharges will be annualized to determine if sub- section (F) applies to the assessment amount.

K.      Changes of ownership. The parties to a change of ownership shall promptly provide written notice to the Administration of a change of ownership and any agreement regarding the pay- ment of the assessment. The assessed amount will continue at the same amount applied to the prior owner. Assessments are the responsibility of the owner of record as of the first day of the quarter; however, this rule is not intended to prohibit the parties to a change of ownership from entering into an agree- ment for a new owner to assume the assessment responsibility of the owner of record as of the first day of the prior quarter.

L.       Hospital closures. Hospitals that close shall pay a proportion of the quarterly assessment equal to that portion of the quarter during which the hospital operated.

M.     Required information. For any hospital that has not filed a 2011 Medicare Cost report, or if the 2011 Medicare Cost report does not include the reliable information sufficient for the Administration to calculate the assessment, the Adminis- tration shall use data reported on the 2011 Uniform Account- ing Report filed by the hospital in place of the 2011 Medicare Cost report to calculate the assessment. If the 2011 Uniform Accounting Report filed by the hospital does not include reli- able information sufficient for the Administration to calculate the assessment amounts, the hospital shall provide the Admin- istration with data specified by the Administration necessary in place of the 2011 Medicare Cost report to calculate the assessment.

N.      The Administration will review and update as necessary rates and peer groups periodically to ensure the assessment is suffi- cient to fund the state match obligation to cover the cost of the populations as specified in 36-2901.08.

O.      Enforcement. If a hospital does not comply with this section, the director may suspend or revoke the hospital’s provider agreement. If the hospital does not comply within 180 days after the hospital’s provider agreement is suspended or revoked, the director shall notify the director of the Depart- ment of Health Services who shall suspend or revoke the hos- pital’s license.

Historical Note

New Section R9-22-730 made by exempt rulemaking at 20 A.A.R. 281, effective January 15, 2014 (Supp. 14-1). Amended by exempt rulemaking at 20 A.A.R. 1833, effective July 1, 2014 (Supp. 14-2). Amended by final

exempt rulemaking at 21 A.A.R. 637, effective April 15, 2015 (Supp. 15-2). Amended by final exempt rulemaking at 21 A.A.R. 1486, effective July 16, 2015 (Supp. 15-3).