Sec. 10.09.92.10. Cost Settlement for Freestanding Acute Rehabilitation Hospitals

A. Retrospective Cost Reimbursement for Freestanding Acute Rehabilitation Hospitals.

(1) An acute rehabilitation hospital not approved by the Program for reimbursement according to HSCRC rates shall be reimbursed according to Medicare standards and principles for retrospective cost reimbursement described in 42 CFR §413, or on the basis of charges if less than reasonable cost.

(2) In calculating retrospective cost reimbursement rates, the Department or its designee will deduct from the designated costs or group of costs those restricted contributions which are designated by the donor for paying certain provider operating costs, or groups of costs, or costs of specific groups of participants.

(3) When the cost, or group or groups of costs designated, cover services rendered to all participants, including Medical Assistance participants, operating costs applicable to all participants shall be reduced by the amount of the restricted grants, gifts, or income from endowments, thus resulting in a reduction of allowable costs.

(4) Final settlement for services in the provider’s fiscal year shall be determined based on Medicare retrospective cost principles found in 42 CFR §413, adjusted for Medicaid allowable costs. Allowable costs specific to the Program shall be limited to a base year cost per discharge increased by the applicable federal rate of increase times the number of Program discharges for that fiscal year.

(5) Base Year. For purposes of determining limits on the increase of cost, in accordance with Medicare regulations, the base year shall be:

(a) For an existing provider, the first year of entering into the Program or the first year separate rates for the unit or units of service or services are approved; or

(b) For a new provider, the 12-month period immediately before the provider was initially subject to target rate increases.

(6) Initial Interim Rates. In order to establish an initial interim rate, the provider shall submit to the Department or its designee, before the beginning of the first billing period, the following:

(a) A detailed cost build-up, consistent with Medicare principles and cost finding, that supports the requested rate;

(b) A current, projected, and prior year’s charge rate schedule;

(c) Finalized prior year’s Medicare cost reports and the most current submission;

(d) A detailed revenue schedule; and

(e) Audited financial statements.

(7) The provider shall supply the Department or its designee the assurances necessary to establish that its customary charges to participants liable for payment on a charge basis exceed the allowable cost for these services.

(8) Initial Interim Rates for Newly Established Services or Providers.

(a) The provider shall submit to the Department or its designee, a detailed cost build-up, consistent with Medicare principles and cost finding that supports the requested rate that follows.

(b) The Department will compare the rate with a compatible facility and determine a reasonable rate that does not exceed the projected charges.

(9) Revision of Interim Rates.

(a) The provider may request an interim rate revision if the actual and projected costs exceed the interim rate by 10 percent.

(b) The provider shall furnish the Department or its designee with appropriate documentation showing the reason for the increase and other necessary comparisons.

(c) The Department will lower the provider’s interim rate to closely approximate the final allowable reasonable cost based on the results of the prior year’s review.

(d) The provider may request no more than one interim rate revision during the provider’s fiscal year.

(10) Cost Settlement. The provider shall submit to the Department or its designee:

(a) A Medicaid cost report based on actual data using the cost reporting forms used by Medicare for retrospective cost reimbursement;

(b) A copy of its Maryland Medical Assistance log;

(c) Cost reports that are sufficient in detail to support a separate cost finding for designated Maryland Medical Assistance unique cost centers; and

(d) A finalized Medicare cost report for the cost reporting year.

(11) Final Program costs shall be Maryland Medical Assistance specific.

(12) Tentative cost settlements may not be performed on a routine basis. However, the Program reserves the right to calculate tentative settlements in limited cases, when appropriate, as determined by the Department.

(13) The Department will base final settlement on the results of the finalized Medicare cost reports.

B. The Department or its designee shall notify each provider participating in the Program of the results of the final settlement under §A(10)-(13) of this regulation.

C. Within 60 days after the provider receives the notification described in §B of this regulation, the Department shall pay the amount due to the provider regardless of whether the provider files an appeal.

D. The provider may request review of the settlement under §A(10)-(13) of this regulation by filing written notice with the Program’s Appeal Board within 30 days after receipt of the notification of the results of the settlement from the Department or its designee.

E. The Appeal Board shall be composed of the following:

(1) A representative of the hospital industry who is:

(a) Knowledgeable in Medicare and Medicaid reimbursement principles; and

(b) Appointed by the Secretary of the Department;

(2) An individual who:

(a) Is employed by the State;

(b) Is knowledgeable in Medicare and Medicaid reimbursement principles;

(c) Did not participate in the verification of costs; and

(d) Is appointed by the Secretary of the Department; and

(3) A third member selected by the first two members of the Appeal Board.

F. When the Appeal Board reviews an appeal from a provider in which an Appeal Board member is employed or in which the member has a financial or personal interest, the Secretary of the Department shall designate an alternate for the member.

G. If the provider elects not to appeal to the Appeal Board:

(1) The provider shall pay the amount due within 60 days after the notification described in §B of this regulation;

(2) The provider may request a longer payment schedule within 60 days after the provider receives notification of the amount due the Program, the Department may establish, after consultation with the provider, a longer payment schedule; and

(3) The Department shall establish a longer payment schedule if, in the Department’s judgment based on sufficient documentation submitted by the provider, failure to grant a longer payment schedule would:

(a) Result in financial hardship to the provider; or

(b) Have an adverse effect on the quality of participant care furnished by the facility.

H. If the provider elects to appeal to the Appeal Board, the following provisions apply:

(1) Within 30 days after a provider’s filing of an appeal of the Department or its designee’s determination that the provider owes money to the Program, the Department or its designee shall:

(a) Recalculate the amount due to the Program based on the verification, exclusive of the amount in controversy which is subject to the appeal; and

(b) Notify the provider of that amount;

(2) In order to enable the Department or its designee to perform this recalculation, the provider shall indicate the specific adjustment and the specific amount being appealed;

(3) Subject to the provisions of §H(4) of this regulation, payment for the amount due the Program, if any, after the recalculation, shall be made within 60 days after the provider receives notification of the recalculation; and

(4) If a provider requests a longer payment schedule within 60 days after the provider receives notification of the recalculation, the Department may establish, after consultation with the provider, a longer payment schedule in accordance with §G(3) of this regulation.

I. Appeal Board Findings.

(1) After the Department receives the findings of the Appeal Board, the Department shall:

(a) Determine the amount that is due either to the Program or to the provider; and

(b) Notify the provider of that amount.

(2) The portion of the amount in controversy that is paid is subject to an award of interest that is:

(a) Calculated from the date the appeal was filed through the date of payment; and

(b) Based on the 6-month Treasury Bill rate in effect on the date the appeal was filed.

(3) Interest paid to a provider under §I(2) of this regulation is not subject to any offset or other reduction against otherwise allowable costs.

(4) If the provider accepted the determination made under §I(1) of this regulation, within 60 days after the provider receives the notification under §I(1) of this regulation, the Program shall pay the amount the Department determined is due the provider, if any.

(5) Subject to §I(6) of this regulation, within 60 days after the provider receives the notification, the provider shall pay the amount due the Program, if any.

(6) If a provider requests a longer payment schedule within 30 days after the provider receives notification of the amount due the Program, the Department may establish, after consultation with the provider, a longer payment schedule in accordance with §G(3) of this regulation.

J. After expiration of the 60-day payment period, or longer payment schedule established by the Department as described in §§G-I of this regulation, and in addition to the sanctions provided in Regulation .12 of this chapter, the Department may recover the unpaid balance by withholding the amount due from the interim payment which would otherwise be payable to the provider.

K. The Department or a provider aggrieved by a reimbursement decision of the Appeal Board may appeal the decision of the Appeal Board as the final decision for judicial review under the Administrative Procedure Act, State Government Article, §10-222, Annotated Code of Maryland.

L. If the provider or the Department appeals the final decision of the Appeal Board, the provider or the Department shall place any money due from the provider or from the Program in an interest-bearing escrow account. The money due shall include the interest, based on the rate in §I(2)(b) of this regulation, calculated from the date of the administrative appeal through the date of opening the escrow account. The money shall remain in escrow until a final decision has been rendered. Upon a final determination of the dispute, the appropriate person administering the escrow account shall distribute the money in that account, including any interest accrued, in conformity with the final determination.

M. The provider may file an appeal of the results of the settlement with the Medicare Appeal Board as a substitute for the Department’s Appeal Board, and the decision rendered by the Medicare Appeal Board will be accepted by the Department as binding.