2013 Connecticut General Statutes
Title 17b - Social Services
Chapter 319v - Medical Assistance
Section 17b-239 - (Formerly Sec. 17-312). Payments to hospitals. Regulations.

(a)(1) Until the time subdivision (2) of this subsection is effective, the rate to be paid by the state to hospitals receiving appropriations granted by the General Assembly and to freestanding chronic disease hospitals providing services to persons aided or cared for by the state for routine services furnished to state patients, shall be based upon reasonable cost to such hospital, or the charge to the general public for ward services or the lowest charge for semiprivate services if the hospital has no ward facilities, imposed by such hospital, whichever is lowest, except to the extent, if any, that the commissioner determines that a greater amount is appropriate in the case of hospitals serving a disproportionate share of indigent patients. Such rate shall be promulgated annually by the Commissioner of Social Services.

(2) On or after July 1, 2013, Medicaid rates paid to acute care and children’s hospitals shall be based on diagnosis–related groups established and periodically rebased by the Commissioner of Social Services, provided the Department of Social Services completes a fiscal analysis of the impact of such rate payment system on each hospital. The Commissioner of Social Services shall, in accordance with the provisions of section 11-4a, file a report on the results of the fiscal analysis not later than six months after implementing the rate payment system with the joint standing committees of the General Assembly having cognizance of matters relating to human services and appropriations and the budgets of state agencies. The Commissioner of Social Services shall annually determine in-patient rates for each hospital by multiplying diagnostic-related group relative weights by a base rate. Within available appropriations, the commissioner may, in his or her discretion, make additional payments to hospitals based on criteria to be determined by the commissioner. Nothing contained in this section shall authorize Medicaid payment by the state to any such hospital in excess of the charges made by such hospital for comparable services to the general public.

(b) Effective October 1, 1991, the rate to be paid by the state for the cost of special services rendered by such hospitals shall be established annually by the commissioner for each such hospital based on the reasonable cost to each hospital of such services furnished to state patients. Nothing contained in this subsection shall authorize a payment by the state for such services to any such hospital in excess of the charges made by such hospital for comparable services to the general public.

(c) The term “reasonable cost” as used in this section means the cost of care furnished such patients by an efficient and economically operated facility, computed in accordance with accepted principles of hospital cost reimbursement. The commissioner may adjust the rate of payment established under the provisions of this section for the year during which services are furnished to reflect fluctuations in hospital costs. Such adjustment may be made prospectively to cover anticipated fluctuations or may be made retroactive to any date subsequent to the date of the initial rate determination for such year or in such other manner as may be determined by the commissioner. In determining “reasonable cost” the commissioner may give due consideration to allowances for fully or partially unpaid bills, reasonable costs mandated by collective bargaining agreements with certified collective bargaining agents or other agreements between the employer and employees, provided “employees” shall not include persons employed as managers or chief administrators, requirements for working capital and cost of development of new services, including additions to and replacement of facilities and equipment. The commissioner shall not give consideration to amounts paid by the facilities to employees as salary, or to attorneys or consultants as fees, where the responsibility of the employees, attorneys or consultants is to persuade or seek to persuade the other employees of the facility to support or oppose unionization. Nothing in this subsection shall prohibit the commissioner from considering amounts paid for legal counsel related to the negotiation of collective bargaining agreements, the settlement of grievances or normal administration of labor relations.

(d) (1) Until such time as subdivision (2) of this subsection is effective, the state shall also pay to such hospitals for each outpatient clinic and emergency room visit a reasonable rate to be established annually by the commissioner for each hospital, such rate to be determined by the reasonable cost of such services.

(2) On or after July 1, 2013, hospitals shall be paid for outpatient and emergency room episodes of care based on prospective rates established by the commissioner in accordance with the Medicare Ambulatory Payment Classification system in conjunction with a state conversion factor, provided the Department of Social Services completes a fiscal analysis of the impact of such rate payment system on each hospital. The Commissioner of Social Services shall, in accordance with the provisions of section 11-4a, file a report on the results of the fiscal analysis not later than six months after implementing the rate payment system with the joint standing committees of the General Assembly having cognizance of matters relating to human services and appropriations and the budgets of state agencies. The Medicare Ambulatory Payment Classification system shall be modified to provide payment for services not generally covered by Medicare, including, but not limited to, pediatric, obstetric, neonatal and perinatal services. Nothing contained in this subsection shall authorize a payment by the state for such episodes of care to any hospital in excess of the charges made by such hospital for comparable services to the general public. Those outpatient hospital services that do not have an established Ambulatory Payment Classification code shall be paid on the basis of a ratio of cost to charges, or the fixed fee in effect as of January 1, 2013. The Commissioner of Social Services shall establish a fee schedule for outpatient hospital services to be effective on and after January 1, 1995, and may annually modify such fee schedule if such modification is needed to ensure that the conversion to an administrative services organization is cost neutral to hospitals in the aggregate and ensures patient access. Utilization may be a factor in determining cost neutrality.

(e) The commissioner shall adopt regulations, in accordance with the provisions of chapter 54, establishing criteria for defining emergency and nonemergency visits to hospital emergency rooms. All nonemergency visits to hospital emergency rooms shall be paid at the hospital’s outpatient clinic services rate. Nothing contained in this subsection or the regulations adopted under this section shall authorize a payment by the state for such services to any hospital in excess of the charges made by such hospital for comparable services to the general public. To the extent permitted by federal law, the Commissioner of Social Services shall impose cost-sharing requirements under the medical assistance program for nonemergency use of hospital emergency room services.

(f) On and after July 1, 1995, no payment shall be made by the state to an acute care general hospital for the inpatient care of a patient who no longer requires acute care and is eligible for Medicare unless the hospital does not obtain reimbursement from Medicare for that stay.

(g) The commissioner shall establish rates to be paid to freestanding chronic disease hospitals.

(h) The Commissioner of Social Services may implement policies and procedures as necessary to carry out the provisions of this section while in the process of adopting the policies and procedures as regulations, provided notice of intent to adopt the regulations is published in the Connecticut Law Journal not later than twenty days after the date of implementation.

(1949, 1953, S. 1586d; 1961, P.A. 474, S. 2; 1967, P.A. 726, S. 1; 1969, P.A. 339, S. 1; P.A. 73-117, S. 23, 31; P.A. 77-574, S. 4, 6; P.A. 79-560, S. 26, 39; P.A. 81-472, S. 111, 159; P.A. 84-367, S. 1, 3; P.A. 85-482, S. 1, 2; P.A. 87-27, S. 1; 87-516, S. 1, 5; P.A. 88-156, S. 19; P.A. 89-296, S. 6, 9; June Sp. Sess. P.A. 91-8, S. 13, 43, 63; May Sp. Sess. P.A. 92-16, S. 25, 89; P.A. 93-262, S. 1, 87; May Sp. Sess. P.A. 94-5, S. 2, 30; P.A. 95-160, S. 25, 69; 95-306, S. 1, 7; 95-351, S. 28, 30; P.A. 96-139, S. 12, 13; P.A. 98-131, S. 1, 2; P.A. 99-279, S. 13, 14, 45; June Sp. Sess. P.A. 00-2, S. 15, 53; June Sp. Sess. P.A. 01-2, S. 11, 66, 69; June Sp. Sess. P.A. 01-3, S. 1, 2, 6; June Sp. Sess. P.A. 01-9, S. 119, 120, 121, 129, 131; May 9 Sp. Sess. P.A. 02-7, S. 57; June 30 Sp. Sess. P.A. 03-3, S. 67, 68; P.A. 04-258, S. 1, 3; May Sp. Sess. P.A. 04-2, S. 34; P.A. 05-280, S. 6; P.A. 06-188, S. 21; June Sp. Sess. P.A. 07-2, S. 27; P.A. 11-44, S. 113; 11-61, S. 122; June 12 Sp. Sess. P.A. 12-1, S. 265; Dec. Sp. Sess. P.A. 12-1, S. 4; P.A. 13-234, S. 76; 13-247, S. 91.)

History: 1961 act changed technical language, added standard of comparable charges to Subsec. (a), deleted requirement of Subsec. (b) that special services be professional and added Subsec. (c); 1967 act changed term “welfare” to “state” patients, restricted standard of comparable charges in Subsec. (a), made allowances for unpaid bills, working capital requirements and services development costs in determination of “actual cost” in Subsec. (c) and added Subsec. (d); 1969 act allowed alternative rates in Subsec. (a) based on charges for ward or semiprivate facilities and placed limit on rate for outpatient clinic visit in Subsec. (d); P.A. 73-117 replaced hospital cost commission with committee established in accordance with Sec. 17-311; P.A. 77-574 included allowances for costs associated with collective bargaining agreements in Subsec. (c); P.A. 79-560 replaced committee with commissioner of income maintenance; P.A. 81-472 made technical changes; P.A. 84-367 changed the basis of the rate from “actual” to “reasonable” cost and added Subsec. (e) setting rates for the inpatient care of patients who no longer require acute care; P.A. 85-482 amended Subsec. (d) by substituting 116% for 150% of combined average fee of general practitioner and specialist for office visit as maximum rate for an outpatient clinic visit; P.A. 87-27 amended Subsec. (c) to exclude from “reasonable cost” amounts paid to employees, attorneys or consultants due to unionization disputes; P.A. 87-516 allowed the commissioner to establish a rate cap if he receives approval for a disproportionate share exemption pursuant to federal regulations; P.A. 88-156 added freestanding chronic disease hospitals providing services to persons aided or cared for by the state for routine services furnished to state patients and gave the commissioner the discretion to set a higher rate for hospitals serving a disproportionate share of indigent patients; P.A. 89-296 amended Subsec. (d) to prohibit the state from paying a hospital for services in excess of the charges made by the hospital for comparable services to the public, added a new Subsec. (e) requiring the commissioner to adopt regulations establishing criteria for defining emergency and nonemergency visits to hospital emergency rooms and relettered former Subsec. (e) as Subsec. (f); June Sp. Sess. P.A. 91-8 amended Subsec. (b) to add a provision re payment by the state of charges in excess of charges made when comparable service is rendered to the general public and amended Subsec. (d) re rates paid by the state for outpatient clinic, services, emergency room visits and outpatient hospital services paid on the basis of a ratio of cost to charges; May Sp. Sess. P.A. 92-16 amended Subsec. (d) by providing that emergency room visit rates in effect on June 30, 1991, shall remain in effect through June 30, 1993, except that those which would decrease on July 1, 1992, shall decrease; P.A. 93-262 authorized substitution of commissioner and department of social services for commissioner and department of income maintenance, effective July 1, 1993; May Sp. Sess. P.A. 94-5 amended Subsec. (d) to add a formula concerning outpatient hospital services paid on the basis of a ratio of cost to charges and required the commissioner to establish a fee schedule for outpatient hospital services, effective July 1, 1994; Sec. 17-312 transferred to Sec. 17b-239 in 1995; P.A. 95-160 amended Subsec. (a) by adding a provision for rates to be paid to freestanding chronic disease hospitals, effective July 1, 1995; P.A. 95-306 amended Subsec. (f) by prohibiting payment to an acute care general hospital for inpatient care of a patient if such patient is no longer in need of such care and is eligible for Medicare, unless Medicare reimbursement is not received for such care, effective July 1, 1995; P.A. 95-351 amended Subsec. (a) by providing that the commissioner use the “actual charge based on utilized service” instead of the “cost of service” when determining rates paid to freestanding chronic disease hospitals, effective July 1, 1995; P.A. 96-139 changed effective date of P.A. 95-160 but without affecting this section; P.A. 98-131 added new Subsec. (g) requiring commissioner to establish hospital inpatient rates, effective July 1, 1998; P.A. 99-279 amended Subsec. (d) to eliminate annual increases in the fee schedule for outpatient hospital services for the rate periods beginning July 1, 1999, and July 1, 2000, and amended Subsec. (g) to provide an exception for the rate period beginning October 1, 1998, from the application of the 3% annual adjustment factor to the target amount per discharge, to prohibit the commissioner from applying an annual adjustment factor for succeeding rate periods, and to make a technical change, effective July 1, 1999; June Sp. Sess. P.A. 00-2 amended Subsec. (a) by deleting provisions re rates paid to freestanding chronic disease hospitals on and after July 1, 1995, and inserting provisions re rates paid to freestanding chronic disease hospitals and freestanding psychiatric hospitals, beginning July 1, 2000, and thereafter, effective July 1, 2000; June Sp. Sess. P.A. 01-2 amended Subsec. (a) to make a technical change for the purpose of gender neutrality, to require commissioner to use the rate of the highest-paid freestanding chronic disease hospital for any freestanding chronic disease hospital having more than an average of 15% of its inpatient days utilized as long-term ventilator patient days beginning for the rate period ending in 2001, in lieu of rate paid for period when determining rates paid on and after July 1, 2001, notwithstanding provisions of subsection, and to define term “long-term ventilator patient”, effective July 1, 2001, and further amended Subsec. (a) to remove discretion of commissioner re determination of appropriate amount in the case of hospitals serving a disproportionate number share of indigent patients and to replace provisions re rates paid to freestanding chronic disease hospitals and freestanding psychiatric hospitals for rate period beginning July 1, 2001, effective July 2, 2001; June Sp. Sess. P.A. 01-3 amended Subsec. (d) by deleting provisions re rate for outpatient clinic visit and rate cap for outpatient clinics upon approval of disproportionate share exemption and adding provision re increase of fee schedule for rate period beginning July 1, 2001, and amended Subsec. (g) by deleting former provisions and adding provisions re establishment of inpatient hospital rates, effective July 1, 2001; June Sp. Sess. P.A. 01-9 amended Subsec. (d) to make 10.5% increase applicable to rate period beginning July 1, 2000, and effective June 1, 2001, and amended Subsec. (g) to make June 1, 2001, the date by which the commissioner is to establish inpatient hospital rates, effective July 1, 2001, and revised effective date of June Sp. Sess. P.A. 01-2 but without affecting this section; May 9 Sp. Sess. P.A. 02-7 amended Subsec. (a) by delaying from July 1, 2002, to January 1, 2003, a 2% rate increase to a free standing chronic disease hospital and a free standing psychiatric hospital and maintaining effectiveness of existing rate until December 31, 2002, effective August 15, 2002; June 30 Sp. Sess. P.A. 03-3 amended Subsec. (d) to provide that outpatient rates in effect as of June 30, 2003, shall remain in effect through June 30, 2005, and amended Subsec. (g) by replacing “and October 1, 2002,” with “through September 30, 2005,” re period of time during which commissioner shall not apply an annual adjustment factor to target amount per discharge, effective August 20, 2003; P.A. 04-258 amended Subsec. (a) by providing that each freestanding chronic disease hospital shall receive a rate that is 2% more than the rate it received in the prior fiscal year and amended Subsec. (g) by substituting September 30, 2004, for September 30, 2005, re time period during which the commissioner shall not apply an annual adjustment factor to the target amount per discharge and adding provisions re revised target amount per discharge for the periods commencing April 1, 2005, April 1, 2006, and April 1, 2007, effective July 1, 2004; May Sp. Sess. P.A. 04-2 amended Subsec. (g) by substituting March 31, 2008, for September 30, 2004, effective July 1, 2004; P.A. 05-280 amended Subsec. (g) by changing effective date for the $4,000 revised target amount per discharge from April 1, 2006, to October 1, 2006, and changing effective date for the $4,250 revised target amount per discharge from April 1, 2007, to October 1, 2007, effective July 1, 2005; P.A. 06-188 amended Subsec. (a) to make a technical change, amended Subsec. (d) to allow commissioner, within available appropriations, to increase outpatient service fees for services that include clinic, emergency room, magnetic resonance imaging and computerized axial tomography and thereafter report to the General Assembly on such fee increases and the associated cost increase estimates, and amended Subsec. (g) to substitute “September 30, 2006” for “March 31, 2008” re time period during which commissioner shall not apply annual adjustment factor to target amount per discharge, and to substitute former provisions re target amount per discharge that were to take effect October 1, 2006, and October 1, 2007, with new language re target amount per discharge to take effect on October 1, 2006, and reporting requirement on cost estimates for new target amount per discharge, effective July 1, 2006; June Sp. Sess. P.A. 07-2 amended Subsec. (a) by replacing “July 1, 2004” with “July 1, 2007” and “two” with “four” re percentage increase in the rate provided to freestanding chronic disease hospitals over the rate provided in prior fiscal year and amended Subsec. (g) by replacing provisions re increased target amount per discharge effective October 1, 2006, with provisions requiring commissioner to establish increased target amount per discharge effective October 1, 2007, and to report to the General Assembly on the costs associated with such action, effective July 1, 2007; P.A. 11-44 amended Subsec. (d) by adding provision allowing commissioner to modify fee schedule for outpatient hospital services and deleting provision re submission of report, effective July 1, 2011; P.A. 11-61 amended Subsec. (d) by adding provision excluding utilization as factor in determining cost neutrality, effective July 1, 2011; June 12 Sp. Sess. P.A. 12-1 amended Subsecs. (b) and (d) by making technical changes and deleted former Subsec. (g) re establishment of inpatient hospital rates by commissioner, effective June 15, 2012; Dec. Sp. Sess. P.A. 12-1 amended Subsec. (d) to replace “shall not” with “may” and add “for the fiscal year ending June 30, 2013” re utilization as a factor in determining cost neutrality, effective December 21, 2012; P.A. 13-234 amended Subsec. (a) to replace former provisions re rates with provisions re acute care and children’s hospital Medicaid rates to be based on diagnosis-related groups and re determination of in-patient rates and to delete provisions re payments to freestanding chronic disease hospitals and psychiatric hospitals, amended Subsec. (d) to add provisions re outpatient and emergency care payments to be based on prospective rates in accordance with the Medicare Ambulatory Payment Classification system, amended Subsec. (e) to add provision re cost-sharing requirements for nonemergency use of hospital emergency room services, added Subsec. (g) re policies and procedures while adopting regulations, and made conforming and technical changes, effective July 1, 2013; P.A. 13-247 amended Subsec. (a) to add Subdiv. (1) re rates to be based on reasonable cost, charge to general public or lowest charge and to designate existing provisions as Subdiv. (2), amended Subsec. (d) to add Subdiv. (1) re rates to be determined by reasonable cost of services and to designate existing provisions as Subdiv. (2), added new Subsec. (g) re rates for freestanding chronic disease hospitals, and redesignated existing Subsec. (g) as Subsec. (h), effective July 1, 2013.