2010 New York Code
PBH - Public Health
Article 28 - (2800 - 2822) HOSPITALS
2807-A - General hospital nineteen hundred eighty-six and nineteen hundred eighty-seven inpatient rates and charges.

§  2807-a.  General  hospital nineteen hundred eighty-six and nineteen
  hundred eighty-seven inpatient rates and charges.
    1. For the rate period from January first, nineteen hundred eighty-six
  through December thirty-first, nineteen hundred eighty-six and  for  the
  rate  period  from  January first, nineteen hundred eighty-seven through
  December thirty-first,  nineteen  hundred  eighty-seven,  the  rates  of
  payment  to  general hospitals for services provided to persons eligible
  for payments made by state  governmental  agencies  and  subscribers  to
  article  forty-three  insurance  law  corporations  and  subscribers  of
  organizations organized under article forty-four of this chapter (unless
  application is made to the commissioner under subdivision three of  this
  section)  shall  be  based  on  the reimbursable operating costs used in
  determining payments for services provided during the rate  period  from
  January   first,   nineteen   hundred   eighty-five   through   December
  thirty-first, nineteen hundred eighty-five. Such operating  costs  shall
  include the annualized cost impact of rate revisions or adjustments made
  with respect to such services. In addition to the reimbursable operating
  costs  identified  in accordance with this subdivision, payment rates by
  governmental agencies and article forty-three insurance law corporations
  shall be adjusted each year to reflect:
    (a) capital related expenses determined in accordance with subdivision
  seven of this section;
    (b) additional financial needs or revenue requirements  in  accordance
  with subdivision eight of this section; and
    (c)  projection  of  reimbursable  costs identified in accordance with
  this  subdivision  by  a  trend  factor  established  by  the  panel  of
  economists as set forth in subdivision fourteen of this section.
    2.   For   the  rate  period  from  January  first,  nineteen  hundred
  eighty-six  through December thirty-first, nineteen  hundred  eighty-six
  and   for   the   rate  period  from  January  first,  nineteen  hundred
  eighty-seven   through   December   thirty-first,    nineteen    hundred
  eighty-seven,  rates  of  payment  pursuant  to  the  provisions  of the
  workers' compensation law, the volunteer firefighters' benefit  law  and
  the  comprehensive  motor  vehicle  insurance  reparations  act shall be
  established on the basis of one hundred twelve percent  of  the  trended
  nineteen  hundred  eighty-one  average  operating  reimbursable per diem
  inpatient  cost  of  the  hospital,  plus  the  additions  specified  in
  subdivisions seven and eight of this section and such revisions that may
  be made pursuant to subdivisions eleven and fourteen of this section.
    3.  Nothing  in  this section shall prohibit the negotiation by health
  maintenance organizations operating in accordance with the provisions of
  article forty-three of the insurance law or article forty-four  of  this
  chapter, of agreements with general hospitals for rates of payment other
  than those provided herein. Such contracts shall require approval by the
  commissioner  and must include provision for special benefit packages or
  arrangements for  providing  inpatient  services  to  encourage  patient
  management  behavior that will minimize the length of patient stay, such
  as special  admission  arrangements,  bed  leasing  or  other  inpatient
  capitation arrangements.
    4.  Hospital inpatient services reimbursement provided to patients who
  are not beneficiaries  or  subscribers  of  corporations  organized  and
  operating  in  accordance with article forty-three of the insurance law,
  eligible for payments made by state governmental agencies, eligible  for
  payments  as  beneficiaries  of  subchapter  XVIII of the federal social
  security act, enrolled in organizations operating in accordance with the
  provisions  of  article  forty-four  of  this  chapter,  enrolled  in  a
  self-insured and self-administered group covered under the provisions of
  paragraph  (b)  of  subdivision  twelve of this section, or eligible for

payments pursuant to the provisions of the  workers'  compensation  law,
  the  volunteer  firefighters'  benefit  law  or  the comprehensive motor
  vehicle insurance reparations act shall be at charges established by the
  hospital in accordance with subdivision twelve of this section.
    5.   Specialty  hospitals  shall  receive  reimbursement  for  general
  hospital inpatient services in accordance with the  provisions  of  this
  section  unless  other  reimbursement  methodologies  are adopted by the
  council and approved by the commissioner. In such event  the  allowances
  provided  in  subdivision  eight  of  this  section shall be included in
  certified and approved inpatient rates.
    6. The establishment of separate rates of  payment  for  patients  who
  require  different  levels or types of care shall require a reallocation
  of costs to insure that costs are equitably allocated to  service  areas
  and appropriate rate adjustments are made.
    7.  Capital  related  expenses.  Capital  related  inpatient expenses,
  including but not limited to straight line depreciation on buildings and
  non-movable equipment, accelerated depreciation on movable equipment  if
  requested  by the hospital, rentals and interest on capital debt (or for
  hospitals financed pursuant to article twenty-eight-b of  this  chapter,
  such  expenses,  including  amortization  in  lieu  of  depreciation, as
  determined  pursuant  to  the  reimbursement   regulations   promulgated
  pursuant  to  that  article  and  article twenty-eight of this chapter),
  shall  be  included  in  rates  established  on  a  budget   basis   and
  subsequently  reconciled  to  actual  expenses through appropriate audit
  procedures. General hospitals shall submit to the commissioner, at least
  one hundred twenty days prior  to  the  commencement  of  each  year,  a
  schedule of capital related inpatient expenses for the forthcoming year.
  Any capital related inpatient expense generated by a capital expenditure
  which  requires or required approval pursuant to this article, must have
  received such approval for the capital related expense to be included in
  the rates established. The submitted  budget  may  include  the  capital
  related  inpatient  expenses  for all existing capital assets as well as
  estimates of capital related inpatient expenses for capital assets to be
  acquired or placed in use prior to the commencement of the rate year  or
  during the rate year provided all required approvals have been obtained.
  The  basis  for  determining capital related inpatient expenses shall be
  the lesser of actual cost or the final amount specifically approved  for
  the construction of the capital asset. The council shall adopt, with the
  approval of the commissioner, regulations to:
    (a) identify by type the eligible capital related inpatient expenses;
    (b)  safeguard the future financial viability of voluntary, non-profit
  general hospitals by requiring  funding  of  inpatient  depreciation  on
  building and fixed and movable equipment;
    (c)  provide  authorization  to  adjust  inpatient  rates by advancing
  payment of depreciation as needed, in instances of capital debt  related
  financial distress of a voluntary, non-profit general hospital; and
    (d) provide a methodology for the reimbursement treatment of sales.
    8.  Allowances.  All rates established for the two years commencing on
  January  first,  nineteen  hundred   eighty-six   in   accordance   with
  subdivisions  one,  two, three, four, five and six of this section shall
  include the allowances specified in paragraphs (a), (b),  (c),  (e)  and
  (f)  of  this subdivision. The allowances shall be computed on the basis
  of the general hospitals' reimbursable inpatient costs after application
  of  the  trend  factor.  For  the  purposes  of  this  subdivision   and
  subdivisions  sixteen  and  twenty-four  of  this  section, major public
  general hospitals are defined as all state operated  general  hospitals,
  all general hospitals operated by the New York city health and hospitals
  corporation  as  established by chapter one thousand sixteen of the laws

of nineteen hundred sixty-nine as amended and all other  public  general
  hospitals   having   annual  inpatient  operating  costs  in  excess  of
  twenty-five million dollars.
    (a) An allowance of one percent of the general hospitals' reimbursable
  inpatient  costs  computed in accordance with this section to be used at
  the discretion of hospital governing boards.
    (b) For public general hospitals an additional allowance of up to  two
  percent subject to the provisions of paragraph (d) of this subdivision.
    (c) For voluntary non-profit and private proprietary general hospitals
  an  additional  allowance up to one percent subject to the provisions of
  paragraph (d) of this subdivision.
    (d) The additional allowances  in  paragraphs  (b)  and  (c)  of  this
  subdivision  shall  be available to general hospitals receiving approval
  from the commissioner as to the acceptable use of  the  allowance  which
  uses  shall  include  but  not  be  limited  to retirement of short term
  non-capital debt, meeting costs related to bad debts  and  charity  care
  not  met  by  the distributions as specified in subdivisions sixteen and
  twenty-four  of  this  section,  offsetting  reductions  in  anticipated
  revenue  resulting  from  charge  limits  below  those applicable to the
  particular hospital immediately prior to the  enactment  of  subdivision
  twelve  of  this  section,  and  needed  improvement  of  current ratio.
  Allowances authorized by paragraphs (b) and (c) of this subdivision  are
  not  to  be  considered  as  a substitute for operational funds that are
  otherwise reimbursable or subject to appeal.
    (e) A percentage to reflect the needs  for  the  financing  of  losses
  resulting  from  bad  debts  and  the  costs  of charity care of general
  hospitals within article forty-three  insurance  law  regions,  or  such
  other  regions  as  adopted  pursuant  to  subdivision  fifteen  of this
  section, and within a statewide determination of financial resources  to
  be  committed  for  this  purpose.  Regional needs shall be equal to the
  total of inpatient losses  from  bad  debts  reduced  to  cost  and  the
  inpatient  costs  of  charity  care  increased  by  any  deficit of such
  hospitals from providing ambulatory services, excluding any  portion  of
  such  deficit  resulting  from governmental payments below average visit
  costs, and revenues and expenses related to the  provision  of  referred
  ambulatory  services.    The  regional  amounts  to be included in rates
  approved for the rate year commencing January  first,  nineteen  hundred
  eighty-six  and  for  the  rate  year commencing January first, nineteen
  hundred eighty-seven will be equal to the result of the  application  of
  the  percentage  of  statewide  need  for  voluntary non-profit, private
  proprietary and  public  general  hospitals,  other  than  major  public
  general  hospitals, that can be met from available resources in regional
  pools, created in accordance with subdivision fifteen  of  this  section
  computed  without  consideration  of inpatient uncollectible amounts, to
  the regional need for  voluntary  non-profit,  private  proprietary  and
  public  general  hospitals,  other  than major public general hospitals,
  expressed  in  dollars  plus  the  dollar  amount  resulting  from   the
  application  of  the  ratio  of major public general hospitals inpatient
  reimbursable  costs  within  the  region  to  total  statewide   general
  inpatient  reimbursable  cost  (as  computed  on  the  basis of nineteen
  hundred eighty-four financial  and  statistical  reports  and  excluding
  costs  related  to  services to beneficiaries of subchapter XVIII of the
  federal social security act) to the statewide  resources  committed  for
  this  purpose  to  regional  pools  computed  without  consideration  of
  inpatient uncollectible amounts and the ratio of these total dollars  to
  the  total  regional  reimbursable  inpatient costs, excluding inpatient
  costs related to services provided to beneficiaries of subchapter  XVIII
  of  the  federal  social  security  act,  after application of the trend

factor. For each year of the  two  year  period  commencing  on  January
  first,  nineteen hundred eighty-six the statewide amount to be available
  in regional pools for this purpose will equal four and one-half  percent
  of  the  total hospital reimbursable inpatient cost, excluding inpatient
  costs related to services provided to beneficiaries of subchapter  XVIII
  of  the federal social security act and inpatient uncollectible amounts,
  after application of the trend factor. The allocations of resources made
  available under this paragraph, as specified in subdivision  sixteen  of
  this  section  may be changed only as follows: An annual review shall be
  conducted pursuant to rules and regulations adopted by the  council  and
  approved  by  the commissioner with respect to bad debt and charity care
  need within each article forty-three insurance law region or such  other
  regions  as are adopted pursuant to subdivision fifteen of this section.
  If within such a region there is a definitive finding  as  a  result  of
  such  review that there has been a change in the proportional amounts of
  bad debts  and  charity  care  provided  by  (i)  major  public  general
  hospitals  and (ii) voluntary non-profit, private proprietary and public
  general hospitals,  other  than  major  public  general  hospitals,  the
  allocation  of  resources  made  available under this paragraph shall be
  adjusted pursuant to the rules and regulations adopted pursuant to  this
  paragraph so as to reflect this change.
    (f)  An  additional allowance of fifty-eight hundredths of one percent
  shall be included in each rate established for each voluntary non-profit
  and private proprietary general hospital to be returned  to  a  regional
  pool  and  distributed  in  accordance with paragraph (b) of subdivision
  sixteen of this section.
    10. Special provisions for payments by governmental agencies.  In  the
  event that the allowances specified in subdivision eight of this section
  are  not  approved  by  the  federal  government  for  federal financial
  participation in payments made for beneficiaries  eligible  for  medical
  assistance  under  subchapter  XIX  of  the federal social security act,
  rates of  payment  by  governmental  agencies  for  the  operating  cost
  component  of  general hospital inpatient services shall be based on the
  reimbursable operating costs used in determining payments  for  services
  provided  during  the  rate  period from January first, nineteen hundred
  eighty-five through December thirty-first, nineteen hundred eighty-five,
  including the annualized cost impact of rate  revisions  or  adjustments
  made  with  respect  to  such  services,  projected  by  a  trend factor
  determined in accordance with subdivision fourteen of this section,  and
  adjusted  by  a  base period adjustment factor to reflect the difference
  between the actual  regional  increase  in  inpatient  general  hospital
  operating  cost for those regions as established pursuant to subdivision
  fifteen of this section between  cost  reporting  periods  for  nineteen
  hundred  eighty-one  and  nineteen  hundred  eighty-four  and  the trend
  factors developed to project costs for such period,  provided,  however,
  such  base  period adjustment factor shall not exceed an amount equal to
  the percentage allowances calculated in accordance with paragraphs  (a),
  (b),  (c),  (e)  and  (f)  of  subdivision  eight  of  this section. The
  commissioner shall assess all  general  hospitals  within  a  region  an
  amount  equal  to  the  regional  allowance  percentage as determined in
  accordance with paragraph (e)  of  subdivision  eight  of  this  section
  applied  to  actual inpatient revenues received from providing inpatient
  services to  persons  eligible  for  payments  from  state  governmental
  agencies  excluding  inpatient  revenues related to services provided to
  beneficiaries of subchapter XVIII of the federal  social  security  act.
  The  commissioner shall also assess an additional fifty-eight hundredths
  of one percent  of  actual  inpatient  revenues  received  by  voluntary
  non-profit  and  private  proprietary  general  hospitals  for  services

provided to persons eligible for payments  made  by  state  governmental
  agencies  excluding  inpatient  revenues related to services provided to
  beneficiaries of subchapter XVIII of the federal  social  security  act.
  Such  assessments shall be returned to regional pools in accordance with
  the methodology contained in subdivision fifteen  of  this  section  and
  distributed  in accordance with the provisions of subdivision sixteen of
  this section.
    11. Adjustments. (a) For  the  period  from  January  first,  nineteen
  hundred  eighty-six  through  December  thirty-first,  nineteen  hundred
  eighty-seven, the commissioner shall on his own initiative,  or  on  the
  basis  of  a request from a general hospital, adjust an established rate
  to reflect:
    (i) the reduction of costs related to the  elimination  of  a  general
  hospital  inpatient service in instances where the costs of such service
  were included in the rate established; and
    (ii) the correction of errors or omissions of data or in computation.
    (b) General hospitals may request and the commissioner shall  consider
  an  adjustment  to  an established rate to reflect increased expenses or
  reconsideration of disallowed expenses based on:
    (i) justification of all or a portion of expenses not included in  the
  rate  resulting from the cost analysis process contained in subparagraph
  (i) of paragraph (a) of this subdivision;
    (ii) additional operational expenses related to approved  construction
  or service changes;
    (iii)  the  addition  of  costs  related  to  a  state requirement for
  additional services to be provided or additional costs to be incurred in
  meeting state and federal requirements;
    (iv) additional expenses to permit a  more  efficient  and  economical
  method of delivering a service; and
    (v) increased costs for compensation of employees.
    (c)   In   determining  the  reasonableness  or  justification  of  an
  adjustment to  an  established  rate  related  to  subparagraph  (v)  of
  paragraph (b) of this subdivision, the commissioner shall consider:
    (i)  the  fiscal  capability  of  the general hospital to finance such
  increases from its own resources;
    (ii) the  past  history  of  the  general  hospital  with  respect  to
  compensation increases and allowed compensation trend factors; and
    (iii)  the  economy  in  the  area  in  which  the general hospital is
  located.
    (d)  The  commissioner  shall  adjust  a   prospectively   established
  inpatient  rate  on  the  basis  of  subsequent data that demonstrates a
  significant cost influencing change in patient mix or volume of service.
  Such adjustments shall be based on rules and regulations adopted by  the
  council and approved by the commissioner. Such rules and regulations for
  a volume adjustment shall take into consideration only volume changes to
  other  than  beneficiaries  of  subchapter  XVIII  of the federal social
  security act.
    (e) All appeals shall be submitted to the commissioner, who may submit
  a copy of the appeal to interested parties for the purpose of  providing
  an opportunity for comment within a specified time period.
    (f)  The  commissioner  shall act upon all properly documented appeals
  for adjustments concerning base year costs  by  November  first  of  the
  calendar  year  for  which  the  rate  is  effective  provided  that all
  information necessary to determine whether an adjustment is justified is
  submitted by the facility prior to May first of such year. In the  event
  such  an  appeal  is  filed  by  May first, but information necessary to
  determine whether an adjustment is justified  is  submitted  after  such

date,  the  commissioner shall act on the appeal within six months after
  receiving the necessary information.
    (g)  The  commissioner  shall  consider  an adjustment to a hospital's
  reported base year costs in instances  where  it  is  demonstrated  that
  recurring  costs resulting from multi-year commitments beginning late in
  a base year should be calculated on an annual basis  in  establishing  a
  rate  in  order  to  avoid  a  significant  inequity.  In making such an
  adjustment the commissioner shall consider the offset  of  non-recurring
  base year costs.
    12.  Hospital  charge schedules. (a) Effective for the year commencing
  January first, nineteen hundred eighty-six and thereafter  each  general
  hospital  shall establish a charge schedule for available and authorized
  services  in  accordance  with  a  gross  charge  determination  formula
  provided  by  the  commissioner  which  shall  establish gross inpatient
  charges such that the payment rate to be made on behalf  of  subscribers
  of  article  forty-three  insurance  law  plans,  adjusted for uncovered
  services shall be at a discount which shall not exceed twelve percent of
  the gross charge rate billed to or on behalf of charge paying  patients.
  For  general  hospitals  subject to the provisions of paragraphs (a) and
  (b) of subdivision twenty-one of this section, the costs (including  all
  allowances  specified  in subdivision eight of this section) of services
  provided to charge paying patients shall not  exceed  a  twelve  percent
  discount  from  the  gross  charge rate billed to or on behalf of charge
  paying patients. In the event that a hospital's gross inpatient  charges
  exceed  the  maximum  inpatient  charges computed in accordance with the
  gross charge  determination  formula  prescribed  by  the  commissioner,
  direct  repayment  or  adjustment  of  subsequent  charges for inpatient
  services shall be effectuated in accordance with regulations adopted  by
  the council and approved by the commissioner.
    (b)  For the period January first, nineteen hundred eighty-six through
  December thirty-first, nineteen hundred eighty-seven, negotiated payment
  rate determination systems between  self-insured  and  self-administered
  groups and hospitals which were in effect on May first, nineteen hundred
  eighty-five may continue.
    13.  Working  capital. General hospitals may include as a financing or
  working capital charge an addition of two percent of any valid claim not
  paid  within  thirty  days  of  submission  or  determination  of  payor
  liability,  whichever  is  later,  and one percent per month thereafter.
  Revenues received from such financing or working capital  charges  shall
  not  be  considered  as a cost offset or as part of the hospital's gross
  inpatient charges. Financing or working capital  charges  shall  not  be
  applied  to  hospital  billings to third party payors participating in a
  periodic interim payment system.
    14. Trend  factors.  (a)  The  commissioner  in  accordance  with  the
  methodology  developed  by  the consultants pursuant to paragraph (b) of
  this subdivision shall  establish  trend  factors  to  project  for  the
  effects  of  inflation.  The factors shall be applied to the appropriate
  portion of reimbursable costs as defined  in  subdivision  one  of  this
  section,  or,  if  effective,  subdivision  ten  of  this  section.  The
  methodology  for  developing  the  trend  factor   shall   include   the
  appropriate  external  price  indicators and shall also include the data
  from major collective bargaining agreements as reported quarterly by the
  federal  department  of  labor,  bureau   of   labor   statistics,   for
  non-supervisory employees.
    (b) The methodology shall be developed by four independent consultants
  with  expertise  in  health economics appointed by the commissioner. Not
  later than September first of each year, the consultants  shall  provide
  to  the  commissioner  and  the  council,  the methodology to be used to

determine the trend factors  for  the  subsequent  twelve  month  period
  commencing  January  first.  The  commissioner  shall monitor the actual
  price movement during this twelve month period  of  the  external  price
  indicators  used  in  the  methodology,  shall report the results of the
  monitoring to the consultants, and shall implement,  semi-annually,  the
  recommendations  of the consultants for adjustments to the trend factor,
  provided, however, that adjustments, except for the final adjustment  of
  the  trend  factor,  shall  not be required unless such adjustment would
  result in the weighted average of the operating cost  component  of  the
  rates differing by more than one-half of one percent from that which was
  previously determined.
    15.  Regional  and  statewide  pools,  general.  Funds  will  be  made
  available in regional  pools  for  regional  distributions  through  the
  submissions by general hospitals of the allowances included in rates and
  charges  in accordance with  paragraphs (e) and (f) of subdivision eight
  of this section and, if effective,  the  amount  of  the  assessment  in
  accordance  with  subdivision  ten  of  this section. Funds will be made
  available for distribution from a statewide pool in accordance with  the
  assessments  authorized in subdivision twenty-three of this section. The
  regions are  established  as  the  article  forty-three  insurance  plan
  regions,  with the exception that the southern sixteen counties shall be
  divided into three regions for the purposes of  subdivisions  eight  and
  sixteen  of  this  section with separate regions consisting of Richmond,
  Manhattan,  Bronx,  Queens  and  Kings  counties;  Nassau  and   Suffolk
  counties,  and  Delaware,  Columbia, Ulster, Sullivan, Orange, Dutchess,
  Putnam, Rockland and Westchester counties. Such  regions  shall  be  the
  same  regions  established and in effect January first, nineteen hundred
  eighty-five. The council with  the  approval  of  the  commissioner  may
  combine  regions,  with the exception of the above specified regions for
  the  southern  sixteen  counties,  upon  application  of   the   article
  forty-three  insurance  law  plans  involved  and  a  demonstration that
  significant inequities would not occur. The commissioner  is  authorized
  to  contract with the article forty-three insurance law plans to receive
  funds for the pools and distribute such funds. In  the  event  contracts
  with  the  article  forty-three insurance law plans are effectuated, the
  commissioner shall conduct annual audits of the receipt and distribution
  of the pooled funds. In order for general hospitals  to  participate  in
  the  distribution  of  funds  from  the  pools the general hospital must
  implement  collection  policies   and   procedures   approved   by   the
  commissioner.
    16.  Regional  pools.  Funds  accumulated in regional pools, including
  income from invested funds, shall be distributed in accordance with  the
  following methodology and sequence:
    (a)  Funds  accumulated  in  regional  pools,  including  income  from
  invested funds,  from  the  allowance  specified  in  paragraph  (e)  of
  subdivision  eight  of  this  section  and, if effective, the assessment
  against all general hospitals as authorized in subdivision ten  of  this
  section shall be distributed as follows:
    (i)  Each  eligible  major  public  general  hospital  as  defined  in
  subdivision eight of this section shall receive a  portion  of  its  bad
  debt  and  charity  care need equal to the  result of the application of
  its percentage of statewide inpatient reimbursable costs excluding costs
  related to services to beneficiaries of subchapter XVIII of the  federal
  social  security  act,  developed  on  the  basis  of  nineteen  hundred
  eighty-four financial and  statistical  reports  to  the  total  of  all
  regional pools.
    (ii)  Funds  remaining  in  the  regional  pools after distribution in
  accordance with subparagraph (i) of this paragraph shall be  distributed

proportionately  to voluntary non-profit, private proprietary and public
  general hospitals, other than major public  general  hospitals,  on  the
  basis  of  need  within  the  region  as  defined  in  paragraph  (e) of
  subdivision eight of this section.
    (b)  Funds  accumulated  in  regional  pools,  including  income  from
  invested funds, created by the allowance specified in paragraph  (f)  of
  subdivision  eight  of  this  section and, if effective, the fifty-eight
  hundredths of one percent assessment against  voluntary  non-profit  and
  private  proprietary  general hospitals as authorized by subdivision ten
  of this section, shall be available for distribution by the commissioner
  in accordance with rules adopted by the council to assist in  offsetting
  losses  resulting  from  bad  debts  and  the  costs  of charity care of
  voluntary  non-profit  and   private   proprietary   general   hospitals
  experiencing severe fiscal hardship because of insufficient resources to
  finance  such losses and costs. Such losses and costs may include losses
  and costs incurred prior to the year used in determining  hospital  need
  pursuant  to paragraph (e) of subdivision eight of this section. Amounts
  to be distributed shall be determined after consideration of amounts  to
  be  distributed  from regional pools in accordance with paragraph (a) of
  this  subdivision  and  from  the  statewide  pool  in  accordance  with
  subparagraph  (iii)  of paragraph (a) of subdivision twenty-four of this
  section.
    (c) Any balance in the  portion  of  regional  pools  created  by  the
  allowance  in paragraph (f) of subdivision eight of this section, and if
  effective, the fifty-eight  hundredths  of  one  percent  assessment  as
  authorized  by  subdivision  ten  of this section, including income from
  invested funds, after distribution in accordance with paragraph  (b)  of
  this  subdivision  shall  be  distributed  to  voluntary  non-profit and
  private proprietary general hospitals  within  the  region  on  a  basis
  related  to  specific  hospital  need  as  defined  in  paragraph (e) of
  subdivision eight of this section.
    20. Unit of service. For the rate period from January first,  nineteen
  hundred  eighty-six  through  December  thirty-first,  nineteen  hundred
  eighty-six and for the rate period from January first, nineteen  hundred
  eighty-seven    through    December   thirty-first,   nineteen   hundred
  eighty-seven the unit of service on which payment  is  made  to  general
  hospitals  for inpatient services shall be the unit of service in effect
  during the rate period from January first, nineteen hundred  eighty-five
  through  December  thirty-first,  nineteen  hundred  eighty-five  unless
  specifically provided otherwise in this section or modified pursuant  to
  a subsequent chapter.
    21.  Provisions for article forty-three insurance law corporations and
  article forty-four of this chapter organizations. Except as provided  in
  paragraphs (a) and (b) of this subdivision, general hospital charges for
  inpatient  and  outpatient  services  to subscribers or beneficiaries of
  contracts entered into pursuant to the provisions of article forty-three
  of the insurance law or to members of a  comprehensive  health  services
  plan  operating pursuant to the provisions of article forty-four of this
  chapter for patient services rendered shall  not  exceed  the  rates  of
  payment  approved  by  the  superintendent  of  insurance or approved or
  certified by the commissioner, whichever is applicable and  required  by
  this  section,  for  payments  by such article forty-three insurance law
  corporations or article forty-four of  this  chapter  organizations.  No
  general  hospital  may  demand  or  request  any charge for such covered
  services in addition to the charges or rates authorized by this article.
    (a) Any general hospital which terminated its contract with an article
  forty-three insurance law corporation or a comprehensive health services
  plan after October first, nineteen hundred seventy-six and prior to  May

first,  nineteen  hundred  seventy-eight,  may not charge subscribers or
  beneficiaries of contracts entered into pursuant to  the  provisions  of
  article  forty-three of the insurance law, or members of a comprehensive
  health  services  plan  operating  pursuant to the provisions of article
  forty-four of this chapter, amounts in excess of the schedule of charges
  established by such hospital for patient services in accordance with the
  provisions of subdivision twelve of this section.
    (b) Any general hospital which has  notified  in  writing  an  article
  forty-three insurance law corporation or a comprehensive health services
  plan  prior  to  June  first,  nineteen  hundred  seventy-eight  of  its
  intention to terminate its contract with such  corporation  or  plan  in
  accordance  with  the  terms of such contract, except a general hospital
  subject to the provisions of paragraph (a) of this subdivision  may  not
  charge  a  subscriber or beneficiary of a contract entered into pursuant
  to the provisions of article forty-three of  the  insurance  law,  or  a
  member of a comprehensive health services plan operating pursuant to the
  provisions  of  article  forty-four of this chapter, after the effective
  date of termination of such contract, amounts in excess of the  schedule
  of  charges  established  by  such  hospital  for  patient  services  in
  accordance with the provisions of subdivision twelve of this section.
    (c) No general hospital shall refuse to provide  patient  services  to
  such  subscribers  or  beneficiaries  solely  on  the  grounds  of  such
  subscription or membership.
    22.  Restitution  authorization.  In  enforcing  the   provisions   of
  subdivisions  twelve  and  twenty-one  of this section, the commissioner
  may, in addition to the penalties and injunctions set forth  in  section
  twelve  of  this  chapter,  order  that  any  general  hospital  provide
  restitution for any overpayments made by any  party.  Any  hospital  may
  request  a formal hearing pursuant to the provisions of section twelve-a
  of this chapter in the event the hospital does not consent to any  order
  of  the  commissioner hereunder. The commissioner may direct that such a
  hearing be held without any request by a hospital.
    23. Bad debt and charity  care  assessments.  The  commissioner  shall
  create  a  bad  debt and charity care statewide pool through assessments
  which shall be charged to general hospitals to reflect the needs for the
  financing of losses resulting from bad debts and the  costs  of  charity
  care.  Such  assessments  will  be  submitted  to  a  statewide  pool as
  designated by the commissioner and distributed on  a  monthly  basis  in
  accordance  with  subdivision  twenty-four of this section. The bad debt
  and charity care assessments shall be:
    (a) Three  and  eight-tenths  percent  aggregate  assessment  of  each
  general hospital's gross revenue received for inpatient hospital service
  provided  during  the  period  July  first,  nineteen hundred eighty-six
  through December thirty-first nineteen hundred  eighty-six  composed  of
  the  following:  (i) an assessment of three and eight hundredths percent
  to be allocated to a statewide bad debt and charity care account in  the
  statewide  pool  and  distributed  in  accordance  with paragraph (a) of
  subdivision  twenty-four  of  this  section,  (ii)  an   assessment   of
  thirty-eight  hundredths  of  one percent to be allocated to a statewide
  financially distressed  hospital  account  in  the  statewide  pool  and
  distributed  in accordance with paragraph (b) of subdivision twenty-four
  of this section, and (iii) an assessment of  thirty-four  hundredths  of
  one  percent  to  be  allocated to a statewide transition account in the
  statewide pool and distributed  in  accordance  with  paragraph  (c)  of
  subdivision twenty-four of this section;
    (b)  One  and nine-tenths percent aggregate assessment of each general
  hospital's  gross  revenue  received  for  inpatient  hospital   service
  provided  during the period January first, nineteen hundred eighty-seven

through December thirty-first, nineteen hundred eighty-seven composed of
  the following:   (i) an assessment  of  one  and  fifty-four  hundredths
  percent to be allocated to a statewide bad debt and charity care account
  in  the  statewide pool and distributed in accordance with paragraph (a)
  of subdivision twenty-four  of  this  section,  (ii)  an  assessment  of
  nineteen  hundredths  of  one  percent  to  be  allocated to a statewide
  financially distressed  hospital  account  in  the  statewide  pool  and
  distributed  in accordance with paragraph (b) of subdivision twenty-four
  of this section, and (iii) an assessment of seventeen hundredths of  one
  percent  to  be  allocated  to  a  statewide  transition  account in the
  statewide pool and distributed  in  accordance  with  paragraph  (c)  of
  subdivision twenty-four of this section;
    (c)  Provided,  however,  there  shall  be no assessment against those
  voluntary non-profit and private  proprietary  general  hospitals  which
  qualify  for  distributions  made  in  accordance  with paragraph (b) of
  subdivision sixteen of this section and  paragraph  (b)  of  subdivision
  twenty-four of this section.
    (d)  For  the purposes of this subdivision and subdivision twenty-four
  of this section,  gross  revenue  received  is  defined  as  all  monies
  received  for  or  on  account  of inpatient hospital service, provided,
  however, that gross revenue received  shall  not  include  distributions
  from  regional  and  statewide pools established in accordance with this
  section and shall not include the component of rates of payment  related
  to  the  allowances provided in accordance with subdivision eight or, if
  effective, the base period adjustment factor provided in accordance with
  subdivision ten of this section.
    24.  Statewide  pool  distribution.  (a)  Funds  accumulated  in   the
  statewide  bad  debt  and  charity  care  account in the statewide pool,
  including income from invested funds, shall be distributed in accordance
  with the following methodology:
    (i) There shall be set aside within  such  account,  from  accumulated
  funds,  from  the total allocation to the statewide bad debt and charity
  care account of the assessment of three and eight hundredths percent  of
  gross  revenue received in accordance with subparagraph (i) of paragraph
  (a) of subdivision twenty-three of  this  section  an  amount  equal  to
  eighty-six  hundredths  of  one  percent  of  gross revenue received, as
  defined in paragraph (d) of subdivision twenty-three  of  this  section,
  and from the total allocation to the statewide bad debt and charity care
  account  of  the  assessment of one and fifty-four hundredths percent of
  gross revenue received in accordance with subparagraph (i) of  paragraph
  (b)  of  subdivision  twenty-three  of  this  section an amount equal to
  forty-three hundredths of one percent  of  gross  revenue  received,  as
  defined  in  paragraph  (d) of subdivision twenty-three of this section.
  Each eligible major public general hospital, as defined  in  subdivision
  eight  of  this  section, shall receive from such funds a portion of its
  bad debt and charity care need equal to the result of the application of
  its percentage of statewide major public general hospital gross  revenue
  received to such funds.
    (ii)  Any funds within the statewide bad debt and charity care account
  set aside for major public general  hospitals  and  not  distributed  in
  accordance  with subparagraph (i) of this paragraph shall be distributed
  in accordance with subparagraph (iii) of this paragraph.
    (iii) Funds remaining in the  statewide  bad  debt  and  charity  care
  account,  after  allocation  in accordance with subparagraph (i) of this
  paragraph, including funds available pursuant to  subparagraph  (ii)  of
  this  paragraph,  and  including  income  from  invested funds, shall be
  distributed  proportionately  on  a   statewide   basis   to   voluntary
  non-profit, private proprietary and public general hospitals, other than

major  public  general  hospitals,  on  the  basis of need as defined in
  paragraph (e) of subdivision  eight  of  this  section.  Amounts  to  be
  distributed  shall  be  determined  after consideration of amounts to be
  distributed  from  regional  pools  in  accordance with paragraph (a) of
  subdivision sixteen of this section.
    (b) Funds accumulated in the statewide financially distressed  general
  hospital  account  in the statewide pool, including income from invested
  funds, shall be distributed or retained in accordance with the following
  methodology:
    (i) Funds in the statewide  financially  distressed  general  hospital
  account,  including  income from invested funds, shall be made available
  on a statewide basis for distribution by the commissioner in  accordance
  with  rules  and  regulations adopted by the council and approved by the
  commissioner to assist  voluntary  non-profit  and  private  proprietary
  general   hospitals  experiencing  severe  fiscal  hardship  because  of
  insufficient resources to finance losses resulting from  bad  debts  and
  the  costs  of  charity care, and to meet reasonable and necessary costs
  related to securing financing of capital improvement projects  for  such
  general  hospitals.  Such  losses and costs may include losses and costs
  incurred prior to the year used in determining hospital need pursuant to
  paragraph (e) of subdivision eight of  this  section.    Amounts  to  be
  distributed  shall  be  determined  after consideration of amounts to be
  distributed from regional pools in accordance with  subdivision  sixteen
  of this section and from the statewide bad debt and charity care account
  in   accordance  with  subparagraph  (iii)  of  paragraph  (a)  of  this
  subdivision. The commissioner, in accordance with rules and  regulations
  adopted  by the council and approved by the commissioner, may allocate a
  portion of the accumulated funds for the purpose of  securing  financing
  of capital improvement projects for such general hospitals.
    (ii)  Any  balance  remaining  in the statewide financially distressed
  general hospital account, including  income  from  invested  funds,  not
  including that portion of accumulated funds allocated for the purpose of
  securing  financing  of capital improvement projects, after distribution
  in  accordance  with  subparagraph  (i)  of  this  paragraph  shall   be
  distributed  to  voluntary  non-profit,  private  proprietary and public
  general hospitals, other than major public general hospitals, on a basis
  related to need as defined in paragraph (e) of subdivision eight of this
  section.
    (c) (i) Funds accumulated in the statewide transition account  in  the
  statewide   pool,   including  income  from  invested  funds,  shall  be
  distributed to voluntary  non-profit,  private  proprietary  and  public
  general  hospitals  that have high percentages of gross revenue received
  from payors whose rates and maximum charges are determined in accordance
  with this section compared to total gross revenue received. For purposes
  of this subparagraph, major public general hospitals operated by the New
  York city health and hospitals corporation as established by chapter one
  thousand sixteen of the laws of nineteen hundred sixty-nine  as  amended
  shall be considered on a consolidated basis. Rules for such distribution
  will  be those adopted by the state hospital review and planning council
  and approved by the commissioner.
    (ii) Any  balance  remaining  in  the  statewide  transition  account,
  including  income  from invested funds, after distribution in accordance
  with  subparagraph  (i)  of  this  paragraph  shall  be  distributed  to
  voluntary  non-profit, private proprietary and public general hospitals,
  other than major public general hospitals, on a basis related to need as
  defined in paragraph (e) of subdivision eight of this section.
    25. Maximum distributions. No general hospital may  receive  in  total
  from the distributions made in accordance with paragraphs (a) and (c) of

subdivision sixteen of this section and paragraph (a), subparagraph (ii)
  of  paragraph  (b) and subparagraph (ii) of paragraph (c) of subdivision
  twenty-four of this  section  an  amount  which  exceeds  its  need  for
  financing  losses  related to bad debts and the costs of charity care as
  defined in paragraph (e) of subdivision eight of this section.
    26. Undistributed funds. Any funds,  including  income  from  invested
  funds, remaining in the statewide pool after distributions in accordance
  with  paragraphs  (a),  (b)  and  (c) of subdivision twenty-four of this
  section shall be distributed proportionately  to  voluntary  non-profit,
  private proprietary and public general hospitals, excluding major public
  general  hospitals,  on  the  basis  of  hospital  specific  assessments
  submitted to the pool.
    27. Payment of assessments.  Payments  by  or  on  behalf  of  general
  hospitals  of  funds  due  for the bad debt and charity care assessments
  pursuant to subdivision twenty-three of this section shall be made on  a
  time schedule established by the council, subject to the approval of the
  commissioner,  by  regulation.  Upon  receipt  of  notification from the
  commissioner, the comptroller or a fiscal intermediary designated by the
  director of the budget shall withhold from the amount of any payment  to
  be  made  by the state to a general hospital the amount of any arrearage
  resulting from such general hospital's failure to make a timely  payment
  of  the  bad  debt  and  charity care assessments. Upon withholding such
  amount, the comptroller or a designated fiscal  intermediary  shall  pay
  the  commissioner,  or  his  designee, such amount withheld. Any general
  hospital in arrears resulting from failure  to  make  a  timely  payment
  shall  not  be  eligible  for  a distribution from the statewide pool in
  accordance with subdivision  twenty-four  of  this  section  until  such
  arrearage is satisfied.
    28.  Reimbursement  rates.  The  assessments  pursuant  to subdivision
  twenty-three of this section shall not  be  an  allowable  cost  in  the
  determination  of  general  hospital  inpatient  reimbursement  rates in
  accordance with this section and section twenty-eight hundred  seven  of
  this chapter.