RFA14FINAL081913.docx

Commonwealth of Massachusetts

Executive Office of Health and Human Services

Office of Medicaid

Rate Year 2014

Acute Hospital

Request for Applications

August 19, 2013

Comm-PASS Document Number: 14LCEHSACUTEHOSPITAL

Table of Contents

Appendices

RY 2014 Acute Hospital RFA vi

Section 1: Introduction

The Massachusetts Executive Office of Health and Human Services (EOHHS) is issuing this Request for Applications (RFA) to solicit applications from eligible, in-state Acute Hospitals wishing to participate as Massachusetts MassHealth Providers. An Acute Hospital’s Contract will apply to (1) covered Acute Hospital Inpatient and Outpatient Services provided to MassHealth Members and recipients of Emergency Aid to the Elderly, Disabled and Children at any Acute Hospital Inpatient Departments, Outpatient Departments, and Satellite Clinics for which a reimbursement method is described in Sections 5 through 8.

EOHHS intends to reimburse Hospitals for Inpatient and Outpatient Services according to the methodologies outlined in this RFA. For out-of-state acute hospital payment, see 130 CMR 450.233, 415.404, and 410.404.

To be a MassHealth Provider of Hospital services other than Emergency Services, a Hospital must accept the rates of payment outlined in this RFA in accordance with the reimbursement methodology specified in this RFA as payment in full. EOHHS will contract with all eligible Hospitals that agree to accept these rates and reimbursement methodologies, and otherwise comply with requirements applicable to Acute Hospitals.

Acceptance of this level of reimbursement, and compliance with all other requirements of this RFA and Contract, including completion and submission of a response to this RFA, is a condition of participation as a Provider in the MassHealth program for provision of non-Emergency Services by Massachusetts Acute Hospitals.

Failure to respond to this RFA by any Massachusetts Acute Hospital may result in its termination as a MassHealth Provider of non-Emergency Services, and in the termination of its Satellite Clinics. However, any inpatient unit within an Acute Hospital for which reimbursement is provided under another contract shall not be terminated as a MassHealth Provider.

Section 2: Definitions

The following terms appearing capitalized throughout this RFA and its appendices shall be defined as follows, unless the context clearly indicates otherwise.

Administrative Day (AD) — a day of inpatient hospitalization on which a Member’s care needs can be provided in a setting other than an Acute Hospital, and on which the Member is clinically ready for discharge, but an appropriate institutional or non-institutional setting is not readily available. See 130 CMR 415.415 and 415.416.

Behavioral Health (BH) Contractor — the entity with which EOHHS contracts to provide Behavioral Health Services to enrolled Members.

Behavioral Health Services — services provided to Members who are being treated for psychiatric disorders or substance-related disorders.

Casemix — the description and categorization of a hospital’s patient population according to criteria approved by EOHHS including, but not limited to, primary and secondary diagnoses, primary and secondary procedures, illness severity, patient age and source of payment.

Center for Health Information and Analysis (CHIA) – The Center for Health Information and Analysis established under M.G.L. c. 12C, or its predecessor agency, DHCFP.

Centers for Medicare & Medicaid Services (CMS) — the federal agency under the Department of Health and Human Services that is responsible for administering the Medicare and Medicaid programs.

Charge — the uniform price for each specific service within a Revenue Center of an Acute Hospital.

Clinical Laboratory Service — Microbiological, serological, chemical, hematological, biophysical, radio bioassay, cytological, immunohematological, immunological, pathological, or other examinations of materials derived from the human body, to provide information for the assessment of a medical condition or for the diagnosis, prevention, or treatment of any disease.

Coinsurance — a percentage of cost or a fee established by a Third-Party Insurance carrier for a specific service or item for which an individual is responsible when the service or supply is delivered. This cost or fee varies according to the individual’s insurance carrier.

Commonwealth Health Insurance Connector (Connector) — the authority established by G.L. chapter 176Q, section 2.

Commonwealth Care Health Insurance program (Commonwealth Care) — a program established by G.L. chapter 118H, section 2 and administered by the Connector, in consultation with the Office of Medicaid, which provides subsidies to assist eligible individuals in purchasing health insurance.

Community-Based Physician — any physician or physician group practice, excluding interns, residents, fellows, and house officers, who is not a Hospital-Based Physician. For purposes of this definition and related provisions, the term physician includes dentists, podiatrists, and osteopaths.

Contract (also Hospital Contract or Agreement) — the agreement executed between each selected Hospital and EOHHS, which is contained in Appendix A attached hereto, and incorporates all of the provisions of this RFA. Unless the context indicates that the term “RFA” refers exclusively to the procurement document as such, references to RFA shall constitute references to the Contract (or Agreement).

Contractor — each Hospital that is selected by EOHHS after submitting a satisfactory application in response to this RFA and that enters into a Contract with EOHHS to meet the purposes specified in this RFA.

Copayment — a predetermined fee that the Member is responsible for paying directly to the Provider for specific services.

Critical Access Hospital (CAH) – An Acute Hospital that is certified by CMS and designated as a Critical Access Hospital under 42 U.S.C. 1395i-4.

Deductible — the amount an individual is required to pay in each calendar year, as specified in their insurance plan, before any payments are made by the insurer.

Department of Mental Health (DMH) — a department of the Commonwealth of Massachusetts, Executive Office of Health and Human Services.

Department of Public Health (DPH) — a department of the Commonwealth of Massachusetts, Executive Office of Health and Human Services.

Division of Health Care Finance and Policy (DHCFP) — a division of the Commonwealth of Massachusetts, Executive Office of Health and Human Services, or successor agency.

DMH-Licensed Bed — a bed in a Hospital that is located in a unit licensed by the Department of Mental Health (DMH), pursuant to 104 CMR 27.00 et seq.

Emergency Aid to the Elderly, Disabled and Children — the program operated by the Department of Transitional Assistance, pursuant to M.G.L. c. 117A, that furnishes and pays for limited medical services to eligible persons.

Emergency Department (ED) — a Hospital’s Emergency Room or Level I Trauma Center which is located at the same site as the Hospital’s inpatient department.

Emergency Medical Condition — a medical condition, whether physical or mental, manifesting itself by symptoms of sufficient severity, including severe pain, that, in the absence of prompt medical attention, could reasonably be expected by a prudent layperson who possesses an average knowledge of health and medicine to result in placing the health of a Member or another person or, in the case of a pregnant woman, the health of the woman or her unborn child, in serious jeopardy, serious impairment to body function, or serious dysfunction of any bodily organ or part, or, with respect to a pregnant woman, as further defined in section 1867(e)(1)(B) of the Social Security Act, 42 U.S.C. § 1395dd(e)(1)(B).

Emergency Services — covered Inpatient and Outpatient Services, including Behavioral Health Services, which are furnished to a Member by a Provider that is qualified to furnish such services under Title XIX of the Social Security Act, and are needed to evaluate or stabilize a Member’s Emergency Medical Condition.

Enhanced Ambulatory Patient Group (EAPG) — a group of Outpatient Services that have been bundled for purposes of categorizing and measuring casemix. It is based on the 3M Corporation’s EAPG Grouper Version 3.6.

Episode — all Outpatient Services, except those described in Section 4.C and Sections 5.C.3 through 5.C.8, delivered to a MassHealth Member where the services were delivered on a single calendar day.

Episode Cost — a Hospital’s cost for delivering an Episode of care as determined by MassHealth and calculated as follows: Episode Cost is the product of the Hospital’s charges for those claim lines of an Episode that adjudicate to pay and the outpatient cost-to-charge ratio as calculated by EOHHS.

Excluded Units — Non-Acute Units as defined in this section; any unit which has a separate license from the Hospital; psychiatric and substance abuse units; and non-distinct observation units.

Executive Office of Health and Human Services (EOHHS) — the single state agency that is responsible for the administration of the MassHealth Program, pursuant to M.G.L. c. 118E and Titles XIX and XXI of the Social Security Act and other applicable laws and waivers.

Fiscal Year (FY) - The time period of 12 months beginning on October 1 of any calendar year and ending on September 30 of the immediately following calendar year.

Freestanding Pediatric Acute Hospital — an Acute Hospital which limits admissions primarily to children and which qualifies as exempt from the Medicare prospective payment system regulations.

Gross Patient Service Revenue — the total dollar amount of a Hospital’s charges for services rendered in a fiscal year.

High Medicaid Volume Freestanding Pediatric Acute Hospital – a Freestanding Pediatric Acute Hospital with more than 1,000 Medicaid discharges in FY12 for which a SPAD was paid, as determined by paid claims in MMIS as of May 11, 2013, and for which MassHealth was the primary payer.

Hospital (also Acute Hospital) — any Hospital licensed under M.G.L. c. 111, § 51 and which meets the eligibility criteria set forth in Section 3 of this RFA.

Hospital-Based Physician — any physician or physician group practice (excluding interns, residents, fellows, and house officers) who contracts with a Hospital to provide Hospital Services to Members at a site for which the hospital is otherwise eligible for reimbursement under this RFA. For purposes of this definition and related provisions, the term physician includes dentists, podiatrists, and osteopaths. Nurse practitioners, nurse midwives, physician assistants, and other allied health professionals are not Hospital-Based Physicians.

Hospital Discharge Data (HDD) —Hospital discharge filings, as provided and verified by each hospital and submitted to CHIA, including (1) FY11 Acute Hospital casemix data as screened and updated by CHIA as of June 13, 2013, for purposes of Section 5.B, on SPAD rate development, (2) Acute Hospital casemix data as screened and updated by CHIA as of May 31, 2013, for the 13-month period of September 1, 2011 through September 30, 2012 for purposes of Section 8.1 on 30-Day Potentially Preventable Readmissions; and (3) Acute Hospital casemix data as accepted by CHIA into CHIA’s database as of a date that will be determined by EOHHS, for the period October 1, 2012 through September 30, 2013 (FY13 HDD) for purposes of Section 7 on Pay-for-Performance Quality Reporting Requirements and Payment Methods.

Hospital-Licensed Health Center (HLHC) — a Satellite Clinic that (1) meets MassHealth requirements for reimbursement as an HLHC as provided at 130 CMR 410.413; and (2) is approved by and enrolled with MassHealth’s Provider Enrollment Unit as an HLHC.

Inflation Factors for Administrative Days — an inflation factor that is a blend of the Center for Medicare and Medicaid Services (CMS) market basket and the Massachusetts Consumer Price Index (CPI). Specifically, the CPI replaces the labor-related component of the CMS market basket to reflect conditions in the Massachusetts economy. The Inflation Factor for Administrative Days is as follows:

1.348% reflects the price changes between RY13 and RY14

Inflation Factors for Capital Costs — the factors used by CMS to update capital payments made by Medicare, which is based on the CMS Capital Input Price Index. The Inflation Factors for Capital Costs between RY04 and RY14 are as follows:

0.7% reflects the price changes between RY04 and RY05 0.7% reflects the price changes between RY05 and RY06 0.8% reflects the price changes between RY06 and RY07 0.9% reflects the price changes between RY07 and RY08 0.7% reflects the price changes between RY08 and RY09 1.4% reflects the price changes between RY09 and RY10 1.5% reflects the price changes between RY10 and RY11 1.5% reflects the price changes between RY11 and RY12 1.2% reflects the price changes between RY12 and RY13 1.4% reflects the price changes between RY13 and RY14

Inflation Factors for Operating Costs — for price changes between RY04 and RY07, and between RY08 and RY14, a blend of the Center for Medicare and Medicaid Services (CMS) market basket and the Massachusetts Consumer Price Index (CPI) in which the CPI replaces the labor-related component of the CMS market basket to reflect conditions in the Massachusetts economy. For price changes between RY07 and RY08, the inflation factor for operating costs is the CMS market basket. The Inflation Factors for Operating Costs between RY04 and RY14 are as follows:

1.186% reflects price changes between RY04 and RY05 1.846% reflects price changes between RY05 and RY06 1.637% reflects price changes between RY06 and RY07 3.300% reflects price changes between RY07 and RY08 3.000% reflects price changes between RY08 and RY09 for the period October 1, 2008 through December 6, 2008 1.424% reflects price changes between RY08 and RY09 for the period December 7, 2008 through September 30, 2009 0.719% reflects the price changes between RY09 and RY10 1.820% reflects the price changes between RY10 and RY11 1.665% reflects the price changes between RY11 and RY12 1.775% reflects the price changes between RY12 and RY13 1.405% reflects the price changes between RY13 and RY14

Inpatient Admission — the admission of a Member to an Acute Hospital for the purpose of receiving Inpatient Services in that Hospital.

Inpatient Services — medical services, including behavioral health services, provided to a Member admitted to an Acute Hospital. Payment rules regarding Inpatient Services are found in 130 CMR Parts 415 and 450, the regulations referenced therein, Appendix F to the MassHealth Acute Inpatient Hospital Manual, MassHealth billing instructions, and this RFA.

Insurance Payment — a payment received from any entity or individual legally responsible for paying all or part of the medical claims of MassHealth Members. Sources of payments include, but are not limited to: commercial health insurers, Medicare, MCOs, personal injury insurers, automobile insurers, and Workers’ Compensation.

Liability — the obligation of an individual to pay, pursuant to the individual’s Third-Party Insurance, for the services or items delivered (i.e., Coinsurance, Copayment or Deductible).

Managed Care Organization (MCO) — any entity with which EOHHS contracts to provide Primary Care and certain other medical services, including behavioral health services, to Members on a capitated basis and which meets the definition of an MCO as set forth in 42 CFR Part 438.2. MCOs also include Senior Care Organizations (SCOs) and CarePlus MCOs. In addition, MCOs include One Care plans for all purposes under this RFA, except for Section 4.A.2 and Section 7. MCOs also contract with the Connector to provide services to Commonwealth Care enrollees.

MassHealth (also Medicaid) — the Medical Assistance Program administered by EOHHS to furnish and pay for medical services pursuant to M.G.L. c. 118E and Titles XIX and XXI of the Social Security Act, and any approved waivers of such provisions.

MassHealth Average Length of Stay (ALOS) — the sum of non-psychiatric inpatient days for MassHealth discharges from October 1, 2011, through September 30, 2012, as determined utilizing MMIS paid claims where MassHealth is the primary payer, including paid Outlier Days, divided by the number of discharges using the casemix data residing in MMIS as of May 11, 2013.

Medicaid Management Information System (MMIS) — the state-operated system of automated and manual processes, certified by CMS, that meets the federal guidelines in Part 11 of the State Medicaid Manual, used to process Medicaid claims from providers of medical care and services furnished to Members, and to retrieve and produce service utilization and management information for program administration and audit purposes.

Member — a person determined by EOHHS to be eligible for medical assistance under the MassHealth program.

Non-Acute Unit — a chronic care, rehabilitation, or skilled nursing facility unit within a Hospital.

Observation Services — outpatient Hospital Services provided anywhere in an Acute Hospital to evaluate a Member’s condition and determine the need for admission to an Acute Hospital. Observation Services are provided under the order of a physician, consist of the use of a bed and intermittent monitoring by professional licensed clinical staff, and may be provided for more than 24 hours. Payment rules regarding Observation Services are found in 130 CMR 410.414, Appendix E to the MassHealth Acute Outpatient Hospital Manual, MassHealth billing instructions, and this RFA.

One Care: MassHealth plus Medicare (One Care plan) – a health plan or provider-based organization contracted with EOHHS and CMS, and accountable for providing integrated care to individuals age 21 through 64 at the time of enrollment who are eligible for both Medicare and MassHealth Standard or CommonHealth and who do not have any other comprehensive public or private health care coverage. A One Care plan is also known as an Integrated Care Organization (ICO).

Outlier Day — each day beyond 20 acute days, during a single admission, for which a Member remains hospitalized at acute status, other than in a DMH-Licensed Bed or an Excluded Unit.

Outpatient Department (also Hospital Outpatient Department) — a department or unit located at the same site as the Hospital’s inpatient facility, or at a School-Based Health Center that operates under the Hospital’s license and provides services to Members on an ambulatory basis. Hospital Outpatient Departments include day surgery units, Primary Care clinics, specialty clinics, and Emergency Departments.

Outpatient Services (also Outpatient Hospital Services) — medical services, including behavioral health services, provided to a Member on an outpatient basis, by or under the direction of a physician or dentist, in a Hospital Outpatient Department or Satellite Clinic for which a reimbursement method is specified in Section 5.C. Such services include, but are not limited to, Emergency Services, Primary Care services, Observation Services, ancillary services, and day surgery services. Payment rules regarding services provided to Members on an outpatient basis are found in 130 CMR Parts 410 and 450, Appendix F to the MassHealth Acute Outpatient Hospital Manual, MassHealth billing instructions, and this RFA.

PAPE Base Year — FY12, paid as of April 30, 2013.

PAPE Covered Services — MassHealth-covered Outpatient Services provided by Hospital Outpatient Departments or Satellite Clinics, except those services described in Section 4.C and Sections 5.C.3 through 5.C.8.

Pass-Through Costs — organ acquisition and malpractice costs that are paid on a cost-reimbursement basis and are added to the Hospital-specific standard payment amount per discharge.

Patient — a person receiving health care services from a hospital.

Pay-for-Performance Program for Acute Hospitals (P4P) — MassHealth’s method for quality scoring and converting quality scores to rate payments contingent upon Hospital adherence to quality standards and achievement of performance thresholds and benchmarks in accordance with the provisions of G.L. c. 118E, sec. 13B.

Payment Amount Per Episode (PAPE) — a Hospital-specific payment for all PAPE Covered Services provided by a Hospital to a MassHealth Member on an outpatient basis in one Episode except those services described in Section 4.C and Sections 5.C.3 through 5.C.8.

Pediatric Specialty Unit — a designated pediatric unit, pediatric intensive care unit, or neonatal intensive care unit in an Acute Hospital other than a Freestanding Pediatric Acute Hospital, in which the ratio of licensed pediatric beds to total licensed Hospital beds as of July 1, 1994, exceeded 0.20, and which qualifies for a Pediatric Standard Payment Amount Per Discharge, as set forth in the qualifying Hospital’s Appendix C.

Pediatric Standard Payment Amount Per Discharge — a Hospital-specific all-inclusive payment for the first twenty cumulative acute days of a Pediatric inpatient hospitalization in a Pediatric Specialty Unit, which is complete payment for an acute episode of illness, excluding the additional payment of Outlier Days, Transfer Per Diems, Administrative Days and Physician Payments.

Primary Care — all health care services customarily furnished by or through a general practitioner, family physician, internal medicine physician, obstetrician/gynecologist, pediatrician, nurse practitioner, or nurse midwife to the extent the furnishing of those services is legally authorized in the Commonwealth.

Primary Care Clinician (PCC) — a physician, independent nurse practitioner, group practice organization, community health center, Hospital-Licensed Health Center or Acute Hospital Outpatient Department with an executed MassHealth PCC Plan Provider contract.

Primary Care Clinician Plan (PCC Plan) — a comprehensive managed care plan, administered by EOHHS, through which enrolled MassHealth Members receive Primary Care, behavioral health, and other medical services. See 130 CMR 450.118.

Provider — an individual or entity that has a written contract with EOHHS to provide medical goods or services to Members.

Psychiatric Per Diem — a statewide per diem payment for psychiatric services provided to members in DMH-Licensed beds who are not enrolled with the BH Contractor or MCO.

Psychiatric Per Diem Base Year — the base year for the psychiatric per diem is FY04, using FY04 -403 cost reports as screened and updated as of March 10, 2006.

Public Service Hospital — any public Acute Hospital or any Acute Hospital operating pursuant to Chapter 147 of the Acts & Resolves of 1995 which has a private sector payer mix that constitutes less than 35% of its Gross Patient Service Revenue (GPSR) and where uncompensated care constitutes more than 5% of its GPSR.

Quality and Performance Initiatives — data-driven systemic efforts, anchored on measurement-driven activities, including Pay-for-Performance (P4P) initiatives, to improve performance of health-delivery systems that result in positive outcomes and cost-effective care.

Rate Year (RY) — generally, the period beginning October 1 and ending the following September 30. Please note that RY14 will begin on October 1, 2013, and end on September 30, 2014.

Rehabilitation Services – services provided in an Acute Hospital that are medically necessary to be provided at a Hospital level of care, to a member with a medical need for an intensive rehabilitation program that requires a multidisciplinary coordinated team approach to upgrade his/her ability to function with a reasonable expectation of significant improvement that will be of practical value to the Member measured against his/her condition at the start of the rehabilitation program.

Rate Year 2013 (RY13) – The period beginning January 1, 2013 and ending on September 30, 2013.

Rehabilitation Services — services provided in an Acute Hospital that are medically necessary to be provided at a Hospital level of care, to a member with medical need for an intensive rehabilitation program that requires a multidisciplinary coordinated team approach to upgrade his/her ability to function with a reasonable expectation of significant improvement that will be of practical value to the Member measured against his/her condition at the start of the rehabilitation program.

Rehabilitation Unit — a distinct unit of rehabilitation beds in a Department of Public Health (DPH)-licensed Acute Hospital that provides comprehensive Rehabilitation Services to Members with appropriate medical needs.

Revenue Center — a functioning unit of a Hospital that provides distinctive services to a patient for a charge.

Satellite Clinic — a facility that operates under a Hospital’s license, is subject to the fiscal, administrative, and clinical management of the Hospital, provides services to Members solely on an outpatient basis, is not located at the same site as the Hospital’s inpatient facility, and demonstrates to EOHHS’ satisfaction that it has CMS provider-based status in accordance with 42 CFR 413.65.

School-Based Health Center (SBHC) — a center located in a school setting which: (1) provides health services to MassHealth Members under the age of 21; (2) operates under a Hospital’s license; (3) is subject to the fiscal, administrative, and clinical management of a Hospital Outpatient Department or HLHC; and (4) provides services to Members solely on an outpatient basis.

SPAD Base Year — the hospital-specific base year for the Standard Payment Amount per Discharge is FY11 using the FY11 -403 cost report as screened and updated as of May 23, 2013.

Standard Payment Amount Per Discharge (SPAD) — a Hospital-specific all-inclusive payment for the first twenty cumulative acute days of an inpatient hospitalization, which is the complete fee-for-service payment for an acute episode of illness, excluding the additional payment of Outlier Days, Transfer Per Diems, Administrative Days and Physician Payments.

Third-Party Insurance — any insurance, including Medicare, that is or may be liable to pay all or part of the Member’s medical claims. Third-Party Insurance includes a MassHealth Member’s own insurance.

Title XIX — Title XIX of the Social Security Act, 42 U.S.C. § 1396 et seq., or any successor statute enacted into federal law for the same purposes as Title XIX.

Total EAPG Payment — an adjusted calculation of total payment for PAPE Covered Services provided to MassHealth Members in the PAPE Base Year using the EAPG grouper, and calculating the Episode Cost using the FY12 outpatient cost-to-charge ratio.

Transfer Patient — any inpatient who meets any of the following criteria: (1) is transferred between Acute Hospitals; (2) is transferred between a DMH-Licensed Bed and a medical/surgical unit in an Acute Hospital; (3) is receiving treatment for a substance-related disorder or mental health-related services and whose enrollment status with the BH Contractor changes; (4) who becomes eligible for MassHealth after the date of admission and prior to the date of discharge; (5) is a Member who exhausts other insurance benefits after the date of admission and prior to the date of discharge; (6) who transfers, after the date of admission, from the PCC Plan or non-managed care to an MCO, or from an MCO to the PCC Plan or non-managed care; or (7) has a primary diagnosis of a psychiatric disorder in a non-DMH-Licensed Bed.

Usual and Customary Charge — a routine fee that Hospitals charge for Acute Inpatient and Outpatient Services, regardless of payer source.

Section 3: Eligible Applicants

A. In-state Acute Hospitals are eligible to apply for a Contract pursuant to this RFA if they:

1. Operate under a Hospital license issued by the Massachusetts Department of Public Health (DPH);

2. Are Medicare-certified and participate in the Medicare program;

3. Have more than 50% of their beds licensed as medical/surgical, intensive care, coronary care, burn, pediatric (Level I or Level II), pediatric intensive care (Level III), maternal (Obstetrics), or neonatal intensive care beds (Level III), as determined by DPH; and

4. Currently utilize more than 50% of their beds exclusively as either medical/surgical, intensive care, coronary care, burn, pediatric (Level I or Level II), pediatric intensive care (Level III), maternal (Obstetrics), or neonatal intensive care beds (Level III), as determined by EOHHS.

In determining whether a Hospital satisfies the utilization requirement set forth in Section 3.A.4, EOHHS may evaluate, pursuant to an on-site audit or otherwise, a number of factors including, but not limited to, the average length of patient stay (see Section 11.B.5) at that Hospital.

B. The Hospital shall apply on behalf of all Inpatient Departments, Outpatient Departments, Emergency Departments and Satellite Clinics.

C. The Hospital is not permitted to apply on behalf of, or claim payment for services provided by, any other related clinics, Provider groups, or other entities, except as otherwise provided in Sections 5.B.10 and 5.C.

Section 4: Non-Covered Services, Program Initiatives and Ambulatory Services Not Covered by the RFA

A. Non-Covered Services

EOHHS will reimburse MassHealth-participating Hospitals at the rates established in this RFA and accompanying Contract for all covered Inpatient, Outpatient, and Emergency Services provided to MassHealth Members except for the following:

1. Behavioral Health Services for Members Enrolled with the BH Contractor EOHHS’ BH Contractor contracts with providers to form a network through which behavioral health services are delivered to MassHealth Members enrolled with the BH Contractor. Hospitals in the BH Contractor’s network qualify for fee-for-service payments solely by the BH Contractor for services to Members enrolled with the BH Contractor, pursuant to contracts between the BH Contractor and each contracting Hospital.

Hospitals that are not in the BH Contractor’s network (hereinafter “non-network Hospitals”) do not qualify for MassHealth reimbursement for Members enrolled with the BH Contractor who receive non-Emergency or Post-Stabilization Behavioral Health Services, except in accordance with a service-specific agreement with the BH Contractor.

Non-network Hospitals that provide medically necessary behavioral health Emergency and Post-Stabilization Services to Members enrolled with the BH Contractor qualify for fee-for-service reimbursement solely by the BH Contractor. Such reimbursement is available only if the Hospital complies with the BH Contractor’s billing requirements and any applicable service authorization requirements that are permissible under federal law at 42 USC 1396u-2(b)(2), 42 CFR 438.114, and 42 CFR 422.113(c). In accordance with the preceding federal law, and with 42 CFR 422.214(b), if a Member enrolled with the BH Contractor receives inpatient or outpatient behavioral health Emergency and Post-Stabilization Services and the BH Contractor offers to pay the non-network Hospital a rate equal to that Hospital’s applicable fee-for-service RFA rate less any amount for graduate medical education, the non-network Hospital must accept the BH Contractor’s rate offer as payment in full for such behavioral health Emergency and Post-Stabilization Services. Nothing in this paragraph prohibits the BH Contractor from negotiating to pay any non-network Hospital at rates lower than the non-network Hospital’s applicable fee-for-service RFA rate less any amount for graduate medical education for Behavioral Health Emergency and Post-Stabilization Services.

Hospitals are not entitled to any fee-for-service reimbursement from EOHHS, and may not claim such reimbursement for any services that are BH Contractor-covered services or are otherwise reimbursable by the BH Contractor. Any such fee-for-service payment by EOHHS shall constitute an overpayment as defined in 130 CMR 450.235. Under such circumstances, EOHHS may also exercise its authority under 130 CMR 450.238 et seq. to impose sanctions for improper billing.

2. MCO Services Hospitals that provide medically necessary MCO-covered services, including Emergency and Post-Stabilization Services, qualify for fee-for-service reimbursement solely by the MCO.

In accordance with 42 USC 1396u-2(b)(2), 42 CFR 438.114, 42 CFR 422.113(c), and 42 CFR 422.214(b), if an MCO offers to pay a non-network Hospital a rate equal to the Hospital’s applicable fee-for-service RFA rate less any amount for graduate medical education for all Emergency and Post-Stabilization Services for all of the MCO’s MassHealth enrollees, that non-network Hospital must accept the MCO’s rate offer as payment in full. This requirement does not prohibit an MCO from negotiating to pay any non-network Hospital at rates lower than the non-network Hospital’s applicable fee-for-service RFA rate less any amount for graduate medical education for Emergency and Post-Stabilization Services.

Hospitals are not entitled to any fee-for-service reimbursement from EOHHS, and may not claim such reimbursement for any services that are MCO-covered services or are otherwise reimbursable by the MCO. Any such fee-for-service payment by EOHHS shall constitute an overpayment as defined in 130 CMR 450.235. Under such circumstances, EOHHS may also exercise its authority under 130 CMR 450.238 et seq. to impose sanctions for improper billing.

3. Commonwealth Care MCO Services

Hospitals that provide medically necessary MCO-covered services, including Emergency and Post-Stabilization Services, qualify for fee-for-service reimbursement solely by the MCO.

If an MCO under contract with the Connector offers to pay a non-network Hospital a rate equal to the Hospital’s applicable fee-for-service RFA rate less any amount for graduate medical education for all Emergency and Post-Stabilization Services for all of the MCO’s Commonwealth Care enrollees, that non-network Hospital is required to accept the MCO’s rate offer as payment in full. This requirement does not prohibit an MCO from negotiating to pay any non-network Hospital at rates lower than the non-network Hospital’s applicable fee-for-service RFA rate less any amount for graduate medical education for Emergency and Post-Stabilization Services.

Hospitals are not entitled to any reimbursement from EOHHS, and may not claim such reimbursement for any services provided to Commonwealth Care enrollees. Any payment by EOHHS for such services shall constitute an overpayment as defined in 130 CMR 450.235. Under such circumstances, EOHHS may also exercise its authority under 130 CMR 450.238 et seq. to impose sanctions for improper billing.

4. Medical Security Plan Direct Coverage Health Plan Services

Hospitals that provide medically necessary Health Plan-covered services, including Emergency and Post-Stabilization Services, qualify for fee-for-service reimbursement solely by the Health Plan.

If a Health Plan under contract with the Connector or the Department of Unemployment Assistance offers to pay a non-network Hospital a rate equal to the Hospital’s applicable fee-for-service RFA rate less any amount for graduate medical education for all Emergency and Post-Stabilization Services for all of the Health Plan’s Medical Security Plan Direct Coverage enrollees, that non-network Hospital is required to accept the Health Plan’s rate offer as payment in full. This requirement does not prohibit a Health Plan from negotiating to pay any non-network Hospital at rates lower than the non-network Hospital’s applicable fee-for-service RFA rate less any amount for graduate medical education for Emergency and Post-Stabilization Services.

Hospitals are not entitled to any reimbursement from EOHHS, and may not claim such reimbursement for any services provided to Medical Security Plan Direct Coverage enrollees. Any payment by EOHHS for such services shall constitute an overpayment as defined in 130 CMR 450.235. Under such circumstances, EOHHS may also exercise its authority under 130 CMR 450.238 et seq. to impose sanctions for improper billing.

For purposes of this Section 4.A.4, the following terms have the following meanings:

Health Plan – any entity that enters into a contract with the Connector or the Department of Unemployment Assistance for the provision of health insurance plans or the arrangement of health care services under the MSP Direct Coverage Health Insurance Program, as defined in M.G.L. c. 151A and 430 CMR 7.07(1)(b).

Medical Security Plan Direct Coverage Enrollee – an individual, and any of the individual’s qualified dependents as defined in 430 CMR 7.00, determined by the Department of Unemployment Assistance to be eligible for participation in the MSP Direct Coverage Program, as defined in M.G.L. c. 151A and 430 CMR 7.07(1)(b), and enrolled by the Department of Unemployment Assistance or its designee in a health insurance plan offered by a Health Plan.

5. One Care Plan Services

Hospitals that provide medically necessary One Care plan-covered services, including Emergency and Post-Stabilization Services, qualify for fee-for-service reimbursement solely by the One Care plan.

If a One Care plan offers to pay a non-network Hospital a rate equal to the amount allowed under original Medicare less any amount for graduate medical education for all Emergency and Post-Stabilization Services for all of the One Care plan’s enrollees, that non-network Hospital must accept the One Care plan’s rate offer as payment in full. This requirement does not prohibit a One Care plan from negotiating to pay any non-network Hospital at rates lower than original Medicare less any amount for graduate medical education for Emergency and Post-Stabilization Services.

Hospitals are not entitled to any fee-for-service reimbursement from EOHHS, and may not claim such reimbursement for any services that are One Care plan-covered services or are otherwise reimbursable by the One Care plan. Any such fee-for-service payment by EOHHS shall constitute an overpayment as defined in 130 CMR 450.235. Under such circumstances, EOHHS may also exercise its authority under 130 CMR 450.238 et seq. to impose sanctions for improper billing.

6. Air Ambulance Services

In order to receive reimbursement for air ambulance services, Hospitals must have a separate contract with EOHHS for such services.

7. Non-Acute Units and Other Separately Licensed Units in Acute Hospitals

Unless otherwise specified in this RFA, EOHHS shall not reimburse Acute Hospitals through this RFA and the accompanying contract for services provided to Members in Non-Acute Units, other than Rehabilitation Units, and any units which have a separate license, such as a skilled nursing unit, or any unit which is licensed to provide services other than Acute Hospital services as described in Section 3.A.4.

8. Claims for Outpatient Professional Services (Primary Care Payment Reform (PCPR)

For any Hospital Outpatient Department, HLHC, or other Satellite Clinic site participating in the Primary Care Payment Reform (PCPR) initiative, outpatient Hospital-Based Physician services are governed by the site’s executed MassHealth PCC Plan Provider contract, and are not payable through this Acute Hospital RFA and Contract.

B. Program Initiatives

1. Hospital Services Reimbursed through Other Contracts or Regulations

The Commonwealth may institute special program initiatives, other than those in this RFA, which provide, through contract or regulation, alternative reimbursement methodologies for Hospital services or certain Hospital services. In such cases, payment for such services is made pursuant to the contract or regulations governing the special program initiative, and not through this RFA and resulting Contract.

2. Demonstration Projects

It is an EOHHS priority to ensure that MassHealth Members receive quality medical care at sites of service that promote delivery of such medical care in a cost-effective and efficient manner. In furtherance of this objective, and subject to state and federal approval requirements, if any, EOHHS may, through separate contracts or through this RFA, institute demonstration projects with Hospitals to develop innovative approaches to delivery of services and payment for services. Such demonstration projects will be designed to focus on ensuring that Hospitals provide or facilitate the provision of quality services to MassHealth Members in a manner that is efficient and cost-effective and that may include alternative reimbursement methodologies for Hospital services or certain Hospital services.

3. MassHealth Drug List

To help ensure consistency in medication regimens and services, prescribers should conform to the MassHealth Drug List (see www.mass.gov/druglist) whenever medically appropriate for inpatients, outpatients, and upon discharge.

C. Ambulatory Services Not Covered by the RFA

The following services provided by Hospitals to MassHealth Members on an outpatient basis are not paid pursuant to the Acute Hospital RFA and Contract: ambulance services, psychiatric day treatment, early intervention, home health, adult day health and adult foster care, and outpatient covered drugs processed through the Pharmacy On-Line Processing System (POPS). Hospitals must continue to conform to the separate provider participation and reimbursement requirements for those MassHealth programs.

Section 5: Reimbursement System

A. General Provisions

Acute Hospitals that participate in the MassHealth program under the terms of the Hospital Contract and its accompanying payment methodology shall accept payment at the rates established in this RFA as payment in full for services reimbursable by EOHHS that are rendered to MassHealth Members admitted as inpatients or treated as outpatients on or after October 1, 2013.

Non-acute units, other than Rehabilitation Units, and units within Hospitals that operate under separate licenses, such as skilled nursing units, will not be affected by this methodology.

For Inpatient Services paid on a per diem basis, MassHealth pays the lesser of (i) the per diem rate or (ii) 100% of the Hospital’s actual charge submitted.

Pursuant to M.G.L. c. 118E, §9 (as amended by c. 211 of the Acts of 2006), which describes pre-admission counseling for long-term care, Hospitals will undertake the following activities in connection with instructions that may be issued from time to time by EOHHS: (i) inform patients of the availability of EOHHS-approved counseling services; (ii) identify patients who might benefit from counseling; (iii) distribute informational materials to patients; and (iv) participate in training events organized by EOHHS.

A Hospital with a DMH-licensed inpatient psychiatric unit must accept into its DMH-licensed inpatient psychiatric unit all referrals of MassHealth members that meet the established admission criteria of the inpatient unit.

Except as otherwise provided in Sections 5.B.7 through 5.B.13, fee-for-service payments for Inpatient Services provided to MassHealth Members not enrolled in an MCO will be a Hospital-specific Standard Payment Amount per Discharge (SPAD) which will consist of the sum of (1) a statewide average payment amount per discharge that is adjusted for wage area differences and the Hospital-specific MassHealth casemix; (2) a per-discharge, Hospital-specific payment amount for Hospital-specific expenses for malpractice and organ acquisition costs; and (3) a per-discharge payment amount for the capital cost allowance, adjusted by a Hospital-specific casemix and by a capital inflation factor, as that sum may be adjusted pursuant to Section 8.1. Each of the elements making up the sum is described in Sections 5.B.2 through 5.B.4.

For Hospitals with Pediatric Specialty Units, payment for admissions to the Pediatric Specialty Unit for which a SPAD is otherwise payable will be made using the Pediatric SPAD. The Pediatric SPAD is calculated using the same methodology as the SPAD, except that the casemix index, discharges, and average length of stay are based on data from the Pediatric Specialty Unit.