TMPPM 2008 > Texas Medicaid Services > Hospital (Medical/Surgical Acute Care Facility) > Inpatient

25.2.2.1 Prospective Payment Methodology

Inpatient hospital stays except in children's hospitals and psychiatric facilities (THSteps-CCP) are reimbursed according to a prospective payment methodology based on diagnosis-related groups (DRGs). The reimbursement method itself does not affect inpatient benefits and limitations. Inpatient admissions must be medically necessary and are subject to the Texas Medicaid Program's utilization review (UR) requirements.

The DRG reimbursement includes all facility charges (for example, laboratory, radiology, and pathology). Hospital-based laboratories and laboratory providers who deliver referred services outside the hospital setting must obtain reimbursement for the technical portion from the hospital. The technical portion includes the handling of specimens and the automated or technician-generated reading and reporting of results. The technical services are not billable to Texas Medicaid clients.

The Texas Medicaid Program does not distinguish types of beds or units within the same acute care facility for the same inpatient stay (i.e., psychiatric or rehabilitation). Because all Medicaid inpatient hospitalizations are included in the DRG database that determines the DRG payment schedule, psychiatric and rehabilitation admissions are not excluded from the DRG payment methodology. To ensure accurate payment, the Texas Medicaid Program requires that only one claim be submitted for each inpatient stay with appropriate diagnosis and procedure code sequencing. The discharge and admission hours (military time) are required on the UB-04 CMS-1450 claim form, to be considered for payment.

Prior authorization is not required for psychiatric admissions to acute care hospitals for reimbursement; however, admissions must be medically necessary and are subject to retrospective UR by HHSC.

Reimbursement to acute care hospitals for inpatient services is limited to $200,000 per client, per benefit year (November 1 through October 31). Claims may be subject to retrospective review, which may result in recoupment. This limitation does not apply to services related to certain organ transplants or services to THSteps clients when provided through CCP.

In accordance with legislative direction included in the 2006-2007 General Appropriations Act (Article II, Section 49, S.B. 1, 79th Legislature, Regular Session, 2005), a rate reduction will be applied to inpatient hospital services rendered to non-Medicare Supplemental Security Income (SSI) and SSI-related Medicaid clients. The rate reduction will affect hospital providers within the Bexar, Dallas, El Paso, Lubbock, Tarrant, Nueces, Harris, and Travis service areas that are reimbursed by DRG.

Effective September 1, 2007, a hospital that is either located in a county with 50,000 or fewer persons, is a Medicare-designated rural referral center (RRC) or sole community hospital (SCH) that is not located in a metropolitan statistical area (MSA) as defined by the U.S. Office of Management and Budget, or is a Medicare-designated critical access hospital (CAH), will be reimbursed the greater of the prospective payment system rate or a cost-reimbursement methodology authorized by the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA) using the most recent data.

A new provider is given a reimbursement inpatient interim rate of 50 percent until a cost audit has been performed. A default standard dollar amount (SDA) rate is assigned for newly enrolled providers or newly constructed facilities.

Payment is calculated by multiplying the SDA for the hospital's payment division indicator times the relative weight associated with the DRG assigned by Grouper.

Refer to: "Children's Hospitals" .

"Psychiatric Hospital/Facility (Freestanding) (THSteps-CCP Only)" for more reimbursement information.