1 TAC § 355.8056. State-Owned Teaching Hospital Reimbursement Methodology, DIVISION 4. MEDICAID HOSPITAL SERVICES

(a) For cost reporting periods beginning on or after September 1, 2008, HHSC or its designee reimburses state-owned teaching hospitals under methods and procedures described in the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA).

(b) For dates of admission on or after September 1, 2003, state-owned teaching hospitals with allowable Direct Graduate Medical Education (DGME) costs will receive a pro rata share of their annual DGME cost based on availability of appropriated funds. DGME expenses are not considered costs associated with inpatient hospital services and are not settled to cost.

(c) Interim payments are determined by multiplying a hospital's charges allowed under Medicaid by the interim rate effective on the date of admission derived from the hospital's most recent Medicaid cost report settlement, whether tentative or final.

(d) The amount and frequency of interim payments will be subject to the availability of funds appropriated for that purpose. Interim payments are subject to settlement at both tentative and final audit of a hospital's cost report.

(e) Cost Settlement.

(1) The cost settlement process is limited by the TEFRA target cap set pursuant to the Social Security Act §1886(b) (

42 U.S.C. §1395ww

(b)).

(2) Notwithstanding the process in (1) of this subsection, HHSC or its designee uses each hospital's final audited cost report, which covers a fiscal year ending during a base year period, for calculating the TEFRA target cap for a hospital.

(3) HHSC or its designee selects a new base year period for calculating the TEFRA target cap at least every three years.

(4) HHSC or its designee increases a hospital's TEFRA target cap in years in which the target cap is not reset under this paragraph, by multiplying the target cap by the CMS Prospective Payment System Hospital Market Basket Index adjusted to the hospital's fiscal year.