Final Action for FFY 2021 DSH Payments and Swing Bed Hospital and Administrative Day Rates

The South Carolina Department of Health and Human Services (SCDHHS), pursuant to the requirements of Section 1902(a)(13)(A) of the Social Security Act, gives notice of the following actions regarding its methods and standards for establishing Medicaid Disproportionate Share Hospital (DSH) payments to qualifying DSH hospitals and for updating the swing bed hospital and administrative day rates.

Division CC, Title II, Section 201 of The Consolidated Appropriations Act, 2021 (H.R. 133), signed into law on December 27, 2020, further delays the Affordable Care Act’s (ACA) DSH payment reductions. The reductions are now scheduled to take effect in federal fiscal year 2024 through 2027 with an aggregate reduction of $8.0 billion dollars a year. Therefore due to the delay in the ACA DSH payment reductions the SCDHHS will make the following changes to the FFY 2021 DSH payment methodology:

• The agency will update the base year used to calculate the interim DSH payments for the DSH allotment period, which ends Sept. 30, 2021 (FFY 2021), using hospital fiscal year-end (HFY) 2019 data; the continued use of the Dec. 19, 2008, final rule (Federal Register / Vol. 73, No. 245) relating to the audits of the Medicaid DSH Payment Plans; and, the Dec. 3, 2014, final rule (Federal Register /Vol. 79, No. 232) relating to the Medicaid Program DSH Payments Uninsured Definition.
• The agency will update the inflation rate used to trend the DSH base year cost to the end of the 2019 calendar year.
• The agency will expend 100% of its FFY 2021 Medicaid DSH allotment to qualifying DSH-eligible hospitals during the Medicaid State Plan Rate Year.
• In accordance with Budget Proviso 33.20 (A) of the state fiscal year (SFY) 2019/2020 South Carolina State Appropriations Act, the agency will tie DSH payments to participation in the Healthy Outcomes Initiative and may expand the program as DSH funding is available.

SCDHHS will also make the following changes to the inpatient hospital payment methodology effective on or after Jan. 1, 2021:

• The agency will update the inpatient hospital swing bed and administrative day rates based upon the Oct. 1, 2020/Jan. 1, 2021 rebasing of nursing facility payment rates.

SCDHHS will implement bullet points one through three in order to calculate the FFY 2021 DSH payments based on the changes in the DSH payment methodology, as previously noted, and the most recent cost reporting period data available (HFY 2019) and Medicaid DSH allotment available. SCDHHS will implement bullet four in order to improve outcomes for the uninsured population. SCDHHS will update the swing bed and administrative day rates, bullet five, based on the annual rebasing of nursing facility rates.

It is anticipated that annual aggregate DSH expenditures may increase by $10.3 million total dollars. In regard to swing bed and administrative day rates, it is anticipated that inpatient hospital expenditures may increase by approximately $30,000 total dollars.

Any written comments submitted may be reviewed by the public at the SCDHHS, Division of Acute Care/Ancillary Reimbursements, Room 1219, 1801 Main Street, Columbia, S.C., Monday through Friday between 9 a.m.-5 p.m.