The purpose and effect of the proposed rule is to incorporate changes to the Florida Title XIX Inpatient Hospital Reimbursement Plan payment methodology, effective July 1, 2008, in accordance with House Bill 5001, 2008-09 General Appropriations Act, Specific Appropriations 206, 207, 238, and 239 and House Bill 5085, Section 5, which amended section 409.908, Florida Statutes. 1. The Agency shall implement a recurring methodology in the Title XIX Inpatient Hospital Reimbursement Plan to achieve a $154,333,435 rate reduction through an additional Medicaid Trend Adjustment. In establishing rates through the normal process, prior to including this reduction, if the unit cost is equal to or less than the unit cost used in establishing the budget, no additional reduction in rates is necessary. In establishing rates through the normal process, prior to including this reduction, if the unit cost is greater than the unit cost used in establishing the budget, then rates shall be reduced by an amount required to achieve this reduction, but shall not be reduced below the unit cost used in establishing the budget. 2. The Agency shall establish rates at a level that ensures no increase in statewide expenditures resulting from a change in unit costs for two fiscal years effective July 1, 2009. Reimbursement rates for the two fiscal years shall be as provided in the General Appropriations Act. 3. Any hospital will be exempt from the inpatient targets and ceilings if that hospital was identified by the Agency for Health Care Administration as qualifying for the exemption pursuant to Section 409.905(5)(c), Florida Statutes, in fiscal year 2007-08 and did not receive funding in the final General Appropriations Act for Fiscal Year 2007-08. 4. Hospitals will be exempt from the inpatient reimbursement ceilings whose charity care and Medicaid days, as a percentage of total adjusted hospital days, equals or exceeds 11 percent. The Agency shall use the average of the 2002, 2003, and 2004 audited DSH data available as of March 1, 2008. In the event the Agency does not have the prescribed three years of audited DSH data for a hospital, the Agency shall use the average of the audited DSH data for 2002, 2003 and 2004 that are available. Those hospitals qualifying using audited DSH data received between January 30, 2008, and March 1, 2008, and who were excluded from the LIP Council recommendations may be exempt from the inpatient ceilings. 5. The inpatient reimbursement ceilings will be eliminated for hospitals that have a minimum of ten licensed Level II Neonatal Intensive Care Beds and are located in Trauma Services Area 2. 6. The inpatient hospital reimbursement ceilings will be eliminated for hospitals whose Medicaid days as a percentage of total hospital days exceed 7.3 percent, and are designated or provisional trauma centers. This provision shall apply to all hospitals that are designated or provisional trauma centers on July 1, 2008, and any hospitals that become a designated or provisional trauma center during state fiscal year 2008-2009. The Agency shall use the average of the 2002, 2003 and 2004 audited DSH data available as of March 1, 2008. In the event the Agency does not have the prescribed three years of audited DSH data for a hospital, the Agency shall use the average of the audited DSH data for 2002, 2003, and 2004 that are available. 7. The inpatient reimbursement ceilings will be eliminated for teaching, specialty, Community Hospital Education Program hospitals and Level III Neonatal Intensive Care Units that have a minimum of three of the following designated tertiary services as regulated under the Certificate of Need Program: pediatric bone marrow transplantation, pediatric open heart surgery, pediatric cardiac catheterization and pediatric heart transplantation. Included in these funds are the annualized amounts to offset the reductions taken against hospitals defined in Section 408.07(45), Florida Statutes, that are not certified trauma centers, as identified in Section 12, Chapter 2007-326, Laws of Florida. 8. A buy back provision will be applied to the Medicaid trend adjustment that is being applied against the Medicaid inpatient rates for the following three categories of hospitals. Budget authority up to $34,484,976 is provided to the first category of hospitals, which are those hospitals that are part of a system that operates a provider service network in the following manner: $20,000,000 is for Jackson Memorial Hospital; $3,968,662 is for hospitals in Broward Health; $2,376,638 is for hospitals in the Memorial Healthcare System; and $3,428,386 is for Shands Jacksonville and $4,711,290 is for Shands Gainesville. In the event the above amounts exceed the amount of the Medicaid trend adjustment applied to each hospital, the excess funds will be used to buy back other Medicaid reductions in the inpatient rate. Budget authority up to $18,125,729 shall be used for the second category to buy back the Medicaid trend adjustment that is being applied against the Medicaid inpatient rates for those hospitals that are licensed as a children’s specialty hospital and whose Medicaid days plus charity care days divided by total adjusted patient days equals or exceeds 30 percent. In the event that the funds under this category exceed the amount of the Medicaid trend adjustment, then any excess funds will be used to buy back other Medicaid reductions in the inpatient rate for those individual hospitals. Budget authority up to $3,420,570 shall be used for the third category to buy back the additional Medicaid trend adjustment that is being applied to rural hospitals under Specific Appropriation 206 for fiscal year 2008-2009. In the event the funds under this category exceed the amount of the Medicaid trend adjustment, then any excess funds will be used to buy back other Medicaid reductions in the inpatient rate for those individual hospitals. For this provision the Agency shall use the 2002, 2003, and 2004 audited DSH data available as of March 1, 2008. In the event the Agency does not have the prescribed three years of audited DSH data for a hospital, the Agency shall use the average of the audited DSH data for 2002, 2003, and 2004 that are available. 9. Effective July 1, 2008, budget authority up to $111,355,553 is provided for a buy back provision for state or local government owned or operated hospitals, teaching hospitals as defined in Section 408.07(45) or 395.805, Florida Statutes, which have 70 or more full-time equivalent resident physicians and those hospitals whose Medicaid and charity care days divided by total adjusted days exceeds 25 percent to buy back the Medicaid inpatient trend adjustment shall be applied to their individual hospital rates and other Medicaid reductions to their inpatient rates up to actual Medicaid inpatient cost. The Agency shall use the average of 2002, 2003, and 2004 audited DSH data available as of March 1, 2008. In the event the Agency does not have the prescribed three years of audited DSH data for a hospital, the Agency shall use the average of the audited DSH data for 2002, 2003 and 2004 that are available. 10. $148,382,079 is provided for disproportionate share payments to public hospitals. 11. $58,231,172 is provided for disproportionate share payments to defined statutory teaching hospitals; prior to the distribution of these funds to the statutorily defined teaching hospitals, $6,487,220 shall be allocated to Shands Jacksonville Hospital, $2,660,440 shall be distributed to Tampa General Hospital, and $1,083,512 shall be distributed to Shands Teaching Hospital. 12. $12,000,000 is provided for disproportionate share payments to family practice teaching hospitals. 13. $62,290,337 is provided for disproportionate share payments to mental heath programs. 14. $2,444,444 is provided for specialty disproportionate share programs. 15. Deletion of the phrase “For cost reports received on or after October 1, 2003” and the word “these” as it relates to the cost reporting receipt provision from the Inpatient Hospital Reimbursement Plan.