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Title: Section 86-1.15 - Definitions

Effective Date


86-1.15 Definitions. As used in this Subpart, the following definitions shall apply:

(a) Diagnosis related groups (DRGs) shall mean the All-Patient-Refined (APR) classification system which utilizes diagnostic related groups with assigned weights that incorporate differing levels of severity of a patient's condition and the associated risk of mortality, and reflects such factors as the patient's medical diagnosis, severity level, sex, age, and procedures performed.

(b) DRG case-based payment per discharge shall mean the payment to be received by a hospital for all inpatient services, except for physician services, rendered to each patient based on the DRG to which that patient has been assigned, as determined by multiplying the statewide base price by the applicable service intensity weight (SIW) and facility-specific wage equalization factor (WEF) and as further adjusted for teaching hospitals by the inclusion of reimbursement for direct and indirect graduate medical education (GME) costs and for all hospitals, the inclusion of non-comparable costs.

(c) Service intensity weights (SlWs) are the cost weights established such that the SIW for any given DRG indicates the relative cost of the average cost of the patient in the DRG as compared to the average cost of all patients in all DRGs. Weights are developed using cost data from Medicaid fee-for-service, Medicaid managed care and commercial payors as reported to the Statewide Planning and Research Cooperative System (SPARCS).

(d) Case mix index (CMI) shall mean the relative costliness of a hospital's case mix relative to the case mix of all other hospitals as reflected in the weighted aggregate SIW for the hospital.

(e) Reimbursable operating costs shall mean reported operating costs which relate to the cost of providing inpatient hospital services to Medicaid patients, adjusted for inflation between the base period used to determine the statewide base price and the rate period in accordance with trend factors determined pursuant to the applicable provisions of section 2807-c(10) of the Public Health Law, but excluding the following costs:

(1) ALC costs;

(2) Exempt unit costs;

(3) Transfer costs; and

(4) High-cost outlier costs.

(f) Graduate medical education (GME).

(1) Direct GME costs shall mean the reimbursable salaries, fringe benefits, non-salary costs and allocated overhead for residents, fellows, and supervising physicians trended to the rate year by the applicable provisions of section 2807-c(10) of the Public Health Law.

(2) Indirect GME costs shall mean an estimate of the costs associated with additional ancillary intensiveness of medical care, more aggressive treatment regimens, and increased availability of state-of-the-art testing technologies resulting from the training of residents and fellows.

(g) High-cost outlier costs for payment purposes shall mean 100 percent of the hospital's charges converted to cost, using the hospital's most recent ratio of cost-to-charges that exceed the DRG specific high-cost thresholds calculated pursuant to section 86-1.21 of this Subpart.

(h) Alternate level of care (ALC) services shall mean those services provided by a hospital to a patient for whom it has been determined that inpatient hospital services are not medically necessary, but that post-hospital extended care services are medically necessary, consistent with utilization review standards, and are being provided by the hospital and are not otherwise available.

(i) Exempt hospitals and units shall mean those hospitals and units that are paid per diem rates of payment pursuant to the provisions of section 86-1.23 of this Subpart, rather than receiving per discharge case-based rates of payment.

(j) The wage equalization factor (WEF) shall mean the mechanism to equalize hospital salary and fringe benefit costs to account for the differences in the price of labor among hospitals and groups of hospitals.

(k) Statewide Base Price shall mean the numeric value calculated pursuant to section 86-1.16 of this Subpart which shall be used to calculate DRG case-based payments per discharge as defined in subdivision (b) of this section.

(l) Non-comparable adjustments shall mean those base year costs that are passed through the statewide base price calculation and applied to the case-based rate of payment as an add-on payment. The following shall be considered non-comparable adjustments:

(1) Medicaid costs associated with ambulance services operated by a facility and reported as inpatient costs in the institutional cost report. Effective October 1, 2020, these costs shall exclude ground emergency transportation services costs that are being reimbursed pursuant to Chapter 56 of the Laws of 2020; and

(2) Medicaid costs associated with hospital-based physicians at hospitals designated under the Medicare program as meeting the criteria set forth in section 1861(b)(7) of the federal Social Security Act; and

(3) Medicaid costs associated with schools of nursing operated by the facility and reported as inpatient costs in the Institutional Cost Report.

(m) Transfers. For purposes of transfer per diem payments, a transfer patient shall mean a patient who is not discharged as defined in this section, is not transferred among two or more divisions of merged or consolidated facilities, is not assigned to a DRG specifically identified as a DRG for transferred patients only, and meets one of the following conditions:

(1) is transferred from an acute care facility reimbursed under the DRG case-based payment system to another acute care facility reimbursed under this system; or

(2) is transferred to an out-of-state acute care facility; or

(3) is a neonate who is being transferred to an exempt hospital for neonatal services.

(n) Discharges, as used in this Subpart, shall mean those inpatients whose admission to the facility occurred on or after December 1, 2009, and:

(1) the patient is released from the facility to a nonacute care setting;

(2) the patient dies in the facility; or

(3) the patient is transferred to a facility or unit that is exempt from the case-based payment system, except when the patient is a newborn transferred to an exempt hospital for neonatal services and thus classified as a transfer patient pursuant to this section; or

(4) the patient is a neonate being released from a hospital providing neonatal specialty services back to the community hospital of birth for weight gain.

(o) Arithmetic Inlier Length of Stay (ALOS) shall mean the arithmetic average of the number of days a patient is in the hospital per admission as calculated by counting the number of days from and including the day of admission up to, but not including the day of discharge. The ALOS shall be calculated for each DRG on a statewide basis.

(p) Hospital, as used in this Subpart, shall mean "general hospital" as defined in section 2801(10) of the Public Health Law.

(q) Charge converter shall mean the ratio of cost to charges using total inpatient costs and total inpatient charges as reported by the hospital in its annual institutional cost reports submitted to the department.

(r) IPRO shall mean the Island Peer Review Organization, Inc., a New York not-for-profit corporation providing health related services.

(s) Medicaid, for the purposes of this subpart, shall mean Medicaid Fee-for-Service and Medicaid Managed Care for the period beginning October 1, 2010.


VOLUME A-2 (Title 10)