in-20260729-IR-405260256INA: HOSPITAL ASSESSMENT FEES

TITLE 405 OFFICE OF THE SECRETARY OF FAMILY AND SOCIAL SERVICES Notice of Public Comment Period for Interim Rule LSA Document #26-256 HOSPITAL ASSESSMENT FEES PURPOSE OF NOTICE The Office of Medicaid Policy and Planning (OMPP) is soliciting public comment on temporarily superseding rules at 405 IAC 1 concerning hospital assessment fees. ADDITIONAL DOCUMENTS Governor's Approval: 20260729-IR-405260256GAA Regulatory Analysis: 20260729-IR-405260256RAA CITATIONS AFFECTED: 405 IAC 1-8-5; 405 IAC 1-10.5-7; 405 IAC 1-22 AUTHORITY: IC 12-15-21-2; IC 12-15-21-3; IC 16-21-10-16 OVERVIEW Basic Purpose and Background Indiana assesses a hospital assessment fee (HAF) on outpatient and inpatient hospital services to finance the state share of Medicaid hospital payments authorized under IC 16-21-10. The existing methodology bases the fee on equivalent patient days drawn from older cost-report data. During the 2025 legislative session, the general assembly enacted P.L. 216-2025 (HEA 1004), which amended IC 16-21-10-6 to authorize the family and social services administration to determine the HAF as a percentage of hospital net patient revenue, not to exceed the maximum amount permitted under federal law. This proposed rulemaking conforms the Indiana Administrative Code to the statutorily authorized, CMS-approved net patient revenue methodology. Approximately 108 hospitals are impacted by the rulemaking. Statement Justifying Requirement or Cost The HAF is authorized and required by IC 16-21-10, and the net patient revenue methodology in this interim rule implements the fee-calculation framework that statute directs. The rule does not impose a requirement or cost on regulated hospitals beyond what IC 16-21-10 and applicable federal law, including the federal limits on health care related taxes under 42 U.S.C. 1396b(w) and 42 CFR 433.68, authorize: the standard inpatient and outpatient rates are capped so they do not exceed the maximum amount permitted under federal law, and the reduced rates for low income utilization rate hospitals, rural obstetrics hospitals, and Perinatal Level IV hospitals lessen rather than increase the fee for those hospitals. The implementation costs of the proposed rule are expected to exceed the threshold set in IC 4-22-2-22.7(c)(6). REQUEST FOR PUBLIC COMMENT OMPP is soliciting public comment on the proposed interim rule. Comments may be submitted in one of the following ways: COMMENT PERIOD DEADLINE All comments must be postmarked or time-stamped not later than August 28, 2026. The rule, Regulatory Analysis, appendices referenced in the Regulatory Analysis and Statement Justifying Requirement or Cost, and materials incorporated by reference (if applicable) are on file at the Family and Social Services Administration, 402 West Washington Street, Room W451, Indianapolis, Indiana and are available for public inspection. Copies of the rule, Regulatory Analysis, and appendices referenced in the Regulatory Analysis and Statement Justifying Requirement or Cost are available at the Family and Social Services Administration office. PROPOSED INTERIM RULE SECTION 1. (a) This SECTION supersedes 405 IAC 1-8-5. (b) Effective through the periods referenced in IC 16-21-10-21 and IC 16-28-15-14, the office shall collect an outpatient hospital assessment fee (HAF) from each outpatient hospital that: (c) The outpatient HAF is determined for the hospital under 405 IAC 1-22, based on the outpatient portion of the hospital's Indiana net patient revenue. (d) The following hospitals are excluded from the assessment fee: (e) The assessment fee rate for the following hospitals is the following percentage of the standard outpatient rate established under SECTION 11 of this document: (f) Notification of the assessment fee, administrative reconsideration of a calculated assessment fee, and appeal is governed by SECTIONs 13 and 14 of this document. (g) The office shall collect the assessment fee for a hospital as follows: (h) A hospital may pay the outpatient HAF on a payment plan as provided in SECTION 9 of this document. (i) If a hospital fails to pay the assessment fee due under this SECTION within ten (10) days after the date the payment is due, the hospital shall pay interest on the assessment fee at the same rate determined under IC 12-15-21-3(6)(A). (j) For hospitals that are not certified for participation in the Medicaid program under Title XIX of the federal Social Security Act (42 U.S.C. 1396 et seq.), the hospital shall remit the assessment fee to the state of Indiana within ten (10) days after the due date. If a hospital fails to pay the hospital assessment under this subsection within ten (10) days after the due date, the hospital shall pay interest on the assessment fee at the rate determined under IC 12-15-21-3(6)(A). (k) If a hospital fails to pay the assessment fee within one hundred twenty (120) days after the payment is due, the office shall report the hospital to the Indiana department of health to initiate license revocation proceedings. (l) For hospitals certified for participation in the Medicaid program under Title XIX of the federal Social Security Act (42 U.S.C. 1396 et seq.), the HAF is an allowable cost for cost reporting and auditing purposes. (m) The office may adjust the assessment fee as provided in SECTION 12 of this document. (n) For the fee period, as defined in SECTION 4(d) of this document, outpatient hospital rates are subject to an outpatient hospital adjustment factor. The outpatient hospital adjustment factors shall result in aggregate payments that reasonably approximate the federal Medicare upper payment limit under 42 CFR 447.321, but shall not result in payments exceeding the federal Medicare upper payment limit. The outpatient hospital adjustment factors are published in provider bulletins. (o) For the periods referenced in IC 16-21-10-21 and IC 16-28-15-14, the limitation on payments for an individual claim to the lesser of the amount computed or billed charges do not apply. (p) In addition to the remedies in this SECTION, a hospital that fails to pay the outpatient HAF when due is subject to sanction under IC 12-15-22, including termination of the hospital's Medicaid provider agreement. SECTION 2. (a) This SECTION supersedes 405 IAC 1-10.5-7. (c) The inpatient HAF is determined for the hospital under 405 IAC 1-22, based on the inpatient portion of the hospital's Indiana net patient revenue. (d) If a hospital's cost report that is used for calculating the HAF for the fee period includes net patient revenue attributable to a distinct part rehabilitation or psychiatric unit of the hospital that was terminated by the hospital before or during that fee period, the date of the unit's termination stated in the notice referenced in subdivision (1) is deemed to be the date of termination, and the assessment fee for the hospital for that fee period is adjusted consistent with the process for adjusting fees for the closing of hospitals, provided the hospital: (e) The following hospitals are excluded from the assessment fee: (f) The assessment fee rate for the following hospitals is the following percentage of the standard inpatient rate established under SECTION 10 of this document: (g) Notification of the assessment fee, administrative reconsideration of a calculated assessment fee, and appeal is governed by SECTIONs 13 and 14 of this document. (h) The office shall collect the assessment fee for a hospital as follows: (i) A hospital may pay the inpatient HAF on a payment plan as provided in SECTION 9 of this document. (j) If a hospital fails to pay the assessment fee due under this SECTION within ten (10) days after the date the payment is due, the hospital shall pay interest on the assessment fee at the rate determined under IC 12-15-21-3(6)(A). (k) For hospitals that are not certified for participation in the Medicaid program under Title XIX of the federal Social Security Act (42 U.S.C. 1396 et seq.), the hospital shall remit the assessment fee to the state of Indiana within ten (10) days after the due date. If a hospital fails to pay the assessment fee due under this subsection within ten (10) days after the payment is due, the hospital shall pay interest on the assessment fee at the rate determined under IC 12-15-21-3(6)(A). (l) If a hospital fails to pay the assessment fee within one hundred twenty (120) days after the payment is due, the office shall report the hospital to the Indiana department of health to initiate license revocation proceedings. (m) For hospitals certified for participation in the Medicaid program under Title XIX of the federal Social Security Act (42 U.S.C. 1396 et seq.), the HAF is an allowable cost for cost reporting and auditing purposes. (n) The office may adjust the assessment fee as provided in SECTION 12 of this document. (o) For the fee period, as defined in SECTION 4(d) of this document, inpatient hospital rates are subject to an inpatient hospital adjustment factor. The inpatient hospital adjustment factors shall result in aggregate payments that reasonably approximate the federal Medicare upper payment limit under 42 CFR 447.272, but shall not result in payments in excess of the federal Medicare upper payment limit. The initial inpatient hospital adjustment factors are published in provider bulletins. (p) Effective through the time periods referenced in IC 16-21-10-21 and IC 16-28-15-14, the limitation on payments for an individual claim to the lesser of the amount computed or billed charges do not apply to those hospitals eligible for the HAF adjustments. (q) Following the close of each state fiscal year, the office or its contractor shall perform a test to ensure that annual aggregate inpatient payments to a hospital do not exceed the hospital's total inpatient billed charges for the fiscal year. Annual aggregate inpatient payments to a hospital exceeding of the hospital's billed charges for the fiscal year shall be recovered by the office or its designee. As permitted by 42 CFR 447.271(b), payments to nominal charge hospitals identified in IC 12-15-15-11 are not subject to this inpatient billed charge limitation. (r) In addition to the remedies in this SECTION, a hospital that fails to pay the inpatient HAF when due is subject to sanction under IC 12-15-22, including termination of the hospital's Medicaid provider agreement. SECTION 3. (a) This SECTION supersedes 405 IAC 1-22-1. (b) This document applies to the calculation of hospital assessment fees (HAF) under IC 16-21-10. (c) The HAF is assessed, calculated, and paid on a state fiscal year basis. SECTION 4. (a) This SECTION supersedes 405 IAC 1-22-2. SECTION 5. (a) This SECTION supersedes 405 IAC 1-22-3. SECTION 6. (a) This SECTION supersedes 405 IAC 1-22-4. SECTION 7. (a) This SECTION supersedes 405 IAC 1-22-5. SECTION 8. (a) This SECTION supersedes 405 IAC 1-22-6. SECTION 9. (a) This SECTION supersedes 405 IAC 1-22-7. SECTION 10. (a) This SECTION supersedes 405 IAC 1-22-8. SECTION 11. (a) This SECTION supersedes 405 IAC 1-22-9. SECTION 12. (a) This SECTION supersedes 405 IAC 1-22-10. SECTION 13. (a) This SECTION supersedes 405 IAC 1-22-11. SECTION 14. (a) This SECTION supersedes 405 IAC 1-22-12. SECTION 15. As authorized by IC 16-21-10-16, and notwithstanding the effective date of this document under IC 4-22-2, SECTIONs 1 through 14 of this document apply to hospital assessment fees for fee periods beginning after June 30, 2025. SECTION 16. This document takes effect on the date and time the Interim Final Rule is accepted for filing with the publisher. SECTION 17. This document expires four hundred twenty-five (425) days after the publisher accepts the Interim Final Rule for filing. Documents Incorporated by Reference: None Received by Publisher