in-20260729-IR-405260256RAA: Regulatory Analysis — 405 IAC (LSA #260256)

TITLE 405 OFFICE OF THE SECRETARY OF FAMILY AND SOCIAL SERVICES Regulatory Analysis LSA Document #26-256 I. Description of Rule II. Fiscal Impact Analysis III. Impacted Parties IV. Changes in Proposed Rule Change Citation Source of Requirement Cost Impact Removes the existing methodology using equivalent outpatient days to calculate the assessment fee and replaces the methodology with a provision stating that the assessment fee is determined under 405 IAC 1-22 based on the outpatient portion of a hospital's Indiana net patient revenue. Adds county or municipal hospitals, physician owned hospitals, hospitals only providing respite care services to the list of hospitals that are exempt from the assessment fee. Establishes new reduction percentages tied to specific hospital classifications. Specifies that notification of assessments, reconsideration requests, and adjustments are governed by 405 IAC 1-22-10, 405 IAC 1-22-11, and 405 IAC 1-22-12. Adds a payment-plan cross-reference. Adds nonpayment sanctions under IC 12-15-22. 405 IAC 1-8-5 (amended) State-initiated (IC 16-21-10-6(c)(2); IC 12-15-22) See Section VI Removes the existing methodology using equivalent inpatient days to calculate the assessment fee and replaces the methodology with a provision stating that the assessment fee is determined under 405 IAC 1-22 based on the inpatient portion of a hospital's Indiana net patient revenue. Converts the terminated distinct-part-unit adjustment from a patient-day basis to a net-patient-revenue basis. Adds county or municipal hospitals, physician owned hospitals, hospitals only providing respite care services to the list of hospitals that are exempt from the assessment fee. Establishes new reduction percentages tied to specific hospital classifications. Specifies that notification of assessments, reconsideration requests, and adjustments are governed by 405 IAC 1-22-10, 405 IAC 1-22-11, and 405 IAC 1-22-12. Adds a payment-plan cross-reference. Adds nonpayment sanctions under IC 12-15-22. 405 IAC 1-10.5-7 (amended) State-initiated (IC 16-21-10-6(c)(2); IC 12-15-22) See Section VI Revises the applicability to specify that the assessment fee is assessed, calculated, and paid on a state fiscal year basis. 405 IAC 1-22-1 (amended) State-initiated (IC 16-21-10-6(c)(2); P.L. 216-2025) No independent cost Adds definition for “fee period”, “Indiana net patient revenue”, “low-income utilization rate hospital”, “net patient revenue”, “secretary”, “standard inpatient rate”, and “standard outpatient rate”. 405 IAC 1-22-2 (amended) State-initiated (IC 16-21-10-6(c)(2); P.L. 216-2025) No independent cost Replaces the projection-based assessment with determination of net patient revenue from cost reports. Specifies that using more recent cost report data must not jeopardize compliance with the federal Medicaid provider tax requirements. Specifies how net patient revenue will be determined if a hospital was licensed after the elected state fiscal year. Specifies that each hospital's Indiana net patient revenue is determined separately for inpatient and outpatient hospital services. 405 IAC 1-22-3 (amended) State-initiated (IC 16-21-10-6(c)(2); P.L. 216-2025) No independent cost Clarifies definition of “state share”. 405 IAC 1-22-4 (amended) State-initiated (IC 16-21-10-6(c)(2); P.L. 216-2025) No independent cost Amends the base hospital assessment fee structure by formally recognizing both base and incremental assessment fees. Establishes a cap on the DSH payment component used in calculating the base fee when the state directed payment program is operating. Specifies the fund that base hospital assessment fee revenues must be deposited. 405 IAC 1-22-5 (amended) State-initiated (IC 16-21-10-6(c)(2); P.L. 216-2025) See Section VI Amends the incremental hospital assessment fee to be equal to the aggregate of all fees less the base fee. Specifies the fund that base hospital assessment fee revenues must be deposited. 405 IAC 1-22-6 (amended) State-initiated (IC 16-21-10-6(c)(2); P.L. 216-2025) See Section VI Replaces the current allocation methodology to a direct assessment methodology. Specifies that the assessment fee is determined separately for inpatient and outpatient services. Sets the assessment fee due date and allows for an optional payment plan of up to twelve (12) months. 405 IAC 1-22-7 (amended) State-initiated (IC 16-21-10-6(c)(2); P.L. 216-2025; conforms to CMS waiver approved 4/28/2026) See Section VI (aggregate fee increase) Replaces the current method for calculating the inpatient hospital assessment fee rate with a standard inpatient rate equaling the lesser of 6% of net patient revenue or the maximum amount permitted under federal law. Specifies that the assessment fee is determined by applying the standard inpatient rate (subject to any reduction under 405 IAC 1-10.5-7(e)) to the hospital's inpatient Indiana net patient revenue. 405 IAC 1-22-8 (amended) State-initiated (IC 16-21-10-6(c)(2); P.L. 216-2025; conforms to CMS waiver approved 4/28/2026) See Section VI (aggregate fee increase) Replaces the current method for calculating the outpatient hospital assessment fee rate with a standard inpatient rate equaling the lesser of 6% of net patient revenue or the maximum amount permitted under federal law. Specifies that the assessment fee is determined by applying the standard outpatient rate (subject to any reduction under 405 IAC 1-8-5(d)) to the hospital's inpatient Indiana net patient revenue. 405 IAC 1-22-9 (amended) State-initiated (IC 16-21-10-6(c)(2); P.L. 216-2025; conforms to CMS waiver approved 4/28/2026) See Section VI (aggregate fee increase) Establishes a mechanism for revising previously calculated assessment fee amounts when new or corrected information becomes available. Adds language specifying how adjustments will be handled for reconciliations or revisions that are identified after the initial assessment. 405 IAC 1-22-10 (amended) State-initiated (IC 16-21-10-6(c)(2); P.L. 216-2025; conforms to CMS waiver approved 4/28/2026) See Section VI (aggregate fee increase) Consolidates assessment fee notification language for inpatient and outpatient hospitals. 405 IAC 1-22-11 (amended) State-initiated (IC 16-21-10-6(c)(2); P.L. 216-2025; conforms to CMS waiver approved 4/28/2026) See Section VI (aggregate fee increase) Clarifies who may request reconsideration. Expands the requirements for reconsideration requests. Establishes a clearer filing deadline for reconsideration requests. Specifies when a reconsideration request is deemed denied. Specifies that no additional reconsideration requests or appeals may be filed once an adjustment has been made through a timely filed reconsideration request. 405 IAC 1-22-12 (amended) State-initiated (IC 16-21-10-6(c)(2); P.L. 216-2025; conforms to CMS waiver approved 4/28/2026) See Section VI (aggregate fee increase) V. Benefit Analysis VI. Cost Analysis VII. Sources of Information VIII. Regulatory Analysis IX. Contact Information of Staff to Answer Substantive Questions Notice of Public Comment Period for Interim Rule: 20260729-IR-405260256INA Notice of Determination Received: July 10, 2026