(a) Requirements for hospitals and physician practices.
  (1) Measure Bundle and measure selection.
    (A) A hospital or physician practice, with the exception of those described in subparagraph (J) of this paragraph, must select Measure Bundles from the Hospital and Physician Practice Measure Bundle Menu of the Measure Bundle Protocol in accordance with the requirements in subparagraphs (B) - (I) of this paragraph in the RHP plan update for DY9-10 for its RHP.
    (B) Each Measure Bundle is assigned a point value for DY9-10 as described in the Measure Bundle Protocol.
    (C) A hospital or physician practice is assigned a minimum point threshold (MPT) for Measure Bundle selection as described in paragraphs (6) and (7) of this subsection.
    (D) A hospital or physician practice must select Measure Bundles worth enough points to meet its MPT in order to maintain its total valuation for DY9 and DY10. If a hospital or physician practice does not select Measure Bundles worth enough points to meet its MPT, its total DY9 valuation will be reduced proportionately across its Categories B-D funds for DY9, and its total DY10 valuation will be reduced proportionately across its Categories B-D funds for DY10, based on the point values of the Measure Bundles it selects.
    (E) A hospital or physician practice may request to delete a maximum of 20 points worth of its DY7-8 Measure Bundles and measures for DY9-10 with good cause. In this context, good cause is defined as:
      (i) a significant system change, such as a hospital merger;
      (ii) updated community needs; or
      (iii) a significant change in a Measure Bundle's required system component of outpatient services or hospital services as described in the Measure Bundle Protocol.
    (F) A hospital or physician practice may only select a Measure Bundle for which its denominators for the baseline measurement period for at least half of the required measures in the Measure Bundle have significant volume.
    (G) A hospital or physician practice with a valuation greater than $2,500,000 per demonstration year (DY) for DY7-8 or with a valuation greater than $2,000,000 in DY10 must:
      (i) select at least one Measure Bundle with at least one required three-point measure for which its denominator for the baseline measurement period has significant volume; or
      (ii) select at least one Measure Bundle with at least one optional three-point measure for which its denominator for the baseline measurement period has significant volume and select at least one optional three-point measure in that Measure Bundle for which its denominator for the baseline measurement period has significant volume.
    (H) A hospital or physician practice with an MPT of 75 must report at least two population-based clinical outcome measures as P4P as specified in the Measure Bundle Protocol.
    (I) A hospital or physician practice may only select an optional measure in a selected Measure Bundle for which its denominator for the baseline measurement period has significant volume.
    (J) If a hospital or physician practice has a limited scope of practice, cannot reasonably report on at least half of the required measures in the Measure Bundle(s) appropriate for it based on its scope of practice and community partnerships, and consequently cannot meet its MPT for Measure Bundle selection, the hospital or physician practice may request HHSC approval to select measures, rather than Measure Bundles, from the Measure Bundle Protocol. The hospital or physician practice must submit a request for such approval to HHSC prior to the RHP plan update for DY9-10 submission, by a date determined by HHSC. Such a request may be subject to review by the Centers for Medicare & Medicaid Services (CMS). If HHSC and CMS, as appropriate, approve such a request, the following requirements apply:
      (i) the hospital's or physician practice's total valuation for DY9 and DY10 may be reduced;
      (ii) the hospital or physician practice must select measures from the following menus of the Measure Bundle Protocol in accordance with the requirements in clauses (iii) - (v) of this subparagraph in the RHP plan update for its RHP:
        (I) the Measure Bundles on the Hospital and Physician Practice Measure Bundle Menu;
        (II) the Community Mental Health Center Measure Menu; or
        (III) the Local Health Department Measure Menu;
      (iii) each measure in a Measure Bundle on the Hospital and Physician Practice Measure Bundle Menu, and each measure on the Community Mental Health Center Measure Menu and the Local Health Department Measure Menu, is assigned a point value as described in the Measure Bundle Protocol;
      (iv) the hospital or physician practice is assigned an MPT for measure selection as described in paragraphs (5) and (6) of this subsection; and
      (v) the hospital or physician practice must select measures worth enough points to meet its MPT in order to maintain its total valuation for DY9 and DY10. If the hospital or physician practice does not select measures worth enough points to meet its MPT, its total DY9 valuation will be reduced proportionately across its Categories B-D funds for DY9, and its total DY10 valuation will be reduced proportionately across its Categories B-D funds for DY10, based on the point values of the measures it selects.
  (2) DSRIP-attributed population. A hospital or physician practice must determine its DSRIP-attributed population to be applied to its selected Measure Bundles and measures as specified in the Measure Bundle Protocol.
  (3) Measure Bundle valuation. Each Measure Bundle selected by a hospital or physician practice for DY9-10 is allocated a percentage of the hospital's or physician practice's Category C valuation that is equal to the Measure Bundle's point value as a percentage of all of the hospital's or physician practice's selected Measure Bundles' point values.
  (4) Measure valuation. The valuation for each measure in a selected Measure Bundle is equal to the Measure Bundle valuation divided by the number of measures in the selected Measure Bundle, so that the valuations of the measures in the selected Measure Bundle are equal, with the following exceptions:
    (A) If a Measure Bundle includes the innovative measure:
      (i) the valuation for the innovative measure in the Measure Bundle is equal to the Measure Bundle valuation divided by the number of measures in the Measure Bundle subtracted by 0.5 for the innovative measure and divided by 2; and
      (ii) the valuation for each measure in the Measure Bundle that is not the innovative measure is equal to the Measure Bundle valuation divided by the number of measures in the Measure Bundle subtracted by 0.5 for the innovative measure.
    (B) If a hospital's or physician practice's denominator for a required measure or numerator for a population-based clinical outcome measure in a selected Measure Bundle for the baseline measurement period or a performance year has no volume, the measure is removed from the Measure Bundle, and its valuation for the applicable DY is redistributed among the remaining measures in the Measure Bundle for which the hospital's or physician practice's denominator for the baseline measurement period or performance year has significant volume for the applicable DY. The valuation for the applicable DY for each of the remaining measures is equal to the valuation for the Measure Bundle for the applicable DY divided by the number of measures for which the hospital's or physician practice's denominator for the baseline measurement period or performance year has significant volume, so that the valuations for the applicable DY for the measures in the Measure Bundle for which the hospital's or physician practice's denominator for the baseline measurement period or performance year has significant volume are equal.
    (C) If a hospital's or physician practice's denominator for a required measure or numerator for a P4R population-based clinical outcome measure in a selected Measure Bundle for the baseline measurement period or a performance year has insignificant volume, the measure's milestone valuations are adjusted in accordance with subsection (e)(2) of this section.
  (5) Milestone valuation. The measure milestones and corresponding valuations for DY9-10 are as described in subsection (e) of this section.
  (6) MPTs for hospitals.
    (A) The MPT for hospitals, with the exception of those described in subparagraphs (B) and (C) of this paragraph, is calculated as follows:
      (i) First, the hospital's statewide hospital factor (SHF) is equal to (.64 multiplied by (the hospital's Medicaid and uninsured inpatient days divided by the sum of all hospitals' Medicaid and uninsured inpatient days)) plus (.36 multiplied by (the hospital's Medicaid and uninsured outpatient costs divided by the sum of all hospitals' Medicaid and uninsured outpatient costs)). A hospital's Medicaid and uninsured inpatient days and uninsured outpatient costs are those reported for federal fiscal year 2016 in Cont'd...