(a) The Texas Health and Human Services Commission (HHSC) uses the methodology in this subsection to calculate Inpatient Direct Graduate Medical Education (GME) cost reimbursement for state-owned or state-operated teaching hospitals.
  (1) Effective September 1, 2008, HHSC or its designee may reimburse a state-owned or state-operated teaching hospital with an approved medical residency program the hospital's inpatient direct GME cost for hospital cost reports beginning with state fiscal year 2009.
  (2) Reimbursement of inpatient direct GME cost for state-owned or state- operated teaching hospitals:
    (A) Inpatient direct GME cost, as specified under methods and procedures set out in the Social Security Act, Title XVIII, as amended, effective October 1, 1982, by Public Law 97-248 is calculated under similar methods for each hospital having inpatient direct GME costs on its tentative or final audited cost report.
    (B) Definitions.
      (i) Base year average per resident amount--the hospital's Medicaid allowable inpatient direct GME cost as reported on CMS Form 2552-96, Hospital Cost Report ending in state fiscal year 2007; Worksheet B; Part I; Column 26; Line 95, divided by the unweighted FTE residents from Worksheet S-3; Part I; Line 25.
      (ii) Current FTE residents--the hospital's number of full time equivalent (FTE) interns, residents, or fellows who participate in a program that is determined by HHSC to be a properly approved medical residency program including a program in osteopathy, dentistry, or podiatry, as required in order to become certified by the appropriate specialty board, as reported on CMS Form 2552-96, Hospital Cost Report; Worksheet S-3; Part I; Line 25.
      (iii) GME Medicaid inpatient utilization percentage--the hospital's proportion of paid Medicaid inpatient days, including managed care days, as reported on CMS Form 2552-96, Hospital Cost Report adjusted to Medicaid Claim Summary Report; Worksheet S-3; Part 1; Line 12; Column 5, divided by the hospital's total inpatient days, as reported on Worksheet S-3; Part 1; Column 6, Lines 12, 14 (subprovider days), and 26 (observation days). Medicaid inpatient days and total inpatient days will include inpatient nursery days.
    (C) HHSC calculates the total GME payments for each hospital as follows:
      (i) multiplies the base year average per resident amount by the applicable Centers for Medicare and Medicaid Services (CMS) Prospective Payment System Hospital Market Basket index;
      (ii) multiplies the results in clause (i) of this subparagraph by the number of current full-time equivalent (FTE) residents; and
      (iii) multiplies the results in clause (ii) of this subparagraph by the GME Medicaid inpatient utilization percentage, which results in the total GME payments.
    (D) Inpatient direct GME costs are removed from the reimbursement methodology and not used in the calculation of the provider's inpatient cost settlement.
    (E) The GME interim payments will be reimbursed on a quarterly basis only after hospital services have been rendered. The interim payments are payable within 90 days of the receipt of the hospital's quarterly resident FTE data. Each hospital's quarterly resident FTE data will be divided by 4 to determine the average resident FTEs for each quarter. The interim payments will be reconciled and settled based on audited final cost report data.
    (F) To receive GME payments from HHSC, a state-owned or state-operated teaching hospital must be enrolled as a Medicaid provider with HHSC and provide intergovernmental transfers to HHSC to fund the non-federal portion of reimbursement for GME costs.
(b) HHSC uses the methodology in this subsection to calculate reimbursement for GME cost reimbursement for non-state government-owned and operated teaching hospitals.
  (1) Effective October 1, 2018, HHSC or its designee may reimburse a non-state government-owned and operated teaching hospital with an approved medical residency program the hospital's estimated Medicaid inpatient direct GME cost.
  (2) Definitions.
    (A) Non-state government-owned and operated teaching hospital--a hospital with a properly approved medical residency program that is owned and operated by a local government entity, including but not limited to, a city, county, or hospital district.
    (B) FTE residents--the hospital's number of unweighted full time equivalent (FTE) interns, residents, or fellows who participate in a program that is determined by HHSC to be a properly approved medical residency program including a program in osteopathy, dentistry, or podiatry, as required in order to become certified by the appropriate specialty board, as reported on the Hospital Cost Report; CMS Form 2552-10; Worksheet S-3; Part 1; Column 9; Line 27.
    (C) Medicare per resident amount (PRA)--average direct cost per medical resident, as reported on the Hospital Cost Report; CMS Form 2552-10; Worksheet E-4; Line 18.
    (D) GME Medicaid inpatient utilization percentage--the hospital's proportion of Medicaid inpatient days, including managed care days, divided by the hospital's total inpatient days, as reported on Hospital Cost Report; CMS Form 2552-10; Worksheet S-3; Part 1; columns 7 and 8.
  (3) HHSC calculates the total annual GME payment for each hospital as follows:
    (A) multiplies the FTE residents by the Medicare per resident amount;
    (B) multiplies the results in subparagraph (A) of this paragraph by the GME Medicaid inpatient utilization percentage.
  (4) On October 1 of each year, the cost report most recently submitted to HHSC or its designee, will be used for the annual GME payment calculation.
  (5) To receive GME payments from HHSC, a non-state government-owned and operated teaching hospital must be enrolled as a Medicaid provider with HHSC and provide intergovernmental transfers to HHSC to fund the non-federal portion of reimbursement for GME costs.
  (6) Payments under this subchapter will be made on a semi-annual basis.
(c) HHSC uses the methodology in this subsection to calculate reimbursement for GME cost reimbursement for teaching hospitals not described in subsections (a) or (b) of this section.
  (1) Effective April 1, 2019, HHSC or its designee may reimburse a non-government owned or operated teaching hospital with an approved medical residency program the hospital's estimated Medicaid inpatient direct GME cost.
  (2) Definitions.
    (A) Teaching hospital--a hospital with a properly approved medical residency program.
    (B) FTE residents--the hospital's number of unweighted full time equivalent (FTE) interns, residents, or fellows who participate in a program that is determined by HHSC to be a properly approved medical residency program including a program in osteopathy, dentistry, or podiatry, as required in order to become certified by the appropriate specialty board:
      (i) as reported on the Hospital Cost Report; CMS Form 2552-10; Worksheet S-3; Part 1; Column 9; Line 27, or
      (ii) for hospitals excluded from the Prospective Payment System (PPS) for Medicare, as reported on the Hospital Cost Report; CMS Form 2552-10; Worksheet E-4; the sum of Column 1, Line 6 and Column 2, Line 10.01.
    (C) Interim Medicare per resident amount (PRA)--If a hospital does not have a Medicare PRA reported on the Hospital Cost Report; CMS Form 2552-10; Worksheet E-4; Line 18, then HHSC shall establish an interim Medicare PRA as follows:
      (i) The annual estimated cost of FTE residents will be the amount on Hospital Cost Report; CMS Form 2552-10; Worksheet B, Part I, Column 25, Line 118.
      (ii) Divided by the FTE residents as determined in subparagraph (B) of this paragraph.
    (D) Medicare per resident amount (PRA)--average direct cost per medical resident, as reported on the Hospital Cost Report; CMS Form 2552-10; Worksheet E-4; Line 18.
    (E) GME Medicaid inpatient utilization percentage--the hospital's proportion of Medicaid inpatient days, including managed care days, divided by the hospital's total inpatient days, as reported on Hospital Cost Report; CMS Form 2552-10; Worksheet S-3; Part 1; columns 7 and 8.
      (i) The numerator (total Medicaid inpatient days including managed care days) is the sum of Worksheet S-3, Part I, column 7, Lines 1 through 4, 8 through 13, 16 through 18, 28, and 30 through 32 and all subscripts of these lines.
      (ii) The denominator (total inpatient days) is the sum of Worksheet S-3, Part I, column 8, Lines 1 through 4, 8 through 13, 16 through 18, 28, and 30 through 32 and all subscripts of these lines.
  (3) HHSC calculates the total annual GME payment for each hospital as follows:
    (A) multiplies the FTE residents by the Medicare PRA or the interim Medicare PRA;
Cont'd...