§ 2807-c. General hospital inpatient reimbursement for annual rate
periods beginning on or after January first, nineteen hundred
eighty-eight. 1. Payor payments. Payments to general hospitals for
inpatient hospital services provided to persons who are not eligible for
payments as beneficiaries of title XVIII of the federal social security
act (medicare) shall be determined pursuant to this section. Payor
payments shall be as follows unless an alternative reimbursement
methodology is authorized in accordance with paragraph (e), (f), (g),
(h) or (i) of subdivision four of this section.

* (a) Payments to general hospitals for reimbursement of inpatient
hospital services provided to patients eligible for payments made by
state governmental agencies for patients discharged prior to January
first, two thousand and on and after January first, two thousand; or for
patients discharged prior to January first, nineteen hundred
ninety-seven provided in accordance with policies written by
corporations organized and operating in accordance with article
forty-three of the insurance law, or payment by such a corporation on
behalf of subscribers of a foreign corporation as described in paragraph
(d) of subdivision twelve of this section, which provide for
reimbursement on an expense incurred basis; or for patients discharged
prior to January first, nineteen hundred ninety-seven provided to
subscribers of organizations operating in accordance with the provisions
of article forty-four of this chapter, shall be case based payments per
discharge, for each diagnosis-related group established in accordance
with paragraph (a) of subdivision three of this section, and shall
include:

(i) a reimbursable inpatient operating cost component determined in
accordance with subdivision five of this section;

(ii) capital related inpatient expenses determined in accordance with
subdivision eight of this section;

(iii) for patients discharged prior to January first, nineteen hundred
ninety-seven (A) a bad debt and charity care allowance determined in
accordance with subdivision fourteen of this section, (B) a general
health care services allowance determined in accordance with subdivision
fourteen-b of this section, and (C) a bad debt and charity care
allowance for financially distressed hospitals determined in accordance
with subdivision fourteen-c of this section;

(iv) a projection of reimbursable inpatient operating costs to the
rate year by the trend factor determined in accordance with subdivision
ten of this section; and

(v) adjustments for any modifications to the case payments determined
in accordance with paragraph (a), (b), (c) or (d) of subdivision four of
this section.

* NB Effective until December 31, 2026

* (a) Payments to general hospitals for reimbursement of inpatient
hospital services provided to patients eligible for payments made by
state governmental agencies; or provided in accordance with policies
written by corporations organized and operating in accordance with
article forty-three of the insurance law, or payment by such a
corporation on behalf of subscribers of a foreign corporation as
described in paragraph (d) of subdivision twelve of this section, which
provide for reimbursement on an expense incurred basis; or provided to
subscribers of organizations operating in accordance with the provisions
of article forty-four of this chapter, shall be case based payments per
discharge, for each diagnosis-related group established in accordance
with paragraph (a) of subdivision three of this section, and shall
include:

(i) a reimbursable inpatient operating cost component determined in
accordance with subdivision five of this section;

(ii) capital related inpatient expenses determined in accordance with
subdivision eight of this section;

(iii) (A) a bad debt and charity care allowance determined in
accordance with subdivision fourteen of this section, (B) a general
health care services allowance determined in accordance with subdivision
fourteen-b of this section, and (C) a bad debt and charity care
allowance for financially distressed hospitals determined in accordance
with subdivision fourteen-c of this section;

(iv) a projection of reimbursable inpatient operating costs to the
rate year by the trend factor determined in accordance with subdivision
ten of this section; and

(v) adjustments for any modifications to the case payments determined
in accordance with paragraph (a), (b), (c) or (d) of subdivision four of
this section.

* NB Effective December 31, 2026

* (a-1) Payments made by local governmental agencies to general
hospitals for reimbursement of inpatient hospital services provided to
incarcerated individuals of local correctional facilities as defined in
subdivision sixteen of section two of the correction law shall be at the
rates of payment determined pursuant to this section for state
governmental agencies, excluding adjustments pursuant to subdivision
fourteen-f of this section.

* NB Effective until December 31, 2026

* (a-1) Payments made by local governmental agencies to general
hospitals for reimbursement of inpatient hospital services provided to
incarcerated individuals of local correctional facilities as defined in
subdivision sixteen of section two of the correction law shall be at the
rates of payment determined pursuant to this section for state
governmental agencies.

* NB Effective December 31, 2026

* (a-2) (i) With the exception of those enrollees covered under a
payment rate methodology agreement negotiated with a general hospital,
payments for inpatient hospital services provided to patients eligible
for medical assistance pursuant to title eleven of article five of the
social services law made by organizations operating in accordance with
the provisions of article forty-four of this chapter or by health
maintenance organizations organized and operating in accordance with
article forty-three of the insurance law shall be the rates of payment
that would be paid for such patients under the medical assistance
program, (i) determined pursuant to this section, excluding adjustments
pursuant to subdivision fourteen-f of this section, and (ii) excluding
medical education costs that are reimbursed directly to the general
hospital in accordance with paragraph (a-3) of this subdivision.

(ii) Effective July first, two thousand seven, with the exception of
those enrollees covered under a payment rate methodology agreement
negotiated with a general hospital, payment for inpatient hospital
services provided to patients enrolled in the child health insurance
program pursuant to title one-A of article twenty-five of this chapter
made by organizations operating in accordance with the provisions of
article forty-four of this chapter or by health maintenance
organizations organized and operating in accordance with article
forty-three of the insurance law shall be the rates of payment that
would be paid under the medical assistance program determined pursuant
to this section, excluding adjustments pursuant to subdivision
fourteen-f of this section.

* NB Expires December 31, 2026

* (a-3) Notwithstanding any inconsistent provision of law:

(i) the commissioner shall establish, subject to the approval of the
director of the budget, discrete rates of payment for general hospitals
for the period July first, nineteen hundred ninety-six through December
thirty-first, nineteen hundred ninety-nine and periods on and after
January first, two thousand for payments under the medical assistance
program pursuant to title eleven of article five of the social services
law for persons eligible for medical assistance who are enrolled in
health maintenance organizations and for payments under the family
health plus program for persons enrolled in approved organizations
pursuant to title eleven-D of article five of the social services law
based on the components of rates of payment established pursuant to this
section for persons eligible for medical assistance who are not enrolled
in health maintenance organizations for a general hospital for such rate
period that reflect the estimated reimbursable costs of direct medical
education expenses and indirect medical education expenses in the
determination of:

(A) the hospital-specific average reimbursable inpatient operating
cost per discharge pursuant to subdivision six of this section, and

(B) group category average inpatient reimbursable operating cost per
discharge pursuant to subdivision seven of this section, and

(C) the operating cost component of rates of payment pursuant to
paragraphs (f) and (k) of subdivision four of this section, and

(D) the operating cost component of rates of payment in accordance
with paragraphs (e), (g) and (i) of subdivision four of this section for
general hospitals or distinct units of general hospitals not reimbursed
on the basis of case based payments per discharge; and

(E) notwithstanding clauses (A) through (D) of this subparagraph, for
periods on and after December first, two thousand nine, the operating
cost component of rates of payment subject to subdivision thirty-five of
this section, and

(F) notwithstanding clauses (A) through (D) of this subparagraph, for
periods on and after December first, two thousand nine, the operating
cost component of rates of payment subject to paragraphs (e-1), (e-2)
and (1) of subdivision four of this section for general hospitals or
distinct units of general hospitals not reimbursed on the basis of case
based payments per discharge; and

(ii) such rates of payment may be established by the commissioner on
any appropriate payment basis, including a case mix adjusted per
discharge basis.

* NB Expires December 31, 2026

* (b) For patients discharged prior to January first, nineteen hundred
ninety-seven, payments to general hospitals for reimbursement of
inpatient hospital services provided to patients eligible for payments
pursuant to the comprehensive motor vehicle insurance reparations act;
or enrolled in a self-insured fund which provides for reimbursement
directly to general hospitals on an expense incurred basis, with the
exception of those enrollees covered under a payment rate methodology
agreement in accordance with the provisions of paragraph (a) of
subdivision two of this section; or insured under a commercial insurer
licensed to do business in this state and authorized to write accident
and health insurance and whose policy provides inpatient hospital
coverage on an expense incurred basis; or receiving inpatient hospital
services pursuant to an out-of-plan benefits system authorized pursuant
to section four thousand four hundred six of this chapter, except where
such out-of-plan, inpatient hospital services are offered by an
organization organized pursuant to the not-for-profit corporation law or
which meets the qualifications of section 501(c) of the internal revenue
code, shall be case based payments per discharge, for each
diagnosis-related group established in accordance with paragraph (a) of
subdivision three of this section, and equal to the case payments to
general hospitals provided in accordance with paragraph (a) of this
subdivision for services provided to subscribers of corporations
organized and operating in accordance with article forty-three of the
insurance law, adjusted for uncovered services, and increased by
thirteen percent or, for payments pursuant to the workers' compensation
law, the volunteer firefighters' benefit law and the volunteer ambulance
workers' benefit law, increased by five percent. Funds received by a
general hospital based on the payment differential applied pursuant to
this paragraph shall be hospital funds for patient care purposes.
Without due cause general hospitals shall not refuse to accept direct
payments from a payor who would otherwise be eligible to reimburse
hospitals for inpatient services on a case based payment per discharge
in accordance with this subdivision.

(b-1) (i) For patients discharged on and after January first, nineteen
hundred ninety-seven and prior to January first, two thousand and on and
after January first, two thousand, payments to general hospitals for
reimbursement of inpatient hospital services provided to patients
eligible for payments pursuant to the workers' compensation law, the
volunteer firefighters' benefit law, the volunteer ambulance workers'
benefit law, and the comprehensive motor vehicle insurance reparations
act shall be at the rates of payment determined pursuant to this section
for state governmental agencies, excluding adjustments pursuant to
subdivision fourteen-f of this section and subdivision thirty-three of
this section, excluding such further reductions to such payments as are
enacted as part of the state budget for the state fiscal year commencing
April first, two thousand ten and excluding such further reductions to
such payments as are enacted as part of the state budget for state
fiscal years commencing on and after April first, two thousand eleven.

(ii) The provisions of paragraph (d) of subdivision eleven of this
section shall continue to apply to such payors for payments determined
pursuant to this paragraph.

(b-2) A payor included in the payor categories specified in paragraph
(a) or (b-1) of this subdivision shall not be provided the option of
payment to a general hospital for inpatient services based on the lower
of hospital charges or the case based payment per discharge determined
in accordance with this section for a patient or apportioning the
appropriate case based payment per discharge for a patient by excluding
payment for a preexisting condition or acquired condition which has to
be treated along with the reason for the admission or, except as may
affect qualification for payments in accordance with paragraph (b) or
(d) of subdivision four of this section, for days within the inlier stay
determined to be medically unnecessary.

* NB Effective until December 31, 2026

* (b) Payments to general hospitals for reimbursement of inpatient
hospital services provided to patients eligible for payments pursuant to
the comprehensive motor vehicle insurance reparations act; or enrolled
in a self-insured fund which provides for reimbursement directly to
general hospitals on an expense incurred basis, with the exception of
those enrollees covered under a payment rate methodology agreement in
accordance with the provisions of paragraph (a) of subdivision two of
this section; or insured under a commercial insurer licensed to do
business in this state and authorized to write accident and health
insurance and whose policy provides inpatient hospital coverage on an
expense incurred basis; or receiving inpatient hospital services
pursuant to an out-of-plan benefits system authorized pursuant to
section four thousand four hundred six of this chapter, except where
such out-of-plan, inpatient hospital services are offered by an
organization organized pursuant to the not-for-profit corporation law or
which meets the qualifications of section 501 (c) of the internal
revenue code, shall be case based payments per discharge, for each
diagnosis-related group established in accordance with paragraph (a) of
subdivision three of this section, and equal to the case payments to
general hospitals provided in accordance with paragraph (a) of this
subdivision for services provided to subscribers of corporations
organized and operating in accordance with article forty-three of the
insurance law, adjusted for uncovered services, and increased by
thirteen percent or, for payments pursuant to the workers' compensation
law, the volunteer firefighters' benefit law and the volunteer ambulance
workers' benefit law, increased by five percent. Funds received by a
general hospital based on the payment differential applied pursuant to
this paragraph shall be hospital funds for patient care purposes.
Without due cause general hospitals shall not refuse to accept direct
payments from a payor who would otherwise be eligible to reimburse
hospitals for inpatient services on a case based payment per discharge
in accordance with this subdivision. A payor included in the payor
categories specified in this paragraph or in paragraph (a) of this
subdivision shall not be provided the option of payment to a general
hospital for inpatient services based on the lower of hospital charges
or the case based payment per discharge determined in accordance with
this section for a patient or apportioning the appropriate case based
payment per discharge for a patient by excluding payment for a
preexisting condition or acquired condition which has to be treated
along with the reason for the admission or, except as may affect
qualification for payments in accordance with paragraph (b) or (d) of
subdivision four of this section, for days within the inlier stay
determined to be medically unnecessary.

* NB Effective December 31, 2026

* (c) Charge based payments. For patients discharged prior to January
first, nineteen hundred ninety-seven, payments to general hospitals for
reimbursement of inpatient hospital services provided to those for whom
a case based payment per discharge system is not authorized by paragraph
(a) or (b) of this subdivision, or who are not covered under the
provisions of paragraph (a) of subdivision two of this section, shall be
on the basis of the hospital's charges; provided, however, for these
patients the definition of a short stay patient pursuant to paragraph
(d) of subdivision four of this section shall apply, and reimbursement
to hospitals for such patients shall be at payments developed in
accordance with paragraph (d) of subdivision four of this section,
increased by thirteen percent. The maximum amount to be charged to any
charge paying patient for a case shall be one hundred twenty percent of
the case based payment per discharge as determined under paragraph (b)
of this subdivision for the diagnosis-related group with which the
patient is identified. Each general hospital shall establish a charge
schedule and inpatient charges from this schedule shall be applied
uniformly for all inpatient charge based payments made in accordance
with this section.

* NB Effective until December 31, 2026

* (c) Charge based payments. Payments to general hospitals for
reimbursement of inpatient hospital services provided to those for whom
a case based payment per discharge system is not authorized by paragraph
(a) or (b) of this subdivision, or who are not covered under the
provisions of paragraph (a) of subdivision two of this section, shall be
on the basis of the hospital's charges; provided, however, for these
patients the definition of a short stay patient pursuant to paragraph
(d) of subdivision four of this section shall apply, and reimbursement
to hospitals for such patients shall be at payments developed in
accordance with paragraph (d) of subdivision four of this section,
increased by thirteen percent. The maximum amount to be charged to any
charge paying patient for a case shall be one hundred twenty percent of
the case based payment per discharge as determined under paragraph (b)
of this subdivision for the diagnosis-related group with which the
patient is identified. Each general hospital shall establish a charge
schedule and inpatient charges from this schedule shall be applied
uniformly for all inpatient charge based payments made in accordance
with this section.

* NB Effective December 31, 2026

(d) The components of rates of payment calculated in accordance with
this section related to inpatient operating costs shall be based on
general hospital reimbursable inpatient operating costs used in
determining payments for services pursuant to section twenty-eight
hundred seven-a of this article during the rate period January first,
nineteen hundred eighty-seven through December thirty-first, nineteen
hundred eighty-seven (or for a distinct unit of a general hospital
excluded from case based payments pursuant to paragraph (e) or (g) of
subdivision four of this section such distinct unit reimbursable
inpatient operating costs), excluding inpatient operating costs related
to services provided to beneficiaries of title XVIII of the federal
social security act (medicare) in accordance with paragraph (g) of
subdivision eleven of this section and adjusted to reflect the
annualized cost impact of rate revisions or adjustments, including the
volume adjustment and case mix adjustment for the nineteen hundred
eighty-seven rate period, made with respect to such services, which
shall be defined as a general hospital's or distinct unit's reimbursable
inpatient operating cost base; a projection to the nineteen hundred
eighty-eight rate period by the trend factor determined in accordance
with subdivision ten of this section; and an increase to reflect special
additional inpatient operating costs determined and allocated in
accordance with paragraph (e) of this subdivision.

(e) General hospital special additional inpatient operating costs
shall be determined and allocated among general hospitals in accordance
with subparagraphs (i), (iii) and (iv) of this paragraph. For purposes
of computing group category average inpatient reimbursable operating
costs in accordance with paragraph (a) of subdivision seven of this
section and an equivalent cost component for general hospitals that are
excluded from the case based payment per diagnosis-related group system
in accordance with paragraph (e) or (g) of subdivision four of this
section special additional inpatient operating costs shall include an
additional increase determined and allocated among general hospitals in
accordance with subparagraph (ii) of this paragraph.

(i) The total cost increases pursuant to this subparagraph for all
general hospitals shall in the aggregate be one hundred thirty million
dollars for the nineteen hundred eighty-eight rate period to reflect
nineteen hundred eighty-five costs incurred in excess of the trend
factor between nineteen hundred eighty-one and nineteen hundred
eighty-five, such cost increases to be projected from nineteen hundred
eighty-eight to subsequent annual rate periods by the applicable trend
factor, and shall be allocated among general hospitals in accordance
with the following methodology:

Five hundred dollars per bed shall be allocated to costs of each
general hospital based on the total number of inpatient beds for which
the hospital is certified pursuant to the operating certificate issued
for such general hospital in accordance with section twenty-eight
hundred five of this article in effect on January first, nineteen
hundred eighty-eight.

A factor of one quarter of one percent of a general hospital's
reimbursable inpatient operating cost base as defined in paragraph (d)
of this subdivision, trended through nineteen hundred eighty-eight,
shall be allocated to costs of general hospitals for technology advances
and a further one quarter of one percent of such costs shall be
allocated to costs of general hospitals for increased activities related
to quality assurance and patient discharge planning.

The balance of one hundred thirty million dollars after deducting the
dollar value of the per bed cost enhancement and the dollar value of the
percentage cost enhancements shall be allocated to costs of general
hospitals based on the ratio of each general hospital's nineteen hundred
eighty-five cost incurred in excess of the trend factor between nineteen
hundred eighty-one and nineteen hundred eighty-five in the following
discrete areas, summed, to the total sum of such cost over trend of all
general hospitals applied to such balance: malpractice insurance costs,
infectious and other waste disposal costs, water charges, direct medical
education expenses, working capital interest costs of hospitals that
qualified for distributions made in accordance with paragraph (b) of
subdivision sixteen of section twenty-eight hundred seven-a of this
article, costs of distinct psychiatric units excluded from case based
payments per diagnosis-related group, and ambulance costs. For purposes
of this subparagraph, nineteen hundred eighty-five cost incurred in
excess of the trend factor between nineteen hundred eighty-one and
nineteen hundred eighty-five shall be calculated for each such discrete
area based on a general hospital's inpatient operating costs for the
fiscal year ending in nineteen hundred eighty-five, after excluding
inpatient operating costs related to services provided to beneficiaries
of title XVIII of the federal social security act (medicare), for such
discrete area in excess of the hospital's comparable component of
reimbursable inpatient operating costs for its fiscal year ending in
nineteen hundred eighty-one, after excluding inpatient operating costs
related to services provided to beneficiaries of title XVIII of the
federal social security act (medicare), trended through nineteen hundred
eighty-five by the appropriate component of the trend factors and
adjusted to reflect approved decreases or increases in inpatient
operating costs resulting from all rate adjustments.

(ii) The total additional cost increases pursuant to this subparagraph
for all general hospitals shall in the aggregate be forty million
dollars for the nineteen hundred eighty-eight rate period, such
additional cost increases to be projected from nineteen hundred
eighty-eight to the rate period by the applicable trend factor, to be
allocated among general hospitals in accordance with the following
methodology:

The additional increase of forty million dollars shall be allocated to
costs of general hospitals that are included in group categories
established pursuant to paragraph (b) of subdivision seven of this
section based on the ratio of the nineteen hundred eighty-eight
intermediate group operating costs of each such general hospital, and to
costs of general hospitals that are excluded from the case based payment
per diagnosis-related group system in accordance with paragraph (e) or
(g) of subdivision four of this section based on the ratio of the
nineteen hundred eighty-eight intermediate operating costs of each such
general hospital, to the total sum of such intermediate group operating
costs and intermediate operating costs applied to the forty million
dollars. For purposes of this subparagraph, intermediate group operating
costs of a general hospital shall be calculated in accordance with rules
and regulations adopted by the council and approved by the commissioner
based on the reimbursable inpatient operating cost base determined in
accordance with paragraph (d) of this subdivision of such general
hospital; adjusted to exclude operating costs related to specialized
hospital services for which an alternative reimbursement methodology is
adopted pursuant to paragraph (e) or (g) or, if effective, (i) of
subdivision four of this section; and trended to the nineteen hundred
eighty-eight rate period by the trend factor determined in accordance
with subdivision ten of this section; and increased to reflect special
additional inpatient operating costs determined and allocated in
accordance with subparagraph (i) of this paragraph; and adjusted to
exclude a factor for operating costs of patients who required an
alternate level of care in accordance with paragraph (h) of subdivision
four of this section; and adjusted to exclude the components of the
trended reimbursable inpatient operating cost base related to education,
physician, ambulance services and organ acquisition costs determined in
accordance with subparagraphs (i), (iii) and (iv) of paragraph (c) of
subdivision seven of this section and malpractice insurance costs, and
the components of special additional inpatient operating costs
determined and allocated in accordance with subparagraph (i) of this
paragraph associated with cost increases in such costs. For purposes of
this subparagraph, intermediate operating costs of a general hospital
excluded from the case based payment per diagnosis-related group system
shall be calculated in accordance with rules and regulations adopted by
the council and approved by the commissioner based on the reimbursable
inpatient operating cost base determined in accordance with paragraph
(d) of this subdivision of such general hospital; trended to the
nineteen hundred eighty-eight rate period by the trend factor determined
in accordance with subdivision ten of this section; and increased to
reflect special additional inpatient operating costs determined and
allocated in accordance with subparagraph (i) of this paragraph; and
adjusted to exclude a factor for operating costs of patients who
required an alternate level of care developed consistent with the
provisions of paragraph (h) of subdivision four of this section; and
adjusted to exclude the components of the trended reimbursable inpatient
operating cost base related to education, physician, ambulance services
and organ acquisition costs determined consistent with the provisions of
subparagraphs (i), (iii) and (iv) of paragraph (c) of subdivision seven
of this section and malpractice insurance costs, and the components of
special additional inpatient operating costs determined and allocated in
accordance with subparagraph (i) of this paragraph associated with cost
increases in such costs.

(iii) Cost increases pursuant to this subparagraph shall be made for
the nineteen hundred ninety-one rate period to reflect cost increases
incurred in excess of the trend factor and not included in the costs
used in determining payments in accordance with paragraph (d) of this
subdivision and subparagraphs (i) and (ii) of this paragraph. Such costs
shall in the aggregate be three hundred twenty-nine million dollars
exclusive of costs related to services provided to beneficiaries of
title XVIII of the federal social security act (medicare). Such costs
increases shall be projected from nineteen hundred ninety-one to
subsequent annual rate periods by the applicable trend factor, and shall
be allocated among general hospitals, except those general hospitals
whose base year for determining payments for services in such facilities
is nineteen hundred eighty-seven, in accordance with the following
methodology:

(A) Up to two hundred twenty-two million dollars shall be allocated
for labor adjustments. If the total of the adjustments is less than two
hundred twenty-two million dollars, then the adjustments shall be fully
funded. If the total of the adjustments is more than two hundred
twenty-two million dollars, then the adjustment specified in accordance
with item (II) of this clause shall be funded at the lower of twenty
percent of the total amount allocated for labor adjustments or its
proportional share of the labor adjustments unless the labor adjustment
specified in item (I) of this clause is less than eighty percent of the
total amount allocated for labor adjustments in which case the
adjustment specified in item (II) of this clause shall be equal to the
difference between two hundred twenty-two million dollars and the total
amount of the adjustment specified in item (I) of this clause.

(I) A portion of the amount allocated for labor adjustments shall be
for labor cost increases related to registered nurses' salaries and
fringes (twenty percent of salaries) and an add-on for the ripple effect
on other health care professionals of at least thirty-five percent. Such
adjustment shall cover both inpatient and outpatient cost incurred,
based on costs reported in a survey conducted by the department for the
period January first, nineteen hundred ninety through June thirtieth,
nineteen hundred ninety on forms specified by the commissioner and
received by the department no later than November first, nineteen
hundred ninety, annualized, in excess of nineteen hundred eighty-five
labor costs related to registered nurses' salaries and fringes trended
to nineteen hundred ninety and the nineteen hundred eighty-eight
statewide nurse salary adjustment trended to nineteen hundred ninety by
the appropriate components of the trend factors adjusted to reflect the
effect of the annualization of nineteen hundred ninety data and the
result trended to nineteen hundred ninety-one and shall be based
exclusively on regional experience. Such regional adjustment shall not
be less than zero. Each individual hospital within a region shall
receive a portion of the regional adjustment equal to its share of the
total inpatient and outpatient reimbursable operating costs for the
region excluding costs related to services provided to beneficiaries of
title XVIII of the federal social security act (medicare) and excluding
direct medical education costs.

(II) A portion of the amount allocated for labor adjustments shall be
for personnel costs other than those related to registered nurses'
salaries and fringes and the ripple effect on other health care
professionals. Such adjustment shall cover both inpatient and outpatient
costs incurred, based on costs reported in a survey conducted by the
department for the period January first, nineteen hundred ninety through
June thirtieth, nineteen hundred ninety on forms specified by the
commissioner and received by the department no later than November
first, nineteen hundred ninety, annualized, in excess of nineteen
hundred eighty-five personnel costs covered by this adjustment trended
to nineteen hundred ninety and the annualized rate adjustments approved
in nineteen hundred eighty-nine for personnel costs covered by this
adjustment for increased hospital costs to meet additional state
requirements that became effective July first, nineteen hundred
eighty-nine trended to nineteen hundred ninety by the appropriate
components of the trend factors adjusted to reflect the effect of the
annualization of nineteen hundred ninety data and the result trended to
nineteen hundred ninety-one and shall be based exclusively on regional
data.

(III) In the event that federal financial participation in payments
made for beneficiaries eligible for medical assistance under title XIX
of the federal social security act based upon the allocation and
adjustment specified in items (I) and (II) of this clause related to
outpatient costs as a component of such payments is not approved by the
federal government then such outpatient costs shall not be considered in
calculating such adjustment.

(C) Thirty-three million dollars shall be allocated for technology
advances and changes in medical practice. A fixed amount per bed shall
be allocated to the costs of each general hospital based on the total
number of inpatient beds for which the general hospital is certified
pursuant to the operating certificate issued for such general hospital
in accordance with section twenty-eight hundred five of this article in
effect on June thirtieth, nineteen hundred ninety.

(D) Thirty-four million dollars shall be allocated to those general
hospitals providing comprehensive health care to the communities they
serve as determined by the commissioner pursuant to regulations approved
by the council. Comprehensive health care includes providing and/or
accommodating patients' health care needs at the appropriate levels and
settings of care, and reaches outside of traditional inpatient services
to outpatient and other services. Factors to be considered in deciding
which general hospitals are providing comprehensive health care and the
size of the adjustment shall include but not be limited to: clinic and
emergency room volume compared to inpatient volume (measured using total
volume and/or volume related to medicaid and medically indigent
patients); number and type of clinic services offered; availability of
services; whether the general hospital is an AIDS designated center,
prenatal care assistance program provider, home health care provider,
trauma center, burn center; whether the general hospital offers neonatal
intensive care services, dialysis services, birthing center backup
agreements, AIDS outpatient programs, specific mental health, drug and
alcohol programs including outpatient and emergency services and those
designated pursuant to section 9.39 of the mental hygiene law; and
whether the general hospital's emergency room is designated as a 911
receiving hospital. In the event that federal financial participation in
payments made for beneficiaries eligible for medical assistance under
title XIX of the federal social security act based upon the adjustment
specified in this clause as a component of such payments is not approved
by the federal government because of the inclusion of outpatient
services then such outpatient services shall not be considered in
calculating such adjustment. If such exclusion results in the allocation
for this adjustment not being spent, then any unspent portion shall be
reallocated to further fund the adjustments specified in clauses (D) and
(E) of this subparagraph in the same proportion as their original
funding.

(E)(I) Twenty-six million dollars shall be allocated to the costs of
general hospitals based on the ratio of each general hospital's nineteen
hundred eighty-nine cost incurred in excess of the trend factor between
nineteen hundred eighty-five and nineteen hundred eighty-nine in the
certain discrete areas, summed, to the total sum of such cost over trend
of all general hospitals applied to the total funds under this
allocation. Such discrete cost areas shall include but not be limited
to: infectious and other waste disposal costs, universal precautions,
working capital interest costs, costs for asbestos removal, costs of low
osmolality contrast media, malpractice costs, water and sewer charges,
ambulance costs and costs related to designation as a trauma center. For
purposes of this clause, nineteen hundred eighty-nine cost incurred in
excess of the trend factor between nineteen hundred eighty-five and
nineteen hundred eighty-nine shall be calculated for each such discrete
area based on a general hospital's inpatient operating costs for the
fiscal year ending in nineteen hundred eighty-nine, after excluding
inpatient operating costs related to services provided to beneficiaries
of title XVIII of the federal social security act (medicare), for such
discrete area in excess of the hospital's comparable component of
reimbursable inpatient operating costs for its fiscal year ending in
nineteen hundred eighty-five, after excluding inpatient operating costs
related to services provided to beneficiaries of title XVIII of the
federal social security act (medicare), trended through nineteen hundred
eighty-nine by the appropriate component of the trend factors and
adjusted to reflect approved decreases or increases in inpatient
operating costs resulting from all rate adjustments.

(II) Any funds allocated under this clause and not distributed
pursuant to item (I) of this clause shall be allocated for the
following: to reimburse for a portion of the cost increases incurred
above the trend factor between nineteen hundred eighty-one and nineteen
hundred eighty-five for those discrete cost areas specified in the last
paragraph of subparagraph (i) of paragraph (e) of this subdivision as
added by chapter two of the laws of nineteen hundred eighty-eight and
not reimbursed in accordance with such paragraph. Such funds shall be
allocated to general hospitals in the same manner as specified in such
paragraph.

(F) Seven million two hundred thousand dollars shall be allocated to
account for the increase in the number of patients admitted through the
emergency room and the high costs of treating such patients which has
resulted in an increase in severity within diagnosis related groups.
Such funds shall be allocated to general hospitals based on the nineteen
hundred eighty-nine hospital-specific data on increased admissions
through the emergency room since nineteen hundred eighty-one, excluding
those admissions related to providing services to beneficiaries of title
XVIII of the federal social security act (medicare).

(G) Two hundred fifty dollars per bed shall be allocated to the costs
of each general hospital having two hundred or less certified acute care
beds and classified as a rural hospital for purposes of determining
payment for inpatient acute care services provided to beneficiaries of
title XVIII of the federal social security act (medicare) or under state
regulations, for recruiting and retaining health care personnel, based
on the total number of inpatient acute care beds for which such general
hospital is certified pursuant to the operating certificate issued for
such general hospital in accordance with section twenty-eight hundred
five of this article in effect on June thirtieth, nineteen hundred
ninety.

(H) One million dollars shall be allocated to assist general hospitals
involved in a merger, acquisition, or consolidation in meeting the costs
associated with such merger, acquisition, or consolidation on or after
January first, nineteen hundred ninety-one. The commissioner shall make
rate adjustments for such allocations.

(I) Five hundred thousand dollars shall be allocated for a
practitioner placement program to assist general hospitals in the
placement of physicians and other health care practitioners to practice
primary health care and/or dentistry in underserved areas, to serve the
medically needy, and including services with affiliated community based
providers. The commissioner shall make rate adjustments for such
allocations. Notwithstanding any inconsistent provision of this
subdivision, this clause shall not apply in rate periods commencing on
or after January first, nineteen hundred ninety-four.

(iv) Cost increases pursuant to this subparagraph shall be made for
the nineteen hundred ninety-four rate period to reflect cost increases
incurred in excess of the trend factor and not included in the costs
used in determining payments in accordance with paragraph (d) of this
subdivision and subparagraphs (i), (ii) and (iii) of this paragraph.
Such costs shall in the aggregate be one hundred seventy-three million
dollars exclusive of costs related to services provided to beneficiaries
of title XVIII of the federal social security act (medicare). Such cost
increases shall be projected from nineteen hundred ninety-four to
subsequent annual rate periods by the applicable trend factor, and shall
be allocated among general hospitals in accordance with the following
methodology:

(A) Forty-six million dollars shall be allocated to the costs of
general hospitals for treating tuberculosis patients. Each general
hospital shall receive a portion of this total equal to its share of the
statewide total of inpatient tuberculosis discharges based on the most
recent twelve month period for which data is available.

(B) Sixty-three million dollars shall be allocated for labor
adjustments in accordance with the following methodology:

(I) Fifty-five million dollars shall be for labor cost increases
incurred prior to June thirtieth, nineteen hundred ninety-three. Each
general hospital shall receive a portion of this total equal to its
share of the statewide total of inpatient and outpatient reimbursable
operating costs based on nineteen hundred ninety data excluding costs
related to services provided to beneficiaries of title XVIII of the
federal social security act (medicare) and excluding direct medical
education costs.

(II) Eight million dollars of the amount to be allocated for labor
adjustments pursuant to this clause shall be distributed to general
hospitals located in the counties of Ulster, Sullivan, Orange, Dutchess,
Putnam, Rockland, Columbia, Delaware and Westchester, to account for
prior disproportionate increases in unreimbursed labor costs. Each
individual hospital shall receive a portion of the eight million dollars
equal to its share of the total inpatient and outpatient reimbursable
operating costs based on nineteen hundred ninety data for all hospitals
located in the above-referenced counties excluding costs related to
services provided to beneficiaries of title XVIII of the federal social
security act (medicare) and excluding direct medical education costs.

(C) Fifty-five million dollars shall be allocated to the costs of
increased activities related to regulatory compliance, universal
precautions and infection control related to AIDS, tuberculosis, and
other infectious diseases, including the training of employees with
regard to infection control, and for infectious and other waste disposal
costs. A fixed amount per bed shall be allocated to the costs of each
general hospital based on the total number of inpatient beds for which
the general hospital is certified pursuant to the operating certificate
issued for each general hospital in accordance with section twenty-eight
hundred five of this article in effect on August twenty-fourth, nineteen
hundred ninety-three.

(D) Three million dollars shall be allocated as follows:

(I) Two hundred fifty dollars per bed shall be allocated to the costs
of each general hospital having two hundred or less certified acute care
beds and classified as a rural hospital for purposes of determining
payment for inpatient services provided to beneficiaries of title XVIII
of the federal social security act (medicare) or under state
regulations, in recognition of the unique costs incurred by these
facilities in complying with state regulations, based on the total
number of inpatient acute care beds for which such general hospital is
certified pursuant to the operating certificate issued for such general
hospital in accordance with section twenty-eight hundred five of this
article in effect on August twenty-fourth, nineteen hundred
ninety-three.

(II) The remainder shall be allocated on a proportional basis to the
costs of each general hospital classified as a rural hospital for
purposes of determining payment for inpatient services provided to
beneficiaries of title XVIII of the federal social security act
(medicare) or under state regulations, in recognition of the unique
costs incurred by these facilities to provide hospital services in
remote or sparsely populated areas, according to the following
methodology:

(1) the net income, or the net loss expressed as a negative, as a
proportion of the net patient revenue, of each such hospital, based on
operating results for the nineteen hundred ninety and nineteen hundred
ninety-one rate years, shall be computed and averaged, and expressed as
a percentage;

(2) each such resulting percentage average shall be multiplied by each
such hospital's number of inpatient beds for which such hospital is
certified pursuant to the operating certificate issued for such hospital
in accordance with section two thousand eight hundred five of this
article in effect on June thirtieth, nineteen hundred ninety, and such
resulting products for all such hospitals shall be summed, and such sum
shall be divided by the total of all such beds for all such hospitals,
and the resulting quotient shall be the weighted average rural operating
margin expressed as a percentage; and

(3) one percentage point shall be subtracted from each such hospital's
average net operating margin, and the resulting difference shall be
divided by the weighted average rural operating margin; and

(4) (a) if the quotient resulting from the computation in subitem
three above is less than zero, then the absolute value of such quotient
shall be multiplied by each such hospital's number of inpatient beds for
which such hospital is certified pursuant to the operating certificate
issued for such hospital in accordance with section two thousand eight
hundred five of this chapter in effect on June thirtieth, nineteen
hundred ninety, such product shall be multiplied by one hundred fifty
dollars, and such resulting amount shall be such hospital's adjustment
pursuant to this clause;

(b) if the quotient resulting from the computation in subitem three
above is zero or greater, such hospital's adjustment pursuant to this
clause shall be zero; and

(c) provided, however, that if the total of all such adjustments so
computed exceeds the amount to be allocated in accordance with this
item, each such hospital's adjustment shall be proportionately reduced.

(E) Three million dollars shall be allocated to assist general
hospitals involved in a merger, acquisition, or consolidation in meeting
the costs associated with such merger, acquisition, or consolidation on
or after January first, nineteen hundred ninety-four. The commissioner
shall make rate adjustments for such allocations.

(F) (I) One million five hundred thousand dollars shall be allocated
for enhanced rates for general hospitals participating within a rural
health network as defined in subdivision two of section twenty-nine
hundred fifty-one of this chapter. Such rate enhancements shall be
established only for inpatient services provided by such hospitals
through the written rural health network agreement, where such services
have been approved for enhanced rates by the commissioner.
Notwithstanding any inconsistent provision of law, such enhanced rates
shall be subject to the availability of federal financial participation
pursuant to title XIX of the federal social security act in expenditures
made for eligible patients, including pooling arrangements and volume
adjustments, provided, however that such enhanced rates shall not affect
the calculation for any other general hospital of the group price
component calculated pursuant to subparagraph (i) of paragraph (a) of
subdivision seven of this section.

(II) One million five hundred thousand dollars shall be allocated for
enhanced rates for general hospitals participating within a central
services facility rural health network as defined in subdivision three
of section twenty-nine hundred fifty-one of this chapter. Such rate
enhancements shall be established only for inpatient services provided
by such hospitals through the network operational plan, where such
services have been approved for enhanced rates by the commissioner.
Notwithstanding any inconsistent provision of law, such enhanced rates
shall be subject to the availability of federal financial participation
pursuant to title XIX of the federal social security act in expenditures
made for eligible patients, including pooling arrangements and volume
adjustments, provided, however that such enhanced rates shall not affect
the calculation for any other general hospital of the group price
component calculated pursuant to subparagraph (i) of paragraph (a) of
subdivision seven of this section.

(f) The commissioner and the state director of the budget shall
consider providing a supplementary increase to general hospital
reimbursable inpatient operating costs for purposes of computing rates
of payment for annual rate periods beginning on or after January first,
nineteen hundred eighty-nine in accordance with this section for
reasonable and necessary supplementary cost increases in general
hospital operating costs for such rate period or periods based on
increased minimum standards and procedures relating to general hospital
operating certificates adopted by the council and approved by the
commissioner or state initiatives related to recruitment or maintenance
of an appropriate level of personnel providing professional services to
patients. Any such supplementary increase shall be allocated to costs of
general hospitals in accordance with rules and regulations adopted by
the council and approved by the commissioner.

(g) Hospital discharges for purposes of computing case based payments
per discharge pursuant to this section shall be based on the number of
patient discharges during the rate period from January first, nineteen
hundred eighty-seven through December thirty-first, nineteen hundred
eighty-seven excluding discharges of beneficiaries of title XVIII of the
federal social security act (medicare) and adjusted as provided in
specific provisions of this section, or the number of such patient
discharges during a recent twelve month period prior thereto established
by regulation for which data are available subsequently reconciled by an
adjustment to reflect nineteen hundred eighty-seven discharge data.

* (h) Notwithstanding any inconsistent provision of this section,
commencing April first, nineteen hundred ninety-five:

(i) rates of payment for patients eligible for payments made by state
governmental agencies shall be reduced by the commissioner to reflect an
exclusion from reimbursable inpatient operating costs commencing April
first, nineteen hundred ninety-five of the special additional inpatient
operating costs determined and allocated among general hospitals in
accordance with clause (C) of subparagraph (iii) and clause (C) of
subparagraph (iv) of paragraph (e) of this subdivision and the factor of
one quarter of one percent of general hospitals' reimbursable inpatient
operating cost base allocated to costs of general hospitals for
technology advances in accordance with subparagraph (i) of paragraph (e)
of this subdivision; and

(ii) general hospitals may not request and the commissioner shall not
consider any pending or further appeals for an adjustment to rates of
payment based on costs associated with technology advances and changes
in medical practice and such adjustments to reimbursable inpatient
operating costs pursuant to clause (C) of subparagraph (iv) of paragraph
(e) of this subdivision.

(iii) Notwithstanding the foregoing, or any other provision of this
section, the commissioner may establish pass through payments, or other
appropriate methodologies, for the period ending December thirty-first,
two thousand three for innovative medical device advances for which the
federal centers for medicare and medicaid services adopts new codes to
the hospital inpatient prospective payment system prior to the federal
food and drug administration's approval of such medical device.

* NB Expired March 31, 2011

(i) For the rate period July first, two thousand seven through March
thirty-first, two thousand eight and for rates applicable to the state
fiscal year commencing April first, two thousand eight, and each state
fiscal year thereafter through March thirty-first, two thousand nine,
and for the period April first, two thousand nine through November
thirtieth, two thousand nine, provided, however, that for the period
April first, two thousand nine through November thirtieth, two thousand
nine the aggregate rate adjustments calculated pursuant to subparagraph
(ii) of this paragraph shall not exceed four million dollars, and
contingent upon the availability of federal financial participation:

(i) The commissioner shall adjust inpatient medical assistance rates
of payment calculated pursuant to this section for public hospitals
other than non-state public hospitals located in a city with a
population of more than one million persons, that meet the targeted
medicaid discharge percentage in accordance with the methodology set
forth in subparagraph (ii) of this paragraph. For purposes of this
paragraph, "targeted medicaid discharge percentage" shall mean that at
least seventeen and one-half percent of a public hospital's total
discharges were patients eligible for payments under the medical
assistance program pursuant to title eleven of article five of the
social services law, including those enrolled in health maintenance
organizations, and patients eligible for payments under the family
health plus program pursuant to title eleven-D of article five of the
social services law, based on data reported in such hospital's
institutional cost report submitted for the two thousand four period and
filed with the department by November first, two thousand six. Any
hospital that meets the filing deadline shall have until June first, two
thousand seven to submit revised and corrected data schedules in such
institutional cost report which established eligibility for such
adjusted rate.

(ii) The aggregate amount of rate adjustments calculated pursuant to
this paragraph shall not exceed six million dollars for each rate
period. Such amount shall be allocated proportionally based on the
relative numbers of medicaid discharges among those public hospitals
eligible for rate adjustments in accordance with subparagraph (i) of
this paragraph based on each such hospital's reported medical assistance
data specified in subparagraph (i) of this paragraph. Such amounts shall
be included as an add-on to medical assistance inpatient rates of
payment, excluding exempt unit rates, and shall not be reconciled to
reflect changes in medical assistance utilization between two thousand
four and the current rate year.

(j) For the rate period July first, two thousand seven through March
thirty-first, two thousand eight and for rates applicable to the state
fiscal year commencing April first, two thousand eight, and each state
fiscal year thereafter through March thirty-first, two thousand nine and
for the period April first, two thousand nine through November
thirtieth, two thousand nine, provided, however, that for the period
April first, two thousand nine through November thirtieth, two thousand
nine the aggregate rate adjustments calculated pursuant to subparagraph
(ii) of this paragraph shall not exceed twenty-eight million dollars,
and contingent upon the availability of federal financial participation:

(i) The commissioner shall adjust inpatient medical assistance rates
of payment calculated pursuant to this section for voluntary hospitals
other than voluntary hospitals located in a city with a population of
more than one million persons that meet the targeted medicaid discharge
percentage in accordance with the methodology set forth in subparagraph
(ii) of this paragraph. For purposes of this paragraph, "targeted
Medicaid discharge percentage" shall mean between seventeen and one-half
percent and thirty-five percent of a voluntary hospital's total
discharges were patients eligible for payments under the medical
assistance program pursuant to title eleven of article five of the
social services law, including those enrolled in health maintenance
organizations, and patients eligible for payments under the family
health plus program pursuant to title eleven-D of article five of the
social services law, based on data reported in such hospital's
institutional cost report submitted for the two thousand four period and
filed with the department by November first, two thousand six. Any
hospital that meets the filing deadline shall have until June first, two
thousand seven to submit revised and corrected data schedules in such
institutional cost report which established eligibility for such
adjusted rate.

(ii) The aggregate amount of rate adjustments calculated pursuant to
this paragraph shall not exceed forty-two million dollars for each rate
period. Such amount shall be allocated proportionally based on relative
numbers of medicaid discharges among those voluntary hospitals eligible
for rate adjustments in accordance with subparagraph (i) of this
paragraph based on each such hospital's reported medical assistance data
specified in subparagraph (i) of this paragraph. Such amounts shall be
included as an add-on to medical assistance inpatient rates of payment,
excluding exempt unit rates, and shall not be reconciled to reflect
changes in medical assistance utilization between two thousand four and
the rate year.

(k) Subject to the availability of federal financial participation,
the commissioner shall adjust inpatient rates of payment for non-public
general hospitals located in a city with a population of more than one
million persons for the following periods and in the following amounts
in order to ensure meaningful access to the hospital's services and
reasonable accommodation for all medicaid patients who require language
assistance:

(i) for the period July first, two thousand seven through December
thirty-first, two thousand seven, thirty-eight million dollars shall be
allocated proportionally to such hospitals based on fifty percent of
each such hospital's reported general clinic medicaid visits and fifty
percent on each such hospital's reported medicaid inpatient discharges,
as reported in each hospital's two thousand four institutional cost
report, as submitted to the department prior to November first, two
thousand six, to the total of all such general clinic visits reported by
all such hospitals.

(ii) for the period April first, two thousand eight through March
thirty-first, two thousand nine, and each state fiscal year thereafter
through November thirtieth, two thousand nine, thirty-eight million
dollars shall be allocated on an annualized basis for such purpose to
such hospitals in accordance with the methodology set forth in
subparagraph (i) of this paragraph, provided, however, that thirty
percent of such funds shall be allocated proportionally, based on the
number of foreign languages utilized by one or more percent of the
residents in each hospital total service area population, provided,
however, that for the period April first, two thousand nine through
November thirtieth, two thousand nine, such allocation shall be reduced
to twenty-five million three hundred thirty-three thousand dollars.

(l) Effective for periods on and after July first, two thousand seven
through November thirtieth, two thousand nine:

(i) Subject to the availability of federal financial participation,
the commissioner shall adjust inpatient medical assistance rates of
payment calculated pursuant to this section for general hospitals
located in the counties of Nassau and Suffolk in accordance with the
methodology set forth in subparagraph (ii) of this paragraph. For
purposes of this paragraph, "medicaid inpatient discharges" shall mean
the total number of such general hospital's discharges where the
patients were eligible for payments under the medical assistance program
pursuant to title eleven of article five of the social services law,
including those enrolled in health maintenance organizations, and
patients eligible for payments under the family health plus program
pursuant to title eleven-D of article five of the social services law,
based on data reported in such hospital's institutional cost report
submitted for the two thousand four period and filed with the department
by November first, two thousand six.

(ii) The amount of rate adjustments calculated pursuant to this
paragraph shall not exceed five million dollars in the aggregate
annually. Such amount shall be allocated proportionally based on the
relative numbers of medicaid discharges among those general hospitals
eligible for rate adjustments in accordance with subparagraph (i) of
this paragraph based on each such hospital's reported medical assistance
data specified in subparagraph (i) of this paragraph. Such amounts shall
be included as an add-on to medical assistance inpatient rates of
payment, excluding exempt unit rates, and shall not be reconciled to
reflect changes in medical assistance utilization between two thousand
four and the current rate year.

2. Special payment rate methodology agreements, negotiated rates. (a)
Any payment rate methodology agreement negotiated between a self-insured
and self-administered fund and a specific general hospital or its
successor which was in effect on May first, nineteen hundred eighty-five
shall be permitted to continue with such fund, or a self-insured and
self-administered fund related in interest to such fund through merger,
consolidation or corporate reorganization subsequent to May first,
nineteen hundred eighty-five, as long as any revision to such
methodology does not provide more of an economic advantage to the fund
than the previous agreement. A general hospital which has any such
agreement shall file with the commissioner information regarding each
such agreement, as may be required by regulations adopted by the council
and approved by the commissioner.

(b)(i) Nothing in this section shall prohibit the establishment of
special payment rate methodologies in arrangements between general
hospitals and health maintenance organizations operating in accordance
with the provisions of article forty-three of the insurance law or
article forty-four of this chapter, provided the commissioner has been
notified of the proposed arrangement, has reviewed such proposed
arrangement and has issued his written approval of the arrangement. The
commissioner shall not approve such an arrangement if it would result in
payments to a general hospital for inpatient services provided to
subscribers of health maintenance organizations which in the aggregate
are less than what otherwise would have been paid under the provisions
of this section, unless the health maintenance organization demonstrates
that such lower payments are justified because the arrangement will
result in lower costs to the general hospital, and the payments
approximate costs. Such arrangements may be approved by the commissioner
to: integrate the medical delivery functions of the health maintenance
organization with the medical delivery functions of the hospital,
including but not limited to joint staffing arrangements or
pre-admission testing arrangements; or integrate the method of payment
and financial incentives to the hospital with the method of payment and
financial incentives to physicians or other providers in the health
maintenance organization; or integrate the method of payment and
financial incentives to the hospital with the health maintenance
organization, including, but not limited to, bed leasing or capitation
payments. Notwithstanding any inconsistent provision of this section,
for periods beginning on or after January first, nineteen hundred
ninety-four, negotiated agreements between health maintenance
organizations and general hospitals which were approved by the
commissioner and which were in effect on December thirty-first, nineteen
hundred ninety-three, may continue.

(ii) Notwithstanding any inconsistent provisions of this section,
health maintenance organizations operating in accordance with the
provisions of article forty-three of the insurance law or article
forty-four of this chapter, having enrollees eligible for inpatient
general hospital payments as beneficiaries of title XVIII of the federal
social security act (medicare) shall reimburse general hospitals for
inpatient services for these enrollees in accordance with the provisions
contained in title XVIII of the federal social security act (medicare).

(c) Special payment rate methodology agreements other than those
permitted in accordance with the provisions of paragraphs (a) and (b) of
this subdivision shall not be authorized, and no other arrangements with
a general hospital for inpatient rates of payment other than those
established in accordance with this section shall be negotiated.

* (d) Notwithstanding any inconsistent provision of law, the
provisions of paragraphs (a), (b) and (c) of this subdivision shall not
apply to payments for patients discharged on or after January first,
nineteen hundred ninety-seven.

* NB Expires December 31, 2026

3. Diagnosis-related groups and weights. (a) The commissioner shall
establish as a basis for case classification for case based rates of
payment the same system of diagnosis-related groups for classification
of hospital discharges as established for purposes of reimbursement of
inpatient hospital service pursuant to title XVIII of the federal social
security act (medicare) in effect on the first day of July in the year
preceding the rate period. However, the council may adopt rules and
regulations, subject to the approval of the commissioner, to adjust such
diagnosis-related groups or establish additional diagnosis-related
groups to reflect subsequent revisions applicable to reimbursement for
discharges of beneficiaries of title XVIII of the federal social
security act (medicare) effective subsequent to the first day of July in
the year preceding the rate period, or to identify medically appropriate
patterns of health resource use efficiently and economically provided.
No such regulations, however, except those to reflect subsequent
revisions applicable to reimbursement for discharges of beneficiaries of
title XVIII of the federal social security act (medicare) or for changes
made to diagnosis-related groups for neonatal services and services to
acquired immune deficiency syndrome (AIDS) patients shall apply to the
rate period beginning January first, nineteen hundred eighty-eight. For
subsequent rate periods regulations other than those to reflect
subsequent revisions applicable to reimbursement for discharges of
beneficiaries of title XVIII of the federal social security act
(medicare) may in addition apply to changes to the diagnosis-related
groups for other services, including but not limited to, pediatric
services; provided, however, that psychiatric and rehabilitation
services shall not be included.

Notwithstanding section one hundred twelve or one hundred seventy-four
of the state finance law or any other law, rule or regulation to the
contrary, the commissioner may contract with a vendor for nominal
consideration to develop the specifications for the adjusted or
additional diagnosis-related groups if the commissioner certifies to the
comptroller that such contract is in the best interest of the health of
the people of the state. Notwithstanding that such specifications shall
be available pursuant to article six of the public officers law, such
contract may provide that the specifications for such adjusted or
additional diagnosis-related groups provided by the vendor shall be
subject to copyright protection pursuant to federal copyright law.

(b) The methodology for assignment of patient discharges within
diagnosis-related groups applicable for purposes of determining payments
for discharges of beneficiaries of title XVIII of the federal social
security act (medicare) in effect on the first day of July in the year
preceding the rate period, revised to reflect such adjustments as may be
made to the diagnosis-related group classification system pursuant to
paragraph (a) of this subdivision, shall be applied to assign specific
patient discharges within the diagnosis-related groups established
pursuant to paragraph (a) of this subdivision. The council may adopt
rules and regulations, subject to the approval of the commissioner, to
revise the methodology for the assignment of specific patient discharges
within the diagnosis-related groups to reflect revisions to the
methodology applicable for purposes of determining payments for
discharges of beneficiaries of title XVIII of the federal social
security act (medicare) effective subsequent to the first day of July in
the year preceding the rate period.

* (c) (i) The commissioner shall determine an appropriate weighting
factor for each diagnosis-related group which reflects the relative
general hospital resources used by all patients, other than
beneficiaries of title XVIII of the federal social security act
(medicare), with respect to discharges classified within that
diagnosis-related group compared to discharges classified within other
diagnosis-related groups. For rate periods during the period January
first, nineteen hundred eighty-eight through December thirty-first,
nineteen hundred ninety, the appropriate weighting factor for each
diagnosis-related group shall be determined using nineteen hundred
eighty-five costs and statistics for a representative sample of general
hospitals. For rate periods during the period January first, nineteen
hundred ninety-one through December thirty-first, nineteen hundred
ninety-three, the appropriate weighting factor for each
diagnosis-related group shall be determined using nineteen hundred
eighty-nine costs and statistics for a representative sample of general
hospitals. For rate periods during the period January first, nineteen
hundred ninety-four through December thirty-first, nineteen hundred
ninety-nine and on and after January first, two thousand through
December thirty-first, two thousand seven, the appropriate weighting
factor for each diagnosis-related group shall be determined using
nineteen hundred ninety-two costs and statistics for a representative
sample of general hospitals. For rate periods on and after January
first, two thousand eight, the appropriate weighting factor for each
diagnosis-related group shall be determined using two thousand four
costs and statistics for a representative sample of general hospitals,
and, further, the computation of the group average arithmetic inlier
length-of-stays for each diagnostic related group, as otherwise
determined in accordance with applicable regulations, shall utilize two
thousand four data as reported to the department, and, be based on a
representative sample of general hospitals, and further, the short-stay
and long-stay length-of-stay trimpoints, as otherwise determined in
accordance with applicable regulations, shall be computed utilizing two
thousand four data as reported to the department and based on a
representative sample of general hospitals. Provided however, that if
the department does not release updated data and documentation described
in subparagraph (iii) of this paragraph, the effective rate period shall
be April 1, 2008. Discharges and costs related to the exceptions to case
payment provided in accordance with paragraphs (e), (g) and (i) of
subdivision four of this section shall be eliminated from the costs and
statistics used in determining the appropriate weighting factors, while
the cost factor related to the exception provided in paragraph (h) of
subdivision four of this section shall be eliminated. The costs and
statistics for the case payment modifications calculated pursuant to
paragraphs (a), (b), (c) and (d) of subdivision four of this section
shall be eliminated in accordance with paragraph (c) of subdivision six
of this section. Costs related to education, physician, ambulance
services and organ acquisition identified consistent with the provisions
of paragraph (c) of subdivision seven of this section and costs related
to malpractice insurance shall also be eliminated. The council may adopt
rules and regulations, subject to the approval of the commissioner, to
prospectively adjust weighting factors determined in accordance with
this paragraph to reflect changes in medical technology. After the
commissioner issues rate certifications pursuant to subdivision four of
section twenty-eight hundred seven of this article the commissioner
shall expeditiously make available for inspection by general hospitals
and payors the data, consistent with appropriate department procedures
for the release and protection of confidential data, and the methodology
utilized to determine the appropriate weighting factors.

(ii) Notwithstanding any contrary provision of law, the case mix
adjustment to the operating component of per diem rates of payment paid
to general hospitals or units of general hospitals that are exempt from
case based payments, as determined in accordance with subdivision four
of this section and as otherwise computed in accordance with applicable
regulations, shall, for periods on and after January first, two thousand
eight, be computed utilizing the diagnosis-related group classification
system in effect for the rate year for inpatient case based medicaid
rates of payment and the related per day cost weights calculated using
two thousand four data as reported to the department and based on a
representative sample of general hospitals. For rate periods on and
after the two thousand eleven rate period, such case mix adjustment
shall utilize the same base period data as determined in accordance with
paragraph (e) of this subdivision.

(iii) The department shall, by no later than June first, two thousand
seven, make available to hospital industry representatives relevant
updated data and documentation that the department will utilize, in
accordance with this paragraph, in developing appropriate service
intensity weights for each diagnosis-related group for the two thousand
eight rate period. The department will thereafter consult with hospital
industry representatives in developing regulations to implement the
utilization of such updated service intensity weight data applicable to
rate periods on and after two thousand eight. If it is deemed
appropriate by the commissioner, in consultation with hospital industry
representatives, such regulations may provide for the phase-in over a
period of time of the application of such updated data in determining
Medicaid rates on and after two thousand eight, provided, however, that
the application of such updated data shall be fully reflected in such
rates by no later than January first, two thousand ten.

(iv) By no later than December first, two thousand seven, the
commissioner shall issue a report to the governor and the legislature
describing the updated data utilization applicable, in accordance with
the provisions of this paragraph, to periods on and after two thousand
eight and setting forth the factors considered in developing it.

* NB Effective until December 31, 2026

* (c) The commissioner shall determine an appropriate weighting factor
for each diagnosis-related group which reflects the relative general
hospital resources used by all patients, other than beneficiaries of
title XVIII of the federal social security act (medicare), with respect
to discharges classified within that diagnosis-related group compared to
discharges classified within other diagnosis-related groups. For rate
periods during the period January first, nineteen hundred eighty-eight
through December thirty-first, nineteen hundred ninety, the appropriate
weighting factor for each diagnosis-related group shall be determined
using nineteen hundred eighty-five costs and statistics for a
representative sample of general hospitals. For rate periods during the
period January first, nineteen hundred ninety-one through December
thirty-first, nineteen hundred ninety-three, the appropriate weighting
factor for each diagnosis-related group shall be determined using
nineteen hundred eighty-nine costs and statistics for a representative
sample of general hospitals. For rate periods during the period January
first, nineteen hundred ninety-four through June thirtieth, nineteen
hundred ninety-six, the appropriate weighting factor for each
diagnosis-related group shall be determined using nineteen hundred
ninety-two costs and statistics for a representative sample of general
hospitals. Discharges and costs related to the exceptions to case
payment provided in accordance with paragraphs (e), (g) and (i) of
subdivision four of this section shall be eliminated from the costs and
statistics used in determining the appropriate weighting factors, while
the cost factor related to the exception provided in paragraph (h) of
subdivision four of this section shall be eliminated. The costs and
statistics for the case payment modifications calculated pursuant to
paragraphs (a), (b), (c) and (d) of subdivision four of this section
shall be eliminated in accordance with paragraph (c) of subdivision six
of this section. Costs related to education, physician, ambulance
services and organ acquisition identified consistent with the provisions
of paragraph (c) of subdivision seven of this section and costs related
to malpractice insurance shall also be eliminated. The council may adopt
rules and regulations, subject to the approval of the commissioner, to
prospectively adjust weighting factors determined in accordance with
this paragraph to reflect changes in medical technology. After the
commissioner issues rate certifications pursuant to subdivision four of
section twenty-eight hundred seven of this chapter the commissioner
shall expeditiously make available for inspection by general hospitals
and payors the data, consistent with appropriate department procedures
for the release and protection of confidential data, and the methodology
utilized to determine the appropriate weighting factors.

* NB Effective December 31, 2026

(d) The commissioner shall consult with technical advisory groups as
necessary in establishing diagnosis-related groups and weights in
accordance with paragraphs (a), (b) and (c) of this subdivision and in
making adjustments in accordance with paragraphs (b) and (c) of
subdivision six of this section.

(e) The appropriate weighting factor for each diagnosis-related group,
the group average arithmetic inlier length-of-stays for each
diagnosis-related group, and the short-stay and long-stay length-of-stay
trimpoints shall, by no later than the two thousand eleven rate period,
be based on reported costs and statistics from a representative sample
of general hospitals from a base period no earlier than two thousand
seven. Thereafter, the base period reported costs and statistics
utilized for such purposes shall be updated no less frequently than
every four years and the new base periods utilized shall be no more than
four years prior to the applicable rate period.

3-a. Dispute resolution system. (a) * The commissioner shall
establish, in accordance with rules and regulations adopted by the
council and approved by the commissioner, a payment dispute resolution
system to resolve disputes between payors of inpatient hospital services
and general hospitals for patients discharged on or after January first,
nineteen hundred ninety-one and prior to January first, nineteen hundred
ninety-seven. The commissioner shall designate the use of a uniform set
of guidelines for determining the application of particular
diagnosis-related group categories to particular patients which may
include guidelines published by associations, universities or other
organizations. The dispute resolution process shall apply to all payors
of hospital services described in paragraphs (a), (b) and (c) of
subdivision one of this section, including patients or payors which pay
hospitals' charges or coinsurance, provided, however, such process shall
not include payments made for persons eligible for payments as
beneficiaries of title XVIII of the federal social security act
(medicare) as a patients' primary payor or payments made pursuant to
title eleven of article five of the social services law, provided that
this exception shall not include payments for medical assistance
participants in health maintenance organizations or prepaid health
services plans. A payor of hospital services included in paragraph (a)
of subdivision one of this section may serve as, or designate, the
review agent for their subscribers, beneficiaries or enrolled members
for an initial review and a reconsideration review but the final step in
such dispute resolution process shall be an independent party unrelated
to the payor which party shall be approved by the commissioner pursuant
to this section.

* NB Effective until December 31, 2026

* The commissioner shall establish, in accordance with rules and
regulations adopted by the council and approved by the commissioner, a
payment dispute resolution system to resolve disputes between payors of
inpatient hospital services and general hospitals for patients
discharged on or after January first, nineteen hundred ninety-one. The
commissioner shall designate the use of a uniform set of guidelines for
determining the application of particular diagnosis-related group
categories to particular patients which may include guidelines published
by associations, universities or other organizations. The dispute
resolution process shall apply to all payors of hospital services
described in paragraphs (a), (b) and (c) of subdivision one of this
section, including patients or payors which pay hospitals' charges or
coinsurance, provided, however, such process shall not include payments
made for persons eligible for payments as beneficiaries of title XVIII
of the federal social security act (medicare) as a patients' primary
payor or payments made pursuant to title eleven of article five of the
social services law, provided that this exception shall not include
payments for medical assistance participants in health maintenance
organizations or prepaid health services plans. A payor of hospital
services included in paragraph (a) of subdivision one of this section
may serve as, or designate, the review agent for their subscribers,
beneficiaries or enrolled members for an initial review and a
reconsideration review but the final step in such dispute resolution
process shall be an independent party unrelated to the payor which party
shall be approved by the commissioner pursuant to this section.

* NB Effective December 31, 2026

In the event a third party payor or patient desires to challenge the
appropriateness of a bill for hospital services rendered by a general
hospital for a particular patient, or in the event a general hospital
desires to challenge the appropriateness of a payment by a third party
payor on behalf of a particular patient, then either the hospital or the
payor may submit the question to the dispute resolution process
established pursuant to this subdivision. The disputes submitted for
resolution may include the appropriateness of the application of a
particular diagnosis-related group category, as described in subdivision
three of this section, to a particular patient; the appropriate
classification and payment of an inpatient stay as a modification of a
case payment pursuant to paragraph (a), (b), (c), or (d) of subdivision
four of this section, including whether payment for services should be,
based on medical necessity or other reasons, made as a case payment or
payment as a modification of a case payment; whether payment should
appropriately be made pursuant to an alternative reimbursement
methodology authorized in accordance with paragraph (e) or (h) of
subdivision four of this section and the payment for such services;
whether payment for services rendered by a general hospital should be
appropriately, based on medical necessity or other reasons, made as
payment for inpatient care or payment for outpatient care and the
payment for such services; or whether the hospital stay should be
classified as a readmission as defined in accordance with regulations
adopted pursuant to paragraph (l) of subdivision eleven of this section
and the payment for such stay.

The dispute resolution system established shall provide for an initial
review and a reconsideration review. The council shall adopt necessary
rules and regulations, subject to the approval of the commissioner,
including but not limited to those for determining the parties to a
dispute resolution review and any reconsideration review; the procedures
and time limits to initiate a dispute resolution review or any
reconsideration review; the procedures for notification of all parties
involved in the dispute upon initiation of a dispute resolution review
or any reconsideration review; time limits for resolving disputes; the
establishment of dispute resolution and reconsideration fees; and
required documents to be submitted including the hospital bill in
dispute, a copy of the patient medical record, or so much thereof as may
be required, and a statement of issues including the basis for the
dispute. During a dispute resolution review or any reconsideration
review, a party may present documentation or evidence in support of its
position regarding the appropriate diagnosis-related group to which the
patient discharge should be assigned or the proper payment for the case.
The commissioner shall approve a statewide utilization review
organization or regional utilization review organization to conduct and
determine such dispute resolution reviews including any reconsideration
reviews in accordance with paragraph (b) of this subdivision. Every
general hospital bill issued for a patient discharged on or after
January first, nineteen hundred ninety-one other than for discharges of
patients eligible for medical assistance pursuant to title eleven of
article five of the social services law subject to case based payments
determined pursuant to this section based on diagnosis-related group
assigned or maximum hospital charges for a case determined pursuant to
this section based on diagnosis-related group assigned shall include or
be accompanied by a notice of the payment dispute resolution system;
provided, however, that a general hospital issuing bills to a payor for
twenty-five or more patients per year may send such notice to such payor
on an annual basis. The form and content of such notice shall be
determined in accordance with rules and regulations adopted by the
council and approved by the commissioner.

(b) The commissioner shall approve a statewide utilization review
organization or regional utilization review organizations to conduct and
determine dispute resolution reviews, including reconsideration reviews,
pursuant to this subdivision. To be approved as a utilization review
organization in accordance with this subdivision such organization must
meet the following criteria: the organization shall employ or otherwise
secure the services of adequate personnel, including medical personnel,
qualified to review such disputes, the organization shall demonstrate
the ability to render decisions in a timely manner, the organization
shall agree to provide ready access by the commissioner to all data,
records and information it collects and maintains concerning its review
activities under this subdivision, the organization shall agree to
provide to the commissioner such data, information and reports as the
commissioner determines necessary to evaluate the review process
provided pursuant to this subdivision, the organization shall provide
assurances that review personnel shall not have a conflict of interest
in conducting a review based on payor, hospital or professional
affiliation, and the organization meets such other performance and
efficiency criteria regarding the conduct of reviews pursuant to this
subdivision established by the commissioner. The commissioner may
withdraw approval of a utilization review organization where such
organization fails to continue to meet approval criteria established
pursuant to this paragraph. A utilization review organization approved
pursuant to this paragraph shall be authorized to receive and review
patient medical records and shall develop and implement appropriate
procedures to maintain confidentiality of such patient medical records.

(c) Upon resolution of a payment dispute in accordance with this
paragraph, the parties involved in the dispute shall be notified of the
reason for the decision and the hospital bill in dispute shall be
adjusted to reflect such resolution.

(d) The party initiating a payment dispute resolution review or any
reconsideration review must submit to the utilization review
organization a dispute resolution fee established to recover the costs
related to the conduct of the initial dispute resolution reviews or a
reconsideration review fee established to recover the costs related to
the conduct of such reconsideration reviews, except that for payors in
paragraph (a) of subdivision one of this section which serve as or
designate the review agent for their subscribers, beneficiaries, or
enrolled members a fee shall be charged only for the final step in the
dispute resolution process. Upon resolution of a payment dispute in
accordance with this subdivision in favor of the payor, the amount due
to the hospital by a payor based upon the hospital bill shall be reduced
by the amount of any fee paid pursuant to this paragraph by such payor.
Upon resolution of a payment dispute in accordance with this subdivision
in favor of the general hospital, the amount due to the hospital based
upon the hospital bill shall be increased by the amount of any fee paid
pursuant to this paragraph by such general hospital.

(e) Nothing herein shall relieve the responsibilities of the payors as
set forth in paragraphs (a), (b) and (c) of subdivision one of this
section.

(f)(i) Whenever the amount of payment made by a payor to a general
hospital is less than the amount of payment due determined by a
utilization review organization in accordance with this subdivision,
general hospitals in accordance with paragraph (d) of subdivision eleven
of this section may include financing or working capital charges on such
balance owed to the general hospital by a payor.

(ii) Whenever the amount of payment made by a payor to a general
hospital is in excess of the amount of payment due determined by a
utilization review organization in accordance with this subdivision,
interest shall be due on such excess owed by the general hospital to a
payor of two percent for the first thirty days and one percent per month
thereafter from the date of payment of such excess amount. Interest
shall not be applied to excess amounts owed to third party payors
participating in an advance payment system.

(g) For payment amounts eligible for payment dispute resolution
pursuant to this subdivision, a general hospital shall not bill a
patient or pursue collection efforts against a patient for the
difference between a hospital bill and the payment made on such bill by
a payor within the payor categories specified in paragraph (a), (b) or
(c) of subdivision one of this section, except for uncovered services by
a payor, deductibles and coinsurance based on maximum hospital charges
calculated based on the undisputed amount of the hospital bill, until
final decision of the utilization review organization. Nothing in this
subdivision shall be construed to prohibit a general hospital from
issuing an informational bill to a patient regarding such difference
between the hospital bill and the payment made on such bill to advise
the patient of the amount in dispute.

(h) The formal written decision of a utilization review organization
approved by the commissioner to conduct and determine dispute resolution
reviews in accordance with paragraph (b) of this subdivision upon a
reconsideration review, or if there is no reconsideration review upon an
initial review, or for a payor of hospital services included in
paragraph (a) of subdivision one of this section which serves as or
designates the review agent for their subscribers, beneficiaries or
enrolled members upon the final step in the dispute resolution process
as to the questions of the appropriateness of a bill for hospital
services or the calculation of the proper payment for such hospital
services shall be admissible in evidence at any subsequent trial upon
the request of any party to the action. The decision shall not be
binding upon the jury or, in a case tried without a jury, upon the trial
court, but shall be considered prima facie evidence to establish the
facts resolved by the utilization review organization.

4. Modifications and exceptions to case payment rates. Case based
rates of payment shall be modified and per diem or other unit of service
payments shall be provided, or exceptions shall be made to case
payments, in accordance with rules and regulations adopted by the
council and approved by the commissioner, in the following
circumstances:

(a) where a case that is eligible for payment under the case based
payment system is transferred between general hospitals, the receiving
hospital shall be reimbursed its total case payment amount for the
diagnosis-related group (including any payments made in accordance with
this subdivision), and the transferring hospital shall receive
reimbursement on a basis consistent with the methodology developed for
the elimination of transfer patient costs in accordance with
subparagraph (i) of paragraph (c) of subdivision six of this section
plus additions contained in subparagraph (ii) of paragraph (a) of
subdivision one of this section on a per diem basis. The payment to a
transferring general hospital shall not exceed the case payment amount
for the diagnosis-related group computed in accordance with this
section;

(b) where the cost per case for a patient that does not qualify for
payment pursuant to paragraph (a) or (d) of this subdivision is in
excess of the basic case payment rate for the diagnosis-related group
multiplied by two and the overall hospital-specific average cost per
case multiplied by six, the payment to the general hospital in addition
to the basic case payment rate will be one hundred percent, or such
percentage as computed in accordance with subparagraph (ii) of paragraph
(c) of subdivision six of this section, multiplied by the difference
between the general hospital's cost for the case and the greater of the
basic case payment rate for the diagnosis-related group multiplied by
two or the overall hospital-specific cost per case multiplied by six. In
determining whether a case qualifies for payment under this paragraph,
prospective rate adjustments made in accordance with paragraph (c) of
subdivision eleven of this section to reflect the retroactive impact of
an adjustment on prior rates, shall be excluded. Where a case qualifies
for payment pursuant to both this paragraph and paragraph (c) of this
subdivision then payment shall be made in accordance with this paragraph
if such payment exceeds that which would be made in accordance with
paragraph (c) of this subdivision. The general hospital's costs per case
shall be computed by adjusting the general hospital's actual charges for
the case by the general hospital's inpatient cost to charge ratio;

(c) where a patient is identified as a long stay patient, payment to
the general hospital in addition to the basic case payment rate shall be
on a basis consistent with the methodology developed for the elimination
of long stay patient costs in accordance with subparagraph (iii) of
paragraph (c) of subdivision six of this section. Where a case qualifies
for payment pursuant to both this paragraph and paragraph (b) of this
subdivision then payment shall be made in accordance with paragraph (b)
of this subdivision if such payment exceeds that which would be made in
accordance with this paragraph. A long stay patient is defined as an
inpatient whose hospital stay exceeds the long stay outlier threshold
for the diagnosis-related group;

(d) where a patient is identified as a short stay patient, payment to
the general hospital shall be on a basis consistent with the methodology
developed for the elimination of short stay patient costs in accordance
with subparagraph (iv) of paragraph (c) of subdivision six of this
section plus additions contained in subparagraph (ii) of paragraph (a)
of subdivision one of this section on a per diem basis. A short stay
patient is defined as an inpatient discharged from the hospital on the
same day of admission, or the day after admission except for those stays
where the statewide mean length of stay for the diagnosis-related group
is less than three days, or whose hospital stay is not greater than
twenty percent of the statewide mean length of stay for the
diagnosis-related group with which the patient is identified, excluding
normal newborn cases and normal deliveries;

(e) in cases where a general hospital or distinct unit of a general
hospital is not or would not have been reimbursed on a case based
payment per diagnosis-related group for inpatient services provided on
or before December thirty-first, two thousand one, to beneficiaries of
title XVIII of the federal social security act (medicare), reimbursement
shall be on a per diem basis computed for excluded general hospitals
based on the hospital's reimbursable inpatient operating cost base, or
for excluded distinct units of general hospitals based on the distinct
unit's reimbursable inpatient operating cost base, determined in
accordance with paragraph (d) of subdivision one of this section,
projected to the applicable rate period by the trend factor determined
in accordance with subdivision ten of this section, and increased in
accordance with subparagraphs (i), (iii) and (iv) of paragraph (e) of
subdivision one of this section to reflect special additional inpatient
operating costs, and adjusted to exclude a factor for operating costs of
patients who required an alternate level of care developed consistent
with the provisions of paragraph (h) of this subdivision, and increased
for excluded general hospitals to reflect the product of the group
category percentage amount applicable for purposes of determining group
category average inpatient reimbursable operating cost per discharge
(price) in the rate period pursuant to paragraph (b) of subdivision five
of this section for general hospitals reimbursed on a case based payment
per diagnosis-related group applied to such excluded general hospital's
additional cost increases determined in accordance with subparagraph
(ii) of paragraph (e) of subdivision one of this section, and adjusted
on a payor category basis to reflect allocation of malpractice insurance
costs in accordance with the methodology developed pursuant to
subparagraph (ii) of paragraph (h) of subdivision eleven of this
section, for those patients included in the payor categories pursuant to
the provisions of paragraph (a) or (b) of subdivision one of this
section; provided, however, for those patients included in the payor
categories pursuant to the provisions of paragraph (b) of subdivision
one of this section payment shall be at the per diem payment to the
hospital or distinct unit of the hospital for services provided to
subscribers of corporations organized and operating in accordance with
article forty-three of the insurance law, adjusted for uncovered
services, and increased by thirteen percent or by five percent, as the
case may be; provided further, however, for those general hospitals that
are not reimbursed on a case-based payment per diagnosis-related group
for inpatient services provided to beneficiaries of title XVIII of the
federal social security act (medicare) as a result of their designation
by the secretary of health and human services as a comprehensive cancer
hospital or as a result of their status as an acute care exempt
children's hospital, the base year for determining payments for services
in such facilities shall be nineteen hundred eighty-seven, provided,
however, such hospitals shall be allowed adjustments in rates of payment
to reflect costs incurred subsequent to nineteen hundred eighty-seven
but not reflected in such base. Funds received by a general hospital
based on the payment differential in accordance with paragraph (b) of
subdivision one of this section applied pursuant to this paragraph shall
be hospital funds for patient care purposes. For those patients not
covered under the provisions of paragraph (a) or (b) of subdivision one
of this section, or who are not covered under the provisions of
paragraph (a) of subdivision two of this section, payment shall be on
the basis of the hospital's charge schedule, limited to one hundred
twenty percent of the total per diem payment that would have been made
if the patient were included in the payor categories pursuant to the
provisions of paragraph (b) of subdivision one of this section. Rates of
payment for excluded general hospitals and excluded distinct units of
general hospitals for a rate period shall be increased on a per diem
basis by additions and allowances specified in subparagraphs (ii) and
(iii) of paragraph (a) of subdivision one of this section. In adopting
regulations for purposes of determining rates of payment for psychiatric
services pursuant to this paragraph, the council and the commissioner
shall consider the advice of the commissioner of mental health and may
include case mix and other adjustments for such rates of payment. The
commissioner of mental health shall study and report on alternative
procedures for the development of rates of payment for inpatient
psychiatric care. Such report shall be submitted to the governor, the
legislature and the commissioner of health by January first, nineteen
hundred ninety-three. Recommendations for alternative financing shall
take into consideration methods to improve access to inpatient care for
seriously mentally ill persons.

(e-1) Notwithstanding any inconsistent provision of paragraph (e) of
this subdivision or any other contrary provision of law and subject to
the availability of federal financial participation, per diem rates of
payment by governmental agencies for a general hospital or a distinct
unit of a general hospital for inpatient psychiatric services that would
otherwise be subject to the provisions of paragraph (e) of this
subdivision shall, with regard to days of service associated with
admissions occurring on and after April first, two thousand ten, be in
accordance with the following:

(i) For rate periods on or after April first, two thousand ten, the
commissioner, in consultation with the commissioner of the office of
mental health, shall promulgate regulations, and may promulgate
emergency regulations, establishing methodologies for determining the
operating cost components of rates of payments for services described in
this paragraph. The commissioner may make such adjustments to the
methodology for computing such rates as is necessary to achieve no
aggregate, net growth in overall Medicaid expenditures related to such
rates, as compared to such aggregate expenditures from the prior year.
In determining the updated base year to be utilized pursuant to this
subparagraph, the commissioner shall take into account the base year
determined in accordance with paragraph (c) of subdivision thirty-five
of this section.

Furthermore, the commissioner shall establish such rates in
consultation with industry representatives to achieve an appropriate
base year update to the operating cost components of rates of payment
for services described in this paragraph and that takes into account
facility cost, mix of services, and patient specific conditions.

(ii) Rates of payment established pursuant to subparagraph (i) of this
paragraph shall reflect an aggregate net statewide increase in
reimbursement for such services of up to twenty-five million dollars on
an annual basis.

(iii) Capital cost reimbursement for general hospitals otherwise
subject to the provisions of this paragraph shall remain subject to the
provisions of subdivision eight of this section.

(e-2) Notwithstanding any inconsistent provision of paragraph (e) of
this subdivision or any other contrary provision of law and subject to
the availability of federal financial participation, per diem rates of
payment by governmental agencies for inpatient services provided by a
general hospital or a distinct unit of a general hospital for services,
as described below, that would otherwise be subject to the provisions of
paragraph (e) of this subdivision, shall, with regard to days of service
occurring on and after December first, two thousand nine, be in accord
with the following:

(i) For physical medical rehabilitation services and for chemical
dependency rehabilitation services, the operating cost component of such
rates shall reflect the use of two thousand five operating costs for
each respective category of services as reported by each facility to the
department prior to July first, two thousand nine and as adjusted for
inflation pursuant to paragraph (c) of subdivision ten of this section,
as otherwise modified by any applicable statute, provided, however, that
such two thousand five reported operating costs, but not including
reported direct medical education cost, shall, for rate-setting
purposes, be held to a ceiling of one hundred ten percent of the average
of such reported costs in the region in which the facility is located,
as determined pursuant to clause (E) of subparagraph (iv) of paragraph
(1) of this subdivision; and provided, further, that for physical
medical rehabilitation services, the commissioner is authorized to make
adjustments to such rates for the purposes of reimbursing pediatric
ventilator services.

(ii) For services provided by rural hospitals designated as critical
access hospitals in accordance with title XVIII of the federal social
security act, the operating cost component of such rates shall reflect
the use of two thousand five operating costs as reported by each
facility to the department prior to July first, two thousand nine and as
adjusted for inflation pursuant to paragraph (c) of subdivision ten of
this section, as otherwise modified by any applicable statutes,
provided, however, that such two thousand five reported operating costs
shall, for rate-setting purposes, be held to a ceiling of one hundred
ten percent of the average of such reported costs for all such
designated hospitals statewide.

(iii) For inpatient services provided by specialty long term acute
care hospitals and for inpatient services provided by cancer hospitals
as so designated as of December thirty-first, two thousand eight, the
operating cost component of such rates shall reflect the use of two
thousand five operating costs for each respective category of facility
as reported by each facility to the department prior to July first, two
thousand nine and as adjusted for inflation pursuant to paragraph (c) of
subdivision ten of this section, as otherwise modified by any applicable
statutes.

(iv) For facilities designated by the federal department of health and
human services as exempt acute care children's hospitals as of December
thirty-first, two thousand eight, for which a discrete institutional
cost report was filed for the two thousand seven calendar year, and
which has reported Medicaid discharges greater than fifty percent of
total discharges in such cost report, shall be determined in accordance
with the following:

(A) The operating cost component of such rates shall reflect the use
of two thousand seven operating costs as reported by each facility to
the department prior to July first, two thousand nine and as adjusted
for the inflation pursuant to paragraph (c) of subdivision ten of this
section, as otherwise modified by any applicable statutes, and as
further adjusted as the commissioner deems appropriate, including
transition adjustments. Such rates shall be determined on a per case
basis or per diem basis, as set forth in regulations promulgated by the
commissioner.

(B) The operating component of outpatient specialty rates of hospitals
subject to this subparagraph shall reflect the use of two thousand seven
operating costs as reported to the department prior to December first,
two thousand eight, and shall include such adjustments as the
commissioner deems appropriate.

(C) The base period reported operating costs used to establish
inpatient and outpatient rates determined pursuant to this subparagraph
shall be updated no less frequently than every two years and each such
hospital shall submit such additional data as the commissioner may
require to assist in the development of ambulatory patient groups (APGs)
rates for such hospitals' outpatient specialty services.

(D) Notwithstanding any other provisions of law to the contrary and
subject to the availability of federal financial participation, for all
rate periods on and after April first, two thousand fourteen, the
operating component of outpatient specialty rates of hospitals subject
to this subparagraph shall be determined by the commissioner pursuant to
regulations, including emergency regulations, and in consultation with
such specialty outpatient facilities, provided however, that for the
period beginning October first, two thousand thirteen through September
thirtieth, two thousand fourteen, services provided to patients enrolled
in medicaid managed care shall be paid by the medicaid managed care
plans at no less than the otherwise applicable medicaid fee-for-service
rates, as computed in accordance with clause (B) of this subparagraph
for the period beginning October first, two thousand thirteen through
March thirty-first, two thousand fourteen and as computed in accordance
with this clause for the period beginning April first, two thousand
fourteen through September thirtieth, two thousand fourteen.

(E) For facilities subject to the provisions of this subparagraph, the
department shall examine the feasibility of reimbursing such facilities
for services provided to children eligible for medical assistance on a
non-fee-for-service basis. For purposes of this clause,
"non-fee-for-service" shall be defined as an alternative payment method
to bundle certain services rendered by such facility, including
inpatient, outpatient, specialty outpatient and physician services, in
amounts determined by the commissioner. The department shall examine:

(a) what services could be provided pursuant to the
non-fee-for-service basis;

(b) how to ensure, for children enrolled in Medicaid managed care,
that their health plans can continue to assist in the coordination of
their care, particularly upon discharge from inpatient, outpatient or
specialty outpatient services; and

(c) whether incentives should be incorporated for meeting quality
benchmarks or achieving efficiencies in the delivery and coordination of
care or whether other means should be considered to achieve these
objectives.

The department shall provide a report of its findings and
recommendations to the governor and legislature no later than March
first, two thousand fifteen.

(v) Rates established pursuant to this paragraph shall be deemed as
excluding reimbursement for physician services for inpatient services
and claims for Medicaid fee payments for such physician services for
such inpatient care may be submitted separately from the rate in
accordance with otherwise applicable law.

(vi) Capital cost reimbursement for general hospitals otherwise
subject to the provisions of this paragraph shall remain subject to the
provisions of subdivision eight of this section.

(vii) The commissioner may promulgate regulations, including emergency
regulations, implementing the provisions of this paragraph, and,
further, such regulations may provide for an update of the base year
costs and statistics used to compute such rates, provided, however, that
such base year update shall take effect no earlier than April first, two
thousand fifteen, and provided further, however, that the commissioner
may make such adjustments to such utilization and to the methodology for
computing such rates as is necessary to achieve no aggregate, net growth
in overall Medicaid expenditures related to such rates, as compared to
such aggregate expenditures from the prior year. In determining the
updated base year to be utilized pursuant to this subparagraph, the
commissioner shall take into account the base year determined in
accordance with paragraph (c) of subdivision thirty-five of this
section.

(viii) The operating cost component of rates of payment pursuant to
this paragraph for a general hospital or distinct unit of a general
hospital without adequate cost experience shall be based on the lower of
the facility's or unit's inpatient budgeted operating costs per day,
adjusted to actual, or the applicable regional ceiling, if any.

(ix) The operating cost component of inpatient medicaid rates subject
to subparagraphs (i), (ii) and (iii) of this paragraph shall, with
regard to alternative level of care (ALC) days of care be subject to
computation pursuant to paragraph (h) of this subdivision.

* (f) where a general hospital having two hundred or less certified
acute care beds, based on the total number of inpatient acute care beds
for which such general hospital is certified pursuant to the operating
certificate issued for such general hospital in accordance with section
twenty-eight hundred five of this article in effect on June thirtieth,
nineteen hundred ninety, is classified as a rural hospital for purposes
of determining payment for inpatient services provided to beneficiaries
of title XVIII of the federal social security act (medicare) or under
state regulations, such general hospital may at its option have its
reimbursable inpatient operating cost component of case based rates of
payment per diagnosis-related group based one hundred percent on the
general hospital's hospital-specific average reimbursable inpatient
operating cost per discharge determined in accordance with subdivision
six of this section; provided however, commencing April first, nineteen
hundred ninety-six the reimbursable inpatient operating cost component
of case based rates of payment per diagnosis-related group for patients
eligible for payments made by state governmental agencies shall be
reduced by five percent to encourage improved productivity and
efficiency. Such election shall not alter the calculation of the group
price component calculated pursuant to subparagraph (i) of paragraph (a)
of subdivision seven of this section;

* NB There are 2 par. (f)'s

* (f) where a general hospital having two hundred or less certified
acute care beds, based on the total number of inpatient acute care beds
for which such general hospital is certified pursuant to the operating
certificate issued for such general hospital in accordance with section
twenty-eight hundred five of this article in effect on June thirtieth,
nineteen hundred ninety, is classified as a rural hospital for purposes
of determining payment for inpatient services provided to beneficiaries
of title XVIII of the federal social security act (medicare) or under
state regulations, such general hospital may at its option have its
reimbursable inpatient operating cost component of case based rates of
payment per diagnosis-related group based one hundred percent on the
general hospital's hospital-specific average reimbursable inpatient
operating cost per discharge determined in accordance with subdivision
six of this section; provided however,

(i) commencing April first, nineteen hundred ninety-six through July
thirty-first, nineteen hundred ninety-six, the reimbursable inpatient
operating cost component of case based rates of payment per
diagnosis-related group, excluding any operating cost components related
to direct and indirect expenses of graduate medical education, for
patients eligible for payments made by state governmental agencies shall
be reduced by five percent; and

(ii) commencing August first, nineteen hundred ninety-six through
March thirty-first, nineteen hundred ninety-seven, the reimbursable
inpatient operating cost component of case based rates of payment per
diagnosis-related group, excluding any operating cost components related
to direct and indirect expenses of graduate medical education, for
patients eligible for payments made by state governmental agencies shall
be reduced by two and five-tenths percent; and

(iii) commencing April first, nineteen hundred ninety-seven through
March thirty-first, nineteen hundred ninety-nine and commencing July
first, nineteen hundred ninety-nine through March thirty-first, two
thousand and April first, two thousand through March thirty-first, two
thousand five and for periods commencing April first, two thousand five
through March thirty-first, two thousand six and for periods commencing
on and after April first, two thousand six through March thirty-first,
two thousand seven, and for periods commencing on and after April first,
two thousand seven through March thirty-first, two thousand nine, and
for periods commencing on and after April first, two thousand nine
through March thirty-first, two thousand eleven, the reimbursable
inpatient operating cost component of case based rates of payment per
diagnosis-related group, excluding any operating cost components related
to direct and indirect expenses of graduate medical education, for
patients eligible for payments made by state governmental agencies shall
be reduced by three and thirty-three hundredths percent to encourage
improved productivity and efficiency. Such election shall not alter the
calculation of the group price component calculated pursuant to
subparagraph (i) of paragraph (a) of subdivision seven of this section;

* NB Effective until December 31, 2026

* (f) where a general hospital having two hundred or less certified
acute care beds, based on the total number of inpatient acute care beds
for which such general hospital is certified pursuant to the operating
certificate issued for such general hospital in accordance with section
twenty-eight hundred five of this article in effect on June thirtieth,
nineteen hundred ninety, is classified as a rural hospital for purposes
of determining payment for inpatient services provided to beneficiaries
of title XVIII of the federal social security act (medicare) or under
state regulations, such general hospital may at its option have its
reimbursable inpatient operating cost component of case based rates of
payment per diagnosis-related group based one hundred percent on the
general hospital's hospital-specific average reimbursable inpatient
operating cost per discharge determined in accordance with subdivision
six of this section; provided however,

(i) commencing April first, nineteen hundred ninety-six through July
thirty-first, nineteen hundred ninety-six, the reimbursable inpatient
operating cost component of case based rates of payment per
diagnosis-related group, excluding any operating cost components related
to direct and indirect expenses of graduate medical education, for
patients eligible for payments made by state governmental agencies shall
be reduced by five percent; and

(ii) commencing August first, nineteen hundred ninety-six through
March thirty-first, nineteen hundred ninety-seven, the reimbursable
inpatient operating cost component of case based rates of payment per
diagnosis-related group, excluding any operating cost components related
to direct and indirect expenses of graduate medical education, for
patients eligible for payments made by state governmental agencies shall
be reduced by two and five-tenths percent; and

(iii) commencing April first, nineteen hundred ninety-seven through
March thirty-first, nineteen hundred ninety-nine and commencing July
first, nineteen hundred ninety-nine through March thirty-first, two
thousand, the reimbursable inpatient operating cost component of case
based rates of payment per diagnosis-related group, excluding any
operating cost components related to direct and indirect expenses of
graduate medical education, for patients eligible for payments made by
state governmental agencies shall be reduced by three and thirty-three
hundredths percent to encourage improved productivity and efficiency.
Such election shall not alter the calculation of the group price
component calculated pursuant to subparagraph (i) of paragraph (a) of
subdivision seven of this section;

* NB Effective and expires December 31, 2026

* (f) where a general hospital having two hundred or less certified
acute care beds, based on the total number of inpatient acute care beds
for which such general hospital is certified pursuant to the operating
certificate issued for such general hospital in accordance with section
twenty-eight hundred five of this article in effect on June thirtieth,
nineteen hundred ninety, is classified as a rural hospital for purposes
of determining payment for inpatient services provided to beneficiaries
of title XVIII of the federal social security act (medicare) or under
state regulations, such general hospital may at its option have its
reimbursable inpatient operating cost component of case based rates of
payment per diagnosis-related group based one hundred percent on the
general hospital's hospital-specific average reimbursable inpatient
operating cost per discharge determined in accordance with subdivision
six of this section. Such election shall not alter the calculation of
the group price component calculated pursuant to subparagraph (i) of
paragraph (a) of subdivision seven of this section;

* NB Effective December 31, 2026

* NB There are 2 par (f)'s

(g) in cases where general hospitals or distinct units of general
hospitals, other than those specified in paragraphs (e) and (f) of this
subdivision, may be excluded from case based payments or receive an
adjustment to case based payment rates. An exclusion or adjustment shall
be provided only where the council, subject to the approval of the
commissioner, determines that the case based rates of payment determined
in accordance with this section would not reflect medically appropriate
patterns of health resource use for such general hospital services
efficiently and economically provided. If an exclusion is provided, then
the reimbursement provisions contained in paragraph (e) of this
subdivision shall apply. The commissioner shall provide to the council
an analysis of the effect of case based payments on rural general
hospitals and the council, subject to the above criteria and the
approval of the commissioner, may exclude for any of the annual rate
periods beginning on or after January first, nineteen hundred
eighty-eight any of these general hospitals from case based payments or
provide an adjustment to the case based payments in addition to that
authorized in accordance with paragraph (f) of this subdivision;

(h) where alternate level of care (ALC) days are provided, a factor as
determined in subparagraph (i) of this paragraph for the costs of these
patients in a general hospital shall not be included in computations
relating to the determination of general hospital case based rates of
payment pursuant to this section. Alternate level of care days shall be
days of care provided by a general 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 and are being provided by the general hospital. Separate rates
of payment shall be established for such patients based on the level of
care required and shall reflect: (i) operating costs based on the
nineteen hundred eighty-seven regional average operating cost component
of rates of payment for hospital based residential health care
facilities determined in accordance with section twenty-eight hundred
eight of this article and trended to the rate period, and (ii) additions
contained in subparagraph (iii) of paragraph (a) of subdivision one of
this section. In the event that federal financial participation in
payments made for beneficiaries eligible for medical assistance under
title XIX of the federal social security act based upon the rates
calculated in accordance with this paragraph is not approved by the
federal government, the council subject to the approval of the
commissioner shall adopt regulations for such payments;

(i) if diagnosis-related groups are not adjusted or established in
accordance with paragraph (a) of subdivision three of this section for
services to acquired immune deficiency syndrome (AIDS) patients, then
general hospitals shall receive separate payments for these patients
based on regulations adopted by the council and approved by the
commissioner;

(j) where general hospitals or distinct units of general hospitals are
excluded from or receive an adjustment to case based payments per
diagnosis-related group in accordance with paragraph (e), (f) or (g) of
this subdivision, reimbursement shall continue to be calculated in
accordance with such paragraph until the beginning of the rate period
immediately following the date when the general hospital or the distinct
unit of the general hospital is no longer excluded from or no longer
receives an adjustment to case based payments per diagnosis-related
group for inpatient services provided to beneficiaries of title XVIII of
the federal social security act (medicare), or until appropriate
diagnosis-related groups have been developed for the specialized service
provided by the general hospital or distinct unit of the general
hospital, pursuant to paragraph (a) of subdivision three of this
section; and

* (k) for facilities designated by the federal department of health
and human services as an exempt acute care children's hospital, payment
effective January first, nineteen hundred ninety-four will be based upon
a hospital specific case payment amount inclusive of high cost and high
length of stay outlier costs. The nineteen hundred eighty-seven base
year cost, trended, volume adjusted and case mix adjusted where
applicable to nineteen hundred ninety-two, trended will be utilized to
determine the rate of payment effective January first, nineteen hundred
ninety-four. Commencing April first, nineteen hundred ninety-six, the
operating cost component of rates of payment for patients eligible for
payments made by a state governmental agency shall be reduced by five
percent to encourage improved productivity and efficiency. The facility
will be eligible to receive the financial incentives for the physician
specialty weighting incentive towards primary care pursuant to
subparagraph (ii) of paragraph (a) of subdivision twenty-five of this
section.

* NB There are 2 par (k)'s

* (k) for facilities designated by the federal department of health
and human services as an exempt acute care children's hospital, payment
effective January first, nineteen hundred ninety-four will be based upon
a hospital specific case payment amount inclusive of high cost and high
length of stay outlier costs. The nineteen hundred eighty-seven base
year cost, trended, volume adjusted and case mix adjusted where
applicable to nineteen hundred ninety-two, trended will be utilized to
determine the rate of payment effective January first, nineteen hundred
ninety-four.

(i) Commencing April first, nineteen hundred ninety-six through July
thirty-first, nineteen hundred ninety-six, the operating cost component
of rates of payment, excluding any operating cost components related to
direct and indirect expenses of graduate medical education, for patients
eligible for payments made by a state governmental agency shall be
reduced by five percent; and

(ii) commencing August first, nineteen hundred ninety-six through
March thirty-first, nineteen hundred ninety-seven the operating cost
component of rates of payment, excluding any operating cost components
related to direct and indirect expenses of graduate medical education,
for patients eligible for payments made by a state governmental agency
shall be reduced by two and five-tenths percent; and

(iii) commencing April first, nineteen hundred ninety-seven through
March thirty-first, nineteen hundred ninety-nine and commencing July
first, nineteen hundred ninety-nine through March thirty-first, two
thousand and April first, two thousand through March thirty-first, two
thousand five and commencing April first, two thousand five through
March thirty-first, two thousand six, and for periods commencing on and
after April first, two thousand six through March thirty-first, two
thousand seven, and for periods commencing on and after April first, two
thousand seven through March thirty-first, two thousand nine, and for
periods commencing on and after April first, two thousand nine through
March thirty-first, two thousand eleven, the operating cost component of
rates of payment, excluding any operating cost components related to
direct and indirect expenses of graduate medical education, for patients
eligible for payments made by a state governmental agency shall be
reduced by three and thirty-three hundredths percent to encourage
improved productivity and efficiency. The facility will be eligible to
receive the financial incentives for the physician specialty weighting
incentive towards primary care pursuant to subparagraph (ii) of
paragraph (a) of subdivision twenty-five of this section.

* NB Effective until December 31, 2026

* (k) for facilities designated by the federal department of health
and human services as an exempt acute care children's hospital, payment
effective January first, nineteen hundred ninety-four will be based upon
a hospital specific case payment amount inclusive of high cost and high
length of stay outlier costs. The nineteen hundred eighty-seven base
year cost, trended, volume adjusted and case mix adjusted where
applicable to nineteen hundred ninety-two, trended will be utilized to
determine the rate of payment effective January first, nineteen hundred
ninety-four.

(i) Commencing April first, nineteen hundred ninety-six through July
thirty-first, nineteen hundred ninety-six, the operating cost component
of rates of payment, excluding any operating cost components related to
direct and indirect expenses of graduate medical education for patients
eligible for payments made by a state governmental agency shall be
reduced by five percent; and

(ii) commencing August first, nineteen hundred ninety-six through
March thirty-first, nineteen hundred ninety-seven the operating cost
component of rates of payment, excluding any operating cost components
related to direct and indirect expenses of graduate medical education,
for patients eligible for payments made by a state governmental agency
shall be reduced by two and five-tenths percent; and

(iii) commencing April first, nineteen hundred ninety-seven through
March thirty-first, nineteen hundred ninety-nine and commencing July
first, nineteen hundred ninety-nine through March thirty-first, two
thousand, the operating cost component of rates of payment, excluding
any operating cost components related to direct and indirect expenses of
graduate medical education, for patients eligible for payments made by a
state governmental agency shall be reduced by three and thirty-three
hundredths percent to encourage improved productivity and efficiency.
The facility will be eligible to receive the financial incentives for
the physician specialty weighting incentive towards primary care
pursuant to subparagraph (ii) of paragraph (a) of subdivision
twenty-five of this section.

* NB Effective and expires December 31, 2026

* (k) for facilities designated by the federal department of health
and human services as an exempt acute care children's hospital, payment
effective January first, nineteen hundred ninety-four will be based upon
a hospital specific case payment amount inclusive of high cost and high
length of stay outlier costs. The nineteen hundred eighty-seven base
year cost, trended, volume adjusted and case mix adjusted where
applicable to nineteen hundred ninety-two, trended will be utilized to
determine the rate of payment effective January first, nineteen hundred
ninety-four. The facility will be eligible to receive the financial
incentives for the physician specialty weighting incentive towards
primary care pursuant to subparagraph (ii) of paragraph (a) of
subdivision twenty-five of this section.

* NB Effective December 31, 2026

* NB There are 2 par (k)'s

(l) Notwithstanding any inconsistent provision of this section and
subject to the availability of federal financial participation, rates of
payment by governmental agencies for general hospitals which are
certified by the office of alcoholism and substance abuse services to
provide inpatient detoxification and withdrawal services and, with
regard to inpatient services provided to patients discharged on and
after December first, two thousand eight and who are determined to be in
diagnosis-related groups as defined by the commissioner and published on
the New York state department of health website, shall be made on a per
diem basis in accordance with the following:

(i) for the period December first, two thousand eight through March
thirty-first, two thousand nine, seventy-five percent of the operating
cost component of such rates of payments shall reflect the operating
cost component of rates of payment effective for December thirty-first,
two thousand seven, as adjusted for inflation pursuant to paragraph (c)
of subdivision ten of this section, as otherwise modified by any
applicable statutes, and twenty-five percent of such rates shall reflect
the use of two thousand six operating costs as reported by each facility
to the department prior to two thousand eight and as computed in
accordance with the provisions of subparagraph (iv) of this paragraph;

(ii) for the period April first, two thousand nine through March
thirty-first, two thousand ten, thirty-seven and five tenths percent of
the operating cost component of such rates of payment shall reflect the
operating cost component of rates of payment effective December
thirty-first, two thousand seven, as adjusted for inflation pursuant to
paragraph (c) of subdivision ten of this section, as otherwise modified
by any applicable statutes, and sixty-two and five tenths percent of
such rates of payment shall reflect the use of two thousand six
operating costs as reported by each facility to the department prior to
two thousand eight and as computed in accordance with the provisions of
subparagraph (iv) of this paragraph;

(iii) for periods on and after April first, two thousand ten, one
hundred percent of the operating cost component of such rates of payment
shall reflect the use of two thousand six operating costs as reported to
the department prior to two thousand eight and as computed in accordance
with the provisions of subparagraph (iv) of this paragraph.

(iv) rates of payment computed in accordance with this paragraph and
reflecting the use of two thousand six base year operating costs shall
be in accord with the following, provided, however that the commissioner
may establish criteria under which reimbursement may be provided at
higher percentages and for longer periods.

(A) For each of the regions within the state as described in clause
(E) of this subparagraph the commissioner shall determine the average
per diem cost incurred by general hospitals in that region subject to
the provisions of this paragraph with regard to inpatients requiring
medically managed detoxification services, as defined by applicable
regulations promulgated by the office of alcoholism and substance abuse
services. In determining such costs the commissioner shall utilize two
thousand six costs and statistics as reported by such hospitals to the
department prior to two thousand eight.

(B) Per diem payments for inpatients requiring medically managed
inpatient detoxification services shall reflect one hundred percent of
the per diem amounts computed pursuant to clause (A) of this
subparagraph for the applicable region in which the facility is located
and as trended forward to adjust for inflation, provided however, that
such payments shall be reduced by fifty percent for any such services
provided on or after the sixth day of services through the tenth day of
services, and further provided that no payments shall be made for any
services provided on or after the eleventh day.

(C) Per diem payments for inpatients requiring medically supervised
withdrawal services, as defined by applicable regulations promulgated by
the office of alcoholism and substance abuse services, shall reflect one
hundred percent of the per diem amounts computed pursuant to clause (A)
of this subparagraph for the applicable region in which the facility is
located for the period January first, two thousand nine through December
thirty-first, two thousand nine, and as trended forward to adjust for
inflation, and shall reflect seventy-five percent of such per diem
amounts for periods on and after January first, two thousand ten, as
trended forward to adjust for inflation, provided, however, that such
payments shall be reduced by fifty percent for any services provided on
or after the sixth day of services through the tenth day of services,
and further provided that no payments shall be made for any services
provided on and after the eleventh day.

(D) Per diem payments for inpatients placed in observation beds, as
defined by applicable regulations promulgated by the office of
alcoholism and substance abuse services, shall be at the same level as
would be paid pursuant to clause (A) of this paragraph, provided,
however, that such payments shall not apply for more than two days of
care, after which payments for such inpatients shall reflect their
designation as requiring either medically managed detoxification
services or medically supervised withdrawal services, and further
provided that days of care provided in such observation beds shall, for
reimbursement purposes, be fully reflected in the computation of the
initial five days of care as set forth in clauses (A) and (B) of this
subparagraph.

(E) For the purposes of this paragraph, the regions of the state shall
be as follows:

(I) New York city, consisting of the counties of Bronx, New York,
Kings, Queens and Richmond;

(II) Long Island, consisting of the counties of Nassau and Suffolk;

(III) Northern metropolitan, consisting of the counties of Columbia,
Delaware, Dutchess, Orange, Putnam, Rockland, Sullivan, Ulster and
Westchester;

(IV) Northeast, consisting of the counties of Albany, Clinton, Essex,
Fulton, Greene, Hamilton, Montgomery, Rensselaer, Saratoga, Schenectady,
Schoharie, Warren and Washington;

(V) Utica/Watertown, consisting of the counties of Franklin, Herkimer,
Lewis, Oswego, Otsego, St. Lawrence, Jefferson, Chenango, Madison and
Oneida;

(VI) Central, consisting of the counties of Broome, Cayuga, Chemung,
Cortland, Onondaga, Schuyler, Seneca, Steuben, Tioga and Tompkins;

(VII) Rochester, consisting of Monroe, Ontario, Livingston, Wayne and
Yates;

(VIII) Western, consisting of the counties of Allegany, Cattaraugus,
Chautauqua, Erie, Genesee, Niagara, Orleans and Wyoming.

(F) Capital cost reimbursement for general hospitals otherwise subject
to the provisions of this paragraph shall remain subject to the
provisions of subdivision eight of this section.

(v) the commissioner may promulgate regulations, including emergency
regulations, providing for an update of the base year costs and
statistics used to compute rates of payment pursuant to this paragraph,
provided, however, that such base year update shall take effect no
earlier than April first, two thousand fifteen, and provided further,
however, that the commissioner may make such adjustments to such
utilization and to the methodology for computing such rates as is
necessary to achieve no aggregate, net growth in overall Medicaid
expenditures related to such rates, as compared to such aggregate
expenditures from the prior year. In determining the updated base year
to be utilized pursuant to this subparagraph, the commissioner shall
take into account the base year determined in accordance with paragraph
(c) of subdivision thirty-five of this section.

5. Reimbursable inpatient operating cost component. (a) The
reimbursable inpatient operating cost component of case based rates of
payment per diagnosis-related group for general hospital inpatient
hospital services shall be the product of the average reimbursable
inpatient operating cost per discharge determined in accordance with
paragraph (b) of this subdivision, adjusted by a third-party payor of
hospital services for uncovered services by such payor, and the
weighting factors determined in accordance with paragraph (c) of
subdivision three of this section.

(b) (i) For the rate year January first, nineteen hundred eighty-eight
through December thirty-first, nineteen hundred eighty-eight, average
reimbursable inpatient operating cost per discharge shall be a composite
sum of no less than ninety percent of the general hospital's
hospital-specific average reimbursable inpatient operating cost per
discharge determined in accordance with paragraph (a) of subdivision six
of this section and a percentage amount not to exceed ten percent of the
general hospital's group category average inpatient reimbursable
operating cost per discharge (price) determined in accordance with
paragraph (a) of subdivision seven of this section such that the
composite sum equals one hundred percent.

(ii) For the rate year commencing January first, nineteen hundred
eighty-nine, average reimbursable inpatient operating cost per discharge
shall be a composite sum of no less than seventy-five percent of the
general hospital's hospital-specific average reimbursable inpatient
operating cost per discharge determined in accordance with paragraph (a)
of subdivision six of this section and a percentage amount not to exceed
twenty-five percent of the general hospital's group category average
inpatient reimbursable operating cost per discharge (price) determined
in accordance with paragraph (a) of subdivision seven of this section,
such that the composite sum equals one hundred percent.

(iii) Except as provided in clause (C) of this subparagraph, for
annual rate years commencing on or after January first, nineteen hundred
ninety, average reimbursable inpatient operating cost per discharge
shall be a composite sum of no less than forty-five percent of the
general hospital's hospital-specific average reimbursable inpatient
operating cost per discharge determined in accordance with paragraph (a)
of subdivision six of this section and a percentage amount not to exceed
fifty-five percent of the general hospital's group category average
inpatient reimbursable operating cost per discharge (price) determined
in accordance with paragraph (a) of subdivision seven of this section,
such that the composite sum equals one hundred percent.

** (A) Except as provided in clause (B) of this subparagraph and
subparagraph (iv) of this paragraph, for annual rate years commencing on
or after January first, nineteen hundred ninety, average reimbursable
inpatient operating cost per discharge shall be a composite sum of no
less than forty-five percent of the general hospital's hospital-specific
average reimbursable inpatient operating cost per discharge determined
in accordance with paragraph (a) of subdivision six of this section and
a percentage amount not to exceed fifty-five percent of the general
hospital's group category average inpatient reimbursable operating cost
per discharge (price) determined in accordance with paragraph (a) of
subdivision seven of this section, such that the composite sum equals
one hundred percent.

** NB There are 2 clause (A)'s

** (A) Except as provided in clauses (B) and (C) of this subparagraph
and subparagraphs (iv), (v) and (vi) of this paragraph, for annual rate
years commencing on or after January first, nineteen hundred ninety,
average reimbursable inpatient operating cost per discharge shall be a
composite sum of no less than forty-five percent of the general
hospital's hospital-specific average reimbursable inpatient operating
cost per discharge determined in accordance with paragraph (a) of
subdivision six of this section and a percentage amount not to exceed
fifty-five percent of the general hospital's group category average
inpatient reimbursable operating cost per discharge (price) determined
in accordance with paragraph (a) of subdivision seven of this section,
such that the composite sum equals one hundred percent.

** NB Effective until December 31, 2026

** (A) Except as provided in clause (B) of this subparagraph, for
annual rate years commencing on or after January first, nineteen hundred
ninety, average reimbursable inpatient operating cost per discharge
shall be a composite sum of no less than forty-five percent of the
general hospital's hospital-specific average reimbursable inpatient
operating cost per discharge determined in accordance with paragraph (a)
of subdivision six of this section and a percentage amount not to exceed
fifty-five percent of the general hospital's group category average
inpatient reimbursable operating cost per discharge (price) determined
in accordance with paragraph (a) of subdivision seven of this section,
such that the composite sum equals one hundred percent.

** NB Effective December 31, 2026

** NB There are 2 clause (A)'s

* (B) For discharges on or after April first, nineteen hundred
ninety-five for purposes of reimbursement of inpatient hospital services
for patients eligible for payments made by state governmental agencies
assigned to one of the twenty most common diagnosis-related groups for
all general hospitals, the average reimbursable inpatient operating cost
per discharge of a general hospital shall be the lower of (I) the amount
determined in accordance with clause (A) of this subparagraph or (II)
the average amount determined in accordance with clause (A) of this
subparagraph for all general hospitals in the group category to which
the hospital is assigned. The twenty most common diagnosis-related
groups shall be determined using discharge data for the year two years
prior to the rate year for all general hospitals, excluding
beneficiaries of title XVIII of the federal social security act
(medicare) and patients assigned to diagnosis related groups for human
immunodeficiency virus (HIV) infection, acquired immune deficiency
syndrome, alcohol/drug use or alcohol/drug induced organic mental
disorders, and exempt unit or exempt hospital patients.

* NB Expired March 31, 2011

* (C) (I) For discharges on or after July first, two thousand six
through December thirty-first, two thousand six, and subject to the
availability of federal financial participation, rates of payment by
state governmental agencies to Westchester medical center shall be
increased by an aggregate amount of twenty-five million dollars to
assist the medical center to maintain critically needed health care
services.

(II) For discharges on or after January first, two thousand seven
through December thirty-first, two thousand seven, and subject to the
availability of federal financial participation, rates of payment by
state governmental agencies to Westchester medical center shall be
increased by an aggregate amount of twenty-five million dollars to
assist the medical center to maintain critically needed health care
services.

(III) For discharges on or after January first, two thousand eight
through December thirty-first, two thousand eight, and subject to the
availability of federal financial participation, rates of payment by
state governmental agencies to Westchester medical center shall be
increased by an aggregate amount of twenty-five million dollars to
assist the medical center to maintain critically needed health care
services.

* NB Expired March 31, 2011

* (iv) for discharges on or after April first, nineteen hundred
ninety-six for purposes of reimbursement of inpatient hospital services
for patients eligible for payments made by state governmental agencies,
the average reimbursable inpatient operating cost per discharge of a
general hospital shall be the sum of:

(A) the amount determined in accordance with clause (B) of
subparagraph (iii) of this paragraph, excluding the value of direct
medical education expenses, as defined in subparagraph (i) of paragraph
(c) of subdivision seven of this section, reflected in the general
hospital's hospital-specific average reimbursable inpatient operating
cost per discharge and group category average inpatient reimbursable
operating cost per discharge, and excluding the value of forty-five
percent of the indirect medical education expenses, as defined in
subparagraph (ii) of paragraph (c) of subdivision seven of this section,
reflected in the general hospital's hospital specific average
reimbursable inpatient operating cost per discharge, and excluding the
value of fifty-five percent of the indirect medical education expenses
reflected in a general hospital's group category average inpatient
reimbursable operating cost per discharge in accordance with subdivision
twenty-five of this section as amended;

(B) minus five percent of the amount determined in accordance with
clause (A) of this subparagraph;

(C) plus the value of direct medical education expenses, as defined in
subparagraph (i) of paragraph (c) of subdivision seven of this section,
reflected in the general hospital's hospital-specific average
reimbursable inpatient operating cost per discharge and group category
average inpatient reimbursable operating cost per discharge;

(D) minus five percent of the costs of hospital based physicians
reflected in the direct medical education amount determined in
accordance with clause (C) of this subparagraph;

(E) plus the value of forty-five percent of the indirect medical
education expenses, as defined in subparagraph (ii) of paragraph (c) of
subdivision seven of this section, reflected in the general hospital's
hospital-specific average reimbursable inpatient operating cost per
discharge; and

(F) plus the value of fifty-five percent of the indirect medical
education expenses reflected in the general hospital's group category
average inpatient operating cost per discharge in accordance with
subdivision twenty-five of this section as amended.

* NB There are 3 subpar (iv)'s

* (iv) for discharges on or after April first, nineteen hundred
ninety-six for purposes of reimbursement of inpatient hospital services
for patients eligible for payments made by state governmental agencies,
the average reimbursable inpatient operating cost per discharge of a
general hospital shall to encourage improved productivity and efficiency
be the sum of:

(A) the amount determined in accordance with clause (B) of
subparagraph (iii) of this paragraph, excluding the value of direct
medical education expenses, as defined in subparagraph (i) of paragraph
(c) of subdivision seven of this section, reflected in the general
hospital's hospital-specific average reimbursable inpatient operating
cost per discharge and group category average inpatient reimbursable
operating cost per discharge, and excluding the value of forty-five
percent of the indirect medical education expenses, as defined in
subparagraph (ii) of paragraph (c) of subdivision seven of this section,
reflected in the general hospital's hospital specific average
reimbursable inpatient operating cost per discharge, and excluding the
value of fifty-five percent of the indirect medical education expenses
reflected in a general hospital's group category average inpatient
reimbursable operating cost per discharge in accordance with subdivision
twenty-five of this section as amended;

(B) minus five percent of the amount determined in accordance with
clause (A) of this subparagraph;

(C) plus the value of direct medical education expenses, as defined in
subparagraph (i) of paragraph (c) of subdivision seven of this section,
reflected in the general hospital's hospital-specific average
reimbursable inpatient operating cost per discharge and group category
average inpatient reimbursable operating cost per discharge;

(D) minus five percent of the costs of hospital based physicians
reflected in the direct medical education amount determined in
accordance with clause (C) of this subparagraph;

(E) plus the value of forty-five percent of the indirect medical
education expenses, as defined in subparagraph (ii) of paragraph (c) of
subdivision seven of this section, reflected in the general hospital's
hospital-specific average reimbursable inpatient operating cost per
discharge; and

(F) plus the value of fifty-five percent of the indirect medical
education expenses reflected in the general hospital's group category
average inpatient operating cost per discharge in accordance with
subdivision twenty-five of this section as amended.

* NB There are 3 subpar (iv)'s

* (iv) for discharges on or after April first, nineteen hundred
ninety-six through July thirty-first, nineteen hundred ninety-six for
purposes of reimbursement of inpatient hospital services for patients
eligible for payments made by state governmental agencies, the average
reimbursable inpatient operating cost per discharge of a general
hospital shall, to encourage improved productivity and efficiency, be
the sum of:

(A) the amount determined in accordance with clause (B) of
subparagraph (iii) of this paragraph, excluding the value of direct
medical education expenses, as defined in subparagraph (i) of paragraph
(c) of subdivision seven of this section, reflected in the general
hospital's hospital-specific average reimbursable inpatient operating
cost per discharge and group category average inpatient reimbursable
operating cost per discharge, and excluding the value of forty-five
percent of the indirect medical education expenses, as defined in
subparagraph (ii) of paragraph (c) of subdivision seven of this section,
reflected in the general hospital's hospital specific average
reimbursable inpatient operating cost per discharge, and excluding the
value of fifty-five percent of the indirect medical education expenses
reflected in a general hospital's group category average inpatient
reimbursable operating cost per discharge in accordance with subdivision
twenty-five of this section as amended;

(B) minus five percent of the amount determined in accordance with
clause (A) of this subparagraph;

(C) plus the value of direct medical education expenses, as defined in
subparagraph (i) of paragraph (c) of subdivision seven of this section,
reflected in the general hospital's hospital-specific average
reimbursable inpatient operating cost per discharge and group category
average inpatient reimbursable operating cost per discharge;

(D) minus five percent of the costs of hospital based physicians
reflected in the direct medical education amount determined in
accordance with clause (C) of this subparagraph;

(E) plus the value of forty-five percent of the indirect medical
education expenses, as defined in subparagraph (ii) of paragraph (c) of
subdivision seven of this section, reflected in the general hospital's
hospital-specific average reimbursable inpatient operating cost per
discharge; and

(F) plus the value of fifty-five percent of the indirect medical
education expenses reflected in the general hospital's group category
average inpatient operating cost per discharge in accordance with
subdivision twenty-five of this section as amended.

* NB Expires December 31, 2026

* NB There are 3 subpar (iv)'s

* (v) for discharges on or after August first, nineteen hundred
ninety-six through March thirty-first, nineteen hundred ninety-seven for
purposes of reimbursement of inpatient hospital services for patients
eligible for payments made by state governmental agencies, the average
reimbursable inpatient operating cost per discharge of a general
hospital shall, to encourage improved productivity and efficiency, be
the sum of:

(A) the amount determined in accordance with clause (B) of
subparagraph (iii) of this paragraph, excluding the value of direct
medical education expenses, as defined in subparagraph (i) of paragraph
(c) of subdivision seven of this section, reflected in the general
hospital's hospital-specific average reimbursable inpatient operating
cost per discharge and group category average inpatient reimbursable
operating cost per discharge, and excluding the value of forty-five
percent of the indirect medical education expenses, as defined in
subparagraph (ii) of paragraph (c) of subdivision seven of this section,
reflected in the general hospital's hospital specific average
reimbursable inpatient operating cost per discharge, and excluding the
value of fifty-five percent of the indirect medical education expenses
reflected in a general hospital's group category average inpatient
reimbursable operating cost per discharge in accordance with subdivision
twenty-five of this section as amended;

(B) minus two and five-tenths percent of the amount determined in
accordance with clause (A) of this subparagraph;

(C) plus the value of direct medical education expenses, as defined in
subparagraph (i) of paragraph (c) of subdivision seven of this section,
reflected in the general hospital's hospital-specific average
reimbursable inpatient operating cost per discharge and group category
average inpatient reimbursable operating cost per discharge;

(D) minus two and five-tenths percent of the costs of hospital based
physicians reflected in the direct medical education amount determined
in accordance with clause (C) of this subparagraph;

(E) plus the value of forty-five percent of the indirect medical
education expenses, as defined in subparagraph (ii) of paragraph (c) of
subdivision seven of this section, reflected in the general hospital's
hospital-specific average reimbursable inpatient operating cost per
discharge; and

(F) plus the value of fifty-five percent of the indirect medical
education expenses reflected in the general hospital's group category
average inpatient operating cost per discharge in accordance with
subdivision twenty-five of this section as amended.

* NB Expires December 31, 2026

* (vi) for discharges on or after April first, nineteen hundred
ninety-seven through March thirty-first, nineteen hundred ninety-nine
and for discharges on or after July first, nineteen hundred ninety-nine
through March thirty-first, two thousand and for discharges on or after
April first, two thousand through March thirty-first, two thousand five
and for discharges on or after April first, two thousand five through
March thirty-first, two thousand six, and for discharges on or after
April first, two thousand six through March thirty-first, two thousand
seven, and for discharges on or after April first, two thousand seven
through March thirty-first, two thousand nine, and for discharges on or
after April first, two thousand nine through March thirty-first, two
thousand eleven, for purposes of reimbursement of inpatient hospital
services for patients eligible for payments made by state governmental
agencies, the average reimbursable inpatient operating cost per
discharge of a general hospital shall, to encourage improved
productivity and efficiency, be the sum of:

(A) the amount determined in accordance with clause (B) of
subparagraph (iii) of this paragraph, excluding the value of direct
medical education expenses, as defined in subparagraph (i) of paragraph
(c) of subdivision seven of this section, reflected in the general
hospital's hospital-specific average reimbursable inpatient operating
cost per discharge and group category average inpatient reimbursable
operating cost per discharge, and excluding the value of forty-five
percent of the indirect medical education expenses, as defined in
subparagraph (ii) of paragraph (c) of subdivision seven of this section,
reflected in the general hospital's hospital-specific average
reimbursable inpatient operating cost per discharge, and excluding the
value of fifty-five percent of the indirect medical education expenses
reflected in a general hospital's group category average inpatient
reimbursable operating cost per discharge in accordance with subdivision
twenty-five of this section as amended;

(B) minus three and thirty-three hundredths percent of the amount
determined in accordance with clause (A) of this subparagraph;

(C) plus the value of direct medical education expenses, as defined in
subparagraph (i) of paragraph (c) of subdivision seven of this section,
reflected in the general hospital's hospital-specific average
reimbursable inpatient operating cost per discharge and group category
average inpatient reimbursable operating cost per discharge;

(D) minus three and thirty-three hundredths percent of the costs of
hospital based physicians reflected in the direct medical education
amount determined in accordance with clause (C) of this subparagraph;

(E) plus the value of forty-five percent of the indirect medical
education expenses, as defined in subparagraph (ii) of paragraph (c) of
subdivision seven of this section, reflected in the general hospital's
hospital-specific average reimbursable inpatient operating cost per
discharge; and

(F) plus the value of fifty-five percent of the indirect medical
education expenses reflected in the general hospital's group category
average inpatient operating cost per discharge in accordance with
subdivision twenty-five of this section as amended.

* NB Effective until December 31, 2026

* (vi) for discharges on or after April first, nineteen hundred
ninety-seven through March thirty-first, nineteen hundred ninety-nine
and for discharges on or after July first, nineteen hundred ninety-nine
through March thirty-first, two thousand for purposes of reimbursement
of inpatient hospital services for patients eligible for payments made
by state governmental agencies, the average reimbursable inpatient
operating cost per discharge of a general hospital shall, to encourage
improved productivity and efficiency, be the sum of:

(A) the amount determined in accordance with clause (B) of
subparagraph (iii) of this paragraph, excluding the value of direct
medical education expenses, as defined in subparagraph (i) of paragraph
(c) of subdivision seven of this section, reflected in the general
hospital's hospital-specific average reimbursable inpatient operating
cost per discharge and group category average inpatient reimbursable
operating cost per discharge, and excluding the value of forty-five
percent of the indirect medical education expenses, as defined in
subparagraph (ii) of paragraph (c) of subdivision seven of this section,
reflected in the general hospital's hospital-specific average
reimbursable inpatient operating cost per discharge, and excluding the
value of fifty-five percent of the indirect medical education expenses
reflected in a general hospital's group category average inpatient
reimbursable operating cost per discharge in accordance with subdivision
twenty-five of this section as amended;

(B) minus three and thirty-three hundredths percent of the amount
determined in accordance with clause (A) of this subparagraph;

(C) plus the value of direct medical education expenses, as defined in
subparagraph (i) of paragraph (c) of subdivision seven of this section,
reflected in the general hospital's hospital-specific average
reimbursable inpatient operating cost per discharge and group category
average inpatient reimbursable operating cost per discharge;

(D) minus three and thirty-three hundredths percent of the costs of
hospital based physicians reflected in the direct medical education
amount determined in accordance with clause (C) of this subparagraph;

(E) plus the value of forty-five percent of the indirect medical
education expenses, as defined in subparagraph (ii) of paragraph (c) of
subdivision seven of this section, reflected in the general hospital's
hospital-specific average reimbursable inpatient operating cost per
discharge; and

(F) plus the value of fifty-five percent of the indirect medical
education expenses reflected in the general hospital's group category
average inpatient operating cost per discharge in accordance with
subdivision twenty-five of this section as amended.

* NB Effective and expires December 31, 2026

* (c) Notwithstanding any inconsistent provision of this section,
commencing July first, nineteen hundred ninety-six through March
thirty-first, nineteen hundred ninety-nine and July first, nineteen
hundred ninety-nine through March thirty-first, two thousand and April
first, two thousand through March thirty-first, two thousand five and
for periods on and after April first, two thousand five through March
thirty-first, two thousand six, and for periods on and after April
first, two thousand six through March thirty-first, two thousand seven,
and for periods on and after April first, two thousand seven through
March thirty-first, two thousand nine, and for periods on and after
April first, two thousand nine through March thirty-first, two thousand
eleven, rates of payment for a general hospital for patients eligible
for payments made by state governmental agencies shall be further
reduced by the commissioner to encourage improved productivity and
efficiency by providers by a factor determined as follows:

(i) an aggregate reduction shall be calculated for each general
hospital commencing July first, nineteen hundred ninety-six through
March thirty-first, nineteen hundred ninety-nine and July first,
nineteen hundred ninety-nine through March thirty-first, two thousand
and April first, two thousand through March thirty-first, two thousand
five and for periods on and after April first, two thousand five through
March thirty-first, two thousand six, and for periods on and after April
first, two thousand six through March thirty-first, two thousand seven,
and for periods on and after April first, two thousand seven through
March thirty-first, two thousand nine, and for periods on and after
April first, two thousand nine through March thirty-first, two thousand
eleven, as the result of (A) eighty-nine million dollars on an
annualized basis for each year, multiplied by (B) the ratio of patient
days for patients eligible for payments made by state governmental
agencies provided in a base year two years prior to the rate year by a
general hospital, divided by the total of such patient days summed for
all general hospitals; and

(ii) (A) the result for each general hospital shall be allocated to
units within such hospital exempt from case based rates of payment based
on the ratio of such patient days provided in the exempt unit to the
total of such patient days provided by the general hospital, and (B) the
result divided by such patient days provided in the exempt unit, for a
per diem unit of service reduction in rates of payment for such exempt
unit for patients eligible for payments made by state governmental
agencies for such general hospital; and

(iii) any amount not allocated to exempt units shall be divided by
case based discharges (or for exempt hospitals by patient days) in the
base year two years prior to the rate year for patients eligible for
payments made by state governmental agencies, for a per case (or for
exempt hospitals a per diem) unit of service reduction in rates of
payment for patients eligible for payments made by state governmental
agencies for such general hospital.

* NB Effective until December 31, 2026

* (c) Notwithstanding any inconsistent provision of this section,
commencing July first, nineteen hundred ninety-six through March
thirty-first, nineteen hundred ninety-nine and July first, nineteen
hundred ninety-nine through March thirty-first, two thousand rates of
payment for a general hospital for patients eligible for payments made
by state governmental agencies shall be further reduced by the
commissioner to encourage improved productivity and efficiency by
providers by a factor determined as follows:

(i) an aggregate reduction shall be calculated for each general
hospital commencing July first, nineteen hundred ninety-six through
March thirty-first, nineteen hundred ninety-nine and July first,
nineteen hundred ninety-nine through March thirty-first, two thousand as
the result of (A) eighty-nine million dollars on an annualized basis for
each year, multiplied by (B) the ratio of patient days for patients
eligible for payments made by state governmental agencies provided in a
base year two years prior to the rate year by a general hospital,
divided by the total of such patient days summed for all general
hospitals; and

(ii) (A) the result for each general hospital shall be allocated to
units within such hospital exempt from case based rates of payment based
on the ratio of such patient days provided in the exempt unit to the
total of such patient days provided by the general hospital, and (B) the
result divided by such patient days provided in the exempt unit, for a
per diem unit of service reduction in rates of payment for such exempt
unit for patients eligible for payments made by state governmental
agencies for such general hospital; and

(iii) any amount not allocated to exempt units shall be divided by
case based discharges (or for exempt hospitals by patient days) in the
base year two years prior to the rate year for patients eligible for
payments made by state governmental agencies, for a per case (or for
exempt hospitals a per diem) unit of service reduction in rates of
payment for patients eligible for payments made by state governmental
agencies for such general hospital.

* NB Effective and expires December 31, 2026

6. Operating costs. (a) A general hospital's hospital-specific average
reimbursable inpatient operating cost per discharge shall be determined
in accordance with rules and regulations adopted by the council and
approved by the commissioner based on the hospital's reimbursable
inpatient operating cost base determined in accordance with paragraph
(d) of subdivision one of this section; adjusted in accordance with
paragraph (b) of this subdivision to reflect exceptions to case
payments; and projected to the applicable rate period by a trend factor
determined in accordance with subdivision ten of this section; and
increased in accordance with subparagraphs (i), (iii) and (iv) of
paragraph (e) of subdivision one of this section to reflect special
additional inpatient operating costs; and adjusted in accordance with
subparagraphs (i), (ii) and (iv) of paragraph (c) of this subdivision to
reflect modifications to case payments; and standardized to reflect
nineteen hundred eighty-seven hospital case mix. A general hospital's
hospital-specific average reimbursable inpatient operating cost per
discharge shall be adjusted on a payor category basis to reflect
allocation of malpractice insurance costs in accordance with the
methodology developed pursuant to subparagraph (ii) of paragraph (h) of
subdivision eleven of this section.

(b) In accordance with rules and regulations adopted by the council
and approved by the commissioner, the commissioner shall adjust
reimbursable inpatient operating costs and discharges to exclude
operating costs and statistics related to specialized hospital services
for which an alternative reimbursement methodology is adopted pursuant
to paragraph (e) or (g) of subdivision four of this section, a factor
for operating costs of patients who required an alternate level of care
in accordance with paragraph (h) of subdivision four of this section and
the operating costs and statistics of AIDS patients pursuant to
paragraph (i) of subdivision four of this section if effective.

(c) In accordance with rules and regulations adopted by the council
and approved by the commissioner, the commissioner shall adjust
weighting factors developed pursuant to paragraph (c) of subdivision
three of this section and reimbursable inpatient operating costs and
statistics on which case payment rates are based to take into account
the provisions for additional payments in accordance with paragraph (a),
(b), (c) or (d) of subdivision four of this section. The rules and
regulations are to be designed to identify an estimate of costs and
statistics as if the payment methodology effective for the applicable
rate period including payment based on the higher of high-cost outliers
or long-stay outliers was in effect during the period used to establish
such costs and statistics to accomplish the following:

(i) an estimate of costs for inpatient services to patients
transferred to another general hospital receiving case payment rates
pursuant to paragraph (a) of subdivision four of this section shall be
eliminated from reimbursable inpatient operating costs considering a
transfer patient cost conversion factor determined based on nineteen
hundred eighty-five data from a representative sample of general
hospitals; a case mix neutral acute care cost component of a general
hospital's reimbursable inpatient operating cost base per day after
application of the trend factor and the addition of special additional
inpatient operating costs; transfer patient days incurred by such
general hospital in nineteen hundred eighty-seven or the number of such
transfer patient days during a recent twelve month period prior thereto
established by regulation for which data are available subsequently
reconciled by an adjustment to reflect nineteen hundred eighty-seven
data; and the specific diagnosis-related groups with which the transfer
patients are identified. Such costs shall be eliminated in accordance
with rules and regulations adopted by the council and approved by the
commissioner which shall contain the specific methodology to adequately
identify the costs related to transfer cases. Transfer cases shall be
eliminated in computing discharges of the transferring hospital. The
costs and discharges for transfer cases for each general hospital
participating in the determination of the weighting factors shall be
removed before calculating the weighting factors;

(ii) an estimate of costs for the outlier portion of inpatient
services which would qualify for additional payments as cost outliers in
accordance with paragraph (b) of subdivision four of this section shall
be eliminated from reimbursable inpatient operating costs based on a
general hospital's high cost percentage outlier factor, applied to an
acute care cost component of such general hospital's reimbursable
inpatient operating cost base after application of the trend factor and
the addition of special additional inpatient operating costs. The high
cost percentage outlier factor shall be calculated based on a
determination of the percentage of nineteen hundred eighty-seven
discharges of patients other than beneficiaries of title XVIII of the
federal social security act (medicare) for which the commissioner has
complete hospital bill submissions or such discharges during a recent
twelve month period prior thereto established by regulation for which
hospital bills are available, as follows, (a) for general hospitals that
have complete hospital bill submissions for at least ninety percent of
their discharges, a high cost percentage outlier factor based on such
data, and (b) for general hospitals that have complete hospital bill
submissions for at least eighty percent but less than ninety percent of
their discharges, a high cost percentage outlier factor based on such
data plus an additional one-quarter of one percent, and (c) for general
hospitals that have complete bill submissions for less than eighty
percent of their discharges, a high cost percentage outlier factor
determined based on nineteen hundred eighty-five data from a
representative sample of general hospitals plus an additional
one-quarter of one percent. The calculation of the high cost percentage
outlier factor shall be subsequently reconciled by an adjustment to
reflect the percentage of such complete hospital bill submissions for
such nineteen hundred eighty-seven discharges as submitted to the
commissioner prior to August first, nineteen hundred eighty-eight.

The minimum percentage threshold applicable pursuant to clause (a) of
the first paragraph of this subparagraph may be increased to "at least
ninety-five percent" and the percentage ceiling applicable pursuant to
clause (b) of the first paragraph of this subparagraph increased to
"less than ninety-five percent" pursuant to rules and regulations
adopted by the council and approved by the commissioner based upon a
study and a report by the commissioner of a sample of incomplete
discharge records which showed that there was a significant difference
in the value of high cost outlier cases potentially reflected in
incomplete records from the value of high cost outlier cases reflected
in records for which the commissioner has complete hospital bill
submissions.

The maximum amount to be eliminated on a statewide basis shall be
three percent of the total of nineteen hundred eighty-eight acute care
cost components of general hospital reimbursable inpatient operating
costs reimbursed on the case payment system. In the event that the total
amount as calculated exceeds three percent, the calculated amount will
be reduced to three percent by the application of a percentage computed
by dividing expected outlier costs based on the three percent by actual
outlier costs, which shall also be the percentage of outlier costs to be
reimbursed in the payment year. The costs for the outlier portion of
cost outliers for general hospitals participating in the determination
of the weighting factors shall be removed from each diagnosis-related
group before determining the weighting factors;

* (iii) an estimate of inpatient costs which are related to a hospital
stay in excess of the long stay threshold for long stay patients as
defined in paragraph (c) of subdivision four of this section shall be
eliminated from reimbursable inpatient operating costs in determining
group category average inpatient reimbursable operating costs
considering a long stay patient cost conversion factor, which shall be
established at sixty percent provided, however, such long stay patient
cost conversion factor may be revised for an annual rate period or
periods beginning on or after January first, nineteen hundred
eighty-nine in accordance with rules and regulations adopted by the
council and approved by the commissioner; a case mix neutral acute care
cost component of a general hospital's reimbursable inpatient operating
cost base per day after application of the trend factor and the addition
of special additional inpatient operating costs; long stay patient days
incurred by such general hospital in nineteen hundred eighty-seven or
the number of such long stay patient days during a recent twelve month
period prior thereto established by regulation for which data are
available subsequently reconciled by an adjustment to reflect nineteen
hundred eighty-seven data; and the specific diagnosis-related groups
with which the long stay patients are identified. The long stay outlier
thresholds shall be determined by adding a sufficient number of standard
deviations to the mean length of stay for each diagnosis-related group
such that it is estimated for rates of payment during the period January
first, nineteen hundred eighty-eight through December thirty-first,
nineteen hundred ninety based upon nineteen hundred eighty-five data
from a representative sample of general hospitals and for rates of
payment during the period January first, nineteen hundred ninety-one
through December thirty-first, nineteen hundred ninety-three based upon
nineteen hundred eighty-nine data from a representative sample of
general hospitals and for rates of payment during the period January
first, nineteen hundred ninety-four through December thirty-first,
nineteen hundred ninety-nine and periods on and after January first, two
thousand based upon nineteen hundred ninety-two data from a
representative sample of general hospitals that the costs associated
with the portion of hospital stays in excess of the long stay outlier
thresholds do not exceed three percent of the total of the acute care
cost components of reimbursable inpatient operating costs related to the
determination of case based rates of payment. The costs associated with
the outlier portion of long stay outliers for each general hospital
participating in the determination of the weighting factors shall be
removed from each diagnosis-related group before calculating the
weighting factors;

* NB Effective until December 31, 2026

* (iii) an estimate of inpatient costs which are related to a hospital
stay in excess of the long stay threshold for long stay patients as
defined in paragraph (c) of subdivision four of this section shall be
eliminated from reimbursable inpatient operating costs in determining
group category average inpatient reimbursable operating costs
considering a long stay patient cost conversion factor, which shall be
established at sixty percent provided, however, such long stay patient
cost conversion factor may be revised for an annual rate period or
periods beginning on or after January first, nineteen hundred
eighty-nine in accordance with rules and regulations adopted by the
council and approved by the commissioner; a case mix neutral acute care
cost component of a general hospital's reimbursable inpatient operating
cost base per day after application of the trend factor and the addition
of special additional inpatient operating costs; long stay patient days
incurred by such general hospital in nineteen hundred eighty-seven or
the number of such long stay patient days during a recent twelve month
period prior thereto established by regulation for which data are
available subsequently reconciled by an adjustment to reflect nineteen
hundred eighty-seven data; and the specific diagnosis-related groups
with which the long stay patients are identified. The long stay outlier
thresholds shall be determined by adding a sufficient number of standard
deviations to the mean length of stay for each diagnosis-related group
such that it is estimated for rates of payment during the period January
first, nineteen hundred eighty-eight through December thirty-first,
nineteen hundred ninety based upon nineteen hundred eighty-five data
from a representative sample of general hospitals and for rates of
payment during the period January first, nineteen hundred ninety-one
through December thirty-first, nineteen hundred ninety-three based upon
nineteen hundred eighty-nine data from a representative sample of
general hospitals and for rates of payment during the period January
first, nineteen hundred ninety-four through December thirty-first,
nineteen hundred ninety-nine based upon nineteen hundred ninety-two data
from a representative sample of general hospitals that the costs
associated with the portion of hospital stays in excess of the long stay
outlier thresholds do not exceed three percent of the total of the acute
care cost components of reimbursable inpatient operating costs related
to the determination of case based rates of payment. The costs
associated with the outlier portion of long stay outliers for each
general hospital participating in the determination of the weighting
factors shall be removed from each diagnosis-related group before
calculating the weighting factors;

* NB Effective and expires December 31, 2026

* (iii) an estimate of inpatient costs which are related to a hospital
stay in excess of the long stay threshold for long stay patients as
defined in paragraph (c) of subdivision four of this section shall be
eliminated from reimbursable inpatient operating costs in determining
group category average inpatient reimbursable operating costs
considering a long stay patient cost conversion factor, which shall be
established at sixty percent provided, however, such long stay patient
cost conversion factor may be revised for an annual rate period or
periods beginning on or after January first, nineteen hundred
eighty-nine in accordance with rules and regulations adopted by the
council and approved by the commissioner; a case mix neutral acute care
cost component of a general hospital's reimbursable inpatient operating
cost base per day after application of the trend factor and the addition
of special additional inpatient operating costs; long stay patient days
incurred by such general hospital in nineteen hundred eighty-seven or
the number of such long stay patient days during a recent twelve month
period prior thereto established by regulation for which data are
available subsequently reconciled by an adjustment to reflect nineteen
hundred eighty-seven data; and the specific diagnosis-related groups
with which the long stay patients are identified. The long stay outlier
thresholds shall be determined by adding a sufficient number of standard
deviations to the mean length of stay for each diagnosis-related group
such that it is estimated for rates of payment during the period January
first, nineteen hundred eighty-eight through December thirty-first,
nineteen hundred ninety based upon nineteen hundred eighty-five data
from a representative sample of general hospitals and for rates of
payment during the period January first, nineteen hundred ninety-one
through December thirty-first, nineteen hundred ninety-three based upon
nineteen hundred eighty-nine data from a representative sample of
general hospitals and for rates of payment during the period January
first, nineteen hundred ninety-four through June thirtieth, nineteen
hundred ninety-six based upon nineteen hundred ninety-two data from a
representative sample of general hospitals that the costs associated
with the portion of hospital stays in excess of the long stay outlier
thresholds do not exceed three percent of the total of the acute care
cost components of reimbursable inpatient operating costs related to the
determination of case based rates of payment. The costs associated with
the outlier portion of long stay outliers for each general hospital
participating in the determination of the weighting factors shall be
removed from each diagnosis-related group before calculating the
weighting factors;

* NB Effective December 31, 2026

(iv) an estimate of inpatient costs which are related to short stay
patients as defined in paragraph (d) of subdivision four of this section
shall be eliminated from reimbursable inpatient operating costs
considering a short stay patient cost conversion factor determined based
on nineteen hundred eighty-five data from a representative sample of
general hospitals; a case mix neutral acute care cost component of a
general hospital's reimbursable inpatient operating cost base per day
after application of the trend factor and the addition of special
additional inpatient operating costs; short stay patient days incurred
by such general hospital in nineteen hundred eighty-seven or the number
of such short stay patient days during a recent twelve month period
prior thereto established by regulation for which data are available
subsequently reconciled by an adjustment to reflect nineteen hundred
eighty-seven data; and the specific diagnosis-related groups with which
the short stay patients are identified. Such costs shall be eliminated
in accordance with rules and regulations adopted by the council and
approved by the commissioner which shall contain the specific
methodology to adequately identify the costs related to short stay
patients. Short stay cases shall be eliminated in computing discharges
of a general hospital. The costs and discharges for short stay cases for
each general hospital participating in the determination of the
weighting factors shall be removed before calculating the weighting
factors.

7. Operating cost group component. (a) A general hospital's group
category average inpatient reimbursable operating cost per discharge
(price) shall be a composite factor determined in accordance with rules
and regulations adopted by the council and approved by the commissioner
based on a group price component determined in accordance with
subparagraph (i) of this paragraph, a hospital-specific price component
determined in accordance with subparagraph (ii) of this paragraph, and
an adjustment in accordance with subparagraph (iii) of this paragraph.

(i) The group price component shall be based on the costs and
statistics of general hospitals in the group category established
pursuant to paragraph (b) of this subdivision to which the hospital is
assigned by the commissioner to compute a group based average inpatient
reimbursable operating cost per discharge for the group category.
General hospital costs and statistics shall be determined consistent
with the methodology to determine hospital-specific average reimbursable
inpatient operating cost per discharge pursuant to subdivision six of
this section; adjusted to reflect additional cost increases in
accordance with subparagraph (ii) of paragraph (e) of subdivision one of
this section; and adjusted to exclude the components of
hospital-specific inpatient reimbursable operating costs related to
education, physician, ambulance services and organ acquisition costs
determined in accordance with paragraph (c) of this subdivision and
malpractice insurance costs, and the components of special additional
inpatient operating costs determined and allocated in accordance with
subparagraphs (i), (iii) and (iv) of paragraph (e) of subdivision one of
this section associated with cost increases in such costs; and adjusted
to exclude the components of special additional inpatient operating
costs determined and allocated in accordance with clauses (B), (D), (H),
and (I) of subparagraph (iii) and clauses (A), (E) and (F) of
subparagraph (iv) of paragraph (e) of subdivision one of this section;
and adjusted to reflect additional modifications to case payments in
accordance with subparagraph (iii) of paragraph (c) of subdivision six
of this section. The group based average inpatient reimbursable
operating costs computed for a general hospital shall be adjusted to
reflect the hospital-specific indirect medical education costs
percentage of such hospital determined in accordance with subparagraph
(ii) of paragraph (c) of this subdivision.

Hospital costs shall be standardized for comparison purposes
considering differences in wage and wage-related costs levels and such
other economic factors, such as a power equalization factor, as may be
determined in accordance with rules and regulations adopted by the
council and approved by the commissioner.

(ii) A hospital-specific price component shall be determined for each
general hospital based on such hospital's hospital-specific education,
physician, ambulance services and organ acquisition costs determined in
accordance with subparagraphs (i), (iii) and (iv) of paragraph (c) of
this subdivision and malpractice insurance costs, and the components of
special additional inpatient operating costs determined and allocated in
accordance with subparagraphs (i), (iii) and (iv) of paragraph (e) of
subdivision one of this section associated with cost increases in such
costs, and special additional inpatient operating costs determined and
allocated in accordance with clauses (B), (D), (H) and (I) of
subparagraph (iii) and clauses (A), (E) and (F) of subparagraph (iv) of
paragraph (e) of subdivision one of this section, as excluded pursuant
to subparagraph (i) of this paragraph, per discharge, standardized to
reflect nineteen hundred eighty-seven hospital case mix.

(iii) A general hospital's group category average inpatient
reimbursable operating cost per discharge shall be adjusted on a payor
category basis to reflect allocation of malpractice insurance costs in
accordance with the methodology developed pursuant to subparagraph (ii)
of paragraph (h) of subdivision eleven of this section.

(b) General hospital group categories shall be established in
accordance with rules and regulations adopted by the council and
approved by the commissioner for purposes of computing group category
average inpatient reimbursable operating cost per discharge considering,
but not limited to, factors such as hospital size, hospital medical
education activity, teaching status and geographic divisions of the
state.

(c) Education, physician, ambulance services and organ acquisition
costs shall include:

(i) direct medical education expenses, defined as the reimbursable
costs of residents, fellows, and supervising physicians, combined with
the costs of hospital based physicians;

(ii) indirect medical education expenses, defined as an estimate of
the costs, other than direct costs, of educational activities in
teaching hospitals attributable to factors including but not limited to
increased overhead, more severely ill patients and the tendency of
residents to provide more tests than experienced licensed physicians.
For the rate period beginning January first, nineteen hundred
eighty-eight and ending December thirty-first, nineteen hundred
eighty-eight, an estimate of indirect medical education costs shall be
determined in accordance with the methodology applicable for purposes of
determining an estimate of indirect medical education costs for
reimbursement for inpatient hospital service pursuant to title XVIII of
the federal social security act (medicare) in effect on the first day of
July in the year preceding the rate period. The council may adopt rules
and regulations, subject to the approval of the commissioner, to revise
the methodology for the determination of an estimate of indirect medical
education costs to reflect revisions to the methodology applicable for
purposes of determining reimbursement for inpatient hospital service
pursuant to title XVIII of the federal social security act (medicare)
effective subsequent to the first day of July in the year preceding the
rate period. For annual rate periods beginning on or after January
first, nineteen hundred eighty-nine an estimate of indirect medical
education costs shall be determined in accordance with rules and
regulations adopted by the council and approved by the commissioner;

(iii) the reimbursable costs of schools of nursing, allied
professional programs and ambulance services; and

(iv) the reimbursable costs of organ acquisition services not
reimbursed pursuant to the methodology applicable for purposes of
reimbursement pursuant to title XVIII of the federal social security act
(medicare).

(d) The commissioner shall establish, in accordance with rules and
regulations adopted by the council and approved by the commissioner, the
methodology to determine the hospital's group category average inpatient
reimbursable operating cost per discharge (price) and the percentage
amounts, pursuant to subparagraphs (i), (ii) and (iii) of paragraph (b)
of subdivision five of this section, of the group category average
inpatient reimbursable operating cost per discharge to be used to
determine the inpatient reimbursable operating cost component of case
based rates for annual rate periods beginning on or after January first,
nineteen hundred eighty-eight.

8. Capital related inpatient expenses. (a) Capital related inpatient
expenses including but not limited to straight line depreciation on
buildings and non-movable equipment, accelerated depreciation on major
movable equipment if requested by the hospital, rentals and interest on
capital debt (or for hospitals financed pursuant to article
twenty-eight-B of this chapter, such expenses, including amortization in
lieu of depreciation, as determined pursuant to the reimbursement
regulations promulgated pursuant to such article and article
twenty-eight of this chapter), shall be included in rates of payment
determined pursuant to this section based on a budget for capital
related inpatient expenses and subsequently reconciled to actual
expenses and statistics through appropriate audit procedures. General
hospitals shall submit to the commissioner, at least one hundred twenty
days prior to the commencement of each year, a schedule of capital
related inpatient expenses for the forthcoming year. Any capital
expenditure which requires or required approval pursuant to this article
must have received such approval for any capital related expense
generated by such capital expenditure to be included in rates of
payment. The basis for determining capital related inpatient expenses
shall be the lesser of actual cost or the final amount specifically
approved for the construction of the capital asset. The submitted budget
may include the capital related inpatient expenses for all existing
capital assets as well as estimates of capital related inpatient
expenses for capital assets to be acquired or placed in use prior to the
commencement of the rate year or during the rate year provided all
required approvals have been obtained.

The council shall adopt, with the approval of the commissioner,
regulations to:

(i) identify by type the eligible capital related inpatient expenses;

(ii) safeguard the future financial viability of voluntary, non-profit
general hospitals by requiring funding of inpatient depreciation on
building and fixed and movable equipment;

(iii) provide authorization to adjust inpatient rates by advancing
payment of depreciation as needed, in instances of capital debt related
financial distress of voluntary, non-profit general hospitals; and

(iv) provide a methodology for the reimbursement treatment of sales.

(b) Capital related inpatient expenses shall be included in case based
payments based on the hospital's average capital related inpatient
expenses per discharge. Adjustments shall be made to capital related
costs and statistics to reflect capital related inpatient expenses
reimbursed on a per diem basis in accordance with paragraphs (a), (d),
(e), (g) and (i) of subdivision four of this section.

(c) In order to reconcile capital related inpatient expenses included
in rates of payment based on a budget to actual expenses and statistics
for the rate period for a general hospital, rates of payment for a
general hospital shall be adjusted to reflect the dollar value of the
difference between capital related inpatient expenses included in the
computation of rates of payment for a prior rate period based on a
budget and actual capital related inpatient expenses for such prior rate
period, each as determined in accordance with paragraph (a) of this
subdivision, adjusted to reflect increases or decreases in volume of
service in such prior rate period compared to statistics applied in
determining the capital related inpatient expenses component of rates of
payment based on a budget for such prior rate period. For rates
effective April first, two thousand twenty through March thirty-first,
two thousand twenty-one, the budgeted capital-related expenses add-on as
described in paragraph (a) of this subdivision, based on a budget
submitted in accordance to paragraph (a) of this subdivision, shall be
reduced by five percent relative to the rate in effect on such date; and
the actual capital expenses add-on as described in paragraph (a) of this
subdivision, based on actual expenses and statistics through appropriate
audit procedures in accordance with paragraph (a) of this subdivision
shall be reduced by five percent relative to the rate in effect on such
date. For rates effective on and after April first, two thousand
twenty-one, the budgeted capital-related expenses add-on as described in
paragraph (a) of this subdivision, based on a budget submitted in
accordance to paragraph (a) of this subdivision, shall be reduced by ten
percent relative to the rate in effect on such date; and the actual
capital expenses add-on as described in paragraph (a) of this
subdivision, based on actual expenses and statistics through appropriate
audit procedures in accordance with paragraph (a) of this subdivision
shall be reduced by ten percent relative to the rate in effect on such
date. For any rate year, all reconciliation add-on amounts calculated on
and after April first, two thousand twenty shall be reduced by ten
percent, and all reconciliation recoupment amounts calculated on or
after April first, two thousand twenty shall increase by ten percent.
Notwithstanding any inconsistent provision of subparagraph (i) of
paragraph (e) of subdivision nine of this section, capital related
inpatient expenses of a general hospital included in the computation of
rates of payment based on a budget shall not be included in the
computation of a volume adjustment made in accordance with such
subparagraph. Adjustments to rates of payment for a general hospital
made pursuant to this paragraph shall be made in accordance with
paragraph (c) of subdivision eleven of this section. Such adjustments
shall not be carried forward except for such volume adjustment as may be
authorized in accordance with subparagraph (i) of paragraph (e) of
subdivision nine of this section for such general hospital.

* (e) Notwithstanding any inconsistent provision of this subdivision,
commencing April first, nineteen hundred ninety-five, when a factor for
reconciliation of budgeted capital related inpatient expenses to actual
capital related inpatient expenses for a prior year is included in the
capital related inpatient expenses component of rates of payment, such
capital related inpatient expenses component of rates of payment shall
be reduced by the commissioner by the difference between the reconciled
capital related inpatient expenses included in rates of payment
determined in accordance with paragraphs (a), (b) and (c) of this
subdivision for such prior year and capital related inpatient expenses
for such prior year calculated based on the hospital's average capital
related inpatient expenses computed on a per diem basis.

* NB Effective through March 31, 2025

* (f) Notwithstanding any inconsistent provision of this section,
commencing April first, nineteen hundred ninety-five for purposes of
determining the capital related inpatient expenses component of rates of
payment for patients eligible for payments made by state governmental
agencies for a rate year, the submitted budget for capital related
inpatient expenses of a general hospital applicable to the rate year
shall be decreased by the commissioner to reflect the percentage amount
by which the budget for the base year two years prior to the rate year
for capital related inpatient expenses of the hospital exceeded actual
expenses.

* NB Effective through March 31, 2025

* (g) Notwithstanding any inconsistent provision of this article,
commencing April first, nineteen hundred ninety-five for rates of
payment for patients eligible for payments made by state governmental
agencies, the capital related inpatient expenses component determined in
accordance with paragraph (a) of this subdivision and the capital cost
per visit components determined in accordance with subparagraphs (i) and
(ii) of paragraph (g) of subdivision two of section twenty-eight hundred
seven of this article shall be adjusted by the commissioner to exclude
such expenses related to:

(i) forty-four percent of the costs of major movable equipment; and

(ii) staff housing.

* NB Effective through March 31, 2025

9. Adjustments. For annual rate periods beginning on or after January
first, nineteen hundred eighty-eight:

(a) The commissioner shall on his own initiative, or on the basis of a
request from a general hospital, adjust an established rate to reflect:

(i) the reduction of costs related to the elimination of a general
hospital inpatient service in instances where the costs of such service
were included in the rate established; and

(ii) the correction of errors or omissions of data or in computation.

(b) General hospitals may request and the commissioner shall consider
an adjustment to an established rate to reflect increased expenses in
excess of costs reported by the general hospital in the nineteen hundred
eighty-five cost report, after application of the trend factor, or
reconsideration of disallowed expenses based on:

(i) justification of all or a portion of expenses not included in the
rate resulting from the cost analysis process contained in subparagraph
(i) of paragraph (a) of this subdivision;

(ii) additional operational expenses related to approved construction
or service changes;

(iii) the addition of costs related to a state requirement for
additional services to be provided or additional costs to be incurred in
meeting state and federal requirements;

(iv) additional operational expenses to permit a more efficient and
economical method of delivering a service;

(v) increased costs determined to be needed to recruit or maintain an
appropriate level of personnel providing professional services to
patients; and

(vi) increased costs for compensation of employees.

(c) In determining the reasonableness or justification of an
adjustment to an established rate related to subparagraph (vi) of
paragraph (b) of this subdivision, the commissioner shall consider:

(i) the fiscal capability of the general hospital to finance such
increases from its own resources;

(ii) the past history of the general hospital with respect to
compensation increases and allowed compensation trend factors; and

(iii) the economy in the area in which the general hospital is
located.

(d) General hospitals may request and the commissioner shall consider
a change in assignment among the group categories established pursuant
to paragraph (b) of subdivision seven of this section to which the
hospital is assigned for purposes of computing group category average
reimbursable inpatient operating cost per discharge.

(e) (i) Volume adjustments which would result in revisions in case
payment rates shall not be made to reflect increases or decreases in
discharges for other than beneficiaries of title XVIII of the federal
social security act (medicare) in rate years beginning on or after
January first, nineteen hundred eighty-eight, except in those specific
instances where a decrease in volume as measured by discharges,
including discharges of patients for whom reimbursement is provided on a
per diem basis in accordance with paragraph (a) of subdivision eleven of
this section, is equal to or greater than one percent of discharges in
nineteen hundred eighty-seven for those general hospitals having two
hundred or less certified acute care beds and classified as a rural
hospital for purposes of determining payment for inpatient services
provided to beneficiaries of title XVIII of the federal social security
act (medicare) or under state regulations, based on the total number of
inpatient acute care beds for which such general hospital is certified
pursuant to the operating certificate issued for such general hospital
in accordance with section twenty-eight hundred five of this article in
effect on June thirtieth, nineteen hundred ninety, or equal to or
greater than ten percent of discharges in nineteen hundred eighty-seven
for all other general hospitals, and the failure to make such adjustment
seriously impacts on the financial stability of a needed hospital, and
except in those specific instances where an increase in volume as
measured by discharges is equal to or greater than ten percent of
discharges in nineteen hundred eighty-seven. Provided, however, that an
adjustment for volume increases shall not apply to those general
hospitals having two hundred or less certified acute care beds and
classified as a rural hospital for purposes of determining payment for
inpatient services provided to beneficiaries of title XVIII of the
federal social security act (medicare) or under state regulations, based
on the total number of inpatient acute care beds for which such general
hospital is certified pursuant to the operating certificate issued for
such general hospital in accordance with section twenty-eight hundred
five of this article in effect on June thirtieth, nineteen hundred
ninety. For general hospitals and distinct units of general hospitals
not reimbursed on a case based payment per discharge basis, volume
adjustments may be made during the above indicated rate years in
accordance with regulations adopted by the council and approved by the
commissioner.

(ii) The commissioner shall adjust the rates for those general
hospitals and units of general hospitals excluded from case payment in
accordance with paragraph (e) or (g) of subdivision four of this section
for case mix changes for other than beneficiaries of title XVIII of the
federal social security act (medicare).

(f) General hospitals that did not qualify for a volume adjustment for
the nineteen hundred eighty-six and nineteen hundred eighty-seven rate
periods for rates of payment determined in accordance with section
twenty-eight hundred seven-a of this article may request and the
commissioner shall consider an adjustment to an established case based
rate of payment for nineteen hundred eighty-eight based on increases in
volume as measured by discharges, based on a comparison between nineteen
hundred eighty-five and nineteen hundred eighty-seven discharges,
excluding in such comparison discharges of patients who are
beneficiaries of title XVIII of the federal social security act
(medicare) and discharges related to transfer cases (transferring
hospital) and short stay cases as defined in this section, provided such
general hospital meets performance criteria established in accordance
with rules and regulations adopted by the council and approved by the
commissioner. Such criteria shall include but need not be limited to:
maintenance of like patient occupancy rates for the rate periods
nineteen hundred eighty-five, nineteen hundred eighty-six and nineteen
hundred eighty-seven; a reduction in patient length of stay for other
than beneficiaries of title XVIII of the federal social security act
(medicare) based on a comparison with nineteen hundred eighty-five data;
and an expanded use of ambulatory surgery by the general hospital based
on a comparison with nineteen hundred eighty-five data. Such adjustment
shall consider, but need not be limited to, the variable costs related
to volume changes in accordance with rules and regulations adopted by
the council and approved by the commissioner.

(g) All appeals shall be submitted to the commissioner, who may submit
a copy of the appeal to interested parties for the purpose of providing
an opportunity for comment within a specified time period.

(h) The commissioner shall act upon all properly documented appeals
for adjustments concerning base year costs by November first of the
calendar year for which the rate is effective provided that all
information necessary to determine whether an adjustment is justified is
submitted by the facility prior to May first of such year. In the event
such an appeal is filed by May first, but information necessary to
determine whether an adjustment is justified is submitted after such
date, the commissioner shall act on the appeal within six months after
receiving the necessary information.

* 10. Trend factors. (a) The commissioner, in accordance with the
methodology developed for rate periods through March thirty-first, two
thousand, for rates of payment for state governmental agencies and
through December thirty-first, nineteen hundred ninety-six for rates of
payment for all other payors pursuant to paragraph (b) of this
subdivision, shall establish trend factors to project for the effects of
inflation. The factors shall be applied to the appropriate portion of
reimbursable costs. The methodology for developing the trend factor
shall include the appropriate external price indicators and shall also
include the data from major collective bargaining agreements as reported
quarterly by the federal department of labor, bureau of labor
statistics, for non-supervisory employees.

(b) The methodology shall be developed for rate periods through March
thirty-first, two thousand, for rates of payment for state governmental
agencies and through December thirty-first, nineteen hundred ninety-six
for rates of payment for all other payors by four independent
consultants with expertise in health economics or reimbursement
methodologies for health-related services appointed by the
commissioner. For nineteen hundred ninety-six, through March
thirty-first, two thousand, the commissioner shall apply the nineteen
hundred ninety-five trend factor methodology. The commissioner shall
monitor the actual price movements of the external price indicators
used in the methodology for one interim adjustment to the trend factors
to reflect such price movements and one final adjustment to the trend
factors to reflect such price movements. At the same time adjustments
are made to the trend factors in accordance with this paragraph,
adjustments shall be made to all inpatient rates of payment affected by
the adjusted trend factors.

(c) (1) For rate periods on and after April first, two thousand, the
commissioner shall establish trend factors for rates of payment for
state governmental agencies to project for the effects of inflation
except that such trend factors shall not be applied to services for
which rates of payment are established by the commissioners of the
department of mental hygiene. The factors shall be applied to the
appropriate portion of reimbursable costs.

(2) In developing trend factors for such rates of payment, the
commissioner shall use the most recent Congressional Budget Office
estimate of the rate year's U.S. Consumer Price Index for all urban
consumers published in the Congressional Budget Office Economic and
Budget Outlook after June first of the rate year prior to the year for
which rates are being developed.

(3) After the final U.S. Consumer Price Index (CPI) for all urban
consumers is published by the United States Department of Labor, Bureau
of Labor Statistics, for a particular rate year, the commissioner shall
reconcile such final CPI to the projection used in subparagraph two of
this paragraph and any difference will be included in the prospective
trend factor for the current year.

(4) At the time adjustments are made to the trend factors in
accordance with this paragraph, adjustments shall be made to all
inpatient rates of payment affected by the trend factor adjustment.

* NB Effective until December 31, 2026

* 10. Trend factors. (a) The commissioner, in accordance with the
methodology developed pursuant to paragraph (b) of this subdivision,
shall establish trend factors to project for the effects of inflation.
The factors shall be applied to the appropriate portion of reimbursable
costs. The methodology for developing the trend factor shall include the
appropriate external price indicators and shall also include the data
from major collective bargaining agreements as reported quarterly by the
federal department of labor, bureau of labor statistics, for
non-supervisory employees.

(b) The methodology shall be developed by four independent consultants
with expertise in health economics or reimbursement methodologies for
health-related services appointed by the commissioner. On or about
September first of each year, the consultants shall provide to the
commissioner and the council a report in writing detailing the
methodology to be used to determine the trend factors for the subsequent
twelve month period commencing January first. The commissioner shall
monitor the actual price movements during this twelve month period of
the external price indicators used in the methodology, shall report the
results of the monitoring to the consultants and shall implement the
recommendations of the consultants for one prospective interim annual
adjustment to the trend factors to reflect such price movements and to
be effective on January first, one year after the initial trend factor
was established and one prospective final annual adjustment to the trend
factors to reflect such price movements and to be effective on January
first, two years after the initial trend factor was established. At the
same time adjustments are made to the trend factors in accordance with
this paragraph, adjustments shall be made to all inpatient rates of
payment affected by the adjusted trend factors.

* NB Effective December 31, 2026

11. Special provisions. (a) Notwithstanding any inconsistent provision
of this chapter or any other law to the contrary, payment for inpatient
hospital services provided on or after January first, nineteen hundred
eighty-eight to a patient admitted to a general hospital prior to
January first, nineteen hundred eighty-eight otherwise eligible for
payment on a case based payment per discharge basis for a
diagnosis-related group shall be at the rate of payment for such general
hospital for such patient in effect for December thirty-first, nineteen
hundred eighty-seven provided, however, that the operating cost
components of such rates of payment for inpatient hospital services
provided on or after January first, nineteen hundred eighty-eight shall
be projected to the rate period by the trend factor determined in
accordance with subdivision ten of this section and reconciled on a
cumulative basis on or about March thirty-first, nineteen hundred
eighty-eight and December thirty-first, nineteen hundred eighty-eight
for payment of adjusted rates of payment based on such trend factor
adjustment. The component of such rates of payment based on the
allowances provided in accordance with paragraphs (e) and (f) of
subdivision eight of section twenty-eight hundred seven-a of this
article shall be returned to the applicable regional pool created in
accordance with subdivision fifteen of such section and distributed in
accordance with subdivision sixteen of such section based on needs for
the financing of losses resulting from bad debts and the costs of
charity care as determined for purposes of nineteen hundred eighty-seven
distributions.

(b) The council shall adopt rules and regulations subject to the
approval of the commissioner regarding payor payment responsibilities
when a patient has coverage with more than one payor for general
hospital inpatient services and during a hospital stay exhausts benefits
available from the primary payor, or receives services not reimbursed by
the primary payor, so that the hospital shall be reimbursed by a
secondary payor for services not reimbursed by the primary payor that
are included as a benefit of the secondary payor. A primary payor for
purposes of this paragraph shall include benefits available pursuant to
title XVIII of the federal social security act (medicare).

* (c)(i) Adjustments to rates made pursuant to this section for rate
periods commencing on or after January first, nineteen hundred
ninety-seven may be made prospectively or retrospectively on the next
following January or July unless otherwise specifically authorized.

(ii) The commissioner may further adjust rates retrospectively for
payments by state governmental agencies upon a finding that the failure
to do so seriously impacts on a general hospital's financial stability.

(iii) Regardless of whether rates are adjusted prospectively or
retrospectively the authorized dollar value of the adjustment shall be
the same, calculated by including the retroactive impact of such
adjustment if such adjustment is made prospectively. A prospective
adjustment to reflect the retroactive impact of an adjustment shall be
included in the determination of rates of payment for a prospective rate
period based on the methodology applied in accordance with this section
for calculation of rates of payment for such prospective rate period.
The allowance reflected in payments to a general hospital or a pool
related to a prospective adjustment which reflects the retroactive
impact of an adjustment shall be computed based on the allowance
percentage in effect during the prospective period such adjustment is in
effect. No recalculation of the basis for distribution of funds from bad
debt and charity care regional pools determined in accordance with
subdivision seventeen of this section shall be made for a prospective
adjustment which reflects the retroactive impact of an adjustment.

* NB Effective until December 31, 2026

* (c)(i) Adjustments to rates made pursuant to this section shall be
made prospectively on the next following January or July unless
otherwise specifically authorized provided, however, that adjustments to
rates of payment to reflect nineteen hundred eighty-seven data and
statistics may be made retrospectively and such retrospective
adjustments shall, to the extent practicable, be cumulated for one
comprehensive adjustment.

(ii) The commissioner may further adjust rates retrospectively upon a
finding that the failure to do so seriously impacts on a general
hospital's financial stability.

(iii) Regardless of whether rates are adjusted prospectively or
retrospectively the authorized dollar value of the adjustment shall be
the same, calculated by including the retroactive impact of such
adjustment if such adjustment is made prospectively. A prospective
adjustment to reflect the retroactive impact of an adjustment shall be
included in the determination of rates of payment for a prospective rate
period based on the methodology applied in accordance with this section
for calculation of rates of payment for such prospective rate period,
provided, however, that no recalculation of bad debt and charity care
allowance percentages determined in accordance with subdivision fourteen
of this section shall be made for a prospective adjustment which
reflects the retroactive impact of an adjustment. The bad debt and
charity care allowance of a general hospital related to a prospective
adjustment which reflects the retroactive impact of an adjustment shall
be computed based on the bad debt and charity care allowance percentage
of such hospital in effect during the prospective period such adjustment
is in effect. No recalculation of the basis for distribution of funds
from bad debt and charity care regional pools determined in accordance
with subdivision seventeen of this section shall be made for a
prospective adjustment which reflects the retroactive impact of an
adjustment.

* NB Effective December 31, 2026

(d) Working capital. General hospitals may include as a financing or
working capital charge an addition of two percent of any valid claim not
paid within thirty days of submission or determination of payor
liability, whichever is later, and one percent per month thereafter.
Financing or working capital charges shall not be applied to hospital
billings to third party payors participating in an advance payment
system. Any payor not participating in an advance payment system or
offering admission billing shall allow interim billing for a patient
whose stay exceeds thirty days.

(e) (i) Except for payments made pursuant to the workers' compensation
law, the volunteer firefighters' benefit law, or the volunteer ambulance
workers' benefit law, a two percent discount from general hospital
payments shall be available to all payors whose payments are calculated
in accordance with paragraphs (b) and (c) of subdivision one of this
section making payment in full to a general hospital for covered
hospital services within ten calendar days of receipt from the hospital
by the appropriate payor of a bill for such services.

(ii) A three percentage point reduction in the differential of five
percent for general hospital payments shall be available to all payors
whose payments are calculated in accordance with paragraph (b) of
subdivision one or paragraph (e) of subdivision four of this section
which are making payments pursuant to the workers' compensation law, the
volunteer firefighters' benefit law, or the volunteer ambulance workers'
benefit law when such payments are made in full to a general hospital
for covered hospital services within ninety calendar days of receipt
from the hospital by the appropriate payor of a bill for such services,
and an additional two percentage point reduction shall be available for
such payors if such payment is made within forty-five calendar days of
receipt of such a bill.

(f) (i) * In order to allow for real increases in general hospital
case mix while limiting the effect of potential case mix changes that
are the result of changes in coding practices rather than real changes
in case mix, the commissioner shall annually for rate periods through
December thirty-first, nineteen hundred ninety-six, in accordance with
rules and regulations adopted by the council and approved by the
commissioner, adjust individual general hospitals' case payment rates
determined in accordance with paragraphs (a) and (b) of subdivision one
of this section to account for increases in the statewide average case
mix, based on increases in statewide average assignment to
diagnosis-related groups for all patients other than beneficiaries of
title XVIII of the federal social security act (medicare), that exceed
the allowable statewide increase determined in accordance with this
subparagraph. The commissioner further shall adjust individual general
hospitals' case payment rates determined in accordance with this section
for state governmental agencies for the periods January first, nineteen
hundred ninety-seven through March thirty-first, two thousand and on and
after April first, two thousand, in accordance with clause (G) of this
subparagraph and to account for increases in statewide average case mix,
based on increases in statewide average assignment to diagnosis-related
groups based on data only for patients that are eligible for medical
assistance pursuant to title eleven of article five of the social
services law, including such patients enrolled in health maintenance
organizations, that exceed the allowable statewide increase determined
in accordance with clause (B-1) of this subparagraph.

* NB Effective until December 31, 2026

* In order to allow for real increases in general hospital case mix
while limiting the effect of potential case mix changes that are the
result of changes in coding practices rather than real changes in case
mix, the commissioner shall annually for rate periods through December
thirty-first, nineteen hundred ninety-six, in accordance with rules and
regulations adopted by the council and approved by the commissioner,
adjust individual general hospitals' case payment rates determined in
accordance with paragraphs (a) and (b) of subdivision one of this
section to account for increases in the statewide average case mix,
based on increases in statewide average assignment to diagnosis-related
groups for all patients other than beneficiaries of title XVIII of the
federal social security act (medicare), that exceed the allowable
statewide increase determined in accordance with this subparagraph. The
commissioner further shall adjust individual general hospitals' case
payment rates determined in accordance with this section for state
governmental agencies for the periods January first, nineteen hundred
ninety-seven through March thirty-first, two thousand in accordance with
clause (G) of this subparagraph and to account for increases in
statewide average case mix, based on increases in statewide average
assignment to diagnosis-related groups based on data only for patients
that are eligible for medical assistance pursuant to title eleven of
article five of the social services law, including such patients
enrolled in health maintenance organizations, that exceed the allowable
statewide increase determined in accordance with clause (B-1) of this
subparagraph.

* NB Effective and expires December 31, 2026

* In order to allow for real increases in general hospital case mix
while limiting the effect of potential case mix changes that are the
result of changes in coding practices rather than real changes in case
mix, the commissioner shall annually, in accordance with rules and
regulations adopted by the council and approved by the commissioner,
adjust individual general hospitals' case payment rates determined in
accordance with paragraphs (a) and (b) of subdivision one of this
section to account for increases in the statewide average case mix,
based on increases in statewide average assignment to diagnosis-related
groups for all patients other than beneficiaries of title XVIII of the
federal social security act (medicare), that exceed the allowable
statewide increase determined in accordance with this subparagraph.

* NB Effective December 31, 2026

(A) The increase in the statewide average case mix in a rate year
during the period January first, nineteen hundred eighty-eight through
December thirty-first, nineteen hundred ninety-three from the nineteen
hundred eighty-seven statewide average case mix shall not exceed two
percent in nineteen hundred eighty-eight compared to nineteen hundred
eighty-seven, three percent in nineteen hundred eighty-nine compared to
nineteen hundred eighty-seven, four percent in nineteen hundred ninety
compared to nineteen hundred eighty-seven, five percent in nineteen
hundred ninety-one compared to nineteen hundred eighty-seven, and,
notwithstanding any inconsistent rule or regulation, for rates of
payment for state governmental agencies six percent in nineteen hundred
ninety-two compared to nineteen hundred eighty-seven and seven percent
in nineteen hundred ninety-three compared to nineteen hundred
eighty-seven, and for rates of payment for payors other than state
governmental agencies six and seven-tenths percent in nineteen hundred
ninety-two compared to nineteen hundred eighty-seven and seven percent
in nineteen hundred ninety-three compared to nineteen hundred
eighty-seven.

* (B) The increase in the statewide average case mix in a rate year
during the period January first, nineteen hundred ninety-four through
December thirty-first, nineteen hundred ninety-six from the nineteen
hundred ninety-two statewide average case mix, plus adjustments, shall
not exceed: for rates of payment for state governmental agencies two
percent in the period January first, nineteen hundred ninety-four
through June thirtieth, nineteen hundred ninety-four, and,
notwithstanding any inconsistent rule or regulation, six and two-tenths
percent in the period July first, nineteen hundred ninety-four through
December thirty-first, nineteen hundred ninety-four, three percent in
the period January first, nineteen hundred ninety-five through March
thirty-first, nineteen hundred ninety-five, two percent in the period
April first, nineteen hundred ninety-five through December thirty-first,
nineteen hundred ninety-five, and three percent in the period January
first, nineteen hundred ninety-six through December thirty-first,
nineteen hundred ninety-six; and for rates of payment for payors other
than state governmental agencies two percent in nineteen hundred
ninety-four, three percent in nineteen hundred ninety-five, and four
percent in the period January first, nineteen hundred ninety-six through
December thirty-first, nineteen hundred ninety-six. Adjustments to the
nineteen hundred ninety-two statewide average case mix shall mean an
adjustment for any increase in nineteen hundred ninety-two statewide
average case mix compared to nineteen hundred eighty-seven statewide
average case mix in excess of six percent of nineteen hundred
eighty-seven statewide average case mix and a further adjustment to
reflect that measurement of case mix increase from the nineteen hundred
ninety-two statewide average case mix rather than the nineteen hundred
eighty-seven statewide average case mix reflects the increase in
statewide average case mix from nineteen hundred eighty-seven to
nineteen hundred ninety-two in order to maintain the effective maximum
rate of allowable statewide average case mix increases at a percentage
per year of the nineteen hundred eighty-seven statewide average case
mix. Nineteen hundred ninety-two case mix shall be determined based on
nineteen hundred ninety-two data received by the department by April
thirtieth, nineteen hundred ninety-three.

* NB Effective until December 31, 2026

* (B) The increase in the statewide average case mix in a rate year
during the period January first, nineteen hundred ninety-four through
June thirtieth, nineteen hundred ninety-six from the nineteen hundred
ninety-two statewide average case mix, plus adjustments, shall not
exceed: for rates of payment for state governmental agencies two percent
in the period January first, nineteen hundred ninety-four through June
thirtieth, nineteen hundred ninety-four, and, notwithstanding any
inconsistent rule or regulation, six and two-tenths percent in the
period July first, nineteen hundred ninety-four through December
thirty-first, nineteen hundred ninety-four, three percent in the period
January first, nineteen hundred ninety-five through March thirty-first,
nineteen hundred ninety-five, and two percent in the period April first,
nineteen hundred ninety-five through December thirty-first, nineteen
hundred ninety-five, and three percent in the period January first,
nineteen hundred ninety-six through June thirtieth, nineteen hundred
ninety-six; and for rates of payment for payors other than state
governmental agencies two percent in nineteen hundred ninety-four, three
percent in nineteen hundred ninety-five, and four percent in the period
January first, nineteen hundred ninety-six through June thirtieth,
nineteen hundred ninety-six. Adjustments to the nineteen hundred
ninety-two statewide average case mix shall mean an adjustment for any
increase in nineteen hundred ninety-two statewide average case mix
compared to nineteen hundred eighty-seven statewide average case mix in
excess of six percent of nineteen hundred eighty-seven statewide average
case mix and a further adjustment to reflect that measurement of case
mix increase from the nineteen hundred ninety-two statewide average case
mix rather than the nineteen hundred eighty-seven statewide average case
mix reflects the increase in statewide average case mix from nineteen
hundred eighty-seven to nineteen hundred ninety-two in order to maintain
the effective maximum rate of allowable statewide average case mix
increases at a percentage per year of the nineteen hundred eighty-seven
statewide average case mix. Nineteen hundred ninety-two case mix shall
be determined based on nineteen hundred ninety-two data received by the
department by April thirtieth, nineteen hundred ninety-three.

* NB Effective December 31, 2026

(B-1) The increase in the statewide average case mix in the periods
January first, nineteen hundred ninety-seven through March thirty-first,
two thousand and on and after April first, two thousand through March
thirty-first, two thousand six and on and after April first, two
thousand six through March thirty-first, two thousand seven, and on and
after April first, two thousand seven through March thirty-first, two
thousand nine, and on and after April first, two thousand nine through
March thirty-first, two thousand eleven, from the statewide average case
mix for the period January first, nineteen hundred ninety-six through
December thirty-first, nineteen hundred ninety-six shall not exceed one
percent for nineteen hundred ninety-seven, two percent for nineteen
hundred ninety-eight, three percent for the period January first,
nineteen hundred ninety-nine through September thirtieth, nineteen
hundred ninety-nine, four percent for the period October first, nineteen
hundred ninety-nine through December thirty-first, nineteen hundred
ninety-nine, and four percent for two thousand plus an additional one
percent per year thereafter, based on comparison of data only for
patients that are eligible for medical assistance pursuant to title
eleven of article five of the social services law, including such
patients enrolled in health maintenance organizations.

(C) Rate year case mix shall be determined based on rate year data
received by the department by April thirtieth next following the end of
the rate year. Case mix may be determined based on general hospital data
received or amended after such due dates provided, however, that a
general hospital that does not submit the appropriate data in a timely
manner shall be subject to the provisions of section twelve-d of this
chapter.

* (D) If in any rate period on an annualized basis the cumulative case
mix increase exceeds the allowable statewide increase, rates of payment
to general hospitals shall be adjusted in accordance with rules and
regulations adopted by the council and approved by the commissioner
which shall contain the specific methodology to allocate the reduction
among general hospitals, in order to reduce the effect of the statewide
increase on rates of payment to reflect the allowable increase.
Notwithstanding any inconsistent provision of this paragraph, rate
adjustments for purposes of this paragraph shall be made on a six month
rate period basis for the period July first, nineteen hundred
ninety-four through December thirty-first, nineteen hundred ninety-four.
The retroactive impact of adjustments to rates of payment for payors
other than state governmental agencies based on the amendments to this
paragraph effective July first, nineteen hundred ninety-four shall be
reflected in a prospective adjustment to rates of payment for such
payors for the period July first, nineteen hundred ninety-four through
December thirty-first, nineteen hundred ninety-four.

* NB Effective until December 31, 2026

* (D) If in any rate year the cumulative case mix increase exceeds the
allowable statewide increase, rates of payment to general hospitals
shall be adjusted in accordance with rules and regulations adopted by
the council and approved by the commissioner which shall contain the
specific methodology to allocate the reduction among general hospitals,
in order to reduce the effect of the statewide increase on rates of
payment to reflect the allowable increase. Notwithstanding any
inconsistent provision of this paragraph, rate adjustments for purposes
of this paragraph shall be made on a six month rate period basis for the
period July first, nineteen hundred ninety-four through December
thirty-first, nineteen hundred ninety-four. The retroactive impact of
adjustments to rates of payment for payors other than state governmental
agencies based on the amendments to this paragraph effective July first,
nineteen hundred ninety-four shall be reflected in a prospective
adjustment to rates of payment for such payors for the period July
first, nineteen hundred ninety-four through December thirty-first,
nineteen hundred ninety-four.

* NB Effective December 31, 2026

(E) Such methodology shall take into account past trends of individual
general hospitals' case mix changes, and, within the aggregate allowable
statewide increase in case mix, permit general hospitals to appeal to
the commissioner their proposed allocation of a reduction in rates of
payment related to increases in statewide average case mix based on such
factors as changes in hospital service delivery and referral patterns.

(F) Case mix changes due to acquired immune deficiency syndrome,
tuberculosis, epidemics or other catastrophes resulting in extraordinary
hospital utilization shall not be subject to this limitation.

* (G) Adjustments determined in accordance with clause (B) of this
subparagraph for the period January first, nineteen hundred ninety-six
through December thirty-first, nineteen hundred ninety-six on a final
basis, and in accordance with subparagraph (ii) of this paragraph on an
interim basis, shall be applied to rates of payment for state
governmental agencies during the period January first, nineteen hundred
ninety-seven through March thirty-first, two thousand and periods on and
after April first, two thousand.

* NB Expires December 31, 2026

* (G) Adjustments determined in accordance with clause (B) of this
subparagraph for the period January first, nineteen hundred ninety-six
through December thirty-first, nineteen hundred ninety-six on a final
basis, and in accordance with subparagraph (ii) of this paragraph on an
interim basis, shall be applied to rates of payment for state
governmental agencies during the period January first, nineteen hundred
ninety-seven through March thirty-first, two thousand.

* NB Effective and repealed December 31, 2026

* (ii) (A) The commissioner shall, in accordance with rules and
regulations adopted by the council and approved by the commissioner, for
purposes of payments on an interim basis periodically compute an
adjustment to individual general hospitals' case payment rates for prior
periods for the payor categories specified in paragraphs (a) and (b) of
subdivision one of this section to account for increases in the
statewide average case mix, based on increases in statewide average
assignment to diagnosis-related groups for all patients other than
beneficiaries of title XVIII of the federal social security act
(medicare), that exceed the allowable statewide increase. The increase
in the statewide average case mix in a rate year during the period
January first, nineteen hundred eighty-eight through December
thirty-first, nineteen hundred ninety-three from the nineteen hundred
eighty-seven statewide average case mix and in a rate year during the
period January first, nineteen hundred ninety-four through December
thirty-first, nineteen hundred ninety-six from the adjusted nineteen
hundred ninety-two statewide average case mix shall not exceed the
allowable statewide increase as determined in accordance with
subparagraph (i) of this paragraph. Adjustments may be made on a
quarterly basis consistent with this annual limitation. If in any
quarter of the rate year the cumulative case mix increase for the rate
year exceeds the allowable statewide increase, payment rates to general
hospitals shall be adjusted in accordance with rules and regulations
adopted by the council and approved by the commissioner which shall
contain the specific methodology to allocate the reduction among general
hospitals provided, however, that any funds to be recovered from
hospitals based on such adjustments for prior periods shall be recovered
by prospective adjustment of rates of payment in accordance with
paragraph (c) of this subdivision, in order to reduce the effect of the
statewide increase on rates of payment to reflect the allowable
increase, taking into consideration the effect of any adjustment
applicable in the rate period made in accordance with subparagraph (iii)
of this paragraph. Case mix changes due to acquired immune deficiency
syndrome, tuberculosis, epidemics or other catastrophes resulting in
extraordinary hospital utilization shall not be subject to this
limitation, pursuant to rules and regulations adopted by the council and
approved by the commissioner.

(B) The commissioner further shall for purposes of payments on an
interim basis periodically compute an adjustment to individual general
hospitals' case payment rates for prior periods for payments made by
state governmental agencies to account for increases in the statewide
average case mix, based on increases in statewide average assignment to
diagnosis-related groups for patients that are eligible for medical
assistance pursuant to title eleven of article five of the social
services law eligible for payments made by state governmental agencies
or by health maintenance organizations, that exceed the allowable
statewide increase as determined in accordance with clause (B-1) of
subparagraph (i) of this paragraph.

* NB Effective until December 31, 2026

* (ii) The commissioner shall, in accordance with rules and
regulations adopted by the council and approved by the commissioner, for
purposes of payments on an interim basis periodically compute an
adjustment to individual general hospitals' case payment rates for prior
periods for the payor categories specified in paragraphs (a) and (b) of
subdivision one of this section to account for increases in the
statewide average case mix, based on increases in statewide average
assignment to diagnosis-related groups for all patients other than
beneficiaries of title XVIII of the federal social security act
(medicare), that exceed the allowable statewide increase. The increase
in the statewide average case mix in a rate year during the period
January first, nineteen hundred eighty-eight through December
thirty-first, nineteen hundred ninety-three from the nineteen hundred
eighty-seven statewide average case mix and in a rate year during the
period January first, nineteen hundred ninety-four through June
thirtieth, nineteen hundred ninety-six from the adjusted nineteen
hundred ninety-two statewide average case mix shall not exceed the
allowable statewide increase as determined in accordance with
subparagraph (i) of this paragraph. Adjustments may be made on a
quarterly basis consistent with this annual limitation. If in any
quarter of the rate year the cumulative case mix increase for the rate
year exceeds the allowable statewide increase, payment rates to general
hospitals shall be adjusted in accordance with rules and regulations
adopted by the council and approved by the commissioner which shall
contain the specific methodology to allocate the reduction among general
hospitals provided, however, that any funds to be recovered from
hospitals based on such adjustments for prior periods shall be recovered
by prospective adjustment of rates of payment in accordance with
paragraph (c) of this subdivision, in order to reduce the effect of the
statewide increase on rates of payment to reflect the allowable
increase, taking into consideration the effect of any adjustment
applicable in the rate period made in accordance with subparagraph (iii)
of this paragraph. Case mix changes due to acquired immune deficiency
syndrome, tuberculosis, epidemics or other catastrophes resulting in
extraordinary hospital utilization shall not be subject to this
limitation, pursuant to rules and regulations adopted by the council and
approved by the commissioner.

* NB Effective December 31, 2026

(iii) The commissioner shall, in accordance with rules and regulations
adopted by the council and approved by the commissioner, periodically
prospectively adjust for purposes of payments on an interim basis
individual general hospitals' case payment rates for the payor
categories specified in paragraphs (a) and (b) of subdivision one of
this section to account for increases in statewide average assignment to
diagnosis-related groups which exceed the allowable statewide increase
as determined in accordance with subparagraph (ii) of this paragraph.

(iv) Rates of payment of a general hospital shall be adjusted in
accordance with paragraph (c) of this subdivision to reflect the
difference between an individual general hospital's case payment rates
adjusted in accordance with subparagraph (i) of this paragraph for a
rate period and such rates determined in accordance with paragraphs (a)
and (b) of subdivision one of this section, taking into consideration
any adjustment to case payment rates applicable for such rate period
made in accordance with subparagraphs (ii) and (iii) and for the periods
beginning on or after July first, nineteen hundred ninety, subparagraph
(v) of this paragraph.

(v) Notwithstanding any inconsistent provision of law, for the periods
beginning on or after July first, nineteen hundred ninety and subsequent
annual rate periods beginning January first the commissioner shall
reduce, in accordance with the methodology adopted for purposes of
adjustments pursuant to subparagraph (ii) of this paragraph, for
purposes of payments on an interim basis individual general hospitals'
case payment rates applicable to state governmental agencies for a
prospective period to reflect an estimate of the cumulative increase in
statewide average assignment to diagnosis-related groups for prior
periods including prior quarters of the rate period which exceeds the
allowable statewide increase specified in subparagraph (i) of this
paragraph for the prospective period. Such adjustment if effected for
less than an annual prospective rate period shall reflect an annualized
adjustment.

(vi) Notwithstanding any inconsistent provision of law, adjustments to
rates of payment pursuant to this paragraph based on nineteen hundred
ninety-three data that reflects an increase in statewide average case
mix compared to nineteen hundred eighty-seven that exceeds the increase
based on nineteen hundred ninety-two data in statewide average case mix
compared to nineteen hundred eighty-seven shall not be implemented until
April first, nineteen hundred ninety-five and shall be made
prospectively for rates of payment issued effective April first,
nineteen hundred ninety-five including the impact of such adjustment for
the period January first, nineteen hundred ninety-five through March
thirtieth, nineteen hundred ninety-five.

(g) Notwithstanding any other provisions of this section, all costs
and statistics that are related to inpatient services provided to
beneficiaries of title XVIII of the federal social security act
(medicare) shall not be included in the establishment of any payment
rates computed in accordance with the provisions of this section.

(i) Unless provided otherwise in specific provisions included in this
section, the exclusion of costs which are related to routine inpatient
services provided to beneficiaries of title XVIII of the federal social
security act (medicare) and covered by title XVIII of the federal social
security act (medicare) shall be based on the nineteen hundred
eighty-five inpatient days actually paid on behalf of beneficiaries of
title XVIII of the federal social security act (medicare) plus any days
for such beneficiaries not paid on the basis of a decision by a review
agent that the days were unnecessary. Ancillary costs related to
inpatient services provided to beneficiaries of title XVIII of the
federal social security act (medicare) and covered by title XVIII of the
federal social security act (medicare) shall be excluded on the basis of
the nineteen hundred eighty-five cost center ratio of hospital ancillary
inpatient service charges related to such beneficiaries to total
hospital cost center inpatient ancillary services charges applied to
cost center costs. Inpatient malpractice insurance costs which are
attributable to title XVIII of the federal social security act
(medicare) shall be excluded based on the methodology employed by title
XVIII of the federal social security act (medicare) to identify such
costs.

(ii) Costs and statistics related to inpatient services provided to
beneficiaries of title XVIII of the federal social security act
(medicare) and covered by a secondary payor shall be excluded in
accordance with rules and regulations adopted by the council and
approved by the commissioner in the determination of case payment rates
computed in accordance with the provisions of this section.

(h)(i) Any malpractice insurance costs which are the result of general
hospitals having to purchase or provide excess malpractice insurance
coverage for physicians in accordance with section nineteen of chapter
two hundred ninety-four of the laws of nineteen hundred eighty-five or
section eighteen of chapter two hundred sixty-six of the laws of
nineteen hundred eighty-six as amended shall not be included in
calculating malpractice insurance costs for purposes of paragraph (e) of
subdivision one of this section.

(ii) The component of general hospital reimbursable inpatient
operating costs based on the general hospital's inpatient malpractice
insurance costs plus the component of special additional inpatient
operating costs determined in accordance with subparagraphs (i) and
(iii) of paragraph (e) of subdivision one of this section specifically
related to inpatient malpractice insurance costs used to determine
payment rates for annual rate periods beginning on or after January
first, nineteen hundred eighty-eight shall be allocated among the payors
in accordance with regulations adopted by the council and approved by
the commissioner.

(i) For patients discharged during the period April first, nineteen
hundred ninety-two through March thirty-first, nineteen hundred
ninety-three insured under a commercial insurer licensed to do business
in this state and authorized to write accident and health insurance and
whose policy provides inpatient hospital coverage on an expense incurred
basis, the payment rate shall be increased in addition to the payment
rate conversion factor of thirteen percent by a supplementary payment
rate conversion factor of eleven percent for a total conversion factor
of twenty-four percent. This paragraph shall not apply to payments
pursuant to the workers' compensation law, the volunteer firefighters'
benefit law, the volunteer ambulance workers' benefit law, the
comprehensive motor vehicle insurance reparations act, the terms of any
personal injury liability insurance policy, marine and inland marine
insurance policy or marine protections and indemnity insurance policy.

(j) No operating cost ceilings or disallowances other than those
applicable for purposes of the determination of a general hospital's
reimbursable inpatient operating cost base in accordance with paragraph
(d) of subdivision one of this section shall be applied to general
hospitals, except for any cost ceilings or disallowances applied for
purposes of subdivision twenty-four of this section and cost
disallowances for general hospitals with rates based on budgeted costs.

(k) Notwithstanding any inconsistent provision of this section, case
based rates of payment per discharge may, in accordance with rules and
regulations adopted by the council and approved by the commissioner,
reflect incorporation of severity of illness considerations in the
methodology to determine such rates of payment.

(l) Notwithstanding any inconsistent provision of this section,
nothing in this section shall preclude a modification to case based
rates of payment per discharge in accordance with rules and regulations
adopted by the council and approved by the commissioner to reflect
readmission of an individual or unnecessary multiple admissions of an
individual to a general hospital or general hospitals.

(m) Notwithstanding any inconsistent provision of this section, a
general hospital that exceeded maximum charge limitations as determined
by the commissioner in the rate periods nineteen hundred eighty-four
through nineteen hundred eighty-seven may be authorized in accordance
with rules and regulations adopted by the council and approved by the
commissioner to reduce payments determined pursuant to this section in
order to effect a reduction equivalent to such amount by which such
general hospital exceeded maximum charge limitations.

(n) (i) For a patient discharged from a general hospital on or after
August first, nineteen hundred eighty-eight and covered by a payor
included in the payor categories specified in paragraph (a) or (b) of
subdivision one of this section that provides for a percentage
coinsurance responsibility by or on behalf of such patient for covered
hospital services: (A) the dollar value of such percentage coinsurance
responsibility by or on behalf of such patient shall be determined by
multiplying such coinsurance percentage by the hospital's charges for
such patient, determined in accordance with paragraph (c) of subdivision
one of this section or paragraph (e) of subdivision four of this section
for a general hospital or distinct unit of a general hospital not
reimbursed on case based payments, for the services covered by the
payor, considering any applicable deductibles, and (B) the payment due
to a general hospital for reimbursement of inpatient hospital services
by such payor shall be determined by multiplying the payment rate
determined in accordance with this section for such patient for covered
hospital services by the coinsurance percentage for which such payor is
responsible, considering any applicable deductibles.

(ii) A patient covered by a payor included in the payor categories
specified in paragraph (a) or (b) of subdivision one of this section
shall be deemed liable for the payment rate for inpatient hospital
services for such patient for covered services determined in accordance
with this section based on the rate of payment for such payor, provided,
however, that for a patient discharged from a general hospital on or
after August first, nineteen hundred eighty-eight a percentage
coinsurance responsibility by or on behalf of such patient shall be
deemed satisfied by payment of the dollar value of such percentage
coinsurance responsibility determined in accordance with clause (A) of
subparagraph (i) of this paragraph.

(o) No general hospital shall refuse to provide hospital services to a
person presented or proposed to be presented for admission to such
general hospital by a representative of a correctional facility or a
local correctional facility as defined respectively in subdivisions
four, fifteen and sixteen of section two of the correction law based
solely on the grounds such person is an incarcerated individual of such
correctional facility or local correctional facility. No general
hospital may demand or request any charge for hospital services provided
to such person in addition to the charges or rates authorized in
accordance with this article, except for charges for identifiable
additional hospital costs associated with or reasonable additional
charges associated with security arrangements for such person.

(p)(i) Notwithstanding any inconsistent provision of law, a general
hospital that provides an inpatient component of hospice care for
persons eligible for payments to a hospice by a government agency made
in accordance with subdivisions two and three of section four thousand
twelve of this chapter shall be reimbursed for such inpatient services
by or on behalf of the hospice at a rate of payment no greater than the
applicable rate of payment determined in accordance with subdivisions
two and three of section four thousand twelve of this chapter for such
hospice and no general hospital may charge for such inpatient services
rendered an amount in excess of such applicable rate of payment.

(ii) Notwithstanding any inconsistent provision of law, a general
hospital that provides in accordance with contractual arrangements
between a hospice and such general hospital an inpatient component of
hospice care for persons who are not eligible for payments to the
hospice by a government agency made in accordance with subdivisions two
and three of section four thousand twelve of this chapter or as
beneficiaries of title XVIII of the federal social security act
(medicare) shall be reimbursed for such inpatient services by or on
behalf of the hospice in accordance with such contractual arrangements.

(q) A third-party payor specified in paragraph (a), (b) or (c) of
subdivision one of this section, with the exception of governmental
agencies, shall provide the general hospital with a remittance advice at
the time payment or adjustment to such payment is made. Such remittance
advice shall include the patient's name, date of service, admission or
financial control number if available and diagnosis-related group
classification number if applicable and if different than that billed by
the hospital. Such remittance advice shall also include (i) the amount
or percentage payable under the policy or certificate after deductibles,
co-payments and any other reduction of the amount billed including
deductions for prompt payment; and (ii) a specific explanation of any
denial, reduction, or other reason including any other third-party payor
coverage, for not providing full reimbursement of the amount claimed.

* (r) Notwithstanding any inconsistent provision of this section, for
purposes of establishing rates of payment by state governmental agencies
for general hospital inpatient services provided for discharges on or
after April first, nineteen hundred ninety-five, the reimbursable base
year inpatient administrative and general costs of a general hospital,
which shall include but not be limited to reported administrative and
general, data processing, non-patient telephone, purchasing, admitting,
and credit and collection costs, excluding a provider reimbursed on an
initial budget basis, shall not exceed the statewide average of total
reimbursable base year inpatient administrative and general costs. For
the purposes of this paragraph, reimbursable base year administrative
and general costs shall mean those base year administrative and general
costs remaining after application of all other efficiency standards,
including, but not limited to, peer group cost ceilings or guidelines.
The limitation on reimbursement for provider administrative and general
expenses provided by this paragraph shall be expressed as a percentage
reduction of the operating cost component of the rate promulgated by the
commissioner for each general hospital.

* NB Expired March 31, 2011

* (s) Notwithstanding any inconsistent provisions of this section, for
the period July first, nineteen hundred ninety-six through March
thirty-first, nineteen hundred ninety-seven, the commissioner shall
increase rates of payment for patients eligible for payments made by
state governmental agencies by an amount not to exceed forty-five
million dollars in the aggregate to be allocated among those voluntary
non-profit and private proprietary general hospitals which qualified for
rate adjustments pursuant to this paragraph as in effect for the period
July first, nineteen hundred ninety-five through June thirtieth,
nineteen hundred ninety-six proportionally based on each such general
hospital's proportional share of the total funds allocated pursuant to
this paragraph as in effect for the period of July first, nineteen
hundred ninety-five through June thirtieth, nineteen hundred ninety-six.

* NB Expires December 31, 2026

(s-1) To the extent funds are available pursuant to the provisions of
paragraph (s-2) of this subdivision and otherwise notwithstanding any
inconsistent provision of law to the contrary, for the rate periods
September first, nineteen hundred ninety-seven through March
thirty-first, nineteen hundred ninety-eight, and April first, nineteen
hundred ninety-eight through March thirty-first, nineteen hundred
ninety-nine, the commissioner shall increase rates of payment for
patients eligible for payments made by state governmental agencies by an
amount not to exceed forty-eight million dollars in the aggregate for
each such rate period, allocated among those voluntary non-profit and
private proprietary general hospitals which qualified for rate
adjustments pursuant to paragraph (s) of this subdivision as in effect
for the period July first, nineteen hundred ninety-five through June
thirtieth, nineteen hundred ninety-six proportionally based on each such
general hospital's proportional share of total funds allocated pursuant
to paragraph (s) of this subdivision as in effect for the period of July
first, nineteen hundred ninety-five through June thirtieth, nineteen
hundred ninety-six. The rate adjustments calculated in accordance with
this paragraph shall be subject to retrospective reconciliation to
ensure that each hospital receives in the aggregate its proportionate
share of the full allocation, to the extent allowable under federal law,
provided however that the department shall not be required to reconcile
payments made pursuant to paragraph (s) of this subdivision applicable
to periods prior to September first, nineteen hundred ninety-seven.

(s-2) (i) Notwithstanding any inconsistent provision of law to the
contrary, the following funds heretofore or hereinafter accumulated
shall be transferred by the commissioner and credited to the credit of
the state general fund medical assistance local assistance account in an
aggregate amount equal to the non-federal share of the costs of the rate
adjustments authorized pursuant to paragraph (s-1) of this subdivision:

(A) from pool reserves from statewide and regional pools established
pursuant to sections twenty-eight hundred seven-a, twenty-eight hundred
seven-c, and twenty-eight hundred eight-c of this article;

(B) from unobligated monies available pursuant to paragraph (b) of
subdivision nineteen of section twenty-eight hundred seven-c of this
article;

(C) from interest income derived from pools established pursuant to
sections twenty-eight hundred seven-k, twenty-eight hundred seven-l and
twenty-eight hundred seven-s of this article.

(ii) To the extent that funds available pursuant to the provisions of
subparagraph (i) of this paragraph are insufficient to meet the
non-federal share of the costs of the rate adjustments authorized
pursuant to paragraph (s-1) of this subdivision, the following funds
hereto or hereinafter accumulated may be transferred by the commissioner
to the state general fund medical assistance local assistance account
for the purposes set forth in subparagraph (i) of this paragraph:

(A) from unobligated monies available pursuant to paragraphs (g) and
(j) of subdivision 1 of section twenty-eight hundred seven-l of this
article;

(B) from unobligated monies available pursuant to clause (D) of
subparagraph (ii) of paragraph (b) of subdivision one of section
twenty-eight hundred seven-l of this article.

(iii) Notwithstanding any inconsistent provision of law to the
contrary, the commissioner shall transfer up to an additional two
million dollars from the funding sources identified in subparagraph (i)
of this paragraph to the state general fund. To the extent monies
available from the funding sources identified in subparagraph (i) of
this paragraph total less than two million dollars, the commissioner
shall transfer monies from funding sources identified in subparagraph
(ii) of this paragraph to the state general fund so that the total
amount transferred pursuant to this provision equals two million
dollars.

(s-3) To the extent funds are available pursuant to the provisions of
paragraph (s-4) of this subdivision and otherwise notwithstanding any
inconsistent provision of law to the contrary, for the rate period July
first, nineteen hundred ninety-nine through March thirty-first, two
thousand, the commissioner shall increase rates of payment for patients
eligible for payments made by state governmental agencies by an amount
not to exceed thirty-six million dollars in the aggregate. Such amount
shall be allocated among those voluntary non-profit and private
proprietary general hospitals which continue to provide inpatient
services as of July first, nineteen hundred ninety-nine under a previous
or new name and which qualified for rate adjustments pursuant to
paragraph (s) of this subdivision as in effect for the period July
first, nineteen hundred ninety-five through June thirtieth, nineteen
hundred ninety-six proportionally based on each such general hospital's
proportional share of total funds allocated pursuant to paragraph (s) of
this subdivision as in effect for the period of July first, nineteen
hundred ninety-five through June thirtieth, nineteen hundred ninety-six,
provided however, that amounts allocable to previously but no longer
qualified hospitals shall be proportionally reallocated to the remaining
qualified hospitals. The rate adjustments calculated in accordance with
this paragraph shall be subject to retrospective reconciliation to
ensure that each hospital receives in the aggregate its proportionate
share of the full allocation, to the extent allowable under federal law,
provided however that the department shall not be required to reconcile
payments made pursuant to paragraph (s) of this subdivision applicable
to periods prior to September first, nineteen hundred ninety-seven.

(s-4) Notwithstanding any inconsistent provision of law to the
contrary, funds available pursuant to section 32-c of part F of the
chapter of the laws of nineteen hundred ninety-nine which adds this
paragraph shall be transferred by the commissioner and credited to the
credit of the state general fund medical assistance local assistance
account in an aggregate amount equal to the non-federal share of the
costs of the rate adjustments authorized pursuant to paragraph (s-3) of
this subdivision.

* (s-5) To the extent funds are available pursuant to paragraph (s) of
subdivision one of section twenty-eight hundred seven-v of this article
and otherwise notwithstanding any inconsistent provision of law, for
rate periods April first, two thousand through March thirty-first, two
thousand three, the commissioner shall increase rates of payment for
patients eligible for payments made by state governmental agencies by an
amount not to exceed forty-eight million dollars annually in the
aggregate. Such amount shall be allocated among those voluntary
non-profit and private proprietary general hospitals which continue to
provide inpatient services as of July first, nineteen hundred
ninety-nine under a previous or new name and which qualified for rate
adjustments pursuant to paragraph (s) of this subdivision as in effect
for the period July first, nineteen hundred ninety-five through June
thirtieth, nineteen hundred ninety-six proportionally based on each such
general hospital's proportional share of total funds allocated pursuant
to paragraph (s) of this subdivision as in effect for the period of July
first, nineteen hundred ninety-five through June thirtieth, nineteen
hundred ninety-six, provided however, that amounts allocable to
previously but no longer qualified hospitals shall be proportionally
reallocated to the remaining qualified hospitals. The rate adjustments
calculated in accordance with this paragraph shall be subject to
retrospective reconciliation to ensure that each hospital receives in
the aggregate its proportionate share of the full allocation, to the
extent allowable under federal law, provided however that the department
shall not be required to reconcile payments made pursuant to paragraph
(s) of this subdivision applicable to periods prior to September first,
nineteen hundred ninety-seven.

* NB Expires December 31, 2026

(s-6) To the extent funds are available otherwise notwithstanding any
inconsistent provision of law to the contrary, for rate periods April
first, two thousand three through March thirty-first, two thousand five,
the commissioner shall increase rates of payment for patients eligible
for payments made by state governmental agencies by an amount not to
exceed forty-eight million dollars annually in the aggregate. Such
amount shall be allocated among those voluntary non-profit and private
proprietary general hospitals which continue to provide inpatient
services as of July first, nineteen hundred ninety-nine under a previous
or new name and which qualified for rate adjustments pursuant to
paragraph (s) of this subdivision as in effect for the period July
first, nineteen hundred ninety-five through June thirtieth, nineteen
hundred ninety-six proportionally based on each such general hospital's
proportional share of total funds allocated pursuant to paragraph (s) of
this subdivision as in effect for the period of July first, nineteen
hundred ninety-five through June thirtieth, nineteen hundred ninety-six,
provided however, that amounts allocable to previously but no longer
qualified hospitals shall be proportionally reallocated to the remaining
qualified hospitals. The rate adjustments calculated in accordance with
this paragraph shall be subject to retrospective reconciliation to
ensure that each hospital receives in the aggregate its proportionate
share of the full allocation, to the extent allowable under federal law,
provided however that the department shall not be required to reconcile
payments made pursuant to paragraph (s) of this subdivision applicable
to periods prior to September first, nineteen hundred ninety-seven.
These payments may be added to rates of payment or made as aggregate
payments to eligible hospitals.

(s-7) To the extent funds are available otherwise notwithstanding any
inconsistent provision of law to the contrary, for rate periods April
first, two thousand five through March thirty-first, two thousand seven,
the commissioner shall increase rates of payment for patients eligible
for payments made by state governmental agencies by an amount not to
exceed forty-eight million dollars annually in the aggregate. Such
amount shall be allocated among those voluntary non-profit and private
proprietary general hospitals which continue to provide inpatient
services as of April first, two thousand five under a previous or new
name and which qualified for rate adjustments pursuant to paragraph (s)
of this subdivision as in effect for the period July first, nineteen
hundred ninety-five through June thirtieth, nineteen hundred ninety-six
proportionally based on each such general hospital's proportional share
of total funds allocated pursuant to paragraph (s) of this subdivision
as in effect for the period of July first, nineteen hundred ninety-five
through June thirtieth, nineteen hundred ninety-six, provided however,
that amounts allocable to previously but no longer qualified hospitals
shall be proportionally reallocated to the remaining qualified
hospitals. The rate adjustments calculated in accordance with this
paragraph shall be subject to retrospective reconciliation to ensure
that each hospital receives in the aggregate its proportionate share of
the full allocation, to the extent allowable under federal law, provided
however that the department shall not be required to reconcile payments
made pursuant to paragraph (s) of this subdivision applicable to periods
prior to September first, nineteen hundred ninety-seven.

(s-8) To the extent funds are available and otherwise notwithstanding
any inconsistent provision of law to the contrary, for rate periods on
and after April first, two thousand seven through November thirtieth,
two thousand nine, the commissioner shall increase rates of payment for
patients eligible for payments made by state governmental agencies by an
amount not to exceed sixty million dollars annually in the aggregate.
Such amount shall be allocated among those voluntary non-profit general
hospitals which continue to provide inpatient services as of April
first, two thousand seven through March thirty-first, two thousand eight
and which have medicaid inpatient discharges percentages equal to or
greater than thirty-five percent. This percentage shall be computed
based upon data reported to the department in each hospital's two
thousand four institutional cost report, as submitted to the department
on or before January first, two thousand seven. The rate adjustments
calculated in accordance with this paragraph shall be allocated
proportionally based on each eligible hospital's total reported medicaid
inpatient discharges in two thousand four, to the total reported
medicaid inpatient discharges for all such eligible hospitals in two
thousand four, provided, however, that such rate adjustments shall be
subject to reconciliation to ensure that each hospital receives in the
aggregate its proportionate share of the full allocation to the extent
allowable under federal law. Such payments may be added to rates of
payment or made as aggregate payments to eligible hospitals, provided,
however, that subject to the availability of federal financial
participation and solely for the period April first, two thousand seven
through March thirty-first, two thousand eight, six million dollars in
the aggregate of this sixty million dollars shall be allocated to
voluntary non-profit hospitals which continue to provide inpatient
services as of April first, two thousand seven through March
thirty-first, two thousand eight and which have Medicaid inpatient
discharge percentages of less than thirty-five percent and which had
previously qualified for distributions pursuant to paragraph (s-7) of
this subdivision. The rate adjustment calculated in accordance with this
paragraph shall be allocated proportionally based on the amount of money
the hospital had received in two thousand six.

12. Provisions for article forty-three insurance law corporations and
article forty-four of this chapter organizations. Except as provided in
paragraphs (a) and (b) of this subdivision, general hospital charges for
inpatient and outpatient services to subscribers or beneficiaries of
contracts entered into pursuant to the provisions of article forty-three
of the insurance law or to members of a comprehensive health services
plan operating pursuant to the provisions of article forty-four of this
chapter for patient services rendered shall not exceed the rates of
payment approved by the commissioner for payments by such article
forty-three insurance law corporations or article forty-four
organizations. No general hospital may demand or request any charge for
such covered services in addition to the charges or rates authorized by
this article.

(a) Any general hospital which terminated its contract with an article
nine-c insurance law corporation or a comprehensive health services plan
after October first, nineteen hundred seventy-six and prior to May
first, nineteen hundred seventy-eight, may not charge subscribers or
beneficiaries of contracts entered into pursuant to the provisions of
article forty-three of the insurance law, or members of a comprehensive
health services plan operating pursuant to the provisions of article
forty-four of this chapter, amounts in excess of the payments
established by such hospital for patient services in accordance with the
provisions of paragraph (c) of subdivision one of this section, or in
the event the article forty-three insurance law corporation or
comprehensive health services plan operating pursuant to the provisions
of article forty-four of this chapter provides for reimbursement on an
expense incurred basis and makes payment directly to such hospital for
patient services for its subscribers or beneficiaries, such article
forty-three insurance law corporation or comprehensive health services
plan shall be an additional category of payor of inpatient hospital
services whose rates of payment are determined in accordance with
paragraph (b) of subdivision one of this section based on an imputed
rate of payment determined in accordance with paragraph (a) of
subdivision one of this section for an article forty-three insurance law
corporation, adjusted for uncovered services, and increased by thirteen
percent.

(b) Any general hospital which had notified in writing an article
nine-c corporation or a comprehensive health services plan prior to June
first, nineteen hundred seventy-eight of its intention to terminate its
contract with such corporation or plan in accordance with the terms of
such contract, except a general hospital subject to the provisions of
paragraph (a) of this subdivision may not charge a subscriber or
beneficiary of a contract entered into pursuant to the provisions of
article forty-three of the insurance law, or a member of a comprehensive
health services plan operating pursuant to the provisions of article
forty-four of this chapter, after the effective date of termination of
such contract, amounts in excess of the payments established by such
hospital for patient services in accordance with the provisions of
paragraph (c) of subdivision one of this section, or in the event the
article forty-three insurance law corporation or comprehensive health
services plan operating pursuant to the provisions of article forty-four
of this chapter provides for reimbursement on an expense incurred basis
and makes payment directly to such hospital for patient services for its
subscribers or beneficiaries, such article forty-three insurance law
corporation or comprehensive health services plan shall be an additional
category of payor of inpatient hospital services whose rates of payment
are determined in accordance with paragraph (b) of subdivision one of
this section based on an imputed rate of payment determined in
accordance with paragraph (a) of subdivision one of this section for an
article forty-three insurance law corporation, adjusted for uncovered
services, and increased by thirteen percent.

(c) No general hospital shall refuse to provide patient services to
such subscribers or beneficiaries solely on the grounds of such
subscription or membership.

(d) The provisions of this subdivision shall also apply to payments to
general hospitals by a corporation organized and operating in accordance
with article forty-three of the insurance law for inpatient and
outpatient services on behalf of subscribers of a foreign corporation
which performs similar functions in another state or which belongs to a
national association comprised of similar corporations to which the
article forty-three corporation also belongs; provided, however, the
foreign corporation or the laws of the state in which the foreign
corporation is organized extends to article forty-three corporations
organized and operating in this state a reciprocal right to have the
foreign corporation make payments to hospitals in that other state on
behalf of subscribers of the article forty-three corporations at the
same rate of payment as that foreign corporation pays for its own
subscribers.

* (e) The provisions of this subdivision shall not apply to patients
discharged on or after January first, nineteen hundred ninety-seven.

* NB Expires December 31, 2026

13. Restitution authorization. In enforcing the provisions of
subdivisions one and twelve of this section, the commissioner may, in
addition to the penalties and injunctions set forth in section twelve of
this chapter, order that any general hospital provide restitution for
any overpayments made by any party. Any hospital may request a formal
hearing pursuant to the provisions of section twelve-a of this chapter
in the event the hospital objects to any order of the commissioner
hereunder. The commissioner may direct that such a hearing be held
without any request by a hospital.

14. Bad debt and charity care allowance. * (a) With the exception of
rates of payment for services provided to beneficiaries of title XVIII
of the federal social security act (medicare), all rates and general
hospital charges, including rates of payment for state governmental
agencies provided all federal approvals necessary by federal law and
regulation for federal financial participation in payments made for
beneficiaries eligible for medical assistance under title XIX of the
federal social security act based upon the allowance provided herein as
a component of such payments are granted, established for rate periods
commencing on or after January first, nineteen hundred eighty-eight and
prior to January first, nineteen hundred ninety-seven in accordance with
this section shall include the allowance specified in paragraph (c) of
this subdivision. The allowance shall be computed on the basis of the
operating and capital related components of such rates after trending of
the operating portion. For the purposes of this subdivision and
subdivision seventeen of this section, major public general hospitals
are defined as all state operated general hospitals, all general
hospitals operated by the New York city health and hospitals corporation
as established by chapter one thousand sixteen of the laws of nineteen
hundred sixty-nine as amended and all other public general hospitals
having annual inpatient operating costs in excess of twenty-five million
dollars.

* NB Effective until December 31, 2026

* (a) With the exception of rates of payment for services provided to
beneficiaries of title XVIII of the federal social security act
(medicare), all rates and general hospital charges, including rates of
payment for state governmental agencies provided all federal approvals
necessary by federal law and regulation for federal financial
participation in payments made for beneficiaries eligible for medical
assistance under title XIX of the federal social security act based upon
the allowance provided herein as a component of such payments are
granted, established for rate periods commencing on or after January
first, nineteen hundred eighty-eight in accordance with this section
shall include the allowance specified in paragraph (c) of this
subdivision. The allowance shall be computed on the basis of the
operating and capital related components of such rates after trending of
the operating portion. For the purposes of this subdivision and
subdivision seventeen of this section, major public general hospitals
are defined as all state operated general hospitals, all general
hospitals operated by the New York city health and hospitals corporation
as established by chapter one thousand sixteen of the laws of nineteen
hundred sixty-nine as amended and all other public general hospitals
having annual inpatient operating costs in excess of twenty-five million
dollars.

* NB Effective December 31, 2026

(b) The allowance shall be a percentage to reflect the needs for the
financing of losses resulting from bad debts and the costs of charity
care of general hospitals within article forty-three insurance law
regions, or such other regions as adopted pursuant to subdivision
sixteen of this section, and within a statewide determination of
financial resources to be committed for this purpose.

Need shall be defined as inpatient losses from bad debts reduced to
cost and the inpatient costs of charity care increased by any deficit of
such hospital from providing ambulatory services, excluding any portion
of such deficit resulting from governmental payments below average visit
costs, and revenues and expenses related to the provision of referred
ambulatory services. Funds received by major public general hospitals
pursuant to article forty-one of the mental hygiene law shall be
considered to have been provided for inpatient hospital deficits only.
The council shall adopt rules and regulations, subject to the approval
of the commissioner, to establish uniform reporting and accounting
principles designed to enable hospitals to fairly and accurately
determine and report losses from bad debts and the costs of charity
care.

(c) The regional amounts to be included in rates approved for the rate
year commencing January first, nineteen hundred eighty-eight shall be
equal to the sum of the following two components divided by the total
reimbursable inpatient costs for the general hospitals located in the
region, excluding inpatient costs related to beneficiaries of title
XVIII of the federal social security act (medicare), and after
application of the trend factor. The first component shall be the result
of the ratio between the total nominal payment amount in dollars as
determined in subparagraph (i) of this paragraph that would be allocated
to voluntary non-profit, private proprietary and public general
hospitals other than major public general hospitals in the region based
on a targeted need formula applied in accordance with subparagraphs (i)
and (ii) of this paragraph and the statewide sum of such nominal payment
amounts to voluntary non-profit, private proprietary and public general
hospitals other than major public general hospitals applied to the total
statewide resources committed for this purpose to regional pools in the
rate year, excluding the total statewide amount allocated in the rate
year for this purpose to major public general hospitals in accordance
with subparagraph (iii) of this paragraph. The second component shall be
the dollar amount allocated to major public general hospitals in the
region in accordance with subparagraph (iii) of this paragraph. The
regional amount to be included in the rates approved for the rate years
commencing on or after January first, nineteen hundred eighty-nine shall
be computed in the same manner except that the base year for the
targeted need as specified in subparagraph (i) of this paragraph shall
be the calendar year which is two years prior to the rate year. For each
annual rate period commencing on or after January first, nineteen
hundred eighty-eight, the statewide amount to be available in regional
pools for this purpose shall equal five and forty-eight hundredths
percent of the total hospital reimbursable inpatient costs, excluding
inpatient costs related to services provided to beneficiaries of title
XVIII of the federal social security act (medicare), computed without
consideration of inpatient uncollectible amounts, and after application
of the trend factor.

(i) Targeted need shall be defined as the relationship of need to net
patient service revenue expressed as a percentage. Net patient service
revenue shall be defined as net patient revenue attributable to
inpatient and outpatient services excluding referred ambulatory
services. For the rate year beginning January first, nineteen hundred
eighty-eight and ending December thirty-first, nineteen hundred
eighty-eight the scale specified in subparagraph (ii) of this paragraph
shall be utilized to calculate individual hospital's nominal payment
amounts on the basis of the percentage relationship between their
nineteen hundred eighty-six need and nineteen hundred eighty-six net
patient service revenues. The nominal payment amount shall be defined as
the sum of the dollars attributable to the application of an
incrementally increasing proportion of reimbursement for percentage
increases in targeted need according to the scale specified in
subparagraph (ii) of this paragraph. The sum of the nominal payment
amounts for all hospitals in a region shall be the region's total
nominal payment amount.

(ii) The scale utilized for development of each hospital's nominal
payment amount shall be as follows:

Percentage of Reimbursement

Attributable to that Portion
Targeted Need Percentage of Targeted Need

0 -1% 35%

1+ -2% 50%

2+ -3% 65%

3+ -4% 85%

4+ -5% 90%

5%+ 95%

(iii) The dollar amount allocated to major public general hospitals in
a region in the rate years nineteen hundred eighty-eight, nineteen
hundred eighty-nine and in that portion of the nineteen hundred ninety
rate year beginning on January first and ending on June thirtieth shall
be one hundred two percent and in that portion of the nineteen hundred
ninety rate year beginning on July first and ending on December
thirty-first, and in subsequent rate years shall be one hundred ten
percent of the result of the application of the ratio of the major
public general hospitals' inpatient reimbursable costs within the region
to total statewide general hospital inpatient reimbursable costs, as
computed on the basis of nineteen hundred eighty-five financial and
statistical reports and excluding costs related to services to
beneficiaries of title XVIII of the federal social security act
(medicare), to the statewide resources committed for this purpose to
regional pools, computed without consideration of inpatient
uncollectible amounts.

(iv) Notwithstanding any inconsistent provision of this section,
commencing April first, nineteen hundred ninety-five the allowance
pursuant to this subdivision shall be a uniform regional allowance
percentage of five and forty-eight hundredths percent for all regions.

(d) In the event the regional percentage bad debt and charity care
allowances for general hospitals for a rate period commencing on or
after January first, nineteen hundred ninety-four determined in
accordance with paragraph (c) of this subdivision to be submitted to bad
debt and charity care regional pools established pursuant to subdivision
sixteen of this section and deposited in accordance with subdivision
seventeen of this section do not qualify for waiver pursuant to federal
law and regulation related to such regional allowance variations, in
order for such allowances to be qualified as a broad-based health care
related tax for purposes of the revenues received by the state from such
allowances not reducing the amount expended by the state as medical
assistance for purposes of federal financial participation, but the
regional percentage allowances for the nineteen hundred ninety-three
rate year do so qualify, then the regional percentage allowances for the
regions for the nineteen hundred ninety-three rate year determined in
accordance with paragraph (c) of this subdivision shall be further
continued for such period for such regions.

14-a. Supplementary bad debt and charity care adjustment. (a)
Notwithstanding any inconsistent provision of this section, rates of
payment for inpatient hospital services for persons eligible for
payments made by state governmental agencies for the period April first,
nineteen hundred eighty-nine to December thirty-first, nineteen hundred
eighty-nine and for each annual period commencing January first during
the period January first, nineteen hundred ninety to December
thirty-first, nineteen hundred ninety-three applicable to patients
eligible for federal financial participation under title XIX of the
federal social security act in medical assistance provided pursuant to
title eleven of article five of the social services law determined in
accordance with this section for a major public general hospital, as
defined in paragraph (a) of subdivision fourteen of this section, shall
include a supplementary bad debt and charity care adjustment determined
in accordance with paragraph (b) of this subdivision provided the state
governmental agency or the county government in which such general
hospital is located, or the city of New York for a general hospital
operated by the New York city health and hospitals corporation, files in
such time and manner as may be specified by the commissioner an election
for such adjustment for such hospital for each period provided that such
election is subject to the approval of the state director of the budget
and provided all federal approvals necessary by federal law and
regulation for federal financial participation in payments made for
beneficiaries eligible for medical assistance under title XIX of the
federal social security act based upon the adjustment provided herein as
a component of such payments are granted.

(b)(i) A supplementary bad debt and charity care adjustment for the
period April first, nineteen hundred eighty-nine to December
thirty-first, nineteen hundred eighty-nine and for each annual period
commencing January first during the period January first, nineteen
hundred ninety to December thirty-first, nineteen hundred ninety-three
for an eligible major public general hospital shall be determined for
each period in accordance with rules and regulations adopted by the
council and approved by the commissioner based upon the amount
calculated by subtracting the amount projected to be distributed to such
major public general hospital pursuant to paragraph (a) of subdivision
seventeen of this section for such period from an amount calculated as
the product of the projected bad debt and charity care nominal payment
amount coverage ratio for such period for voluntary non-profit, private
proprietary and public general hospitals other than major public general
hospitals multiplied by the base year bad debt and charity care imputed
nominal payment amount for such major public general hospital determined
in accordance with the methodology provided in paragraph (c) of
subdivision fourteen of this section for calculation of a nominal
payment amount for voluntary non-profit, private proprietary and public
general hospitals other than major public general hospitals. The
coverage ratio shall be computed as the ratio between the sum of the
dollar value of the amount committed to the regional pools in accordance
with paragraph (c) of subdivision fourteen of this section and paragraph
(a) of subdivision nineteen of this section for the rate period that
would be allocated to voluntary non-profit, private proprietary and
public general hospitals other than major public general hospitals in
accordance with paragraph (b) of subdivision seventeen of this section
and the base year nominal payment amount for such hospitals.

(ii) A supplementary bad debt and charity care adjustment provided in
accordance with subparagraph (i) of this paragraph shall be adjusted to
reflect actual distributions pursuant to paragraph (a) and (b) of
subdivision seventeen of this section.

* (c) Notwithstanding any inconsistent provision of this subdivision,
a supplementary bad debt and charity care adjustment shall be determined
and provided for each of the nineteen hundred ninety-four, nineteen
hundred ninety-five and nineteen hundred ninety-six rate periods,
provided that the election pursuant to paragraph (a) of this subdivision
is continued for such period, for a major public general hospital equal
to the higher of such adjustment for the nineteen hundred ninety-one
rate period or for the nineteen hundred ninety-three rate period. The
adjustment may be made to rates of payment or as aggregate payments to
an eligible hospital.

* NB Effective until December 31, 2026

* (c) Notwithstanding any inconsistent provision of this subdivision,
a supplementary bad debt and charity care adjustment shall be determined
and provided for each of the nineteen hundred ninety-four, nineteen
hundred ninety-five and for the period January first, nineteen hundred
ninety-six through June thirtieth, nineteen hundred ninety-six rate
periods, provided that the election pursuant to paragraph (a) of this
subdivision is continued for such period, for a major public general
hospital equal to the higher of such adjustment for the nineteen hundred
ninety-one rate period or for the nineteen hundred ninety-three rate
period. The adjustment may be made to rates of payment or as aggregate
payments to an eligible hospital.

* NB Effective December 31, 2026

* (d) Notwithstanding any inconsistent provision of law, the
provisions of paragraphs (a), (b) and (c) of this subdivision shall not
apply to payments for patients discharged on or after January first,
nineteen hundred ninety-seven.

* NB Expires December 31, 2026

14-b. General health care services allowance. (a) With the exception
of rates of payment for services provided to beneficiaries of title
XVIII of the federal social security act (medicare), all rates and
general hospital charges established for rate periods commencing on or
after January first, nineteen hundred ninety-one in accordance with this
section shall include a percentage allowance of the general hospital's
reimbursable inpatient costs, excluding inpatient costs related to
services provided to beneficiaries of title XVIII of the federal social
security act (medicare), computed without consideration of inpatient
uncollectible amounts, and after application of the trend factor, as
follows:

(i) for the nineteen hundred ninety-one, nineteen hundred ninety-two
and nineteen hundred ninety-three rate periods, an allowance of
twenty-three hundredths of one percent;

(ii) for the nineteen hundred ninety-four rate period, an allowance of
six hundred fourteen thousandths of one percent;

(iii) for the January first, nineteen hundred ninety-five through June
thirtieth, nineteen hundred ninety-five rate period, an allowance of six
hundred thirty-seven thousandths of one percent;

(iv) for the July first, nineteen hundred ninety-five through December
thirty-first, nineteen hundred ninety-five rate period, an allowance of
one and forty-two hundredths percent; and

* (v) for the January first, nineteen hundred ninety-six through
December thirty-first, nineteen hundred ninety-six rate period, an
allowance of one and nine hundredths percent.

* NB Effective until December 31, 2026

* (v) for the January first, nineteen hundred ninety-six through June
thirtieth, nineteen hundred ninety-six rate period, an allowance of one
and nine hundredths percent.

* NB Effective December 31, 2026

(b) For rate periods beginning on or after January first, nineteen
hundred ninety-one but prior to January first, nineteen hundred
ninety-four, funds will be accumulated and made available in regional
pools created by the commissioner for regional distributions in
accordance with section twenty-eight hundred seven-bb of this chapter
through the submission by or on behalf of general hospitals of the
allowance included in rates and charges in accordance with paragraph (a)
of this subdivision. Such regions shall be those established pursuant to
paragraph (b) of subdivision sixteen of this section. The regional pools
may be administered in accordance with the provisions of paragraph (c)
of subdivision sixteen of this section applicable to bad debt and
charity care regional pools. Payments by or on behalf of general
hospitals to regional pools shall be due and arrearages shall be treated
in accordance with the provisions of subdivision twenty of this section
applicable to bad debt and charity care regional pools.

(c) If on September thirtieth, nineteen hundred ninety-four, any funds
accumulated over the period January first, nineteen hundred ninety-one
through December thirty-first, nineteen hundred ninety-three are unused
or uncommitted for the allocations provided for in this subdivision,
such unused or uncommitted funds shall be reallocated for use in
accordance with the provisions of subdivision seventeen of this section.

(d) For the rate periods commencing on or after January first,
nineteen hundred ninety-four, funds will be accumulated in a statewide
pool created by the commissioner through the submission by or on behalf
of general hospitals of the allowance included in rates and charges in
accordance with paragraph (a) of this subdivision, for distributions in
accordance with subdivision nineteen-a of this section.

(e) The commissioner is authorized to contract with a pool
administrator designated in accordance with paragraph (c) of subdivision
sixteen of this section or, if not available, such other administrators
as the commissioner shall designate, to receive funds for the pools
created pursuant to this subdivision and to distribute funds in
accordance with this subdivision and subdivision nineteen-a of this
section. If a pool administrator is designated, the commissioner shall
conduct or cause to be conducted an annual audit of the receipt and
distribution of pool funds. The reasonable costs and expenses of a pool
administrator as approved by the commissioner, not to exceed for
personnel services on an annual basis two hundred thousand dollars,
shall be paid from the pooled funds.

(f) (i) Payments to the pools by or on behalf of general hospitals of
funds due based on the allowances provided in accordance with this
subdivision shall be due in accordance with the provisions of
subdivision twenty of this section in the same manner as applicable to
bad debt and charity care regional pools. Arrearages in payments due may
be collected and interest and penalties due shall be determined and may
be collected by the commissioner in accordance with the provisions of
subdivision twenty of this section in the same manner as applicable to
bad debt and charity care regional pools.

(ii) Notwithstanding any inconsistent provision of this section, as
shall be necessary to obtain federal financial participation in medical
assistance expenditures in accordance with title XIX of the federal
social security act, the allowances included in rates of payment
pursuant to this subdivision on behalf of patients eligible for medical
assistance pursuant to title eleven of article five of the social
services law shall be withheld from medical assistance payments to
general hospitals and paid to pools on behalf of the general hospitals
where a general hospital elects such withholding in such time and manner
as specified by the commissioner, and in the event a general hospital
does not elect such withholding, payments by such general hospital to a
pool based on an allowance received for medical assistance patients
shall be due within five days of receipt of such funds. Funds withheld
by a payor and paid to a pool on behalf of a general hospital shall be
considered received by such general hospital and paid to the pool by
such general hospital for all purposes.

(g) The allowances provided pursuant to paragraph (a) of this
subdivision shall be effective and implemented for purposes of
determining rates of payment for state governmental agencies contingent
on receipt of all federal approvals necessary by federal law or
regulations for federal financial participation in payments made for
beneficiaries eligible for medical assistance under title XIX of the
federal social security act based upon such allowances as a component of
such payments. If such federal approvals are not granted for such
allowances or components thereof, rates of payment for state
governmental agencies shall be determined in accordance with the
provisions of this section without consideration of such allowances or
such components plus an adjustment not subject to federal financial
participation equal to one-half of the difference between such rates of
payment determined without consideration of such allowances or
components and a rate of payment determined based on such allowances or
components. The pools established pursuant to this subdivision shall
refund to the state governmental agency from pool reserves, current
funds or future receipts any overpayment received based on a retroactive
reduction pursuant to this paragraph in the allowances.

(h) The allowances provided pursuant to paragraph (a) of this
subdivision or components thereof shall be of no force and effect and
shall be deemed to have been null and void as of January first, nineteen
hundred ninety-four in the event the secretary of the department of
health and human services determines that such allowances or such
components thereof are an impermissible health care related tax for
purposes of the federal medicaid voluntary contribution and
provider-specific tax amendments of nineteen hundred ninety-one for
purposes of such funds reducing the amount deemed expended by the state
as medical assistance for purposes of federal financial participation.

14-c. Bad debt and charity care allowance for financially distressed
hospitals. * (a) With the exception of rates of payment for services
provided to beneficiaries of title XVIII of the federal social security
act (medicare), all rates and general hospital charges established for
rate periods commencing on or after January first, nineteen hundred
ninety-one but prior to January first, nineteen hundred ninety-four in
accordance with this section shall include an allowance of two hundred
thirty-five thousandths of one percent; and for the rate periods during
the period January first, nineteen hundred ninety-four through December
thirty-first, nineteen hundred ninety-six an allowance of three hundred
twenty-five thousandths of one percent of the general hospital's
reimbursable inpatient costs, excluding inpatient costs related to
services provided to beneficiaries of title XVIII of the federal social
security act (medicare), computed without consideration of inpatient
uncollectible amounts, and after application of the trend factor.

* NB Effective until December 31, 2026

* (a) With the exception of rates of payment for services provided to
beneficiaries of title XVIII of the federal social security act
(medicare), all rates and general hospital charges established for rate
periods commencing on or after January first, nineteen hundred
ninety-one but prior to January first, nineteen hundred ninety-four in
accordance with this section shall include an allowance of two hundred
thirty-five thousandths of one percent; and for the rate periods during
the period January first, nineteen hundred ninety-four through June
thirtieth, nineteen hundred ninety-six an allowance of three hundred
twenty-five thousandths of one percent of the general hospital's
reimbursable inpatient costs, excluding inpatient costs related to
services provided to beneficiaries of title XVIII of the federal social
security act (medicare), computed without consideration of inpatient
uncollectible amounts, and after application of the trend factor.

* NB Effective December 31, 2026

(b) A statewide pool shall be created through the submissions by or on
behalf of general hospitals of the allowance included in rates and
charges in accordance with paragraph (a) of this subdivision. Funds
accumulated in the statewide pool, including income from invested funds,
shall be deposited by the commissioner and credited to a special
revenue-other fund to be established by the comptroller. To the extent
of funds appropriated therefor, funds shall be made available for
distributions by or on behalf of the state, as payments under the state
medical assistance program provided pursuant to title eleven of article
five of the social services law, from the statewide pool in the same
manner as distributions made in accordance with paragraph (c) of
subdivision nineteen of this section. The statewide pools may be
administered in accordance with the provisions of paragraph (c) of
subdivision sixteen of this section applicable to bad debt and charity
care regional pools. Payments by or on behalf of general hospitals to
statewide pools shall be due and arrearages, interest and penalties
shall be treated in accordance with the provisions of subdivision twenty
of this section applicable to bad debt and charity care regional pools.

(c) Notwithstanding any inconsistent provision of law, the
commissioner may allocate and distribute funds accumulated in the
statewide pool created pursuant to this subdivision and funds
accumulated in the statewide pool created by the assessments authorized
in accordance with subdivision eighteen of this section and available
for distribution in accordance with paragraphs (c) and (d) of
subdivision nineteen of this section for contracts for independent
management audits of financially distressed hospitals, provided,
however, that the total amount for audits pursuant to this paragraph
shall not exceed two million five hundred thousand dollars over the
period January first, nineteen hundred ninety-four through December
thirty-first, nineteen hundred ninety-five. Copies of management audit
reports of financially distressed hospitals shall be provided by the
commissioner to the chairs of the senate and assembly health committees.

14-d. Supplementary low income patient adjustment. * (a)
Notwithstanding any inconsistent provision of this section, payment for
inpatient hospital services for persons eligible for payments made by
state governmental agencies for rate periods during the period January
first, nineteen hundred ninety-one through December thirty-first,
nineteen hundred ninety-six applicable to patients eligible for federal
financial participation under title XIX of the federal social security
act in medical assistance provided pursuant to title eleven of article
five of the social services law determined in accordance with this
section shall include for eligible general hospitals a supplementary low
income patient adjustment determined in accordance with paragraph (b) of
this subdivision, provided all federal approvals necessary by federal
law and regulation for federal financial participation in payments made
for beneficiaries eligible for medical assistance under title XIX of the
federal social security act based upon the adjustment provided herein as
a component of such payments are granted. The adjustment may be made to
rates of payment or as aggregate payments to an eligible hospital.

* NB Effective until December 31, 2026

* (a) Notwithstanding any inconsistent provision of this section,
payment for inpatient hospital services for persons eligible for
payments made by state governmental agencies for rate periods during the
period January first, nineteen hundred ninety-one through June
thirtieth, nineteen hundred ninety-six applicable to patients eligible
for federal financial participation under title XIX of the federal
social security act in medical assistance provided pursuant to title
eleven of article five of the social services law determined in
accordance with this section shall include for eligible general
hospitals a supplementary low income patient adjustment determined in
accordance with paragraph (b) of this subdivision, provided all federal
approvals necessary by federal law and regulation for federal financial
participation in payments made for beneficiaries eligible for medical
assistance under title XIX of the federal social security act based upon
the adjustment provided herein as a component of such payments are
granted. The adjustment may be made to rates of payment or as aggregate
payments to an eligible hospital.

* NB Effective December 31, 2026

* (b) A supplementary low income patient adjustment for the period
January first, nineteen hundred ninety-one through December
thirty-first, nineteen hundred ninety-three shall be determined, subject
to the provisions of subparagraph (iv) of this paragraph, and for the
period January first, nineteen hundred ninety-four through December
thirty-first, nineteen hundred ninety-six shall be determined for each
eligible hospital according to the scale specified in subparagraph (iii)
of this paragraph based upon the amount calculated by multiplying the
applicable supplemental percentage coverage of need amount for the
hospital by the hospital's need as defined in paragraph (b) of
subdivision fourteen of this section; provided, however, that for the
period January first, nineteen hundred ninety-four through December
thirty-first, nineteen hundred ninety-six if the sum of the adjustments
pursuant to clause (C) of subparagraph (iii) of this paragraph would
exceed thirty-six million dollars for a rate year on an annualized basis
the supplemental percentage coverage of need scale pursuant to clause
(C) of subparagraph (iii) of this paragraph shall be reduced on a pro
rata basis so that the sum of such adjustments provided for the rate
year on an annualized basis shall not exceed thirty-six million dollars.

(i) The low income patient percentage of a general hospital shall be
defined as the ratio of the sum of inpatient discharges of patients
eligible for medical assistance pursuant to title eleven of article five
of the social services law plus inpatient discharges of self-pay
patients plus inpatient discharges of charity care patients divided by
total inpatient discharges expressed as a percentage. For the period
January first, nineteen hundred ninety-one through December
thirty-first, nineteen hundred ninety-three, the percentages shall be
calculated based on base year nineteen hundred eighty-nine, received by
the department no later than November first, nineteen hundred ninety,
data from the statewide planning and research cooperative system
consistent with data submitted in accordance with section twenty-eight
hundred five-a of this article. For the period January first, nineteen
hundred ninety-four through December thirty-first, nineteen hundred
ninety-six, the percentages shall be calculated based on base year
nineteen hundred ninety-one, received by the department no later than
November first, nineteen hundred ninety-three, data from the statewide
planning and research cooperative system consistent with data submitted
in accordance with section twenty-eight hundred five-a of this article.
In order to be eligible for an adjustment pursuant to this subdivision,
a hospital must maintain its collection efforts to obtain payment in
full from self-pay patients.

(ii) For the period January first, nineteen hundred ninety-one through
December thirty-first, nineteen hundred ninety-three, hospital need
shall be calculated based on base year nineteen hundred eighty-nine
data. For the period January first, nineteen hundred ninety-four through
December thirty-first, nineteen hundred ninety-six, hospital need shall
be calculated based on base year nineteen hundred ninety-one data.

(iii)(A) The scale utilized for development of a hospital's
supplementary low income patient adjustment shall be as follows for the
period January first, nineteen hundred ninety-one through June
thirtieth, nineteen hundred ninety-one:

Low Income Supplemental Percentage

Patient Percentage Coverage of Need

50+ 55% 5%

55+ 60% 10%

60+ 65% 15%

65+ 70% 22.5%

70+ 75% 30%

75+ 80% 37.5%

80+ 45%

(B) The scale utilized for development of a hospital's supplementary
low income adjustment shall be as follows for the period July first,
nineteen hundred ninety-one for a public general hospital through
December thirty-first, nineteen hundred ninety-six and for a voluntary
non-profit or a private proprietary general hospital through September
thirtieth, nineteen hundred ninety-two:

Low Income Supplemental Percentage

Patient Percentage Coverage of Need

35+ 55% 20%

55+ 60% 25%

60+ 65% 30%

65+ 70% 37.5%

70+ 45%

(C) The scale utilized for development of a voluntary non-profit or
private proprietary general hospital's supplementary low income patient
adjustment shall be as follows for the period October first, nineteen
hundred ninety-two through March thirty-first, nineteen hundred
ninety-three and for the period January first, nineteen hundred
ninety-four through December thirty-first, nineteen hundred ninety-six:

Low Income Supplemental Percentage

Patient Percentage Coverage of Need

35+ 50% 10%

50+ 55% 20%

55+ 60% 25%

60+ 65% 30%

65+ 70% 37.5%

70+ 45%

(D) The scale utilized for development of a voluntary non-profit or
private proprietary general hospital's supplementary low income patient
adjustment for the period May fifteenth, nineteen hundred ninety-three
through December thirty-first, nineteen hundred ninety-three shall be at
one hundred twenty percent of the supplemental percentage coverage of
need scale specified in clause (C) of this subparagraph.

(iv) A supplementary low income patient adjustment determined
according to the scale specified in subparagraph (iii) of this paragraph
shall be limited for rate periods during the period January first,
nineteen hundred ninety-one through December thirty-first, nineteen
hundred ninety-three such that the amount of such adjustment for an
eligible hospital, plus the amount committed to the regional pools in
accordance with paragraph (c) of subdivision fourteen of this section
and paragraph (a) of subdivision nineteen of this section for the rate
period that would be allocated to such hospital, plus, if applicable,
any distribution for the rate period pursuant to paragraph (d) of
subdivision nineteen of this section for such hospital, and plus for a
major public general hospital the amount of any supplementary bad debt
and charity care adjustment provided pursuant to subdivision fourteen-a
of this section for the rate period shall not exceed ninety percent of
need.

(v) The provisions of this subdivision shall not apply to a general
hospital eligible for distributions made pursuant to paragraph (c) of
subdivision nineteen of this section.

* NB Effective until December 31, 2026

* (b) A supplementary low income patient adjustment for the period
January first, nineteen hundred ninety-one through December
thirty-first, nineteen hundred ninety-three shall be determined, subject
to the provisions of subparagraph (iv) of this paragraph, and for the
period January first, nineteen hundred ninety-four through June
thirtieth, nineteen hundred ninety-six shall be determined for each
eligible hospital according to the scale specified in subparagraph (iii)
of this paragraph based upon the amount calculated by multiplying the
applicable supplemental percentage coverage of need amount for the
hospital by the hospital's need as defined in paragraph (b) of
subdivision fourteen of this section; provided, however, that for the
period January first, nineteen hundred ninety-four through June
thirtieth, nineteen hundred ninety-six if the sum of the adjustments
pursuant to clause (C) of subparagraph (iii) of this paragraph would
exceed thirty-six million dollars for a rate year on an annualized basis
the supplemental percentage coverage of need scale pursuant to clause
(C) of subparagraph (iii) of this paragraph shall be reduced on a pro
rate basis so that the sum of such adjustments provided for the rate
year on an annualized basis shall not exceed thirty-six million dollars.

(i) The low income patient percentage of a general hospital shall be
defined as the ratio of the sum of inpatient discharges of patients
eligible for medical assistance pursuant to title eleven of article five
of the social services law plus inpatient discharges of self-pay
patients plus inpatient discharges of charity care patients divided by
total inpatient discharges expressed as a percentage. For the period
January first, nineteen hundred ninety-one through December
thirty-first, nineteen hundred ninety-three, the percentages shall be
calculated based on base year nineteen hundred eighty-nine, received by
the department no later than November first, nineteen hundred ninety,
data from the statewide planning and research cooperative system
consistent with data submitted in accordance with section twenty-eight
hundred five-a of this article. For the period January first, nineteen
hundred ninety-four through June thirtieth, nineteen hundred ninety-six,
the percentages shall be calculated based on base year nineteen hundred
ninety-one, received by the department no later than November first,
nineteen hundred ninety-three, data from the statewide planning and
research cooperative system consistent with data submitted in accordance
with section twenty-eight hundred five-a of this article. In order to be
eligible for an adjustment pursuant to this subdivision, a hospital must
maintain its collection efforts to obtain payment in full from self-pay
patients.

(ii) For the period January first, nineteen hundred ninety-one through
December thirty-first, nineteen hundred ninety-three, hospital need
shall be calculated based on base year nineteen hundred eighty-nine
data. For the period January first, nineteen hundred ninety-four through
June thirtieth, nineteen hundred ninety-six, hospital need shall be
calculated based on base year nineteen hundred ninety-one data.

(iii)(A) The scale utilized for development of a hospital's
supplementary low income patient adjustment shall be as follows for the
period January first, nineteen hundred ninety-one through June
thirtieth, nineteen hundred ninety-one:

Low Income Supplemental Percentage

Patient Percentage Coverage of Need

50+ 55% 5%

55+ 60% 10%

60+ 65% 15%

65+ 70% 22.5%

70+ 75% 30%

75+ 80% 37.5%

80+ 45%

(B) The scale utilized for development of a hospital's supplementary
low income adjustment shall be as follows for the period July first,
nineteen hundred ninety-one for a public general hospital through June
thirtieth, nineteen hundred ninety-six and for a voluntary non-profit or
a private proprietary general hospital through September thirtieth,
nineteen hundred ninety-two:

Low Income Supplemental Percentage

Patient Percentage Coverage of Need

35+ 55% 20%

55+ 60% 25%

60+ 65% 30%

65+ 70% 37.5%

70+ 45%

(C) The scale utilized for development of a voluntary non-profit or
private proprietary general hospital's supplementary low income patient
adjustment shall be as follows for the period October first, nineteen
hundred ninety-two through March thirty-first, nineteen hundred
ninety-three and for the period January first, nineteen hundred
ninety-four through June thirtieth, nineteen hundred ninety-six:

Low Income Supplemental Percentage

Patient Percentage Coverage of Need

35+ 50% 10%

50+ 55% 20%

55+ 60% 25%

60+ 65% 30%

65+ 70% 37.5%

70+ 45%

(D) The scale utilized for development of a voluntary non-profit or
private proprietary general hospital's supplementary low income patient
adjustment for the period May fifteenth, nineteen hundred ninety-three
through December thirty-first, nineteen hundred ninety-three shall be at
one hundred twenty percent of the supplemental percentage coverage of
need scale specified in clause (C) of this subparagraph.

(iv) A supplementary low income patient adjustment determined
according to the scale specified in subparagraph (iii) of this paragraph
shall be limited for rate periods during the period January first,
nineteen hundred ninety-one through December thirty-first, nineteen
hundred ninety-three such that the amount of such adjustment for an
eligible hospital, plus the amount committed to the regional pools in
accordance with paragraph (c) of subdivision fourteen of this section
and paragraph (a) of subdivision nineteen of this section for the rate
period that would be allocated to such hospital, plus, if applicable,
any distribution for the rate period pursuant to paragraph (d) of
subdivision nineteen of this section for such hospital, and plus for a
major public general hospital the amount of any supplementary bad debt
and charity care adjustment provided pursuant to subdivision fourteen-a
of this section for the rate period shall not exceed ninety percent of
need.

(v) The provisions of this subdivision shall not apply to a general
hospital eligible for distributions made pursuant to paragraph (c) of
subdivision nineteen of this section.

* NB Effective December 31, 2026

(c) A supplementary low income patient adjustment provided in
accordance with this subdivision for rate periods during the period
January first, nineteen hundred ninety-one through December
thirty-first, nineteen hundred ninety-three shall be adjusted to reflect
actual distributions pursuant to paragraphs (a) and (b) of subdivision
seventeen of this section and paragraph (d) of subdivision nineteen of
this section and adjustments provided pursuant to subdivision fourteen-a
of this section.

(d) Notwithstanding any inconsistent provision of law, a voluntary
non-profit or proprietary general hospital where the low income patient
percentage, as determined in accordance with provisions of this
subdivision, is between thirty-five and sixty-five percent shall be
charged an assessment which for the period July first, nineteen hundred
ninety-one through December thirty-first, nineteen hundred ninety-one
shall equal five percent of the general hospital's bad debt and charity
care need as determined in accordance with paragraph (b) of subdivision
fourteen of this section and for the period January first, nineteen
hundred ninety-two through September thirtieth, nineteen hundred
ninety-two shall equal seven and one-half percent of the general
hospital's bad debt and charity care need as determined in accordance
with paragraph (b) of subdivision fourteen of this section. Such
assessment shall be paid to the commissioner or his designee prior to
October first, nineteen hundred ninety-two in accordance with a schedule
established by the commissioner. The assessments may be administered in
accordance with the provisions of paragraph (c) of subdivision sixteen
of this section applicable to bad debt and charity care regional pools.
Payments of the assessments shall be due and arrearages shall be treated
in accordance with the provisions of subdivision twenty of this section
applicable to bad debt and charity care regional pools. Funds
accumulated shall be deposited by the commissioner and credited to the
department of social services medical assistance program general fund -
local assistance account appropriation.

* (e) Notwithstanding any inconsistent provision of law, the
provisions of paragraphs (a) and (b) of this subdivision shall not apply
to payments for patients discharged on or after January first, nineteen
hundred ninety-seven.

* NB Expires December 31, 2026

* 14-f. Public general hospital indigent care adjustment.
Notwithstanding any inconsistent provision of this section and subject
to the availability of federal financial participation, payment for
inpatient hospital services for persons eligible for payments made by
state governmental agencies for the period January first, nineteen
hundred ninety-seven through December thirty-first, nineteen hundred
ninety-nine and periods on and after January first, two thousand
applicable to patients eligible for federal financial participation
under title XIX of the federal social security act in medical assistance
provided pursuant to title eleven of article five of the social services
law determined in accordance with this section shall include for
eligible public general hospitals a public general hospital indigent
care adjustment equal to the aggregate amount of the adjustments
provided for such public general hospital for the period January first,
nineteen hundred ninety-six through December thirty-first, nineteen
hundred ninety-six pursuant to subdivisions fourteen-a and fourteen-d of
this section on an annualized basis, provided, however, that for periods
on and after January first, two thousand thirteen an annual amount of
four hundred twelve million dollars shall be allocated to eligible major
public hospitals based on each hospital's proportionate share of
medicaid and uninsured losses to total medicaid and uninsured losses for
all eligible major public hospitals, net of any disproportionate share
hospital payments received pursuant to sections twenty-eight hundred
seven-k and twenty-eight hundred seven-w of this article. The adjustment
may be made to rates of payment or as aggregate payments to an eligible
hospital.

* NB Effective until December 31, 2026

* 14-f. Public general hospital indigent care adjustment.
Notwithstanding any inconsistent provision of this section, payment for
inpatient hospital services for persons eligible for payments made by
state governmental agencies for the period January first, nineteen
hundred ninety-seven through December thirty-first, nineteen hundred
ninety-nine applicable to patients eligible for federal financial
participation under title XIX of the federal social security act in
medical assistance provided pursuant to title eleven of article five of
the social services law determined in accordance with this section shall
include for eligible public general hospitals a public general hospital
indigent care adjustment equal to the aggregate amount of the
adjustments provided for such public general hospital for the period
January first, nineteen hundred ninety-six through December
thirty-first, nineteen hundred ninety-six pursuant to subdivisions
fourteen-a and fourteen-d of this section on an annualized basis,
provided all federal approvals necessary by federal law and regulation
for federal financial participation in payments made for beneficiaries
eligible for medical assistance under title XIX of the federal social
security act based upon the adjustment provided herein as a component of
such payments are granted. The adjustment may be made to rates of
payment or as aggregate payments to an eligible hospital.

* NB Effective and repealed December 31, 2026

15. Special provisions for payments by governmental agencies. In the
event that federal financial participation in payments made for
beneficiaries eligible for medical assistance under title XIX of the
federal social security act based upon the allowance specified in
paragraph (c) of subdivision fourteen of this section as a component of
such payments is not approved by the federal government, rates of
payment by governmental agencies for the operating cost component of
general hospital inpatient services shall be increased for each hospital
by the same percentage allowance as each hospital's federal fiscal year
nineteen hundred eighty-seven disproportionate share payment adjustment
factor for revenues received from services provided to beneficiaries of
title XVIII of the federal social security act (medicare) as determined
in accordance with the provisions of section eighteen hundred
eighty-six-d of title XVIII of the federal social security act
(medicare). Increased amounts received by general hospitals in
accordance with the provision of this subdivision shall be offset
against distributions to such hospitals that were made or would be made
pursuant to the provisions contained in subdivisions seventeen and
nineteen of this section. In the event that distributions had been made
to such hospitals pursuant to such subdivisions, the hospital shall, on
a proportional basis, return to the pool from which the distributions
were made an amount equal to the increased amounts received under this
subdivision to the extent that such increased amounts do not exceed
distributions made. Funds in the statewide pool created in accordance
with subdivision sixteen of this section, which would have been
distributed in accordance with paragraph (c) of subdivision nineteen of
this section if the provisions of this subdivision were not in effect,
less any amounts not distributed as the result of the offset provisions
of this subdivision shall be distributed to regional pools to the extent
that such funds are available and necessary to maintain regional pool
distributions, with consideration of the offset provisions in this
subdivision, at the levels that would be available pursuant to the
provisions of subdivision fourteen of this section if the provisions of
this subdivision did not apply.

16. Bad debt and charity care regional pools and bad debt and charity
care and capital statewide pool, general. (a) Funds will be made
available in bad debt and charity care regional pools created by the
commissioner for distributions in accordance with subdivision seventeen
of this section through the submissions by or on behalf of general
hospitals of the allowance included in rates and charges in accordance
with paragraph (c) of subdivision fourteen of this section and through
the transfer of funds available from the bad debt and charity care and
capital statewide pool in accordance with paragraph (a) of subdivision
nineteen of this section. Funds will be made available for distributions
in accordance with subdivision nineteen of this section from a bad debt
and charity care and capital statewide pool created by the commissioner
through the submissions by general hospitals of the amount of the
assessments authorized in accordance with subdivision eighteen of this
section.

(b) The regions are established as the article forty-three insurance
plan regions, with the exception that the southern sixteen counties
shall be divided into three regions for the purposes of subdivisions
fourteen and seventeen of this section with separate regions consisting
of Richmond, Manhattan, Bronx, Queens and Kings counties; Nassau and
Suffolk counties; and Delaware, Columbia, Ulster, Sullivan, Orange,
Dutchess, Putnam, Rockland and Westchester counties. Such regions shall
be the same regions established and in effect January first, nineteen
hundred eighty-five. The council with the approval of the commissioner
may combine regions, with the exception of the above specified regions
for the southern sixteen counties, upon application of the article
forty-three insurance law plans involved and a demonstration that
significant inequities would not occur.

(c) For periods prior to January first, two thousand five, the
commissioner and the commissioner of social services are authorized to
contract with the article forty-three insurance law plans, or if not
available such other administrators as the commissioner and the
commissioner of social services shall designate, to receive funds for
the bad debt and charity care regional pools and/or the bad debt and
charity care and capital statewide pool and distribute funds from such
pools. In the event contracts with the article forty-three insurance law
plans or other commissioners' designees are effectuated, the
commissioner and the commissioner of social services shall jointly
conduct or cause to be conducted annual audits of the receipt and
distribution of the pooled funds. The reasonable costs and expenses of a
pool administrator as approved by the commissioner and the commissioner
of social services, not to exceed for personnel services on an annual
basis four hundred thousand dollars for all pools, shall be paid from
the pooled funds. Such pool administrator or pool administrators shall
be acting on behalf of the state medical assistance program provided
pursuant to title eleven of article five of the social services law in
the distribution to hospitals pursuant to subdivisions fourteen-c,
seventeen and paragraphs (c) and (d) of subdivision nineteen of this
section of pooled funds.

(d) In order for a general hospital to participate in the distribution
of funds from the pools, the general hospital must implement collection
policies and procedures approved by the commissioner.

(e) In order for a general hospital to be eligible for distribution of
funds from the pools, such general hospital if it provides obstetrical
care and services must agree to participate in a program approved by the
department for the provision of prenatal care to persons eligible for
medical assistance or medically indigent persons if requested by such a
program. Nothing stated herein shall require a hospital to grant
admitting privileges to a physician solely because such person is part
of an approved program. The participation of hospitals in an approved
program shall include, but not be limited to:

(i) arrangements with designated prenatal care providers for
prebooking pregnant women for approximate delivery time, and provision
of staff and facilities for the delivery and necessary postpartum care
for women and infants involved in such programs;

(ii) a system for medical record transfer from a prenatal care
provider to hospital staff participating in delivery and for the
transfer of information regarding hospital delivery and care back to the
prenatal care provider for postpartum follow-up; and

(iii) an agreement with designated prenatal care providers to accept
the care of high risk patients on a referral basis and/or to provide
special tests and procedures which are not ordinarily available to
prenatal care clinics if such hospital is capable of caring for high
risk patients and/or providing special tests and procedures.

(f) The council may adopt regulations subject to the approval of the
commissioner to allow advanced distributions from these pools to a
general hospital qualifying for distributions in accordance with
paragraph (c) of subdivision nineteen of this section, based on a
demonstration by the hospital that there is an inability to finance
current obligations and obtain needed working capital.

* (g) Notwithstanding any inconsistent provision of law to the
contrary, from interest heretofore earned or hereinafter earned on funds
in bad debt and charity care regional pools and the bad debt and charity
care and capital statewide pool established pursuant to this section,
such amounts as shall be necessary, within amounts appropriated, shall
be reallocated to, and the state comptroller is hereby authorized and
directed to receive for deposit to, the credit of the department of
health's special revenue fund - other, hospital based grants program
account, for purposes of services and expenses related to general
hospital based grant programs for the period April first, nineteen
hundred ninety-four through June thirtieth, nineteen hundred ninety-six
and for the period July first, nineteen hundred ninety-six through March
thirty-first, nineteen hundred ninety-seven.

* NB Effective until December 31, 2026

* (g) Notwithstanding any inconsistent provision of law to the
contrary, from interest heretofore earned or hereinafter earned on funds
in bad debt and charity care regional pools and the bad debt and charity
care and capital statewide pool established pursuant to this section,
such amounts as shall be necessary, within amounts appropriated, shall
be reallocated to, and the state comptroller is hereby authorized and
directed to receive for deposit to, the credit of the department of
health's special revenue fund - other, hospital based grants program
account, for purposes of services and expenses related to general
hospital based grant programs for the period April first, nineteen
hundred ninety-four through June thirtieth, nineteen hundred ninety-six.

* NB Effective December 31, 2026

16-a. Pool administration, general. (a) If a general hospital fails to
timely file a report with the department of funds due to a regional pool
or a statewide pool established pursuant to this section, the
commissioner may estimate the amount due from such hospital based on
available financial and statistical data and may collect in accordance
with subdivision twenty of this section any amount due based on such
estimate as a deficiency in payments to such regional pool or statewide
pool with interest and penalties. The commissioner shall provide a
general hospital with notice of any estimate of the amount due pursuant
to this paragraph at least three days prior to collection of a
deficiency by the commissioner. Such notice shall contain the financial
basis for the commissioner's estimate.

* (b) Notwithstanding any inconsistent provision of section one
hundred twelve or one hundred seventy-four of the state finance law or
any other law, at the discretion of the commissioner and the
commissioner of social services without a competitive bid or request for
proposal process, regional pool and statewide pool administration
contracts in effect for rate year nineteen hundred ninety-three may be
extended for administration of regional pools and statewide pools
established for rate years nineteen hundred ninety-four and nineteen
hundred ninety-five and nineteen hundred ninety-six to provide an
uninterrupted continuation of services and may be amended as may be
necessary.

* NB Effective until December 31, 2026

* (b) Notwithstanding any inconsistent provision of section one
hundred twelve or one hundred seventy-four of the state finance law or
any other law, at the discretion of the commissioner and the
commissioner of social services without a competitive bid or request for
proposal process, regional pool and statewide pool administration
contracts in effect for rate year nineteen hundred ninety-three may be
extended for administration of regional pools and statewide pools
established for rate years nineteen hundred ninety-four and nineteen
hundred ninety-five and for the rate period January first, nineteen
hundred ninety six through June thirtieth, nineteen hundred ninety-six
to provide an uninterrupted continuation of services and may be amended
as may be necessary.

* NB Effective December 31, 2026

17. Bad debt and charity care regional pool distributions. Funds
accumulated in bad debt and charity care regional pools, including
income from invested funds, from the allowance specified in paragraph
(c) of subdivision fourteen of this section and funds accumulated in bad
debt and charity care regional pools, including income from invested
funds, from the transfer of funds available from the bad debt and
charity care and capital statewide pool in accordance with paragraph (a)
of subdivision nineteen of this section shall be deposited by the
commissioner and credited to a special revenue-other fund to be
established by the comptroller. To the extent of funds appropriated
therefor, funds shall be made available for distribution by or on behalf
of the state, as payments under the state medical assistance program
provided pursuant to title eleven of article five of the social services
law, from bad debt and charity care regional pools in accordance with
the following methodology and sequence:

(a) For the nineteen hundred eighty-eight, nineteen hundred
eighty-nine and for that portion of the nineteen hundred ninety rate
year beginning on January first and ending on June thirtieth, each
eligible major public general hospital shall receive a portion of its
bad debt and charity care need equal to one hundred two percent of the
result of the application of its percentage of statewide inpatient
reimbursable costs excluding costs related to services provided to
beneficiaries of title XVIII of the federal social security act
(medicare), developed on the basis of nineteen hundred eighty-five
financial and statistical reports, to the total of all regional pools.
For that portion of the nineteen hundred ninety rate year beginning on
July first and ending on December thirty-first and in the annual rate
years beginning on or after January first, nineteen hundred ninety-one,
each eligible major public general hospital shall receive a portion of
its bad debt and charity care need equal to one hundred ten percent of
the result of the application of its percentage of statewide inpatient
reimbursable costs excluding costs related to services provided to
beneficiaries of title XVIII of the federal social security act
(medicare), developed on the basis of nineteen hundred eighty-five
financial and statistical reports, to the total of all regional pools.

(b) (i) Funds remaining in the regional pools after distribution in
accordance with paragraph (a) of this subdivision shall be distributed
to voluntary non-profit, private proprietary and public general
hospitals, other than major public general hospitals, on the basis of
each hospital's targeted need share. For the rate year beginning January
first, nineteen hundred eighty-eight, an individual hospital's targeted
need share shall be defined as the relationship between each hospital's
nineteen hundred eighty-six nominal payment amount as defined in
subparagraph (i) of paragraph (c) of subdivision fourteen of this
section to the nineteen hundred eighty-six nominal payment amounts for
all hospitals in the region other than major public general hospitals.
For annual rate years beginning on or after January first, nineteen
hundred eighty-nine, the base need shall be the calendar year which is
two years prior to the rate year. The amount of funds to be distributed
in accordance with this paragraph and paragraph (a) of this subdivision
shall be limited to the amount of funds accumulated in the pools.

(ii) Notwithstanding any inconsistent provision of this section,
commencing April first, nineteen hundred ninety-five funds remaining in
the regional pools after distribution in accordance with paragraph (a)
of this subdivision shall be aggregated on a statewide basis and treated
as a common pool for statewide distributions and distributed to
voluntary non-profit, private proprietary and public general hospitals,
other than major public general hospitals, on the basis of each
hospital's targeted need share defined as the relationship between each
hospital's base year nominal payment amount as defined in subparagraph
(i) of paragraph (c) of subdivision fourteen of this section to the base
year nominal payment amounts for all hospitals statewide other than
major public general hospitals.

(d) The department may provide for interim payments to general
hospitals of funds available for distribution from regional pools
pursuant to this subdivision, subject to reasonable retainage for
adjustments, subsequently reconciled to amounts due determined in
accordance with this subdivision.

(e) Notwithstanding any inconsistent provision of this section, in the
event funds available pursuant to paragraph (b-1) of subdivision
nineteen of this section for programs to provide health care coverage
for uninsured or underinsured children are inadequate to provide
coverage to all eligible children for whom application for coverage is
made in a rate period, such additional amounts not to exceed twenty-five
million dollars for nineteen hundred ninety-four as shall be necessary
to provide such coverage shall be reserved by the commissioner from the
amount to be available in bad debt and charity care regional pools for
such rate period for additional distributions to such programs. Ten
million dollars of the amount reserved for nineteen hundred ninety-four
shall not result in a decrease to disproportionate share payments to
hospitals.

18. Bad debt and charity care and capital statewide pool funding.
* The commissioner shall create a bad debt and charity care and capital
statewide pool which shall be funded by a transfer of funds, which is
hereby authorized, for the period January first, nineteen hundred
ninety-five through December thirty-first, nineteen hundred ninety-five,
the period January first, nineteen hundred ninety-six through June
thirtieth, nineteen hundred ninety-six and the period July first,
nineteen hundred ninety-six through December thirty-first, nineteen
hundred ninety-six equal to seven million five hundred thousand dollars
for the nineteen hundred ninety-five period, three million seven hundred
fifty thousand dollars for the January first, nineteen hundred
ninety-six through June thirtieth, nineteen hundred ninety-six period
and three million seven hundred fifty thousand dollars for the July
first, nineteen hundred ninety-six through December thirty-first,
nineteen hundred ninety-six period to be submitted to a statewide pool,
as designated by the commissioner, from the medical malpractice
insurance association pursuant to section five thousand five hundred
sixteen-c of the insurance law and through an assessment which shall be
charged to general hospitals. In the event that the transfers of funds
authorized by section five thousand five hundred sixteen-c of the
insurance law do not occur by January first, nineteen hundred
ninety-five, January first, nineteen hundred ninety-six and August
first, nineteen hundred ninety-six respectively, the commissioner for
each period for which such transfer from the medical malpractice
insurance association has not occurred shall transfer seven million five
hundred thousand dollars for the nineteen hundred ninety-five period,
three million seven hundred fifty thousand dollars for the January
first, nineteen hundred ninety-six through June thirtieth, nineteen
hundred ninety-six period and three million seven hundred fifty thousand
dollars for the July first, nineteen hundred ninety-six through December
thirty-first, nineteen hundred ninety-six period from regional or
statewide pool reserves for pools established pursuant to this section
and section twenty-eight hundred eight-c or twenty-eight hundred seven-a
of this article to the bad debt and charity care and capitol statewide
pool established pursuant to this subdivision. Such assessment shall be
submitted to a statewide pool as designated by the commissioner and
distributed on a monthly basis in accordance with subdivision twenty of
this section. The assessment shall be:

* NB Effective until December 31, 2026

* The commissioner shall create a bad debt and charity care and
capital statewide pool which shall be funded by a transfer of funds,
which is hereby authorized, for the period January first, nineteen
hundred ninety-five through December thirty-first, nineteen hundred
ninety-five and the period January first, nineteen hundred ninety-six
through June thirtieth, nineteen hundred ninety-six equal to seven
million five hundred thousand dollars for the nineteen hundred
ninety-five period and three million seven hundred fifty thousand
dollars for the January first, nineteen hundred ninety-six through June
thirtieth, nineteen hundred ninety-six period to be submitted to a
statewide pool, as designated by the commissioner, from the medical
malpractice insurance association pursuant to section five thousand five
hundred sixteen-c of the insurance law and through an assessment which
shall be charged to general hospitals. In the event that the transfers
of funds authorized by section five thousand five hundred sixteen-c of
the insurance law do not occur by January first, nineteen hundred
ninety-five and January first nineteen hundred ninety-six respectively,
the commissioner for each period for which such transfer from the
medical malpractice insurance association has not occurred shall
transfer seven million five hundred thousand dollars for the nineteen
hundred ninety-five period and three million seven hundred fifty
thousand dollars for the January first, nineteen hundred ninety-six
through June thirtieth, nineteen hundred ninety-six period from regional
or statewide pool reserves for pools established pursuant to this
section and section twenty-eight hundred eight-c or twenty-eight hundred
seven-a of this article to the bad debt and charity care and capital
statewide pool established pursuant to this subdivision. Such assessment
shall be submitted to a statewide pool as designated by the commissioner
and distributed on a monthly basis in accordance with subdivision twenty
of this section. The assessment shall be:

* NB Effective December 31, 2026

* (a) one and seventy-five thousandths percent of each general
hospital's gross revenue received for inpatient hospital services
provided during the period January first, nineteen hundred eighty-eight
through December thirty-first, nineteen hundred eighty-eight; one and
five hundredths percent of each general hospital's gross revenue
received for inpatient hospital services provided during the period
January first, nineteen hundred eighty-nine through December
thirty-first, nineteen hundred eighty-nine; and one percent of each
general hospital's gross revenue received for inpatient hospital
services provided during annual periods beginning on or after January
first, nineteen hundred ninety through December thirty-first, nineteen
hundred ninety-nine and on or after January first, two thousand,

* NB Effective until December 31, 2026

* (a) one and seventy-five thousandths percent of each general
hospital's gross revenue received for inpatient hospital services
provided during the period January first, nineteen hundred eighty-eight
through December thirty-first, nineteen hundred eighty-eight; one and
five hundredths percent of each general hospital's gross revenue
received for inpatient hospital services provided during the period
January first, nineteen hundred eighty-nine through December
thirty-first, nineteen hundred eighty-nine; and one percent of each
general hospital's gross revenue received for inpatient hospital
services provided during annual periods beginning on or after January
first, nineteen hundred ninety through December thirty-first, nineteen
hundred ninety-nine,

* NB Effective and expires December 31, 2026

* (a) one and seventy-five thousandths percent of each general
hospital's gross revenue received for inpatient hospital services
provided during the period January first, nineteen hundred eighty-eight
through December thirty-first, nineteen hundred eighty-eight; one and
five hundredths percent of each general hospital's gross revenue
received for inpatient hospital services provided during the period
January first, nineteen hundred eighty-nine through December
thirty-first, nineteen hundred eighty-nine; and one percent of each
general hospital's gross revenue received for inpatient hospital
services provided during annual rate periods beginning on or after
January first, nineteen hundred ninety,

* NB Effective December 31, 2026

* (b) provided, however, subject to the provisions of paragraph (e) of
this subdivision there shall be no assessment against those voluntary
non-profit and private proprietary general hospitals which qualify for
distributions made in accordance with paragraph (c) of subdivision
nineteen of this section, or for the annual assessment period January
first, nineteen hundred ninety-seven through December thirty-first,
nineteen hundred ninety-seven which qualified for distributions made in
accordance with paragraph (c) of subdivision nineteen of this section as
of December thirty-first, nineteen hundred ninety-five, and

* NB Effective until December 31, 2026

* (b) provided, however, subject to the provisions of paragraph (e) of
this subdivision there shall be no assessment against those voluntary
non-profit and private proprietary general hospitals which qualify for
distributions made in accordance with paragraph (c) of subdivision
nineteen of this section, and

* NB Effective December 31, 2026

* (c) provided further, however, subject to the provisions of
paragraph (e) of this subdivision the assessment against those voluntary
non-profit and private proprietary general hospitals which qualified for
distributions made in accordance with paragraph (c) of subdivision
nineteen of this section as of December thirty-first, nineteen hundred
ninety-five shall for the annual assessment period January first,
nineteen hundred ninety-eight through December thirty-first, nineteen
hundred ninety-eight be abated in the amount of three-quarters of one
percent of gross revenue received and for the annual assessment period
January first, nineteen hundred ninety-nine through December
thirty-first, nineteen hundred ninety-nine be abated in the amount of
one-quarter of one percent of gross revenue received.

* NB Effective until December 31, 2026

* (c) provided further, however, subject to the provisions of
paragraph (e) of this subdivision the assessment against those voluntary
non-profit and private proprietary general hospitals which qualified for
distributions made in accordance with paragraph (b) of subdivision
sixteen of section twenty-eight hundred seven-a of this article during
the nineteen hundred eighty-seven rate period or qualified for
distributions made in accordance with paragraph (c) of subdivision
nineteen of this section during a rate period or rate periods but which
do not continue to qualify for distributions made in accordance with
paragraph (c) of subdivision nineteen of this section during a rate
period or rate periods shall for the initial rate period in which such
general hospital does not continue to qualify for distributions made in
accordance with paragraph (c) of subdivision nineteen of this section be
abated in the amount of two-thirds of one percent of gross revenue
received and for the next succeeding annual rate period be abated in the
amount of one-third of one percent of gross revenue received.

* NB Effective December 31, 2026

* (d) Gross revenue received shall mean all moneys received for or on
account of inpatient hospital service, provided, however, that subject
to the provisions of paragraph (e) of this subdivision gross revenue
received shall not include distributions from bad debt and charity care
regional pools, health care services pools, bad debt and charity care
for financially distressed hospitals statewide pools and bad debt and
charity care and capital statewide pools created in accordance with this
section or distributions from funds allocated in accordance with section
twenty-eight hundred seven-l, twenty-eight hundred seven-k, twenty-eight
hundred seven-v or twenty-eight hundred seven-w of this article and
shall not include the components of rates of payment or charges related
to the allowances provided in accordance with subdivisions fourteen,
fourteen-b and fourteen-c of this section, the adjustment provided in
accordance with subdivision fourteen-a of this section, the adjustment
provided in accordance with subdivision fourteen-d of this section, the
adjustment for health maintenance organization reimbursement rates
provided in accordance with former subdivision two-a of this section,
payments made pursuant to paragraph (i) of subdivision thirty-five of
this section or, if effective, the adjustment provided in accordance
with subdivision fifteen of this section, the adjustment provided in
accordance with section eighteen of chapter two hundred sixty-six of the
laws of nineteen hundred eighty-six as amended, revenue received from
physician practice or faculty practice plan discrete billings for
private practicing physician services, revenue from affiliation
agreements or contracts with public hospitals for the delivery of health
care services at such public hospitals, revenue received as
disproportionate share hospital payments in accordance with title
nineteen of the federal social security act, or revenue from government
deficit financing, provided, however, that funds received as medical
assistance payments which include state share amounts authorized
pursuant to section twenty-eight hundred seven-v of this article that
are not disproportionate share hospital payments shall be included
within the meaning of gross revenue for purposes of this subdivision.

* NB Effective until December 31, 2026

* (d) Gross revenue received shall mean all moneys received for or on
account of inpatient hospital service, provided, however, that subject
to the provisions of paragraph (e) of this subdivision gross revenue
received shall not include distributions from bad debt and charity care
regional pools, health care services pools, bad debt and charity care
for financially distressed hospitals statewide pools and bad debt and
charity care and capital statewide pools created in accordance with this
section and shall not include the components of rates of payment or
charges related to the allowances provided in accordance with
subdivisions fourteen, fourteen-b and fourteen-c of this section, the
adjustment provided in accordance with subdivision fourteen-a of this
section, the adjustment provided in accordance with subdivision
fourteen-d of this section, the adjustment for health maintenance
organization reimbursement rates provided in accordance with subdivision
two-a of this section, or, if effective, the adjustment provided in
accordance with subdivision fifteen of this section or the adjustment
provided in accordance with section eighteen of chapter two hundred
sixty-six of the laws of nineteen hundred eighty-six as amended.

* NB Effective December 31, 2026

(e) Each exclusion of hospitals or sources of gross revenue received
from the assessments effective on or after October first, nineteen
hundred ninety-two established pursuant to this subdivision shall be
contingent upon either: (i) qualification of the assessments for waiver
pursuant to federal law and regulation; or, (ii) consistent with federal
law and regulation, not requiring a waiver by the secretary of the
department of health and human services related to such exclusion; in
order for the assessments under this section to be qualified as a
broad-based health care related tax for purposes of the revenues
received by the state pursuant to the assessments not reducing the
amount expended by the state as medical assistance for purposes of
federal financial participation. The commissioner shall collect the
assessments relying on such exclusions, pending any contrary action by
the secretary of the department of health and human services. In the
event the secretary of the department of health and human services
determines that the assessments do not so qualify based on any such
exclusion, then the exclusion shall be deemed to have been null and void
as of October first, nineteen hundred ninety-two and the commissioner
shall collect any retroactive amount due as a result, without interest
or penalty provided the hospital pays the retroactive amount due within
ninety days of notice from the commissioner to the hospital that the
exclusion is null and void. Interest and penalties shall be measured
from the due date of ninety days following notice from the commissioner
to the hospital.

(f) Payments of assessments and allowances required to be submitted by
general hospitals pursuant to this subdivision and subdivisions fourteen
and fourteen-b of this section and paragraph (a) of subdivision two of
section twenty-eight hundred seven-d of this article shall be subject to
audit by the commissioner for a period of six years following the close
of the calendar year in which such payments are due, after which such
payments shall be deemed final and not subject to further adjustment or
reconciliation, including through offset adjustments or reconciliations
made by general hospitals with regard to subsequent payments, provided,
however, that nothing herein shall be construed as precluding the
commissioner from pursuing collection of any such assessments and
allowances which are identified as delinquent within such six year
period, or which are identified as delinquent as a result of an audit
commenced within such six year audit period, or from conducting an audit
of any adjustment or reconciliation made by a general hospital within
such six year period, or from conducting an audit of payments made prior
to such six year period which are found to be commingled with payments
which are otherwise subject to timely audit pursuant to this section.
General hospitals which, in the course of such an audit, fail to produce
data or documentation requested in furtherance of such an audit, within
thirty days of such request may be assessed a civil penalty of up to ten
thousand dollars for each such failure, provided, however, that such
civil penalty shall not be imposed if the hospital demonstrates good
cause for such failure. The imposition of such civil penalties shall be
subject to the provisions of section twelve-a of this chapter.

(g) If a general hospital fails to produce data or documentation
requested in furtherance of an audit for a month to which an assessment
applies, the commissioner may estimate, based on available financial and
statistical data as determined by the commissioner, the amount due for
such month. If the impact of exemptions permitted pursuant to paragraph
(d) of this subdivision cannot be determined from such available
financial and statistical data the estimated amount due may be
calculated on the basis of the general hospital's aggregate gross
inpatient revenue amount, as determined from such available financial
and statistical data for the year subject to audit. Estimated amounts
due pursuant to this paragraph shall be paid by a general hospital
within sixty days or within such other time period as agreed to by the
commissioner and the facility. Thereafter the commissioner shall take
all necessary steps to collect amounts owed pursuant to this paragraph,
including by offsetting, or by directing the state comptroller to
offset, such amounts due from any other payments made by state
governmental agencies to the general hospital pursuant to this article.
Interest and penalties shall be applied to such amounts due in
accordance with the provisions of paragraph (c) of subdivision twenty of
this section.

(h) The commissioner shall take all necessary steps to collect
delinquent amounts owed pursuant to this subdivision, including by
recoupment or offsetting, or by directing the state comptroller to
offset, such amounts due from any other payments made by state
governmental agencies to the general hospital pursuant to this article.
Interest and penalties shall be applied to such amounts due in
accordance with the provisions of paragraph (c) of subdivision twenty of
this section. Delinquent amounts which have been referred for recoupment
or offset pursuant to this paragraph, or which have been referred to the
office of the attorney general for collection, shall be deemed final and
not subject to further revision or reconciliation by the commissioner
based on any additional reports or other information submitted by the
hospital, provided, however, that such delinquencies shall not be
referred for such recoupment or for such collection based on estimated
amounts unless the hospital has received written notification of such
delinquencies and has been given no less than thirty days in which to
submit delinquent reports.

(i) The commissioner may enter into agreements with general hospitals
subject to this subdivision, in regard to which audit findings or prior
settlements have been made pursuant to this subdivision, extending and
applying such audit findings or prior settlements or a portion thereof,
in settlement and satisfaction of potential audit liabilities for
subsequent un-audited periods. The commissioner may reduce or waive
payment of interest and penalties otherwise applicable to such
subsequent un-audited periods when such amounts due as a result of such
agreement, other than reduced or waived penalties and interest, are paid
in full to the commissioner or the commissioner's designee within sixty
days of execution of such agreement by all parties to the agreement. Any
payments made pursuant to agreements entered into in accordance with
this paragraph shall be deemed to be in full satisfaction of any
liability arising under this subdivision, as referenced in such
agreements and for the time periods covered by such agreements,
provided, however, that the commissioner may audit future retroactive
adjustments to payments made for such periods based on reports filed by
hospitals subsequent to such agreements.

19. Bad debt and charity care and capital statewide pool distribution.
* Funds accumulated in the statewide pool created by the assessment
authorized in accordance with subdivision eighteen of this section for
periods through December thirty-first, nineteen hundred ninety-six,
including income from invested funds, shall be distributed or retained
in accordance with the following sequence:

* NB Effective until December 31, 2026

* Funds accumulated in the statewide pool created by the assessment
authorized in accordance with subdivision eighteen of this section,
including income from invested funds, shall be distributed or retained
in accordance with the following sequence:

* NB Effective December 31, 2026

(a) Funds shall be distributed by the commissioner to bad debt and
charity care regional pools established pursuant to subdivision sixteen
of this section to provide additional funds for distribution from such
bad debt and charity care regional pools in accordance with subdivision
seventeen of this section equal to the amount computed as the difference
between the amount that would be available in such regional pools based
on a statewide determination of financial resources to be committed to
regional pools in each year in accordance with paragraph (c) of
subdivision fourteen of this section based upon a percentage factor
equal to five and ninety-three hundredths percent and the amount to be
available in such regional pools based on a statewide determination of
financial resources to be committed to regional pools in each year in
accordance with paragraph (c) of subdivision fourteen of this section
based upon a percentage factor equal to five and forty-eight hundredths
percent.

* (b) An amount not to exceed seventeen million dollars on an
annualized basis from the assessment through December thirty-first,
nineteen hundred ninety-six may annually be placed in a statewide
account in accordance with rules and regulations adopted by the council
and approved by the commissioner for the purpose of securing financing
of capital improvement projects for general hospitals qualifying for
distributions made in accordance with paragraph (c) of this subdivision.
Any reserved funds available on September first, nineteen hundred
ninety-seven and not obligated, in accordance with section twelve of
chapter nine hundred thirty-four of the laws of nineteen hundred
eighty-five as amended, for the purpose of securing financing of capital
improvement projects for general hospitals and any reserved funds that
thereafter become available may be transferred by the commissioner, in
consultation with the director of the budget and the dormitory
authority, to the health facility restructuring pool established
pursuant to section twenty-eight hundred fifteen of this article or to
the general hospital indigent care pool established pursuant to section
twenty-eight hundred seven-k of this article.

* NB Effective until December 31, 2026

* (b) An amount not to exceed seventeen million dollars may annually
be placed in a statewide account in accordance with rules and
regulations adopted by the council and approved by the commissioner for
the purpose of securing financing of capital improvement projects for
general hospitals qualifying for distributions made in accordance with
paragraph (c) of this subdivision.

* NB Effective December 31, 2026

* (b-1) An amount equal to: twenty million dollars annually for the
period January first, nineteen hundred ninety-one through December
thirty-first, nineteen hundred ninety-three; thirty million dollars for
the period January first, nineteen hundred ninety-four through December
thirty-first, nineteen hundred ninety-four; thirty-seven million five
hundred thousand dollars for the period January first, nineteen hundred
ninety-five through December thirty-first, nineteen hundred ninety-five;
eighteen million seven hundred fifty thousand dollars for the period
January first, nineteen hundred ninety-six through June thirtieth,
nineteen hundred ninety-six; and eighteen million seven hundred fifty
thousand dollars for the period July first, nineteen hundred ninety-six
through December thirty-first, nineteen hundred ninety-six shall
annually be reserved and accumulated from year to year by the
commissioner for distributions to programs to provide health care
coverage for uninsured or underinsured children. Such accumulated funds
shall not be used for any other purpose other than those authorized in
section twenty-five hundred ten and twenty-five hundred eleven of this
chapter. If on March thirty-first, nineteen hundred ninety-eight, any
funds accumulated during the period January first, nineteen hundred
ninety-one through December thirty-first, nineteen hundred ninety-seven
are unused or uncommitted for such distributions, such unused or
uncommitted funds shall be immediately transferred by the commissioner
to the health care initiatives pool established by the commissioner to
provide additional funds for distribution to programs to provide health
care coverage for uninsured or underinsured children pursuant to
sections twenty-five hundred ten and twenty-five hundred eleven of this
chapter. For cash flow purposes, the commissioner may borrow from
regional or statewide pool reserves for pools established pursuant to
this section such funds as shall be necessary not to exceed the amount
authorized to be reserved annually to meet premium requirements pursuant
to sections twenty-five hundred ten and twenty-five hundred eleven of
this chapter for a rate year and shall refund such moneys when pool
funds become available pursuant to this paragraph for such rate year.

* NB Effective until December 31, 2026

* (b-1) An amount equal to: twenty million dollars annually for the
period January first, nineteen hundred ninety-one through December
thirty-first, nineteen hundred ninety-three; thirty million dollars for
the period January first, nineteen hundred ninety-four through December
thirty-first, nineteen hundred ninety-four; thirty-seven million five
hundred thousand dollars for the period January first, nineteen hundred
ninety-five through December thirty-first, nineteen hundred ninety-five;
and eighteen million seven hundred fifty thousand dollars for the period
January first, nineteen hundred ninety-six through June thirtieth,
nineteen hundred ninety-six shall annually be reserved and accumulated
from year to year by the commissioner for distributions to programs to
provide health care coverage for uninsured or underinsured children.
Such accumulated funds shall not be used for any other purpose other
than those authorized in section twenty-five hundred ten and twenty-five
hundred eleven of this chapter. If on September thirtieth, nineteen
hundred ninety-seven, any funds accumulated during the period January
first, nineteen hundred ninety-one through June thirtieth, nineteen
hundred ninety-six are unused or uncommitted for such distributions,
such unused or uncommitted funds shall be immediately transferred by the
commissioner to bad debt and charity care regional pools established
pursuant to subdivision sixteen of this section to provide additional
funds for distribution from such bad debt and charity care regional
pools in accordance with subdivision seventeen of this section. For cash
flow purposes, the commissioner may borrow from regional or statewide
pool reserves for pools established pursuant to this section such funds
as shall be necessary not to exceed the amount authorized to be reserved
annually to meet premium requirements pursuant to sections twenty-five
hundred ten and twenty-five hundred eleven of this chapter for a rate
year and shall refund such moneys when pool funds become available
pursuant to this paragraph for such rate year.

* NB Effective December 31, 2026

(b-2) Funds available for distribution in accordance with paragraphs
(c) and (d) of this subdivision shall be deposited by the commissioner
and credited to a special revenue-other fund to be established by the
comptroller. To the extent of funds appropriated therefor, funds shall
be made available for distributions by or on behalf of the state, as
payments under the state medical assistance program provided pursuant to
title eleven of article five of the social services law from the bad
debt and charity care and capital statewide pool pursuant to paragraphs
(c) and (d) of this subdivision.

(c) Funds shall be made available on a statewide basis for
distribution by the commissioner in accordance with rules and
regulations adopted by the council and approved by the commissioner to
assist voluntary non-profit and private proprietary general hospitals
experiencing severe fiscal hardship because of insufficient resources to
finance losses resulting from bad debts and the costs of charity care.
Amounts to be distributed for bad debt and charity care purposes shall
be determined after consideration of amounts to be distributed from
regional pools in accordance with subdivision seventeen of this section
and shall result in up to one hundred percent as defined in paragraph
(b) of subdivision fourteen of this section being financed for these
general hospitals.

(d) Funds shall be made available on a statewide basis for
distribution by the commissioner in accordance with rules and
regulations adopted by the council and approved by the commissioner to
assist voluntary non-profit and private proprietary general hospitals
which qualified for distributions made in accordance with paragraph (b)
of subdivision sixteen of section twenty-eight hundred seven-a of this
article during the nineteen hundred eighty-seven rate period or
qualified for distributions made in accordance with paragraph (c) of
this subdivision during a rate period or rate periods but which do not
continue to qualify for distributions made in accordance with paragraph
(c) of this subdivision during a rate period or rate periods. Amounts to
be distributed to a general hospital pursuant to this paragraph for the
initial rate period in which such general hospital does not continue to
qualify for distributions made in accordance with paragraph (c) of this
subdivision shall be two-thirds of the amount such general hospital
would have received in accordance with paragraph (c) of this subdivision
for such initial rate period if the hospital had continued to be
eligible for such distribution and for the next succeeding annual rate
period one-third of the amount such general hospital would have received
in accordance with paragraph (c) of this subdivision for such succeeding
rate period.

(e) There shall be set aside within a transition account in the
statewide pool, from accumulated funds, from the total allocation to the
bad debt and charity care and capital statewide pool of the assessment
of one and seventy-five thousandths percent of gross revenue received in
accordance with paragraph (a) of subdivision eighteen of this section
for the rate period commencing January first, nineteen hundred
eighty-eight and the assessment of one and five hundredths percent of
gross revenue received in accordance with paragraph (a) of subdivision
eighteen of this section for the rate period commencing January first,
nineteen hundred eighty-nine an amount equal to seventy-five thousandths
of one percent of gross revenue received and five hundredths of one
percent of gross revenue received respectively to be distributed to
voluntary non-profit, private proprietary and public general hospitals
receiving less bad debt and charity care funds under the provisions of
this section than if the provisions of section twenty-eight hundred
seven-a of this article had applied using the same base year need as
calculated in accordance with subdivision fourteen of this section.
Rules for such distribution shall be those adopted by the council and
approved by the commissioner.

(f) Any balance in the statewide pool shall be distributed in
accordance with the following:

(i) Fifty percent of the balance shall be reserved and accumulated
from year to year by the commissioner for distributions to regional
pilot projects to provide health care coverage under insurance or
equivalent mechanisms for uninsured or underinsured individuals and
families and to provide health care coverage for catastrophic expenses
provided legislation is enacted before July fifteenth, nineteen hundred
eighty-eight authorizing such regional pilot projects and including an
authorization for such regional pilot projects, notwithstanding any
inconsistent provision of law, to negotiate special payment rate
methodologies with general hospitals for inpatient hospital services.

(ii) * The remaining balance shall be reserved and accumulated from
year to year by the commissioner for priority distributions in
accordance with rules and regulations adopted by the council and
approved by the commissioner: (A) to assist general hospitals in
offsetting losses from bad debt and the costs of charity care in
providing existing or expanded priority health services to the medically
indigent or medically underserved in urban and rural areas including,
but not limited to, services for pregnant women, services for children
under the age of six, and services related to acquired immune deficiency
syndrome; (B) for quality assurance demonstration projects; (C) for
severity of illness measurement demonstration projects; (D) for cost
analyses and evaluations of health care provider services; (E) for
quality improvement program grants and contracts pursuant to subdivision
fifteen of section two hundred six of this chapter and department of
health administrative costs related thereto; and (F) for initiatives to
improve public health and to expand the availability of health care
services.

* NB Effective until December 31, 2026

* The remaining balance shall be reserved and accumulated from year to
year by the commissioner for priority distributions in accordance with
rules and regulations adopted by the council and approved by the
commissioner: (A) to assist general hospitals in offsetting losses from
bad debt and the costs of charity care in providing existing or expanded
priority health services to the medically indigent or medically
underserved in urban and rural areas including, but not limited to,
services for pregnant women, services for children under the age of six,
and services related to acquired immune deficiency syndrome; (B) for
quality assurance demonstration projects; (C) for severity of illness
measurement demonstration projects; (D) for cost analyses and
evaluations of health care provider services; and (E) for quality
improvement program grants and contracts pursuant to subdivision fifteen
of section two hundred six of this chapter and department of health
administrative costs related thereto.

* NB Effective December 31, 2026

Notwithstanding any provision of law to the contrary, a sum not to
exceed three million five hundred thousand dollars from funds available
for distribution pursuant to this subparagraph may be allocated and
distributed to regional pilot projects to provide health care coverage
under insurance or equivalent mechanisms for uninsured or underinsured
individuals and families pursuant to chapter seven hundred three of the
laws of nineteen hundred eighty-eight.

Notwithstanding any inconsistent provision of section one hundred
twelve or one hundred seventy-four of the state finance law or any other
law, funds available for distribution pursuant to this subparagraph may
be allocated and distributed without a competitive bid or request for
proposal process.

(iii) Any unused funds from the allocations provided for in paragraph
(b) and paragraph (e) of this subdivision and subparagraph (i) of this
paragraph and any funds contingently allocated to regional pilot
projects pursuant to subparagraph (i) of this paragraph if authorizing
legislation is not enacted as required by such subparagraph shall be
reallocated for use in accordance with the provisions of subparagraph
(ii) of this paragraph.

(iv) Notwithstanding any inconsistent provision of this section, the
commissioner shall enter into agreements with one or more persons,
not-for-profit corporations, or other organizations, other than a state
employee, official or agency, for the purposes of an independent
evaluation of the implementation and effectiveness of primary care
initiatives, including preferred primary care provider designations,
applicable to general hospitals, diagnostic and treatment centers and
participating practitioners and may allocate and distribute funds
otherwise available for distribution in accordance with subparagraph
(ii) of this paragraph for the costs of such evaluation. The evaluation
shall assess factors including but not limited to:

(A) the overall effect of such primary care initiatives on access to
and utilization of health care services;

(B) the extent to which such initiatives have fostered cooperative
working relationships between various providers of health care services;

(C) the impact of such initiatives on the cost of health care
services.

An initial evaluation pursuant to this subparagraph shall be submitted
to the governor and the legislature on or before April first, nineteen
hundred ninety-two and a further evaluation shall be submitted by April
first, nineteen hundred ninety-three.

* 19-a. Health care services allowance statewide pool distribution.
Funds accumulated in the statewide pool created by the allowance
authorized in accordance with subparagraphs (ii) and (iii) of paragraph
(a) of subdivision fourteen-b of this section, including income from
invested funds, shall be distributed or retained in accordance with the
following:

(a) Funds shall be transferred to primary health care services
regional pools created by the commissioner, and shall be available,
including income from invested funds, for distributions in accordance
with section twenty-eight hundred seven-bb of this article. Such funds
shall be transferred to each regional pool so that the regional pool
receives, for the rate periods January first, nineteen hundred
ninety-four through December thirty-first, nineteen hundred ninety-four
fifty-one and five-tenths percent, January first, nineteen hundred
ninety-five through December thirty-first, nineteen hundred ninety-five
forty-nine and six-tenths percent, and January first, nineteen hundred
ninety-six through December thirty-first, nineteen hundred ninety-six
forty-nine and six-tenths percent of the total funds to be accumulated
in the statewide pool from the allowance submitted by or on behalf of
hospitals in that region. Such regions shall be those established for
purposes of section two thousand nine hundred four-b of this chapter.

(b) A fixed percentage of the total funds accumulated in the statewide
pool, including income from invested funds, shall be available for
primary care education and training. For the rate periods January first,
nineteen hundred ninety-four through December thirty-first, nineteen
hundred ninety-four, such percentage shall be twenty-two and one-tenth
percent, and January first, nineteen hundred ninety-five through
December thirty-first, nineteen hundred ninety-five, such percentage
shall be twenty and four-tenths percent, and January first, nineteen
hundred ninety-six through December thirty-first, nineteen hundred
ninety-six such percentage shall be twenty and four-tenths percent.
Funds shall be available for distributions as follows:

(i) up to four million dollars annually plus income thereon from
invested funds shall be set aside and reserved from accumulated funds
and may be accumulated for the following year for distribution by the
commissioner for primary care undergraduate medical education in
accordance with section nine hundred two of this chapter;

(ii) up to four million dollars annually plus income thereon from
invested funds shall be set aside and reserved from accumulated funds
and may be accumulated for the following year for distribution by the
commissioner for the primary care physician loan repayment program in
accordance with section nine hundred three of this chapter;

(iii) up to two million dollars annually plus income thereon from
invested funds shall be set aside and reserved from accumulated funds
and may be accumulated for the following year for distribution by the
commissioner for the primary care practitioner scholarship program in
accordance with section nine hundred four of this chapter;

(iv) up to two million dollars annually plus income thereon from
invested funds shall be set aside and reserved from accumulated funds
and may be accumulated for the following year for distribution by the
commissioner for the primary care practitioner education program in
accordance with section nine hundred five of this chapter;

(v) the balance remaining annually plus income thereon from invested
funds shall be set aside and reserved from accumulated funds and may be
accumulated from year to year for distributions by the commissioner for
health care development in accordance with section nine hundred six of
this chapter; and

(vi) provided, however, that the commissioner in the absence of
qualified recipients within a category may reallocate any funds
remaining or unallocated within such a category for distribution by the
commissioner for the primary care practitioner scholarship program in
accordance with section nine hundred four of this chapter and the
primary care practitioner education program in accordance with section
nine hundred five of this chapter.

(c) A fixed percentage of the total funds accumulated in the statewide
pool, including income from invested funds, shall be deposited by the
commissioner into the miscellaneous special revenue fund - 339, health
care planning account, which is established for services and expenses
for health planning, for purposes of: (i) per capita support of health
systems agencies, provided no health systems agency shall receive less
than two hundred fifty thousand dollars annually from the per capita
allocation, and provided further that a health systems agency receiving
the minimum level of funding provided pursuant to a per capita formula
shall also be entitled to receive matching support; (ii) matching
support for other contributions received by health systems agencies from
qualified sources as determined by the commissioner; (iii) five hundred
thousand dollars for global budgeting demonstrations grants authorized
pursuant to section twenty-eight hundred fourteen of this article; and
(iv) five hundred thousand dollars for health networks grants authorized
pursuant to section twenty-eight hundred fourteen of this article. For
the rate period January first, nineteen hundred ninety-four through
December thirty-first, nineteen hundred ninety-four such percentage
shall be eight and eight-tenths percent, and for the rate period January
first, nineteen hundred ninety-five through December thirty-first,
nineteen hundred ninety-six such percentage shall be eight and
two-tenths percent.

(c-1) Notwithstanding any other provision of law to the contrary, any
unspent funds available for programs and services pursuant to
subparagraphs (iii) and (iv) of paragraph (c) of this subdivision as of
April first, nineteen hundred ninety-five and any additional funds
available for programs and services pursuant to subparagraphs (iii) and
(iv) of paragraph (c) of this subdivision for the period April first,
nineteen hundred ninety-five through December thirty-first, nineteen
hundred ninety-five shall be transferred by the commissioner and
deposited and credited to the medical assistance program general fund -
local assistance account.

(c-2) Notwithstanding any other provision of law to the contrary,
funds accumulated for programs and services pursuant to subparagraphs
(i) and (ii) of paragraph (c) of this subdivision for nineteen hundred
ninety-five shall be transferred by the commissioner and deposited and
credited to the general fund - local assistance account.

(d) A fixed percentage of the total funds accumulated in the statewide
pool, including income from invested funds, shall be deposited by the
commissioner and credited to the emergency medical services training
account established for purposes of section ninety-seven-q of the state
finance law for services and expenses related to emergency medical
services training and administration. For the rate period January first,
nineteen hundred ninety-four through December thirty-first, nineteen
hundred ninety-four, such percentage shall be seventeen and six-tenths
percent, for the rate period January first, nineteen hundred ninety-five
through December thirty-first, nineteen hundred ninety-five, such
percentage shall be twenty-one and eight-tenths percent, and for the
rate period January first, nineteen hundred ninety-six through December
thirty-first, nineteen hundred ninety-six, such percentage shall be
twenty-one and eight-tenths percent.

(f) Distributions from the pools created in accordance with this
subdivision and subdivision fourteen-b of this section, and the
components of rates of payment or charges related to the allowances
provided in accordance with subdivision fourteen-b of this section shall
not be included in gross revenue received for purposes of the
assessments pursuant to subdivision eighteen of this section, subject to
the provisions of paragraph (e) of subdivision eighteen of this section,
and shall not be included in gross receipts received for purposes of the
assessments pursuant to section twenty-eight hundred seven-d of this
article, subject to the provisions of subdivision twelve of section
twenty-eight hundred seven-d of this article.

(g) Notwithstanding any inconsistent provisions of law, the
commissioner may borrow from regional or statewide pool reserves for
pools established pursuant to sections twenty-eight hundred eight-c,
twenty-eight hundred seven-a or this section of this article such funds
as shall be necessary, not to exceed the amounts projected to be
available pursuant to paragraph (d) of subdivision fourteen-b of this
section, annually for distributions in accordance with paragraphs (a),
(b), (c), (d) and (h) of this subdivision for a rate year and shall
refund such moneys when pool funds become available pursuant to
paragraphs (a), (b), (c), (d) and (h) of this subdivision for such rate
year.

(h) Notwithstanding any inconsistent provision of this subdivision,
prior to allocation of funds in accordance with paragraphs (a), (b), (c)
and (d) of this subdivision from the allowance for the period July
first, nineteen hundred ninety-five through December thirty-first,
nineteen hundred ninety-five and from the allowance for the period
January first, nineteen hundred ninety-six through June thirtieth,
nineteen hundred ninety-six, thirty-nine million five hundred thousand
dollars from the nineteen hundred ninety-five pool and forty-four
million five hundred thousand dollars from the nineteen hundred
ninety-six pool respectively shall be reserved by the commissioner from
the amount accumulated in the statewide pool, proportionally based on
the total amount of funds projected to be accumulated in the pool for
the year, for additional distributions in accordance with paragraph
(b-1) of subdivision nineteen of this section to programs to provide
health care coverage for uninsured or underinsured children, and the
balance of funds accumulated in the statewide pool shall be
proportionally allocated in accordance with paragraphs (a), (b), (c) and
(d) of this subdivision.

* NB Effective until December 31, 2026

* 19-a. Health care services allowance statewide pool distribution.
Funds accumulated in the statewide pool created by the allowance
authorized in accordance with subparagraphs (ii) and (iii) of paragraph
(a) of subdivision fourteen-b of this section, including income from
invested funds, shall be distributed or retained in accordance with the
following:

(a) Funds shall be transferred to primary health care services
regional pools created by the commissioner, and shall be available,
including income from invested funds, for distributions in accordance
with section twenty-eight hundred seven-bb of this article. Such funds
shall be transferred to each regional pool so that the regional pool
receives, for the rate periods January first, nineteen hundred
ninety-four through December thirty-first, nineteen hundred ninety-four
fifty-one and five-tenths percent, January first, nineteen hundred
ninety-five through December thirty-first, nineteen hundred ninety-five
forty-nine and six-tenths percent, and January first, nineteen hundred
ninety-six through June thirtieth, nineteen hundred ninety-six
forty-nine and six tenths percent of the total funds to be accumulated
in the statewide pool from the allowance submitted by or on behalf of
hospitals in that region. Such regions shall be those established for
purposes of section two thousand nine hundred four-b of this chapter.

(b) A fixed percentage of the total funds accumulated in the statewide
pool, including income from invested funds, shall be available for
primary care education and training. For the rate periods January first,
nineteen hundred ninety-four through December thirty-first, nineteen
hundred ninety-four, such percentage shall be twenty-two and one-tenth
percent, January first, nineteen hundred ninety-five through December
thirty-first, nineteen hundred ninety-five, such percentage shall be
twenty and four-tenths percent, and January first, nineteen hundred
ninety-six through June thirtieth, nineteen hundred ninety-six, such
percentage shall be twenty and four-tenths percent. Funds shall be
available for distributions as follows:

(i) up to four million dollars annually plus income thereon from
invested funds shall be set aside and reserved from accumulated funds
and may be accumulated for the following year for distribution by the
commissioner for primary care undergraduate medical education in
accordance with section nine hundred two of this chapter;

(ii) up to four million dollars annually plus income thereon from
invested funds shall be set aside and reserved from accumulated funds
and may be accumulated for the following year for distribution by the
commissioner for the primary care physician loan repayment program in
accordance with section nine hundred three of this chapter;

(iii) up to two million dollars annually plus income thereon from
invested funds shall be set aside and reserved from accumulated funds
and may be accumulated for the following year for distribution by the
commissioner for the primary care practitioner scholarship program in
accordance with section nine hundred four of this chapter;

(iv) up to two million dollars annually plus income thereon from
invested funds shall be set aside and reserved from accumulated funds
and may be accumulated for the following year for distribution by the
commissioner for the primary care practitioner education program in
accordance with section nine hundred five of this chapter;

(v) the balance remaining annually plus income thereon from invested
funds shall be set aside and reserved from accumulated funds and may be
accumulated from year to year for distributions by the commissioner for
health care development in accordance with section nine hundred six of
this chapter; and

(vi) provided, however, that the commissioner in the absence of
qualified recipients within a category may reallocate any funds
remaining or unallocated within such a category for distribution by the
commissioner for the primary care practitioner scholarship program in
accordance with section nine hundred four of this chapter and the
primary care practitioner education program in accordance with section
nine hundred five of this chapter.

(c) A fixed percentage of the total funds accumulated in the statewide
pool including income from invested funds, shall be deposited by the
commissioner into the miscellaneous special revenue fund - 339, health
care planning account, which is established for services and expenses
for health planning, for purposes of: (i) per capita support of health
systems agencies, provided no health systems agency shall receive less
than two hundred fifty thousand dollars annually from the per capita
allocation, and provided further that a health systems agency receiving
the minimum level of funding provided pursuant to a per capita formula
shall also be entitled to receive matching support; (ii) matching
support for other contributions received by health systems agencies from
qualified sources as determined by the commissioner; (iii) five hundred
thousand dollars for global budgeting demonstrations grants authorized
pursuant to section twenty-eight hundred fourteen of this article; and
(iv) five hundred thousand dollars for health networks grants authorized
pursuant to section twenty-eight hundred fourteen of this article. For
the rate period January first, nineteen hundred ninety-four through
December thirty-first, nineteen hundred ninety-four such percentage
shall be eight and eight-tenths percent, and for the rate period January
first, nineteen hundred ninety-five through June thirtieth, nineteen
hundred ninety-six such percentage shall be eight and two-tenths
percent.

(c-1) Notwithstanding any other provision of law to the contrary, any
unspent funds available for programs and services pursuant to
subparagraphs (iii) and (iv) of paragraph (c) of this subdivision as of
April first, nineteen hundred ninety-five and any additional funds
available for programs and services pursuant to subparagraphs (iii) and
(iv) of paragraph (c) of this subdivision for the period April first,
nineteen hundred ninety-five through December thirty-first, nineteen
hundred ninety-five shall be transferred by the commissioner and
deposited and credited to the medical assistance program general fund
local assistance account.

(c-2) Notwithstanding any other provision of law to the contrary,
funds accumulated for programs and services pursuant to subparagraphs
(i) and (ii) of paragraph (c) of this subdivision for nineteen hundred
ninety-five shall be transferred by the commissioner and deposited and
credited to the general fund - local assistance account.

(d) A fixed percentage of the total funds accumulated in the statewide
pool, including income from invested funds, shall be deposited by the
commissioner and credited to the emergency medical services training
account established for purposes of section ninety-seven-q of the state
finance law for services and expenses related to emergency medical
services training and administration. For the rate period January first,
nineteen hundred ninety-four through December thirty-first, nineteen
hundred ninety-four, such percentage shall be seventeen and six-tenths
percent, for the rate period January first, nineteen hundred ninety-five
through December thirty-first, nineteen hundred ninety-five, such
percentage shall be twenty-one and eight-tenths percent, and for the
rate period January first, nineteen hundred ninety-six through June
thirtieth, nineteen hundred ninety-six, such percentage shall be
twenty-one and eight-tenths percent.

(e) If on September thirtieth, nineteen hundred ninety-seven, any
funds accumulated over the period January first, nineteen hundred
ninety-four through June thirtieth, nineteen hundred ninety-six in the
regional pools established pursuant to paragraph (a) of this subdivision
are unused or uncommitted for the allocations provided for, such unused
or uncommitted funds shall be reallocated for use in accordance with the
provisions of subdivision seventeen of this section.

(f) Distributions from the pools created in accordance with this
subdivision and subdivision fourteen-b of this section, and the
components of rates of payment or charges related to the allowances
provided in accordance with subdivision fourteen-b of this section shall
not be included in gross revenue received for purposes of the
assessments pursuant to subdivision eighteen of this section, subject to
the provisions of paragraph (e) of subdivision eighteen of this section,
and shall not be included in gross receipts received for purposes of the
assessments pursuant to section twenty-eight hundred seven-d of this
article, subject to the provisions of subdivision twelve of section
twenty-eight hundred seven-d of this article.

(g) Notwithstanding any inconsistent provisions of law, the
commissioner may borrow from regional or statewide pool reserves for
pools established pursuant to sections twenty-eight hundred eight-c,
twenty-eight hundred seven-a or this section of this article such funds
as shall be necessary, not to exceed the amounts projected to be
available pursuant to paragraph (d) of subdivision fourteen-b of this
section, annually for distributions in accordance with paragraphs (a),
(b), (c), (d) and (h) of this subdivision for a rate year and shall
refund such moneys when pool funds become available pursuant to
paragraphs (a), (b), (c), (d) and (h) of this subdivision for such rate
year.

(h) Notwithstanding any inconsistent provision of this subdivision,
prior to allocation of funds in accordance with paragraphs (a), (b), (c)
and (d) of this subdivision from the allowance for the period July
first, nineteen hundred ninety-five through December thirty-first,
nineteen hundred ninety-five and from the allowance for the period
January first, nineteen hundred ninety-six through June thirtieth,
nineteen hundred ninety-six, thirty-nine million five hundred thousand
dollars from the nineteen hundred ninety-five pool and twenty-two
million two hundred fifty thousand dollars from the nineteen hundred
ninety-six pool respectively shall be reserved by the commissioner from
the amount accumulated in the statewide pool, proportionally based on
the total amount of funds projected to be accumulated in the pool for
the year, for additional distributions in accordance with paragraph
(b-1) of subdivision nineteen of this section to programs to provide
health care coverage for uninsured or underinsured children, and the
balance of funds accumulated in the statewide pool shall be
proportionally allocated in accordance with paragraphs (a), (b),(c) and
(d) of this subdivision.

* NB Effective December 31, 2026

* 19-b. Funds accumulated in the statewide pool created by the
assessment authorized in accordance with subdivision eighteen of this
section for a period during the period January first, nineteen hundred
ninety-seven through December thirty-first, nineteen hundred ninety-nine
and periods on and after January first, two thousand, including income
from invested funds, shall be transferred by the commissioner and
consolidated with funds accumulated from the allowance pursuant to
subdivision two of section twenty-eight hundred seven-j of this article
for such period and allocated in accordance with subdivision nine of
section twenty-eight hundred seven-j of this article.

* NB Effective until December 31, 2026

* 19-b. Funds accumulated in the statewide pool created by the
assessment authorized in accordance with subdivision eighteen of this
section for a period during the period January first, nineteen hundred
ninety-seven through December thirty-first, nineteen hundred
ninety-nine, including income from invested funds, shall be transferred
by the commissioner and consolidated with funds accumulated from the
allowance pursuant to subdivision two of section twenty-eight hundred
seven-j of this article for such period and allocated in accordance with
subdivision nine of section twenty-eight hundred seven-j of this
article.

* NB Effective and repealed December 31, 2026

20. Payments to pools. (a) Payments by or on behalf of general
hospitals to bad debt and charity care regional pools of funds due based
on the allowance included in rates and charges in accordance with
paragraph (c) of subdivision fourteen of this section and to regional
pools created pursuant to paragraph (b) of subdivision fourteen-b and to
a statewide pool created pursuant to paragraph (b) of subdivision
fourteen-c of this section shall be made on a time schedule established
by the council, subject to the approval of the commissioner, by
regulation; provided, however, that estimated payments of amounts due
for patients discharged in a calendar month commencing on or after
October first, nineteen hundred ninety-one must be made within sixty
days of the end of each month unless payments of actual amounts due for
such calendar months have been made within such sixty day time period.
Upon receipt of notification from the commissioner, the comptroller, or
a fiscal intermediary designated by the director of the budget, or the
commissioner of social services, or a corporation organized and
operating in accordance with article forty-three of the insurance law or
an organization operating in accordance with article forty-four of this
chapter shall withhold from the amount of any payment to be made by the
state or such article forty-three corporation or article forty-four
organization to a general hospital the amount of any arrearage resulting
from such general hospital's failure to make a timely payment to the
pools of funds due based on the allowances included in rates and charges
in accordance with paragraph (c) of subdivision fourteen, paragraph (a)
of subdivision fourteen-b and paragraph (a) of subdivision fourteen-c of
this section. Upon withholding such amount, the comptroller, or a
designated fiscal intermediary, or the commissioner of social services,
or a corporation organized and operating in accordance with article
forty-three of the insurance law or an organization operating in
accordance with article forty-four of this chapter shall pay the
commissioner, or his designee, such amount withheld for deposit into the
applicable pool. Any general hospital in arrears resulting from failure
to make a timely payment to a pool shall not be eligible for a
distribution from a bad debt and charity care regional pool in
accordance with subdivision seventeen of this section until such
arrearage is satisfied.

(b) (i) Payments by or on behalf of general hospitals to the bad debt
and charity care and capital statewide pool of funds due from the
assessments pursuant to subdivision eighteen of this section shall be
made on a time schedule established by the council, subject to the
approval of the commissioner, by regulation; provided, however, that
estimated payments of amounts due for patients discharged in a calendar
month commencing on or after October first, nineteen hundred ninety-one
must be made within sixty days of the end of each month unless payments
of actual amounts due for such calendar months have been made within
such sixty day time period. Upon receipt of notification from the
commissioner, the comptroller, or a fiscal intermediary designated by
the director of the budget, or a corporation organized and operating in
accordance with article forty-three of the insurance law or an
organization operating in accordance with article forty-four of this
chapter shall withhold from the amount of any payment to be made by the
state or such article forty-three corporation or article forty-four
organization to a general hospital the amount of any arrearage resulting
from such general hospital's failure to make a timely payment to the bad
debt and charity care and capital statewide pool of funds due from the
assessments. Upon withholding such amount, the comptroller, or a
designated fiscal intermediary, or a corporation organized and operating
in accordance with article forty-three of the insurance law or an
organization operating in accordance with article forty-four of this
chapter shall pay the commissioner, or his designee, such amount
withheld for deposit into the applicable pool. Any general hospital in
arrears resulting from failure to make a timely payment to the bad debt
and charity care and capital statewide pool shall not be eligible for a
distribution from the bad debt and charity care regional pools in
accordance with subdivision seventeen of this section or the bad debt
and charity care and capital statewide pool in accordance with
subdivision nineteen of this section until such arrearage is satisfied.

(ii) For periods on and after January first, two thousand five,
reports submitted by general hospitals to implement the assessment set
forth in subdivision eighteen of this section shall be submitted
electronically in a form as may be required by the commissioner;
provided, however, general hospitals are not prohibited from submitting
reports electronically on a voluntary basis prior to such date, and
provided further, however, that all such electronic submissions
submitted on and after July first, two thousand twelve shall be verified
with an electronic signature as prescribed by the commissioner.

(c) (i) Interest shall be due and payable to the commissioner by a
general hospital or by a payor paying directly to a pool on the
difference between the amount paid to a pool and the amount due to such
pool by the hospital or payor from the day of the month the payment was
due until the date of payment. The rate of interest shall be twelve
percent per annum or at the rate of interest set by the commissioner of
taxation and finance with respect to underpayments of tax pursuant to
subsection (e) of section one thousand ninety-six of the tax law minus
four percentage points. Interest under this paragraph shall not be paid
if the amount thereof is less than one dollar. Interest may be collected
by the commissioner in the same manner as an arrearage pursuant to this
subdivision.

(ii) If a payment by a general hospital or by a payor paying directly
to a pool is less than seventy percent of the amount due to such pool by
the hospital or payor, a penalty shall be due and payable to the
commissioner by the hospital or payor of five percent of the difference
between the amount paid to the pool and the amount due to such pool when
the failure to pay is for a duration of not more than one month after
the due date of the payment with an additional five percent for each
additional month or fraction thereof during which such failure
continues, not exceeding twenty-five percent in the aggregate. A penalty
may be collected by the commissioner in the same manner as an arrearage
pursuant to this subdivision.

21. Maximum distributions. (a) No general hospital may receive in
total from the distributions made in accordance with paragraph (b) of
subdivision fourteen-c, paragraphs (a) and (b) of subdivision seventeen
and paragraphs (c), (d) and (e) of subdivision nineteen of this section
an amount which exceeds its need for financing losses related to bad
debts and the costs of charity care as defined in paragraph (b) of
subdivision fourteen of this section.

* (b)(i) No public general hospital may receive in total from
disproportionate share payment distributions made in accordance with
subdivision seventeen of this section and adjustments in accordance with
subdivisions fourteen-a and fourteen-d of this section for the period
April first, nineteen hundred ninety-four through December thirty-first,
nineteen hundred ninety-four or for annual rate periods beginning on
January first on or after January first, nineteen hundred ninety-five
through December thirty-first, nineteen hundred ninety-six, or made in
accordance with section twenty-eight hundred seven-k of this article and
adjustments in accordance with subdivision fourteen-f of this section
for annual periods beginning on January first on and after January
first, nineteen hundred ninety-seven through December thirty-first,
nineteen hundred ninety-nine and on and after January first, two
thousand an amount which exceeds the costs incurred during such period
of furnishing inpatient and ambulatory hospital services, net of medical
assistance payments pursuant to title eleven of article five of the
social services law, other than disproportionate share payments pursuant
to subdivision twenty-six of this section or subdivision thirteen of
section twenty-eight hundred seven-k of this article, and payments by
uninsured patients, by the hospital to individuals who either are
eligible for medical assistance pursuant to title eleven of article five
of the social services law or have no health insurance or other source
of third party coverage; provided, however, that the commissioner shall
make such increase to such maximum or to the manner in which the
limitation on disproportionate share payments is applied as shall
increase the maximum limit for a period or part of a period as
authorized by federal law or regulation or the secretary of the
department of health and human services for purposes of federal
financial participation pursuant to title XIX of the federal social
security act. For purposes of this paragraph, payments to a general
hospital for services provided to indigent patients made by the state or
a unit of local government within the state shall not be considered to
be a source of third party payment.

(ii) Reductions pursuant to this paragraph shall be made in the
following sequence:

(A) for periods through December thirty-first, nineteen hundred
ninety-six, adjustments in accordance with subdivision fourteen-d of
this section; adjustments in accordance with subdivision fourteen-a of
this section; and distributions in accordance with subdivision seventeen
of this section, and

(B) for periods during the period January first, nineteen hundred
ninety-seven through December thirty-first, nineteen hundred ninety-nine
and on and after January first, two thousand, adjustments in accordance
with subdivision fourteen-f of this section; and distributions in
accordance with section twenty-eight hundred seven-k of this article.

(iii) (A) In the event a reduction pursuant to subparagraphs (i) and
(ii) of this paragraph is effective for distributions in accordance with
subdivision seventeen of this section for a general hospital, such
general hospital shall receive a supplementary distribution not as a
disproportionate share payment and not subject to federal financial
participation from funds available pursuant to subdivision seventeen of
this section for periods through December thirty-first, nineteen hundred
ninety-six equal to one-half of such reduction.

(B) In the event a reduction pursuant to subparagraphs (i) and (ii) of
this paragraph is effective for distributions in accordance with section
twenty-eight hundred seven-k of this article for a general hospital,
such general hospital shall receive a supplementary distribution not as
a disproportionate share payment and not subject to federal financial
participation from funds available pursuant to section twenty-eight
hundred seven-k of this article for periods during the period January
first, nineteen hundred ninety-seven through December thirty-first,
nineteen hundred ninety-nine and on and after January first, two
thousand equal to one-half of such reduction.

* NB Effective until December 31, 2026

* (b)(i) No public general hospital may receive in total from
disproportionate share payment distributions made in accordance with
subdivision seventeen of this section and adjustments in accordance with
subdivisions fourteen-a and fourteen-d of this section for the period
April first, nineteen hundred ninety-four through December thirty-first,
nineteen hundred ninety-four or for annual rate periods beginning on
January first on or after January first, nineteen hundred ninety-five
through December thirty-first, nineteen hundred ninety-six, or made in
accordance with section twenty-eight hundred seven-k of this article and
adjustments in accordance with subdivision fourteen-f of this section
for annual periods beginning on January first on and after January
first, nineteen hundred ninety-seven through December thirty-first,
nineteen hundred ninety-nine an amount which exceeds the costs incurred
during such period of furnishing inpatient and ambulatory hospital
services, net of medical assistance payments pursuant to title eleven of
article five of the social services law, other than disproportionate
share payments pursuant to subdivision twenty-six of this section or
subdivision thirteen of section twenty-eight hundred seven-k of this
article, and payments by uninsured patients, by the hospital to
individuals who either are eligible for medical assistance pursuant to
title eleven of article five of the social services law or have no
health insurance or other source of third party coverage; provided,
however, that the commissioner shall make such increase to such maximum
or to the manner in which the limitation on disproportionate share
payments is applied as shall increase the maximum limit for a period or
part of a period as authorized by federal law or regulation or the
secretary of the department of health and human services for purposes of
federal financial participation pursuant to title XIX of the federal
social security act. For purposes of this paragraph, payments to a
general hospital for services provided to indigent patients made by the
state or a unit of local government within the state shall not be
considered to be a source of third party payment.

(ii) Reductions pursuant to this paragraph shall be made in the
following sequence:

(A) for periods through December thirty-first, nineteen hundred
ninety-six, adjustments in accordance with subdivision fourteen-d of
this section; adjustments in accordance with subdivision fourteen-a of
this section; and distributions in accordance with subdivision seventeen
of this section, and

(B) for periods during the period January first, nineteen hundred
ninety-seven through December thirty-first, nineteen hundred
ninety-nine, adjustments in accordance with subdivision fourteen-f of
this section; and distributions in accordance with section twenty-eight
hundred seven-k of this article.

(iii) (A) In the event a reduction pursuant to subparagraphs (i) and
(ii) of this paragraph is effective for distributions in accordance with
subdivision seventeen of this section for a general hospital, such
general hospital shall receive a supplementary distribution not as a
disproportionate share payment and not subject to federal financial
participation from funds available pursuant to subdivision seventeen of
this section for periods through December thirty-first, nineteen hundred
ninety-six.

(B) In the event a reduction pursuant to subparagraphs (i) and (ii) of
this paragraph is effective for distributions in accordance with section
twenty-eight hundred seven-k of this article for a general hospital,
such general hospital shall receive a supplementary distribution not as
a disproportionate share payment and not subject to federal financial
participation from funds available pursuant to section twenty-eight
hundred seven-k of this article for periods during the period January
first, nineteen hundred ninety-seven through December thirty-first,
nineteen hundred ninety-nine equal to one-half of such reduction.

* NB Effective and expires December 31, 2026

* (b) (i) No public general hospital may receive in total from
disproportionate share payment distributions made in accordance with
subdivision seventeen of this section and adjustments in accordance with
subdivisions fourteen-a and fourteen-d of this section for the period
April first, nineteen hundred ninety-four through December thirty-first,
nineteen hundred ninety-four or for annual rate period beginning on
January first on or after January first, nineteen hundred ninety-five an
amount which exceeds the costs incurred during such period of furnishing
inpatient and ambulatory hospital services, net of medical assistance
payments pursuant to title eleven of article five of the social services
law, other than disproportionate share payments pursuant to subdivision
twenty-six of this section, and payments by uninsured patients, by the
hospital to individuals who either are eligible for medical assistance
pursuant to title eleven of article five of the social services law or
have no health insurance or other source of third party coverage;
provided, however, that the commissioner shall make such increase to
such maximum or to the manner in which the limitation on
disproportionate share payments is applied as shall increase the maximum
limit for a period or part of a period as authorized by federal law or
regulation or the secretary of the department of health and human
services for purposes of federal financial participation pursuant to
title XIX of the federal social security act. For purposes of this
paragraph, payments to a general hospital for services provided to
indigent patients made by the state or a unit of local government within
the state shall not be considered to be a source of third party payment.

(ii) Reductions pursuant to this paragraph shall be made in the
following sequence: adjustments in accordance with subdivision
fourteen-d of this section; adjustments in accordance with subdivision
fourteen-a of this section; and distributions in accordance with
subdivision seventeen of this section.

(iii) In the event a reduction pursuant to subparagraphs (i) and (ii)
of this paragraph is effective for distributions in accordance with
subdivision seventeen of this section for a general hospital, such
general hospital shall receive a supplementary distribution not as a
disproportionate share payment and not subject to federal financial
participation from funds available pursuant to subdivision seventeen of
this section equal to one-half of such reduction.

* NB Effective December 31, 2026

* (c)(i) No general hospital other than a public general hospital may
receive in total from disproportionate share payment distributions made
in accordance with paragraph (b) of subdivision fourteen-c, subdivision
seventeen and paragraphs (c) and (d) of subdivision nineteen of this
section and adjustments in accordance with subdivision fourteen-d of
this section for the period April first, nineteen hundred ninety-five
through December thirty-first, nineteen hundred ninety-five or for the
annual rate period beginning on January first, nineteen hundred
ninety-six through December thirty-first, nineteen hundred ninety-six,
or made in accordance with section twenty-eight hundred seven-k of this
article for annual periods beginning on January first on and after
January first, nineteen hundred ninety-seven through December
thirty-first, nineteen hundred ninety-nine and on and after January
first, two thousand an amount which exceeds the costs incurred during
such period of furnishing inpatient and ambulatory hospital services,
net of medical assistance payments pursuant to title eleven of article
five of the social services law, other than disproportionate share
payments pursuant to subdivision twenty-six of this section or
subdivision thirteen of section twenty-eight hundred seven-k of this
article, and payments by uninsured patients, by the hospital to
individuals who either are eligible for medical assistance pursuant to
title eleven of article five of the social services law or have no
health insurance or other source of third party coverage; provided,
however, that the commissioner shall make such modifications to the
manner in which the limitation on disproportionate share payments is
applied to such hospitals as shall increase the maximum limit for a
period or part of a period as authorized by federal law or regulation or
the secretary of the department of health and human services for
purposes of federal financial participation pursuant to title XIX of the
federal social security act. For purposes of this paragraph, payments to
a general hospital for services provided to indigent patients made by
the state or a unit of local government within the state shall not be
considered to be a source of third party payment.

(ii)(A) Reductions pursuant to this paragraph for periods through
December thirty-first, nineteen hundred ninety-six shall be made in the
following sequence for general hospitals other than financially
distressed hospitals: adjustments in accordance with subdivision
fourteen-d of this section; and distributions in accordance with
subdivision seventeen of this section.

(B) Reductions pursuant to this paragraph for periods through December
thirty-first, nineteen hundred ninety-six shall be made in the following
sequence for general hospitals designated as financially distressed
hospitals: distributions in accordance with paragraph (b) of subdivision
fourteen-c of this section; distributions in accordance with paragraphs
(c) and (d) of subdivision nineteen of this section; and distributions
in accordance with subdivision seventeen of this section.

(C) Reductions pursuant to this paragraph for periods during the
period January first, nineteen hundred ninety-seven through December
thirty-first, nineteen hundred ninety-nine and on and after January
first, two thousand, shall be made from distributions in accordance with
section twenty-eight hundred seven-k of this article.

(iii) (A) In the event a reduction pursuant to subparagraphs (i) and
(ii) of this paragraph is effective for distributions in accordance with
paragraph (b) of subdivision fourteen-c of this section, paragraph (c)
or (d) of subdivision nineteen of this section, subdivision fourteen-d
of this section or subdivision seventeen of this section for a general
hospital, such general hospital shall receive a supplementary
distribution not as a disproportionate share payment and not subject to
federal financial participation from funds available pursuant to such
subdivisions equal to one-half of such reduction for periods through
December thirty-first, nineteen hundred ninety-six.

(B) In the event a reduction pursuant to subparagraphs (i) and (ii) of
this paragraph is effective for distributions in accordance with section
twenty-eight hundred seven-k of this article for a general hospital,
such general hospital shall receive a supplementary distribution not as
a disproportionate share payment and not subject to federal financial
participation from funds available pursuant to section twenty-eight
hundred seven-k of this article for periods during the period January
first, nineteen hundred ninety-seven through December thirty-first,
nineteen hundred ninety-nine and on and after January first, two
thousand equal to one-half of such reduction.

* NB Effective until December 31, 2026

* (c)(i) No general hospital other than a public general hospital may
receive in total from disproportionate share payment distributions made
in accordance with paragraph (b) of subdivision fourteen-c, subdivision
seventeen and paragraphs (c) and (d) of subdivision nineteen of this
section and adjustments in accordance with subdivision fourteen-d of
this section for the period April first, nineteen hundred ninety-five
through December thirty-first, nineteen hundred ninety-five or for the
annual rate period beginning on January first, nineteen hundred
ninety-six through December thirty-first, nineteen hundred ninety-six,
or made in accordance with section twenty-eight hundred seven-k of this
article for annual periods beginning on January first on and after
January first, nineteen hundred ninety-seven through December
thirty-first, nineteen hundred ninety-nine an amount which exceeds the
costs incurred during such period of furnishing inpatient and ambulatory
hospital services, net of medical assistance payments pursuant to title
eleven of article five of the social services law, other than
disproportionate share payments pursuant to subdivision twenty-six of
this section or subdivision thirteen of section twenty-eight hundred
seven-k of this article, and payments by uninsured patients, by the
hospital to individuals who either are eligible for medical assistance
pursuant to title eleven of article five of the social services law or
have no health insurance or other source of third party coverage;
provided, however, that the commissioner shall make such modifications
to the manner in which the limitation on disproportionate share payments
is applied to such hospitals as shall increase the maximum limit for a
period or part of a period as authorized by federal law or regulation or
the secretary of the department of health and human services for
purposes of federal financial participation pursuant to title XIX of the
federal social security act. For purposes of this paragraph, payments to
a general hospital for services provided to indigent patients made by
the state or a unit of local government within the state shall not be
considered to be a source of third party payment.

(ii)(A) Reductions pursuant to this paragraph for periods through
December thirty-first, nineteen hundred ninety-six shall be made in the
following sequence for general hospitals other than financially
distressed hospitals: adjustments in accordance with subdivision
fourteen-d of this section; and distributions in accordance with
subdivision seventeen of this section.

(B) Reductions pursuant to this paragraph for periods through December
thirty-first, nineteen hundred ninety-six shall be made in the following
sequence for general hospitals designated as financially distressed
hospitals: distributions in accordance with paragraph (b) of subdivision
fourteen-c of this section; distributions in accordance with paragraphs
(c) and (d) of subdivision nineteen of this section; and distributions
in accordance with subdivision seventeen of this section.

(C) Reductions pursuant to this paragraph for periods during the
period January first, nineteen hundred ninety-seven through December
thirty-first, nineteen hundred ninety-nine, shall be made from
distributions in accordance with section twenty-eight hundred seven-k of
this article.

(iii) (A) In the event a reduction pursuant to subparagraphs (i) and
(ii) of this paragraph is effective for distributions in accordance with
paragraph (b) of subdivision fourteen-c of this section, paragraph (c)
or (d) of subdivision nineteen of this section, subdivision fourteen-d
of this section or subdivision seventeen of this section for a general
hospital, such general hospital shall receive a supplementary
distribution not as a disproportionate share payment and not subject to
federal financial participation from funds available pursuant to such
subdivisions equal to one-half of such reduction for periods through
December thirty-first, nineteen hundred ninety-six.

(B) In the event a reduction pursuant to subparagraphs (i) and (ii) of
this paragraph is effective for distributions in accordance with section
twenty-eight hundred seven-k of this article for a general hospital,
such general hospital shall receive a supplementary distribution not as
a disproportionate share payment and not subject to federal financial
participation from funds available pursuant to section twenty-eight
hundred seven-k of this article for periods during the period January
first, nineteen hundred ninety-seven through December thirty-first,
nineteen hundred ninety-nine equal to one-half of such reduction.

* NB Effective and expires December 31, 2026

* (c) (i) No general hospital other than a public general hospital may
receive in total from disproportionate share payment distributions made
in accordance with paragraph (b) of subdivision fourteen-c, subdivision
seventeen and paragraphs (c) and (d) of subdivision nineteen of this
section and adjustments in accordance with subdivision fourteen-d of
this section for the period April first, nineteen hundred ninety-five
through December thirty-first, nineteen hundred ninety-five or for the
annual rate period beginning on January first, nineteen hundred
ninety-six an amount which exceeds the costs incurred during such period
of furnishing inpatient and ambulatory hospital services, net of medical
assistance payments pursuant to title eleven of article five of the
social services law, other than disproportionate share payments pursuant
to subdivision twenty-six of this section, and payments by uninsured
patients, by the hospital to individuals who either are eligible for
medical assistance pursuant to title eleven of article five of the
social services law or have no health insurance or other source of third
party coverage; provided, however, that the commissioner shall make such
modifications to the manner in which the limitation on disproportionate
share payments is applied to such hospitals as shall increase the
maximum limit for a period or part of a period as authorized by federal
law or regulation or the secretary of the department of health and human
services for purposes of federal financial participation pursuant to
title XIX of the federal social security act. For purposes of this
paragraph, payments to a general hospital for services provided to
indigent patients made by the state or a unit of local government within
the state shall not be considered to be a source of third party payment.

(ii)(A) Reductions pursuant to this paragraph shall be made in the
following sequence for general hospitals other than financially
distressed hospitals: adjustments in accordance with subdivision
fourteen-d of this section; and distributions in accordance with
subdivision seventeen of this section.

(B) Reductions pursuant to this paragraph shall be made in the
following sequence for general hospitals designated as financially
distressed hospitals: distributions in accordance with paragraph (b) of
subdivision fourteen-c of this section; distributions in accordance with
paragraphs (c) and (d) of subdivision nineteen of this section; and
distributions in accordance with subdivision seventeen of this section.

(iii) In the event a reduction pursuant to subparagraphs (i) and (ii)
of this paragraph is effective for distributions in accordance with
paragraph (b) of subdivision fourteen-c of this section, paragraph (c)
or (d) of subdivision nineteen of this section, subdivision fourteen-d
of this section or subdivision seventeen of this section for a general
hospital, such general hospital shall receive a supplementary
distribution not as a disproportionate share payment and not subject to
federal financial participation from funds available pursuant to such
subdivisions equal to one-half of such reduction.

* NB Effective December 31, 2026

* (d)(i) Commencing April first, nineteen hundred ninety-four, no
general hospital may be eligible to receive disproportionate share
payments determined in accordance with subdivision twenty-six of this
section through December thirty-first, nineteen hundred ninety-six or in
accordance with section twenty-eight hundred seven-k of this article for
periods during the period January first, nineteen hundred ninety-seven
through December thirty-first, nineteen hundred ninety-nine and on and
after January first, two thousand unless the hospital has an inpatient
utilization rate for patients eligible for payments pursuant to title
eleven of article five of the social services law eligible for federal
financial participation pursuant to title nineteen of the federal social
security act of not less than one percent.

(ii) In the event a general hospital is disqualified pursuant to
subparagraph (i) of this paragraph from receiving disproportionate share
payments for a period, such general hospital shall receive distributions
not as disproportionate share payments and not subject to federal
financial participation from funds available pursuant to subdivision
seventeen of this section for periods through December thirty-first,
nineteen hundred ninety-six, and pursuant to section twenty-eight
hundred seven-k of this article for periods during the period January
first, nineteen hundred ninety-seven through December thirty-first,
nineteen hundred ninety-nine and on and after January first, two
thousand equal to one-half of the distributions for which such general
hospital would have been qualified pursuant to subdivision seventeen of
this section for periods through December thirty-first, nineteen hundred
ninety-six, and pursuant to section twenty-eight hundred seven-k of this
article for periods during the period January first, nineteen hundred
ninety-seven through December thirty-first, nineteen hundred ninety-nine
and on and after January first, two thousand without consideration of
subparagraph (i) of this paragraph.

* NB Effective until December 31, 2026

* (d)(i) Commencing April first, nineteen hundred ninety-four, no
general hospital may be eligible to receive disproportionate share
payments determined in accordance with subdivision twenty-six of this
section through December thirty-first, nineteen hundred ninety-six or in
accordance with section twenty-eight hundred seven-k of this article for
periods during the period January first, nineteen hundred ninety-seven
through December thirty-first, nineteen hundred ninety-nine unless the
hospital has an inpatient utilization rate for patients eligible for
payments pursuant to title eleven of article five of the social services
law eligible for federal financial participation pursuant to title
nineteen of the federal social security act of not less than one
percent.

(ii) In the event a general hospital is disqualified pursuant to
subparagraph (i) of this paragraph from receiving disproportionate share
payments for a period, such general hospital shall receive distributions
not as disproportionate share payments and not subject to federal
financial participation from funds available pursuant to subdivision
seventeen of this section for periods through December thirty-first,
nineteen hundred ninety-six, and pursuant to section twenty-eight
hundred seven-k of this article for periods during the period January
first, nineteen hundred ninety-seven through December thirty-first,
nineteen hundred ninety-nine equal to one-half of the distributions for
which such general hospital would have been qualified pursuant to
subdivision seventeen of this section for periods through December
thirty-first, nineteen hundred ninety-six, and pursuant to section
twenty-eight hundred seven-k of this article for periods during the
period January first, nineteen hundred ninety-seven through December
thirty-first, nineteen hundred ninety-nine without consideration of
subparagraph (i) of this paragraph.

* NB Effective and expires December 31, 2026

* (d)(i) Commencing April first, nineteen hundred ninety-four, no
general hospital may be eligible to receive disproportionate share
payments determined in accordance with subdivision twenty-six of this
section unless the hospital has an inpatient utilization rate for
patients eligible for payments pursuant to title eleven of article five
of the social services law eligible for federal financial participation
pursuant to title nineteen of the federal social security act of not
less than one percent.

(ii) In the event a general hospital is disqualified pursuant to
subparagraph (i) of this paragraph from receiving disproportionate share
payments for a period, such general hospital shall receive distributions
not as disproportionate share payments and not subject to federal
financial participation from funds available pursuant to subdivision
seventeen of this section equal to one-half of the distributions for
which such general hospital would have been qualified pursuant to
subdivision seventeen of this section without consideration of
subparagraph (i) of this paragraph.

* NB Effective December 31, 2026

* (e) For purposes of calculations pursuant to paragraphs (b) and (c)
of this subdivision of maximum disproportionate share payment
distributions for a year or part thereof, costs incurred of furnishing
hospital services net of medical assistance payments, other than
disproportionate share payments, and payments by uninsured patients
shall be determined initially based on base year data and statistics for
the base year two years immediately preceding the year projected to the
year by the trend factor determined in accordance with subdivision ten
of this section and shall be subsequently revised to reflect actual
period data and statistics. For purposes of calculations pursuant to
paragraph (d) of this subdivision of eligibility to receive
disproportionate share payments for a year or part thereof, the hospital
inpatient utilization rate shall be determined based on base year
statistics in accordance with a methodology established by the
commissioner, and costs incurred of furnishing hospital services shall
be determined in accordance with a methodology established by the
commissioner consistent with requirements of the secretary of the
department of health and human services for purposes of federal
financial participation pursuant to title XIX of the federal social
security act in disproportionate share payments.

* NB Effective until December 31, 2026

* (e) For purposes of calculations pursuant to paragraphs (b) and (c)
of this subdivision of maximum disproportionate share payment
distributions for a rate year or part thereof, costs incurred of
furnishing hospital services net of medical assistance payments, other
than disproportionate share payments, and payments by uninsured patients
shall be determined initially based on base year data and statistics for
the base year two years immediately preceding the rate year projected to
the rate year by the trend factor determined in accordance with
subdivision ten of this section and shall be subsequently revised to
reflect actual rate period data and statistics. For purposes of
calculations pursuant to paragraph (d) of this subdivision of
eligibility to receive disproportionate share payments for a rate year
or part thereof, the hospital inpatient utilization rate shall be
determined based on base year statistics in accordance with a
methodology established by the commissioner, and costs incurred of
furnishing hospital services shall be determined in accordance with a
methodology established by the commissioner consistent with requirements
of the secretary of the department of health and human services for
purposes of federal financial participation pursuant to title XIX of the
federal social security act in disproportionate share payments.

* NB Effective December 31, 2026

(e-1) For periods on and after January first, two thousand eleven, for
purposes of calculations pursuant to paragraphs (b) and (c) of this
subdivision of maximum disproportionate share payment distributions for
a rate year or part thereof, costs incurred of furnishing hospital
services net of medical assistance payments, other than disproportionate
share payments, and payments by uninsured patients shall for the two
thousand eleven calendar year, shall be determined initially based on
each hospital's submission of a fully completed two thousand eight
disproportionate share hospital data collection tool, which is required
to be submitted to the department by March thirty-first, two thousand
eleven, and shall be subsequently revised to reflect each hospital's
submission of a fully completed two thousand nine disproportionate share
hospital data collection tool, which is required to be submitted to the
department by October first, two thousand eleven.

For calendar years on and after two thousand twelve, such initial
determinations shall reflect submission of data as required by the
commissioner on a specified date. All such initial determinations shall
subsequently be revised to reflect actual rate period data and
statistics. Indigent care payments will be withheld in instances when a
hospital has not submitted required information by the due dates
prescribed in this paragraph, provided, however, that such payments
shall be made upon submission of such required data. For purposes of
calculations pursuant to paragraph (d) of this subdivision of
eligibility to receive disproportionate share payments for a rate year
or part thereof, the hospital inpatient utilization rate shall be
determined based on the base year statistics in accordance with the
methodology established by the commissioner, and costs incurred of
furnishing hospital services shall be determined in accordance with a
methodology established by the commissioner consistent with requirements
of the secretary of the department of health and human services for
purposes of federal financial participation pursuant to the title XIX of
the federal social security act in disproportionate share payments.

(f) The commissioner may recover any amounts paid in excess of maximum
permissible distributions and adjustments determined pursuant to this
subdivision by retroactive adjustment and recoupment from payments made
for beneficiaries eligible for payments pursuant to title eleven of
article five of the social services law.

(g) Notwithstanding any inconsistent provision of this subdivision,
the provision of subparagraph (iii) of paragraph (b), subparagraph (iii)
of paragraph (c) or subparagraph (ii) of paragraph (d) of this
subdivision shall be of no force and effect and shall be deemed to have
been null and void as of January first, nineteen hundred ninety-four in
the event the secretary of the department of health and human services
determines that distributions based on such provisions would render a
health care related tax on general hospitals an impermissible health
care related tax for purposes of the federal medicaid voluntary
contribution and provider specific tax amendments of nineteen hundred
ninety-one for purposes of such health care related tax receipts
reducing the amount deemed expended by the state as medical assistance
for purposes of federal financial participation.

22. Undistributed funds. Any funds, including income from invested
funds, remaining in the bad debt and charity care and capital statewide
pool after distributions in accordance with paragraphs (a), (b), (b-1),
(c), (d), (e) and (f) of subdivision nineteen of this section shall be
distributed proportionately to voluntary non-profit, private proprietary
and public general hospitals, excluding major public general hospitals,
on the basis of hospital specific assessments submitted to the pool.

23. Reimbursement rates. The assessments pursuant to subdivision
eighteen of this section shall not be an allowable cost in the
determination of general hospital inpatient reimbursement rates in
accordance with this section and section twenty-eight hundred seven of
this article.

24. Federal financial participation. The council may adopt rules and
regulations, subject to the approval of the commissioner, to adjust
rates of payment by governmental agencies for general hospital inpatient
services determined in accordance with this section as necessary to meet
federal requirements for securing federal financial participation
pursuant to title XIX of the federal social security act in the event
the state cannot provide assurances satisfactory to the secretary of
health and human services related to a comparison of rates of payment in
the aggregate to maximum aggregate payments determined in accordance
with federal law and regulation which are substantially the same as such
assurances as in effect on October twenty-sixth, nineteen hundred
eighty-seven for securing such federal financial participation.
Notwithstanding any other law, the state reserves the right to recoup
any payments by governmental agencies for general hospital inpatient
services authorized by this section for which federal financial
participation has been denied in connection with that determination by
the department of health and human services.

25. Medical education expenses. (a) Notwithstanding any inconsistent
provision of this section, to encourage the training of more primary
care physicians, for annual rate periods beginning on or after January
first, nineteen hundred ninety-two, indirect medical education expenses,
as defined in subparagraph (ii) of paragraph (c) of subdivision seven of
this section, of a general hospital included in the determination of the
operating cost component of general hospital rates of payment for a rate
period in accordance with subdivisions six and seven of this section or
in accordance with paragraph (e), (g) or (i) of subdivision four of this
section for general hospitals or distinct units of general hospitals not
reimbursed on the basis of case based payments per discharge shall be
adjusted to reflect the following modifications:

(i) the calculation of interns and residents to bed ratios for
purposes of determining indirect reimbursement shall include residents
in non-hospital ambulatory settings. The sum in total for all general
hospitals of the indirect medical education expenses shall equal the sum
in total for each general hospital determined as if the provisions of
this section were applied without consideration of residents in
non-hospital ambulatory settings; and

(ii) for annual rate periods beginning on or after January first,
nineteen hundred ninety-two, residencies shall be weighted to provide
higher weights for primary care and emergency medicine physicians.
Primary care residents specialties shall include family medicine,
general pediatrics, primary care internal medicine and primary care
obstetrics and gynecology. In determining whether a residency is in
primary care, the commissioner shall consult with the New York state
council on graduate medical education and the state hospital review and
planning council. Reimbursable indirect expenses of medical education of
a general hospital for a rate period shall be weighted based on
projected medical education statistics for such general hospital for
such rate period, and subsequently reconciled through appropriate audit
procedures to actual statistics by a prospective adjustment to rates of
payment. The weighting factors shall be determined based on nineteen
hundred ninety data and statistics and shall include residents
identified in subparagraph (i) of this paragraph not previously included
in such calculations such that the sum in total for all general
hospitals of the results of the weighting factors multiplied by the
indirect medical education expenses for each general hospital shall
equal, approximately, the sum in total for all general hospitals of the
indirect medical education expenses for each general hospital determined
as if the provisions of this section were applied without consideration
of the weighting factors or residents in non-hospital ambulatory
settings determined pursuant to this subdivision. Residency positions in
any specialty shall be weighted to equal no less than nine-tenths of
what such position would have equaled if reimbursement were to have been
calculated without regard to the weighting factors. If a general
hospital is reimbursed by this provision in excess of the amount such
hospital would have been reimbursed without regard to the weighting
factors, such general hospital shall apply such additional funds to
encourage the training of primary care physicians. The provisions of
this subparagraph shall not apply to those four specialty eye and ear,
special surgery and orthopedic and joint disease hospitals, specified by
the commissioner, whose primary mission is to engage in research,
training, and clinical care in the above-named areas.

(b) Hospitals shall furnish to the department such reports and
information as may be required by the commissioner to assess the cost,
quality and health system needs for medical education provided.

(c) For purposes of determining how such weighting factors have
resulted in the increased training of physicians in primary care
specialties, the council on graduate medical education shall prepare a
report on or before March thirty-first, nineteen hundred ninety-five.
Such report shall include, but shall not be limited to: an evaluation of
the effectiveness such weighting factors have had on the number of
residents matched in primary care specialties; the degree to which such
weighting factors have impacted general hospitals to redirect their
residency programs toward training primary care physicians; and the
impact such weighting factors have had on graduate medical education
within general hospitals. Such report shall also include recommendations
to the governor and the legislature on the continuation, expiration or
modification of such weighting factors.

(d) Notwithstanding any inconsistent provision of this section and
subject to the availability of federal financial participation:

(i) For periods on and after April first, two thousand four, the
commissioner shall adjust inpatient medical assistance rates of payment
established pursuant to this section, including discrete rates of
payment calculated pursuant to paragraph a-three of subdivision one of
this section, for non-public general hospitals, and for periods on and
after April first, two thousand seven, for public and non-public general
hospitals, in accordance with subparagraph (ii) of this paragraph, for
purposes of reimbursing graduate medical education costs based on the
following methodology:

(ii) Rate adjustments for each general hospital shall be based on the
difference between the graduate medical education component, direct and
indirect, of the two thousand three medical assistance inpatient rates
of payment, including exempt unit per diem rates, and an estimate of
what the graduate medical education component, direct and indirect, of
such medical assistance inpatient rates of payment, including exempt
unit per diem rates would be, stated at two thousand three levels and
calculated as follows:

(A) Each general hospital's total direct medical education costs as
reported in the two thousand one institutional cost report submitted as
of December thirty-first, two thousand three, and

(B) An estimate of the total indirect medical education costs for two
thousand one calculated in accordance with the methodology applicable
for purposes of determining an estimate of indirect medical education
costs pursuant to subparagraph (ii) of paragraph (c) of subdivision
seven of this section. The indirect medical education costs shall equal
the product of two thousand one hospital specific inpatient operating
costs, including exempt unit costs, and the indirect teaching cost
percentage determined by the following formula:

1-(1/(1+1.89(((1+r)^.405)-1)))
where r equals the ratio of residents and fellows to beds for two
thousand one adjusted to reflect the projected two thousand three
resident counts.

(C) Each hospital's rate adjustment shall be limited to seventy-five
percent of the graduate medical education component included in its two
thousand three medical assistance inpatient rates of payment, including
exempt unit rates. For periods on and after April first, two thousand
seven, the seventy-five percent limit shall not apply to rate decreases
calculated pursuant to this paragraph.

(D) For the period April first, two thousand four through March
thirty-first, two thousand seven, no hospital shall receive a rate
adjustment pursuant to this paragraph if such rate adjustment would be a
negative amount. For periods on and after April first, two thousand
seven, no public general hospital shall receive a rate increase
calculated pursuant to this paragraph.

(iii) If the aggregate amount of rate adjustments calculated pursuant
to this paragraph exceeds the upper payment limit calculated pursuant to
federal regulations, such rate adjustments shall be reduced
proportionally by the amount in excess of the federal upper payment
limit. Such reduction, if applicable, shall be calculated on an annual
basis.

(iv) Such rate adjustment shall be included as an add-on to medical
assistance inpatient rates of payment, excluding exempt unit rates, but
including inpatient rates of payment established in accordance with
paragraph a-three of subdivision one of this section. Such rate add-on
shall be based on medical assistance data reported in each hospital's
annual cost report submitted for the period two years prior to the rate
year and filed with the department by November first of the year prior
to the rate year. Such amounts shall not be reconciled to reflect
changes in medical assistance utilization between the year two years
prior to the rate year and the rate year.

(e) From amounts available pursuant to paragraph (oo) of subdivision
one of section twenty-eight hundred seven-v of this article, allocations
shall be made to non-public general hospitals receiving a rate
adjustment pursuant to paragraph (d) of this subdivision when the rate
adjustment pursuant to paragraph (d) of this subdivision results in the
general hospital exceeding its applicable disproportionate share payment
limit in the year in which the adjustment is made and the amount of the
associated reduction in the hospital's disproportionate share payments
would result in the hospital receiving less than its total distribution
amount in that year. A hospital's "total distribution amount" shall be
the amount that the hospital would have received pursuant to paragraphs
(c) and (d) of subdivision three of section twenty-eight hundred seven-m
of this article prior to the effective date of this paragraph. A
hospital's eligible loss for purposes of this paragraph shall be the
amount of the loss in such total distribution amount. Each eligible
hospital's allocation of available funds pursuant to this paragraph
within a year shall be determined based on its proportionate share of
the aggregate eligible losses for all such hospitals, limited by the
amount of the rate adjustment pursuant to paragraph (d) of this
subdivision.

26. Disproportionate share payments. Distributions to general
hospitals from bad debt and charity care regional pools pursuant to
subdivision seventeen of this section, distributions to general
hospitals from the bad debt and charity care and capital statewide pool
pursuant to paragraphs (c) and (d) of subdivision nineteen of this
section, distributions to general hospitals from the bad debt and
charity care for financially distressed hospitals statewide pool
pursuant to subdivision fourteen-c of this section and the adjustment
provided in accordance with subdivision fourteen-a of this section and
the adjustment provided in accordance with subdivision fourteen-d of
this section shall be considered disproportionate share payments for
inpatient hospital services to general hospitals serving a
disproportionate number of low income patients with special needs for
purposes of providing assurances to the secretary of health and human
services as necessary to meet federal requirements for securing federal
financial participation pursuant to title XIX of the federal social
security act.

27. Reports. (a) The commissioner of health shall submit a report to
the legislature and the council on health care financing on or before
February first, nineteen hundred eighty-eight detailing the objective,
impact, design and computation for an inpatient pricing component. In
terms of the design and computation for a pricing system such report
shall include but not be limited to: a description and methodology for
developing peer groups, identification of costs included in the
calculation of a group average and any adjustments made to such costs,
the methodology developed to reflect outliers, any teaching or
disproportionate share adjustments made, the calculation of wage and
power equalization factors, and identification of any adjustments made
to the service intensity weights or diagnosis-related group categories.
The commissioner shall explore methodologies for the inclusion of
severity of illness considerations in determining group average costs
and rates and shall include all details of his analysis in the report
required under this subparagraph. If it is determined that a severity of
illness adjustment cannot be developed for incorporation in the
computations, the report filed shall include the specific reasons for
this conclusion. With regard to a fiscal impact analysis such report
shall include but not be limited to the impact on major types of general
hospitals including rural, urban, teaching, non-teaching, plus a
regional analysis; and should indicate any characteristics which can be
observed regarding general hospitals which would be significantly
impacted by the introduction of a pricing component. The commissioner
shall expeditiously make available for inspection by interested parties
pertinent data used in the development of the inpatient pricing
component consistent with appropriate department procedures for the
release and protection of confidential data.

(b) The commissioner shall submit a report to the governor and the
legislature on or before February first, nineteen hundred ninety-five
regarding the objective, impact, design and implementation of the case
based payment system for inpatient hospital services based on
diagnosis-related groups created pursuant to this section including, in
particular, an analysis of the group price component of case based rates
of payment and the appropriateness and effectiveness of the provisions
relating to financing of uncompensated care. The reports shall include
but not be limited to a fiscal impact analysis of the impact of the case
based payment system on major types of general hospitals including
rural, urban, teaching and non-teaching, plus a regional analysis. Such
reports shall evaluate the impact of the case based payment system on
general hospital inpatient medical and clinical care and the quality of
hospital services. The reports shall also include recommendations for
continuation or modification of the case based payment system for
inpatient hospital services provided on or after January first, nineteen
hundred ninety-six.

** (c) The commissioner shall report to the governor and the
legislature on or before December first, nineteen hundred eighty-eight
with a plan relating to the structure and financing of graduate medical
education. Such plan shall include an evaluation of and recommendations
for graduate medical education with respect to health services delivery
and educational goals including but not limited to the following:
appropriate supply and distribution of primary care providers by
geographic area; adequate supply and distribution of medical specialists
according to projected population needs; educational opportunities
representative of current and future practice settings; the impact of
such plan on health care delivery in currently underserved and rural
areas; and reimbursement changes to effectuate the recommendations
included in the plan. Such plan shall be developed with substantial
participation by the department of education, the medical schools,
residency training programs, health systems agencies, health care
institutions, and physicians.

** NB Inadvertently omitted from 731/93 amendment

* 28. Notwithstanding any inconsistent provision of this section:

(a) the commissioner may adjust, on a per unit of service basis,
general hospital inpatient services rates of payment established
pursuant to this section as in effect on and before December
thirty-first, nineteen hundred ninety-six prospectively as an additional
factor to be paid, including the impact of payment differentials as were
in effect pursuant to this section, in addition to, or as a reduction
to, any hospital charges or negotiated rate (the adjustment may not be
negotiated by the payor); including, but not limited to, capital related
inpatient expenses reconciliation adjustments pursuant to subdivision
eight of this section, rate adjustments for corrections, appeals and
volume changes pursuant to subdivision nine of this section, rate
adjustments to reflect trend factor adjustments pursuant to subdivision
ten of this section, maximum case mix change adjustments pursuant to
paragraph (f) of subdivision eleven of this section, and adjustments
based on audits;

(b) the allowances percentages established pursuant to this article in
effect for a rate period shall be applied to hospital charges or
negotiated rates plus the prospectively adjusted payment of rates of
payment of a general hospital in accordance with paragraph (a) of this
subdivision;

(c) no recalculation of the basis for distribution of funds from
regional or statewide pools established pursuant to this section shall
be made based on the impact of a prospective adjustment to rates of
payment authorized pursuant to this subdivision; and

(d) prospective rate adjustments authorized pursuant to this
subdivision for a general hospital based on appeals approved after
January first, nineteen hundred ninety-eight shall be included in rates
of payment as a one hundred percent facility specific adjustment and
shall not affect the calculation of the group category average inpatient
reimbursable operating cost per discharge for such retrospective period
for any other general hospital.

* NB Expires December 31, 2026

* 29. Coinsurance and deductibles. (a) If a general hospital and a
third-party payor agree to a negotiated payment methodology for a period
on or after January first, nineteen hundred ninety-seven that is based
on a discount from hospital charges, such discount shall apply to the
calculation of the charge basis for deductible and coinsurance amounts
for such period owed for any patient covered by such third-party payor
as the primary payor.

(b) If a general hospital and a third-party payor agree to a
negotiated payment methodology for a period on or after January first,
nineteen hundred ninety-seven that is not based on a discount from
hospital charges, excluding capitation arrangements, the maximum amount
to be charged for deductible and coinsurance amounts for such period for
any patient covered by such third-party payor as the primary payor shall
not exceed the amount calculated by applying the deductible and
coinsurance amounts to the amount due on the basis of such negotiated
payment arrangement.

* NB Expires December 31, 2026

30. General hospital recruitment and retention of health care workers.
Notwithstanding any inconsistent provision of this section and subject
to the availability of federal financial participation:

(a) (i) The commissioner shall adjust inpatient medical assistance
rates of payment established pursuant to this section for non-public
general hospitals in accordance with subparagraph (ii) of this paragraph
for purposes of recruitment and retention of health care workers in the
following aggregate amounts for the following periods:

(A) ninety-three million two hundred thousand dollars on an annualized
basis for the period April first, two thousand two through December
thirty-first, two thousand two; one hundred eighty-seven million eight
hundred thousand dollars on an annualized basis for the period January
first, two thousand three through December thirty-first, two thousand
three; two hundred sixty-two million one hundred thousand dollars on an
annualized basis for the period January first, two thousand four through
December thirty-first, two thousand six; one hundred thirty-one million
one hundred thousand dollars for the period January first, two thousand
seven through June thirtieth, two thousand seven, and two hundred
forty-three million five hundred thousand dollars for the period July
first, two thousand seven through March thirty-first, two thousand
eight, two hundred forty-three million five hundred thousand dollars for
the period April first, two thousand eight through March thirty-first,
two thousand nine; one hundred sixty-three million one hundred
forty-five thousand dollars for the period April first, two thousand
nine through November thirtieth, two thousand nine.

(ii) Such increases shall be allocated proportionally based on each
non-public general hospital's reported total gross salary and fringe
benefit costs as reported on exhibit 11 of the 1999 institutional cost
report submitted as of November first, two thousand one to the total of
such reported costs for all non-public general hospitals, provided,
however, that for periods on and after July first, two thousand seven,
fifty percent of such increases shall be allocated proportionally, based
on each non-public hospital's reported total gross salary and fringe
benefit costs, as reported on exhibit 11 of the nineteen hundred
ninety-nine institutional cost report as submitted to the department
prior to November first, two thousand one, to the total of such reported
costs for all non-public general hospitals, and fifty percent of such
increases shall be allocated proportionally, based on each such
hospital's total reported medicaid inpatient discharges, as reported in
the two thousand four institutional cost report as submitted to the
department prior to November first, two thousand six, to the total of
such reported medicaid inpatient discharges for all non-public general
hospitals, as weighted proportionally to reflect the relative medicaid
case mix of each such hospital. These amounts shall be included as a
reimbursable cost add-on to medical assistance inpatient rates of
payment established pursuant to this section for non-public general
hospitals based on medical assistance utilization data in each
hospital's annual cost report submitted two years prior to the rate
year. Such amounts shall be reconciled to reflect changes in medical
assistance utilization between the year two years prior to the rate year
and the rate year based on data reported in each hospital's cost report
for the respective rate year. These amounts shall be included as a
reimbursable cost add-on to medical assistance inpatient rates of
payment established pursuant to this section for non-public general
hospitals based on medical assistance utilization data in each
facility's annual cost report submitted two years prior to the rate
year. For rate adjustments effective May first, two thousand five and
thereafter such amounts shall be reconciled to reflect changes in
medical assistance utilization between the year two years prior to the
rate year and the rate year based upon data reported in each hospital's
institutional cost report for the respective rate year.

(b) (i) Notwithstanding sections one hundred twelve and one hundred
sixty-three of the state finance law and any other inconsistent
provision of law, the commissioner shall make grants to public general
hospitals without a competitive bid or request for proposal process for
purposes of recruitment and retention of health care workers in the
following aggregate amounts for the following periods:

(A) eighteen million five hundred thousand dollars on an annualized
basis for the period April first, two thousand two through December
thirty-first, two thousand two; thirty-seven million four hundred
thousand dollars on an annualized basis for the period January first,
two thousand three through December thirty-first, two thousand three;
fifty-two million two hundred thousand dollars on an annualized basis
for the period January first, two thousand four through December
thirty-first, two thousand six; twenty-six million one hundred thousand
dollars for the period January first, two thousand seven through June
thirtieth, two thousand seven, forty-nine million dollars for the period
July first, two thousand seven through March thirty-first, two thousand
eight, and forty-nine million dollars for the period April first, two
thousand eight through March thirty-first, two thousand nine.

(ii) Such grants shall be allocated proportionally based on each
public general hospital's reported total gross salary and fringe benefit
costs as reported on exhibit 11 of the 1999 institutional cost report
submitted as of November first, two thousand one to the total of such
reported costs for all public general hospitals.

(c) From amounts available pursuant to paragraph (gg) of subdivision
one of section twenty-eight hundred seven-v of this article, allocations
shall be made to non-public general hospitals whose allocated labor
adjustments pursuant to paragraphs (a) and (e) of this subdivision and
adjustment pursuant to subdivision thirty-two of this section results in
the general hospital exceeding its applicable disproportionate share
payment limit. Each such hospital's allocation of available funds
pursuant to this paragraph within a year shall be determined based on
its proportionate share of the aggregate reduction of federal
disproportionate share funding for all such hospitals for the year
resulting from the allocated labor adjustments pursuant to paragraphs
(a) and (e) of this subdivision and from the adjustment pursuant to
subdivision thirty-two of this section.

(d) General hospitals which have their rates adjusted or receive
grants pursuant to paragraphs (a) and (b) of this subdivision,
respectively, shall use such funds for the purpose of recruitment and
retention of non-supervisory workers at health care facilities or any
worker with direct patient care responsibility and are prohibited from
using such funds for any other purpose. Funds under this subdivision are
not intended to supplant support provided by a local government. Each
such general hospital shall submit, at a time and in a manner to be
determined by the commissioner, a written certification attesting that
such funds will be used solely for the purpose of recruitment and
retention of non-supervisory workers at health care facilities or any
worker with direct patient care responsibility. The commissioner is
authorized to audit each general hospital to ensure compliance with the
written certification required by this paragraph and shall recoup any
funds determined to have been used for purposes other than recruitment
and retention of non-supervisory workers at health care facilities or
any worker with direct patient care responsibility. Such recoupment
shall be in addition to applicable penalties under sections twelve and
twelve-b of this chapter.

(e)(i) The commissioner shall adjust inpatient medical assistance
rates of payment established pursuant to this section for general
hospitals in accordance with subparagraph (ii) of this paragraph and
shall establish discrete rates of payment for such hospitals in
accordance with subparagraph (iii) of this paragraph, for purposes of
additional support of recruitment and retention of health care workers
in the following aggregate amounts for the following periods:

(A) one hundred twenty-one million dollars for the period May first,
two thousand five through December thirty-first, two thousand five and
one hundred twenty-one million dollars for the period January first, two
thousand six through December thirty-first, two thousand six.

(ii) Such increases shall be allocated proportionally based on each
general hospital's reported gross salary and fringe benefit costs as
reported on exhibit 11 of the 1999 institutional cost report submitted
as of November first, two thousand one to the total of such reported
costs for all general hospitals. These amounts shall be included as a
reimbursable cost add-on to medical assistance inpatient rates of
payment established pursuant to this section for general hospitals based
on medical assistance utilization data in each facility's annual cost
report submitted two years prior to the rate year. Such amounts shall be
reconciled to reflect changes in medical assistance utilization between
the year two years prior to the rate year and the rate year based upon
data reported in each hospital's institutional cost report for the
respective rate year.

(iii) The commissioner shall establish, subject to the approval of the
director of the budget, discrete rates of payment for general hospitals
for payments under the medical assistance program pursuant to titles
eleven and eleven-D of article five of the social services law for
persons eligible for medical assistance and family health plus who are
enrolled in health maintenance organizations based on the calculation
set forth in subparagraph (ii) of this paragraph for such general
hospitals. If discrete rates of payment under this subparagraph are not
established, the commissioner shall adjust the calculation established
pursuant to subparagraph (ii) of this paragraph to account for medical
assistance utilization described under this subparagraph for such
non-public general hospital.

(iv) Payment of the non-federal share of the medical assistance
payments made pursuant to this paragraph shall be the responsibility of
the state and shall not include a local share. Payments made pursuant to
this paragraph or pursuant to paragraph (a) of this subdivision may be
added to rates of payment or made as aggregate payments to eligible
general hospitals.

(f) In the event that a hospital entitled to an adjustment pursuant to
paragraph (a) or (e) of this subdivision closes or otherwise experiences
a change in status that eliminates its ability to continue to receive
such adjustments, the commissioner shall allocate the amount determined
under subparagraph (ii) of paragraph (a) and subparagraph (ii) of
paragraph (e) of this subdivision for such hospital to hospitals in the
immediate region of the closing hospital based upon the remaining
hospitals' reported gross salary and fringe benefit costs as reported on
exhibit eleven of the two thousand four institutional cost report
submitted as of November first, two thousand five to the total of such
reported costs for all general hospitals in the region, provided,
however, that for periods on and after July first, two thousand seven,
such allocations shall be based on such remaining hospitals' reported
medicaid inpatient discharges, as reported in the two thousand four
institutional cost report submitted to the department prior to November
first, two thousand six, to the total of such reported medicaid
inpatient discharges for all such remaining hospitals. The commissioner
shall define the immediate region as the county or counties within which
workers displaced from the closing hospital are likely to seek
re-employment.

31. Supplemental general hospital recruitment and retention
adjustment. (a) Notwithstanding any law, rule or regulation to the
contrary, the commissioner shall, within amounts appropriated, and
contingent on the availability of federal financial participation, make
Medicaid rate adjustments for non-public general hospitals to address
extraordinary costs associated with recruitment and retention of
non-supervisory workers at health care facilities or any worker with
direct patient care responsibility at such general hospitals. Eligible
hospitals shall be selected by the commissioner pursuant to a
competitive process. Requests for proposals for eligible projects shall
be issued by the commissioner.

(b) Such eligible projects may include:

(i) an increase in non-supervisory staff, either facility wide or
targeted at a particular area of care or shift;

(ii) increased training and education of non-supervisory staff,
including allowing non-supervisory staff to increase their level of
licensure relevant to general hospital care;

(iii) efforts to decrease staff turn-over; and

(iv) other efforts related to the recruitment and retention of
non-supervisory staff or any worker with direct patient care
responsibility that will affect the quality of care at such facility.

(c) The commissioner shall consider, in selecting eligible projects,
the likelihood that such project will provide needed resources to meet
legal commitments for increased labor costs, the financial need of the
facility, the existence of a shortage of qualified hospital workers in
the geographic area in which the facility is located, the existence of
high employee turn-over at the facility and such other matters as the
commissioner deems appropriate.

(d) In implementing rate adjustments authorized under this
subdivision, the commissioner shall establish, subject to the approval
of the director of the budget, discrete rates of payment for non-public
general hospitals for payments under the medical assistance program
pursuant to titles eleven and eleven-D of article five of the social
services law for persons eligible for medical assistance and family
health plus who are enrolled in health maintenance organizations.

(e) Adjustments to Medicaid rates of payment made pursuant to this
section shall not be subject to subsequent adjustment or reconciliation.

(f) Adjustments to Medicaid rates of payment made pursuant to this
section shall not, in aggregate, exceed fifteen million dollars for the
period beginning April first, two thousand two and ending December
thirty-first, two thousand two and, on an annualized basis, for each
annual period thereafter beginning January first, two thousand three and
ending December thirty-first, two thousand six, and shall not, in
aggregate, exceed seven million five hundred thousand dollars for the
period January first, two thousand seven through June thirtieth, two
thousand seven.

32. Rural hospital supplemental rate adjustment. Notwithstanding any
inconsistent provision of this section:

(a) The commissioner shall adjust inpatient medical assistance rates
of payment established pursuant to this section for rural hospitals as
defined in paragraph (c) of subdivision one of section twenty-eight
hundred seven-w of this article in accordance with paragraph (b) of this
subdivision for purposes of supporting critically needed health care
services in rural areas in the following aggregate amounts for the
following periods:

seven million dollars for the period May first, two thousand five
through December thirty-first, two thousand five, seven million dollars
for the period January first, two thousand six through December
thirty-first, two thousand six, seven million dollars for the period
April first, two thousand seven through December thirty-first, two
thousand seven, seven million dollars for calendar year two thousand
eight, and six million four hundred seventeen thousand dollars for the
period January first, two thousand nine through November thirtieth, two
thousand nine.

(b) Such increases shall be allocated proportionately based on each
such rural hospital's total reported medicaid inpatient discharges as
reported in the two thousand two institutional cost report to the total
of such discharges for all rural hospitals. These amounts shall be
included as a reimbursable cost add-on to medical assistance inpatient
rates of payment established pursuant to this section for rural
hospitals based on medical assistance utilization data in each
facility's annual cost report submitted two years prior to the rate
year. Such amounts shall be reconciled to reflect changes in medical
assistance utilization between the year two years prior to the rate year
and the rate year based upon data reported in each hospital's
institutional cost report for the respective rate year.

(c) Payment of the non-federal share of the medical assistance
payments made pursuant to this subdivision shall be the responsibility
of the state and shall not include a local share. Payments made pursuant
to this subdivision may be added to rates of payment or made as
aggregate payments to eligible general hospitals.

33. Notwithstanding any provision of law which is inconsistent with or
contrary to the structure established by this subdivision and
subdivision two-a of section twenty-eight hundred seven of this article
in order to transition from nineteen hundred eighty-one base year costs
to two thousand five base year costs by no later than December
thirty-first, two thousand twelve, and subject to the availability of
federal financial participation, medicaid per diem and per discharge
rates of payment for general hospital inpatient services for discharges
and days occurring on and after December first, two thousand eight,
shall be computed in accordance with the following:

(a)(i) for the period December first, two thousand eight through March
thirty-first, two thousand nine, such rates shall be subject to a
uniform transition adjustment which shall be based on each general
hospital's proportional share of projected medicaid reimbursable
inpatient operating costs and result in an aggregate reduction in such
rates equal to fifty-one million five hundred thousand dollars, as
determined by the commissioner, provided, however, that such transition
adjustment shall not apply to rates computed pursuant to paragraph (1)
of subdivision four of this section; and

(ii) for the period April first, two thousand nine through March
thirty-first, two thousand ten, such rates shall be revised pursuant to
a chapter of the laws of two thousand nine and as reflecting the
findings and recommendations of the commissioner as issued pursuant to
the provisions of paragraph (b) of this subdivision, provided, however,
that such revisions shall reflect an aggregate reduction in such rates
of no less than one hundred fifty-four million five hundred thousand
dollars, provided further, however, that, notwithstanding any contrary
provision of law, as determined by the commissioner, to the extent that
a chapter of the laws of two thousand nine is not enacted resulting in
such an aggregate annual reduction of no less than one hundred
fifty-four million five hundred thousand dollars in such rates, the
commissioner shall implement a uniform reduction of such rates in
accordance with the methodology described in subparagraph (i) of this
paragraph to the extent necessary, as determined by the commissioner, to
achieve such an aggregate reduction in such rates for the state fiscal
year beginning April first, two thousand nine and each state fiscal year
thereafter; and

(iii) for the periods April first, two thousand ten through March
thirty-first, two thousand twelve, rates shall reflect prior year rate
reductions and such additional reductions as are required to establish
rates based on two thousand five reported allowable Medicaid costs
pursuant to a chapter of the laws of two thousand ten.

(b) In consultation with the chairs of the senate and assembly health
committees, the commissioner shall, by no later than July first, two
thousand eight, establish a technical advisory committee for the
purposes of examining data and evaluating rate-setting methodological
issues, including the impact on hospitals of different methodologies in
preparation for the phased transition to the utilization of reported
allowable two thousand five operating costs for the purpose of setting
inpatient rates of payment for periods on and after April first, two
thousand nine, which phased transition shall be authorized in accordance
with a chapter of the laws of two thousand nine. The technical advisory
committee shall consist of three representatives of hospital
associations, two representatives of the health care industry and three
representatives of community providers and consumers as determined by
the commissioner. By no later than August first, two thousand eight, the
commissioner shall make available to the technical advisory committee
updated data and documentation relevant to the projected phased
transition to utilization of reported allowable two thousand five
operating costs for rate-setting purposes. The issues to be examined by
the technical advisory committee shall include, but not be limited to,
hospital re-basing, workforce recruitment and retention funding,
graduate medical education funding, peer group pricing, wage
equalization factors, case mix and such other related elements of the
general hospital inpatient reimbursement system as deemed appropriate by
the commissioner. The technical advisory committee shall also examine
the scope and volume of hospital out-patient services. By no later than
November first, two thousand eight the commissioner shall issue a report
setting forth findings and recommendations, including divergent views of
members of the technical advisory committee members concerning the
matters examined by the technical advisory committee and the projected
phased transition to utilization of two thousand five base year reported
allowable operating costs for inpatient rates of payments on and after
April first, two thousand nine.

(c) Paragraph (a) of this subdivision shall be effective the later of:
(i) December first, two thousand eight; (ii) after the commissioner
receives final approval of federal financial participation in payments
made for beneficiaries eligible for medical assistance under title XIX
of the federal social security act for the rate methodology established
pursuant to subdivision two-a of section twenty-eight hundred seven of
this article; or (iii) after the commissioner determines that the
department of health has the capability, for payments made pursuant to
subdivision two-a of section twenty-eight hundred seven of this article,
to electronically receive and process claims and transmit payments with
remittance statements. Prior to the commissioner making such a
determination, the department shall provide training sessions on the
rate methodology and billing requirements for services pursuant to
subdivision two-a of section twenty-eight hundred seven of this article
and opportunity for hospitals to perform end-to-end testing on claims
submission, processing and payment.

34. Enhanced safety net hospital program. (a) For the purposes of this
subdivision, "enhanced safety net hospital" shall mean a hospital which:

(i) in any of the previous three calendar years, has met the following
criteria:

(A) not less than fifty percent of the patients it treats receive
medicaid or are medically uninsured;

(B) not less than forty percent of its inpatient discharges are
covered by medicaid;

(C) twenty-five percent or less of its discharged patients are
commercially insured;

(D) not less than three percent of the patients it provides services
to are attributed to the care of uninsured patients; and

(E) provides care to uninsured patients in its emergency room,
hospital based clinics and community based clinics, including the
provision of important community services, such as dental care and
prenatal care;

(ii) is a public hospital operated by a county, municipality, public
benefit corporation or the state university of New York;

(iii) is an acute children's hospital licensed by the department
primarily for the provision of pediatric and neonatal services for which
a discrete institutional cost report was filed for the past three
calendar years, and which has medicaid discharges in excess of fifty
percent of its total discharges;

(iv) is federally designated as a critical access hospital; or

(v) is federally designated as a sole community hospital.

(b) Within amounts appropriated, the commissioner shall adjust medical
assistance rates to enhanced safety net hospitals for the purposes of
supporting critically needed health care services and to ensure the
continued maintenance and operation of such hospitals.

(c) Payments made pursuant to this subdivision may be added to rates
of payment or made as aggregate payments to eligible general hospitals.

35. Notwithstanding any inconsistent provision of this section, or any
other contrary provision of law and subject to the availability of
federal financial participation, rates of payment by governmental
agencies for general hospital inpatient services with regard to
discharges occurring on and after December first, two thousand nine
shall be in accordance with the following:

(a) For periods on and after December first, two thousand nine the
operating cost component of such rates of payments shall reflect the use
of two thousand five operating costs as reported by each facility to the
department prior to July first, two thousand nine and as otherwise
computed in accordance with the provisions of this subdivision;

(b) The commissioner shall promulgate regulations, and may promulgate
emergency regulations, establishing methodologies for the computation of
general hospital inpatient rates and such regulations shall include, but
not be limited to, the following:

(i) The computation of a case-mix neutral statewide base price,
applicable to each rate period, but excluding adjustments for graduate
medical education costs, high cost outlier costs, costs related to
patient transfers, and other non-comparable costs as determined by the
commissioner, such statewide base prices may be periodically adjusted to
reflect changes in provider coding patterns and case-mix and such other
factors as may be determined by the commissioner;

(ii) Only those two thousand five base year costs which relate to the
cost of services provided to Medicaid inpatients, as determined by the
applicable ratio of costs to charges methodology, shall be utilized for
rate-setting purposes, provided, however, that the commissioner may
utilize updated Medicaid inpatient related base year costs and
statistics as necessary to adjust inpatient rates in accordance with
clause (C) of subparagraph (x) of this paragraph;

(iii) Such rates shall reflect the application of hospital specific
wage equalization factors reflecting differences in wage rates;

(iv) Such rates shall reflect the utilization of the all patient
refined (APR) case mix methodology, utilizing diagnostic related groups
with assigned weights that incorporate differing levels of severity of
patient condition and the associated risk of mortality, and as may be
periodically updated by the commissioner;

* (iv-a) Effective April first, two thousand twenty, such rates for
public general hospitals or public health systems, other than those
operated by the state of New York or the state university of New York,
located in a city having a population of one million or more shall
include a rate add-on that reflects reimbursement for costs, to the
extent permitted under 42 CFR 447.272(b)(1) and based on actual
utilization of services. Such rate add-on shall be contingent upon
federal financial participation and approval, and subject to the terms
of a binding memorandum of understanding executed between the department
of health and the public general hospital or public health system
receiving the rate add-on. If payment of such rate add-on is projected
to cause Medicaid disbursements for such period to exceed the projected
department of health Medicaid state funds in the enacted budget
financial plan pursuant to subdivision three of section twenty-three of
the state finance law, as determined by the director of the budget, or
memorandum of understanding is not executed or is breached, the
commissioner, in consultation with the director of budget, may either
cancel or reduce payment of such rate add-on to achieve compliance with
the enacted budget financial plan.

* NB Repealed March 31, 2026

(v) such regulations shall incorporate quality related measures,
including, but not limited to, potentially preventable re-admissions
(PPRs) and provide for rate adjustments or payment disallowances related
to PPRs and other potentially preventable negative outcomes (PPNOs),
which shall be calculated in accordance with methodologies as determined
by the commissioner, provided, however, that such methodologies shall be
based on a comparison of the actual and risk adjusted expected number of
PPRs and other PPNOs in a given hospital and with benchmarks established
by the commissioner and provided further that such rate adjustments or
payment disallowances shall result in an aggregate reduction in Medicaid
payments of no less than thirty-five million dollars for the period July
first, two thousand ten through March thirty-first, two thousand eleven
and no less than fifty-one million dollars for annual periods beginning
April first, two thousand eleven through March thirty-first, two
thousand fifteen, provided further that such aggregate reductions shall
be offset by Medicaid payment reductions occurring as a result of
decreased PPRs during the period July first, two thousand ten through
March thirty-first, two thousand eleven and the period April first, two
thousand eleven through March thirty-first, two thousand fifteen and as
a result of decreased PPNOs during the period April first, two thousand
eleven through March thirty-first, two thousand fifteen; and provided
further that for the period July first, two thousand ten through March
thirty-first, two thousand fifteen, such rate adjustments or payment
disallowances shall not apply to behavioral health PPRs; or to
readmissions that occur on or after fifteen days following an initial
admission. By no later than July first, two thousand eleven the
commissioner shall enter into consultations with representatives of the
health care facilities subject to this section regarding potential
prospective revisions to applicable methodologies and benchmarks set
forth in regulations issued pursuant to this subparagraph;

(vi) Such regulations shall address adjustments based on the costs of
high cost outlier patients;

(vii) Such rates shall continue to reflect trend factor adjustments as
otherwise provided in paragraph (c) of subdivision ten of this section;

(viii) Such rates shall not include any adjustments pursuant to
subdivision nine of this section;

(ix) Rates for non-public, not for profit general hospitals which have
not, as of the effective date of this subdivision, published an
ancillary charges schedule as provided in paragraph (j) of subdivision
one of section twenty-eight hundred three of this article shall have
their inlier payments increased by an amount equal to the average of
cost outlier payments for comparable hospitals or by a methodology that
uses a statewide or regional ratio of cost to charges applied to
statewide or regional comparable charges for those cases determined by
the commissioner;

(x) Such regulations shall provide for administrative rate appeals,
but only with regard to: (A) the correction of computational errors or
omissions of data, including with regard to the hospital specific
computations pertaining to graduate medical education, wage equalization
factor adjustments, (B) capital cost reimbursement, and, (C) changes to
the base year statistics and costs used to determine the direct and
indirect graduate medical education components of the rates as a result
of new teaching programs at new teaching hospitals and/or as a result of
residents displaced and transferred as a result of teaching hospital
closures;

(xi) Rates for teaching general hospitals shall include reimbursement
for direct and indirect graduate medical education as defined and
calculated pursuant to such regulations. In addition, such regulations
shall specify the reports and information required by the commissioner
to assess the cost, quality and health system needs for medical
education provided;

(xii) Such regulations may incorporate quality related measures
pertaining to the inappropriate use of certain medical procedures,
including, but not limited to, cesarean deliveries, coronary artery
bypass grafts and percutaneous coronary interventions;

(xiii) Such regulations may impose a fee on general hospital
sufficient to cover the costs of auditing the institutional cost reports
submitted by general hospitals, which shall be deposited in the Health
Care Reform Act (HCRA) resources account.

(c) 1. The base period reported costs and statistics used for
rate-setting for operating cost components, including the weights
assigned to diagnostic related groups, shall be updated no less
frequently than every four years and the new base period shall be no
more than four years prior to the first applicable rate period that
utilizes such new base period provided, however, that the first updated
base period shall begin on or after April first, two thousand fourteen,
but no later than July first, two thousand fourteen; and further
provided that the updated base period subsequent to July first, two
thousand eighteen shall begin on or after January first, two thousand
twenty-four.

2. In the event of a declaration of a federal public health emergency,
as defined in 42 USC § 247d, or a state disaster emergency, as defined
in section twenty of the executive law, that severely impacts general
hospitals within the state, the department may exclude, for purposes of
this paragraph, the audited reported costs and statistics during such
declaration.

(d) Capital cost reimbursement for general hospitals otherwise subject
to the provisions of this subdivision shall remain subject to the
provisions of subdivision eight of this section.

(e) The provisions of this subdivision shall not apply to those
general hospitals or distinct units of general hospitals whose inpatient
reimbursement does not, as of November thirtieth, two thousand nine,
reflect case based payment per diagnosis-related group or whose
inpatient reimbursement is, for periods on and after July first, two
thousand nine, governed by the provisions of paragraphs (e-1) or (e-2)
of subdivision four of this section.

(f) Notwithstanding section one hundred twelve or one hundred
sixty-three of the state finance law or any other law, rule or
regulation to the contrary, the commissioner may contract with a vendor
for consideration to develop the specifications for the
diagnosis-related groups methodology as provided for in regulations
promulgated pursuant to paragraph (b) of this subdivision if the
commissioner certifies to the comptroller that such contract is in the
best interest of the health of the people of the state. Notwithstanding
that such specifications shall be available pursuant to article six of
the public officers law, such contract may provide that the
specifications for such adjusted or additional diagnosis-related groups
provided by the vendor shall be subject to copyright protection pursuant
to federal copyright law.

(g) Notwithstanding any inconsistent provision of this subdivision or
any other contrary provision of law, the commissioner may, for rate
periods on and after December first, two thousand nine and subject to
the availability of federal financial participation, make additional
adjustments to the inpatient rates of payment of eligible general
hospitals, to facilitate improvements in hospital operations and
finances, in accordance with the following:

(i) General hospitals eligible for distributions pursuant to this
paragraph shall be those non public hospitals with Medicaid discharges
equal to or greater than seventeen and one-half percent for two thousand
seven.

(ii) Funds distributed pursuant to this paragraph shall be allocated
to eligible hospitals pursuant to a formula such that, to the extent of
funds available, no hospital's reduction in Medicaid inpatient revenue
as a result of the application of the provisions of paragraphs (a) and
(b) of this subdivision exceeds a percentage reduction as determined by
the commissioner.

(iii) Funding pursuant to this paragraph shall be available for the
following periods and in the following amounts:

(A) for the period December first, two thousand nine through March
thirty-first, two thousand ten, up to thirty-three million five hundred
thousand dollars;

(B) for the period April first, two thousand ten through March
thirty-first, two thousand eleven, up to seventy-five million dollars,
provided, however, that, notwithstanding subparagraph (ii) of this
paragraph, no facility shall receive an amount pursuant to this clause
that is less than such facility received pursuant to clause (A) of this
subparagraph;

(C) for the period April first, two thousand eleven through March
thirty-first, two thousand twelve, up to fifty million dollars;

(D) for the period April first, two thousand twelve through March
thirty-first, two thousand thirteen, up to twenty-five million dollars.

(iv) Payments made pursuant to this paragraph shall be added to rates
of payments and not be subject to retroactive adjustment or
reconciliation.

(v) Each hospital receiving funds pursuant to this paragraph shall, as
a condition for eligibility for such funds, adopt a resolution of the
board of directors of each such hospital setting forth its current
financial condition and a plan for reforming and improving such
financial condition, including ongoing board oversight, and shall, after
two years, issue a report as adopted by each such board of directors
setting forth what progress has been achieved regarding such
improvement, provided, however, if such report is not issued and adopted
by each such board of directors, or if such report fails to set forth
adequate progress, as determined by the commissioner, the commissioner
may deem such facility ineligible for further distributions pursuant to
this paragraph and may redistribute such further distributions to other
eligible facilities in accordance with the provisions of this paragraph.
The commissioner shall be provided with copies of all such resolutions
and reports.

(h) Inpatient rate adjustments made pursuant to paragraphs (a) through
(f) of this subdivision after application of adjustments authorized
pursuant to subdivision thirty-three of this section shall result in a
net statewide decrease in aggregate Medicaid payments of no less than
seventy-five million dollars for the period December first, two thousand
nine through March thirty-first, two thousand ten, and no less than two
hundred twenty-five million dollars for the period April first, two
thousand ten through March thirty-first, two thousand eleven and each
state fiscal year thereafter, provided, however, that such reductions
shall be in addition to the reductions required pursuant to subparagraph
(ii) of paragraph (a) of subdivision thirty-three of this section.

(i) (i) Notwithstanding any inconsistent provision of this subdivision
or any other contrary provision of law and subject to the availability
of federal financial participation, for the period July first, two
thousand ten through March thirty-first, two thousand eleven, and each
state fiscal year period thereafter, the commissioner shall make
additional inpatient hospital payments up to the aggregate upper payment
limit for inpatient hospital services after all other medical assistance
payments, but not to exceed two hundred thirty-five million five hundred
thousand dollars for the period July first, two thousand ten through
March thirty-first, two thousand eleven, three hundred fourteen million
dollars for each state fiscal year beginning April first, two thousand
eleven, through March thirty-first, two thousand thirteen, and no less
than three hundred thirty-nine million dollars for each state fiscal
year thereafter, to general hospitals, other than major public general
hospitals, providing emergency room services and including safety net
hospitals, which shall, for the purpose of this paragraph, be defined as
having either: a Medicaid share of total inpatient hospital discharges
of at least thirty-five percent, including both fee-for-service and
managed care discharges for acute and exempt services; or a Medicaid
share of total discharges of at least thirty percent, including both
fee-for-service and managed care discharges for acute and exempt
services, and also providing obstetrical services. Eligibility to
receive such additional payments shall be based on data from the period
two years prior to the rate year, as reported on the institutional cost
report submitted to the department as of October first of the prior rate
year. Such payments shall be made as medical assistance payments for
fee-for-service inpatient hospital services pursuant to title eleven of
article five of the social services law for patients eligible for
federal financial participation under title XIX of the federal social
security act and in accordance with the following:

(A) Thirty percent of such payments shall be allocated to safety net
hospitals based on each eligible hospital's proportionate share of all
eligible safety net hospitals' Medicaid discharges for inpatient
hospital services, including both Medicaid fee-for-service and managed
care discharges for acute and exempt services, based on data from the
period two years prior to the rate year, as reported on the
institutional cost report submitted to the department as of October
first of the prior rate year;

(B) Seventy percent of such payments shall be allocated to eligible
general hospitals based on each such hospital's proportionate share of
all eligible hospitals' Medicaid discharges for inpatient hospital
services, including both Medicaid fee-for-service and managed care
discharges for acute and exempt services, based on data from the period
two years prior to the rate year, as reported on the institutional cost
report submitted to the department as of October first of the prior rate
year;

(C) No eligible general hospital's annual payment amount pursuant to
this paragraph shall exceed the lower of the sum of the annual amounts
due that hospital pursuant to section twenty-eight hundred seven-k and
section twenty-eight hundred seven-w of this article; or the hospital's
facility specific projected disproportionate share hospital payment
ceiling established pursuant to federal law, provided, however, that
payment amounts to eligible hospitals pursuant to clauses (A) and (B) of
this subparagraph in excess of the lower of such sum or payment ceiling
shall be reallocated to eligible hospitals that do not have excess
payment amounts. Such reallocations shall be proportional to each such
hospital's aggregate payment amount pursuant to clauses (A) and (B) of
this subparagraph to the total of all payment amounts for such eligible
hospitals;

(D) Subject to the availability of federal financial participation,
the payment methodology set forth in this subparagraph may be further
revised by the commissioner on an annual basis pursuant to regulations
issued pursuant to this subdivision for periods on and after April
first, two thousand eleven; and

(E) Subject to the availability of federal financial participation and
in conformance with all applicable federal statutes and regulations,
such payments shall be made as upper payment limit payments and,
further, such payments shall be made as aggregate monthly payments to
eligible general hospitals.

(ii) In the event that the commissioner determines that federal
financial participation will not be available for aggregate payments
made in accordance with clause (E) of subparagraph (i) of this
paragraph, payments pursuant to this paragraph shall be included as rate
add-ons to medical assistance inpatient rates of payment established
pursuant to this subdivision based on data from the period two years
prior to the rate year, as reported on the institutional cost report
submitted to the department as of October first of the prior rate year,
provided, however, that if such payments are made as rate add-ons, the
commissioner shall establish a procedure to reconcile payment amounts to
reflect changes in medical assistance utilization from the period two
years prior to the rate year and the actual rate year based on data as
reported on each hospital's annual institutional cost report for the
respective rate year, as submitted to the department as of October first
of the year following the rate year.

(iii) Notwithstanding any other law, rule or regulation to the
contrary, projections of each general hospital's disproportionate share
limitations as computed by the commissioner pursuant to applicable
regulations shall be adjusted to reflect any additional revenue received
or anticipated to be received by each such general hospital pursuant to
this paragraph.

(j) Notwithstanding any contrary provision of law, with regard to
inpatient and outpatient Medicaid rates of payment for general hospital
services, the commissioner may make such adjustments to such rates and
to the methodology for computing such rates as is necessary to achieve
no aggregate, net increase or decrease in overall Medicaid expenditures
related to the implementation of the International Classification of
Diseases Version 10 (ICD-10) coding system on or about October first,
two thousand fourteen, as compared to such aggregate expenditures from
the twelve-month period immediately prior to such implementation.