Section 0720-40-.03 - CALCULATION OF FEE(1) The license fee shall be calculated as provided in Section 2 of Public Chapter 459, Acts of 1991 and computations shall be based on the most current complete compilation of all hospitals' Joint Annual Report data, as of April 30 of each year, and the latest information available from Cost Reports, as of April 30 of each year. The Joint Annual Report data is considered complete when all hospitals have submitted data, the data has been queried, edited, updated, and the annual tabulations and computer files are created.(2) The Commissioner is authorized pursuant to T.C.A. § 68-11-216(d) to establish a license fee for any hospital covered therein. These fees shall be directly related to each hospital's Medicaid utilization rate, low income utilization rate and large volume of Medicaid days per year. The fee cannot exceed the hospital's bad debt, charity care, medically indigent care, and Medicare/Medicaid contractual adjustments adjusted to expense. (a) Any hospital meeting any one of the following criteria shall be subject to a license fee: 1. Any hospital with a Medicaid utilization rate of 14% or greater; or2. Any hospital with a low income utilization rate of 25% or greater; or3. Any hospital providing more than 3,000 Medicaid days per year; or4. Any teaching hospital that incurs educational costs.(b) The license fee shall be computed as follows:1. By multiplying the Medicaid utilization rate for every whole percent in excess of 14% by a factor of six (6) capped at 34%. An additional 10% will be added if free outpatient services and outpatient pharmacy services are provided to the medically indigent.2. By multiplying each whole percent increment above the 25 % low income ratio by a factor of two (2) capped at 10%.3. By multiplying each complete 1,000 day increment above 3,000 days by a factor of six (6) capped at 34%. If total Medicaid days exceed 3,650 but are less than 4,000, then a factor of three (3) is used to determine the license fee as described in Part 4 below. An additional 10% will be added if free outpatient and outpatient pharmacy services are provided to the medically indigent.4. The highest computation from Parts 1, 2, or 3 above for each hospital will be multiplied times the hospital per them rate composed of capital, direct education, and the untrended operating component, and multiplied by the projected Medicaid days. The computed amount in this paragraph cannot exceed 80% of a hospital's inpatient bad debt, charity care, and medically indigent care. The license fee shall be 31.55% of the computed amount.5. In addition to all other license fees in this paragraph, any hospital that receives a payment for educational costs shall be assessed an additional fee equal to 31.55% of the total direct and indirect education payments. This amount shall not be included in the computation described in Part 4 above relating to the 80% limit.(c) An acute care hospital that pays a license fee described above, with the exception of those that pay only the fee levied in paragraph (2)(b)5., shall also be assessed an additional license fee if both of the following conditions are met: 1. The hospital Medicaid days are projected to be 1,000 days per year or greater.2. The Medicaid day ratio for the hospital is greater than the acute care industry average utilization rate.(d) The additional license fee will be computed by taking the difference obtained by subtracting the industry average utilization rate from the qualifying hospital's Medicaid Day Ratio multiplied times a factor of 9.45 times the per them described in paragraph (2)(b)4. above and then multiplied by the projected Medicaid days.(e) The sum of the computed amount which serves as the basis for the fee in subparagraph (b)4. plus the amount of the additional fee in subparagraph (d) cannot exceed the cost adjusted sum of the hospital's total bad debt, charity care and medically indigent care adjustments plus the Medicaid and Medicare contractual adjustment. This sum is adjusted to cost using the cost to charge ratio for each hospital determined from each hospital's Joint Annual Report.(f) The sum of all calculations provided for in Rule 0720-40-.03(1) through 0720-40-.03(2)(e) shall then be multiplied by twenty-five percent (25%) and this amount shall represent the assessment of the hospital services license fee for July 1, 1992.(3) In the event a hospital fails to submit a Joint Annual Report or fails to include data on it that is necessary to calculate the amount due, the hospital shall submit or amend the report promptly, to reflect the data as accurately as possible. The hospital may not change data that is submitted.(4) The fees collected by these rules are to be placed in the Indigent Health Care Risk Fund.Tenn. Comp. R. & Regs. 0720-40-.03
Original rule filed March 30, 1990; effective May 14, 1990. Amendment filed July 25, 1990; effective September 8, 1990. Amendment filed September 25, 1991; effective November 9, 1991. Transferred from chapter 1200-24-01 pursuant to Public Chapter 1119 of 2022 effective 7/1/2022.Authority: T.C.A. §§ 4-5-202 and 68-11-216(d) and Public Chapter 434, Acts of 1989.