W. Va. Code R. § 65-26-23

Current through Register Vol. XLI, No. 50, December 13, 2024

Section 65-26-23 - Discount Contracts

23.1. This section applies to all hospitals, regardless of their eligibility for benchmarking.

23.2. Pursuant to W. Va. Code § 16-29B-20(a)(2), a contract which establishes a discount to a purchaser or third party payer cannot take effect until it is approved by the Authority. To obtain approval by the Authority, the hospital shall demonstrate that:

(a) the discount does not constitute an amount below the cost to the hospital;

(b) the cost of any discount contained in the contract will not be shifted to any other purchaser or third party payer;

(c) the discount will not result in a decrease in the hospital"s average number of Medicare, Medicaid or uncompensated care patients served during the previous three fiscal years; and,

(d) the discount is based upon criteria which constitutes a quantifiable economic benefit to the hospital.

23.3. The hospital may file a discount contract with the Authority for approval at any time during its fiscal year.

23.4. To obtain approval of a discount contract, the hospital shall file with the Authority a copy of the proposed contract and a discount contract form to be provided by the Authority which contains the following:

23.4.a. The name of the hospital;

23.4.b. The name of the payer;

23.4.c. A statement that the discount shall not decrease the charges for the services below the actual cost to the hospital. For purposes of reviewing discount contracts under this rule, Acost@ is defined as the total operating expenses, as reported in the most recent rate filing by the hospital with the Authority;

23.4.d. A statement that the cost of any discount contained in the contract will not be shifted to any other purchaser or third-party payer. All discounts resulting from the discount contract shall be reported as contractual allowances;

23.4.e. A statement that the discount shall not result in a decrease in the hospital"s proportion of Medicare, Medicaid or uncompensated care patients;

23.4.f. A statement that the discount is based upon criteria which constitute a quantifiable economic benefit to the hospital. The hospital shall justify that the contract provides an economic benefit by demonstrating at least one of the following:

23.4.f.1. The payments under the contract are above cost as defined in subdivision 23.4.c. of this section and therefore provide some contribution to overhead;

23.4.f.2. Effective management of cases will result in lower costs and the reductions in utilization will provide some benefit for other patients;

23.4.f.3. The increase in volume will result in a larger base of patients over which to spread fixed costs;

23.4.f.4. In the absence of the contract, the hospital will lose volume and will have to increase its charges to fully recover its fixed costs;

23.4.f.5. Reduced costs without cost shifting will force the hospital to become more efficient; or,

23.4.f.6. Approval of the contract will assist the hospital in avoiding bad debt and charity care;

23.4.g. Any other information required by the Authority; and,

23.4.h. The chief executive officer of the hospital shall sign a form that contains a notarized statement that affirmatively states that the information contained in the form is accurate and true to the best of his or her knowledge.

23.5. Effective date - The effective date of the approval of the contract is the date the order is signed by the board of the Authority.

23.6. Denial of contract - In the event the Authority determines that the discount contract does not meet the criteria specified in this rule, the Authority shall issue a final order denying approval of the discount contract.

23.7. Compliance.

23.7.a. During the review of the rate application, and throughout the year, the Authority shall analyze whether hospitals are in compliance with the various requirements of this section, including whether they have been paid an amount equal to or above their cost as defined in subdivision 23.4.c. of this section.

23.7.b. If a discount contract was implemented prior to its approval by the Authority, the Authority shall apply 20% of the discount as a penalty. In some situations the penalty may be so large it would do financial harm to the hospital if the entire amount was applied in one year. In those cases, the Authority may hold the penalty in abeyance or apply it over several years.

23.7.c. If the Authority previously approved the contract, but the discount percent is larger than budgeted or the discount amount is greater than budgeted, no penalty shall be applied provided the contract meets the requirements of W. Va. Code § 16-29B-20. In the event the approved discount contract doesn't meet the requirements of W. Va. Code § 16-29B-20, the entire contract shall be disallowed.

W. Va. Code R. § 65-26-23