|(a) Introduction. This section establishes the Comprehensive
Hospital Increase Reimbursement Program (CHIRP) for program periods
on or after September 1, 2021, wherein the Health and Human Services
Commission (HHSC) directs a managed care organization (MCO) to provide
a uniform reimbursement increase to hospitals in the MCO's network
in a designated service delivery area (SDA) for the provision of inpatient
services, outpatient services, or both. This section also describes
the methodology used by HHSC to calculate and administer such reimbursement
increases. CHIRP is designed to incentivize hospitals to improve access,
quality, and innovation in the provision of hospital services to Medicaid
recipients through the use of metrics that are expected to advance
at least one of the goals and objectives of the state's managed care
(b) Definitions. The following definitions apply when
the terms are used in this section. Terms that are used in this section
may be defined in §353.1301 of this subchapter (relating to General
(1) Average Commercial Reimbursement (ACR) gap--The
difference between what an average commercial payor is estimated to
pay for the services and what Medicaid actually paid for the same
(2) Children's hospital--A children's hospital as defined
by §355.8052 of this title (relating to Inpatient Hospital Reimbursement).
(3) Inpatient hospital services--Services ordinarily
furnished in a hospital for the care and treatment of inpatients under
the direction of a physician or dentist, or a subset of these services
identified by HHSC. Inpatient hospital services do not include skilled
nursing facility or intermediate care facility services furnished
by a hospital with swing-bed approval, or any other services that
HHSC determines should not be subject to the rate increase.
(4) Institution for mental diseases (IMD)--A hospital
that is primarily engaged in providing psychiatric diagnosis, treatment,
or care of individuals with mental illness. IMD hospitals are reimbursed
as freestanding psychiatric facilities under §355.8060 of this
title (relating to Reimbursement Methodology for Freestanding Psychiatric
(5) Medicare payment gap--The difference between what
Medicare is estimated to pay for the services and what Medicaid actually
paid for the same services.
(6) Outpatient hospital services--Preventive, diagnostic,
therapeutic, rehabilitative, or palliative services that are furnished
to outpatients of a hospital under the direction of a physician or
dentist, or a subset of these services identified by HHSC. HHSC may,
in its contracts with MCOs governing rate increases under this section,
exclude from the definition of outpatient hospital services such services
as are not generally furnished by most hospitals in the state, or
such services that HHSC determines should not be subject to the rate
(7) Program period--A period of time for which HHSC
will contract with participating MCOs to pay increased capitation
rates for the purpose of provider payments under this section. Each
program period is equal to a state fiscal year beginning September
1 and ending August 31 of the following year.
(8) Rural hospital--A hospital that is a rural hospital
as defined in §355.8052 of this title.
(9) State-owned non-IMD hospital--A hospital that is
owned and operated by a state university or other state agency that
is not primarily engaged in providing psychiatric diagnosis, treatment,
or care of individuals with mental disease.
(10) Urban hospital--An urban hospital as defined by §355.8052
of this title.
(c) Participation requirements. As a condition of participation,
all hospitals participating in CHIRP must allow for the following.
(1) The hospital must submit a properly completed enrollment
application by the due date determined by HHSC. The enrollment period
must be no less than 21 calendar days and the final date of the enrollment
period will be at least nine days prior to the IGT notification.
(A) In the application, the hospital must select whether
it will participate in the optional program component described in
subsection (g)(3) of this section. A hospital cannot participate in
the program component described in subsection (g)(3) of this section
without also participating in the program component described in subsection
(g)(2) of this section.
(B) If the hospital chooses to participate in the optional
program component described in subsection (g)(3) of this section,
the hospital may be required to submit certain necessary data to calculate
the ACR gap.
(C) A hospital is required to maintain all supporting
documentation at the hospital for any information provided under subparagraph
(B) of this paragraph for a period of no less than 5 years.
(2) The entity that owns the hospital must certify,
on a form prescribed by HHSC, that no part of any payment made under
the CHIRP will be used to pay a contingent fee and that the entity's
agreement with the hospital does not use a reimbursement methodology
that contains any type of incentive, directly or indirectly, for inappropriately
inflating, in any way, claims billed to the Medicaid program, including
the hospitals' receipt of CHIRP funds. The certification must be received
by HHSC with the enrollment application described in paragraph (1)
of this subsection.
(3) If a provider has changed ownership in the past
five years in a way that impacts eligibility for this program, the
provider must submit to HHSC, upon demand, copies of contracts it
has with third parties with respect to the transfer of ownership or
the management of the provider and which reference the administration
of, or payment from, this program.
(4) All quality metrics for which a hospital is eligible
based on class, as described in subsection (d) of this section, must
be reported by the participating hospital to be eligible for payment.
(d) Classes of participating hospitals.
(1) HHSC may direct the MCOs in an SDA that is participating
in the program described in this section to provide a uniform percentage
rate increase to all hospitals within one or more of the following
classes of hospital with which the MCO contracts for inpatient or
(A) children's hospitals;
(B) rural hospitals;
(C) state-owned non-IMD hospitals;
(D) urban hospitals;
(E) non-state-owned IMDs; and
(F) state-owned IMDs.
(2) If HHSC directs rate increases to more than one
class of hospital within the SDA, the percentage rate increases directed
by HHSC may vary between classes of hospital.
(e) Eligibility. HHSC determines eligibility for rate
increases by SDA and class of hospital.
(1) Service delivery area. Only hospitals in an SDA
that includes at least one sponsoring governmental entity are eligible
for a rate increase.
(2) Class of hospital. HHSC will identify the class
or classes of hospital within each SDA described in paragraph (1)
of this subsection to be eligible for a rate increase. HHSC will consider
the following factors when identifying the class or classes of hospital
eligible for a rate increase and the percent increase applicable to
(A) whether a class of hospital contributes more or
less significantly to the goals and objectives in HHSC's managed care
quality strategy, as required in 42 C.F.R. §438.340, relative
to other classes;
(B) which class or classes of hospital the sponsoring
governmental entity wishes to support through IGTs of public funds,
as indicated on the application described in subsection (c) of this
(C) the estimated Medicare gap for the class of hospitals,
based upon the upper payment limit demonstration most recently submitted
by HHSC to the Centers for Medicare and Medicaid Services (CMS);
(D) the estimated ACR gap for the class or individual
hospitals, as indicated on the application described in subsection
(c) of this section; and
(E) the percentage of Medicaid costs incurred by the
class of hospital in providing care to Medicaid managed care clients
that are reimbursed by Medicaid MCOs prior to any rate increase administered
under this section.
(f) Services subject to rate increase.
(1) HHSC may direct the MCOs in an SDA to increase
rates for all or a subset of inpatient services, all or a subset of
outpatient services, or all or a subset of both, based on the service
or services that will best advance the goals and objectives of HHSC's
managed care quality strategy.
(2) In addition to the limitations described in paragraph
(1) of this subsection, rate increases for a state-owned IMD or non-state-owned
IMD are limited to inpatient psychiatric hospital services provided
to individuals under the age of 21 and to inpatient hospital services
provided to individuals 65 years or older.
(3) CHIRP rate increases will apply only to the in-network
managed care claims billed under a hospital's primary National Provider
Identifier (NPI) and will not be applicable to NPIs associated with
non-hospital sub-providers owned or operated by a hospital.
(g) CHIRP capitation rate components. CHIRP funds will
be paid to MCOs through two components of the managed care per member
per month (PMPM) capitation rates. The MCOs' distribution of CHRIP
funds to the enrolled hospitals may be based on each hospital's performance
related to the quality metrics as described in §353.1307 of this
subchapter (relating to Quality Metrics and Required Reporting Used
to Evaluate the Success of the Comprehensive Hospital Increase Reimbursement
Program). The hospital must have provided at least one Medicaid service
to a Medicaid client for each reporting period to be eligible for
(1) In determining the percentages described under
subsection (i)(1) and (2) of this section, HHSC will consider:
(A) information from the participants in the SDA (including
hospitals, managed-care organizations, and sponsoring governmental
entities) on the amount of IGT the sponsoring governmental entities
propose to transfer to HHSC to support the non-federal share of the
increased rates for the first six months of a program period, as indicated
on the applications described in subsection (c) of this section;
(B) the class or classes of hospital determined in
subsection (e)(2) of this section;
(C) the type of service or services determined in subsection
(f) of this section;
(D) actuarial soundness of the capitation payment needed
to support the rate increase;
(E) available budget neutrality room under any applicable
federal waiver programs;
(F) hospital market dynamics within the SDA; and
(G) other HHSC goals and priorities.
(2) The Uniform Hospital Rate Increase Payment (UHRIP)
is the first component.
(A) The total value of UHRIP will be equal to a percentage
of the estimated Medicare gap on a per class basis.
(B) Allocation of funds across hospital classes will
be proportional to the combined Medicare gap of each hospital class
within an SDA to the total Medicare gap of all hospital classes within
(3) The Average Commercial Incentive Award (ACIA) is
the second component.
(A) The total value of ACIA will be equal to a percentage
of the ACR gap less payments received under UHRIP.
(B) Allocation of funds across hospitals will be proportional
to each participating hospital's individual ACR gap to the total ACR
gap for all participating hospitals in the SDA. For example, if two
hospitals in a class in an SDA both have anticipated base payments
of $100 and UHRIP payments of $50, but one hospital has an estimated
ACR gap of $300 between its base payment and the estimate payment
it would have received from a commercial payor, and the other hospital
has an estimated ACR gap of $100, HHSC will first reduce the gaps
by the UHRIP payment of $50 to a gap of $250 and $50, respectively.
HHSC would then apply a uniform percentage of the gap (e.g., 50 percent
of the gap) and would calculate an ACIA payment of $125 and $25, respectively.
HHSC will then direct the MCOs to pay a percentage increase for the
first hospital of 125 percent in addition to the 50 percent increase
under UHRIP for the first hospital for a total increase of 175 percent
above the contracted base rate, and 25 percent in addition to the
50 percent increase under UHRIP for the second hospital for a total
increase of 75 percent.
(h) Distribution of CHIRP payments. CHIRP payments
will be based upon actual utilization and will be paid as a percentage
increase above the contracted rate between the MCO and the hospital.
(i) Determination of percentage of rate increase.
(1) HHSC will determine the percentage of rate increase
applicable to one or more classes of hospital by program component.
(A) UHRIP rate increases will be determined by HHSC
to be the percentage that is estimated to result in payments for the
class that are equivalent to the amount described under subsection
(g)(2)(A) of this section.