Medicare and Medicaid; payment for the cost of malpractice insurance--HCFA. Interim final rule with comment period.
In this final rule we are adopting an apportionment methodology for determining reasonable cost reimbursement for hospital malpractice insurance costs. The new apportionment policy for hospitals will divide total malpractice insurance premium cost into two components. The "administrative component," which accounts for 8.5 percent of total premium cost, will be included in the General and Administrative cost center and will be apportioned on the basis of the individual hospital's Medicare utilization rate. The "risk component," which comprises 91.5 percent of total cost, will be apportioned on the basis of a formula that takes into account the individual hospital's utilization as well as the national Medicare patient utilization rate and the national Medicare malpractice loss ratio (as adjusted to account for associated claims handling costs). Effectively, the "scaling factor formula" will relate the national utilization rate to the adjusted national loss ratio. As a hospital's own utilization rate exceeds or falls below the national utilization rate, the risk component will be reimbursed on the basis of a "scaling factor" that is more or less than the national Medicare malpractice loss ratio. Different apportionment policies are being adopted for Medicare skilled nursing facilities and for providers of services under the Medicaid and Maternal and Child Health programs. This final rule replaces our current apportionment policy for reimbursement of malpractice insurance costs and is applicable, subject to the rules of reopening and administrative finality, to cost reporting periods beginning on or after July 1, 1979.
D003361:Cost Allocation / Q000331:legislation & jurisprudence*; D003365:Costs and Cost Analysis / Q000331:legislation & jurisprudence*; D007351:Insurance, Liability / Q000331:legislation & jurisprudence*; D008484:Medicaid / Q000331:legislation & jurisprudence*; D006278:Medicare / Q000331:legislation & jurisprudence*; D014481:United States