Medicaid Program; Final FY 2018, Final FY 2019, Preliminary FY 2020, and Preliminary FY 2021 Disproportionate Share Hospital Allotments, and Final FY 2018, Final FY 2019, Preliminary FY 2020, and Preliminary FY 2021 Institutions for Mental Diseases Disproportionate Share Hospital Limits

CourtCenters For Medicare & Medicaid Services
Citation87 FR 14858
Published date16 March 2022
Record Number2022-05459
Federal Register, Volume 87 Issue 51 (Wednesday, March 16, 2022)
[Federal Register Volume 87, Number 51 (Wednesday, March 16, 2022)]
                [Notices]
                [Pages 14858-14888]
                From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
                [FR Doc No: 2022-05459]
                =======================================================================
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                DEPARTMENT OF HEALTH AND HUMAN SERVICES
                Centers for Medicare & Medicaid Services
                [CMS-2436-N]
                RIN 0938-ZB62
                Medicaid Program; Final FY 2018, Final FY 2019, Preliminary FY
                2020, and Preliminary FY 2021 Disproportionate Share Hospital
                Allotments, and Final FY 2018, Final FY 2019, Preliminary FY 2020, and
                Preliminary FY 2021 Institutions for Mental Diseases Disproportionate
                Share Hospital Limits
                AGENCY: Centers for Medicare & Medicaid Services (CMS), Department of
                Health and Human Services (HHS).
                ACTION: Notice.
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                SUMMARY: This notice announces the final Federal share (FS)
                disproportionate share hospital (DSH) allotments for Federal fiscal
                year (FY) 2018 and FY 2019, and the preliminary FS DSH allotments for
                FY 2020 and FY 2021. This notice also announces the final FY 2018 and
                FY 2019 and the preliminary FY 2020 and FY 2021 limitations on
                aggregate DSH payments that States may make to institutions for mental
                disease and other mental health facilities. In addition, this notice
                includes background information describing the methodology for
                determining the amounts of States' FY DSH allotments.
                DATES: The allotments announced in this notice are effective April 15,
                2022. The final allotments and limitations set forth in this notice are
                applicable for the fiscal years specified.
                FOR FURTHER INFORMATION CONTACT: Stuart Goldstein, (410) 786-0694 and
                Richard Cuno, (410) 786-1111.
                SUPPLEMENTARY INFORMATION:
                I. Background
                A. Fiscal Year DSH Allotments
                 A State's Federal fiscal year (FY) disproportionate share hospital
                (DSH) allotment represents the aggregate limit on the Federal share
                (FS) amount of the State's DSH payments to DSH hospitals in the State
                for the FY. The amount of such allotment is determined in accordance
                with the provisions of section 1923(f) of the Social Security Act (the
                Act), with some State-specific exceptions as specified in section
                1923(f) of the Act. Under such provisions, in general, a State's FY DSH
                allotment is calculated by increasing the amount of its DSH allotment
                for the preceding FY by the percentage change in the Consumer Price
                Index for all Urban Consumers (CPI-U) for the previous FY.
                 The Patient Protection and Affordable Care Act of 2010 (Pub. L.
                111-148), as amended by the Health Care and Education Reconciliation
                Act of 2010 (Pub. L. 111-152) (collectively, the Affordable Care Act),
                amended Medicaid DSH provisions, adding section 1923(f)(7) of the Act.
                Section 1923(f)(7) of the Act would have required reductions to States'
                FY DSH allotments from FY 2014 through FY 2020, the calculation of
                which was described in the Disproportionate Share Hospital Payment
                Reduction final rule published in the September 18, 2013 Federal
                Register (78 FR 57293). Subsequent legislation, most recently the
                Consolidated Appropriations Act, 2021 (Pub. L. 116-260, enacted
                December 27, 2020), delayed the start of these reductions until FY
                2024. The final rule delineating a revised methodology for the
                calculation of DSH allotment reductions beginning in 2020 (subsequently
                delayed by further statutory enactment) was published in the September
                25, 2019 Federal Register (84 FR 50308).
                 Because there are no reductions to DSH allotments for FY 2018
                through FY 2023 under section 1923(f)(7) of the Act, as amended, this
                notice contains only the State-specific final FY 2018 and FY 2019 DSH
                allotments and preliminary FY 2020 and FY 2021 DSH allotments, as
                calculated under the statute without application of the reductions that
                would have been imposed beginning as early as FY 2014 under prior
                versions of section 1923(f)(7) of the Act. This notice also provides
                information on the calculation of the FY DSH allotments, the
                calculation of the States' institution for mental diseases (IMD) DSH
                limits, and the amounts of States' final FY 2018 and FY 2019 IMD DSH
                limits and preliminary FY 2020 and FY 2021 IMD DSH limits.
                B. Determination of Fiscal Year DSH Allotments
                 Generally, in accordance with the methodology specified under
                section 1923(f)(3) of the Act, a State's FY DSH allotment is calculated
                by increasing the amount of its DSH allotment for the preceding FY by
                the percentage change in the CPI-U for the previous FY. Also, in
                accordance with section 1923(f)(3) of
                [[Page 14859]]
                the Act, a State's DSH allotment for a FY is subject to the limitation
                that an increase to a State's DSH allotment for a FY cannot result in
                the DSH allotment exceeding the greater of the State's DSH allotment
                for the previous FY or 12 percent of the State's total medical
                assistance expenditures for the allotment year (this is referred to as
                the 12 percent limit).
                 Furthermore, under section 1923(h) of the Act, Federal financial
                participation (FFP) for DSH payments to IMDs and other mental health
                facilities is limited to State-specific aggregate amounts. Under this
                provision, the aggregate limit for DSH payments to IMDs and other
                mental health facilities is the lesser of a State's FY 1995 total
                computable (State and FS) IMD and other mental health facility DSH
                expenditures applicable to the State's FY 1995 DSH allotment (as
                reported on the Form CMS-64 as of January 1, 1997), or the amount equal
                to the product of the State's current year total computable DSH
                allotment and the applicable percentage specified in section 1923(h) of
                the Act.
                C. Determination of Fiscal Year DSH Allotments for FY 2020 and FY 2021
                 The Families First Coronavirus Response Act's (FFCRA) (Pub. L. 116-
                127, enacted March 18, 2020) temporary Federal medical assistance
                percentage (FMAP) increase of 6.2 percentage points went into effect on
                January 1, 2020 for eligible States, as provided in section 6008 of the
                FFCRA. As relevant to this notice, this FMAP increase applies to
                eligible Medicaid expenditures including DSH payments for FY 2020 (with
                the exception of the 1st quarter, from October 1, 2019 through December
                31, 2019), and FY 2021, and all States currently are receiving the
                temporary FFCRA FMAP increase. For States that exhaust their entire DSH
                allotment, the FFCRA FMAP increase would effectively reduce the amount
                of total computable (TC) DSH payments that such States could pay to
                qualifying providers.
                 To avoid this reduction in TC DSH allotments, section 9819 of the
                American Rescue Plan Act of 2021 (ARP) (Pub. L. 117-2, enacted March
                11, 2021) added section 1923(f)(3)(F) of the Act, adjusting FS DSH
                allotments during periods when and for States where the temporary 6.2
                percentage point FMAP increase under section 6008 of the FFCRA is in
                effect. As directed by the ARP, we are required to recalculate FS DSH
                allotments to an amount that will allow States to make the same amount
                of TC DSH payments as they would have been otherwise able to make in
                the absence of the FFCRA FMAP increase.
                 In accordance with section 1923(f)(3)(B) of the Act, a State's DSH
                allotment for a FY is subject to the limitation that an increase to a
                State's DSH allotment for a FY cannot result in the DSH allotment
                exceeding the greater of the State's DSH allotment for the previous FY
                or 12 percent of the State's total medical assistance expenditures for
                the allotment year. Because States incur medical assistance
                expenditures throughout the fiscal year, the calculations for the 12
                percent limit under section 1923(f)(3)(B)(ii) of the Act were performed
                using a prorated FMAP for FY 2020. To arrive at the stated limits, we
                prorated each State's FY 2020 FMAP rate because the temporary 6.2
                percentage point FMAP increase under section 6008 of the FFCRA does not
                apply to the 1st quarter of FY 2020. For the calculation of the 12
                percent limit for FY 2021, we used the FFCRA FMAP rate (that is, the
                otherwise applicable FMAP rate plus the temporary 6.2 percentage point
                FFCRA FMAP increase), because the FFCRA FMAP rate applies to the entire
                FY for qualifying States, and medical assistance expenditures are made
                throughout the year.
                 Section 1923(f)(3)(F)(i) of the Act requires us to recalculate the
                annual DSH allotment, including the DSH allotment specified under
                paragraph (6)(A)(vi), to ensure that the total DSH payments (including
                both Federal and State shares) that a State may make related to a
                fiscal year is equal to the total DSH payments that the State could
                have made for such fiscal year without such FMAP increase. To meet the
                statutory requirement to enable States to make the same amount of TC
                DSH payments as if the FFCRA FMAP increase were not in effect, we have
                used the full (non-prorated) FFCRA-increased FMAP rate in the
                calculation of the increased FY 2020 and FY 2021 FS DSH allotments. We
                used the full FFCRA-increased FMAP rate rather than a prorated FMAP
                rate for the FY 2020 calculation, despite it not being applicable to
                the 1st quarter of FY 2020, to ensure this provision applies to all
                States consistent with the statutory requirement, including a State
                that made all DSH payments for FY 2020 in quarters other than the first
                fiscal quarter of that fiscal year.
                 While States have distinct payment methodologies that specify when
                DSH payments are made to providers, States may not claim TC DSH
                payments in excess of the amount they would have otherwise been able to
                claim without the application of the temporary 6.2 percentage point
                FFCRA FMAP rate increase. This is regardless of whether a portion of
                unspent FS DSH allotment as adjusted to account for section
                1923(f)(3)(F) of the Act, as added by section 9819 of the ARP, remains.
                For example, if the State made all DSH payments for FY 2020 during the
                first quarter of that FY, then no increase to the State's DSH allotment
                is available for that year, since the temporary 6.2 percentage point
                FMAP increase under section 6008 of the FFCRA was not available for
                that quarter and section 1923(f)(3)(F) therefore has no effect. We will
                monitor both the FS and TC DSH allotments to ensure that States do not
                exceed statutory authority to claim DSH payments. Consistent with
                previous guidance by CMS during the public health emergency, States
                should follow existing Federal requirements regarding the applicability
                of a particular match rate available for a given quarter, including
                reporting prior period adjustments.
                 For calculation of the FY 2020 and FY 2021 IMD limits determined
                under section 1923(h) of the Act, we used the ARP-adjusted DSH
                allotments and the associated non-prorated FFCRA-increased FMAP rates
                for FY 2020 and FY 2021, to reflect the maximum DSH allotment amount
                and IMD limit that might be available to a State, for FY 2020,
                depending on the State's timing of DSH payments.
                 In general, we determine States' DSH allotments for a FY and the
                IMD DSH limits for the same FY using the most recent available
                estimates of or actual medical assistance expenditures, including DSH
                expenditures and the most recent available CPI-U data for the FY in
                accordance with the methodology prescribed in the statute. The
                indicated estimated or actual expenditures are obtained from States for
                each relevant FY from the most recent available quarterly Medicaid
                budget reports (Form CMS-37) or quarterly Medicaid expenditure reports
                (Form CMS-64), respectively, submitted by the States. For example, as
                part of the initial determination of a State's FY DSH allotment
                (referred to as the preliminary DSH allotments) that is determined
                before the beginning of the FY for which the DSH allotments and IMD DSH
                limits are being determined, we use estimated expenditures for the FY
                obtained from the August submission of the CMS-37 submitted by States
                prior to the beginning of the FY; such estimated expenditures are
                subject to update and revision during the FY before actual expenditure
                data become available. We also use the most recent available estimated
                CPI-U percentage change that
                [[Page 14860]]
                is available before the beginning of the FY for determining the States'
                preliminary FY DSH allotments; such estimated CPI-U percentage change
                is subject to update and revision during the FY before the actual CPI-U
                percentage change becomes available. In determining the final DSH
                allotments and IMD DSH limits for a FY we use the actual expenditures
                for the FY and actual CPI-U percentage change for the previous FY.
                II. Provisions of the Notice
                A. Calculation of the Final FY 2018 and FY 2019 FS State DSH Allotments
                and the Preliminary FY 2020 and FY 2021 FS State DSH Allotments
                1. Final FY 2018 FS State DSH Allotments
                 Addendum 1 to this notice provides the States' final FY 2018 DSH
                allotments determined in accordance with section 1923(f)(3) of the Act.
                As described in the background section, in general, the DSH allotment
                for a FY is calculated by increasing the FY DSH allotment for the
                preceding FY by the CPI-U increase for the previous fiscal year. For
                purposes of calculating the States' final FY 2018 DSH allotments, the
                preceding final fiscal year DSH allotments (for FY 2017) were published
                in the February 11, 2019 Federal Register (84 FR 3169). For purposes of
                calculating the States' final FY 2018 DSH allotments we are using the
                actual Medicaid expenditures for FY 2018. Finally, for purposes of
                calculating the States' final FY 2018 DSH allotments, the applicable
                historical percentage change in the CPI-U for the previous FY (FY 2017)
                was 2.1 percent; we note that this is lower than the estimated 2.4
                percentage change in the CPI-U for FY 2017 that was available and used
                in the calculation of the preliminary FY 2018 DSH allotments which were
                published in the July 6, 2018 Federal Register (83 FR 31536).
                2. Final FY 2019 FS State DSH Allotments
                 Addendum 2 to this notice provides the States' final FY 2019 DSH
                allotments determined in accordance with section 1923(f)(3) of the Act.
                As described in the background section, in general, the DSH allotment
                for a FY is calculated by increasing the FY DSH allotment for the
                preceding FY by the CPI-U increase for the previous fiscal year. For
                purposes of calculating the States' final FY 2019 DSH allotments, the
                preceding final fiscal year DSH allotments (for FY 2018) are being
                published in this notice. For purposes of calculating the States' final
                FY 2019 DSH allotments we are using the actual Medicaid expenditures
                for FY 2019. Finally, for purposes of calculating the States' final FY
                2019 DSH allotments, the applicable historical percentage change in the
                CPI-U for the previous FY (FY 2018) was 2.4 percent; we note that this
                is the same as the estimated 2.4 percentage change in the CPI-U for FY
                2018 that was available and used in the calculation of the preliminary
                FY 2019 DSH allotments which were published in the February 11, 2019
                Federal Register (84 FR 3169).
                3. Calculation of the Preliminary FY 2020 FS State DSH Allotments
                 Addendum 3 to this notice provides the preliminary FY 2020 DSH
                allotments determined in accordance with section 1923(f)(3) of the Act.
                The preliminary FY 2020 DSH allotments contained in this notice were
                determined based on the most recent available estimates from States of
                their FY 2020 total computable Medicaid expenditures and by increasing
                the preliminary FY 2019 DSH allotments. The applicable historical
                percentage change in the CPI-U for FY 2019 was 1.9 percent (we
                originally published the preliminary FY 2019 DSH allotments in the
                February 11, 2019 Federal Register (84 FR 3169)). We then used each
                State's FS DSH allotment divided by its respective regular FMAP rate in
                order to determine the TC amount of DSH payments each State would have
                otherwise been able to make without application of the FFCRA-increased
                FMAP rate. We then multiplied each State's TC DSH payment amount by its
                respective FFCRA-increased FMAP rate in order to calculate the
                increased FY 2020 DSH allotment.
                 We will publish States' final FY 2020 DSH allotments in a future
                notice based on the States' four quarterly Medicaid expenditure reports
                (Form CMS-64) for FY 2020 available following the end of FY 2020
                utilizing the actual change in the CPI-U for FY 2019.
                4. Calculation of the Preliminary FY 2021 FS State DSH Allotments
                 Addendum 4 to this notice provides the preliminary FY 2021 DSH
                allotments determined in accordance with section 1923(f)(3) of the Act.
                The preliminary FY 2021 DSH allotments contained in this notice were
                determined based on the most recent available estimates from States of
                their FY 2021 total computable Medicaid expenditures and by increasing
                the preliminary FY 2020 DSH allotments calculated prior to the
                application of the ARP adjustment. The applicable historical percentage
                change in the CPI-U for FY 2020 was 1.5 percent (we are publishing the
                preliminary FY 2020 DSH allotments in this notice). We then used each
                State's FS DSH allotment divided by its respective regular FMAP rate in
                order to determine the TC amount of DSH payments each State would have
                otherwise been able to make without application of the FFCRA-increased
                FMAP rate. We then multiplied each State's TC DSH payment amount by its
                respective FFCRA-increased FMAP rate in order to calculate the ARP-
                adjusted FY 2021 DSH allotment.
                 We will publish States' final FY 2021 DSH allotments in a future
                notice based on the States' four quarterly Medicaid expenditure reports
                (Form CMS-64) for FY 2021 available following the end of FY 2021.
                B. Calculation of the Final FY 2018 and FY 2019 and Preliminary FY 2020
                and FY 2021 IMD DSH Limits
                 Section 1923(h) of the Act specifies the methodology to be used to
                establish the limits on the amount of DSH payments that a State can
                make to IMDs and other mental health facilities. FFP is not available
                for DSH payments to IMDs or other mental health facilities that exceed
                the IMD DSH limits. In this notice, we are publishing the final FY 2018
                and FY 2019 and the preliminary FY 2020 and FY 2021 IMD DSH limits
                determined in accordance with the provisions discussed above.
                 Addendums 5 through 8 to this notice detail each State's final FY
                2018 and FY 2019 and preliminary FY 2020 and FY 2021 IMD DSH limits,
                respectively, determined in accordance with section 1923(h) of the Act.
                III. Collection of Information Requirements
                 As it relates to the Paperwork Reduction Act of 1995 (PRA; 44
                U.S.C. 3501 et seq.), this notice does not impose any new or revised
                ``collection of information'' requirements or burden. With respect to
                the PRA and this section of the preamble, collection of information is
                defined under 5 CFR 1320.3(c) of the PRA's implementing regulations.
                While discussed in sections I.B., I.C., II.A.3., II.A.4., and in
                Addendums 3 through 8 of this notice, the requirements and burden
                associated with form CMS-37 and form CMS-64 are unaffected by this
                notice. Both forms are approved by the Office of Management and Budget
                (OMB) under control number 0938-1265, which expires on April 30, 2024.
                Since this notice will not impose any new or revised collection of
                information requirements/burden, we are not
                [[Page 14861]]
                making any changes under that control number.
                IV. Regulatory Impact Analysis
                 We have examined the impact of this notice as required by Executive
                Order 12866 on Regulatory Planning and Review (September 1993), the
                Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-354),
                section 1102(b) of the Act, section 202 of the Unfunded Mandates Reform
                Act of 1995 (Pub. L. 104-4; enacted on March 22, 1995) (UMRA `95),
                Executive Order 13132 on Federalism (August 4, 1999) and the
                Congressional Review Act (5 U.S.C. 804(2)).
                 Executive Order 12866 directs agencies to assess all costs and
                benefits of available regulatory alternatives and, if regulation is
                necessary, to select regulatory approaches that maximize net benefits
                (including potential economic, environmental, public health and safety
                effects, distributive impacts, and equity). A regulatory impact
                analysis (RIA) must be prepared for major rules with economically
                significant effects ($100 million or more in any 1 year). This notice
                reaches the $100 million economic threshold and thus has been
                designated a major rule under the Congressional Review Act by the
                Office of Information and Regulatory Affairs.
                 The final FY 2018 DSH allotments being published in this notice are
                $36 million less than the preliminary FY 2018 DSH allotments published
                in the July 6, 2018 Federal Register (83 FR 31536). This is due to the
                actual percentage change in the CPI-U for FY 2017 used in the
                calculation of the final FY 2018 allotments (2.1 percent) being less
                than the estimated percentage change in the CPI-U for FY 2017 used in
                the calculation of the preliminary FY 2018 allotments (2.4 percent).
                The final FY 2018 IMD DSH limits being published in this notice are
                $2.4 million less than the preliminary FY 2018 IMD DSH limits published
                in the July 6, 2018 Federal Register (83 FR 31536). Since the final FY
                2018 DSH allotments were less than the preliminary FY 2018 DSH
                allotments, the associated FY 2018 IMD DSH limits also decreased.
                 The final FY 2019 DSH allotments being published in this notice are
                $36 million less than the preliminary FY 2019 DSH allotments published
                in the February 11, 2019 Federal Register (84 FR 3169). The decrease in
                the final FY 2019 DSH allotments is a result of being calculated by
                multiplying the actual increase in the CPI-U for 2018 by the final FY
                2018 DSH allotments, while the preliminary FY 2019 DSH allotments were
                calculated by multiplying the estimated CPI-U for 2018 by the
                preliminary FY 2018 DSH allotments. Although the estimated and actual
                increase in the CPI-U remained the same at 2.4 percent, the preliminary
                FY 2018 DSH allotments were higher than the final FY 2018 DSH
                allotments and therefore the final FY 2019 DSH allotments are lower
                than the preliminary FY 2019 DSH allotments. The final FY 2019 IMD DSH
                limits being published in this notice are approximately $2 million
                lower than the preliminary FY 2019 IMD DSH limits published in the
                February 11, 2019 Federal Register (84 FR 3169). The decreases in the
                IMD DSH limits are because the DSH allotment for a FY is a factor in
                the determination of the IMD DSH limit for the FY. Since the final FY
                2019 DSH allotments were decreased as compared to the preliminary FY
                2019 DSH allotments, the associated FY 2019 IMD DSH limits for some
                States were also decreased. This is a result of statutory provision,
                discussed above, that the aggregate limit for DSH payments to IMDs and
                other mental health facilities is the lesser of a State's FY 1995 total
                computable IMD and other mental health facility DSH expenditures
                applicable to the State's FY 1995 DSH allotment or the amount equal to
                the product of the State's current year total computable DSH allotment
                and the applicable percentage specified in section 1923(h) of the Act.
                As a result of the final FY 2019 DSH allotments decreasing from the
                preliminary FY 2019 DSH allotments, States that had applicable
                percentages of their current year's total computable DSH allotments
                lower than FY 1995 total computable IMD and other mental health
                facility DSH expenditures had their IMD limits decreased as a result.
                 The preliminary FY 2020 DSH allotments being published in this
                notice have been increased by approximately $1.6 billion more than the
                preliminary FY 2019 DSH allotments published in the February 11, 2019
                Federal Register (84 FR 3169). The increase in the DSH allotments is
                due to the application of the statutory formula for calculating DSH
                allotments under which the prior fiscal year allotments are increased
                by the percentage increase in the CPI-U for the prior fiscal year, and
                to the ARP adjustment, as discussed in more detail in the next
                paragraph. The preliminary FY 2020 IMD DSH limits being published in
                this notice are approximately $246 million more than the preliminary FY
                2019 IMD DSH limits published in the February 11, 2019 Federal Register
                (84 FR 3169). The increases in the IMD DSH limits are because the DSH
                allotment for a FY is a factor in the determination of the IMD DSH
                limit for the FY. Since the preliminary FY 2020 DSH allotments are
                greater than the preliminary FY 2019 DSH allotments, the associated
                preliminary FY 2020 IMD DSH limits for some States also increased.
                 The preliminary FY 2020 DSH allotments (before application of the
                ARP adjustment) being published in this in this notice are
                approximately $238 million more than the final FY 2019 DSH allotments
                being published in this notice. This increase is attributable to the
                application of the statutory formula for calculating DSH allotments
                under which the prior fiscal year allotments are increased by the
                percentage increase in the CPI-U for the prior fiscal year. The
                applicable historical percentage change in the CPI-U for FY 2019 was
                1.9 percent. The preliminary FY 2020 DSH allotments were further
                increased by approximately $1.4 billion in order to comply with the
                statutory provisions of the ARP requiring us to recalculate FS DSH
                allotments to an amount that will allow States to make the same amount
                of TC DSH payments as they would have been otherwise able to make in
                the absence of the FFCRA FMAP increase.
                 The preliminary FY 2021 DSH allotments (before application of the
                ARP adjustment) being published in this notice are approximately $192
                million more than the preliminary FY 2020 DSH allotments published in
                this notice. The increase in the DSH allotments is due to the
                application of the statutory formula for calculating DSH allotments
                under which the prior fiscal year allotments are increased by the
                percentage increase in the CPI-U for the prior fiscal year. The
                applicable historical percentage change in the CPI-U for FY 2020 was
                1.5 percent. The preliminary FY 2020 DSH allotments were increased by
                approximately $1.4 billion in order to comply with the statutory
                provisions of the ARP requiring us to recalculate FS DSH allotments to
                an amount that will allow States to make the same amount of TC DSH
                payments as they would have been otherwise able to make in the absence
                of the FFCRA FMAP increase. The preliminary FY 2021 DSH allotments were
                further increased by approximately $1.4 billion in order to comply with
                the statutory provisions of the ARP requiring us to recalculate FS DSH
                allotments to an amount that will allow States to make the same amount
                of TC DSH payments as they would have been otherwise able to make in
                the absence of the FFCRA FMAP increase.
                [[Page 14862]]
                 The preliminary FY 2021 IMD DSH limits being published in this
                notice are approximately $16 million more than the preliminary FY 2020
                IMD DSH limits published in this notice. The increases in the IMD DSH
                limits are because the DSH allotment for a FY is a factor in the
                determination of the IMD DSH limit for the FY. Since the preliminary FY
                2021 DSH allotments are greater than the preliminary FY 2020 DSH
                allotments, the associated preliminary FY 2021 IMD DSH limits for some
                States also increased.
                 The RFA requires agencies to analyze options for regulatory relief
                of small businesses, if a rule has a significant impact on a
                substantial number of small entities. For purposes of the RFA, small
                entities include small businesses, nonprofit organizations, and small
                governmental jurisdictions. Most hospitals and most other providers and
                suppliers are small entities, either by nonprofit status or by having
                revenues of less than $8.0 million to $41.5 million in any one year.
                Individuals and States are not included in the definition of a small
                entity. We are not preparing an analysis for the RFA because the
                Secretary has determined that this notice will not have significant
                economic impact on a substantial number of small entities.
                Specifically, any impact on providers is due to the effect of the
                various controlling statutes; providers are not impacted as a result of
                the independent regulatory action in publishing this notice. The
                purpose of the notice is to announce the latest DSH allotments and IMD
                DSH limits, as required by the statute.
                 In addition, section 1102(b) of the Act requires us to prepare a
                regulatory impact analysis if a rule may have a significant impact on
                the operations of a substantial number of small rural hospitals. This
                analysis must conform to the provisions of section 604 of the RFA. For
                purposes of section 1102(b) of the Act, we define a small rural
                hospital as a hospital that is located outside of a Core-Based
                Statistical Area for Medicaid payment regulations and has fewer than
                100 beds. We are not preparing analysis for section 1102(b) of the Act
                because the Secretary has determined that this notice will not have a
                significant impact on the operations of a substantial number of small
                rural hospitals.
                 The Medicaid statute specifies the methodology for determining the
                amounts of States' DSH allotments and IMD DSH limits; and as described
                previously, the application of the methodology specified in statute
                results in the decreases or increases in States' DSH allotments and IMD
                DSH limits for the applicable FYs. The statute applicable to these
                allotments and limits does not apply to the determination of the
                amounts of DSH payments made to specific DSH hospitals; rather, these
                allotments and limits represent an overall limit on the total of such
                DSH payments. For this reason, we do not believe that this notice will
                have a significant economic impact on a substantial number of small
                entities.
                 Section 202 of the Unfunded Mandates Reform Act of 1995 also
                requires that agencies assess anticipated costs and benefits before
                issuing any rule whose mandates require spending in any 1 year of $100
                million in 1995 dollars, updated annually for inflation. In 2021, that
                threshold is approximately $158 million. This notice will have no
                consequential effect on spending by State, local, or tribal
                governments, in the aggregate, or on the private sector.
                 Executive Order 13132 establishes certain requirements that an
                agency must meet when it issues a proposed rule (and subsequent final
                rule) that imposes substantial direct requirement costs on State and
                local governments, preempts State law, or otherwise has Federalism
                implications. Since this notice does not impose any costs on State or
                local governments or otherwise have Federalism implications, the
                requirements of E.O. 13132 are not applicable.
                A. Alternatives Considered
                 Because the FFCRA temporary FMAP increase of 6.2 percentage points
                was not applicable to the 1st quarter of FY 2020, we considered
                utilizing prorated FMAP rates in the calculation of the ARP-adjusted FY
                2020 DSH allotments. However, this could have been contrary to the
                statutory language at section 1923(f)(3)(F) of the Act requiring us to
                recalculate FS DSH allotments to an amount to allow for States to make
                the same amount of TC DSH payments as they would have been otherwise
                able to make in the absence of the FFCRA FMAP increase, depending on
                States' timing of their DSH payments to eligible providers. The
                methodologies for determining the States' fiscal year DSH allotments
                and IMD DSH limits, as reflected in this notice, were established in
                accordance with the methodologies and formula for determining States'
                allotments and limits as specified in statute. This notice does not put
                forward any further discretionary administrative policies for
                determining such allotments and limits, or otherwise.
                B. Accounting Statement
                 As required by OMB Circular A-4 (available at https://obamawhitehouse.archives.gov/omb/circulars_a004_a-4/), in Tables 1 and
                2, we have prepared an accounting statement showing the classification
                of the estimated expenditures associated with the provisions of this
                notice. Table 1 provides our best estimate of the change (decrease) in
                the FS of States' Medicaid DSH payments resulting from the application
                of the provisions of the Medicaid statute relating to the calculation
                of States' FY DSH allotments and the increase in the FY DSH allotments
                from FY 2019 to FY 2020. Table 2 provides our best estimate of the
                change (decrease) in the FS of States' Medicaid DSH payments resulting
                from the application of the provisions of the Medicaid statute relating
                to the calculation of States' FY DSH allotments and the increase in the
                FY DSH allotments from FY 2020 to FY 2021.
                Table 1--Accounting Statement: Classification of Estimated Expenditures,
                 From the FY 2019 to FY 2020
                 [In millions]
                ------------------------------------------------------------------------
                 Category Transfers
                ------------------------------------------------------------------------
                Annualized Monetized Transfers............ $238.
                From Whom To Whom? Federal Government to
                 States.
                ------------------------------------------------------------------------
                Table 2--Accounting Statement: Classification of Estimated Expenditures,
                 From the FY 2020 to FY 2021
                 [In millions]
                ------------------------------------------------------------------------
                 Category Transfers
                ------------------------------------------------------------------------
                Annualized Monetized Transfers............ $192.
                From Whom To Whom? Federal Government to
                 States.
                ------------------------------------------------------------------------
                C. Congressional Review Act
                 This document is subject to the Congressional Review Act provisions
                of the Small Business Regulatory Enforcement Fairness Act of 1996 (5
                U.S.C. 801 et seq.) and has been transmitted to the Congress and the
                Comptroller General for review.
                [[Page 14863]]
                 In accordance with the provisions of Executive Order 12866, this
                notice was reviewed by the Office of Management and Budget.
                 Chiquita Brooks-LaSure, Administrator of the Centers for Medicare &
                Medicaid Services, approved this document on February 1, 2022.
                 Dated: March 9, 2022.
                Xavier Becerra,
                Secretary, Department of Health and Human Services.
                BILLING CODE 4120-01-P
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                [FR Doc. 2022-05459 Filed 3-14-22; 4:15 pm]
                BILLING CODE 4120-01-C
                

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