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OVERVIEW: Kentucky residents may be eligible for free care through the Indigent Care Disproportionate Share Hospital Program, which reimburses hospitals for the care they provide.
Medical Assistance Revolving Trust Fund
Kentucky Revised Statutes § 205.640
Disproportionate Share Hospital Distributions
907 Kentucky Administrative Regulations § 1:820
Indigent Care Disproportionate Share Hospital Program
The Cabinet for Health and Family Services (hereinafter “The Cabinet”), which sits within the Department for Medicaid Services (hereinafter “the Department”), is responsible for promulgating administrative regulations for the Indigent Care Disproportionate Share Hospital Program. Ky. Rev. Stat. Ann. 205.640(6).
DEFINITIONS AND DISTINCTIONS: N/A
FREE CARE AS A COMMUNITY BENEFIT: N/A
The Indigent Care Disproportionate Share Program (hereinafter “the DSH Program”) reimburses hospitals for uncompensated care provided to eligible patients. Services rendered to individuals and families may qualify for reimbursement if patients meet the following criteria:
- Reside in Kentucky;
- Have total annual incomes and resources up to 100 percent FPL; and
- Do not qualify for medical assistance (e.g., Medicaid) or the Kentucky Children’s Health Insurance Program. Ky. Rev. Stat. Ann.§ 205.640.
The DSH Program is financed through the Medical Assistance Revolving Trust Fund (hereinafter “MART”). Ky. Rev. Stat. Ann. § 205.640(2). MART is funded from provider tax revenues and state and federal matching funds, which are then divided into three pools for distribution:
- 43.92 percent goes to acute care hospitals;
- 37 percent goes to university hospitals; and
- 19.08 percent to private psychiatric hospitals and state mental hospitals. Ky. Rev. Stat. Ann. § 205.640(3)(a).
The Department must calculate an indigent care factor for each hospital annually, which consists of a percentage of hospital’s annual indigent care costs toward the sum of the total annual indigent care costs for all hospitals within each of the above pools. Ky. Rev. Stat. Ann. § 205.640(3)(d). Indigent care costs are defined as the hospital’s inpatient and outpatient care multiplied by the hospital’s Medicaid rate (or a rate determined by the department in regulations). Id. The hospital’s indigent care factor is multiplied by the total fund allocated to all hospitals within the respective pool in order to determine the hospital’s annual distribution. Id. By September 1 of each year, the department shall calculate a preliminary indigent care factor and preliminary annual payment for each hospital and notify the hospital of these figures. Any adjustments should be made by October 1. Id.
The Department issues one lump-sum payment on October 15, or later, as soon as federal financial participation becomes available for the disproportionate share funds available during the corresponding federal fiscal year. Ky. Rev. Stat. Ann. § 205.640(3)(e). Total annual disproportionate share payments shall be equal to the maximum amount of disproportionate share payments established under the Federal Balanced Budget Act of 1997. They shall also be subject to the availability of adequate state matching funds and not exceed total uncompensated costs. Ky. Rev. Stat. Ann. § 205.640(4).
Indigent care payments can be made to acute care hospitals, private psychiatric hospitals, and university hospitals that qualify for the disproportionate share program. Ky. Rev. Stat. Ann. § 205.640(3)(b).
All hospitals receiving reimbursement under this section shall display a prominent sign that reads, “This hospital will accept patients regardless of race, creed, ethnic background, or ability to pay.” Ky. Rev. Stat. Ann. § 250.640(7).
Hospitals must first make the determination that the applicant does not qualify for Medicaid or the Kentucky Children’s Health Insurance Program before that person will be eligible for services under these provisions. A hospital will not be eligible for reimbursement for services provided to a patient who would have qualified for Medicaid or the Kentucky Children’s Health Insurance Program but did not apply. Ky. Rev. Stat. Ann. § 250.640(5).
Prior to billing a patient for services, and prior to submitting the cost of a service to the department as uncompensated, a hospital shall use the indigent care eligibility form, DSH-001 Application for Disproportionate Share Hospital Program, to screen a patient for eligibility for Medicaid, Kentucky Children's Health Insurance Program (KCHIP), or indigent care. 907 Ky. Admin. Regs. 1:820 § 8(1).
If a hospital determines that a patient does not meet indigent care eligibility criteria, the patient or responsible party may request a fair hearing within thirty (30) days of receiving the determination. 907 Ky. Admin. Regs. 1:820 § 10(1). The hearing shall be conducted by impartial hospital staff not involved in the initial determination within thirty (30) days of receiving the hearing request. 907 Ky. Admin. Regs. 1:820 § 10(2). The appellant at a fair hearing is permitted to review and present evidence, call witnesses, and be represented by counsel. 907 Ky. Admin. Regs. 1:820 § 10(3). A hospital is required to render a decision within fourteen (14) days of the hearing. 907 Ky. Admin. Regs. 1:820 § 10(4) A patient or responsible party may appeal a fair hearing decision to a court of competent jurisdiction. 907 Ky. Admin. Regs. 1:820 § 10(6).
Hospitals must report quarterly to the Cabinet the level of uncompensated care provided to eligible individuals. This data must include care provided in psychiatric hospitals to patients between 22 and 64 years of age. Reports for the previous fiscal year must be submitted by August 15 of each year. These figures are used to calculate the hospital’s indigent care factor. Hospitals must comply with requests from the Cabinet for supporting documentation to verify the data submitted. Ky. Rev. Stat. Ann. § 205.640(3)(d)(2)(a-b).
PENALTIES FOR NONCOMPLIANCE: N/A
Hospitals that receive reimbursement under these provisions cannot bill patients for services submitted for payment. Ky. Rev. Stat. Ann. § 205.640(5).