Notice of Final Agency Action 

SUBJECT: 
MassHealth: Payment for Out-of-State Acute Hospital Services effective May 25, 
2012 

AGENCY: 
Massachusetts Executive Office of Health and Human Services (EOHHS), Office 
of Medicaid 

Introduction 

The following describes and summarizes changes in MassHealth payment for services provided 
by out-of-state acute hospitals. The rate year 2012 (RY2012) MassHealth in-state acute hospital 
inpatient and outpatient methodologies are in the Final Notice of Agency Action effective 
October 1, 2011, which is available at www.mass.gov/masshealth, (click on the link to 
“MassHealth Regulations and Other Publications” and the link to “Special Notices for 
Hospitals”). For further information regarding RY2012 payment methods and rates, you may 
contact Kiki Feldmar at the Executive Office of Health and Human Services, Office of Acute and 
Ambulatory Care, 100 Hancock Street, 6th Floor, Quincy, MA, or by e-mail at 
kiki.feldmar@state.ma.us. 

Change in Payment Method 

1. Out-of-State State Acute Hospital Inpatient Services 
Currently, all out-of-state acute hospitals are paid for inpatient services provided to 
MassHealth members based on the Medicaid rate methodology used by that state. There are 
a number of different payment methods that vary by state. Effective May 25, 2012, 
MassHealth will pay out-of-state acute inpatient hospitals a per discharge payment equal to 
the median inpatient MassHealth Standard Payment Amount Per Discharge (SPAD) for instate 
acute hospitals in effect on the date of admission. In addition, for members under age 
21, for each acute inpatient day following the first 20 days of admission, MassHealth will 
pay the median outlier per diem payment rate in effect for in-state hospitals on the date of 
service. For a description of the Rate Year 2012 SPAD and outlier per diem, please see the 
Final Notice of Agency Action referenced above. 

The Rate Year 2012 out-of-state SPAD is $7,611.47 per discharge. 

 The Rate Year 2012 out-of-state acute outlier per diem hospital rate is $1,572.08 per day. 

2. Out-of-State Acute hospital Outpatient Services 
Currently, all out-of-state acute hospitals are paid for outpatient services provided to 
MassHealth members based on the Medicaid rate methodology used by that state. There are 
a number of different payment methods that vary by state. Effective May 25, 2012, 
MassHealth will pay out-of-state acute outpatient hospitals a payment per episode of care 
equal to the median outpatient Payment Amount Per Episode (PAPE) for in-state acute 


hospitals for these same services, or according to the fee schedule promulgated by the 
Division of Health Care Finance and Policy, where applicable. Certain services, including 
laboratory services, are carved out of the PAPE calculation and payment, and will be paid 
for in accordance with the applicable fee schedules adopted by the Massachusetts 
Division of Health Care Finance and Policy (DHCFP). For a description of the Rate Year 
2012 PAPE, including PAPE-covered services, please see the Final Notice of Agency 
Action referenced above. 

The Rate Year 2012 out-of-state PAPE is $280.18 per episode for PAPE-covered services. 

Justification 

These changes simplify the acute hospital out-of-state inpatient claims payment process, 
reduce undue administrative burden and assure timely and predictable payments to out-of-state 
acute hospitals. All changes to hospital payment rates and methods are in accordance with 
state and federal law and are within the range of reasonable payment levels to acute 
hospitals. 

Estimated Fiscal Effect 

EOHHS estimates that the changes in inpatient and outpatient rates described herein, will be 
a decrease in annual aggregate expenditures of approximately $4.1 million, which is the 
combination of a $4.4 million decrease in out-of-state inpatient payments, and a $0.3 million 
increase in out-of-state outpatient payments. 

Statutory Authority: M.G.L. c.118G; M.G.L. c.118E, 42 USC 1396a. 

Related Regulations: 130 CMR 410, 415, 450; 42 CFR Parts 431and 447. 


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