We are revising the regulations on Medicaid payment for long-term care (LTC) facility and inpatient hospital services. Revised regulations are needed to implement recent amendments to the Medicaid law (section 962 of the Omnibus Reconciliation Act of 1980 and section 2173 of the Omnibus Budget Reconciliation Act of 1981) that: (1) Removed the requirements, in the previous law, that State agencies pay for LTC facility services on a reasonable cost-related basis and for inpatient hospital services on a reasonable cost basis, in accordance with methods and standards developed by the State and approved by the Secretary; (2) Added the requirement that State agencies pay for both types of services through the use of rates that the State finds, and makes assurances satisfactory to the Secretary, are reasonable and adequate to meet the costs that efficiently and economically operated facilities must incur to provide care in conformity with applicable State and Federal laws, regulations, and quality and safety standards; and (3) Specified that payments for inpatient hospital services must take into account certain other factors, as explained in the preamble to these regulations. The purpose of the revised regulations is to set forth the procedures HCFA will use in obtaining and accepting States' assurances that their payment rates meet the requirements of the Medicaid law. These procedures are intended to increase States' discretion in setting rates, minimize the administrative requirements States, facilities, and hospitals must comply with, and ensure that facilities and hospitals receive the reasonable and adequate payments intended by law.
Fees and Charges Medicaid