United States: Massachusetts Releases 2017 Acute Hospital Request For Applications And Contract

On August 24, 2016, the Massachusetts Executive Office of Health and Human Services ("EOHHS") released the Rate Year 2017 Acute Hospital Request for Applications and Contract ("RY17 RFA"), which establishes the rates, reimbursement methodologies, and other requirements for in-state hospitals participating in the MassHealth (Medicaid) program. The key provisions of the RY17 RFA, which will take effect on October 1, 2016, include significant changes to the payment methodologies for outpatient hospital services and High Public Payer Hospital Supplemental Payments (formerly known as state-defined Disproportionate Share Hospital ("DSH") Supplemental Payments), elimination of $14.8 million in pediatric supplemental payments for complex care, reduction of pay-for-performance ("P4P") payments by $25 million, and addition of a new managed care organization ("MCO") contracting requirement, as discussed in further detail below.

Outpatient Hospital Services

Currently, MassHealth pays hospitals for outpatient services using the Payment Amount Per Episode ("PAPE") payment methodology. For dates of service from October 1, 2016 through November 30, 2016, hospitals will be paid consistent with their RY16 PAPE for outpatient services. Effective December 1, 2016, and through September 30, 2017, MassHealth will pay hospitals using a new payment methodology called the Adjudicated Payment per Episode of Care ("APEC"). The APEC is both hospital-specific and episode-specific.

The APEC is the sum of (1) the Episode-Specific Total EAPG Payment and (2) the APEC Outlier Component, if applicable, both as defined below:

  • Episode-Specific Total EAPG Payment: For each claim detail line within an episode, the APEC Outpatient Statewide Standard (the base) is multiplied by the claim detail line's Adjusted EAPG Weight (based on relative weights determined by EOHHS for each Enhanced Ambulatory Patient Grouping, or "EAPG," assigned to a particular claim detail line). The Episode-Specific Total EAPG Payment is the sum of these products within an episode.
  • APEC Outlier Component: An outlier payment supplements the Episode-Specific EAPG Payment if (1) the Episode-Specific Total EAPG Payment is greater than $0; and (2) the calculated cost of the episode (the product of the episode's total allowed charges and the hospital's fiscal year 2014 outpatient cost-to-charge ratio) exceeds the sum of the Episode-Specific Total EAPG Payment and a fixed outlier threshold set at $2,100. This difference, multiplied by a marginal cost factor of 80%, equals the outlier component.

Under the PAPE payment methodology, an episode includes all PAPE-covered outpatient services (regardless of the number or type) provided to a MassHealth member in a single calendar day. In contrast, under the new APEC payment methodology, an episode may extend past midnight in cases of emergency or observation services. Unrelated services delivered on a second distinct visit to the hospital during the same day may, however, be considered a separate episode.

Supplemental Payments

Hospitals that receive at least 63% of their gross patient service revenue1 from government payers (i.e., Medicare and Medicaid) and free care continue to be eligible to receive DSH supplemental payments (now referred to as High Public Payer Hospital Supplemental Payments). The amount and allocation methodology, however, will change significantly. The amount of funding will no longer be based on a fee-for-service system. Instead, the total amounts of funding allocated for inpatient discharges and outpatient episodes ($6.5 million, each), will be distributed to each qualifying hospital on a pro rata basis, based on the number of MCO-reported paid inpatient discharges and paid outpatient episodes, respectively, in federal fiscal year 2017. As these numbers will not be finalized until March 31, 2018, hospitals will not receive High Public Payer Hospital Supplemental Payments in 2017.

The total amount of funding ($13 million) allocated to High Public Payer Hospital Supplemental Payments is nearly half of what had been budgeted by the state for FY17.2 The RY17 RFA also eliminates the Freestanding Pediatric Acute Hospital High Complexity Supplemental Payment and the Pediatric Specialty Unit High Complexity Supplemental Payment, which together accounted for $14.8 million in supplemental payments to qualifying pediatric hospitals in RY16.

P4P Payments

The RY17 RFA reduces available P4P payments (an incentive program based on certain quality measures) by half, from $50 million to $25 million.

MCO Contracting and Rates Requirement

Effective January 1, 2017, any hospital providing non-emergency services must contract to join at least one MCO provider network if offered such a contract. In addition, non-network hospitals must accept an MCO reimbursement rate comparable to the RY17 RFA fee-for-service rate for that service as payment in full, unless the MCO negotiates a different rate with the hospital. This latter requirement applies to all services—not just emergency and post-stabilization services, as in the RY16 RFA—and represents a reversion back to a more expansive approach that was last present in the RY08 RFA.


Along with implementing new payment methodologies and contracting requirements, the RY17 RFA significantly reduces MassHealth payments to hospitals. Not only does the RY17 RFA cut available funding for supplemental payments, it reduces funding for P4P payments by half. In total, the RY17 RFA and related policies will reduce MassHealth funding by up to $150 million, according to some estimates.3

The RY17 RFA can be found at the COMMBUYS website here, by clicking on "Bids" and entering "17LCEHSACUTEHOSPITAL" in the bid description search field.


1. Based on the hospital's FY15 cost report.

2. Massachusetts Hospital Association, State Proposes Even Further Cuts to Hospitals, MONDAY REP., Sept. 3, 2016.

3. Id.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.