Reimbursement Principles. The Department will make no direct reimbursement to any State-operated hospital. The Department will claim federal fund recoveries from the U.S. Department of Health and Human Services for services to participants in State-operated hospitals. The Department shall compare the current rates with the projected upper payment limit for inpatient days of service on or after July 1, 2012, in freestanding private psychiatric hospitals in Maryland whose rates for commercial providers are set by the HSCRC. If the rates do not exceed the projected upper payment limit calculated by the Department, the Department shall reimburse these hospitals using a rate of 94 percent of the current rates for services set by the HSCRC for each hospital’s commercial providers in the fiscal year the prospective payments are made. If the rates do exceed the projected upper payment limit calculated by the Department, the per diem payments to each such hospital shall be decreased by the same proportion that the projected upper payment limit is exceeded. If the Program discontinues using rates which have been approved by HSCRC, the Program shall reimburse providers: According to Medicare standards and principles for retrospective cost reimbursement described in 42 CFR §413; or On the basis of charges if less than reasonable cost. The Department may not reimburse for the services of a hospital’s salaried or contractual physicians as a separate line item. When HSCRC has included these salaries in the hospital’s costs, charges for these services shall be included in the room and board rate or the appropriate ancillary service only. Payment advances other than those made in accordance with HSCRC regulations may not be made routinely. Inpatient and outpatient services in District of Columbia special psychiatric and outpatient services in in-State special psychiatric hospitals are cost-settled on an annual basis according to §B of this regulation. Effective October 1, 2018, an out-of-State special psychiatric hospital shall be reimbursed the lesser of its charges or the amount reimbursable by the host state’s Title XIX agency. An out-of-State provider shall submit proof of host state rates on an annual basis. Retrospective Cost Reimbursement. Except as specified in §A of this regulation, a special psychiatric hospital not approved by the Program for reimbursement according to HSCRC rates shall be reimbursed: According to Medicare standards and principles for retrospective cost reimbursement described in 42 CFR §413; or On the basis of charges, if less than reasonable cost. In calculating retrospective cost reimbursement rates, the Department or its designee will deduct from the designated costs or group of costs those restricted contributions which are designated by the donor for paying certain provider operating costs, groups of costs, or costs of specific groups of participants. When the cost, or group or groups of costs designated, cover services rendered to all participants, including Medical Assistance participants, operating costs applicable to all participants shall be reduced by the amount of the restricted grants, gifts, or income from endowments thus resulting in a reduction of allowable costs. Final settlement for services in the provider’s fiscal year shall be determined based on Medicare retrospective cost principles found at 42 CFR §413, adjusted for Medicaid allowable costs. Allowable costs specific to the Program shall be limited to a base-year cost per discharge increased by the applicable federal rate of increase times the number of Program discharges for that fiscal year. Base Year. For purposes of determining limits on the increase of cost, in accordance with Medicare regulations, the base year shall be: For an existing provider, the first year of entering into the Program or the first year separate rates for the unit or units of service or services are approved; and For a new provider, or all of these, the 12-month period immediately before the provider was initially subjected to target rate increases. Initial Interim Rates. In order to establish an initial interim rate, the provider shall submit to the Department or its designee, before the beginning of the first billing period, at least 90 days before the beginning of billing for services, the following: A detailed cost build-up, consistent with Medicare principles and cost finding, that supports the requested rate; A current, projected, and prior year’s charge rate schedule; Finalized prior year’s Medicare cost reports and the most current submission; A detailed revenue schedule; and Audited financial statements. The provider shall supply the Department or its designee the assurances necessary to establish that its customary charges to participants liable for payment on a charge basis exceed the allowable cost for these services. Initial Interim Rates for Newly Established Services or Providers. The provider shall submit to the Department or its designee, a detailed cost build-up, consistent with Medicare principles and cost finding, that supports the requested rate that follows Medicare principles and cost finding. The Department will compare the rate with a compatible facility and determine a reasonable rate that does not exceed the projected charges. Revision of Interim Rates. The provider may request an interim rate revision should the actual and projected cost exceed the interim rate by 10 percent. The provider shall furnish the Department or its designee with appropriate schedules showing the reason for the increase and other any other information that supports the rate increase. The Department will lower the provider’s interim rate to approximate the final allowable reasonable cost based on the results of the prior year’s review. The provider may request not more than two interim rate revisions during the accounting year. Cost Settlement. The provider shall submit to the Department or its designee: A Medicaid cost report based on actual data using the cost reporting forms used by Medicare for retrospective cost reimbursement; A copy of the provider’s Program log; and A finalized Medicare cost report for the cost reporting year. The final Program cost report shall be sufficiently detailed to support a separate cost finding for Maryland Medical Assistance unique cost centers. The provider shall also submit a copy of its Maryland Medical Assistance log. The submitted cost report shall be in sufficient detail to support a separate cost finding for designated Maryland Medical Assistance unique cost centers. Tentative cost settlements may not be performed on a routine basis. However, the Program may, when it determines appropriate, calculate tentative settlements. The provider shall furnish the Department or its designee with a finalized Medicare cost report for the cost reporting year. The Department will base final settlement on the results of the finalized Medicare cost reports. The Program shall reimburse room and board charges for the day of admission, but may not reimburse room and board charges for the day of discharge from the hospital. The provider shall submit request for payment according to procedures established by the Department. Payments on Medicare claims are authorized if: The provider accepts Medicare assignment; Medicare makes direct payment to the provider; Medicare determined the services were medically necessary; The services are covered by the Program; and Initial billing is made directly to Medicare according to Medicare guidelines. Payment on Medicare claims is subject to the following provisions: Deductible and co-insurance, according to the limits of §E of this regulation, shall be paid subject to the HSCRC discounts, except in the case of a participant receiving hospital services in an out-of-State facility, in which case deductible and co-insurance shall be paid in full; or Services not covered by Medicare, but by the Program, if medically justified according to §E of this regulation. Administrative Days. To be paid for administrative days, the special psychiatric hospital shall document, on forms designated by the Department, information demonstrating that the participant who was initially eligible has been determined to no longer require special psychiatric hospital services and the provider has: Received a determination from the Department or its designee that the participant requires the level of service provided in a lower-acuity facility, but an appropriate facility is not available; Established a plan for discharge during the period of administrative days, is actively pursuing placement at an appropriate level of care for the participant, and has documented this activity in the participant’s record; Maintained documentation in the participant’s medical record that placement activity was conducted no fewer than 3 days per week during the period for which payment is requested for administrative days; and Notified the local agency responsible for development of the discharge treatment and education plan of the potential placement, if the participant is at risk of a residential treatment center placement on admission; If the participant requires the level of care provided by a residential treatment center and a bed in a residential treatment center is not available, in order to be paid for administrative days, the special psychiatric hospital shall document that it timely notified local coordinating councils and any other local agency, as appropriate, of the necessity to continue inpatient psychiatric service at a residential treatment center before the termination of the need for inpatient psychiatric hospitalization; If the participant is at an inappropriate level of care but cannot be moved, in order to be paid for administrative days, the special psychiatric hospital shall: Provide the attending physician’s declaration that, because of physical or emotional problems, the participant is unable to be moved; Document in the participant’s medical record the attending physician’s reasons why the participant cannot be moved; and Document the attending physician’s reevaluation of the participant’s inability to be moved in the participant’s record at least every 14 days in special psychiatric hospital. Payment for approved administrative days for a special psychiatric hospital seeking placement of a participant to a residential treatment center shall be the average residential treatment center rate issued pursuant to COMAR 10.09.29.13B. The Department may not reimburse a special psychiatric hospital for administrative days if: The special psychiatric hospital bills the Program for days of care for which the hospital is licensed to provide; or The Program or the Program’s designee determines the participant no longer requires the level of care for the days requested. The Department may not make direct payment to the participant. Billing time limitations for claims submitted pursuant to this chapter are set forth in COMAR 10.09.36.06. The Department reserves the right to return to the provider, before payment, all invoices not properly completed. Noncompliance with the Program’s requirements as determined by the Department or its designee shall result in nonpayment of the claim.