SHOPP Hospitals

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The Supplemental Hospital Offset Payment Program (SHOPP) program was created and implemented in 2011 for the purpose of assuring access to quality care for Oklahoma Medicaid members. The program is designed to assess Oklahoma hospitals, unless exempt, a supplemental hospital offset payment program fee. The collected fees will be placed in pools and then allocated to hospitals as directed by legislation. The Oklahoma Health Care Authority (OHCA) does not guarantee that allocations will or equal or exceed the amount of the supplemental hospital offset payment program fee paid by the hospital.

House Bill 1381 specifies that all Oklahoma licensed hospitals that do not meet one of the exemptions below will be required to participate in the SHOPP program:

  • A hospital that is owned or operated by the state or a state agency, the federal government, a federally recognized Indian Tribe, or the Indian Health Service;
  • A hospital that provides more than fifty percent of its inpatient days under a contract with a state agency other than OHCA;
  • A hospital for which the majority of its inpatient days are for any one of the following services, as determined by OHCA using the Inpatient Discharge Data File published by the Oklahoma State Department of Health, or in the case of a hospital not included in the Inpatient Discharge Data File, using substantially equivalent data provided by the hospital:
    • treatment of a neurological injury,
    • treatment of cancer,
    • treatment of cardiovascular disease,
    • obstetrical or childbirth services,
    • surgical care, except that this exemption shall not apply to any hospital located in a city of less than five hundred thousand population and for which the majority of inpatient days are for back, neck, or spine surgery;
  • A hospital that is certified by the federal Centers for Medicaid and Medicare Services as a long-term acute care hospital or as a children’s hospital; and
  • A hospital that is certified by the federal Centers for Medicaid and Medicare Services as a critical access hospital.

Hospital Assessment Methodology

The assessment will be imposed on each qualifying hospital, for each calendar year in an amount calculated as a percentage of each hospital’s net patient revenue. “Net hospital patient revenue” is defined for the purposes of the SHOPP program as the gross hospital revenue as reported on Worksheet G-2 (columns 1 and 2, lines 16, 17 and 18) of the Medicare Cost Report, multiplied by the hospital’s ratio of total net to gross revenue as reported on Worksheet G-3 (column 1, line 3) and Worksheet G-2 (part I, column 3, line 25). This will be calculated using the data from each hospital’s fiscal year 2009 Medicare Cost Report in the Centers for Medicare and Medicaid Services’ (CMS) Healthcare Cost Report Information System file date December 31, 2010. The assessment rate until December 31, 2012 is fixed at 2.5 percent and will at no time in subsequent years exceed four percent.

Hospital Allocation Methodology

The SHOPP program creates funding pools for the purpose of allocating SHOPP fees and the additional federal funds resulting from SHOPP fees. There are three funding pools described below:

  • The first pool is the inpatient hospital access payment pool. Each eligible hospital will receive inpatient hospital access payments each year equal to the hospitals pro rata share of the inpatient hospital access payment pool based on the hospital’s Medicaid payments for inpatient services divided by the total Medicaid payments for inpatient services of all eligible.
  • The second pool is the outpatient hospital access payment pool. Each eligible hospital will receive outpatient hospital access payments each year equal to the hospitals pro rata share of the outpatient hospital access payment pool based on the hospital’s Medicaid payments for outpatient services divided by the total Medicaid payments for outpatient services of all eligible.
  • The third pool is established by legislation to allocate a portion of the inpatient hospital access payment pool and a portion of the outpatient hospital access payment pool to the critical access hospital payment pool. Critical access hospital payments will be allocated first and the remaining amount will be allocated to the inpatient and outpatient hospital access payment pools as appropriate. Each critical access hospital will receive hospital access payments equal to the amount by which the payment for these services was less than 101 percent of the hospital’s cost of providing these services. The calculation of costs for inpatient and outpatient is as follows:
    • Inpatient – Oklahoma Medicaid inpatient total billed charges for paid claims multiplied by the hospital specific cost to charge ratio (CCR) used by OHCA for DRG payments calculated as cost from Medicare cost report worksheet B, part I, column 27, line 95 minus sum of lines 63-94, including subscripts and charges from Medicare cost report worksheet C, part 1, column 8, line 101 minus sum of lines 63-100, including subscripts; compute average CCR from all unique cost reports in most recent 3 years.
    • Outpatient - Oklahoma Medicaid outpatient total billed charges for paid claims multiplied by the hospital specific outpatient cost to charge ratio (CCR) calculated as cost from Medicare cost report worksheet C, part I, column 5, sum of lines 37-68, including subscripts and charges from Medicare cost report worksheet C, part 1, column 8, sum of lines 37-68 less RHC charges, including subscripts; compute CCR from most recent cost report available.
      If at a later date, CMS finds that payments to hospitals have exceeded the upper payment limits determined in accordance with 42 C.F.R 447.272 and 42 C.F.R. 447.321, hospitals will be required to refund a share of the recouped federal funds that is proportionate to the hospitals’ positive contribution to the upper payment limit.