(1) The department's DRG prospective payment rate for inpatient hospital services is based on the classification of inpatient hospital discharges to DRGs. The procedure for determining the DRG prospective payment rate is as follows:

(a) Prior to October 1st of each year, the department will assign a DRG to each Medicaid patient discharge in accordance with the current Medicare grouper program version, as developed by 3M Health Information Systems. The assignment of each DRG is based on:

(i) the ICD-9-CM principal diagnoses;

(ii) the ICD-9-CM secondary diagnoses;

(iii) the ICD-9-CM medical procedures performed during the recipient's hospital stay;

(iv) the recipient's age;

(v) the recipient's sex; and

(vi) the recipient's discharge status.

(b) For each DRG, the department determines a relative weight that reflects the cost of hospital resources used to treat cases in that DRG relative to the statewide average cost of all Medicaid hospital cases. The relative weight for each DRG is available upon request from Department of Public Health and Human Services, Health Resources Division, 1400 Broadway, P.O. Box 202951, Helena, MT 59620-2951.

(c) The department computes a Montana average base price per case. This average base price per case is $1980 excluding capital expenses, medical education, and disproportionate share hospital payments effective for services provided from August 1, 2003 through December 31, 2005. For services provided January 1, 2006 through June 30, 2006, the average base price per case is $2037 excluding capital expenses, medical education, and disproportionate share hospital payments. For services provided between July 1, 2006 and September 30, 2006, the average base price is $2118 excluding capital expenses, medical education, and disproportionate share hospital payments. For services provided on or after October 1, 2006, the average base price is $2025 excluding capital expenses, medical education, and disproportionate share hospital payments.

(d) The relative weight for the assigned DRG is multiplied by the average base price per case to compute the DRG prospective payment rate for that Medicaid patient discharge except where there is no weight assigned to a DRG. Referred to as "exempt", the unweighted DRG will be paid at the statewide cost to charge ratio as defined in ARM 37.86.2904.

(2) For those Montana hospitals designated by the department after July 15, 2005 as having met the requirements for a specialty (level II) and subspecialty (level III) neonatal intensive care facility as provided in the Guidelines for Perinatal Care, Fifth Edition (2002), published by the American Academy of Pediatrics and the American College of Obstetricians and Gynecologists, reimbursement for neonatal DRGs 385 through 389 will be actual allowable cost determined on a retrospective basis, with allowable costs determined according to ARM 37.86.2803. The guidelines are adopted and incorporated by reference and are available through the Department of Public Health and Human Services, Health Resources Division, 1400 Broadway, P.O. Box 202951, Helena, MT 59620-2951. In addition, such facilities:

(a) will be reimbursed on an interim basis during each facility's fiscal year. The interim rate will be a percentage of usual and customary charges, and the percentage will be the facility-specific cost to charge ratio, determined by the department in accordance with Medicare reimbursement principles.

(b) may split bill when total charges reach $100,000. The first interim split bill must total at least $100,000 in charges.

(c) will not receive any cost outlier payment with respect to such discharges or services.

(3) The Montana Medicaid DRG relative weight values, average length of stay (ALOS), and outlier thresholds are contained in the DRG Table of Weights and Thresholds (effective October 1, 2006) published by the department. The department adopts and incorporates by reference the DRG Table of Weights and Thresholds (effective October 1, 2006). Copies may be obtained from the Department of Public Health and Human Services, Health Resources Division, 1400 Broadway, P.O. Box 202951, Helena, MT 59620-2951.