| (4) Dividing the amount reached in subparagraph (3) by | the product of: |
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| (a) The number of inpatient discharges, adjusted | by the all payer case mix index for the hospital; | and |
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| (b) The ratio of total gross patient service | revenue to gross inpatient service revenue. |
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| For the purposes of this paragraph, a hospital's total | hospital-only expenses include any item that is listed on | the hospital's Medicare cost report as a subprovider, such | as a psychiatric unit or rehabilitation unit, and does not | include nonhospital cost centers shown on the hospital's | Medicare cost report, such as home health agencies, nursing | facilities, swing beds, skilled nursing facilities and | hospital-owned physician practices. For purposes of this | paragraph, a hospital's bad debt is as defined and reported | in the hospital's Medicare cost report. |
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| C. By October 1, 2005, the Maine Hospital Association and | the Governor's Office of Health Policy and Finance shall | agree on a target for increases in hospitals' expense per | casemix-adjusted inpatient discharge. Each hospital's | expense per casemix-adjusted inpatient discharge is | calculated using the following process: |
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| (1) Each patient's expense per discharge is calculated | by applying the Medicare cost report ratio of cost-to- | charges for the matching cost centers to the charge | detail on each patient's discharge abstract as reported | in the Maine Health Data Organization's discharge | abstracts; |
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| (2) The hospital's average expense per discharge is | calculated by adding the costs of all discharges and | dividing the sum by the total number of discharges; and |
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| (3) The hospital's expense per casemix-adjusted | inpatient discharge is calculated by adjusting the | average expense per discharge by the average case | weight for the hospital, using case weights issued by | the federal Centers for Medicare and Medicaid Services. |
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| | Sec. 5. Outpatient cost-efficiency. By January 1, 2006, the Maine | Hospital Association and the Governor's Office of Health Policy | and Finance shall agree on a timetable, format and methodology | for the hospital association to measure and report on outpatient | cost-efficiency. The methodology must use the ambulatory payment | classification system as the unit of cost. |
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