Inpatient hospital services include medically necessary items and services ordinarily furnished by a Medicaid hospital provided under the direction of physician for the care and treatment of inpatient clients.
Methodology / Rules
The Hospital Services program rules are located at Title 1 of the Texas Administrative Code, Part 15, Chapter 354, SubChapter A, Division 6, Rules 1071-1073, 1075, and 1077.
Reimbursement rules applicable to Hospitals are located at Title 1 of the Texas Administrative Code, Part 15, Chapter 355, SubChapter J, Division 4, Rules 8052, 8056, 8058, 8060, 8061, 8065, and 8066.
Prospective Payment Methodology
Inpatient hospital stays except in state-owned teaching hospitals and psychiatric facilities (CCP) are reimbursed according to a prospective payment methodology based on diagnosis-related groups (DRGs). The reimbursement method itself does not affect inpatient benefits and limitations. Inpatient admissions must be medically necessary and are subject to Texas Medicaid's UR requirements.
Attention: PPS Hospital Relative Weight Updates - September 12, 2018
HHSC has determined that an adjustment is needed for some All Patient Refined Diagnosis Related Group (APR-DRG) relative weights and related factors. The relative weights that are being adjusted are for new APR-DRGs in Grouper 35. The relative weights that were originally assigned were not proper for HHSCs reimbursement system.
The changes will require an adjustment in payment to some inpatient claims and encounters with discharge dates on or after October 1, 2017. The adjusted relative weights are included on this webpage in the Payment Information section.
Note: There are no changes in the weight tables from 2018 (revised) to 2019.
TEFRA Payment Methodology
Medicaid providers that are cost-reimbursed according to the TEFRA reimbursement principles on a reasonable cost basis are subject to cost reporting, cost reconciliation, and cost settlement processes. This includes state-owned teaching hospitals.
Additional information is available on the Texas Medicaid & Health Partnership (TMHP) website.
Hospital Inpatient Payments
Current and previous versions of all SDA rates and APR DRG Grouper information are available on the TMHP website.
Inpatient Ratio of Cost to Charges (RCC Rates) - effective 08/01/19
Previous Inpatient Ratio of Cost to Charges (RCC Rates)
FY 2019 Psychiatric Hospital (Per Diem Rates) (.pdf)
Cost Report Requirements
Provider Cost and Reporting
The method of determining reasonable cost is similar to that used by Title XVIII (Medicare). Hospitals must include inpatient and outpatient costs in the cost reports submitted annually. The provider must prepare one copy of the applicable CMS Cost Report Form. Additional information is available on the Texas Medicaid & Health Partnership (TMHP) website.