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DHCS to Recalculate 2017-18 Hospital Fee Directed Payments

For CFOs

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The Department of Health Care Services (DHCS) announced this week that, due to a system process error, it will be forced to recalculate the entire state fiscal year (FY) 2017-18 Private Hospital Directed Payment Program (PHDP) program payments.

As result of the system process error, DHCS will reopen the contract status validation process for Phase 1 and Phase 2 of the FY 2017-18 directed payments — originally completed in March 2018 (Phase 1)  and October 2018 (Phase 2) — and will ask hospitals and health plans to re-evaluate and re-submit previously submitted files no later than May 26.

DHCS acknowledges the result will either increase or decrease the contracted utilization for the fiscal period — which will require it to recalculate the inpatient (IP) and outpatient/emergency department (OP/ED) add-on amounts for both Phase 1 and Phase 2. Unfortunately, because DHCS will be required to update the IP and OP/ED add-on amounts, every hospital is expected to receive an updated payment summary file with the new revenue totals for each phase.

Any retroactive payment/recoupments will be addressed in the FY 2018-19 Phase 1 directed payment cycle, expected to be paid to hospitals in October 2020.

Lastly, while DHCS is making this one-time exception to revisit the contract status work associated with Phase 1 and Phase 2 of FY 2017-18, it will not allow any new encounter data submissions for this period or incorporate any subsequent changes to the counting methodology. DHCS will only accept changes to the contract status files for these periods of time.

For questions about this process or other PHDP-related questions, please email or see the DHCS website.