§ 2807-a. General hospital nineteen hundred eighty-six and nineteen
hundred eighty-seven inpatient rates and charges.

1. For the rate period from January first, nineteen hundred eighty-six
through December thirty-first, nineteen hundred eighty-six and for the
rate period from January first, nineteen hundred eighty-seven through
December thirty-first, nineteen hundred eighty-seven, the rates of
payment to general hospitals for services provided to persons eligible
for payments made by state governmental agencies and subscribers to
article forty-three insurance law corporations and subscribers of
organizations organized under article forty-four of this chapter (unless
application is made to the commissioner under subdivision three of this
section) shall be based on the reimbursable operating costs used in
determining payments for services provided during the rate period from
January first, nineteen hundred eighty-five through December
thirty-first, nineteen hundred eighty-five. Such operating costs shall
include the annualized cost impact of rate revisions or adjustments made
with respect to such services. In addition to the reimbursable operating
costs identified in accordance with this subdivision, payment rates by
governmental agencies and article forty-three insurance law corporations
shall be adjusted each year to reflect:

(a) capital related expenses determined in accordance with subdivision
seven of this section;

(b) additional financial needs or revenue requirements in accordance
with subdivision eight of this section; and

(c) projection of reimbursable costs identified in accordance with
this subdivision by a trend factor established by the panel of
economists as set forth in subdivision fourteen of this section.

2. For the rate period from January first, nineteen hundred
eighty-six through December thirty-first, nineteen hundred eighty-six
and for the rate period from January first, nineteen hundred
eighty-seven through December thirty-first, nineteen hundred
eighty-seven, rates of payment pursuant to the provisions of the
workers' compensation law, the volunteer firefighters' benefit law and
the comprehensive motor vehicle insurance reparations act shall be
established on the basis of one hundred twelve percent of the trended
nineteen hundred eighty-one average operating reimbursable per diem
inpatient cost of the hospital, plus the additions specified in
subdivisions seven and eight of this section and such revisions that may
be made pursuant to subdivisions eleven and fourteen of this section.

3. Nothing in this section shall prohibit the negotiation by health
maintenance organizations operating in accordance with the provisions of
article forty-three of the insurance law or article forty-four of this
chapter, of agreements with general hospitals for rates of payment other
than those provided herein. Such contracts shall require approval by the
commissioner and must include provision for special benefit packages or
arrangements for providing inpatient services to encourage patient
management behavior that will minimize the length of patient stay, such
as special admission arrangements, bed leasing or other inpatient
capitation arrangements.

4. Hospital inpatient services reimbursement provided to patients who
are not beneficiaries or subscribers of corporations organized and
operating in accordance with article forty-three of the insurance law,
eligible for payments made by state governmental agencies, eligible for
payments as beneficiaries of subchapter XVIII of the federal social
security act, enrolled in organizations operating in accordance with the
provisions of article forty-four of this chapter, enrolled in a
self-insured and self-administered group covered under the provisions of
paragraph (b) of subdivision twelve of this section, or eligible for
payments pursuant to the provisions of the workers' compensation law,
the volunteer firefighters' benefit law or the comprehensive motor
vehicle insurance reparations act shall be at charges established by the
hospital in accordance with subdivision twelve of this section.

5. Specialty hospitals shall receive reimbursement for general
hospital inpatient services in accordance with the provisions of this
section unless other reimbursement methodologies are adopted by the
council and approved by the commissioner. In such event the allowances
provided in subdivision eight of this section shall be included in
certified and approved inpatient rates.

6. The establishment of separate rates of payment for patients who
require different levels or types of care shall require a reallocation
of costs to insure that costs are equitably allocated to service areas
and appropriate rate adjustments are made.

7. Capital related expenses. Capital related inpatient expenses,
including but not limited to straight line depreciation on buildings and
non-movable equipment, accelerated depreciation on movable equipment if
requested by the hospital, rentals and interest on capital debt (or for
hospitals financed pursuant to article twenty-eight-b of this chapter,
such expenses, including amortization in lieu of depreciation, as
determined pursuant to the reimbursement regulations promulgated
pursuant to that article and article twenty-eight of this chapter),
shall be included in rates established on a budget basis and
subsequently reconciled to actual expenses through appropriate audit
procedures. General hospitals shall submit to the commissioner, at least
one hundred twenty days prior to the commencement of each year, a
schedule of capital related inpatient expenses for the forthcoming year.
Any capital related inpatient expense generated by a capital expenditure
which requires or required approval pursuant to this article, must have
received such approval for the capital related expense to be included in
the rates established. The submitted budget may include the capital
related inpatient expenses for all existing capital assets as well as
estimates of capital related inpatient expenses for capital assets to be
acquired or placed in use prior to the commencement of the rate year or
during the rate year provided all required approvals have been obtained.
The basis for determining capital related inpatient expenses shall be
the lesser of actual cost or the final amount specifically approved for
the construction of the capital asset. The council shall adopt, with the
approval of the commissioner, regulations to:

(a) identify by type the eligible capital related inpatient expenses;

(b) safeguard the future financial viability of voluntary, non-profit
general hospitals by requiring funding of inpatient depreciation on
building and fixed and movable equipment;

(c) provide authorization to adjust inpatient rates by advancing
payment of depreciation as needed, in instances of capital debt related
financial distress of a voluntary, non-profit general hospital; and

(d) provide a methodology for the reimbursement treatment of sales.

8. Allowances. All rates established for the two years commencing on
January first, nineteen hundred eighty-six in accordance with
subdivisions one, two, three, four, five and six of this section shall
include the allowances specified in paragraphs (a), (b), (c), (e) and
(f) of this subdivision. The allowances shall be computed on the basis
of the general hospitals' reimbursable inpatient costs after application
of the trend factor. For the purposes of this subdivision and
subdivisions sixteen and twenty-four of this section, major public
general hospitals are defined as all state operated general hospitals,
all general hospitals operated by the New York city health and hospitals
corporation as established by chapter one thousand sixteen of the laws
of nineteen hundred sixty-nine as amended and all other public general
hospitals having annual inpatient operating costs in excess of
twenty-five million dollars.

(a) An allowance of one percent of the general hospitals' reimbursable
inpatient costs computed in accordance with this section to be used at
the discretion of hospital governing boards.

(b) For public general hospitals an additional allowance of up to two
percent subject to the provisions of paragraph (d) of this subdivision.

(c) For voluntary non-profit and private proprietary general hospitals
an additional allowance up to one percent subject to the provisions of
paragraph (d) of this subdivision.

(d) The additional allowances in paragraphs (b) and (c) of this
subdivision shall be available to general hospitals receiving approval
from the commissioner as to the acceptable use of the allowance which
uses shall include but not be limited to retirement of short term
non-capital debt, meeting costs related to bad debts and charity care
not met by the distributions as specified in subdivisions sixteen and
twenty-four of this section, offsetting reductions in anticipated
revenue resulting from charge limits below those applicable to the
particular hospital immediately prior to the enactment of subdivision
twelve of this section, and needed improvement of current ratio.
Allowances authorized by paragraphs (b) and (c) of this subdivision are
not to be considered as a substitute for operational funds that are
otherwise reimbursable or subject to appeal.

(e) A percentage to reflect the needs for the financing of losses
resulting from bad debts and the costs of charity care of general
hospitals within article forty-three insurance law regions, or such
other regions as adopted pursuant to subdivision fifteen of this
section, and within a statewide determination of financial resources to
be committed for this purpose. Regional needs shall be equal to the
total of inpatient losses from bad debts reduced to cost and the
inpatient costs of charity care increased by any deficit of such
hospitals from providing ambulatory services, excluding any portion of
such deficit resulting from governmental payments below average visit
costs, and revenues and expenses related to the provision of referred
ambulatory services. The regional amounts to be included in rates
approved for the rate year commencing January first, nineteen hundred
eighty-six and for the rate year commencing January first, nineteen
hundred eighty-seven will be equal to the result of the application of
the percentage of statewide need for voluntary non-profit, private
proprietary and public general hospitals, other than major public
general hospitals, that can be met from available resources in regional
pools, created in accordance with subdivision fifteen of this section
computed without consideration of inpatient uncollectible amounts, to
the regional need for voluntary non-profit, private proprietary and
public general hospitals, other than major public general hospitals,
expressed in dollars plus the dollar amount resulting from the
application of the ratio of major public general hospitals inpatient
reimbursable costs within the region to total statewide general
inpatient reimbursable cost (as computed on the basis of nineteen
hundred eighty-four financial and statistical reports and excluding
costs related to services to beneficiaries of subchapter XVIII of the
federal social security act) to the statewide resources committed for
this purpose to regional pools computed without consideration of
inpatient uncollectible amounts and the ratio of these total dollars to
the total regional reimbursable inpatient costs, excluding inpatient
costs related to services provided to beneficiaries of subchapter XVIII
of the federal social security act, after application of the trend
factor. For each year of the two year period commencing on January
first, nineteen hundred eighty-six the statewide amount to be available
in regional pools for this purpose will equal four and one-half percent
of the total hospital reimbursable inpatient cost, excluding inpatient
costs related to services provided to beneficiaries of subchapter XVIII
of the federal social security act and inpatient uncollectible amounts,
after application of the trend factor. The allocations of resources made
available under this paragraph, as specified in subdivision sixteen of
this section may be changed only as follows: An annual review shall be
conducted pursuant to rules and regulations adopted by the council and
approved by the commissioner with respect to bad debt and charity care
need within each article forty-three insurance law region or such other
regions as are adopted pursuant to subdivision fifteen of this section.
If within such a region there is a definitive finding as a result of
such review that there has been a change in the proportional amounts of
bad debts and charity care provided by (i) major public general
hospitals and (ii) voluntary non-profit, private proprietary and public
general hospitals, other than major public general hospitals, the
allocation of resources made available under this paragraph shall be
adjusted pursuant to the rules and regulations adopted pursuant to this
paragraph so as to reflect this change.

(f) An additional allowance of fifty-eight hundredths of one percent
shall be included in each rate established for each voluntary non-profit
and private proprietary general hospital to be returned to a regional
pool and distributed in accordance with paragraph (b) of subdivision
sixteen of this section.

10. Special provisions for payments by governmental agencies. In the
event that the allowances specified in subdivision eight of this section
are not approved by the federal government for federal financial
participation in payments made for beneficiaries eligible for medical
assistance under subchapter XIX of the federal social security act,
rates of payment by governmental agencies for the operating cost
component of general hospital inpatient services shall be based on the
reimbursable operating costs used in determining payments for services
provided during the rate period from January first, nineteen hundred
eighty-five through December thirty-first, nineteen hundred eighty-five,
including the annualized cost impact of rate revisions or adjustments
made with respect to such services, projected by a trend factor
determined in accordance with subdivision fourteen of this section, and
adjusted by a base period adjustment factor to reflect the difference
between the actual regional increase in inpatient general hospital
operating cost for those regions as established pursuant to subdivision
fifteen of this section between cost reporting periods for nineteen
hundred eighty-one and nineteen hundred eighty-four and the trend
factors developed to project costs for such period, provided, however,
such base period adjustment factor shall not exceed an amount equal to
the percentage allowances calculated in accordance with paragraphs (a),
(b), (c), (e) and (f) of subdivision eight of this section. The
commissioner shall assess all general hospitals within a region an
amount equal to the regional allowance percentage as determined in
accordance with paragraph (e) of subdivision eight of this section
applied to actual inpatient revenues received from providing inpatient
services to persons eligible for payments from state governmental
agencies excluding inpatient revenues related to services provided to
beneficiaries of subchapter XVIII of the federal social security act.
The commissioner shall also assess an additional fifty-eight hundredths
of one percent of actual inpatient revenues received by voluntary
non-profit and private proprietary general hospitals for services
provided to persons eligible for payments made by state governmental
agencies excluding inpatient revenues related to services provided to
beneficiaries of subchapter XVIII of the federal social security act.
Such assessments shall be returned to regional pools in accordance with
the methodology contained in subdivision fifteen of this section and
distributed in accordance with the provisions of subdivision sixteen of
this section.

11. Adjustments. (a) For the period from January first, nineteen
hundred eighty-six through December thirty-first, nineteen hundred
eighty-seven, the commissioner shall on his own initiative, or on the
basis of a request from a general hospital, adjust an established rate
to reflect:

(i) the reduction of costs related to the elimination of a general
hospital inpatient service in instances where the costs of such service
were included in the rate established; and

(ii) the correction of errors or omissions of data or in computation.

(b) General hospitals may request and the commissioner shall consider
an adjustment to an established rate to reflect increased expenses or
reconsideration of disallowed expenses based on:

(i) justification of all or a portion of expenses not included in the
rate resulting from the cost analysis process contained in subparagraph
(i) of paragraph (a) of this subdivision;

(ii) additional operational expenses related to approved construction
or service changes;

(iii) the addition of costs related to a state requirement for
additional services to be provided or additional costs to be incurred in
meeting state and federal requirements;

(iv) additional expenses to permit a more efficient and economical
method of delivering a service; and

(v) increased costs for compensation of employees.

(c) In determining the reasonableness or justification of an
adjustment to an established rate related to subparagraph (v) of
paragraph (b) of this subdivision, the commissioner shall consider:

(i) the fiscal capability of the general hospital to finance such
increases from its own resources;

(ii) the past history of the general hospital with respect to
compensation increases and allowed compensation trend factors; and

(iii) the economy in the area in which the general hospital is
located.

(d) The commissioner shall adjust a prospectively established
inpatient rate on the basis of subsequent data that demonstrates a
significant cost influencing change in patient mix or volume of service.
Such adjustments shall be based on rules and regulations adopted by the
council and approved by the commissioner. Such rules and regulations for
a volume adjustment shall take into consideration only volume changes to
other than beneficiaries of subchapter XVIII of the federal social
security act.

(e) All appeals shall be submitted to the commissioner, who may submit
a copy of the appeal to interested parties for the purpose of providing
an opportunity for comment within a specified time period.

(f) The commissioner shall act upon all properly documented appeals
for adjustments concerning base year costs by November first of the
calendar year for which the rate is effective provided that all
information necessary to determine whether an adjustment is justified is
submitted by the facility prior to May first of such year. In the event
such an appeal is filed by May first, but information necessary to
determine whether an adjustment is justified is submitted after such
date, the commissioner shall act on the appeal within six months after
receiving the necessary information.

(g) The commissioner shall consider an adjustment to a hospital's
reported base year costs in instances where it is demonstrated that
recurring costs resulting from multi-year commitments beginning late in
a base year should be calculated on an annual basis in establishing a
rate in order to avoid a significant inequity. In making such an
adjustment the commissioner shall consider the offset of non-recurring
base year costs.

12. Hospital charge schedules. (a) Effective for the year commencing
January first, nineteen hundred eighty-six and thereafter each general
hospital shall establish a charge schedule for available and authorized
services in accordance with a gross charge determination formula
provided by the commissioner which shall establish gross inpatient
charges such that the payment rate to be made on behalf of subscribers
of article forty-three insurance law plans, adjusted for uncovered
services shall be at a discount which shall not exceed twelve percent of
the gross charge rate billed to or on behalf of charge paying patients.
For general hospitals subject to the provisions of paragraphs (a) and
(b) of subdivision twenty-one of this section, the costs (including all
allowances specified in subdivision eight of this section) of services
provided to charge paying patients shall not exceed a twelve percent
discount from the gross charge rate billed to or on behalf of charge
paying patients. In the event that a hospital's gross inpatient charges
exceed the maximum inpatient charges computed in accordance with the
gross charge determination formula prescribed by the commissioner,
direct repayment or adjustment of subsequent charges for inpatient
services shall be effectuated in accordance with regulations adopted by
the council and approved by the commissioner.

(b) For the period January first, nineteen hundred eighty-six through
December thirty-first, nineteen hundred eighty-seven, negotiated payment
rate determination systems between self-insured and self-administered
groups and hospitals which were in effect on May first, nineteen hundred
eighty-five may continue.

13. Working capital. General hospitals may include as a financing or
working capital charge an addition of two percent of any valid claim not
paid within thirty days of submission or determination of payor
liability, whichever is later, and one percent per month thereafter.
Revenues received from such financing or working capital charges shall
not be considered as a cost offset or as part of the hospital's gross
inpatient charges. Financing or working capital charges shall not be
applied to hospital billings to third party payors participating in a
periodic interim payment system.

14. Trend factors. (a) The commissioner in accordance with the
methodology developed by the consultants pursuant to paragraph (b) of
this subdivision shall establish trend factors to project for the
effects of inflation. The factors shall be applied to the appropriate
portion of reimbursable costs as defined in subdivision one of this
section, or, if effective, subdivision ten of this section. The
methodology for developing the trend factor shall include the
appropriate external price indicators and shall also include the data
from major collective bargaining agreements as reported quarterly by the
federal department of labor, bureau of labor statistics, for
non-supervisory employees.

(b) The methodology shall be developed by four independent consultants
with expertise in health economics appointed by the commissioner. Not
later than September first of each year, the consultants shall provide
to the commissioner and the council, the methodology to be used to
determine the trend factors for the subsequent twelve month period
commencing January first. The commissioner shall monitor the actual
price movement during this twelve month period of the external price
indicators used in the methodology, shall report the results of the
monitoring to the consultants, and shall implement, semi-annually, the
recommendations of the consultants for adjustments to the trend factor,
provided, however, that adjustments, except for the final adjustment of
the trend factor, shall not be required unless such adjustment would
result in the weighted average of the operating cost component of the
rates differing by more than one-half of one percent from that which was
previously determined.

15. Regional and statewide pools, general. Funds will be made
available in regional pools for regional distributions through the
submissions by general hospitals of the allowances included in rates and
charges in accordance with paragraphs (e) and (f) of subdivision eight
of this section and, if effective, the amount of the assessment in
accordance with subdivision ten of this section. Funds will be made
available for distribution from a statewide pool in accordance with the
assessments authorized in subdivision twenty-three of this section. The
regions are established as the article forty-three insurance plan
regions, with the exception that the southern sixteen counties shall be
divided into three regions for the purposes of subdivisions eight and
sixteen of this section with separate regions consisting of Richmond,
Manhattan, Bronx, Queens and Kings counties; Nassau and Suffolk
counties, and Delaware, Columbia, Ulster, Sullivan, Orange, Dutchess,
Putnam, Rockland and Westchester counties. Such regions shall be the
same regions established and in effect January first, nineteen hundred
eighty-five. The council with the approval of the commissioner may
combine regions, with the exception of the above specified regions for
the southern sixteen counties, upon application of the article
forty-three insurance law plans involved and a demonstration that
significant inequities would not occur. The commissioner is authorized
to contract with the article forty-three insurance law plans to receive
funds for the pools and distribute such funds. In the event contracts
with the article forty-three insurance law plans are effectuated, the
commissioner shall conduct annual audits of the receipt and distribution
of the pooled funds. In order for general hospitals to participate in
the distribution of funds from the pools the general hospital must
implement collection policies and procedures approved by the
commissioner.

16. Regional pools. Funds accumulated in regional pools, including
income from invested funds, shall be distributed in accordance with the
following methodology and sequence:

(a) Funds accumulated in regional pools, including income from
invested funds, from the allowance specified in paragraph (e) of
subdivision eight of this section and, if effective, the assessment
against all general hospitals as authorized in subdivision ten of this
section shall be distributed as follows:

(i) Each eligible major public general hospital as defined in
subdivision eight of this section shall receive a portion of its bad
debt and charity care need equal to the result of the application of
its percentage of statewide inpatient reimbursable costs excluding costs
related to services to beneficiaries of subchapter XVIII of the federal
social security act, developed on the basis of nineteen hundred
eighty-four financial and statistical reports to the total of all
regional pools.

(ii) Funds remaining in the regional pools after distribution in
accordance with subparagraph (i) of this paragraph shall be distributed
proportionately to voluntary non-profit, private proprietary and public
general hospitals, other than major public general hospitals, on the
basis of need within the region as defined in paragraph (e) of
subdivision eight of this section.

(b) Funds accumulated in regional pools, including income from
invested funds, created by the allowance specified in paragraph (f) of
subdivision eight of this section and, if effective, the fifty-eight
hundredths of one percent assessment against voluntary non-profit and
private proprietary general hospitals as authorized by subdivision ten
of this section, shall be available for distribution by the commissioner
in accordance with rules adopted by the council to assist in offsetting
losses resulting from bad debts and the costs of charity care of
voluntary non-profit and private proprietary general hospitals
experiencing severe fiscal hardship because of insufficient resources to
finance such losses and costs. Such losses and costs may include losses
and costs incurred prior to the year used in determining hospital need
pursuant to paragraph (e) of subdivision eight of this section. Amounts
to be distributed shall be determined after consideration of amounts to
be distributed from regional pools in accordance with paragraph (a) of
this subdivision and from the statewide pool in accordance with
subparagraph (iii) of paragraph (a) of subdivision twenty-four of this
section.

(c) Any balance in the portion of regional pools created by the
allowance in paragraph (f) of subdivision eight of this section, and if
effective, the fifty-eight hundredths of one percent assessment as
authorized by subdivision ten of this section, including income from
invested funds, after distribution in accordance with paragraph (b) of
this subdivision shall be distributed to voluntary non-profit and
private proprietary general hospitals within the region on a basis
related to specific hospital need as defined in paragraph (e) of
subdivision eight of this section.

20. Unit of service. For the rate period from January first, nineteen
hundred eighty-six through December thirty-first, nineteen hundred
eighty-six and for the rate period from January first, nineteen hundred
eighty-seven through December thirty-first, nineteen hundred
eighty-seven the unit of service on which payment is made to general
hospitals for inpatient services shall be the unit of service in effect
during the rate period from January first, nineteen hundred eighty-five
through December thirty-first, nineteen hundred eighty-five unless
specifically provided otherwise in this section or modified pursuant to
a subsequent chapter.

21. Provisions for article forty-three insurance law corporations and
article forty-four of this chapter organizations. Except as provided in
paragraphs (a) and (b) of this subdivision, general hospital charges for
inpatient and outpatient services to subscribers or beneficiaries of
contracts entered into pursuant to the provisions of article forty-three
of the insurance law or to members of a comprehensive health services
plan operating pursuant to the provisions of article forty-four of this
chapter for patient services rendered shall not exceed the rates of
payment approved by the superintendent of financial services or approved
or certified by the commissioner, whichever is applicable and required
by this section, for payments by such article forty-three insurance law
corporations or article forty-four of this chapter organizations. No
general hospital may demand or request any charge for such covered
services in addition to the charges or rates authorized by this article.

(a) Any general hospital which terminated its contract with an article
forty-three insurance law corporation or a comprehensive health services
plan after October first, nineteen hundred seventy-six and prior to May
first, nineteen hundred seventy-eight, may not charge subscribers or
beneficiaries of contracts entered into pursuant to the provisions of
article forty-three of the insurance law, or members of a comprehensive
health services plan operating pursuant to the provisions of article
forty-four of this chapter, amounts in excess of the schedule of charges
established by such hospital for patient services in accordance with the
provisions of subdivision twelve of this section.

(b) Any general hospital which has notified in writing an article
forty-three insurance law corporation or a comprehensive health services
plan prior to June first, nineteen hundred seventy-eight of its
intention to terminate its contract with such corporation or plan in
accordance with the terms of such contract, except a general hospital
subject to the provisions of paragraph (a) of this subdivision may not
charge a subscriber or beneficiary of a contract entered into pursuant
to the provisions of article forty-three of the insurance law, or a
member of a comprehensive health services plan operating pursuant to the
provisions of article forty-four of this chapter, after the effective
date of termination of such contract, amounts in excess of the schedule
of charges established by such hospital for patient services in
accordance with the provisions of subdivision twelve of this section.

(c) No general hospital shall refuse to provide patient services to
such subscribers or beneficiaries solely on the grounds of such
subscription or membership.

22. Restitution authorization. In enforcing the provisions of
subdivisions twelve and twenty-one of this section, the commissioner
may, in addition to the penalties and injunctions set forth in section
twelve of this chapter, order that any general hospital provide
restitution for any overpayments made by any party. Any hospital may
request a formal hearing pursuant to the provisions of section twelve-a
of this chapter in the event the hospital does not consent to any order
of the commissioner hereunder. The commissioner may direct that such a
hearing be held without any request by a hospital.

23. Bad debt and charity care assessments. The commissioner shall
create a bad debt and charity care statewide pool through assessments
which shall be charged to general hospitals to reflect the needs for the
financing of losses resulting from bad debts and the costs of charity
care. Such assessments will be submitted to a statewide pool as
designated by the commissioner and distributed on a monthly basis in
accordance with subdivision twenty-four of this section. The bad debt
and charity care assessments shall be:

(a) Three and eight-tenths percent aggregate assessment of each
general hospital's gross revenue received for inpatient hospital service
provided during the period July first, nineteen hundred eighty-six
through December thirty-first nineteen hundred eighty-six composed of
the following: (i) an assessment of three and eight hundredths percent
to be allocated to a statewide bad debt and charity care account in the
statewide pool and distributed in accordance with paragraph (a) of
subdivision twenty-four of this section, (ii) an assessment of
thirty-eight hundredths of one percent to be allocated to a statewide
financially distressed hospital account in the statewide pool and
distributed in accordance with paragraph (b) of subdivision twenty-four
of this section, and (iii) an assessment of thirty-four hundredths of
one percent to be allocated to a statewide transition account in the
statewide pool and distributed in accordance with paragraph (c) of
subdivision twenty-four of this section;

(b) One and nine-tenths percent aggregate assessment of each general
hospital's gross revenue received for inpatient hospital service
provided during the period January first, nineteen hundred eighty-seven
through December thirty-first, nineteen hundred eighty-seven composed of
the following: (i) an assessment of one and fifty-four hundredths
percent to be allocated to a statewide bad debt and charity care account
in the statewide pool and distributed in accordance with paragraph (a)
of subdivision twenty-four of this section, (ii) an assessment of
nineteen hundredths of one percent to be allocated to a statewide
financially distressed hospital account in the statewide pool and
distributed in accordance with paragraph (b) of subdivision twenty-four
of this section, and (iii) an assessment of seventeen hundredths of one
percent to be allocated to a statewide transition account in the
statewide pool and distributed in accordance with paragraph (c) of
subdivision twenty-four of this section;

(c) Provided, however, there shall be no assessment against those
voluntary non-profit and private proprietary general hospitals which
qualify for distributions made in accordance with paragraph (b) of
subdivision sixteen of this section and paragraph (b) of subdivision
twenty-four of this section.

(d) For the purposes of this subdivision and subdivision twenty-four
of this section, gross revenue received is defined as all monies
received for or on account of inpatient hospital service, provided,
however, that gross revenue received shall not include distributions
from regional and statewide pools established in accordance with this
section and shall not include the component of rates of payment related
to the allowances provided in accordance with subdivision eight or, if
effective, the base period adjustment factor provided in accordance with
subdivision ten of this section.

24. Statewide pool distribution. (a) Funds accumulated in the
statewide bad debt and charity care account in the statewide pool,
including income from invested funds, shall be distributed in accordance
with the following methodology:

(i) There shall be set aside within such account, from accumulated
funds, from the total allocation to the statewide bad debt and charity
care account of the assessment of three and eight hundredths percent of
gross revenue received in accordance with subparagraph (i) of paragraph
(a) of subdivision twenty-three of this section an amount equal to
eighty-six hundredths of one percent of gross revenue received, as
defined in paragraph (d) of subdivision twenty-three of this section,
and from the total allocation to the statewide bad debt and charity care
account of the assessment of one and fifty-four hundredths percent of
gross revenue received in accordance with subparagraph (i) of paragraph
(b) of subdivision twenty-three of this section an amount equal to
forty-three hundredths of one percent of gross revenue received, as
defined in paragraph (d) of subdivision twenty-three of this section.
Each eligible major public general hospital, as defined in subdivision
eight of this section, shall receive from such funds a portion of its
bad debt and charity care need equal to the result of the application of
its percentage of statewide major public general hospital gross revenue
received to such funds.

(ii) Any funds within the statewide bad debt and charity care account
set aside for major public general hospitals and not distributed in
accordance with subparagraph (i) of this paragraph shall be distributed
in accordance with subparagraph (iii) of this paragraph.

(iii) Funds remaining in the statewide bad debt and charity care
account, after allocation in accordance with subparagraph (i) of this
paragraph, including funds available pursuant to subparagraph (ii) of
this paragraph, and including income from invested funds, shall be
distributed proportionately on a statewide basis to voluntary
non-profit, private proprietary and public general hospitals, other than
major public general hospitals, on the basis of need as defined in
paragraph (e) of subdivision eight of this section. Amounts to be
distributed shall be determined after consideration of amounts to be
distributed from regional pools in accordance with paragraph (a) of
subdivision sixteen of this section.

(b) Funds accumulated in the statewide financially distressed general
hospital account in the statewide pool, including income from invested
funds, shall be distributed or retained in accordance with the following
methodology:

(i) Funds in the statewide financially distressed general hospital
account, including income from invested funds, shall be made available
on a statewide basis for distribution by the commissioner in accordance
with rules and regulations adopted by the council and approved by the
commissioner to assist voluntary non-profit and private proprietary
general hospitals experiencing severe fiscal hardship because of
insufficient resources to finance losses resulting from bad debts and
the costs of charity care, and to meet reasonable and necessary costs
related to securing financing of capital improvement projects for such
general hospitals. Such losses and costs may include losses and costs
incurred prior to the year used in determining hospital need pursuant to
paragraph (e) of subdivision eight of this section. Amounts to be
distributed shall be determined after consideration of amounts to be
distributed from regional pools in accordance with subdivision sixteen
of this section and from the statewide bad debt and charity care account
in accordance with subparagraph (iii) of paragraph (a) of this
subdivision. The commissioner, in accordance with rules and regulations
adopted by the council and approved by the commissioner, may allocate a
portion of the accumulated funds for the purpose of securing financing
of capital improvement projects for such general hospitals.

(ii) Any balance remaining in the statewide financially distressed
general hospital account, including income from invested funds, not
including that portion of accumulated funds allocated for the purpose of
securing financing of capital improvement projects, after distribution
in accordance with subparagraph (i) of this paragraph shall be
distributed to voluntary non-profit, private proprietary and public
general hospitals, other than major public general hospitals, on a basis
related to need as defined in paragraph (e) of subdivision eight of this
section.

(c) (i) Funds accumulated in the statewide transition account in the
statewide pool, including income from invested funds, shall be
distributed to voluntary non-profit, private proprietary and public
general hospitals that have high percentages of gross revenue received
from payors whose rates and maximum charges are determined in accordance
with this section compared to total gross revenue received. For purposes
of this subparagraph, major public general hospitals operated by the New
York city health and hospitals corporation as established by chapter one
thousand sixteen of the laws of nineteen hundred sixty-nine as amended
shall be considered on a consolidated basis. Rules for such distribution
will be those adopted by the state hospital review and planning council
and approved by the commissioner.

(ii) Any balance remaining in the statewide transition account,
including income from invested funds, after distribution in accordance
with subparagraph (i) of this paragraph shall be distributed to
voluntary non-profit, private proprietary and public general hospitals,
other than major public general hospitals, on a basis related to need as
defined in paragraph (e) of subdivision eight of this section.

25. Maximum distributions. No general hospital may receive in total
from the distributions made in accordance with paragraphs (a) and (c) of
subdivision sixteen of this section and paragraph (a), subparagraph (ii)
of paragraph (b) and subparagraph (ii) of paragraph (c) of subdivision
twenty-four of this section an amount which exceeds its need for
financing losses related to bad debts and the costs of charity care as
defined in paragraph (e) of subdivision eight of this section.

26. Undistributed funds. Any funds, including income from invested
funds, remaining in the statewide pool after distributions in accordance
with paragraphs (a), (b) and (c) of subdivision twenty-four of this
section shall be distributed proportionately to voluntary non-profit,
private proprietary and public general hospitals, excluding major public
general hospitals, on the basis of hospital specific assessments
submitted to the pool.

27. Payment of assessments. Payments by or on behalf of general
hospitals of funds due for the bad debt and charity care assessments
pursuant to subdivision twenty-three of this section shall be made on a
time schedule established by the council, subject to the approval of the
commissioner, by regulation. Upon receipt of notification from the
commissioner, the comptroller or a fiscal intermediary designated by the
director of the budget shall withhold from the amount of any payment to
be made by the state to a general hospital the amount of any arrearage
resulting from such general hospital's failure to make a timely payment
of the bad debt and charity care assessments. Upon withholding such
amount, the comptroller or a designated fiscal intermediary shall pay
the commissioner, or his designee, such amount withheld. Any general
hospital in arrears resulting from failure to make a timely payment
shall not be eligible for a distribution from the statewide pool in
accordance with subdivision twenty-four of this section until such
arrearage is satisfied.

28. Reimbursement rates. The assessments pursuant to subdivision
twenty-three of this section shall not be an allowable cost in the
determination of general hospital inpatient reimbursement rates in
accordance with this section and section twenty-eight hundred seven of
this chapter.