Letter from Deputy Administrator Herb B. Kuhn to Dr. Robert L. Robinson (Mississippi) announcing the availability of an additional $19.1 million in grant funds to be divided between two of the States impacted by Hurricane Katrina.

Enclosure c

DEFICIT REDUCTION ACT HURRICANE KATRINA HEALTHCARE RELATED PROVIDER STABILIZATION GRANT

APPLICATION INSTRUCTIONS FOR FY 2008, FY 2009.

Grant Application Requirements/Content and Submission (See also Enclosure B)

Requirements:

1. Proposal requests must be from the State Medicaid Agency;

2. Proposals must have approval of the State Medicaid Director;

3. Proposals must be for Federal funding that will be used by identified States to restore access to health care in communities impacted by Hurricane Katrina by assisting those general acute care hospitals and inpatient psychiatric facilities (IPFs) that are significantly negatively impacted with financial pressures resulting from post-Katrina wage rates.

   Eligible health care communities are only those Hurricane Katrina affected counties/parishes (or any subset thereof) in Louisiana and Mississippi designated by the Federal Emergency Management Agency to receive both individual and public assistance as authorized by section 408 of the Robert T. Stafford Act. (See Enclosure A for a list of these designated communities.) Note: States are permitted to limit funding to a subset of those parishes or counties that it determines have suffered greater than anticipated economic disadvantage, and also limit payments to one or more hospitals within those parishes and counties that are most distressed.

4. Grant funds must only be used to make payments to assist general acute care hospitals and IPFs that are paid under Medicare’s prospective payment system (PPS) until such time as Medicare’s hospital inpatient prospective payment system (IPPS) recognizes post-storm wage rates being paid in Hurricane Katrina affected counties, and in administering such payments. Grant funds may only be for payments to general acute care hospitals and IPFs participating in the Medicare program at the time the grant funds are disbursed; that mean s that grant funds may not be distributed to general acute care hospitals and IPFs that are not in operation.

5. All payments to general acute care hospitals and IPFs under this grant program must be made by the end of Federal fiscal year 2009.

6. Payments to general acute care hospitals and IPFs under this program are not to be considered payments for Medicare, Medicaid or other specific services, and are not available as the non-Federal share of expenditures or for supplemental Medicaid disproportionate share hospital payments. Payments cannot be made conditional on the provision of any particular items or services by the facilities.

In applying for Hurricane Katrina Provider Stabilization Grant funds, each State must submit a cover letter. The cover letter must include the following:

• State, Name of the Medicaid Agency
• Contact Person Name and Title
• Contact Person Telephone and Fax number
• Contact Person E-mail Address
• Acknowledgment of support for the project from the State Medicaid Director

Narrative: Applications must contain a narrative describing each of the following:

Justification for Grant Funds –The intent of the grant is to provide payments to those general acute care hospitals and IPFs that participate in Medicare and are paid under a Medicare PPS system and that have been most significantly, negatively affected by continuous financial pressures resulting from changes in post-Katrina wage rates. Please provide a description of how the grant will be used by the State to restore access to healthcare.

Please provide a clear, concise description of prevailing wage rates pre-Katrina and also (to the maximum extent possible) at the time grant funds are to be dispersed,, the number (size and scope) of providers involved, the relevant time periods, the financial criteria, if any, and the expected benefits to the health care system in the State if grant funding is awarded,

Status of Ongoing Award and Impact of not Receiving Funds - Given that this is the third round of CMS’ Provider Stabilization Grant (PSG), please describe as measurably as possible, what already has been accomplished by each State’s disbursement of its share of the prior $181.7 M dollars PSG award, what needs still exist, and how the grant award will relieve financial pressures for sub-awardee IPPS hospitals and IPFs. In addition, please describe the impact of not receiving the additional funding in lieu of these needs.

Target Area – the Secretary has defined “impacted communities” for this purpose to include the universe of counties/parishes in Louisiana, and Mississippi designated by FEMA that received both individual and public assistance as authorized by section 408 of the Robert T. Stafford Act. Please provide a description of the impacted communities that is consistent with this definition, and the specific impacted providers that may receive grant funding.

• If the State proposes to limit or target eligible counties or parishes to a subset of this universe, please identify this subset, and supply the rationale for the State’s determination along with supporting data, if any.

Target Providers - For purposes of selecting eligible providers, propose how the State will consider “negatively affected by continuous financial pressures resulting from changes in post-Katrina wage rates”. Please provide the basis for how the State will limit or target eligible providers from the total universe of Medicare participating IPPS hospitals and IPFs to meet the definition it proposes, the financial criteria, if any, and all other selection factors that it will consider to determine those IPPS hospitals and IPFs to which it will disburse grant funds. Describe the process or method it will use to come to this determination (e.g., use of existing objective data, a grant application process, competition, oth er selection methods, etc.) in accordance with principles outlined in this solicitation. Please identify this subset of hospitals and IPFs, and supply the State’s rationale for this determination along with supporting data, if any.

Describe how the State will determine the amount of payment to make to each sub-awardee IPPS hospital and IPF, including how it will make sure that the most financially or otherwise negatively impacted hospitals and IPFs receive an appropriate share of the grant funds.

(Optional) – Other Unmet Infrastructure Needs – If the State wishes to proposes to use a portion of the funds (in an amount not to exceed 20% of total State grant award) to address any other immediate (one-time only) unmet healthcare infrastructure need, please supply: objective data to support the presence and proposed resolution of this need; the justification of how this need is a direct result of Hurricane Katrina and/or its subsequent flooding; the proposal for how it intends to use grant funds to fully resolve the need identified; and cost benefit information justifying how diverting funds to resolve this identified infrastructure need outweighs the need to pay its full grant allotment to it s IPPS hospitals and IPFs

Implementation – provide a description of the State’s administrative infrastructure, proposed budget including expected administrative costs, and time table for making grant payments to providers in impacted communities.

Distribution of Grant Funds – provide a description of the State’s plan to distribute grant funds. Provide the breakdown by the requested Federal grant amount during the remainder of Federal FY 2008 and 2009, if payment is made to providers in other than a lump sum distribution, including any grant funds proposed to be used for unmet infrastructure needs.

There is a total of $19.1 million in grant funds available to the two States. The Secretary has allocated grant funds to each State in the following proportions, which are based on the relative proportions of each eligible IPPS hospital’s and IPFs share of total 2006 Medicare inpatient payments for the impacted communities: 53 percent to Louisiana ($10,143,671) and 47 percent to Mississippi ($8,956,329). A copy of a State’s Medicare data used to support the allocation to a grantee State is available to that State upon request.

Application Submission Process:

The grant application must be submitted on the Office of Management and Budget (OMB)-approved application form. The complete application can be downloaded from the following CMS website: http://www.cms.hhs.gov/GrantOpportunities/.

Each grant application must be submitted electronically to: louise.amburgey@cms.hhs.gov by 5:00 PM (Eastern) on May 23, 2008, with a cc to Dr. Wendy Alexander at wendy.alexander@cms.hhs.gov.

CMS Project Contacts:

The CMS contact for administrative assistance for this grant is Ms. Louise Amburgey. She may be reached at 410-786-5130 or by e-mail at (louise.amburgey@cms.hhs.gov). The CMS contact for programmatic technical assistance for this grant is Dr. Wendy Alexander. She may be reached at 410-786-5245, or by e-mail at (wendy.alexander@cms.hhs.gov).