South Dakota Medicaid is working towards the implementation of revised inpatient and outpatient hospital reimbursement methodologies in calendar year 2026. The intent of this work is to modernize and streamline the methodologies. South Dakota Medicaid will be hosting a virtual meeting to brief providers on the changes to CAH reimbursement methodology. The session will be held on August 19 at 9:00 AM CDT. Please register for the meeting.
Based on feedback from providers, Medicaid will phase-in the in-state CAH cost-based methodology pending CMS approval of the methodology. The phase-in period will be from January 1, 2026, to June 30, 2027. During the phase-in, CAH interim rates will be set using a ceiling of 125% of costs and a floor of 100% of costs.
- Providers with estimated cost coverage of 125% or more during the CY22-24 claim set will have interim rates established that approximate 125% cost coverage.
- Providers with estimated cost coverage of less than 125% and more than 100% during the CY 22-24 claims set will have interim rates established that approximate the provider’s cost coverage during that time period.
- Providers with estimated total hospital cost coverage of less than 100% or during the CY22-24 claim set will have interim rates established that approximate cost coverage of 100%.
Both inpatient and outpatient hospital services interim rates are established using a percent of charge. For dates of service in the phase-in period, CAHs will be paid the greater of their interim payment amount or 100% of actual allowable costs using a cost settlement process. Payments during the phase-in period in excess of 100% of costs will not be recouped. CAHs may request fiscal impact modeling by emailing a request to DSS.Medicaid@state.sd.us.
Medicaid anticipates using the phase-in period to also explore a Rural Health Clinic alternative payment methodology that brings reimbursement rates for these services closer to cost and work with the Department of Human Services to bring swing-bed rates closer to nursing facility rates.
SDAHO members with additional questions, contact Jacob Parsons, Director of Advocacy and Reimbursement, SDAHO. Jacob.Parsons@sdaho.org
