(1) Beginning January 1, 1988, through December 31, 1991, hospital rates payable by workers' compensation insurers shall not exceed those rates prevailing in the hospital in effect on January 1, 1988.

(2) Beginning January 1, 1992, hospital rates payable shall not exceed the product of the rates prevailing in the hospital and the applicable discount factor issued by the department. Applicable discount factors are identified for inpatient services according to the date of discharge, and for outpatient services according to the date of service. The department shall establish discount factors according to the following methodology:

(a) The discount factor in effect for a hospital beginning January 1, 1992, is the discount factor in effect on December 31, 1991, multiplied by 1.0402, and divided by the quantity 1 + ORI, where ORI is the overall percent rate increase, if any, adopted by the hospital for January 1, 1992, divided by 100. Discount factors in effect December 31, 1991, are those established by the department in accordance with (1) . These discount factors are available from the department upon request.

(b) The discount factor in effect for a hospital beginning January 1, 1993, is the discount factor in effect on December 31, 1992, multiplied by the quantity 1 + AWW93, and divided by the quantity 1 + ORI, where AWW93 is the percent increase in the state's average weekly wage over fiscal year 1992, divided by 100, and ORI is the overall percent rate increase, if any, adopted by the hospital for January 1, 1993, divided by 100.

(c) In addition to the dates given in (2) (a) and (2) (b) , the discount factor for a hospital is also updated on any date(s) through December 31, 1993, for which a rate change is adopted by the hospital. The discount factor in effect beginning the date of rate adoption is the previous discount factor divided by the quantity 1 + ORI, where ORI is the overall percent rate increase adopted by the hospital, divided by 100.

(3) (a) The discount factor in effect for a hospital from January 1, 1994 through June 30, 1997, is the discount factor in effect on December 31 of the previous year, multiplied by the quantity 1 + AWW (current year) , and divided by the quantity 1 + ORI, where AWW (current year) is the percentage increase in the state's average weekly wage over the previous calendar year, divided by 100, and ORI is the overall percentage rate increase, if any, adopted by the hospital on January 1, divided by 100.

(b) In addition to the dates given in (3) (a) , the discount factor for a hospital is also updated on any date(s) through June 30, 1997, for which a rate change is adopted by the hospital. The discount factor in effect beginning the date of rate adoption is the previous discount factor divided by the quantity 1 + ORI, where ORI is the overall percentage rate increase adopted by the hospital, divided by 100.

(4) The overall rate increase adopted by a hospital shall be reported to the department on a department-approved form before the effective date of any rate change. Notification by the Montana hospitals rate review system of the amount and date of an overall rate increase shall be accepted in lieu of direct rate change reporting by the hospital. The department may in its discretion conduct audits of any hospital's financial records, to determine proper reporting of rate filings.

(5) Charges billed by a hospital are not subject to reduction under the Montana relative value fee schedule, except that hospital professional fees may be paid according to either the fee schedule or the applicable hospital rates, but not both.

(6) Insurers shall make timely payments of hospital bills. In cases where there is no dispute over liability the insurer shall, within 30 days of receipt of a hospital's charges, either pay the charges according to the rates established by this rule, or notify the hospital that additional information is requested, and specify that information. The insurer shall then pay the charges within 30 days of receipt of the requested information.