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(2) the department will set annual rates established for the facility’s fiscal year;

(3) base years may be changed to more current years and may be subject to audit; the department may determine the timing for a re-basing under this paragraph and whether and when to conduct an audit;

(4) for all facilities, except facilities with rate agreements established under 7 AAC 150.190, the department

(A) will perform a re-basing for the first fiscal year beginning after notification to the facilities that a re-basing will be done;

(B) will perform a re-basing no less than every four years;

(C) may perform a re-basing sooner than every four years; and

(D) will not consider the first cost-based rate a re-basing. (b) The department will express the inpatient hospital payment rate for general acute care hospitals not subject to Diagnosis Related Groups (DRG) reimbursement under 7 AAC 150.250, specialty hospitals, and inpatient psychiatric hospitals as a per-day rate. The per-day inpatient hospital payment rate will be based on allowable costs calculated in (1) — (9) of this subsection from the appropriate base year adjusted Medicare cost report, as follows:

(1) the noncapital routine portion of the prospective per-day rate is the base year’s facility-specific Medicaid noncapital routine average cost, calculated as follows, and updated to the prospective year based on adjustment factors identified in 7 AAC 150.150:

(A) the Medicaid cost of each reimbursable routine cost center is determined by dividing the total noncapital costs in each reimbursable routine cost center by the total patient days in that cost center and multiplying that quotient by the allowable paid Medicaid patient days in that cost center;

(B) the sum of the Medicaid costs for each reimbursable routine cost center is divided by the sum of the allowable paid Medicaid patient days, resulting in the base year’s facility-specific Medicaid noncapital routine average cost;

(2) the routine capital portion of the prospective per-day rate is the base year’s facility-specific Medicaid inpatient routine average capital cost, calculated as follows, and updated to the prospective year based on adjustment factors identified in 7 AAC 150.150:

(A) the Medicaid cost of each reimbursable capital cost center is determined by dividing the total capital costs in each reimbursable routine cost center by the total patient days in that cost center and multiplying that quotient by the allowable paid Medicaid patient days in that cost center;

(B) the sum of the Medicaid costs for each reimbursable routine capital cost center is divided by the sum of the allowable paid Medicaid patient days, resulting in the base