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S1486................................................by JUDICIARY AND RULES IDAHO HOSPITAL CONTRIBUTION ACT - Adds to existing law relating to hospitals to provide for the Idaho Hospital Contribution Act; to set forth legislative intent; to define terms; to establish the hospital contribution fund; to provide for contributions; to provide for a review of the annual contribution amount; to provide for inpatient and outpatient adjustment payments; to provide for timing of payments and contributions; to provide an exception; to provide for multi-hospital locations, hospital closures and new hospitals; and to provide applicability. 03/28 Senate intro - 1st rdg - to printing 03/29 Rpt prt - to Jud
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]] Fifty-eighth Legislature Second Regular Session - 2006IN THE SENATE SENATE BILL NO. 1486 BY JUDICIARY AND RULES COMMITTEE 1 AN ACT 2 RELATING TO THE IDAHO HOSPITAL CONTRIBUTION ACT; AMENDING TITLE 56, IDAHO 3 CODE, BY THE ADDITION OF A NEW CHAPTER 14, TITLE 56, IDAHO CODE, TO PRO- 4 VIDE A SHORT TITLE AND SET FORTH LEGISLATIVE INTENT, TO DEFINE TERMS, TO 5 ESTABLISH THE HOSPITAL CONTRIBUTION FUND, TO PROVIDE FOR CONTRIBUTIONS, TO 6 PROVIDE FOR A REVIEW OF THE ANNUAL CONTRIBUTION AMOUNT, TO PROVIDE FOR 7 INPATIENT AND OUTPATIENT ADJUSTMENT PAYMENTS, TO PROVIDE FOR TIMING OF 8 PAYMENTS AND CONTRIBUTIONS, TO PROVIDE AN EXCEPTION, TO PROVIDE FOR MULTI- 9 HOSPITAL LOCATIONS, HOSPITAL CLOSURES AND NEW HOSPITALS AND TO PROVIDE 10 APPLICABILITY; AND PROVIDING A SUNSET DATE. 11 Be It Enacted by the Legislature of the State of Idaho: 12 SECTION 1. That Title 56, Idaho Code, be, and the same is hereby amended 13 by the addition thereto of a NEW CHAPTER, to be known and designated as Chap- 14 ter 14, Title 56, Idaho Code, and to read as follows: 15 CHAPTER 14 16 IDAHO HOSPITAL CONTRIBUTION ACT 17 56-1401. SHORT TITLE -- LEGISLATIVE INTENT. (1) This chapter shall be 18 known and may be cited as the "Idaho Hospital Contribution Act." 19 (2) It is the intent of the legislature to encourage the maximization of 20 financial resources eligible and available for medicaid services by establish- 21 ing a fund within the Idaho department of health and welfare to receive pri- 22 vate hospital contributions to use in securing federal matching funds under 23 federally prescribed upper payment limit programs available through the state 24 medicaid plan. 25 56-1402. DEFINITIONS. As used in this chapter: 26 (1) "Governmental entity" means and includes the state and its political 27 subdivisions. 28 (2) "Hospital" is as defined in section 39-1301(a), Idaho Code. 29 (3) "Political subdivision" means a county, city, municipal corporation 30 or hospital taxing district and, as used in this chapter, shall include state 31 licensed hospitals established by counties pursuant to chapter 36, title 31, 32 Idaho Code, or jointly by cities and counties pursuant to chapter 37, title 33 31, Idaho Code. 34 (4) "Upper payment limit" means a limitation established by federal regu- 35 lations, 42 CFR 447.272 and 42 CFR 447.321, that disallows federal matching 36 funds when state medicaid agencies pay certain classes of hospitals an aggre- 37 gate amount for inpatient and outpatient hospital services that would exceed 38 the amount that would be paid for the same services furnished by that class of 39 hospitals under medicare payment principles. 40 56-1403. HOSPITAL CONTRIBUTION FUND ESTABLISHED. (1) There is hereby cre- 2 1 ated in the office of the state treasurer a dedicated fund to be known as the 2 hospital contribution fund, hereinafter "fund," to be administered by the 3 department of health and welfare, hereinafter "department." The state trea- 4 surer shall invest idle moneys in the fund and any interest received on those 5 investments shall be returned to the fund. 6 (2) Moneys in the fund shall consist of: 7 (a) All moneys collected or received by the department from hospital con- 8 tributions required by this chapter; 9 (b) All federal matching funds received by the department as a result of 10 expenditures made by the department that are attributable to moneys depos- 11 ited in the fund; 12 (c) Any interest or penalties levied in conjunction with the administra- 13 tion of this chapter; and 14 (d) Any appropriations, federal funds, donations, gifts or moneys from 15 any other sources. 16 (3) The fund is created for the purpose of receiving moneys in accordance 17 with this section and section 56-1404, Idaho Code. The fund shall not be used 18 to replace any moneys appropriated to the Idaho medical assistance program by 19 the legislature. Moneys in the fund shall be distributed by the department 20 subject to appropriation for the following purposes only: 21 (a) Payments to hospitals as required under Idaho's medical assistance 22 program as set forth in section 56-209b, Idaho Code, et seq.; 23 (b) Reimbursement of moneys collected by the department from hospitals 24 through error or mistake in performing the activities authorized under 25 Idaho's medical assistance program; 26 (c) Payments of administrative expenses incurred by the department or its 27 agent in performing the activities authorized by this chapter; 28 (d) Payments of any amounts which are reimbursable to the federal govern- 29 ment for payments from the fund which are required to be paid by state 30 warrant; 31 (e) Transfers to any other fund in the state treasury, provided such 32 transfers shall not exceed the amount transferred previously from that 33 other fund into the hospital contribution fund; and 34 (f) Making refunds to hospitals pursuant to section 56-1410, Idaho Code. 35 56-1404. CONTRIBUTIONS. (1) Subject to section 56-1410, Idaho Code, an 36 annual contribution on both inpatient and outpatient services is determined 37 for each qualifying hospital for state fiscal years 2007, 2008 and 2009, in an 38 amount calculated by multiplying the rate, as set forth in subsection (3) of 39 this section, by the contribution base, as set forth in subsection (4) of this 40 section. 41 (2) The department shall calculate the private hospital upper payment 42 limit gap for both inpatient and outpatient services. The upper payment limit 43 gap is the difference between the maximum allowable payments eligible for fed- 44 eral match less medicaid payments not financed using provider contribution 45 funds. The upper payment limit gap shall be calculated separately for hospital 46 inpatient and outpatient services. Medicaid disproportionate share payments 47 shall be excluded from the calculation. 48 (3) The contribution rate for state fiscal year 2007 shall be .6612 per- 49 cent. For subsequent years, the rate shall be increased by two and one-half 50 percent (2.5%) annually. 51 (4) The contribution base shall be the hospital's net patient revenue for 52 the applicable period as follows: 53 (a) "Net patient revenue" shall be determined using the most recent data 54 available from each hospital's fiscal year 2002 medicare cost report on 3 1 file with the department on June 30, 2006, without regard to any subse- 2 quent adjustments or changes to such data. If a hospital's fiscal year 3 2002 medicare cost report is not available, the hospital shall furnish 4 such cost report or the data necessary to determine its net patient reve- 5 nue as required by department rule; 6 (b) Net patient revenue is reported on worksheet "G-3" column 1, line 3 7 of the medicare cost report; 8 (c) If the hospital was not in operation during all of fiscal year 2002, 9 the department shall utilize the medicare cost report from the first full 10 year of operation. 11 56-1405. REVIEW OF ANNUAL CONTRIBUTION AMOUNT. Each state fiscal year, 12 hospitals shall have at least thirty (30) days prior to implementation to 13 review and verify the contribution base, rate, and the estimated contribution 14 amount. The contribution amount shall not exceed three percent (3%) of the 15 hospital's net patient revenue. 16 56-1406. INPATIENT AND OUTPATIENT ADJUSTMENT PAYMENTS. All hospitals 17 required to make provider contributions under section 56-1404, Idaho Code, 18 shall be eligible for inpatient and outpatient adjustments as follows: 19 (1) For state fiscal year 2007, the inpatient upper payment limit gap for 20 qualifying hospitals shall be divided by medicaid inpatient days for the same 21 class of Idaho hospitals from calendar year 2005 to establish an average per 22 diem adjustment rate. Each qualifying hospital shall receive an annual payment 23 that is equal to the average per diem adjustment rate multiplied by the hospi- 24 tals' calendar year 2005 medicaid inpatient days. For purposes of this sec- 25 tion, "hospital medicaid inpatient days" are days of inpatient hospitalization 26 paid for by the Idaho medical assistance program for the applicable calendar 27 year. For fiscal year 2008, calendar year 2006 inpatient hospital medicaid 28 days shall be utilized to determine the hospital inpatient adjustment payment. 29 For state fiscal year 2009, calendar year 2007 hospital medicaid inpatient 30 days shall be utilized to determine the hospital inpatient adjustment payment. 31 In the event that either the inpatient upper payment limit gap for qualifying 32 hospitals or the available hospital contribution funding is lower than antici- 33 pated, the department shall apply an across-the-board factor such that the 34 inpatient payment adjustments are maximized, financed entirely from hospital 35 contribution funding, and do not exceed the Idaho inpatient upper payment 36 limit for qualifying hospitals. Payments shall be made no later than seven (7) 37 days after the due date for the provider contributions set forth in section 38 56-1404, Idaho Code. 39 (2) For state fiscal year 2007, the outpatient upper payment limit gap 40 for qualifying hospitals shall be divided by medicaid outpatient hospital 41 reimbursement for the same class of Idaho hospitals from calendar year 2005 to 42 establish an average percentage adjustment rate. Each qualifying hospital 43 shall receive an annual payment that is equal to the average percentage 44 adjustment rate multiplied by the hospital's calendar year 2005 hospital med- 45 icaid outpatient reimbursement. For purposes of this section, "hospital outpa- 46 tient reimbursement" is reimbursement for hospital outpatient services paid 47 for by the Idaho medical assistance program for the applicable calendar year. 48 For state fiscal year 2008, calendar year 2006 hospital medicaid outpatient 49 reimbursement shall be utilized to determine the outpatient hospital adjust- 50 ment payment. For state fiscal year 2009, calendar year 2007 hospital medicaid 51 outpatient reimbursement shall be utilized to determine the outpatient hospi- 52 tal adjustment payment. In the event that either the outpatient upper payment 53 limit gap for qualifying hospitals or the available hospital contribution 4 1 funding is lower than anticipated, the department shall apply an across-the- 2 board factor such that outpatient adjustment payments are maximized, financed 3 entirely from hospital contribution funding, and do not exceed the Idaho out- 4 patient upper payment limit for qualifying hospitals. Payments shall be made 5 no later than seven (7) days after the due date for the hospital contributions 6 set forth in section 54-1404, Idaho Code. 7 56-1407. TIMING OF PAYMENTS AND CONTRIBUTIONS. (1) The department shall 8 establish an annual payment schedule for all payments created under this chap- 9 ter. 10 (2) If a hospital fails to pay the full amount of an installment when 11 due, including any extensions granted, there shall be added to the contribu- 12 tion imposed by section 56-1404, Idaho Code, unless waived by the department 13 for reasonable cause, a penalty equal to the lesser of: 14 (a) An amount equal to five percent (5%) of the contribution installment 15 amount not paid on or before the due date, plus five percent (5%) of the 16 portion thereof remaining unpaid on the last day of each month thereafter; 17 or 18 (b) An amount equal to one hundred percent (100%) of the contribution 19 installment amount not paid on or before the due date. 20 (3) For purposes of subsection (2) of this section, payments shall be 21 credited first to unpaid installment amounts rather than to penalty or inter- 22 est amounts, beginning with the most delinquent installment. 23 56-1408. EXCEPTION. A hospital that is a governmental entity, including a 24 state agency, is exempt from the contribution required by section 56-1404, 25 Idaho Code, unless the exemption is adjudged to be unconstitutional or other- 26 wise invalid, in which case the hospital shall pay such contribution. 27 56-1409. MULTI-HOSPITAL LOCATIONS, HOSPITAL CLOSURE AND NEW HOSPITALS. 28 (1) If a hospital conducts, operates or maintains more than one (1) hospital 29 licensed by the department, the hospital shall pay the contribution for each 30 hospital separately. 31 (2) A hospital subject to contributions under this chapter that ceases to 32 conduct hospital operations or maintain its state license, commences hospital 33 operations during a fiscal year, or did not conduct hospital operations 34 throughout a calendar or fiscal year, shall have its required contribution 35 adjusted by multiplying the contribution computed under section 56-1404, Idaho 36 Code, by a fraction, the numerator of which is the number of days in the year 37 during which the hospital conducts hospital business, operates a hospital and 38 maintains licensure, and the denominator of which is three hundred sixty-five 39 (365). The hospital shall pay the required contribution computed under section 40 56-1404, Idaho Code, on the date and in pro rata installments as required by 41 the department for that portion of the state fiscal year during which the hos- 42 pital operated and maintained state licensure, to the extent not previously 43 paid. 44 56-1410. APPLICABILITY. (1) The contribution required by section 56-1404, 45 Idaho Code, shall not take effect or shall cease to be imposed, and any moneys 46 remaining in the fund shall be refunded to hospitals in proportion to the 47 amounts paid by such hospitals if: 48 (a) The appropriation for each state fiscal year 2007, 2008 and 2009 from 49 the general fund for hospital payments under the Idaho medical assistance 50 program is less than for fiscal year 2006; 51 (b) The department makes changes in its rules that reduce the hospital 5 1 inpatient or outpatient payment rates, including adjustment payment 2 rates, in effect on January 1, 2006; or 3 (c) The payments to hospitals required under section 56-1403(3), Idaho 4 Code, are changed or are not eligible for federal matching funds under the 5 Idaho medical assistance program. 6 (2) The contribution required by section 56-1404, Idaho Code, shall not 7 take effect or shall cease to be required if the contribution is determined to 8 be impermissible under title XIX of the social security act. Moneys in the 9 fund derived from contributions required prior thereto shall be disbursed in 10 accordance with section 56-1403(3), Idaho Code, to the extent federal matching 11 is not reduced due to the impermissibility of the contributions, and any 12 remaining moneys shall be refunded to hospitals in proportion to the amounts 13 paid by such hospitals. 14 SECTION 2. The provisions of Section 1 of this act shall be null, void 15 and of no force and effect on and after July 1, 2009.
STATEMENT OF PURPOSE RS 16289 The purpose of this legislation is to leverage federal Medicaid dollars by having private hospitals contribute to the state the amount necessary to match the federal dollars. With an approximate match rate of 70% federal dollars to 30% state dollars, existing below-cost reimbursement to hospitals can be enhanced, thereby reducing the losses hospitals incur when they treat Medicaid patients. For this to be permissible under federal law and regulation, the hospital contribution must be mandatory. This legislation creates a hospital contribution fund to collect the contributions and the funds are then used as the state match to access the federal dollars. When the federal funds are secured, they are paid to the contributing hospitals based upon the number of Medicaid patients they care for within a given year. This type of mechanism is allowable under federal regulations which set a limitation, called the "upper payment limit (UPL)," on how much state Medicaid programs can reimburse hospitals. Simply put, the limit is the amount Medicare would have paid for the same services. In Idaho, like most states, Medicaid reimburses hospitals less than Medicare does, thus creating a "gap" in what is reimbursed compared to what could be reimbursed. To increase reimbursement to hospitals, the state would need to appropriate additional dollars to draw down the federal dollars. This legislation increases reimbursement to private hospitals by having them put up the matching dollars instead of the state. FISCAL NOTE There is no fiscal impact on the general fund. Contact Name: Steve Millard, Idaho Hospital Association Phone: (208) 338-5100 STATEMENT OF PURPOSE/FISCAL NOTE S 1486