Print Friendly SENATE BILL NO. 1486 – Idaho Hospital Contribution Act
SENATE BILL NO. 1486
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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 - 2006
IN 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
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-
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
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
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
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
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-
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;
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
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
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
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
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
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.
There is no fiscal impact on the general fund.
Name: Steve Millard, Idaho Hospital Association
Phone: (208) 338-5100
STATEMENT OF PURPOSE/FISCAL NOTE S 1486