2007 Legislation
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SENATE BILL NO. 1048 – Idaho Hospital Contribution Act

SENATE BILL NO. 1048

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Bill Status



S1048.................................................by HEALTH AND WELFARE
IDAHO HOSPITAL CONTRIBUTION ACT - Adds to existing law to set forth the
Idaho Hospital Contribution Act; to provide a short title; 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 exemption; to provide for multi-hospital locations, hospital closures
and new hospitals; and to provide applicability.
                                                                        
01/25    Senate intro - 1st rdg - to printing
01/26    Rpt prt - to Health/Wel
02/07    Rpt out - rec d/p - to 2nd rdg
02/08    2nd rdg - to 3rd rdg
02/12    3rd rdg - PASSED - 35-0-0
      AYES -- Andreason, Bair, Bastian, Bilyeu, Broadsword, Burkett,
      Cameron, Coiner, Corder, Darrington, Davis, Fulcher, Gannon, Geddes,
      Goedde, Hammond, Heinrich, Hill, Jorgenson, Kelly, Keough, Langhorst,
      Little, Lodge, Malepeai, McGee, McKague, McKenzie, Pearce,
      Richardson, Schroeder, Siddoway, Stegner, Stennett, Werk
      NAYS -- None
      Absent and excused -- None
    Floor Sponsor - Darrington
    Title apvd - to House
02/13    House intro - 1st rdg - to Health/Wel

Bill Text


                                                                        
                                                                        
  ]]]]              LEGISLATURE OF THE STATE OF IDAHO             ]]]]
 Fifty-ninth Legislature                   First Regular Session - 2007
                                                                        
                                                                        
                                       IN THE SENATE
                                                                        
                                    SENATE BILL NO. 1048
                                                                        
                              BY HEALTH AND WELFARE 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 TO SET FORTH LEGISLATIVE INTENT, TO  DEFINE  TERMS,
  5        TO ESTABLISH THE HOSPITAL CONTRIBUTION FUND, TO PROVIDE FOR CONTRIBUTIONS,
  6        TO  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 EXEMPTION, 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)  "Private hospital" means a hospital that is not owned by a governmen-
 35    tal entity.
 36        (5)  "Upper payment limit" means a limitation established by federal regu-
 37    lations, 42 CFR 447.272 and 42 CFR 447.321, that  disallows  federal  matching
 38    funds  when state medicaid agencies pay certain classes of hospitals an aggre-
 39    gate amount for inpatient and outpatient hospital services that  would  exceed
 40    the amount that would be paid for the same services furnished by that class of
 41    hospitals under medicare payment principles.
                                                                        
                                       2
                                                                        
  1        56-1403.  HOSPITAL CONTRIBUTION FUND ESTABLISHED. (1) There is hereby cre-
  2    ated  in the office of the state treasurer a dedicated fund to be known as the
  3    hospital contribution fund, hereinafter "fund,"  to  be  administered  by  the
  4    department  of  health  and welfare, hereinafter "department." The state trea-
  5    surer shall invest idle moneys in the fund and any interest received  on those
  6    investments shall be returned to the fund.
  7        (2)  Moneys in the fund shall consist of:
  8        (a)  All moneys collected or received by the department from hospital con-
  9        tributions required by this chapter;
 10        (b)  All federal matching funds received by the department as a result  of
 11        expenditures made by the department that are attributable to moneys depos-
 12        ited in the fund;
 13        (c)  Any  interest or penalties levied in conjunction with the administra-
 14        tion of this chapter; and
 15        (d)  Any appropriations, federal funds, donations, gifts  or  moneys  from
 16        any other sources.
 17        (3)  The fund is created for the purpose of receiving moneys in accordance
 18    with  this section and section 56-1404, Idaho Code. The fund shall not be used
 19    to replace any moneys appropriated to the Idaho medical assistance program  by
 20    the  legislature.  Moneys  in  the fund shall be distributed by the department
 21    subject to appropriation for the following purposes only:
 22        (a)  Payments to hospitals as required under  Idaho's  medical  assistance
 23        program as set forth in section 56-209b, Idaho Code, et seq.;
 24        (b)  Reimbursement  of  moneys  collected by the department from hospitals
 25        through error or mistake in performing  the  activities  authorized  under
 26        Idaho's medical assistance program;
 27        (c)  Payments of administrative expenses incurred by the department or its
 28        agent in performing the activities authorized by this chapter;
 29        (d)  Payments  of any amounts that are reimbursable to the federal govern-
 30        ment for payments from the fund that are required to be paid by state war-
 31        rant;
 32        (e)  Transfers to any other fund in  the  state  treasury,  provided  such
 33        transfers  shall  not  exceed  the amount transferred previously from that
 34        other fund into the hospital contribution fund; and
 35        (f)  Making refunds to hospitals pursuant to section 56-1410, Idaho Code.
                                                                        
 36        56-1404.  CONTRIBUTIONS. (1) All private hospitals shall make payments  to
 37    the  fund  in  accordance with this chapter. Subject to section 56-1410, Idaho
 38    Code, an annual contribution on both  inpatient  and  outpatient  services  is
 39    determined  for each qualifying hospital for state fiscal years 2008, 2009 and
 40    2010, in an amount calculated by multiplying the rate, as set forth in subsec-
 41    tion (3) of this section, by the contribution base, as set forth in subsection
 42    (4) of this section.
 43        (2)  The department shall calculate the  private  hospital  upper  payment
 44    limit  gap for both inpatient and outpatient services. The upper payment limit
 45    gap is the difference between the maximum allowable payments eligible for fed-
 46    eral match less medicaid payments not  financed  using  hospital  contribution
 47    funds. The upper payment limit gap shall be calculated separately for hospital
 48    inpatient  and  outpatient  services. Medicaid disproportionate share payments
 49    shall be excluded from the calculation.
 50        (3)  The contribution rate for state fiscal year 2008 shall be .6612  per-
 51    cent. The contribution rate for state fiscal year 2009 shall be .6677 percent.
 52    The contribution rate for state fiscal year 2010 shall be .6947 percent.
 53        (4)  The contribution base shall be the hospital's net patient revenue for
 54    the applicable period as follows:
                                                                        
                                       3
                                                                        
  1        (a)  "Net  patient revenue" shall be determined using the most recent data
  2        available from each hospital's fiscal year 2003 medicare  cost  report  on
  3        file  with  the department  on June 30, 2007, without regard to any subse-
  4        quent adjustments or changes to such data. If  a  hospital's  fiscal  year
  5        2003  medicare  cost  report  is not available, the hospital shall furnish
  6        such cost report or the data necessary to determine its net patient  reve-
  7        nue as required by department rule;
  8        (b)  Net  patient  revenue is reported on worksheet "G-3" column 1, line 3
  9        of the medicare cost report;
 10        (c)  If the hospital was not in operation during all of fiscal year  2003,
 11        the  department shall utilize the medicare cost report from the first full
 12        year of operation.
                                                                        
 13        56-1405.  REVIEW OF ANNUAL CONTRIBUTION AMOUNT. Each  state  fiscal  year,
 14    hospitals  shall  have  at  least  thirty (30) days prior to implementation to
 15    review and verify the contribution base, rate, and the estimated  contribution
 16    amount.  The  contribution  amount  shall not exceed three percent (3%) of the
 17    hospital's net patient revenue.
                                                                        
 18        56-1406.  INPATIENT AND OUTPATIENT ADJUSTMENT PAYMENTS. All private hospi-
 19    tals shall be eligible for inpatient and outpatient adjustments as follows:
 20        (1)  For state fiscal year 2008, the inpatient upper payment limit gap for
 21    qualifying hospitals shall be divided by medicaid inpatient days for the  same
 22    hospitals  from calendar year 2006 to establish an average per diem adjustment
 23    rate. Each qualifying hospital shall receive an annual payment that  is  equal
 24    to  the average per diem adjustment rate multiplied by the hospital's calendar
 25    year 2006 medicaid inpatient days. For purposes  of  this  section,  "hospital
 26    medicaid inpatient days" are days of inpatient hospitalization paid for by the
 27    Idaho  medical assistance program for the applicable calendar year. For fiscal
 28    year 2009, calendar year 2007 inpatient hospital medicaid days shall  be  uti-
 29    lized to determine the hospital inpatient adjustment payment. For state fiscal
 30    year  2010,  calendar year 2008 hospital medicaid inpatient days shall be uti-
 31    lized to determine the hospital inpatient adjustment  payment.  In  the  event
 32    that  either the inpatient upper payment limit gap for qualifying hospitals or
 33    the available hospital contribution funding is  lower  than  anticipated,  the
 34    department shall apply an across-the-board factor such that the inpatient pay-
 35    ment  adjustments  are maximized, financed entirely from hospital contribution
 36    funding, and do not exceed the Idaho inpatient upper payment limit for  quali-
 37    fying hospitals. Payments shall be made no later than seven (7) days after the
 38    due  date  for  the  hospital contributions required in section 56-1404, Idaho
 39    Code.
 40        (2)  For state fiscal year 2008, the outpatient upper  payment  limit  gap
 41    for  qualifying  hospitals  shall  be  divided by medicaid outpatient hospital
 42    reimbursement for the same hospitals from calendar year 2006 to  establish  an
 43    average  percentage adjustment rate. Each qualifying hospital shall receive an
 44    annual payment that is equal to the average percentage adjustment rate  multi-
 45    plied  by the hospital's calendar year 2006 hospital medicaid outpatient reim-
 46    bursement. For purposes of this section, "hospital  outpatient  reimbursement"
 47    is  reimbursement for hospital outpatient services paid for by the Idaho medi-
 48    cal assistance program for the applicable calendar year. For state fiscal year
 49    2009, calendar year 2007 hospital medicaid outpatient reimbursement  shall  be
 50    utilized  to  determine  the outpatient hospital adjustment payment. For state
 51    fiscal year 2010, calendar year 2008 hospital medicaid  outpatient  reimburse-
 52    ment  shall  be  utilized to determine the outpatient hospital adjustment pay-
 53    ment. In the event that either the outpatient  upper  payment  limit  gap  for
                                                                        
                                       4
                                                                        
  1    qualifying  hospitals  or the available hospital contribution funding is lower
  2    than anticipated, the department shall apply an across-the-board  factor  such
  3    that outpatient adjustment payments are maximized, financed entirely from hos-
  4    pital  contribution funding, and do not exceed the Idaho outpatient upper pay-
  5    ment limit for qualifying hospitals. Payments shall  be  made  no  later  than
  6    seven  (7)  days after the due date for the hospital contributions required in
  7    section 54-1404, Idaho Code.
                                                                        
  8        56-1407.  TIMING OF PAYMENTS AND CONTRIBUTIONS. (1) The  department  shall
  9    establish  an annual contribution schedule for all payments created under this
 10    chapter.
 11        (2)  If a hospital fails to pay the full amount  of  an  installment  when
 12    due,  including  any extensions granted, there shall be added to the contribu-
 13    tion imposed by section 56-1404, Idaho Code, unless waived by  the  department
 14    for reasonable cause, a penalty equal to the lesser of:
 15        (a)  An  amount equal to five percent (5%) of the contribution installment
 16        amount not paid on or before the due date, plus five percent (5%)  of  the
 17        portion thereof remaining unpaid on the last day of each month thereafter;
 18        or
 19        (b)  An  amount  equal  to  one hundred percent (100%) of the contribution
 20        installment amount not paid on or before the due date.
 21        (3)  For purposes of subsection (2) of this  section,  payments  shall  be
 22    credited  first to unpaid installment amounts rather than to penalty or inter-
 23    est amounts, beginning with the most delinquent installment.
                                                                        
 24        56-1408.  EXEMPTION. A hospital that is a governmental entity, including a
 25    state agency, is exempt from the contribution  required  by  section  56-1404,
 26    Idaho  Code, unless the exemption is adjudged to be unconstitutional or other-
 27    wise invalid, in which case the hospital shall pay such contribution.
                                                                        
 28        56-1409.  MULTI-HOSPITAL LOCATIONS, HOSPITAL CLOSURE  AND  NEW  HOSPITALS.
 29    (1)  If  a hospital conducts, operates or maintains more than one (1) hospital
 30    licensed by the department, the hospital shall pay the contribution  for  each
 31    hospital separately.
 32        (2)  A hospital subject to contributions under this chapter that ceases to
 33    conduct  hospital operations or maintain its state license, commences hospital
 34    operations during a fiscal  year,  or  did  not  conduct  hospital  operations
 35    throughout  a  calendar  or  fiscal year, shall have its required contribution
 36    adjusted by multiplying the contribution computed under section 56-1404, Idaho
 37    Code, by a fraction, the numerator of which is the number of days in the  year
 38    during  which the hospital conducts hospital business, operates a hospital and
 39    maintains licensure, and the denominator of which is three hundred  sixty-five
 40    (365). The hospital shall pay the required contribution computed under section
 41    56-1404,  Idaho  Code, on the date and in pro rata installments as required by
 42    the department for that portion of the state fiscal year during which the hos-
 43    pital operated and maintained state licensure, to the  extent  not  previously
 44    paid.
                                                                        
 45        56-1410.  APPLICABILITY. (1) The contribution required by section 56-1404,
 46    Idaho Code, shall not take effect or shall cease to be imposed, and any moneys
 47    remaining  in  the  fund  shall  be refunded to hospitals in proportion to the
 48    amounts paid by such hospitals if:
 49        (a)  The appropriation for each state fiscal year 2008, 2009 and 2010 from
 50        the general fund for hospital payments under the Idaho medical  assistance
 51        program is less than for fiscal year 2007;
                                                                        
                                       5
                                                                        
  1        (b)  The  department  makes  changes in its rules that reduce the hospital
  2        inpatient or outpatient payment rates, including adjustment payment rates,
  3        in effect on January 1, 2007; or
  4        (c)  The payments to hospitals required under  section  56-1403(3),  Idaho
  5        Code, are changed or are not eligible for federal matching funds under the
  6        Idaho medical assistance program.
  7        (2)  The  contribution  required by section 56-1404, Idaho Code, shall not
  8    take effect or shall cease to be required if the contribution is determined to
  9    be impermissible under title XIX of the social security  act.  Moneys  in  the
 10    fund  derived  from contributions required prior thereto shall be disbursed in
 11    accordance with section 56-1403(3), Idaho Code, to the extent federal matching
 12    funds are not reduced due to the impermissibility of  the  contributions,  and
 13    any  remaining  moneys  shall  be  refunded  to hospitals in proportion to the
 14    amounts paid by such hospitals.
                                                                        
 15        SECTION 2.  The provisions of Section 1 of this act shall  be  null,  void
 16    and of no force and effect on and after July 1, 2010.

Statement of Purpose / Fiscal Impact


                    STATEMENT OF PURPOSE
  
                           RS 16595
  
  The purpose of this legislation is to leverage federal Medicaid
  funds by having private hospitals contribute to the state the
  amount necessary to match the federal funds that are available 
  for reimbursement to private hospitals.  Those dollars would be 
  used to enhance existing below-cost reimbursement to hospitals, 
  thereby reducing the losses hospitals incur when they treat 
  Medicaid patients. It should also reduce such losses being 
  shifted to private payers and insurers.  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 available federal funds.  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 otherwise increase reimbursement to hospitals, the state would 
  need to appropriate additional state funds to leverage the federal 
  funds. This legislation increases reimbursement to private hospitals 
  by having them put up the matching funds instead of the state doing so.
  
  
  
                             FISCAL NOTE
  
  There is no fiscal impact on the state general fund.
  
  
  
  
  
  Contact
  Names:    Steven A. Millard, President
            Toni Lawson, Vice President
            Idaho Hospital Association 
  Phone:    (208) 338-5100, exts. 203 and 207
                                                                S 1048