Print Friendly SENATE BILL NO. 1048 – Idaho Hospital Contribution Act
SENATE BILL NO. 1048
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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
]]]] 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
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.
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-
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:
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
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
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
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;
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
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;
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
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
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.
There is no fiscal impact on the state general fund.
Names: Steven A. Millard, President
Toni Lawson, Vice President
Idaho Hospital Association
Phone: (208) 338-5100, exts. 203 and 207