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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 - 2007IN 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 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