S.B. 166

This document includes Senate Committee Amendments incorporated into the bill on Fri, Feb 8, 2013 at 9:15 AM by lpoole. --> 1

HOSPITAL PROVIDER ASSESSMENT AMENDMENTS
2 2013 GENERAL SESSION
3 STATE OF UTAH
4 Chief Sponsor: Lyle W. Hillyard
5 House Sponsor: Brad R. Wilson
6
7 LONG TITLE
8 General Description:
9 This bill amends the Hospital Provider Assessment Act.
10 Highlighted Provisions:
11 This bill:
12 . defines terms;
13 . modifies the calculation of the annual assessment;
14 . modifies the manner in which a hospital's discharge data is derived;
15 . requires the Division of Health Care Financing of the Department of Health to
16 incorporate $154 million into the accountable care organization rate structure;
17 . grants rulemaking authority to the Department of Health over the penalties and
18 interest assessed under the act;
19 . repeals the assessment on July 1, 2016; and
20 . makes technical changes.
21 Money Appropriated in this Bill:
22 None
23 Other Special Clauses:
24 If approved by two-thirds of all the members elected to each house, this bill takes effect
25 on April 1, 2013.
26 Utah Code Sections Affected:
27 AMENDS:

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- 2 - 28 26-36a-103, as enacted by Laws of Utah 2010, Chapter 179
29 26-36a-202, as enacted by Laws of Utah 2010, Chapter 179
30 26-36a-203, as last amended by Laws of Utah 2012, Chapter 348
31 26-36a-204, as enacted by Laws of Utah 2010, Chapter 179
32 26-36a-205, as last amended by Laws of Utah 2012, Chapter 348
33 26-36a-206, as enacted by Laws of Utah 2010, Chapter 179
34 26-36a-207, as enacted by Laws of Utah 2010, Chapter 179
35 26-36a-208, as last amended by Laws of Utah 2011, Chapter 118
36 63I-1-226, as last amended by Laws of Utah 2012, Chapters 171 and 328
37 REPEALS:
38 26-36a-209, as last amended by Laws of Utah 2012, Chapter 348
39
40 Be it enacted by the Legislature of the state of Utah:
41 Section 1. Section 26-36a-103 is amended to read:
42 26-36a-103. Definitions.
43 As used in this chapter:
44 (1) "Assessment" means the Medicaid hospital provider assessment established by this
45 chapter.
46 (2) "Discharges" means the number of total hospital discharges reported on worksheet
47 S-3, column 15, lines 12, 14, and 14.01 of the Medicare Cost Report for the applicable
48 assessment year.
49 (3) "Division" means the Division of Health Care Financing of the department.
50 (4) "Hospital":
51 (a) means a privately owned:
52 (i) general acute hospital operating in the state as defined in Section 26-21-2 ; and
53 (ii) specialty hospital operating in the state, which shall include a privately owned
54 hospital whose inpatient admissions are predominantly:
55 (A) rehabilitation;
56 (B) psychiatric;
57 (C) chemical dependency; or
58 (D) long-term acute care services; and

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- 3 - 59 (b) does not include:
60 (i) a residential care or treatment facility as defined in Section 62A-2-101 ;
61 (ii) a hospital owned by the federal government, including the Veterans Administration
62 Hospital; or
63 [(iii) a Shriners hospital that does not charge for its services; or]
64 [(iv)] (iii) a hospital that is owned by the state government, a state agency, or a political
65 subdivision of the state, including:
66 (A) a state-owned teaching hospital; and
67 (B) the Utah State Hospital.
68 [(5) "Low volume select access hospital" means a hospital that furnished inpatient
69 hospital services during fiscal year 2008 to less than 300 Medicaid cases under the select
70 access program.]
71 [(6)] (5) "Medicare cost report" means CMS-2552-96 or CMS-2552-10, the cost report
72 for electronic filing of hospitals.
73 [(7) "Select access cases" means the number of hospital inpatient cases related to
74 individuals enrolled in the state's select access program for 2008.]
75 [(8)] (6) "State plan amendment" means a change or update to the state Medicaid plan.
76 [(9) "Upper payment limit" means the maximum ceiling imposed by federal regulation
77 on a hospital Medicaid reimbursement for inpatient services under 42 C.F.R. Sec. 447.272.]
78 [(10) "Upper payment limit gap":]
79 [(a) means the difference between:]
80 [(i) the inpatient hospital upper payment limit for hospitals; and]
81 [(ii) Medicaid payments for inpatient hospital services not financed using hospital
82 assessments paid by all hospitals;]
83 [(b) shall be calculated separately for hospital inpatient services; and]
84 [(c) does not include Medicaid disproportionate share payments as part of the
85 calculation for the upper payment limit gap.]
86 (7) "Accountable care organization" means a managed care organization, as defined in
87 42 C.F.R. Sec. 438, that contracts with the department under the provisions of Section
88 26-18-405 .
89 Section 2. Section 26-36a-202 is amended to read:

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26-36a-202. Assessment, collection, and payment of hospital provider assessment.
91 (1) A uniform, broad based, assessment is imposed on each hospital as defined in
92 Subsection 26-36a-103 (4)(a):
93 (a) in the amount designated in Section 26-36a-203 ; and
94 (b) in accordance with Section 26-36a-204 [, beginning when the division has obtained
95 approval from the Center for Medicare and Medicaid Services and provided notice of the
96 assessment to the hospital].
97 (2) (a) The assessment imposed by this chapter is due and payable on a quarterly basis
98 in accordance with Section 26-36a-204 .
99 (b) The collecting agent for this assessment is the department which is vested with the
100 administration and enforcement of this chapter, including the right to adopt administrative rules
101 in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, necessary to:
102 (i) implement and enforce the provisions of this act; and
103 (ii) audit records of a facility:
104 (A) that is subject to the assessment imposed by this chapter; and
105 (B) does not file a Medicare cost report.
106 (c) The department shall forward proceeds from the assessment imposed by this
107 chapter to the state treasurer for deposit in the restricted special revenue fund as specified in
108 Section 26-36a-207 .
109 (3) The department may, by rule, extend the time for paying the assessment.
110 Section 3. Section 26-36a-203 is amended to read:
111 26-36a-203. Calculation of assessment.
112 [(1) The division shall calculate the inpatient upper payment limit gap for hospitals for
113 each state fiscal year.]
114 [(2)] (1) (a) An annual assessment is payable on a quarterly basis for each hospital in
115 an amount calculated at a uniform assessment rate for each hospital discharge, in accordance
116 with this section.
117 (b) The uniform assessment rate shall be determined using the total number of hospital
118 discharges for assessed hospitals divided into the total nonfederal portion [of the upper
119 payment limit gap] in an amount S. [ equal to the $154 million ] consistent with 26-36a-205 .S
119a that is needed to support capitated
120 rates for accountable care organizations for purposes of hospital services provided to Medicaid

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- 5 - 121 enrollees.
122 (c) Any quarterly changes to the uniform assessment rate shall be applied uniformly to
123 all assessed hospitals.
124 (d) [(i) Except as provided in Subsection (2)(d)(ii), the] The annual uniform
125 assessment rate may not generate more than [the non-federal share of the annual upper payment
126 limit gap for the fiscal year.]:
127 [(ii) For fiscal years 2011-12 and 2012-13 the department may generate an additional
128 amount from the assessment imposed under Subsection (2)(d)(i) in the amount of:]
129 [(A)] (i) $1,000,000 to offset Medicaid mandatory expenditures; and
130 [(B)] (ii) the nonfederal share to seed amounts needed to support capitated rates for
131 accountable care organizations as provided for in Section (1)(b).
132 [(3) (a) For state fiscal years 2010 and 2011, discharges shall be determined using the
133 data from each hospital's Medicare Cost Report contained in the Centers for Medicare and
134 Medicaid Services' Healthcare Cost Report Information System file as of April 1, 2009, for
135 hospital fiscal years ending between October 1, 2007, and September 30, 2008.]
136 [(b) If a hospital's fiscal year Medicare Cost Report is not contained in the Centers for
137 Medicare and Medicaid Services' Healthcare Cost Report Information System file dated March
138 31, 2009:]
139 [(i) the hospital shall submit to the division a copy of the hospital's Medicare Cost
140 Report with a fiscal year end between October 1, 2007, and September 30, 2008; and]
141 [(ii) the division shall determine the hospital's discharges from the information
142 submitted under Subsection (3)(b)(i).]
143 [(c) If a hospital started operations after the due date for a 2007 Medicare Cost Report:]
144 [(i) the hospital shall submit to the division a copy of the hospital's most recent
145 complete year Medicare Cost Report; and]
146 [(ii) the division shall determine the hospital's discharges from the information
147 submitted under Subsection (3)(c)(i).]
148 [(d) If a hospital is not certified by the Medicare program and is not required to file a
149 Medicare Cost Report:]
150 [(i) the hospital shall submit to the division its applicable fiscal year discharges with
151 supporting documentation;]

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- 6 - 152 [(ii) the division shall determine the hospital's discharges from the information
153 submitted under Subsection (3)(d)(i); and]
154 [(iii) the failure to submit discharge information under Subsections (3)(d)(i) and (ii)
155 shall result in an audit of the hospital's records by the department and the imposition of a
156 penalty equal to 5% of the calculated assessment.]
157 [(4)] (2) (a) For each state fiscal year [2012 and 2013], discharges shall be determined
158 using the data from each hospital's Medicare Cost Report contained in the Centers for Medicare
159 and Medicaid Services' Healthcare Cost Report Information System file [as of:]. The hospital's
160 discharge data will be derived as follows:
161 [(i) for state fiscal year 2012, September 30, 2010, for hospital fiscal years ending
162 between October 1, 2008, and September 30, 2009; and]
163 [(ii) for state fiscal year 2013, September 30, 2011, for hospital fiscal years ending
164 between October 1, 2009, and September 30, 2010.]
165 (i) for state fiscal year 2013, the hospital's cost report data for the hospital's fiscal year
166 ending between July 1, 2009, and June 30, 2010;
167 (ii) for state fiscal year 2014, the hospital's cost report data for the hospital's fiscal year
168 ending between July 1, 2010, and June 30, 2011;
169 (iii) for state fiscal year 2015, the hospital's cost report data for the hospital's fiscal year
170 ending between July 1, 2011, and June 30, 2012; and
171 (iv) for state fiscal year 2016, the hospital's cost report data for the hospital's fiscal year
172 ending between July 1, 2012, and June 30, 2013.
173 (b) If a hospital's fiscal year Medicare Cost Report is not contained in the Centers for
174 Medicare and Medicaid Services' Healthcare Cost Report Information System file:
175 (i) the hospital shall submit to the division a copy of the hospital's Medicare Cost
176 Report applicable to the assessment year; and
177 (ii) the division shall determine the hospital's discharges.
178 (c) If a hospital is not certified by the Medicare program and is not required to file a
179 Medicare Cost Report:
180 (i) the hospital shall submit to the division its applicable fiscal year discharges with
181 supporting documentation;
182 (ii) the division shall determine the hospital's discharges from the information

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- 7 - 183 submitted under Subsection [(4)] (2)(c)(i); and
184 (iii) the failure to submit discharge information shall result in an audit of the hospital's
185 records and a penalty equal to 5% of the calculated assessment.
186 [(5)] (3) Except as provided in Subsection [(6)] (4), if a hospital is owned by an
187 organization that owns more than one hospital in the state:
188 (a) the assessment for each hospital shall be separately calculated by the department;
189 and
190 (b) each separate hospital shall pay the assessment imposed by this chapter.
191 [(6)] (4) Notwithstanding the requirement of Subsection [(5)] (3), if multiple hospitals
192 use the same Medicaid provider number:
193 (a) the department shall calculate the assessment in the aggregate for the hospitals
194 using the same Medicaid provider number; and
195 (b) the hospitals may pay the assessment in the aggregate.
196 [(7) (a) The assessment formula imposed by this section, and the inpatient access
197 payments under Section 26-36a-205 , shall be adjusted in accordance with Subsection (7)(b) if a
198 hospital, for any reason, does not meet the definition of a hospital subject to the assessment
199 under Section 26-36a-103 for the entire fiscal year.]
200 [(b) The department shall adjust the assessment payable to the department under this
201 chapter for a hospital that is not subject to the assessment for an entire fiscal year by
202 multiplying the annual assessment calculated under Subsection (3) or (4) by a fraction, the
203 numerator of which is the number of days during the year that the hospital operated, and the
204 denominator of which is 365.]
205 [(c) A hospital described in Subsection (7)(a):]
206 [(i) that is ceasing to operate in the state, shall pay any assessment owed to the
207 department immediately upon ceasing to operate in the state; and]
208 [(ii) shall receive Medicaid inpatient hospital access payments under Section
209 26-36a-205 for the state fiscal year, adjusted using the same formula described in Subsection
210 (7)(b).]
211 [(8) A hospital that is subject to payment of the assessment at the beginning of a state
212 fiscal year, but during the state fiscal year experiences a change in status so that it no longer
213 falls under the definition of a hospital subject to the assessment in Section 26-36a-204 , shall:]

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Senate Committee Amendments 2-8-2013 lp/akj 214

[(a) not be required to pay the hospital assessment beginning on the date established by
215 the department by administrative rule; and]
216 [(b) not be entitled to Medicaid inpatient hospital access payments under Section
217 26-36a-205 on the date established by the department by administrative rule.]
218 Section 4. Section 26-36a-204 is amended to read:
219 26-36a-204. Quarterly notice -- Collection.
220 [(1) (a) The division shall submit to the Center for Medicare and Medicaid Services:]
221 [(i) the payment methodology for the assessment imposed by this chapter; and]
222 [(ii) if necessary, a waiver under 42 C.F.R. Sec. 433.68.]
223 [(b) When the division receives notice of approval of the assessment and access
224 payments under this chapter from the Center for Medicare and Medicaid Services, the division
225 shall, within 45 days of the notice from the Center for Medicare and Medicaid Services,
226 provide a hospital that is subject to the assessment notice of:]
227 [(i) the approval of the assessment methodology from the Center for Medicare and
228 Medicaid Services;]
229 [(ii) the assessment rate;]
230 [(iii) the hospital's discharges subject to the assessment; and]
231 [(iv) the assessment amount owed by the hospital for the applicable fiscal year.]
232 [(2) The initial quarterly installments of the assessment imposed by this chapter are due
233 and payable if:]
234 [(a) the division has provided notice of the annual assessment under Subsection (1);
235 and]
236 [(b) the division has made all the quarterly installments of the Medicaid inpatient
237 hospital access payments that were otherwise due under Section 26-36a-205 , consistent with
238 the effective date of the approved state plan amendment.]
239 [(3) After the initial quarterly installments of the Medicaid inpatient hospital access
240 payments are made by the division, a hospital shall pay to the division the initial quarterly
241 assessments imposed by this chapter within 10 business days. Subsequent quarterly]
242 Quarterly assessments imposed by this chapter shall be paid to the division within [10]
243 15 business days after the [hospital receives its Medicaid inpatient hospital access payment due
244 for the applicable quarter under Section 26-36a-205 ] S. original invoice .S date that appears on
244a the invoice issued by

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the division.
246 Section 5. Section 26-36a-205 is amended to read:
247 26-36a-205. Medicaid hospital adjustment under accountable care organization
248 rates.
249 [(1)] To preserve and improve access to [hospitals] hospital services, the division shall
250 [make Medicaid inpatient hospital access payments to hospitals in accordance with this section,
251 Section 26-36a-204 , and Subsection 26-36a-203 (7)], for accountable care organization rates
252 effective on or after April 1, 2013, incorporate an S. annualized .S amount equal to $154
252a million into the
253 accountable care organization rate structure S. calculation .S consistent with the certified
253a actuarial rate range.
254 [(2) (a) The Medicaid inpatient hospital access payment amount to a particular hospital
255 shall be established by the division.]
256 [(b) The aggregate of all hospital's Medicaid inpatient hospital access payments shall
257 be:]
258 [(i) equal to the upper payment limit gap for inpatient services for all hospitals; and]
259 [(ii) designated as the Medicaid inpatient hospital access payment pool.]
260 [(3) In addition to any other funds paid to hospitals during fiscal years 2010 and 2011
261 for inpatient hospital services to Medicaid patients, a Medicaid hospital inpatient access
262 payment shall be made:]
263 [(a) for state fiscal years 2010 and 2011:]
264 [(i) the amount of $825 per Medicaid fee for service day, to a hospital that:]
265 [(A) was not a specialty hospital; and]
266 [(B) had less than 300 select access inpatient cases during state fiscal year 2008; and]
267 [(ii) inpatient hospital access payments as determined by dividing the remaining
268 spending room available in the current year UPL, after offsetting the payments authorized
269 under Subsection (3)(a)(i) by the total 2008 Medicaid inpatient hospital payments, multiplied
270 by the hospital's Medicaid inpatient payments for state fiscal year 2008, exclusive of medical
271 education and Medicaid disproportionate share payments;]
272 [(b) for state fiscal year 2012:]
273 [(i) the amount of $825 per Medicaid fee for service day, to a hospital that:]
274 [(A) is not a specialty hospital; and]
275 [(B) has less than 300 select access inpatient cases during the state fiscal year 2008;

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277 [(ii) inpatient hospital access payments as determined by dividing the remaining
278 spending room available in the current year upper payment limit, after offsetting the payments
279 authorized under Subsection (3)(a)(i), by the total 2009 Medicaid inpatient hospital payments,
280 multiplied by the hospital's Medicaid inpatient payments for state fiscal year 2009; and]
281 [(c) for state fiscal year 2013:]
282 [(i) the amount of $825 per Medicaid fee for service day, to a hospital that:]
283 [(A) is not a specialty hospital; and]
284 [(B) has less than 300 select access inpatient cases during the state fiscal year 2008;
285 and]
286 [(ii) inpatient hospital access payments as determined by dividing the remaining
287 spending room available in the current year upper payment limit, after offsetting the payments
288 authorized under Subsection (3)(a)(i), by the total 2010 Medicaid inpatient hospital payments,
289 multiplied by the hospital's Medicaid inpatient payments for state fiscal year 2010.]
290 [(4) Medicaid inpatient hospital access payments shall be made:]
291 [(a) on a quarterly basis for inpatient hospital services furnished to Medicaid
292 individuals during each quarter; and]
293 [(b) within 15 days after the end of each quarter.]
294 [(5) A hospital's Medicaid inpatient access payment shall not be used to offset any
295 other payment by Medicaid for hospital inpatient or outpatient services to Medicaid
296 beneficiaries, including a:]
297 [(a) fee-for-service payment;]
298 [(b) per diem payment;]
299 [(c) hospital inpatient adjustment; or]
300 [(d) cost settlement payment.]
301 [(6) When the division obtains approval from the Centers for Medicare and Medicaid
302 Services for the Medicaid Waiver - Accountable Care Organizations, and has determined the
303 capitated rate for the accountable care organizations, the department shall consult with the Utah
304 Hospitals Association to develop an alternative supplemental payment methodology that can be
305 approved by the Centers for Medicare and Medicaid Services.]
306 [(7) A hospital shall not be guaranteed that the hospital's Medicaid inpatient hospital

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308 Section 6. Section 26-36a-206 is amended to read:
309 26-36a-206. Penalties and interest.
310 (1) A facility that fails to pay any assessment or file a return as required under this
311 chapter, within the time required by this chapter, shall pay, in addition to the assessment,
312 penalties and interest established by the department.
313 (2) (a) Consistent with Subsection (2)(b), the department shall adopt rules in
314 accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, which establish
315 reasonable penalties and interest for the violations described in Subsection (1).
316 (b) If a hospital fails to timely pay the full amount of a quarterly assessment, the
317 department shall add to the assessment:
318 (i) a penalty equal to 5% of the quarterly amount not paid on or before the due date;
319 and
320 (ii) on the last day of each quarter after the due date until the assessed amount and the
321 penalty imposed under Subsection (2)(b)(i) are paid in full, an additional 5% penalty on:
322 (A) any unpaid quarterly assessment; and
323 (B) any unpaid penalty assessment.
324 [(c) The division may waive, reduce, or compromise the penalties and interest provided
325 for in this section in the same manner as provided in Subsection 59-1-401 (8).]
326 (c) Upon making a record of its actions, and upon reasonable cause shown, the division
327 may waive, reduce, or compromise any of the penalties imposed under this part.
328 Section 7. Section 26-36a-207 is amended to read:
329 26-36a-207. Restricted Special Revenue Fund -- Creation -- Deposits.
330 (1) There is created a restricted special revenue fund known as the "Hospital Provider
331 Assessment Special Revenue Fund."
332 (2) The fund shall consist of:
333 (a) the assessments collected by the department under this chapter;
334 (b) any interest and penalties levied with the administration of this chapter; and
335 (c) any other funds received as donations for the restricted fund and appropriations
336 from other sources.
337 (3) Money in the fund shall be used:

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Senate Committee Amendments 2-8-2013 lp/akj 338

[(a) to make inpatient hospital access payments under Section 26-36a-205 ; and]
339 (a) to support capitated rates S. consistent with 26-36a-203(1)(d) .S for accountable
339a care organizations S. [in an amount equal to
340 $154 million ] .S ; and
341 (b) to reimburse money collected by the division from a hospital through a mistake
342 made under this chapter.
343 Section 8. Section 26-36a-208 is amended to read:
344 26-36a-208. Repeal of assessment.
345 (1) The repeal of the assessment imposed by this chapter shall occur upon the
346 certification by the executive director of the department that the sooner of the following has
347 occurred:
348 (a) the effective date of any action by Congress that would disqualify the assessment
349 imposed by this chapter from counting towards state Medicaid funds available to be used to
350 determine the federal financial participation;
351 (b) the effective date of any decision, enactment, or other determination by the
352 Legislature or by any court, officer, department, or agency of the state, or of the federal
353 government that has the effect of:
354 (i) disqualifying the assessment from counting towards state Medicaid funds available
355 to be used to determine federal financial participation for Medicaid matching funds; or
356 (ii) creating for any reason a failure of the state to use the assessments for the Medicaid
357 program as described in this chapter; [and]
358 (c) the effective date of:
359 (i) an appropriation for any state fiscal year from the General Fund for hospital
360 payments under the state Medicaid program that is less than the amount appropriated for state
361 fiscal year 2012;
362 (ii) the annual revenues of the state General Fund budget return to the level that was
363 appropriated for fiscal year 2008;
364 (iii) approval of any change in the state Medicaid plan that requires a greater
365 percentage of Medicaid patients to enroll in Medicaid managed care plans than what is
366 required:
367 (A) to implement accountable care organizations in the state plan; and
368 (B) by other managed care enrollment requirements in effect on or before January 1,

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370 (iv) a division change in rules that reduces any of the following below July 1, 2011
371 payments:
372 (A) aggregate hospital inpatient payments;
373 (B) adjustment payment rates; or
374 (C) any cost settlement protocol; or
375 (v) a division change in rules that reduces the aggregate outpatient payments below
376 July 1, 2011, payments[.]; and
377 (d) the sunset of this chapter in accordance with Section 63I-1-226 .
378 (2) If the assessment is repealed under Subsection (1), money in the fund that was
379 derived from assessments imposed by this chapter, before the determination made under
380 Subsection (1), shall be disbursed under Section 26-36a-205 to the extent federal matching is
381 not reduced due to the impermissibility of the assessments. Any funds remaining in the special
382 revenue fund shall be refunded to the hospitals in proportion to the amount paid by each
383 hospital.
384 Section 9. Section 63I-1-226 is amended to read:
385 63I-1-226. Repeal dates, Title 26.
386 (1) Title 26, Chapter 9f, Utah Digital Health Service Commission Act, is repealed July
387 1, 2015.
388 (2) Section 26-18-12 , Expansion of 340B drug pricing programs, is repealed July 1,
389 2013.
390 (3) Section 26-21-23 , Licensing of non-Medicaid nursing care facility beds, is repealed
391 July 1, 2016.
392 (4) Section 26-21-211 is repealed July 1, 2013.
393 (5) Title 26, Chapter 33a, Utah Health Data Authority Act, is repealed July 1, 2014.
394 (6) Title 26, Chapter 36a, Hospital Provider Assessment Act, is repealed July 1, [2013]
395 2016.
396 (7) Section 26-38-2.5 is repealed July 1, 2017.
397 (8) Section 26-38-2.6 is repealed July 1, 2017.
398 Section 10. Repealer.
399 This bill repeals:

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- 14 - 400 Section 26-36a-209, State plan amendment.
401 Section 11. Effective date.
402 If approved by two-thirds of all the members elected to each house, this bill takes effect
403 on April 1, 2013.

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as of 2-4-13 3:33 PM

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