This document includes House Floor Amendments incorporated into the bill on Mon, Mar 7, 2016 at 9:21 AM by cynthiahopkin.
Representative James A. Dunnigan proposes the following substitute bill:




Chief Sponsor: James A. Dunnigan

Senate Sponsor: Allen M. Christensen


8     General Description:
9          This bill implements a health coverage improvement program through Medicaid waiver
10     authority granted to states before the federal Patient Protection and Affordable Care
11     Act, and establishes a funding mechanism for the waiver program.
12     Highlighted Provisions:
13          This bill:
14          ▸     authorizes a preferred drug list for psychotropic drugs with an override for dispense
15     as written;
16          ▸     establishes targets for savings from the preferred drug list;
17          ▸     authorizes the Department of Health to apply for waivers from federal law necessary
18     to implement a health coverage improvement program in Medicaid;
19          ▸     distinguishes the health coverage improvement program from Medicaid expansion
20     under the Affordable Care Act;
21          ▸     defines terms;
22          ▸     describes the Medicaid waiver request;
23          ▸     permits a waiver enrollee to maintain Medicaid coverage for 12 months;
24          ▸     provides eligibility criteria;
25          ▸     amends the county matching funds for enrollees in the health coverage improvement

26     program;
27          ▸     expands Medicaid eligibility for adults with dependent children;
28          ▸     requires the Department of Health to apply for a waiver for the existing Medicaid
29     population and the enrollees in the health coverage improvement program to allow
30     substance abuse treatment at facilities with no bed capacity limits;
31          ▸     enhances the efficiency of Medicaid enrollment for adults released from
32     incarceration;
33          ▸     establishes an inpatient private hospital assessment to fund the Medicaid waiver;
34          ▸     establishes a mandatory intergovernmental transfer of funds from the state teaching
35     hospital and certain other government owned hospitals to fund the Medicaid waiver;
36          ▸     authorizes the Public Employees' Benefit and Insurance Program to provide services
37     for drugs and devices for certain individuals at the request of a procurement unit;
38     and
39          ▸     requires the Department of Health to study methods to increase coverage to
40     uninsured low income adults with children and to maximize the use of employer
41     sponsored coverage.
42     Money Appropriated in this Bill:
43          This bill appropriates $2,508,500 ongoing General Fund from other programs to the
44     Medicaid Expansion Fund and makes changes to other funds.
45     Other Special Clauses:
46          This bill provides a coordination clause.
47     Utah Code Sections Affected:
48     AMENDS:
49          26-18-2.4, as last amended by Laws of Utah 2012, Chapters 242 and 343
50          26-18-18, as last amended by Laws of Utah 2015, Chapter 283
51          49-20-401, as last amended by Laws of Utah 2015, Chapter 155
52          63I-1-226, as last amended by Laws of Utah 2015, Chapters 16, 31, and 258
53     ENACTS:
54          26-18-411, Utah Code Annotated 1953
55          26-36b-101, Utah Code Annotated 1953
56          26-36b-102, Utah Code Annotated 1953

57          26-36b-103, Utah Code Annotated 1953
58          26-36b-201, Utah Code Annotated 1953
59          26-36b-202, Utah Code Annotated 1953
60          26-36b-203, Utah Code Annotated 1953
61          26-36b-204, Utah Code Annotated 1953
62          26-36b-205, Utah Code Annotated 1953
63          26-36b-206, Utah Code Annotated 1953
64          26-36b-207, Utah Code Annotated 1953
65          26-36b-208, Utah Code Annotated 1953
66          26-36b-209, Utah Code Annotated 1953
67          26-36b-210, Utah Code Annotated 1953
68          26-36b-211, Utah Code Annotated 1953
69     Utah Code Sections Affected by Coordination Clause:
70          26-18-2.4, as last amended by Laws of Utah 2012, Chapters 242 and 343

72     Be it enacted by the Legislature of the state of Utah:
73          Section 1. Section 26-18-2.4 is amended to read:
74          26-18-2.4. Medicaid drug program -- Preferred drug list.
75          (1) A Medicaid drug program developed by the department under Subsection
76     26-18-2.3(2)(f):
77          (a) shall, notwithstanding Subsection 26-18-2.3(1)(b), be based on clinical and
78     cost-related factors which include medical necessity as determined by a provider in accordance
79     with administrative rules established by the Drug Utilization Review Board;
80          (b) may include therapeutic categories of drugs that may be exempted from the drug
81     program;
82          (c) may include placing some drugs, except the drugs described in Subsection (2), on a
83     preferred drug list:
84          (i) to the extent determined appropriate by the department; and
85          (ii) in the manner described in Subsection (3) for psychotropic drugs;
86          (d) notwithstanding the requirements of Part 2, Drug Utilization Review Board, and
87     except as provided in Subsection (3), shall immediately implement the prior authorization

88     requirements for a nonpreferred drug that is in the same therapeutic class as a drug that is:
89          (i) on the preferred drug list on the date that this act takes effect; or
90          (ii) added to the preferred drug list after this act takes effect; and
91          (e) except as prohibited by Subsections 58-17b-606(4) and (5), shall establish the prior
92     authorization requirements established under Subsections (1)(c) and (d) which shall permit a
93     health care provider or the health care provider's agent to obtain a prior authorization override
94     of the preferred drug list through the department's pharmacy prior authorization review process,
95     and which shall:
96          (i) provide either telephone or fax approval or denial of the request within 24 hours of
97     the receipt of a request that is submitted during normal business hours of Monday through
98     Friday from 8 a.m. to 5 p.m.;
99          (ii) provide for the dispensing of a limited supply of a requested drug as determined
100     appropriate by the department in an emergency situation, if the request for an override is
101     received outside of the department's normal business hours; and
102          (iii) require the health care provider to provide the department with documentation of
103     the medical need for the preferred drug list override in accordance with criteria established by
104     the department in consultation with the Pharmacy and Therapeutics Committee.
105          (2) (a) For purposes of this Subsection (2):
106          (i) "Immunosuppressive drug":
107          (A) means a drug that is used in immunosuppressive therapy to inhibit or prevent
108     activity of the immune system to aid the body in preventing the rejection of transplanted organs
109     and tissue; and
110          (B) does not include drugs used for the treatment of autoimmune disease or diseases
111     that are most likely of autoimmune origin.
112          [(ii) "Psychotropic drug" means the following classes of drugs: atypical anti-psychotic,
113     anti-depressants, anti-convulsant/mood stabilizer, anti-anxiety, attention deficit hyperactivity
114     disorder stimulants, or sedative/hypnotics.]
115          [(iii)] (ii) "Stabilized" means a health care provider has documented in the patient's
116     medical chart that a patient has achieved a stable or steadfast medical state within the past 90
117     days using a particular psychotropic drug.
118          (b) A preferred drug list developed under the provisions of this section may not

119     include[: (i) except as provided in Subsection (2)(e), a psychotropic or anti-psychotic drug; or
120     (ii)] an immunosuppressive drug.
121          (c) The state Medicaid program shall reimburse for a prescription for an
122     immunosuppressive drug as written by the health care provider for a patient who has undergone
123     an organ transplant. For purposes of Subsection 58-17b-606(4), and with respect to patients
124     who have undergone an organ transplant, the prescription for a particular immunosuppressive
125     drug as written by a health care provider meets the criteria of demonstrating to the Department
126     of Health a medical necessity for dispensing the prescribed immunosuppressive drug.
127          (d) Notwithstanding the requirements of Part 2, Drug Utilization Review Board, the
128     state Medicaid drug program may not require the use of step therapy for immunosuppressive
129     drugs without the written or oral consent of the health care provider and the patient.
130          (e) The department may include a sedative hypnotic on a preferred drug list in
131     accordance with Subsection (2)(f).
132          (f) The department shall grant a prior authorization for a sedative hypnotic that is not
133     on the preferred drug list under Subsection (2)(e), if the health care provider has documentation
134     related to one of the following conditions for the Medicaid client:
135          (i) a trial and failure of at least one preferred agent in the drug class, including the
136     name of the preferred drug that was tried, the length of therapy, and the reason for the
137     discontinuation;
138          (ii) detailed evidence of a potential drug interaction between current medication and
139     the preferred drug;
140          (iii) detailed evidence of a condition or contraindication that prevents the use of the
141     preferred drug;
142          (iv) objective clinical evidence that a patient is at high risk of adverse events due to a
143     therapeutic interchange with a preferred drug;
144          (v) the patient is a new or previous Medicaid client with an existing diagnosis
145     previously stabilized with a nonpreferred drug; or
146          (vi) other valid reasons as determined by the department.
147          (g) A prior authorization granted under Subsection (2)(f) is valid for one year from the
148     date the department grants the prior authorization and shall be renewed in accordance with
149     Subsection (2)(f).

150          (3) (a) For purposes of this Subsection (3), "psychotropic drug" means the following
151     classes of drugs:
152          (i) atypical anti-psychotic;
153          (ii) anti-depressant;
154          (iii) anti-convulsant/mood stabilizer;
155          (iv) anti-anxiety; and
156          (v) attention deficit hyperactivity disorder stimulant.
157          (b) The department shall develop a preferred drug list for psychotropic drugs. Except
158     as provided in Subsection (3)(d), a preferred drug list for psychotropic drugs developed under
159     this section shall allow a health care provider to override the preferred drug list by writing
160     "dispense as written" on the prescription for the psychotropic drug. A health care provider may
161     not override Section 58-17b-606 by writing "dispense as written" on a prescription.
162          (c) The department, and a Medicaid accountable care organization that is responsible
163     for providing behavioral health, shall:
164          (i) establish a system to:
165          (A) track health care provider prescribing patterns for psychotropic drugs;
166          (B) educate health care providers who are not complying with the preferred drug list;
167     and
168          (C) implement peer to peer education for health care providers whose prescribing
169     practices continue to not comply with the preferred drug list; and
170          (ii) determine whether health care provider compliance with the preferred drug list is at
171     least:
172          (A) 55% of prescriptions by July 1, 2017;
173          (B) 65% of prescriptions by July 1, 2018; and
174          (C) 75% of prescriptions by July 1, 2019.
175          (d) Beginning October 1, 2019, the department shall eliminate the dispense as written
176     override for the preferred drug list, and shall implement a prior authorization system for
177     psychotropic drugs, in accordance with Subsection (2)(f), if by July 1, 2019, the department has
178     not realized annual savings from implementing the preferred drug list for psychotropic drugs of
179     at least $750,000 General Fund savings.
180          (e) The department shall report to the Health and Human Services Interim Committee

181     and the Social Services Appropriations Subcommittee before November 30, 2016, and before
182     each November 30 thereafter regarding compliance with and savings from implementation of
183     this Subsection (3).
184          [(3)] (4) The department shall report to the Health and Human Services Interim
185     Committee and to the Social Services Appropriations Subcommittee [prior to] before
186     November 1, 2013, regarding the savings to the Medicaid program resulting from the use of the
187     preferred drug list permitted by Subsection (1).
188          Section 2. Section 26-18-18 is amended to read:
189          26-18-18. Optional Medicaid expansion.
190          (1) For purposes of this section [PPACA is as], "PPACA" means the same as that term
191     is defined in Section 31A-1-301.
192          (2) The department and the governor shall not expand the state's Medicaid program to
193     the optional population under PPACA unless:
194          [(a) the Health Reform Task Force has completed a thorough analysis of a statewide
195     charity care system;]
196          [(b) the department and its contractors have:]
197          [(i) completed a thorough analysis of the impact to the state of expanding the state's
198     Medicaid program to optional populations under PPACA; and]
199          [(ii) made the analysis conducted under Subsection (2)(b)(i) available to the public;]
200          [(c)] (a) the governor or the governor's designee has reported the intention to expand
201     the state Medicaid program under PPACA to the Legislature in compliance with the legislative
202     review process in Sections 63N-11-106 and 26-18-3; and
203          [(d)] (b) notwithstanding Subsection 63J-5-103(2), the governor submits the request
204     for expansion of the Medicaid program for optional populations to the Legislature under the
205     high impact federal funds request process required by Section 63J-5-204, Legislative review
206     and approval of certain federal funds request.
207          (3) The department shall request approval from the Centers for Medicare and Medicaid
208     Services within the United States Department of Health and Human Services for waivers from
209     federal statutory and regulatory law necessary to implement the health coverage improvement
210     program under Section 26-18-411. The health coverage improvement program under Section
211     26-18-411 is not Medicaid expansion for purposes of this section.

212          Section 3. Section 26-18-411 is enacted to read:
213          26-18-411. Health coverage improvement program -- Eligibility -- Annual report
214     -- Expansion of eligibility for adults with dependent children.
215          (1) For purposes of this section:
216          (a) "Adult in the expansion population" means an individual who:
217          (i) is described in 42 U.S.C. Sec. 1396a(10)(A)(i)(VIII); and
218          (ii) is not otherwise eligible for Medicaid as a mandatory categorically needy
219     individual.
220          (b) "CMS" means the Centers for Medicare and Medicaid Services within the United
221     States Department of Health and Human Services.
222          (c) "Federal poverty level" means the poverty guidelines established by the secretary of
223     the United States Department of Health and Human Services under 42 U.S.C. Sec. 9909(2).
224          (d) "Homeless":
225          (i) means an individual who is chronically homeless, as determined by the department;
226     and
227          (ii) includes someone who was chronically homeless and is currently living in
228     supported housing for the chronically homeless.
229          (e) "Income eligibility ceiling" means the percent of federal poverty level:
230          (i) established by the state in an appropriations act adopted pursuant to Title 63J,
231     Chapter 1, Budgetary Procedures Act; and
232          (ii) under which an individual may qualify for Medicaid coverage in accordance with
233     this section.
234          (2) (a) No later than July 1, 2016, the division shall submit to CMS a request for
235     waivers, or an amendment of existing waivers, from federal statutory and regulatory law
236     necessary for the state to implement the health coverage improvement program in the Medicaid
237     program in accordance with this section.
238          (b) An adult in the expansion population is eligible for Medicaid if the adult meets the
239     income eligibility and other criteria established under Subsection (3).
240          (c) An adult who qualifies under Subsection (3) shall receive Medicaid coverage:
241          (i) through:
242          (A) the traditional fee for service Medicaid model in counties without Medicaid

243     accountable care organizations or the state's Medicaid accountable care organization delivery
244     system, where implemented; and
245          (B) except as provided in Subsection (2)(c)(ii), for behavioral health, through the
246     counties in accordance with Sections 17-43-201 and 17-43-301;
247          (ii) that integrates behavioral health services and physical health services with
248     Medicaid accountable care organizations in select geographic areas of the state that chose an
249     integrated model; and
250          (iii) that permits temporary residential treatment for substance abuse in a short term,
251     non-institutional, 24-hour facility, without a bed capacity limit, as approved by CMS, that
252     provides rehabilitation services that are medically necessary and in accordance with an
253     individualized treatment plan;
254          (d) Medicaid accountable care organizations and counties that elect to integrate care
255     under Subsection (2)(c)(ii) shall collaborate on enrollment, engagement of patients, and
256     coordination of services.
257          (3) (a) An individual is eligible for the health coverage improvement program under
258     Subsection (2)(b) if:
259          (i) at the time of enrollment, the individual's annual income is below the income
260     eligibility ceiling established by the state under Subsection (1)(e); and
261          (ii) the individual meets the eligibility criteria established by the department under
262     Subsection (3)(b).
263          (b) Based on available funding and approval from CMS, the department shall select the
264     criteria for an individual to qualify for the Medicaid program under Subsection (3)(a)(ii), based
265     on the following priority:
266          (i) a chronically homeless individual;
267          (ii) if funding is available, an individual:
268          (A) involved in the justice system through probation, parole, or court ordered
269     treatment; and
270          (B) in need of substance abuse treatment or mental health treatment, as determined by
271     the department; or
272          (iii) if funding is available, an individual in need of substance abuse treatment or
273     mental health treatment, as determined by the department.

274          (c) An individual who qualifies for Medicaid coverage under Subsections (3)(a) and (b)
275     may remain on the Medicaid program for a 12-month certification period as defined by the
276     department. Eligibility changes made by the department under Subsection (1)(e) or (3)(b) shall
277     not apply to an individual during the 12-month certification period.
278          (4) The state may request a modification of the income eligibility ceiling and other
279     eligibility criteria under Subsection (3) each fiscal year based on enrollment in the health
280     coverage improvement program, projected enrollment, costs to the state, and the state budget.
281          (5) On or before September 30, 2017, and on or before September 30 each year
282     thereafter, the department shall report to the Legislature's Health and Human Services Interim
283     Committee and to the Legislature's Executive Appropriations Committee:
284          (a) the number of individuals who enrolled in Medicaid under Subsection (2);
285          (b) the state cost of providing Medicaid to individuals enrolled under Subsection (2);
286     and
287          (c) recommendations for adjusting the income eligibility ceiling under Subsection (4),
288     and other eligibility criteria under Subsection (3), for the upcoming fiscal year.
289          (6) In addition to the waiver under Subsection (2), beginning July 1, 2016, the
290     department shall amend the state Medicaid plan:
291          (a) for an individual with a dependent child, to increase the income eligibility ceiling to
292     a percent of the federal poverty level designated by the department, based on appropriations for
293     the program; and
294          (b) to allow temporary residential treatment for substance abuse, for the traditional
295     Medicaid population, in a short term, non-institutional, 24-hour facility, without a bed capacity
296     limit that provides rehabilitation services that are medically necessary and in accordance with
297     an individualized treatment plan, as approved by CMS and as long as the county makes the
298     required match under Section 17-43-201.
299          (7) The current Medicaid program and the health coverage improvement program,
300     when implemented, shall coordinate with a state prison or county jail to expedite Medicaid
301     enrollment for an individual who is released from custody and was eligible for or enrolled in
302     Medicaid before incarceration.
303          (8) Notwithstanding Sections 17-43-201 and 17-43-301, a county does not have to
304     provide matching funds to the state for the cost of providing Medicaid services to newly

305     enrolled individuals who qualify for Medicaid coverage under the health coverage
306     improvement program under Subsection (3).
307          (9) The department shall:
308          (a) study, in consultation with health care providers, employers, uninsured families,
309     and community stakeholders:
310          (i) options to maximize use of employer sponsored coverage for current Medicaid
311     enrollees; and
312          (ii) strategies to increase participation of currently Medicaid eligible, and uninsured,
313     children; and
314          (b) report the findings of the study to the Legislature's Health Reform Task Force
315     before November 30, 2016.
316          Section 4. Section 26-36b-101 is enacted to read:

Part 1. General Provisions

319          26-36b-101. Title.
320          This chapter is known as "Inpatient Hospital Assessment Act."
321          Section 5. Section 26-36b-102 is enacted to read:
322          26-36b-102. Application.
323          (1) Other than for the imposition of the assessment described in this chapter, nothing in
324     this chapter shall affect the nonprofit or tax exempt status of any nonprofit charitable, religious,
325     or educational health care provider under:
326          (a) Section 501(c), as amended, of the Internal Revenue Code;
327          (b) other applicable federal law;
328          (c) any state law;
329          (d) any ad valorem property taxes;
330          (e) any sales or use taxes; or
331          (f) any other taxes, fees, or assessments, whether imposed or sought to be imposed, by
332     the state or any political subdivision, county, municipality, district, authority, or any agency or
333     department thereof.
334          (2) All assessments paid under this chapter may be included as an allowable cost of a
335     hospital for purposes of any applicable Medicaid reimbursement formula.

336          (3) This chapter does not authorize a political subdivision of the state to:
337          (a) license a hospital for revenue;
338          (b) impose a tax or assessment upon a hospital; or
339          (c) impose a tax or assessment measured by the income or earnings of a hospital.
340          Section 6. Section 26-36b-103 is enacted to read:
341          26-36b-103. Definitions.
342          As used in this chapter:
343          (1) "Assessment" means the inpatient hospital assessment established by this chapter.
344          (2) "CMS" means the same as that term is defined in Section 26-18-411.
345          (3) "Discharges" means the number of total hospital discharges reported on:
346          (a) Worksheet S-3 Part I, column 15, lines 14, 16, and 17 of the 2552-10 Medicare cost
347     report for the applicable assessment year; or
348          (b) a similar report adopted by the department by administrative rule, if the report
349     under Subsection (3)(a) is no longer available.
350          (4) "Division" means the Division of Health Care Financing within the department.
351          (5) "Medicare cost report" means CMS-2552-10, the cost report for electronic filing of
352     hospitals.
353          (6) "Non-state government hospital":
354          (a) means a hospital owned by a non-state government entity; and
355          (b) does not include:
356          (i) the Utah State Hospital; or
357          (ii) a hospital owned by the federal government, including the Veterans Administration
358     Hospital;
359          (7) "Private hospital":
360          (a) means:
361          (i) a privately owned general acute hospital operating in the state as defined in Section
362     26-21-2; and
363          (ii) a privately owned specialty hospital operating in the state, which shall include a
364     privately owned hospital whose inpatient admissions are predominantly:
365          (A) rehabilitation;
366          (B) psychiatric;

367          (C) chemical dependency; or
368          (D) long-term acute care services; and
369          (b) does not include a residential care or treatment facility as defined in Section
370     62A-2-101.
371          (8) "State teaching hospital" means a state owned teaching hospital that is part of an
372     institution of higher education.
373          Section 7. Section 26-36b-201 is enacted to read:
Part 2. Assessment and Collection

375          26-36b-201. Assessment.
376          (1) An assessment is imposed on each private hospital:
377          (a) beginning upon the later of CMS approval of:
378          (i) the health coverage improvement program waiver under Section 26-18-411; and
379          (ii) the assessment under this chapter;
380          (b) in the amount designated in Sections 26-36b-204 and 26-36b-205; and
381          (c) in accordance with Section 26-36b-202.
382          (2) Subject to Section 26-36b-203, the assessment imposed by this chapter is due and
383     payable on a quarterly basis, after payment of the outpatient upper payment limit supplemental
384     payments under Section 26-36b-210 have been paid.
385          (3) The first quarterly payment shall not be due until at least three months after the
386     effective date of the coverage provided through the health coverage improvement program
387     waiver under Section 26-18-411.
388          Section 8. Section 26-36b-202 is enacted to read:
389          26-36b-202. Collection of assessment -- Deposit of revenue -- Rulemaking.
390          (1) The collecting agent for assessment imposed under Section 26-36b-201 is the
391     department. The department is vested with the administration and enforcement of this chapter,
392     including the right to adopt administrative rules in accordance with Title 63G, Chapter 3, Utah
393     Administrative Rulemaking Act, necessary to:
394          (a) implement and enforce the provisions of this chapter;
395          (b) audit records of a facility that:
396          (i) is subject to the assessment imposed by this chapter; and
397          (ii) does not file a Medicare cost report; and

398          (c) select a report similar to the Medicare cost report if Medicare no longer uses a
399     Medicare cost report.
400          (2) The department shall:
401          (a) administer the assessment in this part separate from the assessment in Chapter 36a,
402     Hospital Provider Assessment Act; and
403          (b) deposit assessments collected under this chapter into the Medicaid Expansion Fund
404     created by Section 26-36b-208.
405          Section 9. Section 26-36b-203 is enacted to read:
406          26-36b-203. Quarterly notice.
407          Quarterly assessments imposed by this chapter shall be paid to the division within 15
408     business days after the original invoice date that appears on the invoice issued by the division.
409     The department may, by rule, extend the time for paying the assessment.
410          Section 10. Section 26-36b-204 is enacted to read:
411          26-36b-204. Hospital financing of health coverage improvement program
412     Medicaid waiver -- Hospital share.
413          (1) For purposes of this section, "hospital share":
414          (a) means 45% of the state's net cost of:
415          (i) the health coverage improvement program Medicaid waiver under Section
416     26-18-411;
417          (ii) Medicaid coverage for individuals with dependent children up to the federal
418     poverty level designated under Section 26-18-411; and
419          (iii) the UPL gap, as that term is defined in Section 26-36b-210;
420          (b) for the hospital share of the additional coverage under Section 26-18-411, is capped
421     at no more than $13,600,000 annually, consisting of:
422          (i) a $11,900,000 cap on the hospital's share for the programs specified in Subsections
423     (1)(a)(i) and (ii); and
424          (ii) a $1,700,000 cap for the program specified in Subsection (1)(a)(iii);
425          (c) for the cap specified in Subsection (1)(b), shall be prorated in any year in which the
426     programs specified in Subsection (1)(a) are not in effect for the full fiscal year; and
427          (d) if the Medicaid program expands in a manner that is greater than the expansion
428     described in Section 26-18-411, is capped at 33% of the state's share of the cost of the

429     expansion that is in addition to the program described in Section 26-18-411.
430          (2) The assessment for the private hospital share under Subsection (1) shall be:
431          (a) 69% of the portion of the hospital share specified in Subsections (1)(a)(i) and (ii);
432     and
433          (b) 100% of the portion of the hospital share specified in Subsection (1)(a)(iii).
434          (3) (a) The department shall, on or before October 15, 2017, and on or before October
435     15 of each year thereafter, produce a report that calculates the state's net cost of the programs
436     described in Subsections (1)(a)(i) and (ii).
437          (b) If the assessment collected in the previous fiscal year is above or below the private
438     hospital's share of the state's net cost as specified in Subsection (2), for the previous fiscal year,
439     the underpayment or overpayment of the assessment by the private hospitals shall be applied to
440     the fiscal year in which the report was issued.
441          (4) A Medicaid accountable care organization shall, on or before October 15 of each
442     year, report to the department the following data from the prior state fiscal year:
443          (a) for the traditional Medicaid population, for each private hospital, state teaching
444     hospital, and non-state government hospital provider:
445          (i) hospital inpatient payments;
446          (ii) hospital inpatient discharges;
447          (iii) hospital inpatient days; and
448          (iv) hospital outpatient payments; and
449          (b) for the Medicaid population newly eligible under Subsection 26-18-411, for each
450     private hospital, state teaching hospital, and non-state government hospital provider:
451          (i) hospital inpatient payments;
452          (ii) hospital inpatient discharges;
453          (iii) hospital inpatient days; and
454          (iv) hospital outpatient payments.
455          Section 11. Section 26-36b-205 is enacted to read:
456          26-36b-205. Calculation of assessment.
457          (1) (a) Except as provided in Subsection (1)(b), an annual assessment is payable on a
458     quarterly basis for each private hospital in an amount calculated at a uniform assessment rate
459     for each hospital discharge, in accordance with this section.

460          (b) A private teaching hospital with more than 425 beds and 60 residents shall pay an
461     assessment rate 2.50 times the uniform rate established under Subsection (1)(c).
462          (c) The uniform assessment rate shall be determined using the total number of hospital
463     discharges for assessed private hospitals, the percentages in Subsection 26-36b-204(2), and rule
464     adopted by the department.
465          (d) Any quarterly changes to the uniform assessment rate shall be applied uniformly to
466     all assessed private hospitals.
467          (2) (a) For each state fiscal year, discharges shall be determined using the data from
468     each hospital's Medicare cost report contained in the Centers for Medicare and Medicaid
469     Services' Healthcare Cost Report Information System file. The hospital's discharge data will be
470     derived as follows:
471          (i) for state fiscal year 2017, the hospital's cost report data for the hospital's fiscal year
472     ending between July 1, 2013, and June 30, 2014; and
473          (ii) for each subsequent state fiscal year, the hospital's cost report data for the hospital's
474     fiscal year that ended in the state fiscal year two years before the assessment fiscal year.
475          (b) If a hospital's fiscal year Medicare cost report is not contained in the Centers for
476     Medicare and Medicaid Services' Healthcare Cost Report Information System file:
477          (i) the hospital shall submit to the division a copy of the hospital's Medicare cost report
478     applicable to the assessment year; and
479          (ii) the division shall determine the hospital's discharges.
480          (c) If a hospital is not certified by the Medicare program and is not required to file a
481     Medicare cost report:
482          (i) the hospital shall submit to the division the hospital's applicable fiscal year
483     discharges with supporting documentation;
484          (ii) the division shall determine the hospital's discharges from the information
485     submitted under Subsection (2)(c)(i); and
486          (iii) the failure to submit discharge information shall result in an audit of the hospital's
487     records and a penalty equal to 5% of the calculated assessment.
488          (3) Except as provided in Subsection (4), if a hospital is owned by an organization that
489     owns more than one hospital in the state:
490          (a) the assessment for each hospital shall be separately calculated by the department;

491     and
492          (b) each separate hospital shall pay the assessment imposed by this chapter.
493          (4) Notwithstanding the requirement of Subsection (3), if multiple hospitals use the
494     same Medicaid provider number:
495          (a) the department shall calculate the assessment in the aggregate for the hospitals
496     using the same Medicaid provider number; and
497          (b) the hospitals may pay the assessment in the aggregate.
498          Section 12. Section 26-36b-206 is enacted to read:
499          26-36b-206. State teaching hospital and non-state government hospital mandatory
500     intergovernmental transfer.
501          (1) A state teaching hospital and a non-state government hospital shall make an
502     intergovernmental transfer to the Medicaid Expansion Fund created in Section 26-36b-208, in
503     accordance with this section.
504          (2) The intergovernmental transfer shall be paid beginning on the later of CMS
505     approval of:
506          (a) the health improvement program waiver under Section 26-18-411;
507          (b) the assessment for private hospitals in this chapter; and
508          (c) the intergovernmental transfer in this section.
509          (3) The intergovernmental transfer shall be paid in an amount divided as follows:
510          (a) the state teaching hospital is responsible for:
511          (i) 30% of the portion of the hospital share specified in Subsections
512     26-36b-204(1)(a)(i) and (ii); and
513          (ii) 0% of the hospital share specified in Subsection 26-36b-204(1)(a)(iii); and
514          (b) non-state government hospitals are responsible for:
515          (i) 1% of the portion of the hospital share specified in Subsections 26-36b-204(1)(a)(i)
516     and (ii); and
517          (ii) 0% of the hospital share specified in Subsection 26-36b-204(1)(a)(iii).
518          (4) The department shall, by rule made in accordance with Title 63G, Chapter 3, Utah
519     Administrative Rulemaking Act, designate the method of calculating the percentages
520     designated in Subsection (3) and the schedule for the intergovernmental transfers.
521          Section 13. Section 26-36b-207 is enacted to read:

522          26-36b-207. Penalties and interest.
523          (1) A hospital that fails to pay any assessment, make the mandated intergovernmental
524     transfer, or file a return as required under this chapter, within the time required by this chapter,
525     shall pay penalties, in addition to the assessment or intergovernmental transfer, and interest
526     established by the department.
527          (2) (a) Consistent with Subsection (2)(b), the department shall adopt rules in
528     accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, that establish
529     reasonable penalties and interest for the violations described in Subsection (1).
530          (b) If a hospital fails to timely pay the full amount of a quarterly assessment or the
531     mandated intergovernmental transfer, the department shall add to the assessment or
532     intergovernmental transfer:
533          (i) a penalty equal to 5% of the quarterly amount not paid on or before the due date;
534     and
535          (ii) on the last day of each quarter after the due date until the assessed amount and the
536     penalty imposed under Subsection (2)(b)(i) are paid in full, an additional 5% penalty on:
537          (A) any unpaid quarterly assessment or intergovernmental transfer; and
538          (B) any unpaid penalty assessment.
539          (c) Upon making a record of the division's actions, and upon reasonable cause shown,
540     the division may waive, reduce, or compromise any of the penalties imposed under this
541     chapter.
542          Section 14. Section 26-36b-208 is enacted to read:
543          26-36b-208. Medicaid Expansion Fund.
544          (1) There is created an expendable special revenue fund known as the Medicaid
545     Expansion Fund.
546          (2) The fund consists of:
547          (a) assessments collected under this chapter;
548          (b) intergovernmental transfers under Section 26-36b-206;
549          (c) savings attributable to the health coverage improvement program under Section
550     26-18-411 as determined by the department;
551          (d) savings attributable to the inclusion of psychotropic drugs on the preferred drug list
552     under Subsection 26-18-2.4(3) as determined by the department;

553          (e) savings attributable to the services provided by the Public Employees' Health Plan
554     under Subsection 49-20-401(1)(u);
555          (f) gifts, grants, donations, or any other conveyance of money that may be made to the
556     fund from private sources; and
557          (g) additional amounts as appropriated by the Legislature.
558          (3) (a) The fund shall earn interest.
559          (b) All interest earned on fund money shall be deposited into the fund.
560          (4) (a) A state agency administering the provisions of this chapter may use money from
561     the fund to pay the costs of the health coverage improvement Medicaid waiver under Section
562     26-18-411, and the outpatient UPL supplemental payments under Section 26-36b-210, not
563     otherwise paid for with federal funds or other revenue sources, except that no funds described
564     in Subsection (2)(b) may be used to pay the cost of outpatient UPL supplemental payments.
565          (b) Money in the fund may not be used for any other purpose.
566          Section 15. Section 26-36b-209 is enacted to read:
567          26-36b-209. Hospital reimbursement.
568          The department shall, to the extent allowed by law, include in a contract with a
569     Medicaid accountable care organization a requirement that the accountable care organization
570     reimburse hospitals in the accountable care organization's provider network, no less than the
571     Medicaid fee-for-service rate. Nothing in this section prohibits a Medicaid accountable care
572     organization from paying a rate that exceeds Medicaid fee-for-service rates.
573          Section 16. Section 26-36b-210 is enacted to read:
574          26-36b-210. Outpatient upper payment limit supplemental payments.
575          (1) For purposes of this section, "UPL gap" means the difference between the private
576     hospital outpatient upper payment limit and the private hospital Medicaid outpatient payments,
577     as determined in accordance with 42 C.F.R. 447.321.
578          (2) Beginning on the effective date of the assessment imposed under this chapter, and
579     for each fiscal year thereafter, the department shall implement an outpatient upper payment
580     limit program for private hospitals that shall supplement the reimbursement to private hospitals
581     in accordance with Subsection (3).
582          (3) The supplemental payment to Utah private hospitals under Subsection (2) shall:
583          (a) not exceed the positive UPL gap; and

584          (b) be allocated based on the Medicaid state plan.
585          (4) The outpatient data used to calculate the UPL gap under Subsection (1) shall be the
586     same outpatient data used to allocate the payments under Subsection (3).
587          (5) The supplemental payments to private hospitals under Subsection (2) shall be
588     payable for outpatient hospital services provided on or after the later of:
589          (a) July 1, 2016;
590          (b) the effective date of the Medicaid state plan amendment necessary to implement the
591     payments under this section; or
592          (c) the effective date of the coverage provided through the health coverage
593     improvement program waiver under Section 26-18-411.
594          Section 17. Section 26-36b-211 is enacted to read:
595          26-36b-211. Repeal of assessment.
596          (1) The repeal of the assessment imposed by this chapter shall occur upon the
597     certification by the executive director of the department that the sooner of the following has
598     occurred:
599          (a) the effective date of any action by Congress that would disqualify the assessment
600     imposed by this chapter from counting toward state Medicaid funds available to be used to
601     determine the federal financial participation;
602          (b) the effective date of any decision, enactment, or other determination by the
603     Legislature or by any court, officer, department, or agency of the state, or of the federal
604     government, that has the effect of:
605          (i) disqualifying the assessment from counting toward state Medicaid funds available
606     to be used to determine federal financial participation for Medicaid matching funds; or
607          (ii) creating for any reason a failure of the state to use the assessments for the Medicaid
608     program as described in this chapter;
609          (c) the effective date of a change that reduces the aggregate hospital inpatient and
610     outpatient payment rate below the aggregate hospital inpatient and outpatient payment rate for
611     July 1, 2015; and
612          (d) the sunset of this chapter in accordance with Section 63I-1-226.
613          (2) If the assessment is repealed under Subsection (1), money in the fund that was
614     derived from assessments imposed by this chapter, before the determination made under

615     Subsection (1), shall be disbursed under Section 26-36b-207 to the extent federal matching is
616     not reduced due to the impermissibility of the assessments. Any funds remaining in the special
617     revenue fund shall be refunded to the hospitals in proportion to the amount paid by each
618     hospital.
619          Section 18. Section 49-20-401 is amended to read:
620          49-20-401. Program -- Powers and duties.
621          (1) The program shall:
622          (a) act as a self-insurer of employee benefit plans and administer those plans;
623          (b) enter into contracts with private insurers or carriers to underwrite employee benefit
624     plans as considered appropriate by the program;
625          (c) indemnify employee benefit plans or purchase commercial reinsurance as
626     considered appropriate by the program;
627          (d) provide descriptions of all employee benefit plans under this chapter in cooperation
628     with covered employers;
629          (e) process claims for all employee benefit plans under this chapter or enter into
630     contracts, after competitive bids are taken, with other benefit administrators to provide for the
631     administration of the claims process;
632          (f) obtain an annual actuarial review of all health and dental benefit plans and a
633     periodic review of all other employee benefit plans;
634          (g) consult with the covered employers to evaluate employee benefit plans and develop
635     recommendations for benefit changes;
636          (h) annually submit a budget and audited financial statements to the governor and
637     Legislature which includes total projected benefit costs and administrative costs;
638          (i) maintain reserves sufficient to liquidate the unrevealed claims liability and other
639     liabilities of the employee benefit plans as certified by the program's consulting actuary;
640          (j) submit, in advance, its recommended benefit adjustments for state employees to:
641          (i) the Legislature; and
642          (ii) the executive director of the state Department of Human Resource Management;
643          (k) determine benefits and rates, upon approval of the board, for multiemployer risk
644     pools, retiree coverage, and conversion coverage;
645          (l) determine benefits and rates based on the total estimated costs and the employee

646     premium share established by the Legislature, upon approval of the board, for state employees;
647          (m) administer benefits and rates, upon ratification of the board, for single employer
648     risk pools;
649          (n) request proposals for provider networks or health and dental benefit plans
650     administered by third party carriers at least once every three years for the purposes of:
651          (i) stimulating competition for the benefit of covered individuals;
652          (ii) establishing better geographical distribution of medical care services; and
653          (iii) providing coverage for both active and retired covered individuals;
654          (o) offer proposals which meet the criteria specified in a request for proposals and
655     accepted by the program to active and retired state covered individuals and which may be
656     offered to active and retired covered individuals of other covered employers at the option of the
657     covered employer;
658          (p) perform the same functions established in Subsections (1)(a), (b), (e), and (h) for
659     the Department of Health if the program provides program benefits to children enrolled in the
660     Utah Children's Health Insurance Program created in Title 26, Chapter 40, Utah Children's
661     Health Insurance Act;
662          (q) establish rules and procedures governing the admission of political subdivisions or
663     educational institutions and their employees to the program;
664          (r) contract directly with medical providers to provide services for covered individuals;
665          (s) take additional actions necessary or appropriate to carry out the purposes of this
666     chapter; [and]
667          (t) (i) require state employees and their dependents to participate in the electronic
668     exchange of clinical health records in accordance with Section 26-1-37 unless the enrollee opts
669     out of participation; and
670          (ii) prior to enrolling the state employee, each time the state employee logs onto the
671     program's website, and each time the enrollee receives written enrollment information from the
672     program, provide notice to the enrollee of the enrollee's participation in the electronic exchange
673     of clinical health records and the option to opt out of participation at any time[.]; and
674          (u) provide services for drugs or medical devices at the request of a procurement unit,
675     as that term is defined in Section 63G-6a-104, that administers benefits to program recipients
676     who are not covered by Title 26, Utah Health Code.

677          (2) (a) Funds budgeted and expended shall accrue from rates paid by the covered
678     employers and covered individuals.
679          (b) Administrative costs shall be approved by the board and reported to the governor
680     and the Legislature.
681          (3) The Department of Human Resource Management shall include the benefit
682     adjustments described in Subsection (1)(j) in the total compensation plan recommended to the
683     governor required under Subsection 67-19-12(5)(a).
684          Section 19. Section 63I-1-226 is amended to read:
685          63I-1-226. Repeal dates, Title 26.
686          (1) Title 26, Chapter 9f, Utah Digital Health Service Commission Act, is repealed July
687     1, 2025.
688          (2) Section 26-10-11 is repealed July 1, 2020.
689          (3) Section 26-21-23, Licensing of non-Medicaid nursing care facility beds, is repealed
690     July 1, 2018.
691          (4) Title 26, Chapter 33a, Utah Health Data Authority Act, is repealed July 1, 2024.
692          (5) Title 26, Chapter 36a, Hospital Provider Assessment Act, is repealed July 1, 2016.
693          (6) Title 26, Chapter 36b, Inpatient Hospital Assessment Act, is repealed July 1, 2021.
694          [(6)] (7) Section 26-38-2.5 is repealed July 1, 2017.
695          [(7)] (8) Section 26-38-2.6 is repealed July 1, 2017.
696          [(8)] (9) Title 26, Chapter 56, Hemp Extract Registration Act, is repealed July 1, 2016.
697          Section 20. Appropriation.
698          Under the terms and conditions of Title 63J, Chapter 1, Budgetary Procedures Act, for
699     the fiscal year beginning July 1, 2016, and ending June 30, 2017, the following sums of money
700     are appropriated from resources not otherwise appropriated, or reduced from amounts
701     previously appropriated, out of the funds or amounts indicated. These sums of money are in
702     addition to amounts previously appropriated for fiscal year 2017.
703          To Fund and Account Transfers -- State Endowment Fund
704               From General Fund Restricted -- Tobacco Settlement Account

705               Schedule of Programs:
706                    State Endowment Fund                    ($1,488,700)
707          To Department of Health -- Medicaid Optional Services

708               From General Fund

709               From General Fund Restricted -- Tobacco Settlement Account

710          To Department of Human Services -- Substance Abuse and Mental Health
711               From General Fund

712               From General Fund, one-time
$ Ĥ→ [498,000] 419,800 ←Ĥ

713               From Federal Funds

714               From Federal Funds, one-time            Ĥ→ [
($498,000)] ($419,800) ←Ĥ
715          To Department of Human Services -- Child and Family Services
716               From General Fund

717               Schedule of Programs:
718                    Out-of-home Care                         ($200,000)
719          To Department of Health -- Medicaid Expansion Fund
720               From General Fund

721               From General Fund, one-time            Ĥ→ [
($498,000)] ($419,800) ←Ĥ
722               Schedule of Programs:
723                    Medicaid Expansion Fund            Ĥ→ [
$2,010,500] $2,088,700 ←Ĥ
724          Section 21. Coordinating H.B. 437 with H.B. 18 -- Superseding amendment.
725          If this H.B. 437 and H.B. 18, Medicaid Preferred Drug List Amendments, both pass and
726     become law, it is the intent of the Legislature that the amendments to Section 26-18-2.4 in this
727     bill supersede the amendments to Section 26-18-2.4 in H.B. 18, when the Office of Legislative
728     Research and General Counsel prepares the Utah Code database for publication.