Chief Sponsor: James A. Dunnigan

Senate Sponsor: Allen M. Christensen

6     Cosponsors:
7     Johnny Anderson
8     LaVar Christensen
9     Kay J. Christofferson
10     Fred C. Cox
11     Bruce R. Cutler
12     Brad M. Daw
13     Brad L. Dee
14     Sophia M. DiCaro
15     Jack R. Draxler
16     Rebecca P. Edwards
17     Steve Eliason
18     Gage Froerer
19     Keith Grover
Craig Hall
Stephen G. Handy
Timothy D. Hawkes
Gregory H. Hughes
Eric K. Hutchings
Don L. Ipson
Kay L. McIff
Merrill F. Nelson
Michael E. Noel
Derrin Owens
Lee B. Perry
Jeremy A. Peterson
Dixon M. Pitcher
Kraig Powell
Paul Ray
Edward H. Redd
Douglas V. Sagers
Scott D. Sandall
V. Lowry Snow
Robert M. Spendlove
Keven J. Stratton
Earl D. Tanner
Norman K Thurston
Raymond P. Ward
R. Curt Webb
John R. Westwood

22     General Description:
23          This bill implements a health coverage improvement program through Medicaid waiver
24     authority granted to states before the federal Patient Protection and Affordable Care
25     Act, and establishes a funding mechanism for the waiver program.
26     Highlighted Provisions:
27          This bill:
28          ▸     authorizes a preferred drug list for psychotropic drugs with an override for dispense

29     as written;
30          ▸     establishes targets for savings from the preferred drug list;
31          ▸     authorizes the Department of Health to apply for waivers from federal law necessary
32     to implement a health coverage improvement program in Medicaid;
33          ▸     distinguishes the health coverage improvement program from Medicaid expansion
34     under the Affordable Care Act;
35          ▸     defines terms;
36          ▸     describes the Medicaid waiver request;
37          ▸     permits a waiver enrollee to maintain Medicaid coverage for 12 months;
38          ▸     provides eligibility criteria;
39          ▸     amends the county matching funds for enrollees in the health coverage improvement
40     program;
41          ▸     expands Medicaid eligibility for adults with dependent children;
42          ▸     requires the Department of Health to apply for a waiver for the existing Medicaid
43     population and the enrollees in the health coverage improvement program to allow
44     substance abuse treatment at facilities with no bed capacity limits;
45          ▸     enhances the efficiency of Medicaid enrollment for adults released from
46     incarceration;
47          ▸     establishes an inpatient private hospital assessment to fund the Medicaid waiver;
48          ▸     establishes a mandatory intergovernmental transfer of funds from the state teaching
49     hospital and certain other government owned hospitals to fund the Medicaid waiver;
50          ▸     authorizes the Public Employees' Benefit and Insurance Program to provide services
51     for drugs and devices for certain individuals at the request of a procurement unit;
52     and
53          ▸     requires the Department of Health to study methods to increase coverage to
54     uninsured low income adults with children and to maximize the use of employer
55     sponsored coverage.
56     Money Appropriated in this Bill:

57          This bill appropriates $2,508,500 ongoing General Fund from other programs to the
58     Medicaid Expansion Fund and makes changes to other funds.
59     Other Special Clauses:
60          None
61     Utah Code Sections Affected:
62     AMENDS:
63          26-18-2.4, as last amended by Laws of Utah 2012, Chapters 242 and 343
64          26-18-18, as last amended by Laws of Utah 2015, Chapter 283
65          49-20-401, as last amended by Laws of Utah 2015, Chapter 155
66          63I-1-226, as last amended by Laws of Utah 2015, Chapters 16, 31, and 258
67     ENACTS:
68          26-18-411, Utah Code Annotated 1953
69          26-36b-101, Utah Code Annotated 1953
70          26-36b-102, Utah Code Annotated 1953
71          26-36b-103, Utah Code Annotated 1953
72          26-36b-201, Utah Code Annotated 1953
73          26-36b-202, Utah Code Annotated 1953
74          26-36b-203, Utah Code Annotated 1953
75          26-36b-204, Utah Code Annotated 1953
76          26-36b-205, Utah Code Annotated 1953
77          26-36b-206, Utah Code Annotated 1953
78          26-36b-207, Utah Code Annotated 1953
79          26-36b-208, Utah Code Annotated 1953
80          26-36b-209, Utah Code Annotated 1953
81          26-36b-210, Utah Code Annotated 1953
82          26-36b-211, Utah Code Annotated 1953

84     Be it enacted by the Legislature of the state of Utah:

85          Section 1. Section 26-18-2.4 is amended to read:
86          26-18-2.4. Medicaid drug program -- Preferred drug list.
87          (1) A Medicaid drug program developed by the department under Subsection
88     26-18-2.3(2)(f):
89          (a) shall, notwithstanding Subsection 26-18-2.3(1)(b), be based on clinical and
90     cost-related factors which include medical necessity as determined by a provider in accordance
91     with administrative rules established by the Drug Utilization Review Board;
92          (b) may include therapeutic categories of drugs that may be exempted from the drug
93     program;
94          (c) may include placing some drugs, except the drugs described in Subsection (2), on a
95     preferred drug list:
96          (i) to the extent determined appropriate by the department; and
97          (ii) in the manner described in Subsection (3) for psychotropic drugs;
98          (d) notwithstanding the requirements of Part 2, Drug Utilization Review Board, and
99     except as provided in Subsection (3), shall immediately implement the prior authorization
100     requirements for a nonpreferred drug that is in the same therapeutic class as a drug that is:
101          (i) on the preferred drug list on the date that this act takes effect; or
102          (ii) added to the preferred drug list after this act takes effect; and
103          (e) except as prohibited by Subsections 58-17b-606(4) and (5), shall establish the prior
104     authorization requirements established under Subsections (1)(c) and (d) which shall permit a
105     health care provider or the health care provider's agent to obtain a prior authorization override
106     of the preferred drug list through the department's pharmacy prior authorization review process,
107     and which shall:
108          (i) provide either telephone or fax approval or denial of the request within 24 hours of
109     the receipt of a request that is submitted during normal business hours of Monday through
110     Friday from 8 a.m. to 5 p.m.;
111          (ii) provide for the dispensing of a limited supply of a requested drug as determined
112     appropriate by the department in an emergency situation, if the request for an override is

113     received outside of the department's normal business hours; and
114          (iii) require the health care provider to provide the department with documentation of
115     the medical need for the preferred drug list override in accordance with criteria established by
116     the department in consultation with the Pharmacy and Therapeutics Committee.
117          (2) (a) For purposes of this Subsection (2):
118          (i) "Immunosuppressive drug":
119          (A) means a drug that is used in immunosuppressive therapy to inhibit or prevent
120     activity of the immune system to aid the body in preventing the rejection of transplanted organs
121     and tissue; and
122          (B) does not include drugs used for the treatment of autoimmune disease or diseases
123     that are most likely of autoimmune origin.
124          [(ii) "Psychotropic drug" means the following classes of drugs: atypical anti-psychotic,
125     anti-depressants, anti-convulsant/mood stabilizer, anti-anxiety, attention deficit hyperactivity
126     disorder stimulants, or sedative/hypnotics.]
127          [(iii)] (ii) "Stabilized" means a health care provider has documented in the patient's
128     medical chart that a patient has achieved a stable or steadfast medical state within the past 90
129     days using a particular psychotropic drug.
130          (b) A preferred drug list developed under the provisions of this section may not
131     include[: (i) except as provided in Subsection (2)(e), a psychotropic or anti-psychotic drug; or
132     (ii)] an immunosuppressive drug.
133          (c) The state Medicaid program shall reimburse for a prescription for an
134     immunosuppressive drug as written by the health care provider for a patient who has undergone
135     an organ transplant. For purposes of Subsection 58-17b-606(4), and with respect to patients
136     who have undergone an organ transplant, the prescription for a particular immunosuppressive
137     drug as written by a health care provider meets the criteria of demonstrating to the Department
138     of Health a medical necessity for dispensing the prescribed immunosuppressive drug.
139          (d) Notwithstanding the requirements of Part 2, Drug Utilization Review Board, the
140     state Medicaid drug program may not require the use of step therapy for immunosuppressive

141     drugs without the written or oral consent of the health care provider and the patient.
142          (e) The department may include a sedative hypnotic on a preferred drug list in
143     accordance with Subsection (2)(f).
144          (f) The department shall grant a prior authorization for a sedative hypnotic that is not
145     on the preferred drug list under Subsection (2)(e), if the health care provider has documentation
146     related to one of the following conditions for the Medicaid client:
147          (i) a trial and failure of at least one preferred agent in the drug class, including the
148     name of the preferred drug that was tried, the length of therapy, and the reason for the
149     discontinuation;
150          (ii) detailed evidence of a potential drug interaction between current medication and
151     the preferred drug;
152          (iii) detailed evidence of a condition or contraindication that prevents the use of the
153     preferred drug;
154          (iv) objective clinical evidence that a patient is at high risk of adverse events due to a
155     therapeutic interchange with a preferred drug;
156          (v) the patient is a new or previous Medicaid client with an existing diagnosis
157     previously stabilized with a nonpreferred drug; or
158          (vi) other valid reasons as determined by the department.
159          (g) A prior authorization granted under Subsection (2)(f) is valid for one year from the
160     date the department grants the prior authorization and shall be renewed in accordance with
161     Subsection (2)(f).
162          (3) (a) For purposes of this Subsection (3), "psychotropic drug" means the following
163     classes of drugs:
164          (i) atypical anti-psychotic;
165          (ii) anti-depressant;
166          (iii) anti-convulsant/mood stabilizer;
167          (iv) anti-anxiety; and
168          (v) attention deficit hyperactivity disorder stimulant.

169          (b) The department shall develop a preferred drug list for psychotropic drugs. Except
170     as provided in Subsection (3)(d), a preferred drug list for psychotropic drugs developed under
171     this section shall allow a health care provider to override the preferred drug list by writing
172     "dispense as written" on the prescription for the psychotropic drug. A health care provider may
173     not override Section 58-17b-606 by writing "dispense as written" on a prescription.
174          (c) The department, and a Medicaid accountable care organization that is responsible
175     for providing behavioral health, shall:
176          (i) establish a system to:
177          (A) track health care provider prescribing patterns for psychotropic drugs;
178          (B) educate health care providers who are not complying with the preferred drug list;
179     and
180          (C) implement peer to peer education for health care providers whose prescribing
181     practices continue to not comply with the preferred drug list; and
182          (ii) determine whether health care provider compliance with the preferred drug list is at
183     least:
184          (A) 55% of prescriptions by July 1, 2017;
185          (B) 65% of prescriptions by July 1, 2018; and
186          (C) 75% of prescriptions by July 1, 2019.
187          (d) Beginning October 1, 2019, the department shall eliminate the dispense as written
188     override for the preferred drug list, and shall implement a prior authorization system for
189     psychotropic drugs, in accordance with Subsection (2)(f), if by July 1, 2019, the department has
190     not realized annual savings from implementing the preferred drug list for psychotropic drugs of
191     at least $750,000 General Fund savings.
192          (e) The department shall report to the Health and Human Services Interim Committee
193     and the Social Services Appropriations Subcommittee before November 30, 2016, and before
194     each November 30 thereafter regarding compliance with and savings from implementation of
195     this Subsection (3).
196          [(3)] (4) The department shall report to the Health and Human Services Interim

197     Committee and to the Social Services Appropriations Subcommittee [prior to] before
198     November 1, 2013, regarding the savings to the Medicaid program resulting from the use of the
199     preferred drug list permitted by Subsection (1).
200          Section 2. Section 26-18-18 is amended to read:
201          26-18-18. Optional Medicaid expansion.
202          (1) For purposes of this section [PPACA is as], "PPACA" means the same as that term
203     is defined in Section 31A-1-301.
204          (2) The department and the governor shall not expand the state's Medicaid program to
205     the optional population under PPACA unless:
206          [(a) the Health Reform Task Force has completed a thorough analysis of a statewide
207     charity care system;]
208          [(b) the department and its contractors have:]
209          [(i) completed a thorough analysis of the impact to the state of expanding the state's
210     Medicaid program to optional populations under PPACA; and]
211          [(ii) made the analysis conducted under Subsection (2)(b)(i) available to the public;]
212          [(c)] (a) the governor or the governor's designee has reported the intention to expand
213     the state Medicaid program under PPACA to the Legislature in compliance with the legislative
214     review process in Sections 63N-11-106 and 26-18-3; and
215          [(d)] (b) notwithstanding Subsection 63J-5-103(2), the governor submits the request
216     for expansion of the Medicaid program for optional populations to the Legislature under the
217     high impact federal funds request process required by Section 63J-5-204, Legislative review
218     and approval of certain federal funds request.
219          (3) The department shall request approval from the Centers for Medicare and Medicaid
220     Services within the United States Department of Health and Human Services for waivers from
221     federal statutory and regulatory law necessary to implement the health coverage improvement
222     program under Section 26-18-411. The health coverage improvement program under Section
223     26-18-411 is not Medicaid expansion for purposes of this section.
224          Section 3. Section 26-18-411 is enacted to read:

225          26-18-411. Health coverage improvement program -- Eligibility -- Annual report
226     -- Expansion of eligibility for adults with dependent children.
227          (1) For purposes of this section:
228          (a) "Adult in the expansion population" means an individual who:
229          (i) is described in 42 U.S.C. Sec. 1396a(10)(A)(i)(VIII); and
230          (ii) is not otherwise eligible for Medicaid as a mandatory categorically needy
231     individual.
232          (b) "CMS" means the Centers for Medicare and Medicaid Services within the United
233     States Department of Health and Human Services.
234          (c) "Federal poverty level" means the poverty guidelines established by the Secretary of
235     the United States Department of Health and Human Services under 42 U.S.C. Sec. 9909(2).
236          (d) "Homeless":
237          (i) means an individual who is chronically homeless, as determined by the department;
238     and
239          (ii) includes someone who was chronically homeless and is currently living in
240     supported housing for the chronically homeless.
241          (e) "Income eligibility ceiling" means the percent of federal poverty level:
242          (i) established by the state in an appropriations act adopted pursuant to Title 63J,
243     Chapter 1, Budgetary Procedures Act; and
244          (ii) under which an individual may qualify for Medicaid coverage in accordance with
245     this section.
246          (2) (a) No later than July 1, 2016, the division shall submit to CMS a request for
247     waivers, or an amendment of existing waivers, from federal statutory and regulatory law
248     necessary for the state to implement the health coverage improvement program in the Medicaid
249     program in accordance with this section.
250          (b) An adult in the expansion population is eligible for Medicaid if the adult meets the
251     income eligibility and other criteria established under Subsection (3).
252          (c) An adult who qualifies under Subsection (3) shall receive Medicaid coverage:

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

281     treatment; and
282          (B) in need of substance abuse treatment or mental health treatment, as determined by
283     the department; or
284          (iii) if funding is available, an individual in need of substance abuse treatment or
285     mental health treatment, as determined by the department.
286          (c) An individual who qualifies for Medicaid coverage under Subsections (3)(a) and (b)
287     may remain on the Medicaid program for a 12-month certification period as defined by the
288     department. Eligibility changes made by the department under Subsection (1)(e) or (3)(b) shall
289     not apply to an individual during the 12-month certification period.
290          (4) The state may request a modification of the income eligibility ceiling and other
291     eligibility criteria under Subsection (3) each fiscal year based on enrollment in the health
292     coverage improvement program, projected enrollment, costs to the state, and the state budget.
293          (5) On or before September 30, 2017, and on or before September 30 each year
294     thereafter, the department shall report to the Legislature's Health and Human Services Interim
295     Committee and to the Legislature's Executive Appropriations Committee:
296          (a) the number of individuals who enrolled in Medicaid under Subsection (3);
297          (b) the state cost of providing Medicaid to individuals enrolled under Subsection (3);
298     and
299          (c) recommendations for adjusting the income eligibility ceiling under Subsection (4),
300     and other eligibility criteria under Subsection (3), for the upcoming fiscal year.
301          (6) In addition to the waiver under Subsection (2), beginning July 1, 2016, the
302     department shall amend the state Medicaid plan:
303          (a) for an individual with a dependent child, to increase the income eligibility ceiling to
304     a percent of the federal poverty level designated by the department, based on appropriations for
305     the program; and
306          (b) to allow temporary residential treatment for substance abuse, for the traditional
307     Medicaid population, in a short term, non-institutional, 24-hour facility, without a bed capacity
308     limit that provides rehabilitation services that are medically necessary and in accordance with

309     an individualized treatment plan, as approved by CMS and as long as the county makes the
310     required match under Section 17-43-201.
311          (7) The current Medicaid program and the health coverage improvement program,
312     when implemented, shall coordinate with a state prison or county jail to expedite Medicaid
313     enrollment for an individual who is released from custody and was eligible for or enrolled in
314     Medicaid before incarceration.
315          (8) Notwithstanding Sections 17-43-201 and 17-43-301, a county does not have to
316     provide matching funds to the state for the cost of providing Medicaid services to newly
317     enrolled individuals who qualify for Medicaid coverage under the health coverage
318     improvement program under Subsection (3).
319          (9) The department shall:
320          (a) study, in consultation with health care providers, employers, uninsured families,
321     and community stakeholders:
322          (i) options to maximize use of employer sponsored coverage for current Medicaid
323     enrollees; and
324          (ii) strategies to increase participation of currently Medicaid eligible, and uninsured,
325     children; and
326          (b) report the findings of the study to the Legislature's Health Reform Task Force
327     before November 30, 2016.
328          Section 4. Section 26-36b-101 is enacted to read:

Part 1. General Provisions

331          26-36b-101. Title.
332          This chapter is known as "Inpatient Hospital Assessment Act."
333          Section 5. Section 26-36b-102 is enacted to read:
334          26-36b-102. Application.
335          (1) Other than for the imposition of the assessment described in this chapter, nothing in
336     this chapter shall affect the nonprofit or tax exempt status of any nonprofit charitable, religious,

337     or educational health care provider under:
338          (a) Section 501(c), as amended, of the Internal Revenue Code;
339          (b) other applicable federal law;
340          (c) any state law;
341          (d) any ad valorem property taxes;
342          (e) any sales or use taxes; or
343          (f) any other taxes, fees, or assessments, whether imposed or sought to be imposed, by
344     the state or any political subdivision, county, municipality, district, authority, or any agency or
345     department thereof.
346          (2) All assessments paid under this chapter may be included as an allowable cost of a
347     hospital for purposes of any applicable Medicaid reimbursement formula.
348          (3) This chapter does not authorize a political subdivision of the state to:
349          (a) license a hospital for revenue;
350          (b) impose a tax or assessment upon a hospital; or
351          (c) impose a tax or assessment measured by the income or earnings of a hospital.
352          Section 6. Section 26-36b-103 is enacted to read:
353          26-36b-103. Definitions.
354          As used in this chapter:
355          (1) "Assessment" means the inpatient hospital assessment established by this chapter.
356          (2) "CMS" means the same as that term is defined in Section 26-18-411.
357          (3) "Discharges" means the number of total hospital discharges reported on:
358          (a) Worksheet S-3 Part I, column 15, lines 14, 16, and 17 of the 2552-10 Medicare cost
359     report for the applicable assessment year; or
360          (b) a similar report adopted by the department by administrative rule, if the report
361     under Subsection (3)(a) is no longer available.
362          (4) "Division" means the Division of Health Care Financing within the department.
363          (5) "Medicare cost report" means CMS-2552-10, the cost report for electronic filing of
364     hospitals.

365          (6) "Non-state government hospital":
366          (a) means a hospital owned by a non-state government entity; and
367          (b) does not include:
368          (i) the Utah State Hospital; or
369          (ii) a hospital owned by the federal government, including the Veterans Administration
370     Hospital.
371          (7) "Private hospital":
372          (a) means:
373          (i) a privately owned general acute hospital operating in the state as defined in Section
374     26-21-2; and
375          (ii) a privately owned specialty hospital operating in the state, which shall include a
376     privately owned hospital whose inpatient admissions are predominantly:
377          (A) rehabilitation;
378          (B) psychiatric;
379          (C) chemical dependency; or
380          (D) long-term acute care services; and
381          (b) does not include a residential care or treatment facility as defined in Section
382     62A-2-101.
383          (8) "State teaching hospital" means a state owned teaching hospital that is part of an
384     institution of higher education.
385          Section 7. Section 26-36b-201 is enacted to read:
Part 2. Assessment and Collection

387          26-36b-201. Assessment.
388          (1) An assessment is imposed on each private hospital:
389          (a) beginning upon the later of CMS approval of:
390          (i) the health coverage improvement program waiver under Section 26-18-411; and
391          (ii) the assessment under this chapter;
392          (b) in the amount designated in Sections 26-36b-204 and 26-36b-205; and

393          (c) in accordance with Section 26-36b-202.
394          (2) Subject to Section 26-36b-203, the assessment imposed by this chapter is due and
395     payable on a quarterly basis, after payment of the outpatient upper payment limit supplemental
396     payments under Section 26-36b-210 have been paid.
397          (3) The first quarterly payment shall not be due until at least three months after the
398     effective date of the coverage provided through the health coverage improvement program
399     waiver under Section 26-18-411.
400          Section 8. Section 26-36b-202 is enacted to read:
401          26-36b-202. Collection of assessment -- Deposit of revenue -- Rulemaking.
402          (1) The collecting agent for the assessment imposed under Section 26-36b-201 is the
403     department. The department is vested with the administration and enforcement of this chapter,
404     including the right to adopt administrative rules in accordance with Title 63G, Chapter 3, Utah
405     Administrative Rulemaking Act, necessary to:
406          (a) implement and enforce the provisions of this chapter;
407          (b) audit records of a facility that:
408          (i) is subject to the assessment imposed by this chapter; and
409          (ii) does not file a Medicare cost report; and
410          (c) select a report similar to the Medicare cost report if Medicare no longer uses a
411     Medicare cost report.
412          (2) The department shall:
413          (a) administer the assessment in this part separate from the assessment in Chapter 36a,
414     Hospital Provider Assessment Act; and
415          (b) deposit assessments collected under this chapter into the Medicaid Expansion Fund
416     created by Section 26-36b-208.
417          Section 9. Section 26-36b-203 is enacted to read:
418          26-36b-203. Quarterly notice.
419          Quarterly assessments imposed by this chapter shall be paid to the division within 15
420     business days after the original invoice date that appears on the invoice issued by the division.

421     The department may, by rule, extend the time for paying the assessment.
422          Section 10. Section 26-36b-204 is enacted to read:
423          26-36b-204. Hospital financing of health coverage improvement program
424     Medicaid waiver -- Hospital share.
425          (1) For purposes of this section, "hospital share":
426          (a) means 45% of the state's net cost of:
427          (i) the health coverage improvement program Medicaid waiver under Section
428     26-18-411;
429          (ii) Medicaid coverage for individuals with dependent children up to the federal
430     poverty level designated under Section 26-18-411; and
431          (iii) the UPL gap, as that term is defined in Section 26-36b-210;
432          (b) for the hospital share of the additional coverage under Section 26-18-411, is capped
433     at no more than $13,600,000 annually, consisting of:
434          (i) an $11,900,000 cap on the hospital's share for the programs specified in Subsections
435     (1)(a)(i) and (ii); and
436          (ii) a $1,700,000 cap for the program specified in Subsection (1)(a)(iii);
437          (c) for the cap specified in Subsection (1)(b), shall be prorated in any year in which the
438     programs specified in Subsection (1)(a) are not in effect for the full fiscal year; and
439          (d) if the Medicaid program expands in a manner that is greater than the expansion
440     described in Section 26-18-411, is capped at 33% of the state's share of the cost of the
441     expansion that is in addition to the program described in Section 26-18-411.
442          (2) The assessment for the private hospital share under Subsection (1) shall be:
443          (a) 69% of the portion of the hospital share specified in Subsections (1)(a)(i) and (ii);
444     and
445          (b) 100% of the portion of the hospital share specified in Subsection (1)(a)(iii).
446          (3) (a) The department shall, on or before October 15, 2017, and on or before October
447     15 of each year thereafter, produce a report that calculates the state's net cost of the programs
448     described in Subsections (1)(a)(i) and (ii).

449          (b) If the assessment collected in the previous fiscal year is above or below the private
450     hospital's share of the state's net cost as specified in Subsection (2), for the previous fiscal year,
451     the underpayment or overpayment of the assessment by the private hospitals shall be applied to
452     the fiscal year in which the report was issued.
453          (4) A Medicaid accountable care organization shall, on or before October 15 of each
454     year, report to the department the following data from the prior state fiscal year:
455          (a) for the traditional Medicaid population, for each private hospital, state teaching
456     hospital, and non-state government hospital provider:
457          (i) hospital inpatient payments;
458          (ii) hospital inpatient discharges;
459          (iii) hospital inpatient days; and
460          (iv) hospital outpatient payments; and
461          (b) for the Medicaid population newly eligible under Subsection 26-18-411, for each
462     private hospital, state teaching hospital, and non-state government hospital provider:
463          (i) hospital inpatient payments;
464          (ii) hospital inpatient discharges;
465          (iii) hospital inpatient days; and
466          (iv) hospital outpatient payments.
467          Section 11. Section 26-36b-205 is enacted to read:
468          26-36b-205. Calculation of assessment.
469          (1) (a) Except as provided in Subsection (1)(b), an annual assessment is payable on a
470     quarterly basis for each private hospital in an amount calculated at a uniform assessment rate
471     for each hospital discharge, in accordance with this section.
472          (b) A private teaching hospital with more than 425 beds and 60 residents shall pay an
473     assessment rate 2.50 times the uniform rate established under Subsection (1)(c).
474          (c) The uniform assessment rate shall be determined using the total number of hospital
475     discharges for assessed private hospitals, the percentages in Subsection 26-36b-204(2), and rule
476     adopted by the department.

477          (d) Any quarterly changes to the uniform assessment rate shall be applied uniformly to
478     all assessed private hospitals.
479          (2) (a) For each state fiscal year, discharges shall be determined using the data from
480     each hospital's Medicare cost report contained in the Centers for Medicare and Medicaid
481     Services' Healthcare Cost Report Information System file. The hospital's discharge data will be
482     derived as follows:
483          (i) for state fiscal year 2017, the hospital's cost report data for the hospital's fiscal year
484     ending between July 1, 2013, and June 30, 2014; and
485          (ii) for each subsequent state fiscal year, the hospital's cost report data for the hospital's
486     fiscal year that ended in the state fiscal year two years before the assessment fiscal year.
487          (b) If a hospital's fiscal year Medicare cost report is not contained in the Centers for
488     Medicare and Medicaid Services' Healthcare Cost Report Information System file:
489          (i) the hospital shall submit to the division a copy of the hospital's Medicare cost report
490     applicable to the assessment year; and
491          (ii) the division shall determine the hospital's discharges.
492          (c) If a hospital is not certified by the Medicare program and is not required to file a
493     Medicare cost report:
494          (i) the hospital shall submit to the division the hospital's applicable fiscal year
495     discharges with supporting documentation;
496          (ii) the division shall determine the hospital's discharges from the information
497     submitted under Subsection (2)(c)(i); and
498          (iii) the failure to submit discharge information shall result in an audit of the hospital's
499     records and a penalty equal to 5% of the calculated assessment.
500          (3) Except as provided in Subsection (4), if a hospital is owned by an organization that
501     owns more than one hospital in the state:
502          (a) the assessment for each hospital shall be separately calculated by the department;
503     and
504          (b) each separate hospital shall pay the assessment imposed by this chapter.

505          (4) Notwithstanding the requirement of Subsection (3), if multiple hospitals use the
506     same Medicaid provider number:
507          (a) the department shall calculate the assessment in the aggregate for the hospitals
508     using the same Medicaid provider number; and
509          (b) the hospitals may pay the assessment in the aggregate.
510          Section 12. Section 26-36b-206 is enacted to read:
511          26-36b-206. State teaching hospital and non-state government hospital mandatory
512     intergovernmental transfer.
513          (1) A state teaching hospital and a non-state government hospital shall make an
514     intergovernmental transfer to the Medicaid Expansion Fund created in Section 26-36b-208, in
515     accordance with this section.
516          (2) The intergovernmental transfer shall be paid beginning on the later of CMS
517     approval of:
518          (a) the health improvement program waiver under Section 26-18-411;
519          (b) the assessment for private hospitals in this chapter; and
520          (c) the intergovernmental transfer in this section.
521          (3) The intergovernmental transfer shall be paid in an amount divided as follows:
522          (a) the state teaching hospital is responsible for:
523          (i) 30% of the portion of the hospital share specified in Subsections
524     26-36b-204(1)(a)(i) and (ii); and
525          (ii) 0% of the hospital share specified in Subsection 26-36b-204(1)(a)(iii); and
526          (b) non-state government hospitals are responsible for:
527          (i) 1% of the portion of the hospital share specified in Subsections 26-36b-204(1)(a)(i)
528     and (ii); and
529          (ii) 0% of the hospital share specified in Subsection 26-36b-204(1)(a)(iii).
530          (4) The department shall, by rule made in accordance with Title 63G, Chapter 3, Utah
531     Administrative Rulemaking Act, designate the method of calculating the percentages
532     designated in Subsection (3) and the schedule for the intergovernmental transfers.

533          Section 13. Section 26-36b-207 is enacted to read:
534          26-36b-207. Penalties and interest.
535          (1) A hospital that fails to pay any assessment, make the mandated intergovernmental
536     transfer, or file a return as required under this chapter, within the time required by this chapter,
537     shall pay penalties, in addition to the assessment or intergovernmental transfer, and interest
538     established by the department.
539          (2) (a) Consistent with Subsection (2)(b), the department shall adopt rules in
540     accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, that establish
541     reasonable penalties and interest for the violations described in Subsection (1).
542          (b) If a hospital fails to timely pay the full amount of a quarterly assessment or the
543     mandated intergovernmental transfer, the department shall add to the assessment or
544     intergovernmental transfer:
545          (i) a penalty equal to 5% of the quarterly amount not paid on or before the due date;
546     and
547          (ii) on the last day of each quarter after the due date until the assessed amount and the
548     penalty imposed under Subsection (2)(b)(i) are paid in full, an additional 5% penalty on:
549          (A) any unpaid quarterly assessment or intergovernmental transfer; and
550          (B) any unpaid penalty assessment.
551          (c) Upon making a record of the division's actions, and upon reasonable cause shown,
552     the division may waive, reduce, or compromise any of the penalties imposed under this
553     chapter.
554          Section 14. Section 26-36b-208 is enacted to read:
555          26-36b-208. Medicaid Expansion Fund.
556          (1) There is created an expendable special revenue fund known as the Medicaid
557     Expansion Fund.
558          (2) The fund consists of:
559          (a) assessments collected under this chapter;
560          (b) intergovernmental transfers under Section 26-36b-206;

561          (c) savings attributable to the health coverage improvement program under Section
562     26-18-411 as determined by the department;
563          (d) savings attributable to the inclusion of psychotropic drugs on the preferred drug list
564     under Subsection 26-18-2.4(3) as determined by the department;
565          (e) savings attributable to the services provided by the Public Employees' Health Plan
566     under Subsection 49-20-401(1)(u);
567          (f) gifts, grants, donations, or any other conveyance of money that may be made to the
568     fund from private sources; and
569          (g) additional amounts as appropriated by the Legislature.
570          (3) (a) The fund shall earn interest.
571          (b) All interest earned on fund money shall be deposited into the fund.
572          (4) (a) A state agency administering the provisions of this chapter may use money from
573     the fund to pay the costs of the health coverage improvement Medicaid waiver under Section
574     26-18-411, and the outpatient UPL supplemental payments under Section 26-36b-210, not
575     otherwise paid for with federal funds or other revenue sources, except that no funds described
576     in Subsection (2)(b) may be used to pay the cost of outpatient UPL supplemental payments.
577          (b) Money in the fund may not be used for any other purpose.
578          Section 15. Section 26-36b-209 is enacted to read:
579          26-36b-209. Hospital reimbursement.
580          The department shall, to the extent allowed by law, include in a contract with a
581     Medicaid accountable care organization a requirement that the accountable care organization
582     reimburse hospitals in the accountable care organization's provider network, no less than the
583     Medicaid fee-for-service rate. Nothing in this section prohibits a Medicaid accountable care
584     organization from paying a rate that exceeds Medicaid fee-for-service rates.
585          Section 16. Section 26-36b-210 is enacted to read:
586          26-36b-210. Outpatient upper payment limit supplemental payments.
587          (1) For purposes of this section, "UPL gap" means the difference between the private
588     hospital outpatient upper payment limit and the private hospital Medicaid outpatient payments,

589     as determined in accordance with 42 C.F.R. 447.321.
590          (2) Beginning on the effective date of the assessment imposed under this chapter, and
591     for each fiscal year thereafter, the department shall implement an outpatient upper payment
592     limit program for private hospitals that shall supplement the reimbursement to private hospitals
593     in accordance with Subsection (3).
594          (3) The supplemental payment to Utah private hospitals under Subsection (2) shall:
595          (a) not exceed the positive UPL gap; and
596          (b) be allocated based on the Medicaid state plan.
597          (4) The outpatient data used to calculate the UPL gap under Subsection (1) shall be the
598     same outpatient data used to allocate the payments under Subsection (3).
599          (5) The supplemental payments to private hospitals under Subsection (2) shall be
600     payable for outpatient hospital services provided on or after the later of:
601          (a) July 1, 2016;
602          (b) the effective date of the Medicaid state plan amendment necessary to implement the
603     payments under this section; or
604          (c) the effective date of the coverage provided through the health coverage
605     improvement program waiver under Section 26-18-411.
606          Section 17. Section 26-36b-211 is enacted to read:
607          26-36b-211. Repeal of assessment.
608          (1) The repeal of the assessment imposed by this chapter shall occur upon the
609     certification by the executive director of the department that the sooner of the following has
610     occurred:
611          (a) the effective date of any action by Congress that would disqualify the assessment
612     imposed by this chapter from counting toward state Medicaid funds available to be used to
613     determine the federal financial participation;
614          (b) the effective date of any decision, enactment, or other determination by the
615     Legislature or by any court, officer, department, or agency of the state, or of the federal
616     government, that has the effect of:

617          (i) disqualifying the assessment from counting toward state Medicaid funds available
618     to be used to determine federal financial participation for Medicaid matching funds; or
619          (ii) creating for any reason a failure of the state to use the assessments for the Medicaid
620     program as described in this chapter;
621          (c) the effective date of a change that reduces the aggregate hospital inpatient and
622     outpatient payment rate below the aggregate hospital inpatient and outpatient payment rate for
623     July 1, 2015; and
624          (d) the sunset of this chapter in accordance with Section 63I-1-226.
625          (2) If the assessment is repealed under Subsection (1), money in the fund that was
626     derived from assessments imposed by this chapter, before the determination made under
627     Subsection (1), shall be disbursed under Section 26-36b-207 to the extent federal matching is
628     not reduced due to the impermissibility of the assessments. Any funds remaining in the special
629     revenue fund shall be refunded to the hospitals in proportion to the amount paid by each
630     hospital.
631          Section 18. Section 49-20-401 is amended to read:
632          49-20-401. Program -- Powers and duties.
633          (1) The program shall:
634          (a) act as a self-insurer of employee benefit plans and administer those plans;
635          (b) enter into contracts with private insurers or carriers to underwrite employee benefit
636     plans as considered appropriate by the program;
637          (c) indemnify employee benefit plans or purchase commercial reinsurance as
638     considered appropriate by the program;
639          (d) provide descriptions of all employee benefit plans under this chapter in cooperation
640     with covered employers;
641          (e) process claims for all employee benefit plans under this chapter or enter into
642     contracts, after competitive bids are taken, with other benefit administrators to provide for the
643     administration of the claims process;
644          (f) obtain an annual actuarial review of all health and dental benefit plans and a

645     periodic review of all other employee benefit plans;
646          (g) consult with the covered employers to evaluate employee benefit plans and develop
647     recommendations for benefit changes;
648          (h) annually submit a budget and audited financial statements to the governor and
649     Legislature which includes total projected benefit costs and administrative costs;
650          (i) maintain reserves sufficient to liquidate the unrevealed claims liability and other
651     liabilities of the employee benefit plans as certified by the program's consulting actuary;
652          (j) submit, in advance, its recommended benefit adjustments for state employees to:
653          (i) the Legislature; and
654          (ii) the executive director of the state Department of Human Resource Management;
655          (k) determine benefits and rates, upon approval of the board, for multiemployer risk
656     pools, retiree coverage, and conversion coverage;
657          (l) determine benefits and rates based on the total estimated costs and the employee
658     premium share established by the Legislature, upon approval of the board, for state employees;
659          (m) administer benefits and rates, upon ratification of the board, for single employer
660     risk pools;
661          (n) request proposals for provider networks or health and dental benefit plans
662     administered by third party carriers at least once every three years for the purposes of:
663          (i) stimulating competition for the benefit of covered individuals;
664          (ii) establishing better geographical distribution of medical care services; and
665          (iii) providing coverage for both active and retired covered individuals;
666          (o) offer proposals which meet the criteria specified in a request for proposals and
667     accepted by the program to active and retired state covered individuals and which may be
668     offered to active and retired covered individuals of other covered employers at the option of the
669     covered employer;
670          (p) perform the same functions established in Subsections (1)(a), (b), (e), and (h) for
671     the Department of Health if the program provides program benefits to children enrolled in the
672     Utah Children's Health Insurance Program created in Title 26, Chapter 40, Utah Children's

673     Health Insurance Act;
674          (q) establish rules and procedures governing the admission of political subdivisions or
675     educational institutions and their employees to the program;
676          (r) contract directly with medical providers to provide services for covered individuals;
677          (s) take additional actions necessary or appropriate to carry out the purposes of this
678     chapter; [and]
679          (t) (i) require state employees and their dependents to participate in the electronic
680     exchange of clinical health records in accordance with Section 26-1-37 unless the enrollee opts
681     out of participation; and
682          (ii) prior to enrolling the state employee, each time the state employee logs onto the
683     program's website, and each time the enrollee receives written enrollment information from the
684     program, provide notice to the enrollee of the enrollee's participation in the electronic exchange
685     of clinical health records and the option to opt out of participation at any time[.]; and
686          (u) provide services for drugs or medical devices at the request of a procurement unit,
687     as that term is defined in Section 63G-6a-104, that administers benefits to program recipients
688     who are not covered by Title 26, Utah Health Code.
689          (2) (a) Funds budgeted and expended shall accrue from rates paid by the covered
690     employers and covered individuals.
691          (b) Administrative costs shall be approved by the board and reported to the governor
692     and the Legislature.
693          (3) The Department of Human Resource Management shall include the benefit
694     adjustments described in Subsection (1)(j) in the total compensation plan recommended to the
695     governor required under Subsection 67-19-12(5)(a).
696          Section 19. Section 63I-1-226 is amended to read:
697          63I-1-226. Repeal dates, Title 26.
698          (1) Title 26, Chapter 9f, Utah Digital Health Service Commission Act, is repealed July
699     1, 2025.
700          (2) Section 26-10-11 is repealed July 1, 2020.

701          (3) Section 26-21-23, Licensing of non-Medicaid nursing care facility beds, is repealed
702     July 1, 2018.
703          (4) Title 26, Chapter 33a, Utah Health Data Authority Act, is repealed July 1, 2024.
704          (5) Title 26, Chapter 36a, Hospital Provider Assessment Act, is repealed July 1, 2016.
705          (6) Title 26, Chapter 36b, Inpatient Hospital Assessment Act, is repealed July 1, 2021.
706          [(6)] (7) Section 26-38-2.5 is repealed July 1, 2017.
707          [(7)] (8) Section 26-38-2.6 is repealed July 1, 2017.
708          [(8)] (9) Title 26, Chapter 56, Hemp Extract Registration Act, is repealed July 1, 2016.
709          Section 20. Appropriation.
710          Under the terms and conditions of Title 63J, Chapter 1, Budgetary Procedures Act, for
711     the fiscal year beginning July 1, 2016, and ending June 30, 2017, the following sums of money
712     are appropriated from resources not otherwise appropriated, or reduced from amounts
713     previously appropriated, out of the funds or amounts indicated. These sums of money are in
714     addition to amounts previously appropriated for fiscal year 2017.
715          To Fund and Account Transfers -- State Endowment Fund
716               From General Fund Restricted -- Tobacco Settlement Account

717               Schedule of Programs:
718                    State Endowment Fund                    ($1,488,700)
719          To Department of Health -- Medicaid Optional Services
720               From General Fund

721               From General Fund Restricted -- Tobacco Settlement Account

722          To Department of Human Services -- Substance Abuse and Mental Health
723               From General Fund

724               From General Fund, one-time

725               From Federal Funds

726               From Federal Funds, one-time

727          To Department of Human Services -- Child and Family Services
728               From General Fund

729               Schedule of Programs:
730                    Out-of-home Care                         ($200,000)
731          To Department of Health -- Medicaid Expansion Fund
732               From General Fund

733               From General Fund, one-time

734               Schedule of Programs:
735                    Medicaid Expansion Fund                    $2,088,700