Assigned to APPROP                                                                                                                     AS ENACTED

 

 

 

 


ARIZONA STATE SENATE

Fifty-Fourth Legislature, Second Regular Session

 

ENACTED

 

AMENDED

FACT SHEET FOR H.B. 2668/S.B. 1247

 

hospitals; unreimbursed costs; assessment; fund

Purpose

Beginning October 1, 2020, requires the Director of the Arizona Health Care Cost Containment System (AHCCCS) to administer and collect an assessment on hospital revenues, discharges or bed days from inpatient or outpatient services, or both, to fund nonfederal cost shares as prescribed. Establishes the Health Care Investment Fund (Fund) for the assessment monies.

Background

            Currently, the Director of AHCCCS (Director) administers and collects an assessment on hospital revenues, discharges or bed days for funding a portion of the nonfederal share of costs incurred to cover eligible persons who meet certain criteria. Monies generated from this hospital assessment are deposited into the Hospital Assessment Fund, which is administered by AHCCCS (A.R.S. §§ 36-2901.01; 36-2901.07; 36-2901.08; and 36-2901.09).

            AHCCCS must annually report, by August 1, to the President of the Senate, the Speaker of the House of Representatives (House), the Director of the Joint Legislative Budget Committee (JLBC) and the Director of the Governor's Office of Strategic Planning and Budgeting (OSPB) on: 1) the amount that each hospital has contributed for the hospital assessment in the previous fiscal year; and 2) the amount of estimated payments each hospital received from coverage funded by the hospital assessment (FY 2019 AHCCCS Report).

            Additionally, AHCCCS must annually report, by October 1, to the President of the Senate, the Speaker of the House, the Director of JLBC and the Director of OSPB on the change in uncompensated hospital costs experienced by Arizona hospitals and hospital profitability during the previous fiscal year (A.R.S. § 36-2903.08 and FY 2019 AHCCCS Report).

            There is no anticipated fiscal impact to the state General Fund associated with this legislation.

Provisions

Hospital Assessment (Assessment)

1.      Requires, beginning October 1, 2020, the Director to establish, administer and collect an assessment on hospital revenues, discharges or bed days from inpatient or outpatient services, or both, to fund the nonfederal share of costs incurred pursuant to statutory requirements.

2.      Deposits assessment monies into the Fund.

3.      Subjects the assessment to approval by the Centers for Medicare and Medicaid Services (CMS) to ensure that the assessment does not cause a reduction in federal financial participation.

4.      Requires the Director to adopt rules regarding the method for determining the assessment, the amount or rate of the assessment and modifications to or exemptions from the assessment.

5.      Allows the Director to establish assessment modifications or exemptions and outlines factors that may be considered, including:

a)      the size of the hospital;

b)      the specialty of services available to patients at the hospital; and

c)      the geographic location of the hospital.

6.      Requires the Director to present any assessment methodology changes to JLBC for review.

7.      Prohibits hospitals from passing assessment costs on to patients or third-party payors and requires hospitals to submit an attestation to the Department of Health Services (DHS) that the hospital has not passed on assessment costs to patients or third-party payors.

8.      Authorizes, if a hospital is not in compliance with assessment stipulations, the Director to suspend or revoke the hospital's provider agreement registration.

9.      Requires the Director to notify the Director of DHS of a hospital that fails to comply with assessment stipulations within 180 days after revocation or suspension of the hospital's provider agreement registration and requires the Director of DHS to suspend or revoke the hospital's license.

Fund

10.  Establishes the Fund to be administered by the Director, consisting of:

a)      assessment monies;

b)      interests earned; and

c)      legislative appropriations.

11.  Prohibits the Director from using Fund monies to pay the base reimbursement level for hospital services.

12.  Requires the Director to use Fund monies as necessary to fund the nonfederal share of costs incurred to:

a)      make directed payments to hospitals that supplement the base reimbursement level for hospital services to eligible persons who meet certain criteria;

b)      increase base reimbursement rates for services reimbursed under AHCCCS dental fee schedule and physician fee schedule, not including the physician drug fee schedule, to restore these providers' rates to levels in existence before FY 2009, if the expenses do not exceed $70,500,000 or 20 percent of the total assessment monies deposited for the fiscal year, whichever is less; and

c)      pay for nonfederal share of Fund administrative expenses, if the expenses do not exceed 1 percent of the total assessment monies deposited for the fiscal year.

13.  Requires AHCCCS to develop a process to ensure that contractors pass directed payments to eligible providers in a timely manner and prohibits contractors from reducing contracted rates as a result of directed payments.

14.  Stipulates that Fund monies are:

a)      exempt from lapsing;

b)      continuously appropriated; and

c)      credited against the total assessment collected for the subsequent fiscal year, if not expended within the same fiscal year the monies are deposited.

15.  Prohibits Fund monies from being used to supplant existing and future appropriations to AHCCCS for existing and future programs.

16.  Prohibits AHCCCS from using Fund monies until CMS approves the use of assessment monies for directed hospital expenditures and federal financial participation eligibility for the contemplated expenditures.

17.  Directs the State Treasurer to invest and divest monies in the Fund on notice from the Director, with proceeds being credited to the Fund.

Reporting Requirements

18.  Adds, to the list of recipients of AHCCCS's annual report on uncompensated hospital costs and hospital profitability, the Chairpersons of the Senate and House Appropriations Committees.

19.  Requires AHCCCS to annually report to the Chairpersons of the Senate and House Appropriations Committees in addition to the President of the Senate, the Speaker of the House, the Director of JLBC and the Director of OSPB, on:

a)      the aggregate amount each hospital has contributed in the previous fiscal year for assessments on:

i.        hospital revenues, discharges or bed days; and

ii.      hospital revenues from inpatient or outpatient services, or both; and

b)      the aggregate amount of estimated payments each hospital received from the coverage and directed payments funded by each assessment.

Miscellaneous

20.  Exempts AHCCCS from rulemaking requirements regarding the assessment for one year after the general effective date.

21.  Defines base reimbursement level as the total expenditures by AHCCCS and AHCCCS's contracted health plans for hospital services to eligible persons in FY 2020.

22.  Excludes, from the definition of base reimbursement level, directed payments made with assessment monies and payments made through the Pediatric Services Initiative.

23.  Defines administration and Director.

24.  Conditions the repeal of the assessment upon the effective date of CMS's notice of final determination that the assessment is no longer eligible for federal financial participation, and requires AHCCCS to:

a)      refund any remaining Fund monies to hospitals in proportion to the amounts paid by each hospital; and

b)      notify the Director of the Legislative Council in writing of the conditional repeal date.

25.  Stipulates that, if the assessment is conditionally repealed, the refund amount due to each hospital must be reduced for any authorized expenditures associated with the period for which the assessment is eligible for federal financial participation.

26.  Makes technical and conforming changes.

27.  Becomes effective on the general effective date.

Amendments Adopted by Committee

·         Adopted the strike-everything amendment.

Amendments Adopted by Committee of the Whole

1.      Includes discharges and bed days with respect to inpatient or outpatient services, or both, in the collection of the assessment.

2.      Renames the Fund.

3.      Excludes, from the definition of base reimbursement level, directed payments made with assessment monies and payments made through the Pediatric Services Initiative.

4.      Specifies that Fund monies are to be used to fund the nonfederal cost share to increase base reimbursement rates for services reimbursed under the AHCCCS dental fee schedule and physician fee schedule, not including the physician drug fee schedule, to the extent necessary to restore provider rates to FY 2009 levels within certain limits.

5.      Requires AHCCCS to develop a process to ensure contractors pass directed payments to eligible providers in a timely manner and prohibits contractors from reducing contracted rates as a result of directed payments.

6.      Stipulates that, if the assessment is conditionally repealed, the refund amount due to each hospital must be reduced for any authorized expenditures associated with the period for which the assessment is eligible for federal financial participation.

7.      Makes technical and conforming changes.

House Action                                                           Senate Action

HHS                2/13/20      DP     9-0-0-0                 APPROP         2/25/20     DPA/SE    7-2-0
3rd Read          3/4/20                   57-3-0                  3rd Read          3/18/20                       23-4-3

                                                                                 (H.B. 2668 was substituted for S.B. 1247 on

                                                                                 3rd Read)

Signed by the Governor 3/25/20

Chapter 46

Prepared by Senate Research

April 1, 2020

CRS/AB/kja