2015 Session

Budget Amendments - SB800 (Member Request)

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Chief Patron: McWaters
Medicaid Provider Assessment for Private Teaching Hospitals (language only)

Item 301 #29s

Item 301 #29s

Health and Human Resources
Medical Assistance Services, Department of

Page 258, line 20, after "expenditures.", insert:
"The Department of Medical Assistance Services shall develop and implement, prior to completion of any  regulatory process undertaken in order to effect such change, a pilot program to use nongeneral  funds in excess of the general funds appropriated in this Item for purposes of accessing additional federal funding to reimburse indigent care and graduate medical education costs at Type 2B hospitals generated from an annual assessment paid by all Type 2B hospitals that shall not exceed six percent of the annual net patient revenues of each hospital or the maximum allowable under federal regulations with respect to upper payment limits, whichever is less. The assessment authorized under this article, once imposed, shall be implemented as a health care related fee as defined under section 1903(w)(3) of the Social Security Act (49 Stat. 620, 42 U.S.C.§ 1396b(w)(3)(B)) or any amendments thereto and may be collected only to the extent and for the periods that the department determines that revenues generated by the assessment will qualify as the State share of program expenditures eligible for federal financial participation. No more than ten percent of the nongeneral fund proceeds collected through the annual hospital assessment payments, may be transferred to the Virginia Health Care Fund. For purposes of this Subdivision and paragraph B.4. of this item "Type 2B hospitals" means any hospital within the Commonwealth,  public or private, that does not currently qualify as a Type 1 hospital and meets each of the  following: (i) is a teaching hospital for graduate medical education programs, (ii) is designated as a Level 1 Trauma Center, (iii) is licensed for 500 or more beds, and (iv) reported at least $100 million in gross charity care to Virginia Health Information in 2012. Neither the Type 2B classification established in this subdivision, nor any formula based on this classification, may be utilized to reduce Medicaid supplemental payments that are received by the Type 1 teaching hospitals."
Page 258, line 22, after "hospitals,", insert:
"Type 2B hospitals as established in paragraph B3 of this item,".
Page 258, line 24 after "hospitals" insert:
"and Type 2B hospitals".
Page 258, line 31, after "to 1.0.", insert:
"The department shall have authority to implement similar adjustments for Type 2B hospitals as those set forth above for Type 1 hospitals to the extent such adjustments can be accomplished using nongeneral  funds appropriated in this item pursuant to paragraph B.3. of this item."
Page 258, line 33, after "change.", insert:
"The department shall implement any necessary changes required to collect the hospital assessment revenue generated pursuant to paragraph B.3. of this item  prior to completion of any regulatory process undertaken to effect such change. The department is authorized to promulgate such emergency regulations to effect the changes set forth in paragraphs B.3. and B.4. of  this item within 280 days or less from the enactment of this act. The department shall report on its implementation of the Type 2B hospital reimbursement system, established pursuant to paragraph B.3. of this item and this Subdivision, to the Chairman of the House Appropriations and Senate Finance Committees, the Department of Planning and Budget and the Auditor of Public Accounts by December 15 of  each year."

(This amendment adds language to establish a new category of hospital (Type 2B) for purposes of federal Medicaid reimbursement through revenue optimization based on several criteria including its teaching mission for graduate medical education, size, extent of charity care, status as a Level I Trauma Center and net revenues. Criteria would qualify at least three hospital systems in Virginia: Carilion, Inova and Sentara. In addition, language provides authority for the imposition of an assessment on net revenues of qualified Type 2B hospitals to use in maximizing Medicaid payments to these hospitals. Language allows for no more than 10 percent of the nongeneral fund proceeds from such assessment to be deposited into the Virginia Health Care Fund which is used to reduce the state's general fund expenditures for the Medicaid program. This revenue maximization strategy will help to mitigate disproportionate indigent care costs incurred by these hospitals without placing any additional financial burden on the state budget or reducing resources for the state teaching hospitals or any other hospital. This additional funding will protect the financial viability of these three private level one trauma centers, and enable them to maintain indigent care access and physician residency education programs in our communities in light of eminent federal funding reductions. Currently, every state in the South, except Virginia, uses revenue optimization to help fund indigent care. Virginia uses revenue optimization at present for intermediate care facilities for the intellectually disabled and at the two state teaching hospitals. Virginia has also used other related strategies in the past such as intergovernmental transfers. As of 2014, 49 of 50 states plus the District of Columbia use Federal revenue optimization in some form. Only Alaska does not use this strategy in some form.)