Bill Summary for H 989 (2019-2020)

Summary date: 

Apr 29 2019

Bill Information:

View NCGA Bill Details2019-2020 Session
House Bill 989 (Public) Filed Thursday, April 25, 2019
AN ACT TO PROVIDE FUNDS FOR THE OPERATION OF THE MEDICAID AND NC HEALTH CHOICE PROGRAMS; TO AUTHORIZE THE USE OF THE MEDICAID TRANSFORMATION FUND FOR MEDICAID TRANSFORMATION NEEDS; TO REPEAL PAST DIRECTIVES TO ELIMINATE GRADUATE MEDICAL EDUCATION TO ALIGN WITH MEDICAID TRANSFORMATION; TO REVISE AND UPDATE HOSPITAL ASSESSMENTS IN A MANNER THAT WILL CONFORM WITH MEDICAID TRANSFORMATION; TO REVISE THE SUPPLEMENTAL PAYMENT PROGRAM FOR ELIGIBLE MEDICAL PROFESSIONAL PROVIDERS AND TO ENACT THE MEDICARE RATE SUPPLEMENTAL AND DIRECTED PAYMENT PROGRAM; TO CREATE THE HOSPITAL UNCOMPENSATED CARE FUND; AND TO CODIFY THE MEDICAID CONTINGENCY RESERVE.
Intro. by Dobson, Lambeth.

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Bill summary

Part I.

Repeals Article 7 of GS Chapter 108A, Hospital Provider Assessment Act, effective October 1, 2019. Effective October 1, 2019, enacts new Article 7A, Hospital Assessment Act, in GS Chapter 108A, providing as follows. 

Provides that the assessments apply to all licensed North Carolina hospitals, except exempts from the supplemental assessment and the base assessment critical access hospitals, freestanding psychiatric hospitals, freestanding rehabilitation hospitals, long-term care hospitals, state-owned and state-operated hospitals, and the primary affiliated teaching hospital for each UNC medical school. Exempts public hospitals from the supplemental assessment.

Requires both the base and supplemental assessments to be a percentage, established by the NCGA, of total hospital costs. Requires the Department of Health and Human Service's (Department) proposed supplemental assessment rate on: (1) the percentage change in aggregate payments to hospitals subject to the supplemental assessment for Medicaid and NC Health Choice enrollees, excluding hospital access payments made under 42 CFR § 438.6 and (2) any changes in the federal medical assistance percentage rate applicable to the Medicaid or NC Health Choice programs for the applicable year. Requires the proposed base assessment rate to be based on: (1) the change in the State's annual Medicaid payment for the applicable year; (2) the percentage change in aggregate payments to hospitals subject to the base assessment for Medicaid and NC Health Choice enrollees, excluding hospital access payments made under 42 CFR § 438.6, as determined by the Department; (3) any changes in the federal medical assistance percentage rate applicable to the Medical or NC Health Choice programs for the applicable year; and (4) any changes, as determined by the Department, in reimbursement under the Medicaid State Plan, managed care payments authorized under 42 CFR § 438.6 for which the nonfederal share is not funded by General Fund appropriations, and reimbursement under the NC Health Choice program. Provides that beginning October 1, 2019, assessments are due quarterly. Allows a hospital to appeal a determination of the assessment amount owed through a reconsideration review. Provides that if the Centers for Medicare and Medicaid Services (CMS) determines that an assessment is impermissible or revokes approval of an assessment, then that assessment must not be imposed and the Department's authority to collect the assessment is repealed.

Provides that if a hospital exempt from both the base and supplemental assessments under this Part (1) makes an intergovernmental transfer to the Department to be used to draw down matching federal funds and (2) has acquired, merged, leased, or managed another hospital on or after March 25, 2011, then the exempt hospital must transfer an additional amount to the State. Sets out the formula for calculating that amount. 

Requires that the proceeds of the assessments imposed under this Part, and all corresponding matching federal funds, must be used to make the State's annual Medicaid payment to the State, to fund payments to hospitals made directly by the Department, to fund a portion of capitation payments to prepaid health plans attributable to hospital care, and to fund the nonfederal share of graduate medical education payments.

Sets the percentage to be used in calculating the supplemental assessment and for calculating the base assessment both at 3 percent for the taxable year October 1, 2019, through September 30, 2020.

Allows the Department to submit any State Plan amendment or other necessary documents to the CMS to implement these provisions.

Part II.

Repeals Section 12H.12(b) of SL 2014-100 (which replaced the individualized base rates for hospital inpatient services under the Medicaid and NC Health Choice programs with a specified single statewide base rate for hospital inpatient services) and Section 12H.23 of SL 2015-241 (which prohibited Medicaid providers from receiving reimbursement for Graduate Medical Education (GME) in addition to their DRG Unit Value rate).

Part III. 

Requires the Department of Health and Human Services (Department) to revise the supplemental payment program for eligible medical professional providers. Effective October 1, 2019, the following two changes to the program must be implemented: (1) the program must no longer utilize a limit on the number of eligible medical professional providers that may be reimbursed through the program, and must instead use a limit on the total payments made under the program and (2) payments under the program must consist of supplemental payments that increase reimbursement to the average commercial rate under the State Plan and directed payments that increase reimbursement to the average commercial rate under the managed care system.

Requires that the limitation on total payments made under the Average Commercial Rate Supplemental and Directed Payment Program for eligible medical professional providers apply to the combined amount of payments made as supplemental payments under the State Plan and payments made as directed payments under the managed care system and must be based on the amount of supplemental payments made during the 2018-2019 fiscal year as specified depending on when services were provided. 

Requires the Department to limit the total amount of supplemental and directed payments that may be received by the eligible providers affiliated with East Carolina University Brody School of Medicine and the University of North Carolina at Chapel Hill Health Care System. Provides that average commercial  rate supplemental payments and directed payments must not be made for services provided in Wake County.  Repeals SL 2014-100, Section 12H.13(b) (which required UNC and ECU to submit an annual report based on their preceding fiscal year to the Joint Legislative Oversight Committee on Health and Human Services on each individual provider for whom the specified supplemental payment was made), effective October 1, 2019.

Part IV.

Requires the Department of Health and Human Services (Department) to create the Medicare Rate Supplemental and Directed Payment Program (Program), with payments under the program consisting of supplemental payments made to eligible professionals that increase reimbursement to the Medicare rate under the State Plan, and directed payments made to eligible professionals that increase reimbursements to the Medicare rate under the managed care system. Professionals eligible to receive payments under the Program include Medicaid-enrolled NC physicians, advance care practitioners, and other related professionals who are employed or contracted by any of the six specified entities. Eligibility is further conditioned for contracted eligible professionals upon a demonstration that the contracts account for at least 80 percent of net professional fees from commercial payers or that the contracts address the overall financial risk of the professional's practice or group. 

Adds new Part 3, Professional Assessment, to Article 7A of GS Chapter 108A, providing as follows. Imposes a professional assessment on all licensed North Carolina hospitals, except: critical access hospitals, freestanding psychiatric hospitals, freestanding rehabilitation hospitals, hospitals owned by the University Health Systems of Eastern Carolina, doing business as Vidant Health, hospitals owned by the University of North Carolina Health Care System, long-term care hospitals, public hospitals, and State-owned and State-operated hospitals. Sets the assessment as a percentage, established by the NCGA, of total hospital costs. Requires the Department to base the proposed professional assessment rate on: (1) the percentage change in aggregate payments to hospitals subject to the professional assessment for Medicaid and NC Health Choice enrollees, excluding hospital access payments made under 42 C.F.R § 438.6, (2) any required increases or decreases in Medicare rate supplemental or directed payments, and (3) any changes in the federal medical assistance percentage rate applicable to the Medicaid or NC Health Choice programs for the applicable year. Requires the proceeds of the assessment, and all corresponding matching federal funds, to be used to fund a portion of fee-for-service Medicare rate supplemental payments to professionals made directly by the Department and to fund a portion of capitation Medicare rate directed payments to prepaid health plans.

Provides that the the percentage rate to be used in calculating the professional assessment under is 3 percent for the taxable year October 1, 2019, through September 30, 2020.

Requires the Department of Health and Human Services to submit a State Plan amendment, or other necessary documents, to the Centers for Medicare and Medicaid (CMS) to implement the Medicare Rate Supplemental and Directed Payment Program and the Professional Assessment, required under this act. 

Makes the proposed new Part and the percentage rate for October 1, 2019, through September 30, 2020, effective upon certification by the Office of State Budget and Management (OSBM) that the implementation of the Medicare Rate Supplemental and Directed Payment Program and the Professional Assessment is not expected to result in total spending under the 1115 waiver that exceeds the budget neutrality limit during the demonstration period. 

Requires that if at any point during the operation of the 1115 waiver, CMS determines that the budget neutrality limit in the waiver has been reached, then (1) the Department must immediately discontinue the Medicare Rate Supplemental and Directed Payment Program, (2) Part 3 of Article 7A of GS Chapter 108A is repealed, and (3) the Department must notify the Revisor of Statutes of CMS's determination.

Except as otherwise provided, this act is effective July 1, 2019.

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