Bill Summaries: H 989 REQUIRED COMPONENTS/MEDICAID TRANSFORMATION. (NEW)

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  • Summary date: Jul 11 2019 - More information

    House committee substitute to the 1st edition makes the following changes.

    Makes organizational changes.

    Part I.

    Directs that the act's implementation be in conjunction with the procedure for budget continuation under specified state law, with the act's provisions superseding conflicting state law.

    Part II.

    Appropriates $33,758,136 in recurring funds from the General Fund to the Department of Health and Human Services (DHHS), Division of Health Benefits, for the 2019-20 fiscal year for the Medicaid and NC Health Choice programs rebase.

    Appropriates $28,617,655 in recurring funds from the General Fund to the Division of Health Benefits for the 2019-20 fiscal year for transitioning to Medicaid managed care.

    Part III.

    Directs the State Controller to transfer $193 million for the 2019-20 fiscal year from funds available in the Medicaid Transformation Reserve in the General Fund to the Medicaid Transformation Fund. Authorizes the transfer of funds from the Medicaid Transformation Fund to the Division of Health Benefits for payment of claims related to services billed under the fee-for-service payment model for recipients being, or who have been, transitioned to managed care (known as "claims run out"). Allows for transfer on an as-needed basis; deems transferred funds appropriated.

    Authorizes $27,280,947 in nonrecurring funds to be transferred from the Medicaid Transformation Fund to the Division of Health Benefits for the 2019-20 fiscal year to provide the State share for nonrecurring qualifying needs, as defined, directly related to Medicaid transformation required by SL 2015-241, as amended. Allows for transfer on an as-needed basis. Requires the Division of Health Benefits to make transfer requests to the Office of State Management and Budget (OSBM), providing for the amount request and the nonrecurring qualifying need for which the funds are to be used. Requires OSBM to verify the amount and use, and that the amount requested provides a State share that will not result in total requirements that exceed $140 million in nonrecurring funds for the 2019-21 fiscal biennium, prior to any transfer. Mandates that any federal funds received in any fiscal year by the Division of Health Benefits that represent a return of State share already expended on a qualifying need related to the funds received by the Division under the act be deposited into the Medicaid Transformation Fund.

    Part V.

    The provisions of previous Part I have been moved to Part V with the following changes.

    Amends new Article 7A, Hospital Assessment Act, of GS Chapter 108A, effective October 1, 2019. Amends the definition set forth for prepaid health plan (PHP) to make a statutory cross-reference rather than referencing a session law. 

    Adjusts the base and supplemental assessment percentage rates to be used pursuant to new GS 108A-142 and GS 108A-141 for the taxable year October 1, 2019, through September 30, 2020, now providing for a base assessment rate of 1.77% (was, 3%) and a supplemental assessment rate of 2.26%.

    Eliminates the directive for DHHS to submit any State Plan amendment or other documents necessary to the Center for Medicare and Medicaid Services (CMS) to implement the act.

    Adds a new directive for the State Controller to transfer funds from the Medicaid Contingency Reserve to the Division of Health Benefits only upon request by the Division as needed to cover any shortfall of receipts from the supplemental or base assessments under new GS 108A-141 and GS 108A-142, and only if two conditions are met: (1) OSBM has certified that there will be a shortfall and (2) OSBM has certified that the amount requested does not exceed the shortfall in receipts certified. Requires the Division of Health Benefits to notify the specified NCGA committee and division of any request and the amount requested. Deems transferred funds appropriated. Sunsets this authority June 30, 2020.

    Directs DHHS to establish a new fund code, Hospital Assessment Fund, to be used to support a decrease in the supplemental assessment or base assessment rates corresponding with the amount in the Fund.

    Applicable for the 2019-20 fiscal year only, provides for the transfer of over-realized receipts from the supplemental and base assessments, based on the amount anticipated in the Governor's proposed base budget for the Division of Health Benefits for the fiscal year, as follows: $45 million transferred to the Hospital Assessment Fund, or if the total amount of over-realized receipts is less than $45 million, then the full amount to the Hospital Assessment Fund; and the remainder, after the $45 million transfer, if appropriate, to the Medicaid Transformation Reserve. Requires OSBM to certify that there will be over-realized receipts for the 2019-20 fiscal year from the supplemental and base assessments, and that the amounts transferred are in compliance with these provisions, prior to transferring any amount. 

    Part VI.

    The provisions of previous Part III have been moved to Part VI with the following changes.

    Modifies the terminology used in the directives concerning the supplemental payment program for eligible medical professional providers to now refer to "supplemental payments for services provided by eligible medical providers," rather than "supplemental payments made to eligible medical providers."

    Additionally repeals Section 12H.13(e) of SL 2013-360, which reduced the percentage of allowable costs for hospitals payments from 80% to 70%, and Section 12H.13A of SL 2014-100, which sets the settlement for outpatient Medicaid services performed by UNC Hospitals and Vidant Medical Center at 70% of costs.

    Eliminates the provisions of previous Part IV, which directed DHHS to create the Medicare Rate Supplemental and Directed Payment Program; enacted Part 3, Professional Assessment, to Article 7A of GS Chapter 108A; and directed DHHS to submit a State Plan amendment and any necessary documents to CMS to implement the Program and the Professional Assessment. 

    Part VII.

    Enacts GS 143C-4-11, establishing the Medicaid Contingency Reserve to be used for budget shortfalls in Medicaid or NC Health Choice programs. Sets forth three criteria that must be met in order for funds from the Medicaid Contingency Reserve Fund to be allocated or expended, including a legislative appropriation, verification of appropriate use by OSBM, and immediate reporting of the shortfall by the Director of Budget to the Fiscal Research Division, as specified. Specifies that gubernatorial authority is not limited by the statute.

    Part VIII.

    Enacts GS 143C-9-9, establishing the Hospital Uncompensated Care Fund as a nonreverting special fund in DHHS, consisting of the federal disproportionate share adjustment receipts arising from certified public expenditures. Authorizes DHHS to use funds from the Fund to (1) make payments to institutions for mental diseases, as defined by federal law and (2) make payments to eligible hospitals to reimburse inpatient services uncompensated care costs or outpatient services uncompensated care costs, or both. Requires DHHS to adopt rules for determining eligibility for, and allocations of, Hospital Uncompensated Care Fund payments. 

    Part IX.

    Changes the effective date of the act to the date the act becomes law, unless otherwise provided (was, July 1, 2019). Makes conforming changes to the act's titles.


  • Summary date: Apr 29 2019 - More information

    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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