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art.019/1

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2013 -- H5127

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ARTICLE 19

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RELATING TO MEDICAL ASSISTANCE

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     SECTION 1. Sections 40-8-13.4 and 40-8-19 of the General Laws in Chapter 40-8

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entitled "Medical Assistance" are hereby amended to read as follows:

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     40-8-13.4. Rate methodology for payment for in state and out of state hospital

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services.-- (a) The department executive office of health and human services shall implement a

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new methodology for payment for in state and out of state hospital services in order to ensure

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access to and the provision of high quality and cost-effective hospital care to its eligible

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recipients.

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     (b) In order to improve efficiency and cost effectiveness, the department executive office

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of health and human services shall:

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     (1) With respect to inpatient services for persons in fee for service Medicaid, which is

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non-managed care, implement a new payment methodology for inpatient services utilizing the

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Diagnosis Related Groups (DRG) method of payment, which is, a patient classification method

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which provides a means of relating payment to the hospitals to the type of patients cared for by

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the hospitals. It is understood that a payment method based on Diagnosis Related Groups may

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include cost outlier payments and other specific exceptions. The department executive office will

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review the DRG payment method and the DRG base price annually, making adjustments as

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appropriate in consideration of such elements as trends in hospital input costs, patterns in hospital

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coding, beneficiary access to care, and the Center for Medicare and Medicaid Services national

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CMS Prospective Payment System (IPPS) Hospital Input Price index. 

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     (B) With respect to inpatient services, (i) it is required as of January 1, 2011 until

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December 31, 2011, that the Medicaid managed care payment rates between each hospital and

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health plan shall not exceed ninety and one tenth percent (90.1%) of the rate in effect as of June

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30, 2010. Negotiated increases in inpatient hospital payments for each annual twelve (12) month

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period beginning January 1, 2012 may not exceed the Centers for Medicare and Medicaid

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Services national CMS Prospective Payment System (IPPS) Hospital Input Price index for the

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applicable period; (ii) provided, however, for the twelve (12) month period beginning July 1,

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2013 the Medicaid managed care payment rates between each hospital and health plan shall not

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exceed the payment rates in effect as of January 1, 2013; (iii) negotiated increases in inpatient

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hospital payments for each annual twelve (12) month period beginning July 1, 2014 may not

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exceed the Centers for Medicare and Medicaid Services national CMS Prospective Payment

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System (IPPS) Hospital Input Price Index, less Productivity Adjustment, for the applicable

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period; (iv) The Rhode Island department executive office of health and human services will

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develop an audit methodology and process to assure that savings associated with the payment

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reductions will accrue directly to the Rhode Island Medicaid program through reduced managed

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care plan payments and shall not be retained by the managed care plans; (iii) (v) All hospitals

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licensed in Rhode Island shall accept such payment rates as payment in full; and (iv) (vi) for all

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such hospitals, compliance with the provisions of this section shall be a condition of participation

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in the Rhode Island Medicaid program. 

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     (2) With respect to outpatient services and notwithstanding any provisions of the law to

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the contrary, for persons enrolled in fee for service Medicaid, the department executive office will

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reimburse hospitals for outpatient services using a rate methodology determined by the

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department executive office and in accordance with federal regulations. Fee-for-service outpatient

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rates shall align with Medicare payments for similar services. Changes Notwithstanding the

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above, there shall be no increase in the Medicaid fee-for-service outpatient rates effective July 1,

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2013. Thereafter, changes to outpatient rates will be implemented on July 1 each year and shall

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align with Medicare payments for similar services from the prior federal fiscal year. With respect

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to the outpatient rate, (i) it is required as of January 1, 2011 until December 31, 2011, that the

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Medicaid managed care payment rates between each hospital and health plan shall not exceed one

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hundred percent (100%) of the rate in effect as of June 30, 2010. Negotiated increases in hospital

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outpatient payments for each annual twelve (12) month period beginning January 1, 2012 may

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not exceed the Centers for Medicare and Medicaid Services national CMS Outpatient Prospective

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Payment System (OPPS) hospital price index for the applicable period.; (ii) provided, however,

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for the twelve (12) month period beginning July 1, 2013 the Medicaid managed care outpatient

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payment rates between each hospital and health plan shall not exceed the payment rates in effect

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as of January 1, 2013; (iii) negotiated increases in outpatient hospital payments for each annual

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twelve (12) month period beginning July 1, 2014 may not exceed the Centers for Medicare and

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Medicaid Services national CMS Outpatient Prospective Payment System (OPPS) Hospital Input

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Price Index, less Productivity Adjustment, for the applicable period.

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     (c) It is intended that payment utilizing the Diagnosis Related Groups method shall

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reward hospitals for providing the most efficient care, and provide the department executive

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office the opportunity to conduct value based purchasing of inpatient care. 

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     (d) The director secretary of the department executive office of health and human

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services and/or the secretary of executive office of health and human services is hereby

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authorized to promulgate such rules and regulations consistent with this chapter, and to establish

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fiscal procedures he or she deems necessary for the proper implementation and administration of

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this chapter in order to provide payment to hospitals using the Diagnosis Related Group payment

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methodology. Furthermore, amendment of the Rhode Island state plan for medical assistance

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(Medicaid) pursuant to Title XIX of the federal Social Security Act is hereby authorized to

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provide for payment to hospitals for services provided to eligible recipients in accordance with

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this chapter. 

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     (e) The department executive office shall comply with all public notice requirements

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necessary to implement these rate changes. 

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     (f) As a condition of participation in the DRG methodology for payment of hospital

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services, every hospital shall submit year-end settlement reports to the department executive

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office within one year from the close of a hospital’s fiscal year. Should a participating hospital

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fail to timely submit a year-end settlement report as required by this section, the department

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executive office shall withhold financial cycle payments due by any state agency with respect to

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this hospital by not more than ten percent (10%) until said report is submitted. For hospital fiscal

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year 2010 and all subsequent fiscal years, hospitals will not be required to submit year-end

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settlement reports on payments for outpatient services. For hospital fiscal year 2011 and all

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subsequent fiscal years, hospitals will not be required to submit year-end settlement reports on

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claims for hospital inpatient services. Further, for hospital fiscal year 2010, hospital inpatient

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claims subject to settlement shall include only those claims received between October 1, 2009

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and June 30, 2010.

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     (g) The provisions of this section shall be effective upon implementation of the

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amendments and new payment methodology pursuant to this section and § 40-8-13.3, which shall

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in any event be no later than March 30, 2010, at which time the provisions of §§ 40-8-13.2, 27-

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19-14, 27-19-15, and 27-19-16 shall be repealed in their entirety. 

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     (h) The director of the Department of Human Services shall establish an independent

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study commission comprised of representatives of the hospital network, representatives from the

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communities the hospitals serve, state and local policy makers and any other stakeholders or

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consumers interested in improving the access and affordability of hospital care.

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     The study commission shall assist the director in identifying: issues of concern and

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priorities in the community hospital system, the delivery of services and rate structures, including

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graduate medical education and training programs; and opportunities for building sustainable and

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effective pubic-private partnerships that support the missions of the department and the state’s

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community hospitals. 

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     The director of the Department of Human Services shall report to the chairpersons of the

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House and Senate Finance Committees the findings and recommendations of the study

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commission by December 31, 2010.

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     40-8-19. Rates of payment to nursing facilities. -- (a) Rate reform. (1) The rates to be

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paid by the state to nursing facilities licensed pursuant to chapter 17 of title 23, and certified to

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participate in the Title XIX Medicaid program for services rendered to Medicaid-eligible

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residents, shall be reasonable and adequate to meet the costs which must be incurred by

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efficiently and economically operated facilities in accordance with 42 U.S.C. § 1396a(a)(13). The

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executive office of health and human services shall promulgate or modify the principles of

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reimbursement for nursing facilities in effect as of July 1, 2011 to be consistent with the

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provisions of this section and Title XIX, 42 U.S.C. § 1396 et seq., of the Social Security Act.

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     (2) The executive office of health and human services (“Executive Office”) shall review

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the current methodology for providing Medicaid payments to nursing facilities, including other

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long-term care services providers, and is authorized to modify the principles of reimbursement to

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replace the current cost based methodology rates with rates based on a price based methodology

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to be paid to all facilities with recognition of the acuity of patients and the relative Medicaid

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occupancy, and to include the following elements to be developed by the executive office:

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     (i) A direct care rate adjusted for resident acuity;

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     (ii) An indirect care rate comprised of a base per diem for all facilities;

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     (iii) A rearray of costs for all facilities every three (3) years beginning October, 2015,

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which may or may not result in automatic per diem revisions;

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     (iv) Application of a fair rental value system;

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     (v) Application of a pass-through system; and

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     (vi) Adjustment of rates by the change in a recognized national nursing home inflation

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index to be applied on October 1st of each year, beginning October 1, 2012. This adjustment will

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not occur on October 1, 2013, but will resume on October 1, 2014. Said inflation index shall be

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applied without regard for the transition factor in subsection (b)(2) below.

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     (b) Transition to full implementation of rate reform. For no less than four (4) years after

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the initial application of the price-based methodology described in subdivision (a)(2) to payment

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rates, the department executive office of health and human services shall implement a transition

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plan to moderate the impact of the rate reform on individual nursing facilities. Said transition

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shall include the following components:

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     (1) No nursing facility shall receive reimbursement for direct care costs that is less than

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the rate of reimbursement for direct care costs received under the methodology in effect at the

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time of passage of this act; and

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     (2) No facility shall lose or gain more than five dollars ($5.00) in its total per diem rate

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the first year of the transition. The adjustment to the per diem loss or gain may be phased out by

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twenty-five percent (25%) each year; and

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     (3) The transition plan and/or period may be modified upon full implementation of

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facility per diem rate increases for quality of care related measures. Said modifications shall be

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submitted in a report to the general assembly at least six (6) months prior to implementation.

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     SECTION 2. Title 40 of the General Laws entitled "HUMAN SERVICES" is hereby

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amended by adding thereto the following chapter:

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     CHAPTER 40-8.11

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     HEALTH CARE FOR ADULTS

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     40-8.11-1. Purpose. -- Pursuant to section 42-12.3-2, it is the intent of the general

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assembly to create access to comprehensive health care for uninsured Rhode Islanders. The

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Rhode Island Medicaid program has become an important source of insurance coverage for low

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income pregnant women, families with children, elders, and persons with disabilities who might

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not be able otherwise to obtain or afford health care. Under the U.S. Patient Protection and

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Affordable Care Act (ACA) of 2010, all Americans will be required to have health insurance, with

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some exceptions, beginning in 2014. Federal funding is available with ACA implementation to

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help pay for health insurance for low income adults, ages nineteen (19) to sixty-four (64), who do

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not qualify for Medicaid eligibility under Rhode Island general and public laws. It is the intent of

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the general assembly, therefore, to implement the Medicaid expansion for childless adults

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authorized by the ACA, to extend health insurance coverage to these Rhode Islanders and further

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the goal established in section 42-12.3-2 in1993.

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     40-8.11-2. Eligibility.-- (a) Medicaid coverage for non-pregnant adults without children.

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There is hereby established, effective January 1, 2014, a category of Medicaid eligibility pursuant

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to Title XIX of the Social Security Act, as amended by the U.S. Patient Protection and

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Affordable Care Act (ACA) of 2010, 42 U.S.C. section 1396u-1, for adults ages nineteen (19) to

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sixty-four (64) who do not have children and do not qualify for Medicaid under Rhode Island

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general laws applying to families with children and adults who are blind, aged or living with a

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disability. The executive office of health and human services is directed to make any amendments

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to the Medicaid state plan and waiver authorities established under title XIX necessary to

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implement this expansion in eligibility and assure the maximum federal contribution for health

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insurance coverage provided pursuant to this chapter.  

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     (b) Income. The secretary of the executive office of health and human services is

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authorized and directed to amend the Medicaid Title XIX state plan and, as deemed necessary,

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any waiver authority to effectuate this expansion of coverage to any Rhode Islander who qualifies

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for Medicaid eligibility under this chapter with income at or below one hundred and thirty-eight

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percent (138%) the federal poverty level, based on modified adjusted gross income.  

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     (c) Delivery system. The executive office of health and human services is authorized and

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directed to apply for and obtain any waiver authorities necessary to provide persons eligible under

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this chapter with managed, coordinated health care coverage consistent with the principles set

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forth in section 42-12.4, pertaining to a health care home.

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     SECTION 3. Section 42-12.4-8 of the General Laws in Chapter 42-12.4 entitled "The

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Rhode Island Medicaid Reform Act of 2008" is hereby amended to read as follows:

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     42-12.4-8. Demonstration termination. -- Demonstration expiration or termination.-

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In the event the demonstration is suspended or terminated for any reason, or in the event that the

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demonstration expires, the department of human services, in conjunction with the executive office

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of health and human services, is directed and authorized to apply for and obtain all waivers an

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extension or renewal of the section 1115 research and demonstration waiver or any new waiver(s)

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that, at a minimum, ensure continuation of the waiver authorities in existence prior to the

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acceptance of the demonstration. The office shall ensure that any such actions are conducted in

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accordance with applicable federal guidelines pertaining to section 1115 demonstration waiver

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renewals, extensions, suspensions or terminations. The department of human services and the

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executive office of health and human services to the extent possible shall ensure that said waivers

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waiver authorities are reinstated prior to any suspension, termination, or expiration of the

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demonstration.

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     SECTION 4. This article shall take effect upon passage.