2023 -- H 6399

========

LC001805

========

     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2023

____________

A N   A C T

RELATING TO HEALTH AND SAFETY -- COMPREHENSIVE HEALTH INSURANCE

PROGRAM

     Introduced By: Representatives Morales, Potter, Sanchez, Stewart, Giraldo, and Henries

     Date Introduced: May 12, 2023

     Referred To: House Health & Human Services

     It is enacted by the General Assembly as follows:

     SECTION 1. Title 23 of the General Laws entitled "HEALTH AND SAFETY" is hereby

amended by adding thereto the following chapter:

CHAPTER 99

THE RHODE ISLAND COMPREHENSIVE HEALTH INSURANCE PROGRAM

     23-99-1. Legislative findings.

     (1) Health care is a human right, not a commodity available only to those who can afford

it;

     (2) Although the federal Affordable Care Act (ACA) allowed states to offer more people

taxpayer subsidized private health insurance, the ACA has not provided universal, comprehensive,

affordable coverage for all Rhode Islanders:

     (i) In 2019, about four and three-tenths percent (4.3%) of Rhode Islanders had no health

insurance, causing about forty-three (43) (1 per 1,000 uninsured) unnecessary deaths each year;

     (ii) An estimated forty-five percent (45%) of Rhode Islanders are under-insured (e.g., not

seeking health care because of high deductibles and co-pays);

     (3) COVID-19 exacerbated and highlighted problems with the status quo health insurance

system including:

     (i) Coverage is too easily lost when health insurance is tied to jobs - between February and

May, 2020, about twenty-one thousand (21,000) more Rhode Islanders lost their jobs and their

health insurance;

     (ii) Systemic racism is reinforced - Black and Hispanic/Latinx Rhode Islanders, are more

likely to be uninsured or underinsured, have suffered the highest rates of COVID-19 mortality and

morbidity;

     (iii) The fear of out-of-pocket costs for uninsured and underinsured puts everyone at risk

because they avoid testing and treatment;

     (4) In 2016, sixty million (60,000,000) people separated from their job at some point during

the year (i.e., about forty-two percent (42%) of the American workforce) and although this act may

cause some job loss, on balance, single payer would increase employment in Rhode Island by nearly

three percent (3%);

     (5) The existing US health insurance system has failed to control the cost of health care

and to provide universal access to health care in a system which is widely accepted to waste thirty

percent (30%) of its revenues on activities that do not improve the health of Americans;

     (6) Every industrialized nation in the world, except the United States, offers universal

health care to its citizens and enjoys better health outcomes for less than two thirds (2/3) to one-

half (1/2) the cost;

     (7) Health care is rationed under our current multi-payer system, despite the fact that Rhode

Island patients, businesses and taxpayers already pay enough to have comprehensive and universal

health insurance under a single-payer system;

     (8) About one-third (1/3) of every "health care" dollar spent in the U.S. is wasted on

unnecessary administrative costs and excessive pharmaceutical company profits due to laws

preventing Medicare from negotiating prices and private health insurance companies lacking

adequate market share to effectively negotiate prices;

     (9) Private health insurance companies are incentivized to let the cost of health care rise

because higher costs require health insurance companies to charge higher health insurance

premiums, increasing companies' revenue and stock price;

     (10) The health care marketplace is not an efficient market and because it represents only

eighteen percent (18%) of the US domestic market, significantly restricts economic growth and

thus the financial well-being of every American, including every Rhode Islander;

     (11) Rhode Islanders cannot afford to keep the current multi-payer health insurance system:

     (i) Between 1991 and 2014, health care spending in Rhode Island per person rose by over

two hundred fifty percent (250%) rising much faster than income and greatly reducing disposable

income;

     (ii) It is estimated that by 2025, the cost of health insurance for an average family of four

LC001805 - Page 2 of 96

(4) will equal about one-half (1/2) of their annual income;

     (iii) In the U.S., about two-thirds (2/3) of personal bankruptcies are medical cost-related

and of these, about three-fourths (3/4) had health insurance at the onset of their medical problems.

In no other industrialized country do people worry about going bankrupt over medical costs;

     (12) Rhode Island private businesses bear most of the costs of employee health insurance

coverage and spend significant time and money choosing from a confusing array of increasingly

expensive plans which do not provide comprehensive coverage;

     (13) Rhode Island employees and retirees lose significant wages and pensions as they are

forced to pay higher amounts of health insurance and health care costs;

     (14) Rhode Island's hospitals are under increasing financial distress i.e., closing, sold to

out-of-state entities, attempting mergers largely due to health insurance reimbursement problems

that other nations do not face and are fixed by a single-payer system;

     (15) The state and its municipalities face enormous other post-employment benefits

(OPEB) unfunded liabilities due mostly to health insurance costs;

     (16) An improved Medicare-for-all style single-payer program would, based on the

performance of existing Medicare, eliminate fifty percent (50%) of the administrative waste in the

current system of private insurance before other savings achieved through meaningful negotiation

of prices and other savings are considered;

     (17) The high costs of medical care could be lowered significantly if the state could

negotiate on behalf of all its residents for bulk purchasing, as well as gain access to usage and price

information currently kept confidential by private health insurers as "proprietary information;"

     (18) Single payer health care would establish a true "free market" system where doctors

compete for patients rather than health insurance companies dictating which patients are able to see

which doctors and setting reimbursement rates;

     (19) Health care providers would spend significantly less time with administrative work

caused by multiple health insurance company requirements and barriers to care delivery and would

spend significantly less for overhead costs because of streamlined billing;

     (20) Rhode Island must act because there are currently no effective state or federal laws

that can provide universal coverage and adequately control rising premiums, co-pays, deductibles

and medical costs, or prevent private insurance companies from continuing to limit available

providers and coverage;

     (21) In 1962, Canada's successful single-payer program began in the province of

Saskatchewan (with approximately the same population as Rhode Island) and became a national

program within ten (10) years; and

LC001805 - Page 3 of 96

     (22) The proposed Rhode Island single payer program was studied by Professor Gerald

Friedman at UMass Amherst in 2015 and he concluded that:

     "Single-payer in Rhode Island will finance medical care with substantial savings compared

with the existing multi-payer system of public and private insurers and would improve access to

health care by extending coverage to the four percent (4%) of Rhode Island residents still without

insurance under the Affordable Care Act and expanding coverage for the growing number with

inadequate health care coverage. Single-payer would improve the economic health of Rhode Island

by: increasing real disposable income for most residents; reducing the burden of health care on

businesses and promoting increased employment; and shifting the costs of health care away from

working and middle-class residents."

     23-99-2. Legislative purpose.

     It is the intent of the general assembly that this chapter establish a universal,

comprehensive, affordable single-payer health care insurance program that will help control health

care costs which shall be referred to as, "the Rhode Island comprehensive health insurance

program" (RICHIP). The program will be paid for by consolidating government and private

payments to multiple insurance carriers into a more economical and efficient improved Medicare-

for-all style single-payer program and substituting lower progressive taxes for higher health

insurance premiums, co-pays, deductibles and costs in excess of caps. This program will save

Rhode Islanders from the current overly expensive, inefficient and unsustainable multi-payer health

insurance system that unnecessarily prevents access to medically necessary health care. The

program will be established after the standard of care funded by Medicaid has been raised to a

Medicare standard.

     23-99-3. Definitions.

     As used in this chapter:

     (1) "Affordable Care Act" or "ACA" means the Federal Patient Protection and Affordable

Care Act (Pub. L. 111-148), as amended by the Federal Health Care and Education Reconciliation

Act of 2010 (Pub. L. 111-152), and any amendments to, or regulations or guidance issued under,

those acts.

     (2) "Carrier" means either a private health insurer authorized to sell health insurance in

Rhode Island or a health care service plan, i.e., any person who undertakes to arrange for the

provision of health care services to subscribers or enrollees, or to pay for or to reimburse any part

of the cost for those services, in return for a prepaid or periodic charge paid by or on behalf of the

subscribers or enrollees, or any person, whether located within or outside of this state, who solicits

or contracts with a subscriber or enrollee in this state to pay for or reimburse any part of the cost

LC001805 - Page 4 of 96

of, or who undertakes to arrange or arranges for, the provision of health care services that are to be

provided, wholly or in part, in a foreign country in return for a prepaid or periodic charge paid by

or on behalf of the subscriber or enrollee.

     (3) "Dependent" has the same definition as set forth in federal tax law (26 U.S.C. § 152).

     (4) "Emergency and urgently needed services" has the same definition as set forth in the

federal Medicare law (42 CFR 422.113).

     (5) "Federally matched public health program" means the state's Medicaid program under

Title XIX of the Social Security Act (42 U.S.C. Sec. 1396 et seq.) and the state's Children's Health

Insurance Program (CHIP) under Title XXI of the Social Security Act (42 U.S.C. Sec. 1397aa et

seq.).

     (6) "For-profit provider" means any health care professional or health care institution that

provides payments, profits or dividends to investors or owners who do not directly provide health

care.

     (7) "Medicaid" or "medical assistance" means a program that is one of the following:

     (i) The state's Medicaid program under Title XIX of the Social Security Act (42 U.S.C.

Sec. 1396 et seq.); or

     (ii) The state's Children's Health Insurance Program under Title XXI of the Social Security

Act (42 U.S.C. Sec. 1397aa et seq.).

     (8) "Medically necessary" means medical, surgical or other services or goods (including

prescription drugs) required for the prevention, diagnosis, cure, or treatment of a health-related

condition including any such services that are necessary to prevent a detrimental change in either

medical or mental health status. Medically necessary services shall be provided in a cost-effective

and appropriate setting and shall not be provided solely for the convenience of the patient or service

provider. "Medically necessary" does not include services or goods that are primarily for cosmetic

purposes; and does not include services or goods that are experimental, unless approved pursuant

to § 23-99-6(b).

     (9) "Medicare" means Title XVIII of the Social Security Act (42 U.S.C. Sec. 1395 et seq.)

and the programs thereunder.

     (10) "Qualified health care provider" means any individual who meets requirements set

forth in § 23-99-7(a)(1).

     (11) "Qualified Rhode Island resident" means any individual who is a "resident" as defined

by §§ 44-30-5(a)(1) and (a)(2) or a dependent of that resident.

     (12) "Rhode Island comprehensive health insurance program" or ("RICHIP") means the

affordable, comprehensive and effective health insurance program as set forth in this chapter.

LC001805 - Page 5 of 96

     (13) "RICHIP participant" means a qualified Rhode Island resident who is enrolled in

RICHIP (and not disenrolled or disqualified) at the time they seek health care.

     23-99-4. Rhode Island health insurance program.

     (a) Organization. This chapter creates the Rhode Island comprehensive health insurance

program (RICHIP), as an independent state government agency.

     (b) Director. A director shall be appointed by the governor, with the advice and consent of

the senate, to lead RICHIP and serve a term of four (4) years, subject to oversight by an executive

board. The director shall be compensated in accordance with the job title and job classification

established by the division of human resources and approved by the general assembly. The duties

of the director shall include:

     (1) Employ staff and authorize reasonable expenditures, as necessary, from the RICHIP

trust fund, to pay program expenses and to administer the program, including creation and oversight

of RICHIP budgets;

     (2) Oversee management of the RICHIP trust fund set forth in § 23-99-12(a) to ensure the

operational well-being and fiscal solvency of the program, including ensuring that all available

funds from all appropriate sources are collected and placed into the trust fund;

     (3) Take any actions necessary and proper to implement the provisions of this chapter;

     (4) Implement standardized claims and reporting procedures;

     (5) Provide for timely payments to participating providers through a structure that is well

organized and that eliminates unnecessary administrative costs, i.e., coordinate with the state

comptroller to facilitate billing from and payments to providers using the state's computerized

financial system, the Rhode Island financial and accounting network system (RIFANS);

     (6) Coordinate with federal health care programs, including Medicare and Medicaid, to

obtain necessary waivers and streamline federal funding and reimbursement;

     (7) Monitor billing and reimbursements to detect inappropriate behavior by providers and

patients and create prohibitions and penalties regarding bad faith or criminal RICHIP participation,

and procedures by which they will be enforced;

     (8) Support the development of an integrated health care database for health care planning

and quality assurance and ensure the legally required confidentiality of all health records it

contains;

     (9) Determine eligibility for RICHIP and establish procedures for enrollment,

disenrollment and disqualification from RICHIP, as well as procedures for handling complaints

and appeals from affected individuals, as set forth in § 29-99-5;

     (10) Create RICHIP expenditure, status, and assessment reports, including, but not limited

LC001805 - Page 6 of 96

to, annual reports with the following:

     (i) Performance of the program;

     (ii) Fiscal condition of the program;

     (iii) Recommendations for statutory changes;

     (iv) Receipt of payments from the federal government;

     (v) Whether current year goals and priorities were met; and

     (vi) Future goals and priorities;

     (11) Review RICHIP collections and disbursements on at least a quarterly basis and

recommend adjustments needed to achieve budgetary targets and permit adequate access to care;

     (12) Develop procedures for accommodating:

     (i) Employer retiree health benefits for people who have been members of RICHIP but go

to live as retirees out of the state;

     (ii) Employer retiree health benefits for people who earned or accrued those benefits while

residing in the state prior to the implementation of RICHIP and live as retirees out of the state; and

     (iii) RICHIP coverage of health care services currently covered under the workers'

compensation system, including whether and how to continue funding for those services under that

system and whether and how to incorporate an element of experience rating; and

     (13) No later than two (2) years after the effective date of this chapter, develop a proposal,

consistent with the principles of this chapter, for provision and funding by the program of long-

term care coverage.

     (c) Board. There shall be a RICHIP board composed of nine (9) members serving terms of

four (4) years. Members shall be appointed by the governor with advice and consent of the senate.

Members of the board shall have no pecuniary interest in any health insurance company or any

business subject to regulation of the board and cannot have previously worked for a health

insurance company. The duties of the board shall include:

     (1) Annually establish a RICHIP benefits package for participants, including a formulary

and a list of other medically necessary goods, as well as a procedure for handling complaints and

appeals relating to the benefits package, pursuant to § 23-99-6.

     (2) Establish RICHIP provider reimbursement and a procedure for handling provider

complaints and appeals as set forth in § 23-99-9;

     (3) Review budget proposals from providers pursuant to § 23-99-11(b); and

     (4) The board shall be subject to chapter 46 of title 42 ("open meetings").

     23-99-5. Coverage.

     (a) All qualified Rhode Island residents may participate in RICHIP. The director shall

LC001805 - Page 7 of 96

establish procedures to determine eligibility, enrollment, disenrollment and disqualification,

including criteria and procedures by which RICHIP can:

     (1) Identify, automatically enroll, and provide a RICHIP card to qualified Rhode Island

residents;

     (2) Process applications from individuals seeking to obtain RICHIP coverage for

dependents after the implementation date;

     (3) Ensure eligible residents are knowledgeable and aware of their rights to health care;

     (4) Determine whether an individual should be disenrolled (e.g., for leaving the state);

     (5) Determine whether an individual should be disqualified (e.g., for fraudulent receipt of

benefits or reimbursements);

     (6) Determine appropriate actions that should be taken with respect to individuals who are

disenrolled or disqualified (including civil and criminal penalties); and

     (7) Permit individuals to request review and appeal decisions to disenroll or disqualify

them.

     (b) Medicare and Medicaid eligible coverage under RICHIP shall be as follows:

     (1) If all necessary federal waivers are obtained, qualified Rhode Island residents eligible

for federal Medicare ("Medicare eligible residents") shall continue to pay required fees to the

federal government. RICHIP shall establish procedures to ensure that Medicare eligible residents

shall have such amounts deducted from what they owe to RICHIP under § 23-99-12(h). RICHIP

shall become the equivalent of qualifying coverage under Medicare part D and Medicare advantage

programs, and as such shall be the vendor for coverage to RICHIP participants. RICHIP shall

provide Medicare eligible residents benefits equal to those available to all other RICHIP

participants and equal to or greater than those available through the federal Medicare program. To

streamline the process, RICHIP shall seek to receive federal reimbursements for services and goods

to Medicare eligible residents and administer all Medicare funds.

     (2) If all necessary federal waivers are obtained, RICHIP shall become the state's sole

Medicaid provider. RICHIP shall create procedures to enroll all qualified Rhode Island residents

eligible for Medicaid ("Medicaid eligible residents") in the federal Medicaid program to ensure a

maximum amount of federal Medicaid funds go to the RICHIP trust fund. RICHIP shall provide

benefits to Medicaid eligible residents equal to those available to all other RICHIP participants.

     (3) If all necessary federal waivers are not granted from the Medicaid or Medicare

programs operated under Title XVIII or XIX of the Social Security Act, the Medicaid or Medicare

program for which a waiver is not granted shall act as the primary insurer for those eligible for such

coverage, and RICHIP shall serve as the secondary or supplemental plan of health insurance

LC001805 - Page 8 of 96

coverage. Until such time as a waiver is granted, the plan shall not pay for services for persons

otherwise eligible for the same health care benefits under the Medicaid or Medicare program. The

director shall establish procedures for determining amounts owed by Medicare and Medicaid

eligible residents for supplemental RICHIP coverage and the extent of such coverage.

     (4) The director may require Rhode Island residents to provide information necessary to

determine whether the resident is eligible for a federally matched public health program or for

Medicare, or any program or benefit under Medicare.

     (5) As a condition of eligibility or continued eligibility for health care services under

RICHIP, a qualified Rhode Island resident who is eligible for benefits under Medicare shall enroll

in Medicare, including Parts A, B, and D.

     (c) Veterans. RICHIP shall serve as the secondary or supplemental plan of health insurance

coverage for military veterans. The director shall establish procedures for determining amounts

owed by military veterans who are qualified residents for such supplemental RICHIP coverage and

the extent of such coverage.

     (d) This chapter does not create any employment benefit, nor require, prohibit, or limit the

providing of any employment benefit.

     (e) This chapter does not affect or limit collective action or collective bargaining on the

part of a health care provider with their employer or any other lawful collective action or collective

bargaining.

     23-99-6. Benefits.

     (a) This chapter shall provide insurance coverage for services and goods (including

prescription drugs) deemed medically necessary by a qualified health care provider and that is

currently covered under:

     (1) Services and goods currently covered by the federal Medicare program (Social Security

Act title XVIII) parts A, B and D;

     (2) Services and goods covered by Medicaid as of January 1, 2024;

     (3) Services and goods currently covered by the state's Children's Health Insurance

Program;

     (4) Essential health benefits mandated by the Affordable Care Act; and

     (5) Services and goods within the following categories:

     (i) Primary and preventive care;

     (ii) Approved dietary and nutritional therapies;

     (iii) Inpatient care;

     (iv) Outpatient care;

LC001805 - Page 9 of 96

     (v) Emergency and urgently needed care;

     (vi) Prescription drugs and medical devices;

     (vii) Laboratory and diagnostic services;

     (viii) Palliative care;

     (ix) Mental health services;

     (x) Oral health, including dental services, periodontics, oral surgery, and endodontics;

     (xi) Substance abuse treatment services;

     (xii) Physical therapy and chiropractic services;

     (xiii) Vision care and vision correction;

     (xiv) Hearing services, including coverage of hearing aids;

     (xv) Podiatric care;

     (xvi) Comprehensive family planning, reproductive, maternity, and newborn care;

     (xvii) Short-term rehabilitative services and devices;

     (xviii) Durable medical equipment;

     (xix) Gender affirming health care; and

     (xx) Diagnostic and routine medical testing.

     (b) Additional coverage. The director shall create a procedure that may permit additional

medically necessary goods and services beyond that provided by federal laws cited herein and

within the areas set forth in § 23-99-5, if the coverage is for services and goods deemed medically

necessary based on credible scientific evidence published in peer-reviewed medical literature

generally recognized by the relevant medical community, physician specialty society

recommendations, and the views of physicians practicing in relevant clinical areas and any other

relevant factors. The director shall create procedures for handling complaints and appeals

concerning the benefits package.

     (c) Restrictions shall not apply. In order for RICHIP participants to be able to receive

medically necessary goods and services, this chapter shall override any state law that restricts the

provision or use of state funds for any medically necessary goods or services, including those

related to family planning and reproductive health care.

     (d) Medically necessary goods:

     (1) Prescription drug formulary:

     (i) In general. The director shall establish a prescription drug formulary system, to be

approved by the board, and encourage best-practices in prescribing and discourage the use of

ineffective, dangerous, or excessively costly medications when better alternatives are available.

     (ii) Promotion of generics. The formulary under this subsection shall promote the use of

LC001805 - Page 10 of 96

generic medications to the greatest extent possible.

     (iii) Formulary updates and petition rights. The formulary under this subsection shall be

updated frequently and the director shall create a procedure for patients and providers to make

requests and appeal denials to add new pharmaceuticals or to remove ineffective or dangerous

medications from the formulary.

     (iv) Use of off-formulary medications. The director shall promulgate rules regarding the

use of off-formulary medications which allow for patient access but do not compromise the

formulary.

     (v) Approved devices and equipment. The director shall present a list of medically

necessary devices and equipment that shall be covered by RICHIP, subject to final approval by the

board.

     (vi) Bulk purchasing. The director shall seek and implement ways to obtain goods at the

lowest possible cost, including bulk purchasing agreements.

     23-99-7. Providers.

     (a) Rhode Island providers.

     (1) Licensing. Participating providers shall meet state licensing requirements in order to

participate in RICHIP. No provider whose license is under suspension or has been revoked shall

participate in the program.

     (2) Participation. All providers may participate in RICHIP by providing items on the

RICHIP benefits list for which they are licensed. Providers may elect either to participate fully, or

not at all, in the program.

     (3) For-profit providers. For-profit providers may continue to offer services and goods in

Rhode Island, but are prohibited from charging patients more than RICHIP reimbursement rates

for covered services and goods and shall notify qualified Rhode Island residents when the services

and goods they offer will not be reimbursed fully under RICHIP.

     (b) Out-of-state providers. Except for emergency and urgently needed service, as set forth

in § 23-99-7(d), RICHIP shall not pay for health care services obtained outside of Rhode Island

unless the following requirements are met:

     (1) The out-of-state provider agrees to accept the RICHIP rate for out-of-state providers;

and

     (2) The services are medically necessary care.

     (c) Out-of-state provider reimbursement. The program shall pay out-of-state health care

providers at a rate equal to the average rate paid by commercial insurers or Medicare for the services

rendered, whichever is higher.

LC001805 - Page 11 of 96

     (d) Out-of-state residents.

     (1) In general. Rhode Island providers who provide any services to individuals who are not

RICHIP participants shall not be reimbursed by RICHIP and shall seek reimbursement from those

individuals or other sources.

     (2) Emergency care exception. Nothing in this chapter shall prevent any individual from

receiving or any provider from providing emergency health care services and goods in Rhode

Island. The director shall adopt rules to provide reimbursement; however, the rules shall reasonably

limit reimbursement to protect the fiscal integrity of RICHIP. The director shall implement

procedures to secure reimbursement from any appropriate third-party funding source or from the

individual to whom the emergency services were rendered.

     23-99-8. Cross border employees.

     (a) State residents employed out-of-state. If an individual is employed out-of-state by an

employer that is subject to Rhode Island state law, the employer and employee shall be required to

pay the payroll taxes as to that employee as if the employment were in the state. If an individual is

employed out-of-state by an employer that is not subject to Rhode Island state law, the employee

health coverage provided by the out-of-state employer to a resident working out-of-state shall serve

as the employee's primary plan of health coverage, and RICHIP shall serve as the employee's

secondary plan of health coverage. The director shall establish procedures for determining amounts

owed by residents employed out-of-state for such supplemental secondary RICHIP coverage and

the extent of such coverage.

     (b) Out-of-state residents employed in the state. The payroll tax set forth in § 23-99-12(i)

shall apply to any out-of-state resident who is employed or self-employed in the state. However,

such out-of-state residents shall be able to take a credit for amounts they spend on health benefits

for themselves that would otherwise be covered by RICHIP if the individual were a RICHIP

participant. The out-of-state resident's employer shall be able to take a credit against such payroll

taxes regardless of the form of the health benefit (e.g., health insurance, a self-insured plan, direct

services, or reimbursement for services), to ensure that the revenue proposal does not relate to

employment benefits in violation of the Federal Employee Retirement Income Security Act

("ERISA") law. For non-employment-based spending by individuals, the credit shall be available

for and limited to spending for health coverage (not out-of-pocket health spending). The credit shall

be available without regard to how little is spent or how sparse the benefit. The credit may only be

taken against the payroll taxes set forth in § 23-99-12(i). Any excess amount may not be applied to

other tax liability. For employment-based health benefits, the credit shall be distributed between

the employer and employee in the same proportion as the spending by each for the benefit. The

LC001805 - Page 12 of 96

employer and employee may each apply their respective portion of the credit to their respective

portion of the payroll taxes set forth in § 23-99-12(i). If any provision of this clause or any

application of it shall be ruled to violate ERISA, the provision or the application of it shall be null

and void and the ruling shall not affect any other provision or application of this section or this

chapter.

     23-99-9. Provider reimbursement.

     (a) Rates for services and goods. RICHIP reimbursement rates to providers shall be

determined by the RICHIP board. These rates shall be equal to or greater than the federal Medicare

rates available to Rhode Island qualified residents that are in effect at the time services and goods

are provided. For outpatient behavioral health services, the minimum rate shall equal one hundred

fifty percent (150%) of federal Medicare rates. If the director determines that there are no such

federal Medicare reimbursement rates, the director shall set the minimum rate. The director shall

review the rates at least annually, recommend changes to the board, and establish procedures by

which complaints about reimbursement rates may be reviewed by the board.

     (b) Billing and payments. Providers shall submit billing for services to RICHIP participants

in the form of electronic invoices entered into RIFANS, the state's computerized financial system.

The director shall coordinate the manner of processing and payment with the office of accounts and

control and the RIFANS support team within the division of information technology. Payments

shall be made by check or electronic funds transfer in accordance with terms and procedures

coordinated by the director and the office of accounts and control and consistent with the fiduciary

management of the RICHIP trust fund.

     (c) Provider restrictions. In-state providers who accept any payment from RICHIP shall

not bill any patient for any covered benefit. In-state providers cannot use any of their operating

budgets for expansion, profit, excessive executive income, including bonuses, marketing, or major

capital purchases or leases.

     23-99-10. Private insurance companies.

     (a) Non-duplication. It is unlawful for a private health insurer to sell health insurance

coverage to qualified Rhode Island residents that duplicates the benefits provided under this

chapter. Nothing in this chapter shall be construed as prohibiting the sale of health insurance

coverage for any additional benefits not covered by this chapter, including additional benefits that

an employer may provide to employees or their dependents, or to former employees or their

dependents (e.g., multiemployer plans can continue to provide wrap-around coverage for any

benefits not provided by RICHIP).

     (b) Displaced employees. Re-education and job placement of persons employed in Rhode

LC001805 - Page 13 of 96

Island-located enterprises who have lost their jobs as a result of this chapter shall be managed by

the Rhode Island department of labor and training or an appropriate federal retraining program. The

director may provide funds from RICHIP or funds otherwise appropriated for this purpose for

retraining and assisting job transition for individuals employed or previously employed in the fields

of health insurance, health care service plans, and other third-party payments for health care or

those individuals providing services to health care providers to deal with third-party payers for

health care, whose jobs may be or have been ended as a result of the implementation of the program,

consistent with applicable laws.

     23-99-11. Budgeting.

     (a) Operating budget. Annually, the director shall create an operating budget for the

program that includes the costs for all benefits set forth in § 23-99-5 and the costs for RICHIP

administration. The director shall determine appropriate reimbursement rates for benefits pursuant

to § 23-99-9(a). The operating budget shall be approved by the executive board prior to submission

to the governor and general assembly.

     (b) Capital expenditures. The director shall work with representatives from state entities

involved with provider capital expenditures (e.g., the Rhode Island department of administration

office of capital projects, the Rhode Island health and educational building corporation, etc.), and

providers to help ensure that capital expenditures proposed by providers, including amounts to be

spent on construction and renovation of health facilities and major equipment purchases, will

address health care needs of RICHIP participants. To the extent that providers are seeking to use

RICHIP funds for capital expenditures, the director shall have the authority to approve or deny such

expenditures.

     (c) Prohibition against co-mingling operations and capital improvement funds. It is

prohibited to use funds under this chapter that are earmarked:

     (1) For operations for capital expenditures; or

     (2) For capital expenditures for operations.

     23-99-12. Financing.

     (a) RICHIP trust fund. There shall be established a RICHIP trust fund into which funds

collected pursuant to this chapter are deposited and from which funds are distributed. All money

collected and received shall be used exclusively to finance RICHIP. The governor or general

assembly may provide funds to the RICHIP trust fund, but may not remove or borrow funds from

the RICHIP trust fund.

     (b) Revenue proposal. After approval of the RICHIP executive board, the director shall

submit to the governor and the general assembly a revenue plan and, if required, legislation

LC001805 - Page 14 of 96

(referred to collectively in this section as the "revenue proposal") to provide the revenue necessary

to finance RICHIP. The initial revenue proposal shall be submitted once waiver negotiations have

proceeded to a level deemed sufficient by the director and annually, thereafter. The basic structure

of the initial revenue proposal will be based on a consideration of:

     (1) Anticipated savings from a single payer program;

     (2) Government funds available for health care;

     (3) Private funds available for health care; and

     (4) Replacing current regressive health insurance payments made to multiple health

insurance carriers with progressive contributions to a single payer (RICHIP) in order to make health

care insurance affordable and remove unnecessary barriers to health care access.

     Subsequent proposals shall adjust the RICHIP contributions, based on projections from the

total RICHIP costs in the previous year, and shall include a five (5) year plan for adjusting RICHIP

contributions to best meet the goals set forth in this section and § 23-99-2.

     (c) Anticipated savings. It is anticipated that RICHIP will lower health care costs by:

     (1) Eliminating payments to private health insurance carriers;

     (2) Reducing paperwork and administrative expenses for both providers and payers created

by the marketing, sales, eligibility checks, network contract management, issues associated

multiple benefit packages, and other administrative waste associated with the current multi-payer

private health insurance system;

     (3) Allowing the planning and delivery of a public health strategy for the entire population

of Rhode Island;

     (4) Improving access to preventive health care; and

     (5) Negotiating on behalf of the state for bulk purchasing of medical supplies and

pharmaceuticals.

     (d) Federal funds. The executive office of health and human services, in collaboration with

the director, the board and the Medicaid office, shall seek and obtain waivers and other approvals

relating to Medicaid, the Children's Health Insurance Program, Medicare, federal tax exemptions

for health care, the ACA, and any other relevant federal programs in order that:

     (1) Federal funds and other subsidies for health care that would otherwise be paid to the

state and its residents and health care providers, would be paid by the federal government to the

state and deposited into the RICHIP trust fund;

     (2) Programs would be waived and such funding from federal programs in Rhode Island

would be replaced or merged into RICHIP in order that it can operate as a single payer program;

     (3) Maximum federal funding for health care is sought even if any necessary waivers or

LC001805 - Page 15 of 96

approvals are not obtained and multiple sources of funding with RICHIP trust fund monies are

pooled, in order that RICHIP can act as much as possible like a single payer program to maximize

benefits to Rhode Islanders; and

     (4) Federal financial participation in the programs that are incorporated into RICHIP are

not jeopardized.

     (e) State funds. State funds that would otherwise be appropriated to any governmental

agency, office, program, instrumentality, or institution for services and benefits covered under

RICHIP shall be directed into the RICHIP trust fund. Payments to the fund pursuant to this section

shall be in an amount equal to the money appropriated for those purposes in the fiscal year

beginning immediately preceding the effective date of this chapter.

     (f) Private funds. Private grants (e.g., from nonprofit corporations) and other funds

specifically ear-marked for health care (e.g., from litigation against tobacco companies, opioid

manufacturers, etc.), shall also be put into the RICHIP trust fund.

     (g) Assignments from RICHIP participants. Receipt of health care services under the plan

shall be deemed an assignment by the RICHIP participant of any right to payment for services from

a policy of insurance, a health benefit plan or other source. The other source of health care benefits

shall pay to the fund all amounts it is obligated to pay to, or on behalf of, the RICHIP participant

for covered health care services. The director may commence any action necessary to recover the

amounts due.

     (h) Replacing current health insurance payments with progressive contributions. Instead of

making health insurance payments to multiple carriers (i.e., for premiums, co-pays deductibles, and

costs in excess of caps) for limited coverage, individuals and entities subject to Rhode Island

taxation pursuant to § 44-30-1 shall pay progressive contributions to the RICHIP trust fund

(referred to collectively in this section as the "RICHIP contributions") for comprehensive coverage.

These RICHIP contributions shall be set and adjusted over time to an appropriate level to:

     (1) Cover the actual cost of the program;

     (2) Ensure that higher brackets of income subject to specified taxes shall be assessed at a

higher marginal rate than lower brackets; and

     (3) Protect the economic welfare of small businesses, low-income earners and working

families through tax credits or exemptions.

     (i) Contributions based on earned income. The amounts currently paid by employers and

employees for health insurance shall initially be replaced by a ten percent (10%) payroll tax, based

on the projected average payroll of employees over three (3) previous calendar years. The employer

shall pay eighty percent (80%) and the employee shall pay twenty percent (20%) of this payroll

LC001805 - Page 16 of 96

tax, except that an employer may agree to pay all or part of the employee's share. Self- employed

individuals shall initially pay one-hundred percent (100%) of the payroll tax. The ten percent (10%)

initial rate will be adjusted by the director in order that higher brackets of income subject to these

taxes shall be assessed at a higher marginal rate than lower brackets and in order that small

businesses and lower income earners receive a credit or exemption.

     (j) Contributions based on unearned income. There shall be a progressive contribution

based on unearned income, i.e., capital gains, dividends, interest, profits, and rents. Initially, the

unearned income RICHIP contributions shall be equal to ten percent (10%) of such unearned

income. The ten percent (10%) initial rate may be adjusted by the director to allow for a graduated

progressive exemption or credit for individuals with lower unearned income levels.

     23-99-13. Implementation.

     (a) State laws and regulations.

     (1) In general. The director shall work with the executive board and receive such assistance

as may be necessary from other state agencies and entities to examine state laws and regulations

and to make recommendations necessary to conform such laws and regulations to properly

implement the RICHIP program. The director shall report recommendations to the governor and

the general assembly.

     (2) Anti-trust laws. The intent of this chapter is to exempt activities provided for under this

chapter from state antitrust laws and to provide immunity from federal antitrust laws through the

state action doctrine.

     (b) The director shall complete an implementation plan to provide health care coverage for

qualified residents in accordance with this chapter within twelve (12) months of its effective date.

     (c) The executive office of health and human services, in collaboration with the director,

the board, and the Medicaid director, will have the initial responsibility of negotiating the waivers.

     (d) Severability. If any provision or application of this chapter shall be held to be invalid,

or to violate or be inconsistent with any applicable federal law or regulation, that shall not affect

other provisions or applications of this chapter which can be given effect without that provision or

application; and to that end, the provisions and applications of this chapter are severable.

     SECTION 2. Chapter 22-11 of the General Laws entitled "Joint Committee on Legislative

Services" is hereby amended by adding thereto the following section:

     22-11-4.1. Employees needed to maximize federal Medicaid funding.

     The joint committee on legislative services shall fund five (5) new FTEs for the senate

fiscal office and five (5) new FTEs for the house fiscal office exclusively devoted to finding ways

to maximize federal Medicaid funding, including compiling proposals for expanding eligibility to

LC001805 - Page 17 of 96

maximize the eligibility allowed by Centers for Medicare & Medicaid Services (CMS).

     SECTION 3. Section 23-17-38.1 of the General Laws in Chapter 23-17 entitled "Licensing

of Healthcare Facilities" is hereby amended to read as follows:

     23-17-38.1. Hospitals -- Licensing fee.

     (a) There is imposed a hospital licensing fee for state fiscal year 2021 against each hospital

in the state. The hospital licensing fee is equal to five percent (5.0%) of the net patient-services

revenue of every hospital for the hospital’s first fiscal year ending on or after January 1, 2019,

except that the license fee for all hospitals located in Washington County, Rhode Island shall be

discounted by thirty-seven percent (37%). The discount for Washington County hospitals is subject

to approval by the Secretary of the U.S. Department of Health and Human Services of a state plan

amendment submitted by the executive office of health and human services for the purpose of

pursuing a waiver of the uniformity requirement for the hospital license fee. This licensing fee shall

be administered and collected by the tax administrator, division of taxation within the department

of revenue, and all the administration, collection, and other provisions of chapter 51 of title 44 shall

apply. Every hospital shall pay the licensing fee to the tax administrator on or before July 13, 2021,

and payments shall be made by electronic transfer of monies to the general treasurer and deposited

to the general fund. Every hospital shall, on or before June 15, 2020, make a return to the tax

administrator containing the correct computation of net patient-services revenue for the hospital

fiscal year ending September 30, 2019, and the licensing fee due upon that amount. All returns

shall be signed by the hospital’s authorized representative, subject to the pains and penalties of

perjury.

     (b)(a) There is also imposed a hospital licensing fee for state fiscal year 2023 against each

hospital in the state. The hospital licensing fee is equal to five and forty-two hundredths percent

(5.42%) of the net patient-services revenue of every hospital for the hospital’s first fiscal year

ending on or after January 1, 2021, except that the license fee for all hospitals located in Washington

County, Rhode Island shall be discounted by thirty-seven percent (37%). The discount for

Washington County hospitals is subject to approval by the Secretary of the U.S. Department of

Health and Human Services of a state plan amendment submitted by the executive office of health

and human services for the purpose of pursuing a waiver of the uniformity requirement for the

hospital license fee. This licensing fee shall be administered and collected by the tax administrator,

division of taxation within the department of revenue, and all the administration, collection, and

other provisions of chapter 51 of title 44 shall apply. Every hospital shall pay the licensing fee to

the tax administrator on or before June 30, 2023, and payments shall be made by electronic transfer

of monies to the general treasurer and deposited to the general fund. Every hospital shall, on or

LC001805 - Page 18 of 96

before May 25, 2023, make a return to the tax administrator containing the correct computation of

net patient-services revenue for the hospital fiscal year ending September 30, 2021, and the

licensing fee due upon that amount. All returns shall be signed by the hospital’s authorized

representative, subject to the pains and penalties of perjury.

     (c)(b) There is also imposed a hospital licensing fee for state fiscal year 2022 against each

hospital in the state. The hospital licensing fee is equal to five and seven hundred twenty-five

thousandths percent (5.725%) of the net patient-services revenue of every hospital for the hospital's

first fiscal year ending on or after January 1, 2020, except that the license fee for all hospitals

located in Washington County, Rhode Island shall be discounted by thirty-seven percent (37%).

The discount for Washington County hospitals is subject to approval by the Secretary of the U.S.

Department of Health and Human Services of a state plan amendment submitted by the executive

office of health and human services for the purpose of pursuing a waiver of the uniformity

requirement for the hospital license fee. This licensing fee shall be administered and collected by

the tax administrator, division of taxation within the department of revenue, and all the

administration, collection, and other provisions of Chapter 51 of title 44 shall apply. Every hospital

shall pay the licensing fee to the tax administrator on or before July 13, 2022, and payments shall

be made by electronic transfer of monies to the general treasurer and deposited to the general fund.

Every hospital shall, on or before June 15, 2022, make a return to the tax administrator containing

the correct computation of net patient-services revenue for the hospital fiscal year ending

September 30, 2020, and the licensing fee due upon that amount. All returns shall be signed by the

hospital's authorized representative, subject to the pains and penalties of perjury.

     (c) There is also imposed a hospital licensing fee described in subsections d through g for

state fiscal year 2024 against net patient-services revenue of every non-government owned hospital

as defined herein for the hospital’s first fiscal year ending on or after January 1, 2022. The hospital

licensing fee shall have three (3) tiers with differing fees based on inpatient and outpatient net

patient-services revenue. The executive office of health and human services, in consultation with

the tax administrator, shall identify the hospitals in each tier, subject to the definitions in this

section, by July 15, 2023, and shall notify each hospital of its tier by August 1, 2023.

     (d) Tier 1 is composed of hospitals that do not meet the description of either Tier 2 or Tier

3.

     (1) The inpatient hospital licensing fee for Tier 1 is equal to thirteen and fifty-four

hundredths percent (13.54%) of the inpatient net patient-services revenue derived from inpatient

net patient-services revenue of every Tier 1 hospital.

     (2) The outpatient hospital licensing fee for Tier 1 is equal to thirteen and seventy-three

LC001805 - Page 19 of 96

hundredths percent (13.73%) of the net patient-services revenue derived from outpatient net

patient-services revenue of every Tier 1 hospital.

     (e) Tier 2 is composed of High Medicaid/Uninsured Cost Hospitals and Independent

Hospitals.

     (1) The inpatient hospital licensing fee for Tier 2 is equal to two and seventy-one

hundredths (2.71%) of the inpatient net patient-services revenue derived from inpatient net patient

services revenue of every Tier 2 hospital.

     (2) The outpatient hospital licensing fee for Tier 2 is equal to two and seven-five one

hundredths (2.75%) of the outpatient net patient-services revenue derived from outpatient net

patient-services revenue of every Tier 2 hospital.

     (f) Tier 3 is composed of hospitals that are Medicare-designated Low Volume hospitals

and rehabilitative hospitals.

     (1) The inpatient hospital licensing fee for Tier 3 is equal to one and thirty-five hundredths

(1.35%) of the inpatient net patient-services revenue derived from inpatient net patient-services

revenue of every Tier 3 hospital.

     (2) The outpatient hospital licensing fee for Tier 3 is equal to one and thirty-seven

hundredths (1.37%) of the outpatient net patient-services revenue derived from outpatient net

patient-services revenue of every Tier 3 hospital.

     (g) There is also imposed a hospital licensing fee for state fiscal year 2024 against state

government owned and operated hospitals in the state as defined therein. The hospital licensing fee

is equal to five and forty-two hundredths percent (5.42%) of the net patient-services revenue of

every hospital for the hospital’s first fiscal year ending on or after January 1, 2023.

     (h) The hospital licensing fee described in subsections (c) through (g) is subject to U.S.

Department of Health and Human Services approval of a request to waive the requirement that

health care-related taxes be imposed uniformly as contained in 42 CFR 433.68(d). (i) This hospital

licensing fee shall be administered and collected by the tax administrator, division of taxation

within the department of revenue, and all the administration, collection, and other provisions of

chapter 51 of title 44 shall apply. Every hospital shall pay the licensing fee to the tax administrator

on a quarterly basis and fully before June 30, 2024, and payments shall be made by electronic

transfer of monies to the tax administrator and deposited to the general fund. Every hospital shall,

on or before August 1, 2023, make a return to the tax administrator containing the correct

computation of inpatient and outpatient net patient-services revenue for the hospital fiscal year

ending in 2022, and the licensing fee due upon that amount. All returns shall be signed by the

hospital’s authorized representative, subject to the pains and penalties of perjury.

LC001805 - Page 20 of 96

     (d)(i) For purposes of this section the following words and phrases have the following

meanings:

     (2)(1) "Gross patient-services revenue" means the gross revenue related to patient care

services.

     (2) “High Medicaid/Uninsured cost hospital” means a hospital for which the hospital’s total

uncompensated care, as calculated pursuant to § 40-8.3-2(4), divided by the hospital’s total net

patient-services revenues, is equal to 6.0% or greater.

     (1)(3) "Hospital" means the actual facilities and buildings in existence in Rhode Island,

licensed pursuant to § 23-17-1 et seq. on June 30, 2010, and thereafter any premises included on

that license, regardless of changes in licensure status pursuant to chapter 17.14 of title 23 (hospital

conversions) and § 23-17-6(b) (change in effective control), that provides short-term acute inpatient

and/or outpatient care to persons who require definitive diagnosis and treatment for injury, illness,

disabilities, or pregnancy. Notwithstanding the preceding language, the negotiated Medicaid

managed care payment rates for a court-approved purchaser that acquires a hospital through

receivership, special mastership, or other similar state insolvency proceedings (which court-

approved purchaser is issued a hospital license after January 1, 2013) shall be based upon the newly

negotiated rates between the court-approved purchaser and the health plan, and such rates shall be

effective as of the date that the court-approved purchaser and the health plan execute the initial

agreement containing the newly negotiated rate. The rate-setting methodology for inpatient hospital

payments and outpatient hospital payments set forth in §§ 40-8-13.4(b) and 40-8-13.4(b)(2),

respectively, shall thereafter apply to negotiated increases for each annual twelve-month (12)

period as of July 1 following the completion of the first full year of the court-approved purchaser's

initial Medicaid managed care contract.

     (4) “Independent hospitals” means a hospital not part of a multi-hospital system

     (5) “Medicare-designated low volume hospital” means a hospital that qualifies under 42

32 CFR 412.101(b)(2) for additional Medicare payments to qualifying hospitals for the higher

incremental costs associated with a low volume of discharges.

     (3)(6) "Net patient-services revenue" means the charges related to patient care services less

(i) Charges attributable to charity care; (ii) Bad debt expenses; and (iii) Contractual allowances.

     (7) “Non-government owned hospitals” means a hospital not owned and operated by the

state.

     (8) “Rehabilitative hospital” means rehabilitation hospital center licensed by the Rhode

Island department of health.

     (9) “State-government owned and operated hospitals” means a hospital facility licensed by

LC001805 - Page 21 of 96

the Rhode Island department of health, owned and operated by the state of Rhode Island.

     (e)(k) The tax administrator in consultation with the executive office of health and human

services shall make and promulgate any rules, regulations, and procedures not inconsistent with

state law and fiscal procedures that he or she deems necessary for the proper administration of this

section and to carry out the provisions, policy, and purposes of this section.

     (f)(l) The licensing fee imposed by subsection (a) shall apply to hospitals as defined herein

that are duly licensed on July 1, 2020 2021, and shall be in addition to the inspection fee imposed

by § 23-17-38 and to any licensing fees previously imposed in accordance with this section.

     (g)(m) The licensing fee imposed by subsection (b) shall apply to hospitals as defined

herein that are duly licensed on July 1, 2021 2022, and shall be in addition to the inspection fee

imposed by § 23-17-38 and to any licensing fees previously imposed in accordance with this

section.

     (h)(n) The licensing fee fees imposed by subsection subsections (c) through (g) shall apply

to hospitals as defined herein that are duly licensed on July 1, 2022 2023, and shall be in addition

to the inspection fee imposed by § 23-17-38 and to any licensing fees previously imposed in

accordance with this section.

     SECTION 4. Section 27-34.3-7 of the General Laws in Chapter 27-34.3 entitled "Rhode

Island Life and Health Insurance Guaranty Association Act" is hereby amended to read as follows:

     27-34.3-7. Board of directors.

     (a) The board of directors of the association shall consist of:

     (1) Nine (9) members appointed by the governor with advice and consent of the senate;

Not less than five (5) nor more than nine (9) member insurers serving terms as established in the

plan of operation; and

     (2) The commissioner or the commissioner's designee, who shall chair the board in a non-

voting ex officio capacity. Only member insurers shall be eligible to vote. The members of the

board shall be selected by member insurers subject to the approval of the commissioner. The board

of directors, previously established under § 27-34.1-8 [Repealed], shall continue to operate in

accordance with the provision of this section. Vacancies on the board shall be filled for the

remaining period of the term by a majority vote of the remaining board members, subject to the

approval of the commissioner.

     (b) In approving selections to the board, the commissioner shall consider, among other

things, whether all member insurers are fairly represented.

     (c) Members of the board may be reimbursed from the assets of the association for expenses

incurred by them as members of the board of directors but members of the board shall not be

LC001805 - Page 22 of 96

compensated by the association for their services.

     SECTION 5. Section 27-66-24 of the General Laws in Chapter 27-66 entitled "The Health

Insurance Conversions Act" is hereby amended to read as follows:

     27-66-24. Exceptions -- Rehabilitation, liquidation or conservation.

     No proposed conversion shall be subject to this chapter in In the event that the health

insurance corporation, health maintenance corporation, a nonprofit hospital service corporation,

nonprofit medical service corporation or affiliate or subsidiary of them, hereinafter "the insurer,"

is subject to an order from the superior court directing the director to rehabilitate, liquidate or

conserve, as provided in §§ 27-19-28, 27-20-24, 27-41-18, or chapter 14.1, 14.2,14.3 or 14.4 of this

title., certain additional conditions shall apply to the insurer:

     (1) The insolvency, financial condition, or default of the insurer at any time shall not permit

the insurer to fail to pay claims in a timely manner.

     (2) Should the insurer fail to pay claims in a timely manner, those claims shall become a

temporary obligation of the state, who shall pay them in a timely manner. Should the state be

compelled to pay claims for this reason, the insurer shall owe the state a fine ten (10) times the

value of all claims paid.

     (3) The insolvency, financial condition, or default of the insurer at any time shall not permit

the insurer to fail to pay state taxes on time. Should the insurer fail to pay taxes on time, the size of

the tax obligation owed shall increase by a factor of ten (10).

     (4) The Medicaid office shall be guaranteed a right of first refusal to acquire the insurer

before alternate buyers are considered. Any obligations due to the state by the insurer shall be

counted towards the purchase price of the insurer. The Rhode Island life and health insurance

guaranty association, created pursuant to § 27-34.3-6, shall pay the costs of the acquisition, but all

ownership shares shall be held by the Medicaid office.

     SECTION 6. Title 27 of the General Laws entitled "INSURANCE" is hereby amended by

adding thereto the following chapter:

CHAPTER 82

PRIOR AUTHORIZATION OF CERTAIN HEALTH INSURANCE POLICY CHANGES

     27-82-1. Prior authorization of general assembly.

     (a) Prior authorization of the general assembly shall be required for certain policy changes

by health insurers:

     (1) Any change that increases the average amount charged annually to consumers on a per

beneficiary basis;

     (2) Any change that in any way reduces any benefits offered to plan beneficiaries;

LC001805 - Page 23 of 96

     (3) Any change that increases any premiums, deductibles, or copays; or

     (4) Ceasing offering any plan a health insurer offers within the State of Rhode Island.

     (b) No rate reviews pursuant to those utilized in § 27-18-54, § 27-19-30.1, § 27-20-25.2, §

27-41-27.2, and §42-62-13 shall be construed to exempt any health insurer from the prior

authorization requirements of this chapter.

     SECTION 7. Section 28-57-5 of the General Laws in Chapter 28-57 entitled "Healthy and

Safe Families and Workplaces Act" is hereby amended to read as follows:

     28-57-5. Accrual of paid sick and safe leave time.

     (a) All employees employed by an employer of eighteen (18) or more employees in Rhode

Island shall accrue a minimum of one hour of paid sick and safe leave time for every thirty five

(35) hours worked up to a maximum of twenty-four (24) hours during the calendar year of 2018,

thirty-two (32) hours during calendar year 2019, and up to a maximum of forty (40) hours per year

during the calendar years 2023 and 2024 and up to a maximum of one hundred sixty (160) hours

per year thereafter, unless the employer chooses to provide a higher annual limit in both accrual

and use. In determining the number of employees who are employed by an employer for

compensation, all employees defined in § 28-57-3(7) shall be counted.

     (b) Employees who are exempt from the overtime requirements under 29 U.S.C. §

213(a)(1) of the Federal Fair Labor Standards Act, 29 U.S.C. § 201 et seq., will be assumed to work

forty (40) hours in each work week for purposes of paid sick and safe leave time accrual unless

their normal work week is less than forty (40) hours, in which case paid sick and safe leave time

accrues based upon that normal work week.

     (c) Paid sick and safe leave time as provided in this chapter shall begin to accrue at the

commencement of employment or pursuant to the law's effective date [July 1, 2018], whichever is

later. An employer may provide all paid sick and safe leave time that an employee is expected to

accrue in a year at the beginning of the year.

     (d) An employer may require a waiting period for newly hired employees of up to ninety

(90) days. During this waiting period, an employee shall accrue earned sick time pursuant to this

section or the employer's policy, if exempt under § 28-57-4(b), but shall not be permitted to use the

earned sick time until after he or she has completed the waiting period.

     (e) Paid sick and safe leave time shall be carried over to the following calendar year;

however, an employee's use of paid sick and safe leave time provided under this chapter in each

calendar year shall not exceed twenty-four (24) hours during calendar year 2018, and thirty-two

(32) hours during calendar year 2019, and forty (40) hours per year thereafter. Alternatively, in lieu

of carryover of unused earned paid sick and safe leave time from one year to the next, an employer

LC001805 - Page 24 of 96

may pay an employee for unused earned paid sick and safe leave time at the end of a year and

provide the employee with an amount of paid sick and safe leave that meets or exceeds the

requirements of this chapter that is available for the employee's immediate use at the beginning of

the subsequent year.

     (f) Nothing in this chapter shall be construed as requiring financial or other reimbursement

to an employee from an employer upon the employee's termination, resignation, retirement, or other

separation from employment for accrued paid sick and safe leave time that has not been used.

     (g) If an employee is transferred to a separate division, entity, or location within the state,

but remains employed by the same employer as defined in 29 C.F.R. § 791.2 of the Federal Fair

Labor Standards Act, 29 U.S.C. § 201 et seq., the employee is entitled to all paid sick and safe leave

time accrued at the prior division, entity, or location and is entitled to use all paid sick and safe

leave time as provided in this act. When there is a separation from employment and the employee

is rehired within one hundred thirty-five (135) days of separation by the same employer, previously

accrued paid sick and safe leave time that had not been used shall be reinstated. Further, the

employee shall be entitled to use accrued paid sick and safe leave time and accrue additional sick

and safe leave time at the re-commencement of employment.

     (h) When a different employer succeeds or takes the place of an existing employer, all

employees of the original employer who remain employed by the successor employer within the

state are entitled to all earned paid sick and safe leave time they accrued when employed by the

original employer, and are entitled to use earned paid sick and safe leave time previously accrued.

     (i) At its discretion, an employer may loan sick and safe leave time to an employee in

advance of accrual by such employee.

     (j) Temporary employees shall be entitled to use accrued paid sick and safe leave time

beginning on the one hundred eightieth (180) calendar day following commencement of their

employment, unless otherwise permitted by the employer. On and after the one hundred eightieth

(180) calendar day of employment, employees may use paid sick and safe leave time as it is

accrued. During this waiting period, an employee shall accrue earned sick time pursuant to this

chapter, but shall not be permitted to use the earned sick time until after he or she has completed

the waiting period.

     (k) Seasonal employees shall be entitled to use accrued paid sick and safe leave time

beginning on the one hundred fiftieth (150) calendar day following commencement of their

employment, unless otherwise permitted by the employer. On and after the one hundred fiftieth

(150) calendar day of employment, employees may use paid sick and safe leave time as it is

accrued. During this waiting period, an employee shall accrue earned sick time pursuant to this

LC001805 - Page 25 of 96

chapter, but shall not be permitted to use the earned sick time until after he or she has completed

the waiting period.

     SECTION 8. Section 36-12-2.1 of the General Laws in Chapter 36-12 entitled "Insurance

Benefits" is hereby repealed.

     36-12-2.1. Health insurance benefits -- Coverage for abortions excluded.

     (a) The state of Rhode Island shall not include in any health insurance contracts, plans, or

policies covering employees, any provision which shall provide coverage for induced abortions

(except where the life of the mother would be endangered if the fetus were carried to term, or where

the pregnancy resulted from rape or incest). This section shall be applicable to all contracts, plans

or policies of:

     (1) All health insurers subject to title 27;

     (2) All group and blanket health insurers subject to title 27;

     (3) All nonprofit hospital, medical, surgical, dental, and health service corporations;

     (4) All health maintenance organizations; and

     (5) Any provision of medical, hospital, surgical, and funeral benefits and of coverage

against accidental death or injury when the benefits or coverage are incidental to or part of other

insurance authorized by the statutes of this state.

     (b) Provided, however, that the provisions of this section shall not apply to benefits

provided under existing collective bargaining agreements entered into prior to June 30, 1982.

     (c) Nothing contained herein shall be construed to pertain to insurance coverage for

complications as the result of an abortion.

     SECTION 9. Sections 40-8-2, 40-8-6, 40-8-10, 40-8-13, 40-8-13.4, 40-8-16, 40-8-19, 40-

8-26 and 40-8-32 of the General Laws in Chapter 40-8 entitled "Medical Assistance" are hereby

amended to read as follows:

     40-8-2. Definitions.

     As used in this chapter, unless the context shall otherwise require:

     (1) "Dental service" means and includes emergency care, X-rays for diagnoses, extractions,

palliative treatment, and the refitting and relining of existing dentures and prosthesis.

     (2) "Department" means the department of human services.

     (3) "Director" means the director of human services Medicaid director.

     (4) "Drug" means and includes only drugs and biologicals prescribed by a licensed dentist

or physician as are either included in the United States pharmacopoeia, national formulary, or are

new and nonofficial drugs and remedies.

     (5) "Inpatient" means a person admitted to and under treatment or care of a physician or

LC001805 - Page 26 of 96

surgeon in a hospital or nursing facility that meets standards of and complies with rules and

regulations promulgated by the director.

     (6) "Inpatient hospital services" means the following items and services furnished to an

inpatient in a hospital other than a hospital, institution, or facility for tuberculosis or mental

diseases:

     (i) Bed and board;

     (ii) Nursing services and other related services as are customarily furnished by the hospital

for the care and treatment of inpatients and drugs, biologicals, supplies, appliances, and equipment

for use in the hospital, as are customarily furnished by the hospital for the care and treatment of

patients;

     (iii) (A) Other diagnostic or therapeutic items or services, including, but not limited to,

pathology, radiology, and anesthesiology furnished by the hospital or by others under arrangements

made by the hospital, as are customarily furnished to inpatients either by the hospital or by others

under such arrangements, and services as are customarily provided to inpatients in the hospital by

an intern or resident-in-training under a teaching program having the approval of the Council on

Medical Education and Hospitals of the American Medical Association or of any other recognized

medical society approved by the director.

     (B) The term "inpatient hospital services" shall be taken to include medical and surgical

services provided by the inpatient's physician, but shall not include the services of a private-duty

nurse or services in a hospital, institution, or facility maintained primarily for the treatment and

care of patients with tuberculosis or mental diseases. Provided, further, it shall be taken to include

only the following organ transplant operations: kidney, liver, cornea, pancreas, bone marrow, lung,

heart, and heart/lung, and other organ transplant operations as may be designated by the director

after consultation with medical advisory staff or medical consultants; and provided that any such

transplant operation is determined by the director or his or her designee to be medically necessary.

Prior written approval of the director, or his or her designee, shall be required for all covered organ

transplant operations.

     (C) In determining medical necessity for organ transplant procedures, the state plan shall

adopt a case-by-case approach and shall focus on the medical indications and contra-indications in

each instance; the progressive nature of the disease; the existence of any alternative therapies; the

life-threatening nature of the disease; the general state of health of the patient apart from the

particular organ disease; and any other relevant facts and circumstances related to the applicant and

the particular transplant procedure.

     (7) "Medicare equivalent rate" means the amount that would be paid for the relevant

LC001805 - Page 27 of 96

services as furnished by the relevant group of facilities under Medicare payment principles

delineated in subchapter B of 42 CFR Chapter IV. Should no direct Medicare rates be available for

the particular service and facility group, the Medicaid director will estimate the rate. Providers will

have standing to bring an action in superior court for a higher rate, but intermediary insurers such

as managed care entities shall have no standing to bring an action for a lower rate.

     (7)(8) "Nursing services" means the following items and services furnished to an inpatient

in a nursing facility:

     (i) Bed and board;

     (ii) Nursing care and other related services as are customarily furnished to inpatients

admitted to the nursing facility, and drugs, biologicals, supplies, appliances, and equipment for use

in the facility, as are customarily furnished in the facility for the care and treatment of patients;

     (iii) Other diagnostic or therapeutic items or services, legally furnished by the facility or

by others under arrangements made by the facility, as are customarily furnished to inpatients either

by the facility or by others under such arrangement;

     (iv) Medical services provided in the facility by the inpatient's physician, or by an intern

or resident-in-training of a hospital with which the facility is affiliated or that is under the same

control, under a teaching program of the hospital approved as provided in subsection (6); and

     (v) A personal-needs allowance of fifty dollars ($50.00) two hundred dollars ($200) per

month.

     (8)(9) "Relative with whom the dependent child is living" means and includes the father,

mother, grandfather, grandmother, brother, sister, stepfather, stepmother, stepbrother, stepsister,

uncle, aunt, first cousin, nephew, or niece of any dependent child who maintains a home for the

dependent child.

     (9)(10) "Visiting nurse service" means part-time or intermittent nursing care provided by

or under the supervision of a registered professional nurse other than in a hospital or nursing home.

     40-8-6. Review of application for benefits.

     The director, or someone designated by him or her, shall review each application for

benefits filed in accordance with regulations, and shall make a determination of whether the

application will be honored and the extent of the benefits to be made available to the applicant, and

shall, within thirty (30) fifteen (15) days after the filing, notify the applicant, in writing, of the

determination. If the application is rejected, the notice to the applicant shall set forth therein the

reason therefor. The director may at any time reconsider any determination.

     40-8-10. Recovery of benefits paid in error.

     Any person, who through error or mistake of himself or herself or another, receives medical

LC001805 - Page 28 of 96

care benefits to which he or she is not entitled or with respect to which he or she was ineligible,

shall be required to reimburse the state for the benefits paid through error or mistake within the

previous three (3) years.

     40-8-13. Rules, regulations, and fee schedules.

     The director shall make and promulgate rules, regulations, and fee schedules not

inconsistent with state law and fiscal procedures as he or she deems necessary for the proper

administration of this chapter and to carry out the policy and purposes thereof, and to make the

department's plan conform to the provisions of the federal Social Security Act, 42 U.S.C. § 1396

et seq., and any rules or regulations promulgated pursuant thereto. Except where explicitly

authorized by this title, the director shall have no power to set any fee schedule below the Medicare

equivalent rate; provided, however, that the director shall be empowered to provide a lower rate

equal to the maximum rate where federal reimbursement can be obtained in the event that federal

reimbursement cannot be obtained for the Medicare equivalent rate. For outpatient behavioral

health services, the minimum fee schedule shall be set at one hundred fifty percent (150%) of the

Medicare equivalent rate. The director shall attempt to obtain federal reimbursement for billing

outpatient behavioral health services at one hundred fifty percent (150%) of the Medicare

equivalent rate, but the state shall bear the costs of this higher rate for outpatient behavioral health

services even if federal reimbursement cannot be obtained. Should federal financial participation

be impossible to obtain for outpatient behavioral health services rate of one hundred fifty percent

(150%) of the Medicare equivalent rate, the director shall impose a surtax on the tax imposed on

health insurers pursuant to chapter 17 of title 44 in the amount necessary to defray the costs of the

inability to obtain federal reimbursement for an outpatient behavioral health services rate of one

hundred fifty percent (150%) of the Medicare equivalent rate.

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

services.

     (a) The executive office of health and human services ("executive office") shall implement

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

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

     (b) In order to improve efficiency and cost-effectiveness, the executive office shall:

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

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

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

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

hospitals. It is understood that a payment method based on DRG may include cost outlier payments

LC001805 - Page 29 of 96

and other specific exceptions. The executive office will review the DRG-payment method and the

DRG base price annually, making adjustments as appropriate in consideration of such elements as

trends in hospital input costs; patterns in hospital coding; beneficiary access to care; and the Centers

for Medicare and Medicaid Services national CMS Prospective Payment System (IPPS) Hospital

Input Price index. For the twelve-month (12) period beginning July 1, 2015, the DRG base rate for

Medicaid fee-for-service inpatient hospital services shall not exceed ninety-seven and one-half

percent (97.5%) of the payment rates in effect as of July 1, 2014. Beginning July 1, 2019, the DRG

base rate for Medicaid fee-for-service inpatient hospital services shall be 107.2% of the payment

rates in effect as of July 1, 2018. Increases in the Medicaid fee-for-service DRG hospital payments

for the twelve-month (12) period beginning July 1, 2020, shall be based on the payment rates in

effect as of July 1 of the preceding fiscal year, and shall be the Centers for Medicare and Medicaid

Services national Prospective Payment System (IPPS) Hospital Input Price Index. Beginning July

1, 2023, payments for inpatient services in fee-for-service Medicaid shall cease utilizing the DRG

method of payment, and payments shall take place on a pure fee-for-services basis, unless a

provider shall elect to utilize the DRG payment methodology. DRG rates shall be set equal to ninety

percent (90%) of a reasonable estimate of the Medicare equivalent rate. Non-DRG rates shall be

set by the Medicaid director through regulation in order that the projected overall per capita

expenditures shall equal ninety-five percent (95%) of a reasonable estimate of the equivalent

overall per capital expenditures that would have been reached under the Medicare equivalent rate.

     (ii) With respect to inpatient services, (A) It is required as of January 1, 2011, until

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

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

30, 2010. Increases in inpatient hospital payments for each annual twelve-month (12) period

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

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

period; (B) Provided, however, for the twenty-four-month (24) period beginning July 1, 2013, the

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

payment rates in effect as of January 1, 2013, and for the twelve-month (12) period beginning July

1, 2015, the Medicaid managed care payment inpatient rates between each hospital and health plan

shall not exceed ninety-seven and one-half percent (97.5%) of the payment rates in effect as of

January 1, 2013; (C) Increases in inpatient hospital payments for each annual twelve-month (12)

period beginning July 1, 2017, shall be the Centers for Medicare and Medicaid Services national

CMS Prospective Payment System (IPPS) Hospital Input Price Index, less Productivity

Adjustment, for the applicable period and shall be paid to each hospital retroactively to July 1; (D)

LC001805 - Page 30 of 96

Beginning July 1, 2019, the Medicaid managed care payment inpatient rates between each hospital

and health plan shall be 107.2% of the payment rates in effect as of January 1, 2019, and shall be

paid to each hospital retroactively to July 1; (E) Increases in inpatient hospital payments for each

annual twelve-month (12) period beginning July 1, 2020, shall be based on the payment rates in

effect as of January 1 of the preceding fiscal year, and shall be the Centers for Medicare and

Medicaid Services national CMS Prospective Payment System (IPPS) Hospital Input Price Index,

less Productivity Adjustment, for the applicable period and shall be paid to each hospital

retroactively to July 1; the executive office will develop an audit methodology and process to assure

that savings associated with the payment reductions will accrue directly to the Rhode Island

Medicaid program through reduced managed care plan payments and shall not be retained by the

managed care plans; (F) All hospitals licensed in Rhode Island shall accept such payment rates as

payment in full; and (G) For all such hospitals, compliance with the provisions of this section shall

be a condition of participation in the Rhode Island Medicaid program. Beginning July 1, 2023,

Medicaid managed care payment rates shall equal one hundred five percent (105%) of the fee-for-

service rates set in subsection (b)(1)(i) of this section.

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

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

hospitals for outpatient services using a rate methodology determined by the executive office and

in accordance with federal regulations. Fee-for-service outpatient rates shall align with Medicare

payments for similar services. Notwithstanding the above, there shall be no increase in the

Medicaid fee-for-service outpatient rates effective on July 1, 2013, July 1, 2014, or July 1, 2015.

For the twelve-month (12) period beginning July 1, 2015, Medicaid fee-for-service outpatient rates

shall not exceed ninety-seven and one-half percent (97.5%) of the rates in effect as of July 1, 2014.

Increases in the outpatient hospital payments for the twelve-month (12) period beginning July 1,

2016, may not exceed the CMS national Outpatient Prospective Payment System (OPPS) Hospital

Input Price Index. Beginning July 1, 2019, the Medicaid fee-for-service outpatient rates shall be

107.2% of the payment rates in effect as of July 1, 2018. Increases in the outpatient hospital

payments for the twelve-month (12) period beginning July 1, 2020, shall be based on the payment

rates in effect as of July 1 of the preceding fiscal year, and shall be the CMS national Outpatient

Prospective Payment System (OPPS) Hospital Input Price Index. With respect to the outpatient

rate, (i) It is required as of January 1, 2011, until December 31, 2011, that the Medicaid managed

care payment rates between each hospital and health plan shall not exceed one hundred percent

(100%) of the rate in effect as of June 30, 2010; (ii) Increases in hospital outpatient payments for

each annual twelve-month (12) period beginning January 1, 2012, until July 1, 2017, may not

LC001805 - Page 31 of 96

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

Payment System OPPS hospital price index for the applicable period; (iii) Provided, however, for

the twenty-four-month (24) period beginning July 1, 2013, the Medicaid managed care outpatient

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

as of January 1, 2013, and for the twelve-month (12) period beginning July 1, 2015, the Medicaid

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

ninety-seven and one-half percent (97.5%) of the payment rates in effect as of January 1, 2013; (iv)

Increases in outpatient hospital payments for each annual twelve-month (12) period beginning July

1, 2017, shall be the Centers for Medicare and Medicaid Services national CMS OPPS Hospital

Input Price Index, less Productivity Adjustment, for the applicable period and shall be paid to each

hospital retroactively to July 1; (v) Beginning July 1, 2019, the Medicaid managed care outpatient

payment rates between each hospital and health plan shall be one hundred seven and two-tenths

percent (107.2%) of the payment rates in effect as of January 1, 2019 and shall be paid to each

hospital retroactively to July 1; (vi) Increases in outpatient hospital payments for each annual

twelve-month (12) period beginning July 1, 2020, shall be based on the payment rates in effect as

of January 1 of the preceding fiscal year, and shall be the Centers for Medicare and Medicaid

Services national CMS OPPS Hospital Input Price Index, less Productivity Adjustment, for the

applicable period and shall be paid to each hospital retroactively to July 1. Beginning July 1, 2023,

fee-for-service and managed care outpatient rates shall equal the Medicare equivalent rate.

     (3) "Hospital," as used in this section, shall mean the actual facilities and buildings in

existence in Rhode Island, licensed pursuant to § 23-17-1 et seq. on June 30, 2010, and thereafter

any premises included on that license, regardless of changes in licensure status pursuant to chapter

17.14 of title 23 (hospital conversions) and § 23-17-6(b) (change in effective control), that provides

short-term, acute inpatient and/or outpatient care to persons who require definitive diagnosis and

treatment for injury, illness, disabilities, or pregnancy. Notwithstanding the preceding language,

the Medicaid managed care payment rates for a court-approved purchaser that acquires a hospital

through receivership, special mastership or other similar state insolvency proceedings (which court-

approved purchaser is issued a hospital license after January 1, 2013), shall be based upon the new

rates between the court-approved purchaser and the health plan, and such rates shall be effective as

of the date that the court-approved purchaser and the health plan execute the initial agreement

containing the new rates. The rate-setting methodology for inpatient-hospital payments and

outpatient-hospital payments set forth in subsections (b)(1)(ii)(C) and (b)(2), respectively, shall

thereafter apply to increases for each annual twelve-month (12) period as of July 1 following the

completion of the first full year of the court-approved purchaser's initial Medicaid managed care

LC001805 - Page 32 of 96

contract.

     (c) It is intended that payment utilizing the phasing out the DRG method shall reward

hospitals for providing the most efficient highest quality care, and provide the executive office the

opportunity to conduct value-based purchasing of inpatient care.

     (d) The secretary of the executive office is hereby authorized to promulgate such rules and

regulations consistent with this chapter, and to establish fiscal procedures he or she deems

necessary, for the proper implementation and administration of this chapter in order to provide

payment to hospitals using the DRG-payment methodology. Furthermore, amendment of the Rhode

Island state plan for Medicaid, pursuant to Title XIX of the federal Social Security Act, 42 U.S.C.

§ 1396 et seq., is hereby authorized to provide for payment to hospitals for services provided to

eligible recipients in accordance with this chapter.

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

implement these rate changes.

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

services, every hospital shall submit year-end settlement reports to the executive office within one

year from the close of a hospital's fiscal year. Should a participating hospital fail to timely submit

a year-end settlement report as required by this section, the executive office shall withhold

financial-cycle payments due by any state agency with respect to this hospital by not more than ten

percent (10%) until the report is submitted. For hospital fiscal year 2010 and all subsequent fiscal

years, hospitals will not be required to submit year-end settlement reports on payments for

outpatient services. For hospital fiscal year 2011 and all subsequent fiscal years, hospitals will not

be required to submit year-end settlement reports on claims for hospital inpatient services. Further,

for hospital fiscal year 2010, hospital inpatient claims subject to settlement shall include only those

claims received between October 1, 2009, and June 30, 2010.

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

payment methodology set forth in this section and § 40-8-13.3, which shall in any event be no later

than March 30, 2010, at which time the provisions of §§ 40-8-13.2, 27-19-14, 27-19-15, and 27-

19-16 shall be repealed in their entirety.

     40-8-16. Notification of long-term care alternative.

     (a) The department of human services, before authorizing care in a nursing home or

intermediate-care facility for a person who is eligible to receive benefits pursuant to Title XIX of

the federal Social Security Act, 42 U.S.C. § 1396 et seq., and who is being discharged from a

hospital to a nursing home, shall notify the person, in writing, of the provisions of the long-term-

care alternative, a home- and a community-based program.

LC001805 - Page 33 of 96

     (b) If a person, eligible to receive benefits pursuant to Title XIX of the federal Social

Security Act, requires services in a nursing home and desires to remain in his or her own home or

the home of a responsible relative or other adult, the person or his or her representative shall so

inform the department.

     (c) The department shall not make payments pursuant to Title XIX of the federal Social

Security Act for benefits until written notification documenting the person's choice as to a nursing

home or home- and community-based services has been filed with the department.

     40-8-19. Rates of payment to nursing facilities.

     (a) Rate reform.

     (1) The rates to be paid by the state to nursing facilities licensed pursuant to chapter 17 of

title 23, and certified to participate in Title XIX of the Social Security Act for services rendered to

Medicaid-eligible residents, shall be reasonable and adequate to meet the costs that must be

incurred by efficiently and economically operated facilities in accordance with 42 U.S.C. §

1396a(a)(13). The executive office of health and human services ("executive office") shall

promulgate or modify the principles of reimbursement for nursing facilities in effect as of July 1,

2011, to be consistent with the provisions of this section and Title XIX, 42 U.S.C. § 1396 et seq.,

of the Social Security Act.

     (2) The executive office shall review the current methodology for providing Medicaid

payments to nursing facilities, including other long-term-care services providers, and is authorized

to modify the principles of reimbursement to replace the current cost-based methodology rates with

rates based on a price-based methodology to be paid to all facilities with recognition of the acuity

of patients and the relative Medicaid occupancy, and to include the following elements to be

developed by the executive office:

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

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

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

may or may not result in automatic per diem revisions;

     (iv) Application of a fair-rental-value system;

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

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

index to be applied on October 1 of each year, beginning October 1, 2012. This adjustment will not

occur on October 1, 2013, October 1, 2014, or October 1, 2015, but will occur on April 1, 2015.

The adjustment of rates will also not occur on October 1, 2017, October 1, 2018, and October 1,

2019. Effective July 1, 2018, rates paid to nursing facilities from the rates approved by the Centers

LC001805 - Page 34 of 96

for Medicare and Medicaid Services and in effect on October 1, 2017, both fee-for-service and

managed care, will be increased by one and one-half percent (1.5%) and further increased by one

percent (1%) on October 1, 2018, and further increased by one percent (1%) on October 1, 2019.

The inflation index shall be applied without regard for the transition factors in subsections (b)(1)

and (b)(2). For purposes of October 1, 2016, adjustment only, any rate increase that results from

application of the inflation index to subsections (a)(2)(i) and (a)(2)(ii) shall be dedicated to increase

compensation for direct-care workers in the following manner: Not less than 85% of this aggregate

amount shall be expended to fund an increase in wages, benefits, or related employer costs of direct-

care staff of nursing homes. For purposes of this section, direct-care staff shall include registered

nurses (RNs), licensed practical nurses (LPNs), certified nursing assistants (CNAs), certified

medical technicians, housekeeping staff, laundry staff, dietary staff, or other similar employees

providing direct-care services; provided, however, that this definition of direct-care staff shall not

include: (i) RNs and LPNs who are classified as "exempt employees" under the Federal Fair Labor

Standards Act (29 U.S.C. § 201 et seq.); or (ii) CNAs, certified medical technicians, RNs, or LPNs

who are contracted, or subcontracted, through a third-party vendor or staffing agency. By July 31,

2017, nursing facilities shall submit to the secretary, or designee, a certification that they have

complied with the provisions of this subsection (a)(2)(vi) with respect to the inflation index applied

on October 1, 2016. Any facility that does not comply with terms of such certification shall be

subjected to a clawback, paid by the nursing facility to the state, in the amount of increased

reimbursement subject to this provision that was not expended in compliance with that certification.

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

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

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

moderate the impact of the rate reform on individual nursing facilities. Said transition shall include

the following components:

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

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

of passage of this act; for the year beginning October 1, 2017, the reimbursement for direct-care

costs under this provision will be phased out in twenty-five-percent (25%) increments each year

until October 1, 2021, when the reimbursement will no longer be in effect; and

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

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

five percent (25%) each year; except, however, for the years beginning October 1, 2015, there shall

be no adjustment to the per diem gain or loss, but the phase out shall resume thereafter; and

LC001805 - Page 35 of 96

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

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

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

     (4) Notwithstanding any law to the contrary, for the twelve-month (12) period beginning

July 1, 2015, Medicaid payment rates for nursing facilities established pursuant to this section shall

not exceed ninety-eight percent (98%) of the rates in effect on April 1, 2015. Consistent with the

other provisions of this chapter, nothing in this provision shall require the executive office to restore

the rates to those in effect on April 1, 2015, at the end of this twelve-month (12) period.

     (c) Effective July 1, 2023, and for each subsequent year, the executive office of health and

human services is hereby authorized and directed to amend its regulations for reimbursement to

nursing facilities in order that each nursing facility in the State of Rhode Island shall receive a

quarterly adjustment payment each state fiscal year of an amount determined as follows:

     (1) Determine the percent of the state's total Medicaid outpatient and emergency

department services (exclusive of physician services) provided by each nursing home during each

nursing facility's prior fiscal year;

     (2) Determine the sum of all Medicaid payments to nursing facilities made for services

provided during each nursing facility's prior fiscal year;

     (3) Multiply the sum of all Medicaid payments as determined in subsection (c)(2) of this

section by a percentage defined as the total identified upper payment limit for all nursing facilities

divided by the sum of all Medicaid payments as determined in subsection (c)(2) of this section; and

then multiply that result by each nursing facility's percentage of the state's total Medicaid services

as determined in subsection (c)(1) of this section to obtain the total adjustment for each nursing

facility to be paid each year; and

     (4) Pay each nursing facility on or before July 20, October 20, January 20, and April 20

one quarter (1/4) of its total adjustment as determined in subsection (c)(3) of this section.

     40-8-26. Community health centers.

     (a) For the purposes of this section, the term community health centers refers to federally

qualified health centers and rural health centers.

     (b) To support the ability of community health centers to provide high-quality medical care

to patients, the executive office of health and human services ("executive office") may adopt and

implement an alternative payment methodology (APM) for determining a Medicaid per-visit

reimbursement for community health centers that is compliant with the prospective payment system

(PPS) provided for in the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection

Act of 2000. The following principles are to ensure that the APM PPS rate determination

LC001805 - Page 36 of 96

methodology is part of the executive office overall value purchasing approach. For community

health centers that do not agree to the principles of reimbursement that reflect the APM PPS,

EOHHS shall reimburse such community health centers at the federal PPS rate, as required per

section 1902(bb)(3) of the Social Security Act, 42 U.S.C. § 1396a(bb)(3). For community health

centers that are reimbursed at the federal PPS rate, subsections (d) through (f) of this section apply.

     (c) The APM PPS rate determination methodology will (i) Fairly recognize the reasonable

costs of providing services. Recognized reasonable costs will be those appropriate for the

organization, management, and direct provision of services and (ii) Provide assurances to the

executive office that services are provided in an effective and efficient manner, consistent with

industry standards. Except for demonstrated cause and at the discretion of the executive office, the

maximum reimbursement rate for a service (e.g., medical, dental) provided by an individual

community health center shall not exceed one hundred twenty-five percent (125%) of the median

rate for all community health centers within Rhode Island. not only bill the community health center

on a fee-for-service basis at ninety percent (90%) of the federal PPS rate but also make a series of

quality incentive payments if the community health center meets certain quality incentives. Quality

incentive payments shall be set at a percentage of the aggregate monthly billing that would be

reached under the traditional federal PPS methodology. The quality incentive payments shall be as

follows:

     (1) Ten percent (10%) for meeting benchmarks set by the Medicaid director for screening

patients for Medicaid eligibility or having added one-tenth percent (0.1%) of its monthly patients

to the Medicaid rolls.

     (2) Five percent (5%) for enrolling at least five percent (5%) of patients who identified as

tobacco smokers in smoking cessation programs.

     (3) Ten percent (10%) for meeting benchmarks set by the director of human services for

screening patients for supplemental nutrition assistance program eligibility or having added one-

tenth percent (0.1%) of its monthly patients to the supplemental nutrition assistance program rolls.

     (4) Ten percent (10%) for ensuring that no more than one percent (1%) of patients are ever

not offered an appointment within a month if they request one.

     (5) Up to fifteen percent (15%) for meeting benchmarks set by the Medicaid director for

the improvement of air quality in patients' homes through directly funding interventions such as:

air quality inspections, the installation of air filters, the installation of ventilation, and the

replacement of gas stoves with electric stoves.

     (6) Up to fifteen percent (15%) for meeting benchmarks set by the Medicaid director for

the removal or mitigation of environmental toxins in patients' homes through the direct funding of

LC001805 - Page 37 of 96

removal or mitigation of environmental toxins. These toxins shall include, but shall not be limited

to, lead, radon, asbestos, and carbon monoxide.

     (d) Community health centers will cooperate fully and timely with reporting requirements

established by the executive office.

     (e) Reimbursement rates established through this methodology shall be incorporated into

the PPS reconciliation for services provided to Medicaid-eligible persons who are enrolled in a

health plan on the date of service. Monthly payments by the executive office related to PPS for

persons enrolled in a health plan shall be made directly to the community health centers.

     (f) Reimbursement rates established through this the APM methodology shall not be

incorporated into the actuarially certified capitation rates paid to a health plan. The health plan shall

be responsible for paying the full amount of the reimbursement rate to the community health center

for each service eligible for reimbursement under the Medicare, Medicaid, and SCHIP Benefits

Improvement and Protection Act of 2000. If the health plan has an alternative payment arrangement

with the community health center opts to utilize the APM methodology, the health plan shall bear

the full upside and downside risk of decreased or increased costs from the APM methodology may

establish a PPS reconciliation process for eligible services and make monthly payments related to

PPS for persons enrolled in the health plan on the date of service. The executive office will review,

at least annually, the Medicaid reimbursement rates and reconciliation methodology used by the

health plans for community health centers to ensure payments to each are made in compliance with

the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000.

     40-8-32. Support for certain patients of nursing facilities.

     (a) Definitions. For purposes of this section:

     (1) "Applied income" shall mean the amount of income a Medicaid beneficiary is required

to contribute to the cost of his or her care.

     (2) "Authorized individual" shall mean a person who has authority over the income of a

patient of a nursing facility, such as a person who has been given or has otherwise obtained

authority over a patient's bank account; has been named as or has rights as a joint account holder;

or is a fiduciary as defined below.

     (3) "Costs of care" shall mean the costs of providing care to a patient of a nursing facility,

including nursing care, personal care, meals, transportation, and any other costs, charges, and

expenses incurred by a nursing facility in providing care to a patient. Costs of care shall not exceed

the customary rate the nursing facility charges to a patient who pays for his or her care directly

rather than through a governmental or other third-party payor.

     (4) "Fiduciary" shall mean a person to whom power or property has been formally entrusted

LC001805 - Page 38 of 96

for the benefit of another, such as an attorney-in-fact, legal guardian, trustee, or representative

payee.

     (5) "Nursing facility" shall mean a nursing facility licensed under chapter 17 of title 23,

that is a participating provider in the Rhode Island Medicaid program.

     (6) "Penalty period" means the period of Medicaid ineligibility imposed pursuant to 42

U.S.C. § 1396p(c), as amended from time to time, on a person whose assets have been transferred

for less than fair market value.

     (7) "Uncompensated care" — Care and services provided by a nursing facility to a

Medicaid applicant without receiving compensation therefore from Medicaid, Medicare, the

Medicaid applicant, or other source. The acceptance of any payment representing actual or

estimated applied income shall not disqualify the care and services provided from qualifying as

uncompensated care.

     (b) Penalty period resulting from transfer. Any transfer or assignment of assets resulting in

the establishment or imposition of a penalty period shall create a debt that shall be due and owing

to a nursing facility for the unpaid costs of care provided during the penalty period to a patient of

that facility who has been subject to the penalty period. The amount of the debt established shall

not exceed the fair market value of the transferred assets at the time of transfer that are the subject

of the penalty period. A nursing facility may bring an action to collect a debt for the unpaid costs

of care given to a patient who has been subject to a penalty period, against either the transferor or

the transferee, or both. The provisions of this section shall not affect other rights or remedies of the

parties.

     (c) Applied income. A nursing facility may provide written notice to a patient who is a

Medicaid recipient and any authorized individual of that patient:

     (1) Of the amount of applied income due;

     (2) Of the recipient's legal obligation to pay the applied income to the nursing facility; and

     (3) That the recipient's failure to pay applied income due to a nursing facility not later than

thirty (30) days after receiving notice from the nursing facility may result in a court action to

recover the amount of applied income due.

     A nursing facility that is owed applied income may, in addition to any other remedies

authorized under law, bring a claim to recover the applied income against a patient and any

authorized individual. If a court of competent jurisdiction determines, based upon clear and

convincing evidence, that a defendant willfully failed to pay or withheld applied income due and

owing to a nursing facility for more than thirty (30) days after receiving notice pursuant to

subsection (c), the court may award the amount of the debt owed, court costs, and reasonable

LC001805 - Page 39 of 96

attorney's fees to the nursing facility.

     (d) Effects. Nothing contained in this section shall prohibit or otherwise diminish any other

causes of action possessed by any such nursing facility. The death of the person receiving nursing

facility care shall not nullify or otherwise affect the liability of the person or persons charged with

the costs of care rendered or the applied income amount as referenced in this section.

     SECTION 10. Sections 40-8-3.1, 40-8-9.1, 40-8-13.5, 40-8-15, 40-8-19.2 and 40-8-27 of

the General Laws in Chapter 40-8 entitled "Medical Assistance" are hereby repealed.

     40-8-3.1. Life estate in property -- Retained powers.

     When an applicant or recipient of Medicaid owns a life estate in property that is his or her

principal place of residence with the reserved power and authority, during his or her lifetime, to

sell, convey, mortgage, or otherwise dispose of the real property without the consent or joinder by

the holder(s) of the remainder interest, the principal place of residence shall not be regarded as an

excluded resource for the purpose of Medicaid eligibility, unless the applicant or recipient

individually, or through his or her guardian, conservator, or attorney in fact, conveys all outstanding

remainder interest to him or herself.

     An applicant or recipient who, by a deed created, executed and recorded on or before June

30, 2014, has reserved a life estate in property that is his or her principal place of residence with

the reserved power and authority, during his or her lifetime, to sell, convey, mortgage, or otherwise

dispose of the real property without the consent or joinder by the holder(s) of the remainder interest,

shall not be ineligible for Medicaid on the basis of the deed, regardless of whether the transferee of

the remainder interest is a person or persons, trust, or entity.

     40-8-9.1. Notice.

     Whenever an individual who is receiving medical assistance under this chapter transfers

an interest in real or personal property, the individual shall notify the executive office of health and

human services within ten (10) days of the transfer. The notice shall be sent to the individual's local

office and the legal office of the executive office of health and human services and include, at a

minimum, the individual's name, social security number or, if different, the executive office of

health and human services identification number, the date of transfer, and the dollar value, if any,

paid or received by the individual who received benefits under this chapter. In the event an

individual fails to provide notice required by this section to the executive office of health and human

services and in the event an individual has received medical assistance, any individual and/or entity,

who knew or should have known that the individual failed to provide the notice and who receives

any distribution of value as a result of the transfer, shall be liable to the executive office of health

and human services to the extent of the value of the transfer. Moreover, any such individual shall

LC001805 - Page 40 of 96

be subject to the provisions of § 40-6-15 and any remedy provided by applicable state and federal

laws and rules and regulations. Failure to comply with the notice requirements set forth in the

section shall not affect the marketability of title to real estate transferred while the transferor is

receiving medical assistance.

     40-8-13.5. Hospital Incentive Program (HIP).