Chapter 120

2010 -- H 8270

Enacted 06/22/10

 

A N A C T

RELATING TO MAKING APPROPRIATIONS IN SUPPORT OF FY 2011

      

     Introduced By: Representatives Costantino, Melo, and Carter

     Date Introduced: June 09, 2010

 

It is enacted by the General Assembly as follows:

 

     SECTION 1. Notwithstanding the provisions of 2010-H 7397 Substitute A, as amended,

Article 1 entitled “Relating to Making Appropriations in Support of FY 2011” is hereby amended

on page on page 1, line 21, to change the number "2,077,066" to the number "2,007,066", and is

further amended on page 2, line 18, to change the number "3,776,902" to the number

"3,776,092".

 

     SECTION 2. Section 40-8-13.4 of the General Laws in Chapter 40-8 entitled “Medical

Assistance” is hereby amended to read as follows:

 

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

services. -- (a) The department of human services 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 department of human

services shall:

      (1)(A) 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

which 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 Diagnosis Related Groups may

include cost outlier payments and other specific exceptions. The department 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 Center for Medicare and Medicaid Services national CMS

Prospective Payment System (IPPS) Hospital Input Price index.

     (B) With respect to inpatient services for persons enrolled in Medicaid managed care

plans, it is required effective January 1, 2011, that: (i) Medicaid managed care payment rates to

any hospital, in aggregate on a case mix adjusted basis (adjusting payment for a beneficiary’s

condition and needs), shall not exceed one hundred and ten percent (110%) of that hospital’s

Medicaid payment rates. (ii) Medicaid managed care payment rates between each hospital and

health plan shall not exceed contracted payment rates between the hospital and the health plan

that were in effect during calendar year 2009 as adjusted by the Center for Medicare and

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

as measured annually and using calendar year 2009 as a base year. Calculation of each hospital's

aggregate payment rates on a case mix adjusted basis, shall be based using a single statewide rate

schedule notwithstanding hospital-specific rates that may be paid on a transitional basis under

fee-for-service Medicaid; (iii) all hospitals licensed in Rhode Island shall accept such payment

rates as payment in full; and (iv) for all such hospitals, compliance with the provisions of this

section shall be a condition of participation in the Rhode Island Medicaid program.

      (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 department will reimburse

hospitals for outpatient services using a rate methodology determined by the department and in

accordance with federal regulations. The department will adjust payment rates annually to reflect

CMS adjustments.

     (B) With respect to inpatient services, (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 ninety and one tenth percent (90.1%) of the rate in effect as of June

30, 2010. Negotiated increases in inpatient hospital payments for the twelve (12) month 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; (ii) The Rhode Island department of human services 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; (iii) All hospitals licensed in Rhode Island shall accept

such payment rates as payment in full; and (iv) for all such hospitals, compliance with the

provisions of this section shall be a condition of participation in the Rhode Island Medicaid

program.

     (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 department will reimburse

hospitals for outpatient services using a rate methodology determined by the department and in

accordance with federal regulations. With respect to the outpatient rate, 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.

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

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

to conduct value based purchasing of inpatient care.

      (d) The director of the department of human services and/or the secretary of executive

office of health and human services 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 Diagnosis Related Group payment methodology. Furthermore, amendment of the

Rhode Island state plan for medical assistance (Medicaid) pursuant to Title XIX of the federal

Social Security Act is hereby authorized to provide for payment to hospitals for services provided

to eligible recipients in accordance with this chapter.

      (e) The department 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 department 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 department shall withhold financial

cycle payments due by any state agency with respect to this hospital by not more than ten percent

(10%) until said report is submitted.

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

amendments and new payment methodology pursuant to this section and section 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.

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

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

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

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

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

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

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

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

community hospitals.

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

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

commission by December 31, 2010.

 

     SECTION 3. Sections 44-34.1-1 and 44-34.1-2 of the General Laws in Chapter 44-34.1

entitled "Motor Vehicle and Trailer Excise Tax Elimination Act of 1998" are hereby amended to

read as follows:

 

     44-34.1-1. Excise tax phase-out. -- (a) (1) Notwithstanding the provisions of chapter 34

of this title or any other provisions to the contrary, the motor vehicle and trailer excise tax

established by section 44-34-1 may be phased out. The phase-out shall apply to all motor vehicles

and trailers, including leased vehicles.

     (2) Lessors of vehicles that pay excise taxes directly to municipalities shall provide

lessees, at the time of entering into the lease agreement, an estimate of annual excise taxes

payable throughout the term of the lease. In the event the actual excise tax is less than the

estimated excise tax, the lessor shall annually rebate to the lessee the difference between the

actual excise tax and the estimated excise tax.

     (b) Pursuant to the provisions of this section, all motor vehicles shall be assessed a value

by the vehicle value commission. That value shall be assessed according to the provisions of

section 44-34-11(c)(1) and in accordance with the terms as defined in subsection (d) of this

section; provided, however, that the maximum taxable value percentage applicable to model year

values as of December 31, 1997, shall continue to be applicable in future year valuations aged by

one year in each succeeding year.

     (c) (1) The motor vehicle excise tax phase-out shall commence with the excise tax bills

mailed to taxpayers for the fiscal year 2000. The phase-out, beyond fiscal year 2003, shall be

subject to annual review and appropriation by the general assembly. The tax assessors of the

various cities and towns and fire districts shall reduce the average retail value of each vehicle

assessed by using the prorated exemptions from the following table:

     Local Fiscal Year                                                                 State fiscal year

     Exempt from value               Local Exemption                       Reimbursement

     fiscal year 1999                    0                                              $1,500

     fiscal year 2000                    $1,500                                       $2,500

     fiscal year 2001                    $2,500                                       $3,500

     fiscal year 2002                    $3,500                                       $4,500

     fiscal years 2003, 2004

     and 2005                              $4,500                                       $4,500

     for fiscal year 2006 and        $5,000                                       $5,000

     for fiscal year 2007               $6,000                                       $6,000

     for fiscal years 2008, 2009 and 2010 the exemption and the state fiscal year

reimbursement shall be increased, at a minimum, to the maximum amount to the nearest two

hundred and fifty dollar ($250) increment within the allocation of one and twenty-two hundredths

percent (l.22%) of net terminal income derived from video lottery games pursuant to the

provisions of section 42-61-15, and in no event shall the exemption in any fiscal year be less than

the prior fiscal year.

     for fiscal year 2011 and thereafter, the exemption shall be five hundred dollars ($500).

Cities and towns may provide an additional exemption of five thousand five hundred dollars

($5,500) or more; provided, however, any such additional exemption shall not be subject to

reimbursement.

     (2) The excise tax phase-out shall provide levels of assessed value reductions until the tax

is eliminated or reduced as provided in this chapter.

     (3) Current exemptions shall remain in effect as provided in this chapter.

     (4) The excise tax rates and ratios of assessment shall be maintained at a level identical to

the level in effect for fiscal year 1998 for each city, town, and fire district; provided, in the town

of Johnston the excise tax rate and ratios of assessment shall be maintained at a level identical to

the level in effect for fiscal year 1999 levels and the levy of a city, town, or fire district shall be

limited to the lesser of the maximum taxable value or net assessed value for purposes of

collecting the tax in any given year. Provided, however, for fiscal year 2011 and thereafter, the

rates and ratios of assessment may be less than but not more than the rates described in this

subsection (4).

     (d) Definitions.

     (1) "Maximum taxable value" means the value of vehicles as prescribed by section 44-34-

11 reduced by the percentage of assessed value applicable to model year values as determined by

the Rhode Island vehicle value commission as of December 31, 1997, for the vehicles valued by

the commission as of December 31, 1997. For all vehicle value types not valued by the Rhode

Island vehicle value commission as of December 31, 1997, the maximum taxable value shall be

the latest value determined by a local assessor from an appropriate pricing guide, multiplied by

the ratio of assessment used by that city, town, or fire district for a particular model year as of

December 31, 1997.

     (2) "Net assessed value" means the motor vehicle values as determined in accordance

with section 44-34-11 less all personal exemptions allowed by cities, towns, fire districts, and the

state of Rhode Island exemption value as provided for in section 44-34.1-1(c)(1).

     (e) If any provision of this chapter shall be held invalid by any court of competent

jurisdiction, the remainder of this chapter and the applications of the provisions hereof shall not

be effected thereby.

 

     44-34.1-2. City and town and fire district reimbursement. -- (a) In fiscal years 2000

and thereafter, cities and towns and fire districts shall receive reimbursements, as set forth in this

section, from state general revenues equal to the amount of lost tax revenue due to the phase out

or reduction of the excise tax. Cities and towns and fire districts shall receive advance

reimbursements through state fiscal year 2002. In the event the tax is phased out, cities and towns

and fire districts shall receive a permanent distribution of sales tax revenue pursuant to section

44-18-18 in an amount equal to any lost revenue resulting from the excise tax elimination. Lost

revenues must be determined using a base tax rate fixed at fiscal year 1998 levels for each city,

town, and fire district, except that the Town of Johnston's base tax rate must be fixed at a fiscal

year 1999 level. Provided, however, for fiscal year 2011 and thereafter, the base tax rate may be

less than but not more than the rates described in this subsection (a).

      (b) (1) The director of administration shall determine the amount of general revenues to

be distributed to each city and town and fire district for the fiscal years 1999 and thereafter so that

every city and town and fire district is held harmless from tax loss resulting from this chapter,

assuming that tax rates are indexed to inflation through fiscal year 2003.

      (2) The director of administration shall index the tax rates for inflation by applying the

annual change in the December Consumer Price Index -- All Urban Consumers (CPI-U),

published by the Bureau of Labor Statistics of the United States Department of Labor, to the

indexed tax rate used for the prior fiscal year calculation; provided, that for state reimbursements

in fiscal years 2004 and thereafter, the indexed tax rate shall not be subject to further CPI-U

adjustments. The director shall apply the following principles in determining reimbursements:

      (i) Exemptions granted by cities and towns and fire districts in the fiscal year 1998 must

be applied to assessed values prior to applying the exemptions in section 44-34.1-1(c)(1). Cities

and towns and fire districts will not be reimbursed for these exemptions.

      (ii) City, town, and fire districts shall be reimbursed by the state for revenue losses

attributable to the exemptions provided for in section 44-34.1-1 and the inflation indexing of tax

rates through fiscal 2003. Reimbursement for revenue losses shall be calculated based upon the

difference between the maximum taxable value less personal exemptions and the net assessed

value.

      (iii) Inflation reimbursements shall be the difference between:

      (A) The levy calculated at the tax rate used by each city and town and fire district for

fiscal year 1998 after adjustments for personal exemptions but prior to adjustments for

exemptions contained in section 44-34.1-1(c)(1); provided, that for the town of Johnston the tax

rate used for fiscal year 1999 must be used for the calculation; and

      (B) The levy calculated by applying the appropriate cumulative inflation adjustment

through state fiscal 2003 to the tax rate used by each city and town and fire district for fiscal year

1998; provided, that for the town of Johnston the tax rate used for fiscal year 1999 shall be used

for the calculation after adjustments for personal exemptions but prior to adjustments for

exemptions contained in section 44-34.1-1.

      (c) (1) Funds shall be distributed to the cities and towns and fire districts as follows:

      (i) On October 20, 1998, and each October 20 thereafter through October 20, 2001,

twenty-five percent (25%) of the amount calculated by the director of administration to be the

difference for the upcoming fiscal year.

      (ii) On February 20, 1999, and each February 20 thereafter through February 20, 2002,

twenty-five percent (25%) of the amount calculated by the director of administration to be the

difference for the upcoming fiscal year.

      (iii) On June 20, 1999, and each June 20 thereafter through June 20, 2002, fifty percent

(50%) of the amount calculated by the director of administration to be the difference for the

upcoming fiscal year.

      (iv) On August 1, 2002, and each August 1 thereafter, twenty-five percent (25%) of the

amount calculated by the director of administration to be the difference for the current fiscal year.

      (v) On November 1, 2002, and each November 1 thereafter, twenty-five percent (25%)

of the amount calculated by the director of administration to be the difference for the current

fiscal year.

      (vi) On February 1, 2003, and each February 1 thereafter, twenty-five percent (25%) of

the amount calculated by the director of administration to be the difference for the current fiscal

year.

      (vii) On May 1, 2003, and each May 1 thereafter, except May 1, 2010, twenty-five

percent (25%) of the amount calculated by the director of administration to be the difference for

the current fiscal year.

     (viii) On June 15, 2010, twenty-five percent (25%) of the amount calculated by the

director of administration to be the difference for the current fiscal year.

     Provided, however, the February and May payments, and June payment in 2010, shall be

subject to submission of final certified and reconciled motor vehicle levy information.

      (2) Each city, town, or fire district shall submit final certified and reconciled motor

vehicle levy information by August 30 of each year. Any adjustment to the estimated amounts

paid in the previous fiscal year shall be included or deducted from the payment due November 1.

      (3) On any of the payment dates specified in paragraphs (1)(i) through (vii) of this

subsection, the director is authorized to deduct previously made over-payments or add

supplemental payments as may be required to bring the reimbursements into full compliance with

the requirements of this chapter.

      (4) For the city of East Providence, the payment schedule is twenty-five percent (25%)

on February 20, 1999, and each February 20 thereafter through February 20, 2002, twenty-five

percent (25%) on June 20, 1999, and each June 20 thereafter through June 20, 2002, which

includes final reconciliation of the previous year's payment, and fifty percent (50%) on October

20, 1999, and each October 20 thereafter through October 20, 2002. For local fiscal years 2003

and thereafter, the payment schedule is twenty-five percent (25%) on each November 1, twenty-

five percent (25%) on each February 1, twenty-five percent (25%) on each May 1, which includes

final reconciliation of the previous year's payment, and twenty-five percent (25%) on each

August 1; provided, the May and August payments shall be subject to submission of final

certified and reconciled motor vehicle levy information.

      (5) When the tax is phased out, funds distributed to the cities, towns, and fire districts for

the following fiscal year shall be calculated as the funds distributed in the fiscal year of the phase-

out. Twenty-five percent (25%) of the amounts calculated shall be distributed to the cities and

towns and fire districts on August 1, in the fiscal year of the phase-out, twenty-five percent (25%)

on the following November 1, twenty-five percent (25%) on the following February 1, and

twenty-five percent (25%) on the following May 1. The funds shall be distributed to each city and

town and fire district in the same proportion as distributed in the fiscal year of the phase-out.

      (6) When the tax is phased out to August 1, of the following fiscal year the director of

administration shall calculate to the nearest tenth of one cent ($.001) the number of cents of sales

tax received for the fiscal year ending June 30, of the year following the phase-out equal to the

amount of funds distributed to the cities, towns, and fire districts under this chapter during the

fiscal year following the phase-out and the percent of the total funds distributed in the fiscal year

following the phase-out received by each city, town, and fire district, calculated to the nearest

one-hundredth of one percent (0.01%). The director of the department of administration shall

transmit those calculations to the governor, the speaker of the house, the president of the senate,

the chairperson of the house finance committee, the chairperson of the senate finance committee,

the house fiscal advisor, and the senate fiscal advisor. The number of cents, applied to the sales

taxes received for the prior fiscal year, shall be the basis for determining the amount of sales tax

to be distributed to the cities and towns and fire districts under this chapter for second fiscal year

following the phase-out and each year thereafter. The cities and towns and fire districts shall

receive that amount of sales tax in the proportions calculated by the director of administration as

that received in the fiscal year following the phase-out.

      (7) When the tax is phased out, twenty-five percent (25%) of the funds shall be

distributed to the cities, towns, and fire districts on August 1, of the following fiscal year and

every August 1 thereafter; twenty-five percent (25%) shall be distributed on the following

November 1, and every November 1 thereafter; twenty-five percent (25%) shall be distributed on

the following February 1, and every February 1 thereafter; and twenty-five percent (25%) shall be

distributed on the following May 1, and every May 1 thereafter.

      (8) For the city of East Providence, in the event the tax is phased out, twenty-five percent

(25%) shall be distributed on November 1, of the following fiscal year and every November 1

thereafter, twenty-five percent (25%) shall be distributed on the following February 1, and every

February 1 thereafter; twenty-five percent (25%) shall be distributed on the following May 1, and

every May 1 thereafter; and twenty-five percent (25%) of the funds shall be distributed on the

following August 1, and every August 1 thereafter.

      (9) As provided for in section 44-34-6, the authority of fire districts to tax motor vehicles

is eliminated effective with the year 2000 tax roll and the state reimbursement for fire districts

shall be based on the provisions of section 44-34-6. All references to fire districts in this chapter

do not apply to the year 2001 tax roll and thereafter.

      (10) For reimbursements payable in the year ending June 30, 2008 and thereafter, the

director of administration shall discount the calculated value of the exemption to ninety-eight

percent (98%) in order to establish a collection rate that is comparable to the collection rate

achieved by municipalities in the levy of the motor vehicle excise tax.

     (11) For reimbursements payable in the year ending June 30, 2010, the director of

administration shall reimburse cities and towns eighty-eight percent (88%) of the reimbursements

payable pursuant to subdivision (c)(10) above.

     (12) For fiscal year 2011 and thereafter, the state shall reimburse cities and towns for the

exemption pursuant to subdivision (c)(10) above, ratably reduced to the appropriation.

 

     SECTION 4. Section 44-34-6 of the General Laws in Chapter 44-34 entitled "Excise on

Motor Vehicles and Trailers" is hereby amended to read as follows:

 

     44-34-6. Fire districts. -- The provisions of this chapter shall apply in all respects in the

case of taxes assessed upon motor vehicles by any fire district. Effective with the year 2000 tax

roll based upon values of December 31, 1999, the authority of fire districts as authorized by

general or public law to levy excise taxes on motor vehicles is eliminated and each district shall

be reimbursed for one hundred percent (100%) of current year lost revenues through fiscal year

2010 based upon what the levy net of personal exemptions would otherwise have been. That

reimbursement shall be based upon submission of information to the department of revenue on

the dates specified in section 44-34.1-2, and reimbursements shall be paid on the dates specified

in that section. Future year reimbursements through fiscal year 2010 shall be based upon the year

2000 tax roll and values of December 31, 1999, and indexed by applying the annual change in the

December Consumer Price Index -- All Urban Consumers (CPI-U). For fiscal year 2011 and

thereafter the state shall not reimburse fire districts pursuant to this chapter. Provided, for fiscal

year 2011, and thereafter, the authority of fire districts to levy excise taxes shall be deemed

restored. The year 2010 tax roll shall be based upon values of December 31, 2009, with

corresponding adjustments made for each subsequent year based on the valuation of vehicles as

of December 31 of the year preceding the tax year.

 

     SECTION 5. This article shall take effect upon passage.

     

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LC02930

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