ARTICLE 15 AS AMENDED
RELATING TO HOSPITAL PAYMENT RATES
SECTION 1. 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
(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, (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
the each annual 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
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. Fee-for-service outpatient rates shall align with Medicare
payments for similar services. Changes to outpatient rates will be implemented on July 1 each
year. 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. Negotiated
increases in hospital outpatient payments for each annual twelve (12) month period beginning
January 1, 2012 may not exceed the Centers for Medicare and Medicaid Services national CMS
Outpatient Prospective Payment System (OPPS) hospital price index for the applicable period.
(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
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. 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
amendments and new payment methodology pursuant to 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.
(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
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 2. Sections 23-15-2, 23-81-3.1, 23-81-4, 23-81-5 and 23-81-6 of the General
Laws in Chapter 23-81 entitled "Rhode Island Coordinated Health Planning Act of 2006" are
hereby amended to read as follows:
23-15-2. Definitions. -- As used in this chapter:
(1) "Affected person" means and includes the person whose proposal is being reviewed,
or the applicant, health care facilities located within the state which provide institutional health
services, the state medical society, the state osteopathic society, those voluntary nonprofit area-
wide planning agencies that may be established in the state, the state budget office, the office of
health insurance commissioner, any hospital or medical service corporation organized under the
laws of the state, the statewide health coordinating council, contiguous health systems agencies,
and those members of the public who are to be served by the proposed new institutional health
services or new health care equipment.
(2) "Cost impact analysis" means a written analysis of the effect that a proposal to offer
or develop new institutional health services or new health care equipment, if approved, will have
on health care costs and shall include any detail that may be prescribed by the state agency in
rules and regulations.
"Director" means the director of the
(4) (i) "Health care facility" means any institutional health service provider, facility or
institution, place, building, agency, or portion of them, whether a partnership or corporation,
whether public or private, whether organized for profit or not, used, operated, or engaged in
providing health care services, which are limited to hospitals, nursing facilities, inpatient
rehabilitation centers (including drug and/or alcohol abuse treatment centers), certain facilities
providing surgical treatment to patients not requiring hospitalization (surgi-centers, multi-practice
physician ambulatory surgery centers and multi-practice podiatry ambulatory surgery centers) and
facilities providing inpatient hospice care. Single-practice physician or podiatry ambulatory
surgery centers (as defined in subdivisions 23-17-2(13) and 23-17-2(14), respectively) are
exempt from the requirements of chapter 15 of this title; provided, however, that such exemption
shall not apply if a single-practice physician or podiatry ambulatory surgery center is established
by a medical practice group (as defined in section 5-37-1) within two (2) years following the
formation of such medical practice group, when such medical practice group is formed by the
merger or consolidation of two (2) or more medical practice groups or the acquisition of one
medical practice group by another medical practice group. The term "health care facility" does
not include Christian Science institutions (also known as Christian Science nursing facilities)
listed and certified by the Commission for Accreditation of Christian Science Nursing
(ii) Any provider of hospice care who provides hospice care without charge shall be
exempt from the provisions of this chapter.
(5) "Health care provider" means a person who is a direct provider of health care
services (including but not limited to physicians, dentists, nurses, podiatrists, physician assistants,
or nurse practitioners) in that the person's primary current activity is the provision of health care
services for persons.
(6) "Health services" means organized program components for preventive, assessment,
maintenance, diagnostic, treatment, and rehabilitative services provided in a health care facility.
services council" means the advisory body to the
department of health established in accordance with chapter 17 of this title, appointed and
empowered as provided to serve as the advisory body to the state agency in its review functions
under this chapter.
(8) "Institutional health services" means health services provided in or through health
care facilities and includes the entities in or through which the services are provided.
(9) "New health care equipment" means any single piece of medical equipment (and any
components which constitute operational components of the piece of medical equipment)
proposed to be utilized in conjunction with the provision of services to patients or the public, the
capital costs of which would exceed
one million dollars
($1,000,000) two million two hundred
fifty thousand dollars ($2,250,000); provided, however, that the state agency shall exempt from
review any application which proposes one for one equipment replacement as defined in
regulation. Further, beginning July 1, 2012 and each July thereafter the amount shall be adjusted
by the percentage of increase in the consumer price index for all urban consumers (CPI-U) as
published by the
(10) "New institutional health services" means and includes:
(i) Construction, development, or other establishment of a new health care facility.
(ii) Any expenditure except acquisitions of an existing health care facility which will not
result in a change in the services or bed capacity of the health care facility by or on behalf of an
existing health care facility in excess of
dollars ($2,000,000) five million two
hundred fifty thousand dollars ($5,250,000) which is a capital expenditure including expenditures
for predevelopment activities; provided further, beginning July 1, 2012 and each July thereafter
the amount shall be adjusted by the percentage of increase in the consumer price index for all
urban consumers (CPI-U) as published by the
September 30 of the prior calendar year.
(iii) Where a person makes an acquisition by or on behalf of a health care facility or
(iii) Where a person makes an acquisition by or on behalf of a health care facility or
health maintenance organization under lease or comparable arrangement or through donation,
which would have required review if the acquisition had been by purchase, the acquisition shall
be deemed a capital expenditure subject to review.
(iv) Any capital expenditure which results in the addition of a health service or which
changes the bed capacity of a health care facility with respect to which the expenditure is made,
except that the state agency may exempt from review by rules and regulations promulgated for
this chapter any bed reclassifications made to licensed nursing facilities and annual increases in
licensed bed capacities of nursing facilities that do not exceed the greater of ten (10) beds or ten
percent (10%) of facility licensed bed capacity and for which the related capital expenditure does
not exceed two million dollars ($2,000,000).
(v) Any health service proposed to be offered to patients or the public by a health care
facility which was not offered on a regular basis in or through the facility within the twelve (12)
month period prior to the time the service would be offered, and which increases operating
expenses by more than
seven hundred and fifty thousand
dollars ($750,000) one million five
hundred thousand dollars ($1,500,000), except that the state agency may exempt from review by
rules and regulations promulgated for this chapter any health service involving reclassification of
bed capacity made to licensed nursing facilities. Further beginning July 1, 2012 and each July
thereafter the amount shall be adjusted by the percentage of increase in the consumer price index
for all urban consumers (CPI-U) as published by the
as of September 30 of the prior calendar year.
(vi) Any new or expanded tertiary or specialty care service, regardless of capital expense
or operating expense, as defined by and listed in regulation, the list not to exceed a total of twelve
(12) categories of services at any one time and shall include full body magnetic resonance
imaging and computerized axial tomography; provided, however, that the state agency shall
exempt from review any application which proposes one for one equipment replacement as
defined by and listed in regulation. Acquisition of full body magnetic resonance imaging and
computerized axial tomography shall not require a certificate of need review and approval by the
state agency if satisfactory evidence is provided to the state agency that it was acquired for under
one million dollars ($1,000,000) on or before January 1, 2010 and was in operation on or before
July 1, 2010.
(11) "Person" means any individual, trust or estate, partnership, corporation (including
associations, joint stock companies, and insurance companies), state or political subdivision, or
instrumentality of a state.
(12) "Predevelopment activities" means expenditures for architectural designs, plans,
working drawings and specifications, site acquisition, professional consultations, preliminary
plans, studies, and surveys made in preparation for the offering of a new institutional health
agency" means the
(14) "To develop" means to undertake those activities which, on their completion, will
result in the offering of a new institutional health service or new health care equipment or the
incurring of a financial obligation, in relation to the offering of that service.
(15) "To offer" means to hold oneself out as capable of providing, or as having the
means for the provision of, specified health services or health care equipment.
23-81-3.1. Establishment of health care planning and accountability advisory
council. -- Contingent upon funding:
(a) The health care planning and accountability advisory council shall be appointed by
the secretary of the executive office of health and human
services and the
director of health
no later than
January 31, 2008 September 30, 2011, to develop and
promote recommendations on the health care system in the form of health planning documents
described in subsection 23-81-4(a).
(b) The secretary of the
executive office of health and human services and the
health insurance commissioner shall serve as co-chairs of the health care planning council.
(c) The department of health, in coordination with the executive office of health and
human services and the office of the health insurance commissioner, shall be the principal staff
agency of the council to develop analysis of the health care system for use by the council,
including, but not limited to, health planning studies and health plan documents; making
recommendations for the council to consider for adoption, modification and promotion; and
ensuring the continuous and efficient functioning of the health care planning council.
(d) The health care planning council shall consist of, but not be limited to, the following:
(1) Five (5) consumer representatives. A consumer is defined as someone who does not
directly or through a spouse or partner receive any of his/her livelihood from the health care
system. Consumers may be nominated from the labor unions in
consumer advocacy organizations in
representing the minority community who have an understanding of the linguistic and cultural
barriers to accessing health care in
(2) One hospital CEO
nominated from among the hospitals in
(3) One physician nominated from among the primary care specialty societies in Rhode
(4) One physician nominated from among the specialty physician organizations in Rhode
(5) One nurse or allied health professional nominated from among their state trade
(6) One practicing nursing home administrator, nominated by a long-term care provider
(7) One provider from
among the community mental health centers in
(8) One representative
from among the community health centers of
(9) One person from a
health professional learning institution located in
Insurance Commissioner Director of the Department of Health;
(11) Director of the department of human services or designee;
(12) CEOs of each health insurance company that administers the health insurance of ten
percent (10%) or more of insured Rhode Islanders;
(13) The speaker of the
designated representative designee;
(14) The house minority
designated representative designee;
(15) The president of
the senate or
designated senator designee;
(16) The senate
minority leader or
designated representative designee; and
(17) The health care advocate of the department of the attorney general.
23-81-4. Powers of the health care planning and accountability advisory council. --
Powers of the council shall include, but not be limited to the following:
(a) The authority to develop and promote studies, advisory opinions and to recommend a
unified health plan on the state's health care delivery and financing system, including but not
(1) Ongoing assessments of the state's health care needs and health care system capacity
that are used to determine the most appropriate capacity of and allocation of health care
providers, services including transportation services, and equipment and other resources, to meet
advise the "determination of need for new health care equipment and new institutional health
services" or "certificate of need" process through the health services council;
(2) The establishment
recommendation of innovative models of health care delivery, that should be encouraged in
(3) Health care payment models that reward improved health outcomes;
(4) Measurements of quality and appropriate use of health care services that are designed
to evaluate the impact of the health planning process;
(5) Plans for promoting the appropriate role of technology in improving the availability
of health information across the health care system, while promoting practices that ensure the
confidentiality and security of health records; and
(6) Recommendations of legislation and other actions that achieve accountability and
adherence in the health care community to the council's plans and recommendations.
(b) Convene meetings of the council no less than every sixty (60) days, which shall be
subject to the open meetings laws and public records laws of the state, and shall include a process
for the public to place items on the council's agenda.
(c) Appoint advisory committees as needed for technical assistance throughout the
(d) Modify recommendations in order to reflect changing health care systems needs.
(e) Promote responsiveness to recommendations among all state agencies that provide
health service programs, not limited to the five (5) state agencies coordinated by the executive
office of the health and human services.
(f) Coordinate the review of existing data sources from state agencies and the private
sector that are useful to developing a unified health plan.
(g) Formulating, testing, and selecting policies and standards that will achieve desired
(h) Provide an annual
report each July,
to begin one year after the convening of the
council, to the governor and general assembly on implementation of the plan adopted by the
council. This annual report shall:
(1) Present the strategic recommendations, updated annually;
(2) Assess the implementation of strategic recommendations in the health care market;
(3) Compare and analyze the difference between the guidance and the reality;
(4) Recommend to the governor and general assembly legislative or regulatory revisions
necessary to achieve the long-term goals and values adopted by the council as part of its strategic
recommendations, and assess the powers needed by the council or governmental entities of the
state deemed necessary and appropriate to carry out the responsibilities of the council.
(5) Include the request for a hearing before the appropriate committees of the general
(6) Include a response letter from each state agency that is affected by the state health
plan describing the actions taken and planned to implement the plans recommendations.
23-81-5. Implementation of the council recommendations. -- In order to promote
effective implementation of the unified health plan, the council shall recommend to the governor,
the general assembly, and other state agencies actions that may be taken to promote and ensure
implementation of the council's policy and program guidance. The secretary of the executive
office of health and human services and the
health insurance commissioner, as co-
chairs, of the council, shall use the powers of their offices to implement the recommendations
adopted by the council, as deemed appropriate, or as required by the governor or general
assembly. The secretary shall coordinate the implementation of the recommended actions by the
state agencies within the executive office of health and human services.
Funding. -- The
department of health executive
office of health and human
apply for and receive private and/or public
funds provide funding to carry out the
requirements of this chapter.
SECTION 3. This Article shall take effect upon passage.