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

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, (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 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

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. 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

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. 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

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 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.

      (3) "Director" means the director of the Rhode Island state department of health.

      (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

Organizations/Facilities, Inc.

      (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.

      (7) "Health services council" means the advisory body to the Rhode Island state

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 United States department of labor statistics as of September 30 of the prior

calendar year.

      (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 two million 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 United States department of labor statistics as of

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 United States department of labor statistics

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

service.

      (13) "State agency" means the Rhode Island state department of health.

      (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

insurance commissioner, 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 director of

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 Rhode Island; the health care

consumer advocacy organizations in Rhode Island, the business community; and organizations

representing the minority community who have an understanding of the linguistic and cultural

barriers to accessing health care in Rhode Island;

      (2) One hospital CEO nominated from among the hospitals in Rhode Island;

      (3) One physician nominated from among the primary care specialty societies in Rhode

Island;

      (4) One physician nominated from among the specialty physician organizations in Rhode

Island;

      (5) One nurse or allied health professional nominated from among their state trade

organizations in Rhode Island;

      (6) One practicing nursing home administrator, nominated by a long-term care provider

organization in Rhode Island;

      (7) One provider from among the community mental health centers in Rhode Island;

      (8) One representative from among the community health centers of Rhode Island;

      (9) One person from a health professional learning institution located in Rhode Island;

      (10) Health 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 house or designated representative designee;

      (14) The house minority leader or 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

limited to:

      (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

Rhode Island's health care needs efficiently and affordably. These assessments shall be used to

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 of Rhode Island's long range health care goals and values, and the

recommendation of innovative models of health care delivery, that should be encouraged in

Rhode Island;

      (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

process.

      (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

objectives.

      (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

assembly.

      (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 director of 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.

 

     23-81-6. Funding. -- The department of health executive office of health and human

services may 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.