ON MARCH 31, 2022, THE SENATE ADOPTED AMENDMENT #1 AND PASSED SENATE BILL 1956, AS AMENDED.
AMENDMENT #1 rewrites this bill to enact the Annual Coverage Assessment Act of 2022. Generally, under present law, an annual assessment is imposed on licensed, covered hospitals. A covered hospital is one licensed by the state for the provision of providing services for health care, mental health care, substance abuse, and intellectual and developmental disabilities, but does not include:
(1) A hospital that has been designated by CMS as a critical access hospital;
(2) A mental health hospital owned by the state of Tennessee;
(3) A hospital providing primarily rehabilitative or long-term acute care services;
(4) A children's research hospital that does not charge patients for services beyond that reimbursed by third-party payors; and
(5) A hospital that is determined by the bureau of TennCare as eligible to certify public expenditures for the purpose of securing federal medical assistance percentage payments.
This amendment imposes on each covered licensed hospital in this state an annual coverage assessment for fiscal year 2023-2023. The annual assessment will be 4.87 percent of a covered hospital's annual coverage assessment base, which is the same rate as fiscal year 2021-2022.
EXPENDITURE OF FUNDS
The Annual Coverage Assessment Act of 2021 set the minimum amount of the payments that must be made from the maintenance of coverage trust fund to reduce unreimbursed costs of providing services to TennCare patients at 40.2 percent of unreimbursed TennCare costs for all hospitals licensed by the state that reported unreimbursed TennCare costs on the 2019 joint annual report (JAR), excluding state-owned hospitals. This amendment instead requires that the amount of the payment to covered hospitals for fiscal year 2022-2023 is based on their DSH class as prescribed in the annual directed payment pre-prints submitted to CMS, excluding state-owned hospitals. The classification of hospitals being established follow existing classifications in the TennCare DSH program and include children's, tier 1, tier 2 rural, tier 2 urban, tier 3, psychiatric, large safety net, small safety net, and hospitals that do not receive DSH payments. If CMS does not approve of the classified structure of directed payments to offset unreimbursed TennCare costs, then this amendment sets, for fiscal year 2022-2023, the minimum amount of the payments that must be made from the maintenance of coverage trust fund to reduce unreimbursed costs of providing services to TennCare patients at 38.4 percent of unreimbursed TennCare costs for all hospitals licensed by the state that reported TennCare charges and revenue and total expenses on the 2020 JAR, excluding state-owned hospitals.
The full text of this amendment specifies various authorized expenditures from maintenance of coverage trust fund revenues for benefits and services under the TennCare program, including those that would have been subject to reduction or elimination from TennCare funding for fiscal year 2022-2023, except for the availability of one-time funding for that year only. The amounts and purposes for which such expenditures are authorized differ from some of the amounts and purposes authorized for the 2021-2022 fiscal year.
The Annual Coverage Assessment Act of 2021 authorized expenditures from maintenance of coverage trust fund revenues for programs and initiatives developed by the bureau of TennCare, in consultation with the Tennessee Hospital Association, to offset the unreimbursed costs of providing services to TennCare enrollees and the financial consequences of the public health emergency caused by the COVID-19 pandemic. This amendment retains authorization for such expenditure in fiscal year 2022-2023, and adds that for fiscal year 2021-2022, the state portion will be provided to draw down the federal match to produce up to a maximum payment of $318,700,000 in hospital pandemic assistance to account for hospital costs necessitated by the public health emergency caused by the COVID-19 pandemic.

Statutes affected:
Amended with SA0619 -- 03/31/2022: 71-5-2005(d), 71-5-2005