H.B. 989
GENERAL ASSEMBLY OF NORTH CAROLINA
Apr 25, 2019
SESSION 2019 HOUSE PRINCIPAL CLERK
H D
HOUSE BILL DRH40406-MRxf-116
Short Title: Hospital Assessment Revision/Prof. Payments. (Public)
Sponsors: Representatives Dobson and Lambeth (Primary Sponsors).
Referred to:
1 A BILL TO BE ENTITLED
2 AN ACT TO REVISE AND UPDATE HOSPITAL ASSESSMENTS IN A MANNER THAT
3 WILL CONFORM WITH MEDICAID TRANSFORMATION, TO REPEAL PAST
4 DIRECTIVES TO ELIMINATE GRADUATE MEDICAL EDUCATION TO ALIGN
5 WITH MEDICAID TRANSFORMATION, TO REVISE THE SUPPLEMENTAL
6 PAYMENT PROGRAM FOR ELIGIBLE MEDICAL PROFESSIONAL PROVIDERS,
7 AND TO ENACT THE MEDICARE RATE SUPPLEMENTAL AND DIRECTED
8 PAYMENT PROGRAM.
9 The General Assembly of North Carolina enacts:
10
11 PART I. REVISE AND UPDATE HOSPITAL ASSESSMENTS
12 SECTION 1.(a) Effective October 1, 2019, Article 7 of Chapter 108A of the General
13 Statutes is repealed.
14 SECTION 1.(b) Effective October 1, 2019, Chapter 108A of the General Statutes is
15 amended by adding a new Article to read:
16 "Article 7A.
17 "Hospital Assessment Act.
18 "Part 1. General.
19 "§ 108A-130. Short title and purpose.
20 This Article shall be known as the "Hospital Assessment Act." This Article does not authorize
21 a political subdivision of the State to license a hospital for revenue or impose a tax or assessment
22 on a hospital.
23 "§ 108A-131. Definitions.
24 The following definitions apply in this Article:
25 (1) Base assessment. – The assessment payable under G.S. 108A-142.
26 (2) CMS. – Centers for Medicare and Medicaid Services.
27 (3) Critical access hospital. – Defined in 42 C.F.R. § 400.202.
28 (4) Department. – The Department of Health and Human Services.
29 (5) Prepaid Health Plan. – As defined in Section 4 of S.L. 2015-245, as amended.
30 (6) Public hospital. – A hospital that certifies its public expenditures to the
31 Department pursuant to 42 C.F.R. § 433.51(b) during the fiscal year for which
32 the assessment applies.
33 (7) Secretary. – The Secretary of Health and Human Services.
34 (8) State's annual Medicaid payment. – An amount equal to one hundred ten
35 million dollars ($110,000,000) for State fiscal year 2019-2020, increased each
36 year over the prior year's payment by the percentage specified as the Medicare
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 General Assembly Of North Carolina Session 2019
1 Market Basket Index less productivity most recently published in the Federal
2 Register.
3 (9) Supplemental assessment. – The assessment payable under G.S. 108A-141.
4 (10) Total hospital costs. – The costs as calculated using the most recent available
5 Hospital Cost Report Information Systems cost report data available through
6 CMS, or other comparable data, including both inpatient and outpatient
7 components, for all hospitals that are not exempt from the applicable
8 assessment.
9 "§ 108A-132. Due dates and collections.
10 (a) Beginning October 1, 2019, assessments under this Article are due quarterly in the
11 time and manner prescribed by the Secretary and shall be considered delinquent if not paid within
12 seven calendar days of this due date.
13 (b) With respect to any hospital owing a past due assessment amount under this Article,
14 the Department may withhold the unpaid amount from Medicaid or NC Health Choice payments
15 otherwise due or impose a late payment penalty. The Secretary may waive a penalty for good
16 cause shown.
17 (c) In the event the data necessary to calculate an assessment under this Article is not
18 available to the Secretary in time to impose the quarterly assessments for a payment year, the
19 Secretary may defer the due date for the assessment to a subsequent quarter.
20 "§ 108A-133. Assessment appeals.
21 A hospital may appeal a determination of the assessment amount owed through a
22 reconsideration review. The pendency of an appeal does not relieve a hospital from its obligation
23 to pay an assessment amount when due.
24 "§ 108A-134. Allowable costs; patient billing.
25 (a) Assessments paid under this Article may be included as allowable costs of a hospital
26 for purposes of any applicable Medicaid reimbursement formula, except that assessments paid
27 under this Article shall be excluded from cost settlement.
28 (b) Assessments imposed under this Article may not be added as a surtax or assessment
29 on a patient's bill.
30 "§ 108A-135. Rule-making authority.
31 The Secretary may adopt rules to implement this Article.
32 "§ 108A-136. Repeal.
33 If CMS determines that an assessment under this Article is impermissible or revokes approval
34 of an assessment under this Article, then that assessment shall not be imposed and the
35 Department's authority to collect the assessment is repealed.
36
37 "Part 2. Supplemental and Base Assessments.
38 "§ 108A-140. Applicability.
39 (a) The assessments imposed under this Part apply to all licensed North Carolina
40 hospitals, except as provided in this section.
41 (b) The following hospitals are exempt from both the supplemental assessment and the
42 base assessment:
43 (1) Critical access hospitals.
44 (2) Freestanding psychiatric hospitals.
45 (3) Freestanding rehabilitation hospitals.
46 (4) Long-term care hospitals.
47 (5) State-owned and State-operated hospitals.
48 (6) The primary affiliated teaching hospital for each University of North Carolina
49 medical school.
50 (c) Public hospitals are exempt from the supplemental assessment.
51 "§ 108A-141. Supplemental assessment.
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1 (a) The supplemental assessment shall be a percentage, established by the General
2 Assembly, of total hospital costs.
3 (b) The Department shall propose the rate of the supplemental assessment to be imposed
4 under this section when the Department prepares its budget request for each upcoming fiscal
5 year. The Governor shall submit the Department's proposed supplemental assessment rate to the
6 General Assembly each fiscal year.
7 (c) The Department shall base the proposed supplemental assessment rate on all of the
8 following factors:
9 (1) The percentage change in aggregate payments to hospitals subject to the
10 supplemental assessment for Medicaid and NC Health Choice enrollees,
11 excluding hospital access payments made under 42 C.F.R § 438.6, as
12 demonstrated in data from prepaid health plans and the State, as determined
13 by the Department.
14 (2) Any changes in the federal medical assistance percentage rate applicable to
15 the Medicaid or NC Health Choice programs for the applicable year.
16 (d) The rate for the supplemental assessment for each taxable year shall be the percentage
17 rate set by law by the General Assembly.
18 "§ 108A-142. Base assessment.
19 (a) The base assessment shall be a percentage, established by the General Assembly, of
20 total hospital costs.
21 (b) The Department shall propose the rate of the base assessment to be imposed under
22 this section when the Department prepares its budget request for each upcoming fiscal year. The
23 Governor shall submit the Department's proposed base assessment rate to the General Assembly
24 each fiscal year.
25 (c) The Department shall base the proposed base assessment rate on all of the following
26 factors:
27 (1) The change in the State's annual Medicaid payment for the applicable year.
28 (2) The percentage change in aggregate payments to hospitals subject to the base
29 assessment for Medicaid and NC Health Choice enrollees, excluding hospital
30 access payments made under 42 C.F.R § 438.6, as demonstrated in data from
31 prepaid health plans and the State, as determined by the Department.
32 (3) Any changes in the federal medical assistance percentage rate applicable to
33 the Medical or NC Health Choice programs for the applicable year.
34 (4) Any changes, as determined by the Department, in (i) reimbursement under
35 the Medicaid State Plan, (ii) managed care payments authorized under 42
36 C.F.R § 438.6 for which the nonfederal share is not funded by General Fund
37 appropriations, and (iii) reimbursement under the NC Health Choice program.
38 (d) The rate for the base assessment for each taxable year shall be the percentage rate set
39 by law by the General Assembly.
40 "§ 108A-143. Payment from other hospitals.
41 If a hospital that is exempt from both the base and supplemental assessments under this Part
42 (i) makes an intergovernmental transfer to the Department to be used to draw down matching
43 federal funds and (ii) has acquired, merged, leased, or managed another hospital on or after March
44 25, 2011, then the exempt hospital shall transfer to the State an additional amount. The additional
45 amount shall be a percentage of the amount of funds that (i) would be transferred to the State
46 through such an intergovernmental transfer and (ii) are to be used to match additional federal
47 funds that the exempt hospital is able to receive because of the acquired, merged, leased, or
48 managed hospital. That percentage shall be calculated by dividing the amount of the State's
49 annual Medicaid payment by the total amount collected under the base assessment under
50 G.S. 108A-142.
51 "§ 108A-144. Use of funds.
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1 The proceeds of the assessments imposed under this Part, and all corresponding matching
2 federal funds, must be used to make the State's annual Medicaid payment to the State, to fund
3 payments to hospitals made directly by the Department, to fund a portion of capitation payments
4 to prepaid health plans attributable to hospital care, and to fund the nonfederal share of graduate
5 medical education payments."
6 SECTION 1.(c) The percentage rate to be used in calculating the supplemental
7 assessment under G.S. 108A-141, as enacted in subsection (b) of this section, is three percent
8 (3%) for the taxable year October 1, 2019, through September 30, 2020.
9 SECTION 1.(d) The percentage rate to be used in calculating the base assessment
10 under G.S. 108A-142, as enacted in subsection (b) of this section, is three percent (3%) for the
11 taxable year October 1, 2019, through September 30, 2020.
12 SECTION 1.(e) The Department of Health and Human Services shall submit any
13 State Plan amendment or other documents necessary to the Center for Medicare and Medicaid
14 Services to implement this section.
15
16 PART II. REPEAL OF PAST DIRECTIVE TO ELIMINATE GME TO ALIGN WITH
17 MEDICAID TRANSFORMATION
18 SECTION 2. Section 12H.12(b) of S.L. 2014-100 and Section 12H.23 of S.L.
19 2015-241, as amended by Section 88 of S.L. 2015-264, are repealed.
20
21 PART III. REVISE AND RENAME THE SUPPLEMENTAL PAYMENT PROGRAM
22 FOR ELIGIBLE MEDICAL PROFESSIONAL PROVIDERS
23 SECTION 3.(a) The Department of Health and Human Services shall revise the
24 supplemental payment program for eligible medical professional providers described in the
25 Medicaid State Plan, Attachment 4.19-B, Section 5, Pages 2 and 3, as required by this section.
26 This payment program shall be called the Average Commercial Rate Supplemental and Directed
27 Payment Program. Effective October 1, 2019, the following two changes to the program shall be
28 implemented:
29 (1) The program shall no longer utilize a limit on the number of eligible medical
30 professional providers that may be reimbursed through the program, and
31 instead shall utilize a limit on the total payments made under the program.
32 (2) Payments under the program shall consist of two components: (i)
33 supplemental payments that increase reimbursement to the average
34 commercial rate under the State Plan and (ii) directed payments that increase
35 reimbursement to the average commercial rate under the managed care
36 system.
37 SECTION 3.(b) The limitation on total payments made under the Average
38 Commercial Rate Supplemental and Directed Payment Program for eligible medical professional
39 providers shall apply to the combined amount of payments made as supplemental payments under
40 the State Plan and payments made as directed payments under the managed care system and shall
41 be based on the amount of supplemental payments made during the 2018-2019 fiscal year as
42 follows:
43 (1) For services provided during the period October 1, 2019, through June 30,
44 2020, the total annual supplemental and directed payments made under the
45 Average Commercial Rate Supplemental and Directed Payment Program shall
46 not exceed seventy-five percent (75%) of the gross supplemental payments
47 made to eligible medical providers during the 2018-2019 fiscal year.
48 (2) For services provided on or after July 1, 2020, the total annual supplemental
49 and directed payments made under the Average Commercial Rate
50 Supplemental and Directed Payment Program shall not exceed one hundred
51 percent (100%) of the gross supplemental payments made to eligible medical
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1 providers during the 2018-2019 fiscal year, increased at the start of each State
2 fiscal year by an inflation factor determined by the Department of Health and
3 Human Services, Division of Health Benefits.
4 SECTION 3.(c) Consistent with the existing supplemental payment program for
5 eligible medical professional providers, the Department of Health and Human Services shall limit
6 the total amount of supplemental and directed payments that may be received by the eligible
7 providers affiliated with East Carolina University Brody School of Medicine and University of
8 North Carolina at Chapel Hill Health Care System. Average commercial rate supplemental
9 payments and directed payments shall not be made for services provided in Wake County.
10 SECTION 3.(d) The Department of Health and Human Services is not authorized to
11 make any modifications to the supplemental payment program for eligible medical professional
12 providers except as authorized by this section.
13 SECTION 3.(e) Effective October 1, 2019, Section 12H.13(b) of S.L. 2014-100 is
14 repealed.
15
16 PART IV. ENACT THE MEDICARE RATE SUPPLEMENTAL AND DIRECTED
17 PAYMENT PROGRAM
18 SECTION 4.(a) The Department of Health and Human Services shall create the
19 Medicare Rate Supplemental and Directed Payment Program. Payments under the program shall
20 consist of two components: (i) supplemental payments made to eligible professionals that
21 increase reimbursement to the Medicare rate under the State Plan and (ii) directed payments made
22 to eligible professionals that increase reimbursement to the Medicare rate under the managed
23 care system. No Medicare rate supplemental or directed payment shall be made for any service
24 for which an average commercial rate supplemental or directed payment is made. Professionals
25 eligible to receive payments under this program shall include Medicaid-enrolled North Carolina
26 physicians, advance care practitioners, and other related professionals, who are employed or
27 contracted by any of the following:
28 (1) State-operated schools of medicine.
29 (2) The University of North Carolina Health Care System.
30 (3) University Health Systems of Eastern Carolina, doing business as Vidant
31 Health.
32 (4) Any entity controlled by or under common control with a hospital that
33 qualifies to certify expenditures or a public hospital. F