H.B. 383
GENERAL ASSEMBLY OF NORTH CAROLINA
Mar 24, 2021
SESSION 2021 HOUSE PRINCIPAL CLERK
H D
HOUSE BILL DRH40238-MRxf-1C
Short Title: Medicaid Modernized Hospital Assessments. (Public)
Sponsors: Representative Lambeth.
Referred to:
1 A BILL TO BE ENTITLED
2 AN ACT TO REVISE THE HOSPITAL ASSESSMENT ACT TO ACCOUNT FOR
3 MEDICAID TRANSFORMATION.
4 The General Assembly of North Carolina enacts:
5 SECTION 1. Effective July 1, 2020, the following portions of S.L. 2020-88 are
6 repealed: subsections (b), (b1), (c), and (d) of Section 15.1, Section 15.2, and Section 15.3.
7 SECTION 2. Effective July 1, 2021, Chapter 108A of the General Statutes is
8 amended by adding a new Article to read:
9 "Article 7B.
10 "Hospital Assessment Act.
11 "Part 1. General.
12 "§ 108A-145.1. Short title and purpose.
13 This Article shall be known as the "Hospital Assessment Act." This Article does not authorize
14 a political subdivision of the State to license a hospital for revenue or impose a tax or assessment
15 on a hospital.
16 "§ 108A-145.3. Definitions.
17 The following definitions apply in this Article:
18 (1) Acute care hospital. – A hospital licensed in North Carolina that is not a
19 freestanding psychiatric hospital, a freestanding rehabilitation hospital, a
20 long-term care hospital, or a State-owned and State-operated hospital.
21 (2) Base capitation rate. – A periodic per-enrollee or per-event amount paid by
22 the Department to prepaid health plans for the delivery of Medicaid and NC
23 Health Choice services in accordance with Article 4 of Chapter 108D of the
24 General Statutes applicable to a particular rating group and appearing in a
25 Medicaid managed care capitation rate certification, as adjusted by the
26 Department and allowed by CMS in accordance with Part 438 of Subchapter
27 C of Chapter IV of Title 42 of the Code of Federal Regulations.
28 (3) Capitated contract plan type. – Any type of capitated prepaid health plan
29 contract defined in G.S. 108D-1.
30 (4) CMS. – Centers for Medicare and Medicaid Services.
31 (5) Critical access hospital. – As defined in 42 C.F.R. § 400.202.
32 (6) Federal medical assistance percentage (FMAP). – The federal share of North
33 Carolina Medicaid service costs as calculated by the federal Department of
34 Health and Human Services in accordance with Section 1905(b) of the Social
35 Security Act, in effect at the start of the applicable assessment quarter,
36 expressed as a decimal.
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1 (7) Hospital costs. – A hospital's costs as calculated using the most recent
2 available Hospital Cost Report Information System's cost report data available
3 through CMS, including both inpatient and outpatient components.
4 (8) Inpatient hospital financing percentage. – For the 2021-2022 State fiscal year,
5 the inpatient hospital financing percentage is sixty-six and one-tenth percent
6 (66.1%), expressed as a decimal. For each subsequent State fiscal year, the
7 inpatient hospital financing percentage is the sum of the inpatient hospital
8 financing percentage for the previous State fiscal year plus the market basket
9 percentage, divided by the sum of one plus the market basket percentage.
10 (9) Inpatient hospital services. – As defined in the Medicaid State Plan, excluding
11 payments made under the graduate medical education methodology and the
12 disproportionate share hospital methodology.
13 (10) Inpatient portion of the statewide capitation rate. – The amount of the
14 statewide capitation rate applicable to a particular rating group that is
15 attributed to inpatient hospital facility health services in the applicable
16 Medicaid managed care rate certification, expressed as a statewide weighted
17 average of all PHP regions.
18 (11) Market basket percentage. – The hospital inpatient prospective payment
19 system market basket minus the multifactor productivity adjustment
20 established in rule by CMS and in effect on March 1 of the previous State
21 fiscal year, expressed as a decimal.
22 (12) Medicaid managed care capitation rate certification. – A rate certification for
23 any capitated contract plan type that contains the rates paid to prepaid health
24 plans and that has been submitted to CMS under 42 C.F.R. § 438.7 and, except
25 as otherwise provided in this subdivision, (i) has been approved by CMS and
26 (ii) is in effect during the applicable time period. If, on the first day of any
27 assessment quarter, CMS has not approved a rate certification for a particular
28 capitated contract plan type for that quarter, then the Medicaid managed care
29 capitation rate certification for that capitated contract plan type is the rate
30 certification submitted to CMS under 42 C.F.R. § 438.7 applicable to that
31 quarter.
32 (13) Outpatient hospital financing percentage. – Twenty-eight percent (28%),
33 expressed as a decimal.
34 (14) Outpatient hospital services. – As defined in the Medicaid State Plan.
35 (15) Outpatient portion of the statewide capitation rate. – The amount of the
36 statewide capitation rate applicable to a particular rating group that is
37 attributed to outpatient hospital facility services and emergency room facility
38 services in the applicable Medicaid managed care capitation rate
39 certifications, expressed as a statewide weighted average of all PHP regions.
40 (16) Paid capitation. – The total amount of the capitation payments made by the
41 Department to all prepaid health plans for a particular rating group (i)
42 attributable to the base capitation rate in the applicable Medicaid managed
43 care capitation rate certification and (ii) adjusted by the Department as a result
44 of retroactively implementing any base capitation rate adjustment that is
45 approved by CMS or allowed under Part 438 of Subchapter C of Chapter IV
46 of Title 42 of the Code of Federal Regulations.
47 (17) Previous data collection period. – The period beginning on the eleventh day
48 of the month that is four months prior to the start of the applicable assessment
49 quarter and ending on the tenth day of the month prior to the start of the
50 applicable assessment quarter.
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1 (18) Private acute care hospital. – An acute care hospital that (i) is not qualified to
2 certify public expenditures as described in 42 C.F.R. § 433.51(b), (ii) is not a
3 critical access hospital, and (iii) is not part of the UNC Health Care System.
4 (19) Private hospital historical assessment share. – Seventy-nine percent (79%),
5 expressed as a decimal.
6 (20) Public acute care hospital. – An acute care hospital that (i) is qualified to
7 certify public expenditures as described in 42 C.F.R. § 433.51(b), (ii) is not a
8 critical access hospital, (iii) is not part of the UNC Health Care System, and
9 (iv) is not the primary affiliated teaching hospital for the East Carolina
10 University Brody School of Medicine.
11 (21) Public hospital historical assessment share. – Twenty-one percent (21%),
12 expressed as a decimal.
13 (22) Rating group. – A category of beneficiaries or maternity services for which a
14 periodic per-enrollee or per-event amount appears in a Medicaid managed
15 care capitation rate certification.
16 (23) State's annual Medicaid payment. – An annual amount equal to one hundred
17 ten million dollars ($110,000,000) for the period July 1, 2021, through June
18 30, 2022, increased each year over the prior year's payment by the market
19 basket percentage.
20 (24) Statewide capitation rate. – A periodic per-enrollee or per-event amount paid
21 by the Department to prepaid health plans for the delivery of Medicaid and
22 NC Health Choice services in accordance with Article 4 of Chapter 108D of
23 the General Statutes applicable to a particular rating group, expressed as a
24 statewide weighted average for the applicable capitated contract plan type for
25 all PHP regions and appearing in a Medicaid managed care capitation rate
26 certification, as adjusted by the Department and allowed by CMS in
27 accordance with Part 438 of Subchapter C of Chapter IV of Title 42 of the
28 Code of Federal Regulations.
29 (25) Third-party coverage. – Liability by any individual, entity, or program for the
30 payment of all or part of the expenditures for medical assistance under the
31 Medicaid State Plan that has been identified by the Department before making
32 the medical assistance expenditure.
33 (26) University of North Carolina Health Care System (UNC Health Care System).
34 – As established in G.S. 116-37 and including the following hospitals:
35 a. The University of North Carolina Hospitals at Chapel Hill.
36 b. Rex Hospital, Inc.
37 c. Chatham Hospital, Incorporated.
38 d. UNC Rockingham Health Care, Inc.
39 e. Caldwell Memorial Hospital, Incorporated.
40 "§ 108A-145.5. Due dates and collections.
41 (a) Assessments under this Article are calculated, imposed, and due quarterly in the time
42 and manner prescribed by the Secretary and shall be considered delinquent if not paid within
43 seven calendar days of this due date.
44 (b) With respect to any hospital owing a past-due assessment amount under this Article,
45 the Department may withhold the unpaid amount from Medicaid or NC Health Choice payments
46 otherwise due or impose a late payment penalty. The Secretary may waive a penalty for good
47 cause shown.
48 (c) In the event the data necessary to calculate an assessment under this Article is not
49 available to the Secretary in time to impose the quarterly assessment, the Secretary may defer the
50 due date for the assessment to a subsequent quarter.
51 "§ 108A-145.7. Assessment appeals.
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1 A hospital may appeal a determination of the assessment amount owed through a
2 reconsideration review. The pendency of an appeal does not relieve a hospital from its obligation
3 to pay an assessment amount when due.
4 "§ 108A-145.9. Allowable costs; patient billing.
5 (a) Assessments paid under this Article may be included as allowable costs of a hospital
6 for purposes of any applicable Medicaid reimbursement formula, except that assessments paid
7 under this Article shall be excluded from cost settlement.
8 (b) Assessments imposed under this Article may not be added as a surtax or assessment
9 on a patient's bill.
10 "§ 108A-145.11. Rulemaking authority.
11 The Secretary may adopt rules to implement this Article.
12 "§ 108A-145.13. Repeal.
13 If CMS determines that an assessment under this Article is impermissible or revokes approval
14 of an assessment under this Article, then that assessment shall not be imposed and the
15 Department's authority to collect the assessment is repealed.
16 "Part 2. Modernized Hospital Assessments.
17 "§ 108A-146.1. Public hospital assessment.
18 (a) The public hospital assessment imposed under this Part shall apply to all public acute
19 care hospitals.
20 (b) The public hospital assessment shall be assessed as a percentage of each public acute
21 care hospital's hospital costs. The assessment percentage shall be calculated quarterly by the
22 Department of Health and Human Services in accordance with this Part. The percentage for each
23 quarter shall equal the aggregate assessment collection amount under G.S. 108A-146.5
24 multiplied by the public hospital historical assessment share and divided by the total hospital
25 costs for all public acute care hospitals holding a license on the first day of the assessment quarter.
26 "§ 108A-146.3. Private hospital assessment.
27 (a) The private hospital assessment imposed under this Part shall apply to all private acute
28 care hospitals.
29 (b) The private hospital assessment shall be assessed as a percentage of each private acute
30 care hospital's hospital costs. The assessment percentage shall be calculated quarterly by the
31 Department of Health and Human Services in accordance with this Part. The percentage for each
32 quarter shall equal the aggregate assessment collection amount under G.S. 108A-146.5
33 multiplied by the private hospital historical assessment share and divided by the total hospital
34 costs for all private acute care hospitals holding a license on the first day of the assessment
35 quarter.
36 "§ 108A-146.5. Aggregate assessment collection amount.
37 The aggregate assessment collection amount is an amount of money that is calculated by
38 adding (i) the managed care component under G.S. 108A-146.7, (ii) the fee-for-service
39 component under G.S. 108A-146.9, (iii) the GME component under G.S. 108A-146.11, and (iv)
40 one-fourth of the State's annual Medicaid payment, and then subtracting the intergovernmental
41 transfer adjustment component under G.S. 108A-146.13.
42 "§ 108A-146.7. Managed care component.
43 (a) The managed care component is an amount of money that is a portion of the total paid
44 capitation for all rating groups in all capitated contracted plan types for the previous data
45 collection period and is calculated in accordance with this section. The managed care component
46 consists of an inpatient subcomponent and an outpatient subcomponent.
47 (b) The inpatient subcomponent is an amount calculated for each rating group by
48 multiplying the paid capitation for the applicable rating group in the previous data collection
49 period by the percentage that is calculated by (i) multiplying the inpatient portion of the statewide
50 capitation rate for the applicable rating group by the inpatient hospital financing percentage, (ii)
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1 multiplying that product by the difference of one minus the FMAP, and (iii) dividing that product
2 by the statewide capitation rate for the applicable rating group.
3 (c) The outpatient subcomponent is an amount calculated for each rating group by
4 multiplying the paid capitation for the applicable rating group in the previous data collection
5 period by the percentage that is calculated by (i) multiplying the outpatient portion of the
6 statewide capitation rate for the applicable rating group by the outpatient hospital financing
7 percentage, (ii) multiplying that product by the difference of one minus the FMAP, and (iii)
8 dividing that product by the statewide capitation rate for the applicable rating group.
9 (d) The managed care component is calculated by adding together the aggregate inpatient
10 subcomponents for all rating groups and the aggregate outpatient subcomponents for all rating
11 groups.
12 "§ 108A-146.9. Fee-for-service component.
13 (a) The fee-for-service component is an amount of money that is a portion of all the
14 Medicaid fee-for-service payments made to acute care hospitals during the previous data
15 collection period for claims with a date of service on or after July 1, 2021. The fee-for-service
16 component consists of a subcomponent pe