HOUSE OF REPRESENTATIVES
TWENTY-NINTH LEGISLATURE, 2017
STATE OF HAWAII
A BILL FOR AN ACT
RELATING TO THE HOSPITAL SUSTAINABILITY PROGRAM.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The legislature finds that hospitals in the State face major financial challenges in providing quality health care for Hawaii residents. These challenges are largely the result of inadequate payments from the medicaid program that do not cover the actual costs of care. Medicaid is jointly financed by the federal and state governments by statutory formula. The federal government pays between fifty per cent and seventy-four per cent, with assistance levels determined by each state's per capita income. States with the lowest per capita income receive higher federal matching rates. Under federal rules, the state share must be paid from public funds that are not federal funds. The legislature finds that public funding to help financially sustain Hawaii's hospitals may be accessed through a provider fee.
The legislature further finds that provider fees exist in forty-nine states and the District of Columbia as a means of drawing down federal funds to sustain medicaid programs due to rising state budget deficits, increasing health care costs, and expanding medicaid enrollment. Provider fees, which are collected from specific categories of health care providers that agree to the fee, may be imposed on nineteen different classes of health care services, including inpatient and outpatient hospital and nursing facility services.
The legislature additionally finds that, in Hawaii, a provider fee on hospitals has resulted in an increase of medicaid payments at a time when there are constraints on the State's budget. The additional federal funds obtained via the fee program authorized by the hospital sustainability program have helped to reduce the amount of losses incurred by hospitals and maintain access to care for medicaid recipients.
The purpose of this Act is to preserve access to health care for medicaid recipients by extending the hospital sustainability program.
SECTION 2. Section 346G-3, Hawaii Revised Statutes, is amended as follows:
1. By amending the definition of "net patient service revenue" to read:
""Net patient service revenue"
means gross revenue from inpatient and outpatient care provided to hospital
patients converted to net patient service revenue utilizing data from
Worksheets G-2 and G-3 of each hospital's medicare cost report for the fiscal
2013-2014.] ending three years prior to the state fiscal year
for which net patient service revenue is being calculated. For example, the
net patient service revenue for fiscal year 2017-2018 shall be based on data
from fiscal year 2014-2015. If the hospital is new or did not file a
fiscal year medicare cost report, the department shall obtain the hospital's
net patient service revenue from the most recent period available."
2. By amending the definition of "private hospital" to read:
""Private hospital" means those
non-public hospitals named in attachment A of the medicaid section 1115
demonstration waiver that were in operation in calendar year [
and are currently operating or any hospitals not named in attachment A of the
medicaid section 1115 demonstration waiver that became private hospitals in
calendar year [ 2016] 2017 or 2018 and are currently operating."
SECTION 3. Section 346G-5, Hawaii Revised Statutes, is amended by amending subsections (c) and (d) to read as follows:
"(c) The hospital sustainability fee for
inpatient care services may differ from the fee for outpatient care services
but the fees charged to the hospital shall not in the aggregate exceed
three per cent of the hospital's net patient service revenue [
from the hospital's medicare cost report ending during state fiscal year
2013-2014]. The inpatient hospital sustainability fee shall not exceed
three per cent of net inpatient hospital service revenue. The outpatient
hospital sustainability fee shall [ be] not exceed three per cent
of net outpatient hospital service revenue. Each fee shall be the same
percentage for all affected hospitals, subject to subsection (d).
(d) The department shall exempt children's
hospitals, federal hospitals, public hospitals, and psychiatric hospitals from
the hospital sustainability fees on inpatient services. In addition, the
department shall exempt from the hospital sustainability fee on outpatient
care services children's hospitals, public hospitals, rehabilitation hospitals,
psychiatric hospitals, and any hospitals with net outpatient revenues of less
than $57,000,000 per year based upon [
fiscal year 2013-2014] the
hospital's medicare cost [ reports from the hospital sustainability fee
on outpatient care services.] report for the fiscal year ending three
years prior to the state fiscal year for which the hospital's net patient
service revenue is calculated; provided that the department may exclude any
facility from the hospital sustainability fee on outpatient care services if it
is determined that its exclusion is required to meet federal standards of
SECTION 4. Section 346G-10, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:
"(b) In accordance with title 42 Code of
Federal Regulations section 438, the department shall use revenues from the
hospital sustainability fee and federal matching funds to enhance the capitated
rates paid to medicaid managed care health plans for the state fiscal [
2016-2017,] years 2017-2018 and 2018-2019, consistent with the
(1) The rate enhancement shall be used exclusively for increasing reimbursements to private hospitals to support the availability of services and to ensure access to care to the medicaid managed care health plan enrollees;
(2) The rate enhancement shall be made part of the monthly capitated rates by the department to medicaid managed care health plans, which shall provide documentation to the department and the hospital trade association located in Hawaii certifying that the revenues received under paragraph (1) are used in accordance with this section;
(3) The rate enhancement shall be actuarially sound and approved by the federal government for federal fund participation;
(4) The rate enhancements shall be retroactive to July
1, 2012, or the effective date approved by the federal government, whichever is
later. Retroactive rate enhancements shall be paid within thirty days of
notification by the Centers for Medicare and Medicaid Services to the
for] of all necessary approvals; and
(5) Payments made by the medicaid managed care health plans shall be made within thirty business days upon receipt of monthly capitation rates from the department."
SECTION 5. Act 217, Session Laws of Hawaii 2012, section 5, as amended by section 2 of Act 141, Session Laws of Hawaii 2013, as amended by section 2 of Act 123, Session Laws of Hawaii 2014, as amended by section 2 of Act 70, Session Laws of Hawaii 2015, as amended by section 3 of Act 60, Session Laws of Hawaii 2016, is amended to read as follows:
"SECTION 5. This Act shall take effect on
July 1, 2012, and shall be repealed on June 30, [
provided that section ‑4, Hawaii Revised Statutes,
in section 2 of this Act, and the amendment to section 36-30(a), Hawaii Revised
Statues, in section 3 of this Act, shall be repealed on December 31, [ 2017.]
SECTION 6. Act 123, Session Laws of Hawaii 2014, section 7, as amended by section 3 of Act 70, Session Laws of Hawaii 2015, as amended by section 4 of Act 60, Session Laws of Hawaii 2016, is amended to read as follows:
"SECTION 7. This Act shall take effect on June 29, 2014; provided that:
(1) Section 5 shall take effect on July 1, 2014; and
amendments made to sections 36-27(a) and 36-30(a), Hawaii Revised Statues, in
sections 3 and 4 of this Act shall be repealed on December 31, [
SECTION 7. There is appropriated out of the hospital sustainability program special fund the sum of $65,000,000 or so much thereof as may be necessary for fiscal year 2017-2018 and the same sum or so much thereof as may be necessary for fiscal year 2018-2019 for the purposes of the hospital sustainability program special fund.
The sums appropriated shall be expended by the department of human services for the purposes of this Act.
SECTION 8. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 9. This Act shall take effect on June 29, 2017; provided that section 7 of this Act shall take effect on July 1, 2017.
Hospital Sustainability Program; Appropriation
Continues the Hospital Sustainability Program for two years. Appropriates funds out of the Hospital Sustainability Program Special Fund for Fiscal Years 2017-2018 and 2018-2019. (SD1)
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.