Section 140.95  Hospital Services Trust Fund

 

a)         Purpose and Contents

 

1)         Effective June 30, 1992, the provider participation fee methodology created under subsections (b)(1), (2), and (3) of this Section terminates in accordance with Public Act 87-861.  All other provisions of this Section remain in effect, including but not limited to subsection (f) on penalties and subsection (l) on annual audit and reconciliation.

 

2)         The Hospital Services Trust Fund ("Fund") was created in the State Treasury upon enactment of Public Act 87-13. Interest earned by the Fund shall be credited to the Fund. The Fund shall not be used to replace any funds appropriated to the Medicaid program by the General Assembly.

 

3)         The Fund is created for the purpose of receiving and disbursing monies in accordance with this Section.

 

4)         The Fund shall consist of:

 

A)        All monies collected or received by the Department under subsections (b)(1), (b)(2) and (b)(3) below;

 

B)        All federal matching funds received by the Illinois Department as a result of expenditures made by the Department that are attributable to monies deposited in the Fund;

 

C)        Any interest or penalty levied in conjunction with the administration of the Fund; and

 

D)        All other monies received for the Fund from any other source, including interest earned thereon.

 

b)         Provider Participation Fees

 

1)         Beginning on July 1, 1991 and ending on June 30, 1995, a fee is imposed upon each hospital in an amount equal to 50 percent of the positive difference between the hospital's anticipated annualized Medicaid spending, which shall be calculated using the estimated rate year utilization, for State fiscal year 1992 and each State fiscal year thereafter through State fiscal year 1995, excluding payments under 89 Ill. Adm. Code 148.120 and Section 5-5.02 of the Public Aid Code (Ill. Rev. Stat. 1989, ch. 23, par. 5-5.02), and the hospital's total Medicaid base year spending. This fee shall be adjusted pursuant to the annual audit described in subsection (1) below to reflect actual annualized Medicaid spending and actual rate year utilization.

 

2)         Beginning on July 1, 1991, and ending on June 30, 1995, a fee is imposed upon each hospital in an amount equal to 5 percent of the hospital's gross receipts for services provided during the previous State fiscal year as determined and reported by the Department. This fee shall be adjusted pursuant to the annual audit described in subsection (1) below to reflect actual Medicaid gross receipts for services provided during the previous State fiscal year.

 

3)         Beginning on July 1, 1991, and ending on June 30, 1995, a fee is imposed upon each hospital which receives critical care access payments under subsection (d) of Section 14-8 of the Public Aid Code (Ill. Rev. Stat. 1989, ch. 23, par. 14-8). This fee is equal to fifty (50) percent of the critical care payments as calculated in accordance with 89 Ill. Adm. Code 148.120(k).

 

c)         Payment of Fees Due

 

1)         The fees described in subsection (b) above shall be due and payable on a calendar quarterly basis.

 

2)         The fees shall be payable to and collected by the Illinois Department in quarterly amounts due and received by the Department at the address specified on the Provider Participation Fee Notice described in subsection (d) on the first business day of the first calendar quarter following the quarter for which the fee is being paid, with the exception of the initial payment which shall be due on November 1, 1991. The subsequent quarterly amounts shall be due on January 1, April 1, July 1, and October 1 of each year with the final payment due on July 1, 1995. All monies collected under subsections (b) and (c) shall be deposited into the Fund.

 

3)         All payments received by the Department shall be credited first to any interest, second to any penalty, and then to the fee due.

 

d)         Notification

The Department shall notify each hospital of the results of its calculations under subsections (b) and (c) above. The notification shall be in writing and shall be submitted to the hospital at least thirty (30) days prior to the date on which the provider participation fee is due. Such calculations shall be subject to quarterly reconciliations as described in subsection (e) below and the annual audit/reconciliation described in subsection (1) below.

 

e)         Procedure for Reconsideration and Quarterly Reconciliation

 

1)         Reconsiderations. Upon notification of the results of the Department's calculations under subsections (b) and (c) above, each hospital shall have the right to reconsideration of the calculation of its provider participation fee for that quarter. Only requests for reconsideration of the assessment calculation shall be considered during the quarterly reconciliation period. All appeals based on utilization/spending estimates shall be addressed during the annual audit/reconciliation described in subsection (1) below.

 

A)        Requests for reconsideration must be received in writing within 30 calendar days of the date of the Department's notification of the fee due. The request shall be accompanied by written materials setting forth the grounds for reconsideration.

 

B)        A hospital shall be required to pay its provider participation fee amount for the time period in question. In the event that a request for reconsideration results in the need for an adjustment to the fee due for the subject quarter, such adjustment shall be made during the quarterly reconciliation for the subject quarter.

 

2)         Quarterly Reconciliation. A quarterly reconciliation shall be performed by the Department to make adjustments to the fees calculated by the Department under subsections (b) and (c) above. During the quarterly reconciliation, the Department shall consider all requests for reconsideration which are received in compliance with subsection (e)(1) above. The Department shall notify each hospital of the results of the quarterly reconciliation. The notification shall be in writing and shall be submitted to the hospital at least ten (10) working days prior to the date on which the subsequent provider participation fee is due.  If, as a result of the reconciliation, the Department determines that the amount of the reconsidered fee was incorrect, the notification shall include an adjustment to the amount of the provider participation fee which is next due. The facility shall be obligated to pay the amount shown on the reconciliation notification if that amount differs from the amount in the notification described in subsection (d).

 

f)          Penalties.

 

1)         Any hospital that fails to pay the fee when due, or pays less than the full amount due as described in subsections (b) and (c) above, shall be assessed a penalty of ten (10) percent of the delinquency or deficiency for each month, or fraction thereof, computed on the full amount of the delinquency or deficiency, which includes any penalty accrued and not paid, from the time the fee was due.

 

2)         Within five days from the due date, the Department will begin immediate recoupment actions against the delinquent provider by withholding the amount due from future payments. No payments will be made to the provider until the entire provider fee, including any penalties, is satisfied. Recoupment proceedings against the same provider two times in a fiscal year shall be cause for termination from the program.

 

3)         If the provider is no longer doing business with the Department or the Department cannot recover the full amount due, including penalties and interest, within three months of the fee due date, the Department may begin legal action to recover monies owed plus court costs.

 

4)         The Director of the Department of Public Aid may establish delayed payment schedules for individual facilities that are unable to make timely payments under this Section due to financial difficulties. The delayed payment provisions are described in subsections (g) and (h) below.

 

g)         Delayed Payment – Groups of Facilities

The Director may establish delayed payment of fees and/or waive the payment of interest and penalties for groups of hospitals such as disproportionate share hospitals or all other hospitals when:

 

1)         the State delays payments to hospitals due to problems related to State cash flow, or

 

2)         a cash flow bond pool's, or any other group financing plans', requests from providers for loans are in excess of its scheduled proceeds such that a significant number of hospitals will be unable to obtain a loan to pay the fee.

 

h)         Delayed Payment – Individual Facilities

In addition to the provisions of subsection (g) above, the Director may waive or delay fees for individual facilities that are unable to make timely payments under this Section due to financial difficulties. No delayed payment arrangements shall extend beyond the last business day of the calendar quarter in which the provider participation fee was to have been received by the Department as described in subsection (c) above.

 

1)         Criteria. Delayed payment provisions may be instituted only under extraordinary circumstances to qualified providers of medical assistance services. Delayed payment provisions may be made only to qualified hospitals that meet all of the following requirements:

 

A)        the provider has experienced an emergency which necessitates institution of delayed payment provisions. Emergency in this instance is defined as a circumstance under which institution of the payment and penalty provisions described in subsections (c)(1), (c)(2), (f)(1) and (f)(2) above would impose severe and irreparable harm to the clients served. Circumstances which may create such emergencies include, but are not limited to, the following:

 

i)          Department system errors (either automated system or clerical) which have precluded payments, or which have caused erroneous payments such that the provider's ability to provide further services to clients is severely impaired;

 

ii)         cash flow problems encountered by a provider which are unrelated to Department technical system problems. These situations include cash flow problems which are unrelated to Department technical system problems and which result in extensive financial problems to a facility, adversely impacting on its ability to serve its clients.

 

B)        the provider serves a significant number of clients under the medical assistance program. Significant in this instance means:

 

i)          that the hospital must qualify as a disproportionate share hospital under 89 Ill. Adm. Code 148.120 (a)(1) through 148.120 (a)(4).

 

ii)         for government-owned facilities, subsection (h)(l)(B)(i) may be waived if the cash flow criteria under subsection (h)(l)(A)(ii) is met; and

 

iii)         for providers who have filed for Chapter 11 bankruptcy, subsection (h)(l)(B)(i) may be waived if the cash flow criteria under subsection (h)(l)(A)(ii) is met.

 

C)        the provider must file a Cash Position Statement which is based upon current assets, current liabilities and other data for a date which is less that sixty (60) days prior to the date of filing. Any liabilities payable to owners or related parties must not be reported as current liabilities on the Cash Position Statement. A deferral of assessment payments will be denied if any of the following criteria are met:

 

i)          the ratio of current assets divided by current liabilities is greater than 2.0.

 

ii)         cash, short term investments and long term investments equal or exceed the total of accrued wages payable and the assessment payment. Long term investments which are unavailable for expenditure for current operations due to donor restrictions or contractual requirements will not be used in this calculation.

 

D)        the provider must show evidence of denial of an application to borrow provider participation fee funds through a cash flow bond pool or financial institution such as a commercial bank.

 

E)         the provider must sign an agreement with the Department which specifies the terms and conditions of the delayed payment provisions. The agreement shall contain the following provisions:

 

i)          specific reason(s) for institution of the delayed payment provisions;

 

ii)         specific dates on which payments must be received and the amount of payment which must be received on each specific date described;

 

iii)         the interest or a statement of interest waiver that shall be due from the provider as a result of institution of the delayed payment provisions;

 

iv)        a certification stating that, should the entity be sold, the new owners will be made aware of the liability and any agreement selling the entity will include provisions that the new owner will assume responsibility for repaying the debt to the Department according to the original agreement; and

 

v)         a certification stating that all information submitted to the Department in support of the delayed payment request is true and accurate to the best of the signator's knowledge.

 

2)         A hospital which does not meet the above criteria may request a delayed payment schedule and/or the waiver of interest and penalties. The Director may approve the request, notwithstanding the hospital not meeting the above criteria, upon a sufficient showing of financial difficulties and good cause by the hospital. If the request for a delayed payment schedule and/or waiver of interest and penalties is approved, all other conditions of this subsection (h) shall apply.

 

3)         Approval Process.

 

A)        In order to receive consideration for delayed payment provisions, providers must submit their request in writing (telefax requests are acceptable) to the Bureau of Program and Reimbursement Analysis. The request must be received within ten (10) working days of the date of the Department's notification of the provider participation fee due for the subject quarter as described in subsection (c) above.  Requests must be complete and contain all required information before they are considered to have met the time requirements for filing a delayed payment request.  All telefax requests must be followed up with original written requests by certified mail, postmarked no later than the date of the telefax. The request must include:

 

i)          an explanation of the circumstances creating the need for the delayed payment provisions;

 

ii)         supportive documentation to substantiate the emergency nature of the request and risk of irreparable harm to the clients; and

 

iii)         specification of the specific arrangements requested by the provider.

 

B)        The hospital shall be notified by the Department, in writing, of the Department's decision with regard to the request for institution of delayed payment provisions.  An agreement shall be issued to the provider for all approved requests. The agreement must be signed by the administrator, owner, chief executive officer or other authorized representative and be received by the Department prior to the first scheduled payment date listed in such agreement.

 

4)         Waiver of Penalties. The penalties described in subsections (f)(1) and (f)(2) may be waived upon approval of the provider's request for institution of delayed payment provisions. In the event a provider's request for institution of delayed payment provisions is approved and the Department has received the signed agreement in accordance with subsection (h)(3)(B) above, such penalties shall be permanently waived for the subject quarter unless the provider fails to meet on the terms and conditions of the agreement. In the event the provider fails to meet on the terms and conditions of the agreement, the agreement shall be considered null and void and such penalties shall be fully reinstated.

 

5)         Interest. The delayed payments shall include interest at a rate not to exceed the State of Illinois borrowing rate. The applicable interest rate shall be identified in the agreement described in subsection (h)(1)(E) above. The interest may be waived by the Director if the facility's current ratio, as described in subsection (h)(l)(C) above is 1.5 or less and the hospital meets the criteria in (h)(l)(A) and (B). Any such waivers granted shall be expressly identified in the agreement described in subsection (h)(l)(D) above.

 

6)         Subsequent Delayed Payment Arrangements. Once a provider has requested and received approval for delayed payment arrangements, the provider shall not receive approval for subsequent delayed payment arrangements until such time as the terms and conditions of any current delayed payment agreement have been satisfied. The waiver of penalties described in subsection (h)(3) shall not apply to a provider that has not satisfied the terms and conditions of any current delayed payment agreement.

 

i)          Disbursements from the Fund

 

1)         Disbursements from the Fund shall be made only:

 

A)        for hospital inpatient, hospital ambulatory care, and disproportionate share distributive expenditures made under Title XIX of the Social Security Act (42 U.S.C. 1396 et seq.);

 

B)        for the reimbursement of monies collected by the Department from hospitals through error or mistake;

 

C)        for payment of administrative expenses incurred by the Department or its agent in performing the activities authorized by subsections (b), (c), (d), (e) and (f) above; and

 

D)        for payments of any amounts which are reimbursable to the federal government for payments from this Fund which are required to be paid by State warrant. Disbursements from this Fund shall be by warrants drawn by the State Comptroller upon receipt of vouchers duly executed and certified by the Department.

 

2)         Disbursements from the Fund are conditional on:

 

A)        expiration of the time limitations for reconsiderations requested by hospitals under subsection (e)(1) above.

 

B)        the availability of sufficient monies in the Fund to make the payments required by Section 14-8 of the Public Aid Code after the quarterly reconciliation determined under subsection (e)(2) above, and the annual audit reconciliation determined under subsection (1) below.

 

j)          Court Orders

If one or more hospitals file suit in any court challenging any part of this Section, payments to hospitals under this Section shall be made only to the extent that sufficient monies are available in the Fund and only to the extent that any monies in the Fund are not prohibited from disbursement under any order of the court.

 

k)         Federal Approval

Payments under the disbursement methodology described in Section 14-8 of the Public Aid Code (Ill. Rev. Stat. 1989, ch. 23, par. 14-8) are subject to approval by the federal government in an appropriate State plan amendment. Fees under this Section are conditioned on the disbursement methodology described in Section 14-8 of the Public Aid Code (Ill. Rev. Stat. 1989, ch. 23, par. 14-8) being approved by the federal government in an appropriate State plan amendment.

 

l)          Annual Audit/Reconciliation

 

1)         The Department shall conduct an annual review and reconciliation of the provider participation fees paid by hospitals.  The purpose of the reconciliation shall be to adjust the provider participation fees paid by a hospital to reflect:

 

A)        the actual services provided by the hospital to recipients of the Medical Assistance Program, and

 

B)        the payments actually received by the hospital related to those services during the period to which the provider participation fee relates.

 

2)         Where the estimated rate year utilization, anticipated annualized Medicaid spending or gross receipts as determined and utilized by the Department in the calculation of fees due under subsections (b)(1) and (b)(2) do not reflect the hospital's actual rate year utilization, actual annualized Medicaid spending or actual gross receipts during the period to which the provider participation fee relates, the Department shall recalculate the hospital's provider participation fee in accordance with subsection (b), utilizing the hospital's actual rate year utilization, actual annualized Medicaid spending and actual gross receipts for the period to which the provider participation fee relates.

 

A)        If the recalculation indicates that the hospital should have been required to pay, but did not pay, a higher provider participation fee based upon actual rate year utilization, actual annualized Medicaid spending or actual gross receipts during the period to which the provider participation fee relates, the hospital shall be required to pay to the Fund, within 60 days of the date of notification from the Department that monies are owed to the Department, the difference between the provider participation fee amount actually paid and the provider participation fee amount which should have been paid.

 

B)        If the recalculation indicates that the hospital paid a total provider participation fee during the twelve-month period which exceeded that which the hospital should have been required to pay based upon actual rate year utilization, actual annualized spending or actual gross receipts during the period to which the provider participation fee relates, the Department shall refund within 60 days of the date of notification from the Department that monies are due to the hospital, the difference between the amount the hospital actually paid and the amount of the provider participation fee the hospital should have paid.

 

3)         In no event shall the payments to a hospital, less the fees paid by the hospital under subsections (b) and (c) above, equal less than the payments from the hospital's State fiscal year 1991 weighted average payment rates reduced by 5 percent.

 

4)         Amounts recovered from a hospital shall be credited to the Fund. A hospital is entitled to recover amounts paid to the Department and to receive refunds and payments from the Department under this Section only to the extent that monies are available in the Fund.

 

5)         Upon notification of the results of the Department's annual audit/reconciliation, each hospital shall have the right to reconsideration of the results of such annual audit/reconciliation. Such requests for reconsideration must be received in writing within thirty (30) calendar days of the date of the Department's notification of the fee due. Such request shall include a clear explanation of the error and documentation of the desired correction. The Department shall notify the hospital of the results of the review within 30 days of the receipt of all required review material. If the hospital fails to request a reconsideration pursuant to this subsection, the Department's determination shall be final.

 

m)        Applicability

The requirements of this Section shall apply only as long as federal funds under Title XIX of the Social Security Act are available to match the fees collected and disbursed under this Section and only as long as reimbursable expenditures are matched at the Federal Medicaid percentage of at least 50 percent. Whenever the Department is informed that federal funds are not available for these purposes, or shall be available at a lower percentage, this Section shall no longer apply, and the Department shall promptly refund to each hospital the amount of money currently in the Fund that has been paid by the hospital, plus any investment earnings on that amount.

 

n)         Definitions

As used in this Section, unless the context requires otherwise:

 

1)         "Actual annualized Medicaid spending" means the actual expenditures made by the Department for services provided during the State fiscal year in which the fee described in subsection (b)(1) is due and which have been paid within nine (9) months from the end of such State fiscal year (for example, services provided in fiscal year 1992 and paid no later than March 31, 1993, for fees imposed in State fiscal year 1992; services provided in fiscal year 1993 and paid no later than March 31, 1994, for fees imposed in State fiscal year 1993; etc.). Such expenditures shall not include disproportionate share payments, targeted access payments, critical care access payments or uncompensated care payments.

 

2)         "Actual gross receipts" means the gross receipts, as determined and reported by the Department, for services provided during the previous fiscal year which have been paid within nine (9) months from the end of such previous State fiscal year (for example, services provided in fiscal year 1991 and paid no later than March 31, 1992, for fees described in subsection (b)(2) which are imposed in State fiscal year 1992; services provided in fiscal year 1992 and paid no later than March 31, 1993, for fees described in subsection (b)(2) which are imposed in State fiscal 1993; etc.).

 

3)         "Actual rate year utilization" means the actual utilization of services provided during the State fiscal year in which the fee described in subsection (b)(1) is due and which have been paid within nine (9) months from the end of such State fiscal year (for example, services provided in fiscal year 1992 and paid no later than March 31, 1993, for fees imposed in State fiscal year 1992; services provided in fiscal year 1993 and paid no later than March 31, 1994, for fees imposed in State fiscal year 1993; etc.).

 

4)         "Anticipated annualized Medicaid spending" means the Department's estimate of expenditures which will be made to the hospital for services provided in the State fiscal year in which the fee described in subsection (b)(1) is due (for example, fiscal year 1992 for fees imposed in State fiscal year 1992, fiscal year 1993 for fees imposed in State fiscal year 1993, etc.). Such expenditures shall not include disproportionate share payments, targeted access payments, critical care access payments or uncompensated care payments.

 

5)         "Estimated rate year utilization" means the hospital's projected utilization for the State fiscal year in which the fee described in subsection (b)(1) is due (for example, fiscal year 1992 for fees imposed in State fiscal year 1992, fiscal year 1993 for fees imposed in State fiscal year 1993, etc.).

 

6)         "Fund" means the Hospital Services Trust Fund.

 

7)         "Gross Receipts" means all payments for medical services delivered under Title XIX of the Social Security Act and Articles V, VI and VII of the Public Aid Code and shall mean any and all payments made by the Department, or a Division thereof, to a Medical Assistance Program provider certified to participate in the Illinois Medical Assistance Program, for services rendered eligible for Medical Assistance under Articles V, VI and VII of the Public Aid Code, State regulations and the federal Medicaid Program as defined in Title XIX of the Social Security Act and federal regulations.

 

8)         "Hospital" means any institution, place, building, or agency, public or private, whether organized for profit or not-for-profit, which is located in the State and is subject to licensure by the Illinois Department of Public Health under the Hospital Licensing Act or any institution, place, building, or agency, public or private, whether organized for profit or not-for-profit, which meets all comparable conditions and requirements of the Hospital Licensing Act in effect for the state in which it is located, and is required to submit cost reports to the Department under 89 Ill. Adm. Code 148, but shall not include the University of Illinois Hospital Act or a county hospital in a county of over 3 million population.

 

9)         "Total Medicaid Base Year Spending" means the hospital's State fiscal year 1991 weighted average payment rates, excluding payments made under 89 Ill. Adm. Code 148.120 and Section 5-5.02 of the Public Aid Code (Ill. Rev. Stat. 1989, ch. 23, par. 5-5.02), reduced by 5 percent and multiplied by the hospital's estimated rate year utilization.

 

10)         "Weighted Average Payment Rate" means the hospital's payment rates for specific services, divided by the hospital's utilization for those specific services, plus any disproportionate share and outlier adjustments and less any third party liability payments.

 

o)         Fee Assurances

 

1)         Notwithstanding any provision of any rule of the Illinois Department of Public Aid, if either of the following events occurs:

 

A)        Federal funds under Title XIX of the Social Security Act are no longer available to match the fees collected and disbursed under Section 14-3 of the Public Aid Code (Ill. Rev. Stat. 1989, ch. 23, par. 14-3) or the State's expenditures are matched at a Federal Medicaid percentage of less than 50%; or

 

B)        The State Plan amendment, in substantially the form submitted to the Health Care Financing Administration ("HCFA") prior to October 1, 1991, implementing the disbursement methodology set forth in Section 14-8 of the Public Aid Code (Ill. Rev. Stat. 1989, ch. 23, par. 14-8) is disapproved by HCFA.

 

2)         Then the Department shall:

 

A)        Make payments to hospitals in an amount commensurate with the payment rates that would have been paid pursuant to Section 14-8 of the Public Aid Code (Ill. Rev. Stat. 1989, ch. 23, par. 14-8), the proposed State Plan amendment, and rules implementing such Section for services provided to Medicaid recipients during the period for which fees have been collected under Section 14-3 of the Public Aid Code (Ill. Rev. Stat. 1989, ch. 23, par. 14-3) (fees due on the first business day of one quarter are considered collected for the previous quarter pursuant to subsection (c)(2) above); or

 

B)        If the Department cannot make payments at the level described in subsection (2)(A) above, refund to the hospital the hospital's fee, or portion thereof, which has not been recouped by the hospital through the payment rates as described in subsection (2)(A) above. The difference between the actual payments made to the hospital and the payments that would have been made to the hospital based on the hospital's total Medicaid base year spending shall be considered the amount of the fee recouped by the hospital.

 

(Source:  Amended at 17 Ill. Reg. 3421, effective February 19, 1993)