Illinois General Assembly - Full Text of SB1763
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Full Text of SB1763  103rd General Assembly




State of Illinois
2023 and 2024


Introduced 2/9/2023, by Sen. Ann Gillespie


See Index

    Amends the Hospital Services Trust Fund Article of the Illinois Public Aid Code. Increases by 20% hospital reimbursement rates for dates of service on and after January 1, 2024, for specified services, including, but not limited to: inpatient general acute care services; inpatient psychiatric services for safety-net hospitals; general acute care hospitals that are not safety-net hospitals; and outpatient general acute care services. Provides that the rates for the listed services shall be increased, beginning on January 1, 2025 and each January 1 thereafter, based on the annual increase in the national hospital market basket price proxies (DRI) hospital cost index from the midpoint of the calendar year 2 years prior to the current year, to the midpoint of the preceding calendar year. Provides that in no instance shall the adjustment result in a reduction to the rates in place at the time of the required adjustment. Provides that if the federal Centers for Medicare and Medicaid Services finds that the increases required under the amendatory Act would result in rates of reimbursement which exceed the federal maximum limits applicable to hospital payments, then the payments and assessment tax imposed on hospital providers shall be reduced as provided in the Hospital Provider Funding Article. Requires the Department of Healthcare and Family Services to promptly take all actions necessary to ensure the changes authorized in the amendatory Act are in effect for dates of service on and after January 1, 2024. Requires the Department to ensure that all necessary adjustments to the managed care organization capitation base rates necessitated by the adjustments in the amendatory Act are completed, published, and applied 90 days prior to the implementation date of the changes required under the amendatory Act. Provides that, by October 1, 2023, the Department shall by rule implement a methodology effective for dates of service beginning on and after January 1, 2024 to reimburse hospitals for extended stays in a hospital emergency department. Amends the Illinois Administrative Procedure Act. Grants the Department emergency rulemaking authority. Effective immediately.

LRB103 27744 KTG 54122 b





SB1763LRB103 27744 KTG 54122 b

1    AN ACT concerning public aid.
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4    Section 1. The Illinois Administrative Procedure Act is
5amended by adding Section 5-45.35 as follows:
6    (5 ILCS 100/5-45.35 new)
7    Sec. 5-45.35. Emergency rulemaking; Medicaid reimbursement
8rates for hospital inpatient and outpatient services. To
9provide for the expeditious and timely implementation of the
10changes made by this amendatory Act of the 103rd General
11Assembly to Sections 5-5.05, 14-12, 14-12.5, and 14-13 of the
12Illinois Public Aid Code, emergency rules implementing the
13changes made by this amendatory Act of the 103rd General
14Assembly to Sections 5-5.05, 14-12, 14-12.5, and 14-13 of the
15Illinois Public Aid Code may be adopted in accordance with
16Section 5-45 by the Department of Healthcare and Family
17Services. The adoption of emergency rules authorized by
18Section 5-45 and this Section is deemed to be necessary for the
19public interest, safety, and welfare.
20    This Section is repealed one year after the effective date
21of this amendatory Act of the 103rd General Assembly.
22    Section 5. The Illinois Public Aid Code is amended by



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1changing Sections 5-5.05, 14-12, and 14-13 and by adding
2Section 14-12.5 as follows:
3    (305 ILCS 5/5-5.05)
4    Sec. 5-5.05. Hospitals; psychiatric services.
5    (a) On and after July 1, 2008, the inpatient, per diem rate
6to be paid to a hospital for inpatient psychiatric services
7shall be not less than $363.77.
8    (b) For purposes of this Section, "hospital" means the
10        (1) Advocate Christ Hospital, Oak Lawn, Illinois.
11        (2) Barnes-Jewish Hospital, St. Louis, Missouri.
12        (3) BroMenn Healthcare, Bloomington, Illinois.
13        (4) Jackson Park Hospital, Chicago, Illinois.
14        (5) Katherine Shaw Bethea Hospital, Dixon, Illinois.
15        (6) Lawrence County Memorial Hospital, Lawrenceville,
16    Illinois.
17        (7) Advocate Lutheran General Hospital, Park Ridge,
18    Illinois.
19        (8) Mercy Hospital and Medical Center, Chicago,
20    Illinois.
21        (9) Methodist Medical Center of Illinois, Peoria,
22    Illinois.
23        (10) Provena United Samaritans Medical Center,
24    Danville, Illinois.
25        (11) Rockford Memorial Hospital, Rockford, Illinois.



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1        (12) Sarah Bush Lincoln Health Center, Mattoon,
2    Illinois.
3        (13) Provena Covenant Medical Center, Urbana,
4    Illinois.
5        (14) Rush-Presbyterian-St. Luke's Medical Center,
6    Chicago, Illinois.
7        (15) Mt. Sinai Hospital, Chicago, Illinois.
8        (16) Gateway Regional Medical Center, Granite City,
9    Illinois.
10        (17) St. Mary of Nazareth Hospital, Chicago, Illinois.
11        (18) Provena St. Mary's Hospital, Kankakee, Illinois.
12        (19) St. Mary's Hospital, Decatur, Illinois.
13        (20) Memorial Hospital, Belleville, Illinois.
14        (21) Swedish Covenant Hospital, Chicago, Illinois.
15        (22) Trinity Medical Center, Rock Island, Illinois.
16        (23) St. Elizabeth Hospital, Chicago, Illinois.
17        (24) Richland Memorial Hospital, Olney, Illinois.
18        (25) St. Elizabeth's Hospital, Belleville, Illinois.
19        (26) Samaritan Health System, Clinton, Iowa.
20        (27) St. John's Hospital, Springfield, Illinois.
21        (28) St. Mary's Hospital, Centralia, Illinois.
22        (29) Loretto Hospital, Chicago, Illinois.
23        (30) Kenneth Hall Regional Hospital, East St. Louis,
24    Illinois.
25        (31) Hinsdale Hospital, Hinsdale, Illinois.
26        (32) Pekin Hospital, Pekin, Illinois.



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1        (33) University of Chicago Medical Center, Chicago,
2    Illinois.
3        (34) St. Anthony's Health Center, Alton, Illinois.
4        (35) OSF St. Francis Medical Center, Peoria, Illinois.
5        (36) Memorial Medical Center, Springfield, Illinois.
6        (37) A hospital with a distinct part unit for
7    psychiatric services that begins operating on or after
8    July 1, 2008.
9    For purposes of this Section, "inpatient psychiatric
10services" means those services provided to patients who are in
11need of short-term acute inpatient hospitalization for active
12treatment of an emotional or mental disorder.
13    (b-5) Notwithstanding any other provision of this Section,
14and subject to appropriation, the inpatient, per diem rate to
15be paid to all safety-net hospitals for inpatient psychiatric
16services on and after January 1, 2021 shall be at least $630,
17subject to the provisions of Section 14-12.5.
18    (b-10) Notwithstanding any other provision of this
19Section, effective with dates of service on and after January
201, 2022, any general acute care hospital with more than 9,500
21inpatient psychiatric Medicaid days in any calendar year shall
22be paid the inpatient per diem rate of no less than $630,
23subject to the provisions of Section 14-12.5.
24    (c) No rules shall be promulgated to implement this
25Section. For purposes of this Section, "rules" is given the
26meaning contained in Section 1-70 of the Illinois



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1Administrative Procedure Act.
2    (d) (Blank). This Section shall not be in effect during
3any period of time that the State has in place a fully
4operational hospital assessment plan that has been approved by
5the Centers for Medicare and Medicaid Services of the U.S.
6Department of Health and Human Services.
7    (e) On and after July 1, 2012, the Department shall reduce
8any rate of reimbursement for services or other payments or
9alter any methodologies authorized by this Code to reduce any
10rate of reimbursement for services or other payments in
11accordance with Section 5-5e.
12(Source: P.A. 102-4, eff. 4-27-21; 102-674, eff. 11-30-21.)
13    (305 ILCS 5/14-12)
14    Sec. 14-12. Hospital rate reform payment system. The
15hospital payment system pursuant to Section 14-11 of this
16Article shall be as follows:
17    (a) Inpatient hospital services. Effective for discharges
18on and after July 1, 2014, reimbursement for inpatient general
19acute care services shall utilize the All Patient Refined
20Diagnosis Related Grouping (APR-DRG) software, version 30,
21distributed by 3MTM Health Information System.
22        (1) The Department shall establish Medicaid weighting
23    factors to be used in the reimbursement system established
24    under this subsection. Initial weighting factors shall be
25    the weighting factors as published by 3M Health



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1    Information System, associated with Version 30.0 adjusted
2    for the Illinois experience.
3        (2) The Department shall establish a
4    statewide-standardized amount to be used in the inpatient
5    reimbursement system. The Department shall publish these
6    amounts on its website no later than 10 calendar days
7    prior to their effective date.
8        (3) In addition to the statewide-standardized amount,
9    the Department shall develop adjusters to adjust the rate
10    of reimbursement for critical Medicaid providers or
11    services for trauma, transplantation services, perinatal
12    care, and Graduate Medical Education (GME).
13        (4) The Department shall develop add-on payments to
14    account for exceptionally costly inpatient stays,
15    consistent with Medicare outlier principles. Outlier fixed
16    loss thresholds may be updated to control for excessive
17    growth in outlier payments no more frequently than on an
18    annual basis, but at least once every 4 years. Upon
19    updating the fixed loss thresholds, the Department shall
20    be required to update base rates within 12 months.
21        (5) The Department shall define those hospitals or
22    distinct parts of hospitals that shall be exempt from the
23    APR-DRG reimbursement system established under this
24    Section. The Department shall publish these hospitals'
25    inpatient rates on its website no later than 10 calendar
26    days prior to their effective date.



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1        (6) Beginning July 1, 2014 and ending on June 30,
2    2024, in addition to the statewide-standardized amount,
3    the Department shall develop an adjustor to adjust the
4    rate of reimbursement for safety-net hospitals defined in
5    Section 5-5e.1 of this Code excluding pediatric hospitals,
6    subject to the provisions of Section 14-12.5.
7        (7) Beginning July 1, 2014, in addition to the
8    statewide-standardized amount, the Department shall
9    develop an adjustor to adjust the rate of reimbursement
10    for Illinois freestanding inpatient psychiatric hospitals
11    that are not designated as children's hospitals by the
12    Department but are primarily treating patients under the
13    age of 21.
14        (7.5) (Blank).
15        (8) Beginning July 1, 2018, in addition to the
16    statewide-standardized amount, the Department shall adjust
17    the rate of reimbursement for hospitals designated by the
18    Department of Public Health as a Perinatal Level II or II+
19    center by applying the same adjustor that is applied to
20    Perinatal and Obstetrical care cases for Perinatal Level
21    III centers, as of December 31, 2017.
22        (9) Beginning July 1, 2018, in addition to the
23    statewide-standardized amount, the Department shall apply
24    the same adjustor that is applied to trauma cases as of
25    December 31, 2017 to inpatient claims to treat patients
26    with burns, including, but not limited to, APR-DRGs 841,



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1    842, 843, and 844.
2        (10) Beginning July 1, 2018, the
3    statewide-standardized amount for inpatient general acute
4    care services shall be uniformly increased so that base
5    claims projected reimbursement is increased by an amount
6    equal to the funds allocated in paragraph (1) of
7    subsection (b) of Section 5A-12.6, less the amount
8    allocated under paragraphs (8) and (9) of this subsection
9    and paragraphs (3) and (4) of subsection (b) multiplied by
10    40%.
11        (11) Beginning July 1, 2018, the reimbursement for
12    inpatient rehabilitation services shall be increased by
13    the addition of a $96 per day add-on.
14    (b) Outpatient hospital services. Effective for dates of
15service on and after July 1, 2014, reimbursement for
16outpatient services shall utilize the Enhanced Ambulatory
17Procedure Grouping (EAPG) software, version 3.7 distributed by
183MTM Health Information System.
19        (1) The Department shall establish Medicaid weighting
20    factors to be used in the reimbursement system established
21    under this subsection. The initial weighting factors shall
22    be the weighting factors as published by 3M Health
23    Information System, associated with Version 3.7.
24        (2) The Department shall establish service specific
25    statewide-standardized amounts to be used in the
26    reimbursement system.



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1            (A) The initial statewide standardized amounts,
2        with the labor portion adjusted by the Calendar Year
3        2013 Medicare Outpatient Prospective Payment System
4        wage index with reclassifications, shall be published
5        by the Department on its website no later than 10
6        calendar days prior to their effective date.
7            (B) The Department shall establish adjustments to
8        the statewide-standardized amounts for each Critical
9        Access Hospital, as designated by the Department of
10        Public Health in accordance with 42 CFR 485, Subpart
11        F. For outpatient services provided on or before June
12        30, 2018, the EAPG standardized amounts are determined
13        separately for each critical access hospital such that
14        simulated EAPG payments using outpatient base period
15        paid claim data plus payments under Section 5A-12.4 of
16        this Code net of the associated tax costs are equal to
17        the estimated costs of outpatient base period claims
18        data with a rate year cost inflation factor applied.
19        (3) In addition to the statewide-standardized amounts,
20    the Department shall develop adjusters to adjust the rate
21    of reimbursement for critical Medicaid hospital outpatient
22    providers or services, including outpatient high volume or
23    safety-net hospitals. Beginning July 1, 2018, the
24    outpatient high volume adjustor shall be increased to
25    increase annual expenditures associated with this adjustor
26    by $79,200,000, based on the State Fiscal Year 2015 base



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1    year data and this adjustor shall apply to public
2    hospitals, except for large public hospitals, as defined
3    under 89 Ill. Adm. Code 148.25(a).
4        (4) Beginning July 1, 2018, in addition to the
5    statewide standardized amounts, the Department shall make
6    an add-on payment for outpatient expensive devices and
7    drugs. This add-on payment shall at least apply to claim
8    lines that: (i) are assigned with one of the following
9    EAPGs: 490, 1001 to 1020, and coded with one of the
10    following revenue codes: 0274 to 0276, 0278; or (ii) are
11    assigned with one of the following EAPGs: 430 to 441, 443,
12    444, 460 to 465, 495, 496, 1090. The add-on payment shall
13    be calculated as follows: the claim line's covered charges
14    multiplied by the hospital's total acute cost to charge
15    ratio, less the claim line's EAPG payment plus $1,000,
16    multiplied by 0.8.
17        (5) Beginning July 1, 2018, the statewide-standardized
18    amounts for outpatient services shall be increased by a
19    uniform percentage so that base claims projected
20    reimbursement is increased by an amount equal to no less
21    than the funds allocated in paragraph (1) of subsection
22    (b) of Section 5A-12.6, less the amount allocated under
23    paragraphs (8) and (9) of subsection (a) and paragraphs
24    (3) and (4) of this subsection multiplied by 46%.
25        (6) Effective for dates of service on or after July 1,
26    2018, the Department shall establish adjustments to the



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1    statewide-standardized amounts for each Critical Access
2    Hospital, as designated by the Department of Public Health
3    in accordance with 42 CFR 485, Subpart F, such that each
4    Critical Access Hospital's standardized amount for
5    outpatient services shall be increased by the applicable
6    uniform percentage determined pursuant to paragraph (5) of
7    this subsection. It is the intent of the General Assembly
8    that the adjustments required under this paragraph (6) by
9    Public Act 100-1181 shall be applied retroactively to
10    claims for dates of service provided on or after July 1,
11    2018.
12        (7) Effective for dates of service on or after March
13    8, 2019 (the effective date of Public Act 100-1181), the
14    Department shall recalculate and implement an updated
15    statewide-standardized amount for outpatient services
16    provided by hospitals that are not Critical Access
17    Hospitals to reflect the applicable uniform percentage
18    determined pursuant to paragraph (5).
19            (1) Any recalculation to the
20        statewide-standardized amounts for outpatient services
21        provided by hospitals that are not Critical Access
22        Hospitals shall be the amount necessary to achieve the
23        increase in the statewide-standardized amounts for
24        outpatient services increased by a uniform percentage,
25        so that base claims projected reimbursement is
26        increased by an amount equal to no less than the funds



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1        allocated in paragraph (1) of subsection (b) of
2        Section 5A-12.6, less the amount allocated under
3        paragraphs (8) and (9) of subsection (a) and
4        paragraphs (3) and (4) of this subsection, for all
5        hospitals that are not Critical Access Hospitals,
6        multiplied by 46%.
7            (2) It is the intent of the General Assembly that
8        the recalculations required under this paragraph (7)
9        by Public Act 100-1181 shall be applied prospectively
10        to claims for dates of service provided on or after
11        March 8, 2019 (the effective date of Public Act
12        100-1181) and that no recoupment or repayment by the
13        Department or an MCO of payments attributable to
14        recalculation under this paragraph (7), issued to the
15        hospital for dates of service on or after July 1, 2018
16        and before March 8, 2019 (the effective date of Public
17        Act 100-1181), shall be permitted.
18        (8) The Department shall ensure that all necessary
19    adjustments to the managed care organization capitation
20    base rates necessitated by the adjustments under
21    subparagraph (6) or (7) of this subsection are completed
22    and applied retroactively in accordance with Section
23    5-30.8 of this Code within 90 days of March 8, 2019 (the
24    effective date of Public Act 100-1181).
25        (9) Within 60 days after federal approval of the
26    change made to the assessment in Section 5A-2 by Public



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1    Act 101-650 this amendatory Act of the 101st General
2    Assembly, the Department shall incorporate into the EAPG
3    system for outpatient services those services performed by
4    hospitals currently billed through the Non-Institutional
5    Provider billing system.
6    (b-5) Notwithstanding any other provision of this Section,
7beginning with dates of service on and after January 1, 2023,
8any general acute care hospital with more than 500 outpatient
9psychiatric Medicaid services to persons under 19 years of age
10in any calendar year shall be paid the outpatient add-on
11payment of no less than $113.
12    (c) In consultation with the hospital community, the
13Department is authorized to replace 89 Ill. Adm. Admin. Code
14152.150 as published in 38 Ill. Reg. 4980 through 4986 within
1512 months of June 16, 2014 (the effective date of Public Act
1698-651). If the Department does not replace these rules within
1712 months of June 16, 2014 (the effective date of Public Act
1898-651), the rules in effect for 152.150 as published in 38
19Ill. Reg. 4980 through 4986 shall remain in effect until
20modified by rule by the Department. Nothing in this subsection
21shall be construed to mandate that the Department file a
22replacement rule.
23    (d) Transition period. There shall be a transition period
24to the reimbursement systems authorized under this Section
25that shall begin on the effective date of these systems and
26continue until June 30, 2018, unless extended by rule by the



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1Department. To help provide an orderly and predictable
2transition to the new reimbursement systems and to preserve
3and enhance access to the hospital services during this
4transition, the Department shall allocate a transitional
5hospital access pool of at least $290,000,000 annually so that
6transitional hospital access payments are made to hospitals.
7        (1) After the transition period, the Department may
8    begin incorporating the transitional hospital access pool
9    into the base rate structure; however, the transitional
10    hospital access payments in effect on June 30, 2018 shall
11    continue to be paid, if continued under Section 5A-16.
12        (2) After the transition period, if the Department
13    reduces payments from the transitional hospital access
14    pool, it shall increase base rates, develop new adjustors,
15    adjust current adjustors, develop new hospital access
16    payments based on updated information, or any combination
17    thereof by an amount equal to the decreases proposed in
18    the transitional hospital access pool payments, ensuring
19    that the entire transitional hospital access pool amount
20    shall continue to be used for hospital payments.
21    (d-5) Hospital and health care transformation program. The
22Department shall develop a hospital and health care
23transformation program to provide financial assistance to
24hospitals in transforming their services and care models to
25better align with the needs of the communities they serve. The
26payments authorized in this Section shall be subject to



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1approval by the federal government.
2        (1) Phase 1. In State fiscal years 2019 through 2020,
3    the Department shall allocate funds from the transitional
4    access hospital pool to create a hospital transformation
5    pool of at least $262,906,870 annually and make hospital
6    transformation payments to hospitals. Subject to Section
7    5A-16, in State fiscal years 2019 and 2020, an Illinois
8    hospital that received either a transitional hospital
9    access payment under subsection (d) or a supplemental
10    payment under subsection (f) of this Section in State
11    fiscal year 2018, shall receive a hospital transformation
12    payment as follows:
13            (A) If the hospital's Rate Year 2017 Medicaid
14        inpatient utilization rate is equal to or greater than
15        45%, the hospital transformation payment shall be
16        equal to 100% of the sum of its transitional hospital
17        access payment authorized under subsection (d) and any
18        supplemental payment authorized under subsection (f).
19            (B) If the hospital's Rate Year 2017 Medicaid
20        inpatient utilization rate is equal to or greater than
21        25% but less than 45%, the hospital transformation
22        payment shall be equal to 75% of the sum of its
23        transitional hospital access payment authorized under
24        subsection (d) and any supplemental payment authorized
25        under subsection (f).
26            (C) If the hospital's Rate Year 2017 Medicaid



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1        inpatient utilization rate is less than 25%, the
2        hospital transformation payment shall be equal to 50%
3        of the sum of its transitional hospital access payment
4        authorized under subsection (d) and any supplemental
5        payment authorized under subsection (f).
6        (2) Phase 2.
7            (A) The funding amount from phase one shall be
8        incorporated into directed payment and pass-through
9        payment methodologies described in Section 5A-12.7.
10            (B) Because there are communities in Illinois that
11        experience significant health care disparities due to
12        systemic racism, as recently emphasized by the
13        COVID-19 pandemic, aggravated by social determinants
14        of health and a lack of sufficiently allocated
15        healthcare resources, particularly community-based
16        services, preventive care, obstetric care, chronic
17        disease management, and specialty care, the Department
18        shall establish a health care transformation program
19        that shall be supported by the transformation funding
20        pool. It is the intention of the General Assembly that
21        innovative partnerships funded by the pool must be
22        designed to establish or improve integrated health
23        care delivery systems that will provide significant
24        access to the Medicaid and uninsured populations in
25        their communities, as well as improve health care
26        equity. It is also the intention of the General



SB1763- 17 -LRB103 27744 KTG 54122 b

1        Assembly that partnerships recognize and address the
2        disparities revealed by the COVID-19 pandemic, as well
3        as the need for post-COVID care. During State fiscal
4        years 2021 through 2027, the hospital and health care
5        transformation program shall be supported by an annual
6        transformation funding pool of up to $150,000,000,
7        pending federal matching funds, to be allocated during
8        the specified fiscal years for the purpose of
9        facilitating hospital and health care transformation.
10        No disbursement of moneys for transformation projects
11        from the transformation funding pool described under
12        this Section shall be considered an award, a grant, or
13        an expenditure of grant funds. Funding agreements made
14        in accordance with the transformation program shall be
15        considered purchases of care under the Illinois
16        Procurement Code, and funds shall be expended by the
17        Department in a manner that maximizes federal funding
18        to expend the entire allocated amount.
19            The Department shall convene, within 30 days after
20        March 12, 2021 (the effective date of Public Act
21        101-655) this amendatory Act of the 101st General
22        Assembly, a workgroup that includes subject matter
23        experts on healthcare disparities and stakeholders
24        from distressed communities, which could be a
25        subcommittee of the Medicaid Advisory Committee, to
26        review and provide recommendations on how Department



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1        policy, including health care transformation, can
2        improve health disparities and the impact on
3        communities disproportionately affected by COVID-19.
4        The workgroup shall consider and make recommendations
5        on the following issues: a community safety-net
6        designation of certain hospitals, racial equity, and a
7        regional partnership to bring additional specialty
8        services to communities.
9            (C) As provided in paragraph (9) of Section 3 of
10        the Illinois Health Facilities Planning Act, any
11        hospital participating in the transformation program
12        may be excluded from the requirements of the Illinois
13        Health Facilities Planning Act for those projects
14        related to the hospital's transformation. To be
15        eligible, the hospital must submit to the Health
16        Facilities and Services Review Board approval from the
17        Department that the project is a part of the
18        hospital's transformation.
19            (D) As provided in subsection (a-20) of Section
20        32.5 of the Emergency Medical Services (EMS) Systems
21        Act, a hospital that received hospital transformation
22        payments under this Section may convert to a
23        freestanding emergency center. To be eligible for such
24        a conversion, the hospital must submit to the
25        Department of Public Health approval from the
26        Department that the project is a part of the



SB1763- 19 -LRB103 27744 KTG 54122 b

1        hospital's transformation.
2            (E) Criteria for proposals. To be eligible for
3        funding under this Section, a transformation proposal
4        shall meet all of the following criteria:
5                (i) the proposal shall be designed based on
6            community needs assessment completed by either a
7            University partner or other qualified entity with
8            significant community input;
9                (ii) the proposal shall be a collaboration
10            among providers across the care and community
11            spectrum, including preventative care, primary
12            care specialty care, hospital services, mental
13            health and substance abuse services, as well as
14            community-based entities that address the social
15            determinants of health;
16                (iii) the proposal shall be specifically
17            designed to improve healthcare outcomes and reduce
18            healthcare disparities, and improve the
19            coordination, effectiveness, and efficiency of
20            care delivery;
21                (iv) the proposal shall have specific
22            measurable metrics related to disparities that
23            will be tracked by the Department and made public
24            by the Department;
25                (v) the proposal shall include a commitment to
26            include Business Enterprise Program certified



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1            vendors or other entities controlled and managed
2            by minorities or women; and
3                (vi) the proposal shall specifically increase
4            access to primary, preventive, or specialty care.
5            (F) Entities eligible to be funded.
6                (i) Proposals for funding should come from
7            collaborations operating in one of the most
8            distressed communities in Illinois as determined
9            by the U.S. Centers for Disease Control and
10            Prevention's Social Vulnerability Index for
11            Illinois and areas disproportionately impacted by
12            COVID-19 or from rural areas of Illinois.
13                (ii) The Department shall prioritize
14            partnerships from distressed communities, which
15            include Business Enterprise Program certified
16            vendors or other entities controlled and managed
17            by minorities or women and also include one or
18            more of the following: safety-net hospitals,
19            critical access hospitals, the campuses of
20            hospitals that have closed since January 1, 2018,
21            or other healthcare providers designed to address
22            specific healthcare disparities, including the
23            impact of COVID-19 on individuals and the
24            community and the need for post-COVID care. All
25            funded proposals must include specific measurable
26            goals and metrics related to improved outcomes and



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1            reduced disparities which shall be tracked by the
2            Department.
3                (iii) The Department should target the funding
4            in the following ways: $30,000,000 of
5            transformation funds to projects that are a
6            collaboration between a safety-net hospital,
7            particularly community safety-net hospitals, and
8            other providers and designed to address specific
9            healthcare disparities, $20,000,000 of
10            transformation funds to collaborations between
11            safety-net hospitals and a larger hospital partner
12            that increases specialty care in distressed
13            communities, $30,000,000 of transformation funds
14            to projects that are a collaboration between
15            hospitals and other providers in distressed areas
16            of the State designed to address specific
17            healthcare disparities, $15,000,000 to
18            collaborations between critical access hospitals
19            and other providers designed to address specific
20            healthcare disparities, and $15,000,000 to
21            cross-provider collaborations designed to address
22            specific healthcare disparities, and $5,000,000 to
23            collaborations that focus on workforce
24            development.
25                (iv) The Department may allocate up to
26            $5,000,000 for planning, racial equity analysis,



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1            or consulting resources for the Department or
2            entities without the resources to develop a plan
3            to meet the criteria of this Section. Any contract
4            for consulting services issued by the Department
5            under this subparagraph shall comply with the
6            provisions of Section 5-45 of the State Officials
7            and Employees Ethics Act. Based on availability of
8            federal funding, the Department may directly
9            procure consulting services or provide funding to
10            the collaboration. The provision of resources
11            under this subparagraph is not a guarantee that a
12            project will be approved.
13                (v) The Department shall take steps to ensure
14            that safety-net hospitals operating in
15            under-resourced communities receive priority
16            access to hospital and healthcare transformation
17            funds, including consulting funds, as provided
18            under this Section.
19            (G) Process for submitting and approving projects
20        for distressed communities. The Department shall issue
21        a template for application. The Department shall post
22        any proposal received on the Department's website for
23        at least 2 weeks for public comment, and any such
24        public comment shall also be considered in the review
25        process. Applicants may request that proprietary
26        financial information be redacted from publicly posted



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1        proposals and the Department in its discretion may
2        agree. Proposals for each distressed community must
3        include all of the following:
4                (i) A detailed description of how the project
5            intends to affect the goals outlined in this
6            subsection, describing new interventions, new
7            technology, new structures, and other changes to
8            the healthcare delivery system planned.
9                (ii) A detailed description of the racial and
10            ethnic makeup of the entities' board and
11            leadership positions and the salaries of the
12            executive staff of entities in the partnership
13            that is seeking to obtain funding under this
14            Section.
15                (iii) A complete budget, including an overall
16            timeline and a detailed pathway to sustainability
17            within a 5-year period, specifying other sources
18            of funding, such as in-kind, cost-sharing, or
19            private donations, particularly for capital needs.
20            There is an expectation that parties to the
21            transformation project dedicate resources to the
22            extent they are able and that these expectations
23            are delineated separately for each entity in the
24            proposal.
25                (iv) A description of any new entities formed
26            or other legal relationships between collaborating



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1            entities and how funds will be allocated among
2            participants.
3                (v) A timeline showing the evolution of sites
4            and specific services of the project over a 5-year
5            period, including services available to the
6            community by site.
7                (vi) Clear milestones indicating progress
8            toward the proposed goals of the proposal as
9            checkpoints along the way to continue receiving
10            funding. The Department is authorized to refine
11            these milestones in agreements, and is authorized
12            to impose reasonable penalties, including
13            repayment of funds, for substantial lack of
14            progress.
15                (vii) A clear statement of the level of
16            commitment the project will include for minorities
17            and women in contracting opportunities, including
18            as equity partners where applicable, or as
19            subcontractors and suppliers in all phases of the
20            project.
21                (viii) If the community study utilized is not
22            the study commissioned and published by the
23            Department, the applicant must define the
24            methodology used, including documentation of clear
25            community participation.
26                (ix) A description of the process used in



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1            collaborating with all levels of government in the
2            community served in the development of the
3            project, including, but not limited to,
4            legislators and officials of other units of local
5            government.
6                (x) Documentation of a community input process
7            in the community served, including links to
8            proposal materials on public websites.
9                (xi) Verifiable project milestones and quality
10            metrics that will be impacted by transformation.
11            These project milestones and quality metrics must
12            be identified with improvement targets that must
13            be met.
14                (xii) Data on the number of existing employees
15            by various job categories and wage levels by the
16            zip code of the employees' residence and
17            benchmarks for the continued maintenance and
18            improvement of these levels. The proposal must
19            also describe any retraining or other workforce
20            development planned for the new project.
21                (xiii) If a new entity is created by the
22            project, a description of how the board will be
23            reflective of the community served by the
24            proposal.
25                (xiv) An explanation of how the proposal will
26            address the existing disparities that exacerbated



SB1763- 26 -LRB103 27744 KTG 54122 b

1            the impact of COVID-19 and the need for post-COVID
2            care in the community, if applicable.
3                (xv) An explanation of how the proposal is
4            designed to increase access to care, including
5            specialty care based upon the community's needs.
6            (H) The Department shall evaluate proposals for
7        compliance with the criteria listed under subparagraph
8        (G). Proposals meeting all of the criteria may be
9        eligible for funding with the areas of focus
10        prioritized as described in item (ii) of subparagraph
11        (F). Based on the funds available, the Department may
12        negotiate funding agreements with approved applicants
13        to maximize federal funding. Nothing in this
14        subsection requires that an approved project be funded
15        to the level requested. Agreements shall specify the
16        amount of funding anticipated annually, the
17        methodology of payments, the limit on the number of
18        years such funding may be provided, and the milestones
19        and quality metrics that must be met by the projects in
20        order to continue to receive funding during each year
21        of the program. Agreements shall specify the terms and
22        conditions under which a health care facility that
23        receives funds under a purchase of care agreement and
24        closes in violation of the terms of the agreement must
25        pay an early closure fee no greater than 50% of the
26        funds it received under the agreement, prior to the



SB1763- 27 -LRB103 27744 KTG 54122 b

1        Health Facilities and Services Review Board
2        considering an application for closure of the
3        facility. Any project that is funded shall be required
4        to provide quarterly written progress reports, in a
5        form prescribed by the Department, and at a minimum
6        shall include the progress made in achieving any
7        milestones or metrics or Business Enterprise Program
8        commitments in its plan. The Department may reduce or
9        end payments, as set forth in transformation plans, if
10        milestones or metrics or Business Enterprise Program
11        commitments are not achieved. The Department shall
12        seek to make payments from the transformation fund in
13        a manner that is eligible for federal matching funds.
14            In reviewing the proposals, the Department shall
15        take into account the needs of the community, data
16        from the study commissioned by the Department from the
17        University of Illinois-Chicago if applicable, feedback
18        from public comment on the Department's website, as
19        well as how the proposal meets the criteria listed
20        under subparagraph (G). Alignment with the
21        Department's overall strategic initiatives shall be an
22        important factor. To the extent that fiscal year
23        funding is not adequate to fund all eligible projects
24        that apply, the Department shall prioritize
25        applications that most comprehensively and effectively
26        address the criteria listed under subparagraph (G).



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1        (3) (Blank).
2        (4) Hospital Transformation Review Committee. There is
3    created the Hospital Transformation Review Committee. The
4    Committee shall consist of 14 members. No later than 30
5    days after March 12, 2018 (the effective date of Public
6    Act 100-581), the 4 legislative leaders shall each appoint
7    3 members; the Governor shall appoint the Director of
8    Healthcare and Family Services, or his or her designee, as
9    a member; and the Director of Healthcare and Family
10    Services shall appoint one member. Any vacancy shall be
11    filled by the applicable appointing authority within 15
12    calendar days. The members of the Committee shall select a
13    Chair and a Vice-Chair from among its members, provided
14    that the Chair and Vice-Chair cannot be appointed by the
15    same appointing authority and must be from different
16    political parties. The Chair shall have the authority to
17    establish a meeting schedule and convene meetings of the
18    Committee, and the Vice-Chair shall have the authority to
19    convene meetings in the absence of the Chair. The
20    Committee may establish its own rules with respect to
21    meeting schedule, notice of meetings, and the disclosure
22    of documents; however, the Committee shall not have the
23    power to subpoena individuals or documents and any rules
24    must be approved by 9 of the 14 members. The Committee
25    shall perform the functions described in this Section and
26    advise and consult with the Director in the administration



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1    of this Section. In addition to reviewing and approving
2    the policies, procedures, and rules for the hospital and
3    health care transformation program, the Committee shall
4    consider and make recommendations related to qualifying
5    criteria and payment methodologies related to safety-net
6    hospitals and children's hospitals. Members of the
7    Committee appointed by the legislative leaders shall be
8    subject to the jurisdiction of the Legislative Ethics
9    Commission, not the Executive Ethics Commission, and all
10    requests under the Freedom of Information Act shall be
11    directed to the applicable Freedom of Information officer
12    for the General Assembly. The Department shall provide
13    operational support to the Committee as necessary. The
14    Committee is dissolved on April 1, 2019.
15    (e) Beginning 36 months after initial implementation, the
16Department shall update the reimbursement components in
17subsections (a) and (b), including standardized amounts and
18weighting factors, and at least once every 4 years and no more
19frequently than annually thereafter. The Department shall
20publish these updates on its website no later than 30 calendar
21days prior to their effective date.
22    (f) Continuation of supplemental payments. Any
23supplemental payments authorized under Illinois Administrative
24Code 148 effective January 1, 2014 and that continue during
25the period of July 1, 2014 through December 31, 2014 shall
26remain in effect as long as the assessment imposed by Section



SB1763- 30 -LRB103 27744 KTG 54122 b

15A-2 that is in effect on December 31, 2017 remains in effect.
2    (g) Notwithstanding subsections (a) through (f) of this
3Section and notwithstanding the changes authorized under
4Section 5-5b.1, any updates to the system shall not result in
5any diminishment of the overall effective rates of
6reimbursement as of the implementation date of the new system
7(July 1, 2014). These updates shall not preclude variations in
8any individual component of the system or hospital rate
9variations. Nothing in this Section shall prohibit the
10Department from increasing the rates of reimbursement or
11developing payments to ensure access to hospital services.
12Nothing in this Section shall be construed to guarantee a
13minimum amount of spending in the aggregate or per hospital as
14spending may be impacted by factors, including, but not
15limited to, the number of individuals in the medical
16assistance program and the severity of illness of the
18    (h) The Department shall have the authority to modify by
19rulemaking any changes to the rates or methodologies in this
20Section as required by the federal government to obtain
21federal financial participation for expenditures made under
22this Section.
23    (i) Except for subsections (g) and (h) of this Section,
24the Department shall, pursuant to subsection (c) of Section
255-40 of the Illinois Administrative Procedure Act, provide for
26presentation at the June 2014 hearing of the Joint Committee



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1on Administrative Rules (JCAR) additional written notice to
2JCAR of the following rules in order to commence the second
3notice period for the following rules: rules published in the
4Illinois Register, rule dated February 21, 2014 at 38 Ill.
5Reg. 4559 (Medical Payment), 4628 (Specialized Health Care
6Delivery Systems), 4640 (Hospital Services), 4932 (Diagnostic
7Related Grouping (DRG) Prospective Payment System (PPS)), and
84977 (Hospital Reimbursement Changes), and published in the
9Illinois Register dated March 21, 2014 at 38 Ill. Reg. 6499
10(Specialized Health Care Delivery Systems) and 6505 (Hospital
12    (j) Out-of-state hospitals. Beginning July 1, 2018, for
13purposes of determining for State fiscal years 2019 and 2020
14and subsequent fiscal years the hospitals eligible for the
15payments authorized under subsections (a) and (b) of this
16Section, the Department shall include out-of-state hospitals
17that are designated a Level I pediatric trauma center or a
18Level I trauma center by the Department of Public Health as of
19December 1, 2017.
20    (k) The Department shall notify each hospital and managed
21care organization, in writing, of the impact of the updates
22under this Section at least 30 calendar days prior to their
23effective date.
24    (l) This Section is subject to Section 14-12.5.
25(Source: P.A. 101-81, eff. 7-12-19; 101-650, eff. 7-7-20;
26101-655, eff. 3-12-21; 102-682, eff. 12-10-21; 102-1037, eff.



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16-2-22; revised 8-22-22.)
2    (305 ILCS 5/14-12.5 new)
3    Sec. 14-12.5. Hospital preservation and stabilization rate
5    (a) Notwithstanding any other provision of this Code, the
6hospital rates of reimbursement authorized under Sections
75-5.05, 14-12, and 14-13 of this Code shall be adjusted in
8accordance with the provisions of this Section.
9    (b) Notwithstanding any other provision of this Code,
10effective for dates of service on and after January 1, 2024,
11hospital reimbursement rates shall be revised as follows:
12        (1) For inpatient general acute care services, the
13    statewide-standardized amount in effect January 1, 2023 as
14    published by the Department on December 1, 2022, shall be
15    increased by 20%.
16        (2) For inpatient psychiatric services:
17            (A) For safety-net hospitals, the per diem rates
18        in effect January 1, 2023, shall be increased by 20%,
19        and the minimum per diem rate of $630, authorized in
20        subsection (b-5) of Section 5-5.05 of this Code, shall
21        be increased by 20%.
22            (B) For all general acute care hospitals that are
23        not safety-net hospitals, the per diem rates in effect
24        January 1, 2023 shall be increased by 20%, except that
25        all rates shall be at least 90% of the minimum



SB1763- 33 -LRB103 27744 KTG 54122 b

1        inpatient per diem rate for safety-net hospitals as
2        authorized in subsection (b-5) of Section 5-5.05 of
3        this Code, including the adjustment authorized in this
4        Section.
5            (C) For all psychiatric specialty hospitals, the
6        per diem rates in effect January 1, 2023, shall be
7        increased by 20%, and the statewide default per diem
8        rates for new psychiatric specialty hospitals shall be
9        increased by 20%.
10        (3) For inpatient rehabilitative services, the per
11    diem rates in effect January 1, 2023, shall be increased
12    by 20%, and the statewide default inpatient rehabilitative
13    services per diem rates, for general acute care hospitals
14    and for rehabilitation specialty hospitals respectively,
15    shall be increased by 20%.
16        (4) The statewide-standardized amount for outpatient
17    general acute care services in effect January 1, 2023, as
18    published by the Department on December 1, 2022, shall be
19    increased by 20%.
20        (5) The statewide-standardized amount for outpatient
21    psychiatric care services in effect January 1, 2023, as
22    published by the Department on December 1, 2022, shall be
23    increased by 20%.
24        (6) The statewide-standardized amount for outpatient
25    rehabilitative care services in effect January 1, 2023, as
26    published by the Department on December 1, 2022, shall be



SB1763- 34 -LRB103 27744 KTG 54122 b

1    increased by 20%.
2        (7) The per diem rate in effect January 1, 2023, as
3    authorized in subsection (a) of Section 14-13 shall be
4    increased by 20%.
5        (8) The per diem add-on payment for safety-net
6    hospitals authorized in paragraph (6) of subsection (a) of
7    Section 14-12, as in effect on January 1, 2023, shall be
8    increased to $115.
9    (c) Beginning on January 1, 2025 and each January 1
10thereafter, all rates identified in paragraphs (1) through (8)
11of subsection (b) in effect December 31st of the year
12preceding the January 1 adjustment shall be increased based on
13the annual increase in the national hospital market basket
14price proxies (DRI) hospital cost index from the midpoint of
15the calendar year 2 years prior to the current year, to the
16midpoint of the preceding calendar year. In no instance shall
17the adjustment required in this subsection result in a
18reduction to the rates in place at the time of the required
20    (d) If the federal Centers for Medicare and Medicaid
21Services finds that the increases required under this Section
22would result in rates of reimbursement which exceed the
23federal maximum limits applicable to hospital payments, then
24the payments and assessment tax authorized under Article V-A
25of this Code shall be reduced in accordance with Section 5A-15
26of this Code.



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1    (e) The Department shall promptly take all actions
2necessary to ensure the changes authorized in this amendatory
3Act of the 103rd General Assembly are in effect for dates of
4service on and after January 1, 2024, including publishing all
5appropriate public notices, applying for federal approval of
6amendments to the Illinois Title XIX State Plan, and adopting
7administrative rules if necessary.
8    (f) The Department of Healthcare and Family Services may
9adopt rules necessary to implement the changes made by this
10amendatory Act of the 103rd General Assembly through the use
11of emergency rulemaking in accordance with Section 5-45 of the
12Illinois Administrative Procedure Act. The 24-month limitation
13on the adoption of emergency rules does not apply to rules
14adopted under this Section. The General Assembly finds that
15the adoption of rules to implement the changes made by this
16amendatory Act of the 103rd General Assembly is deemed an
17emergency and necessary for the public interest, safety, and
19    (g) The Department shall ensure that all necessary
20adjustments to the managed care organization capitation base
21rates necessitated by the adjustments in this Section are
22completed, published, and applied in accordance with Section
235-30.8 of this Code 90 days prior to the implementation date of
24the changes required under this amendatory Act of the 103rd
25General Assembly.



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1    (305 ILCS 5/14-13)
2    Sec. 14-13. Reimbursement for inpatient stays extended
3beyond medical necessity.
4    (a) By October 1, 2019, the Department shall by rule
5implement a methodology effective for dates of service July 1,
62019 and later to reimburse hospitals for inpatient stays
7extended beyond medical necessity due to the inability of the
8Department or the managed care organization in which a
9recipient is enrolled or the hospital discharge planner to
10find an appropriate placement after discharge from the
11hospital. The Department shall evaluate the effectiveness of
12the current reimbursement rate for inpatient hospital stays
13beyond medical necessity.
14    (a-5) By October 1, 2023, the Department shall by rule
15implement a methodology effective for dates of service
16beginning on and after January 1, 2024 to reimburse hospitals
17for extended stays in a hospital emergency department due to
18the inability of the Department or the managed care
19organization in which a recipient is enrolled or the hospital
20discharge planner to find an appropriate placement or transfer
21to an appropriate facility other than the hospital to which
22the patient presented. The per diem rate established shall be
23equal to 2 times the per diem rate paid for stays identified in
24subsection (a), prorated in hourly increments for each new
25hour beyond the 4th hour after the time that the patient is
26determined to be ready for transfer or admission. The rate



SB1763- 37 -LRB103 27744 KTG 54122 b

1established under this subsection shall be paid based on the
2entire length of the stay in the hospital emergency department
3awaiting transfer.
4    (b) The methodology shall provide reasonable compensation
5for the services provided attributable to the days of the
6extended stay for which the prevailing rate methodology
7provides no reimbursement. The Department may use a day
8outlier program to satisfy this requirement. The reimbursement
9rate shall be set at a level so as not to act as an incentive
10to avoid transfer to the appropriate level of care needed or
11placement, after discharge.
12    (c) The Department shall require managed care
13organizations to adopt this methodology or an alternative
14methodology that pays at least as much as the Department's
15adopted methodology unless otherwise mutually agreed upon
16contractual language is developed by the provider and the
17managed care organization for a risk-based or innovative
18payment methodology.
19    (d) Days beyond medical necessity shall not be eligible
20for per diem add-on payments under the Medicaid High Volume
21Adjustment (MHVA) or the Medicaid Percentage Adjustment (MPA)
23    (e) For services covered by the fee-for-service program,
24reimbursement under this Section shall only be made for days
25beyond medical necessity that occur after the hospital has
26notified the Department of the need for post-discharge



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1placement. For services covered by a managed care
2organization, hospitals shall notify the appropriate managed
3care organization of an admission within 24 hours of
4admission. For every 24-hour period beyond the initial 24
5hours after admission that the hospital fails to notify the
6managed care organization of the admission, reimbursement
7under this subsection shall be reduced by one day.
8(Source: P.A. 101-209, eff. 8-5-19; 102-4, eff. 4-27-21.)
9    Section 99. Effective date. This Act takes effect upon
10becoming law.



SB1763- 39 -LRB103 27744 KTG 54122 b

2 Statutes amended in order of appearance
3    5 ILCS 100/5-45.35 new
4    305 ILCS 5/5-5.05
5    305 ILCS 5/14-12
6    305 ILCS 5/14-12.5 new
7    305 ILCS 5/14-13