Rep. Greg Harris

Filed: 10/19/2021





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2    AMENDMENT NO. ______. Amend Senate Bill 1040 by replacing
3everything after the enacting clause with the following:
4    "Section 5. The Illinois Public Aid Code is amended by
5changing Sections 5-5.02 and 14-12 as follows:
6    (305 ILCS 5/5-5.02)  (from Ch. 23, par. 5-5.02)
7    Sec. 5-5.02. Hospital reimbursements.
8    (a) Reimbursement to hospitals; July 1, 1992 through
9September 30, 1992. Notwithstanding any other provisions of
10this Code or the Illinois Department's Rules promulgated under
11the Illinois Administrative Procedure Act, reimbursement to
12hospitals for services provided during the period July 1, 1992
13through September 30, 1992, shall be as follows:
14        (1) For inpatient hospital services rendered, or if
15    applicable, for inpatient hospital discharges occurring,
16    on or after July 1, 1992 and on or before September 30,



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1    1992, the Illinois Department shall reimburse hospitals
2    for inpatient services under the reimbursement
3    methodologies in effect for each hospital, and at the
4    inpatient payment rate calculated for each hospital, as of
5    June 30, 1992. For purposes of this paragraph,
6    "reimbursement methodologies" means all reimbursement
7    methodologies that pertain to the provision of inpatient
8    hospital services, including, but not limited to, any
9    adjustments for disproportionate share, targeted access,
10    critical care access and uncompensated care, as defined by
11    the Illinois Department on June 30, 1992.
12        (2) For the purpose of calculating the inpatient
13    payment rate for each hospital eligible to receive
14    quarterly adjustment payments for targeted access and
15    critical care, as defined by the Illinois Department on
16    June 30, 1992, the adjustment payment for the period July
17    1, 1992 through September 30, 1992, shall be 25% of the
18    annual adjustment payments calculated for each eligible
19    hospital, as of June 30, 1992. The Illinois Department
20    shall determine by rule the adjustment payments for
21    targeted access and critical care beginning October 1,
22    1992.
23        (3) For the purpose of calculating the inpatient
24    payment rate for each hospital eligible to receive
25    quarterly adjustment payments for uncompensated care, as
26    defined by the Illinois Department on June 30, 1992, the



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1    adjustment payment for the period August 1, 1992 through
2    September 30, 1992, shall be one-sixth of the total
3    uncompensated care adjustment payments calculated for each
4    eligible hospital for the uncompensated care rate year, as
5    defined by the Illinois Department, ending on July 31,
6    1992. The Illinois Department shall determine by rule the
7    adjustment payments for uncompensated care beginning
8    October 1, 1992.
9    (b) Inpatient payments. For inpatient services provided on
10or after October 1, 1993, in addition to rates paid for
11hospital inpatient services pursuant to the Illinois Health
12Finance Reform Act, as now or hereafter amended, or the
13Illinois Department's prospective reimbursement methodology,
14or any other methodology used by the Illinois Department for
15inpatient services, the Illinois Department shall make
16adjustment payments, in an amount calculated pursuant to the
17methodology described in paragraph (c) of this Section, to
18hospitals that the Illinois Department determines satisfy any
19one of the following requirements:
20        (1) Hospitals that are described in Section 1923 of
21    the federal Social Security Act, as now or hereafter
22    amended, except that for rate year 2015 and after a
23    hospital described in Section 1923(b)(1)(B) of the federal
24    Social Security Act and qualified for the payments
25    described in subsection (c) of this Section for rate year
26    2014 provided the hospital continues to meet the



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1    description in Section 1923(b)(1)(B) in the current
2    determination year; or
3        (2) Illinois hospitals that have a Medicaid inpatient
4    utilization rate which is at least one-half a standard
5    deviation above the mean Medicaid inpatient utilization
6    rate for all hospitals in Illinois receiving Medicaid
7    payments from the Illinois Department; or
8        (3) Illinois hospitals that on July 1, 1991 had a
9    Medicaid inpatient utilization rate, as defined in
10    paragraph (h) of this Section, that was at least the mean
11    Medicaid inpatient utilization rate for all hospitals in
12    Illinois receiving Medicaid payments from the Illinois
13    Department and which were located in a planning area with
14    one-third or fewer excess beds as determined by the Health
15    Facilities and Services Review Board, and that, as of June
16    30, 1992, were located in a federally designated Health
17    Manpower Shortage Area; or
18        (4) Illinois hospitals that:
19            (A) have a Medicaid inpatient utilization rate
20        that is at least equal to the mean Medicaid inpatient
21        utilization rate for all hospitals in Illinois
22        receiving Medicaid payments from the Department; and
23            (B) also have a Medicaid obstetrical inpatient
24        utilization rate that is at least one standard
25        deviation above the mean Medicaid obstetrical
26        inpatient utilization rate for all hospitals in



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1        Illinois receiving Medicaid payments from the
2        Department for obstetrical services; or
3        (5) Any children's hospital, which means a hospital
4    devoted exclusively to caring for children. A hospital
5    which includes a facility devoted exclusively to caring
6    for children shall be considered a children's hospital to
7    the degree that the hospital's Medicaid care is provided
8    to children if either (i) the facility devoted exclusively
9    to caring for children is separately licensed as a
10    hospital by a municipality prior to February 28, 2013;
11    (ii) the hospital has been designated by the State as a
12    Level III perinatal care facility, has a Medicaid
13    Inpatient Utilization rate greater than 55% for the rate
14    year 2003 disproportionate share determination, and has
15    more than 10,000 qualified children days as defined by the
16    Department in rulemaking; (iii) the hospital has been
17    designated as a Perinatal Level III center by the State as
18    of December 1, 2017, is a Pediatric Critical Care Center
19    designated by the State as of December 1, 2017 and has a
20    2017 Medicaid inpatient utilization rate equal to or
21    greater than 45%; or (iv) the hospital has been designated
22    as a Perinatal Level II center by the State as of December
23    1, 2017, has a 2017 Medicaid Inpatient Utilization Rate
24    greater than 70%, and has at least 10 pediatric beds as
25    listed on the IDPH 2015 calendar year hospital profile; or
26    .



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1        (6) A hospital that reopens a previously closed
2    hospital facility within 3 calendar years of the hospital
3    facility's closure, if the previously closed hospital
4    facility qualified for payments under paragraph (c) at the
5    time of closure, until utilization data for the new
6    facility is available for the Medicaid inpatient
7    utilization rate calculation. For purposes of this clause,
8    a "closed hospital facility" shall include hospitals that
9    have been terminated from participation in the medical
10    assistance program in accordance with Section 12-4.25 of
11    this Code.
12    (c) Inpatient adjustment payments. The adjustment payments
13required by paragraph (b) shall be calculated based upon the
14hospital's Medicaid inpatient utilization rate as follows:
15        (1) hospitals with a Medicaid inpatient utilization
16    rate below the mean shall receive a per day adjustment
17    payment equal to $25;
18        (2) hospitals with a Medicaid inpatient utilization
19    rate that is equal to or greater than the mean Medicaid
20    inpatient utilization rate but less than one standard
21    deviation above the mean Medicaid inpatient utilization
22    rate shall receive a per day adjustment payment equal to
23    the sum of $25 plus $1 for each one percent that the
24    hospital's Medicaid inpatient utilization rate exceeds the
25    mean Medicaid inpatient utilization rate;
26        (3) hospitals with a Medicaid inpatient utilization



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1    rate that is equal to or greater than one standard
2    deviation above the mean Medicaid inpatient utilization
3    rate but less than 1.5 standard deviations above the mean
4    Medicaid inpatient utilization rate shall receive a per
5    day adjustment payment equal to the sum of $40 plus $7 for
6    each one percent that the hospital's Medicaid inpatient
7    utilization rate exceeds one standard deviation above the
8    mean Medicaid inpatient utilization rate; and
9        (4) hospitals with a Medicaid inpatient utilization
10    rate that is equal to or greater than 1.5 standard
11    deviations above the mean Medicaid inpatient utilization
12    rate shall receive a per day adjustment payment equal to
13    the sum of $90 plus $2 for each one percent that the
14    hospital's Medicaid inpatient utilization rate exceeds 1.5
15    standard deviations above the mean Medicaid inpatient
16    utilization rate; and .
17        (5) Hospitals qualifying under clause (6) of paragraph
18    (b) shall have the rate assigned to the previously closed
19    hospital facility at the date of closure, until
20    utilization data for the new facility is available for the
21    Medicaid inpatient utilization rate calculation.
22    (d) Supplemental adjustment payments. In addition to the
23adjustment payments described in paragraph (c), hospitals as
24defined in clauses (1) through (6) (5) of paragraph (b),
25excluding county hospitals (as defined in subsection (c) of
26Section 15-1 of this Code) and a hospital organized under the



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1University of Illinois Hospital Act, shall be paid
2supplemental inpatient adjustment payments of $60 per day. For
3purposes of Title XIX of the federal Social Security Act,
4these supplemental adjustment payments shall not be classified
5as adjustment payments to disproportionate share hospitals.
6    (e) The inpatient adjustment payments described in
7paragraphs (c) and (d) shall be increased on October 1, 1993
8and annually thereafter by a percentage equal to the lesser of
9(i) the increase in the DRI hospital cost index for the most
10recent 12 month period for which data are available, or (ii)
11the percentage increase in the statewide average hospital
12payment rate over the previous year's statewide average
13hospital payment rate. The sum of the inpatient adjustment
14payments under paragraphs (c) and (d) to a hospital, other
15than a county hospital (as defined in subsection (c) of
16Section 15-1 of this Code) or a hospital organized under the
17University of Illinois Hospital Act, however, shall not exceed
18$275 per day; that limit shall be increased on October 1, 1993
19and annually thereafter by a percentage equal to the lesser of
20(i) the increase in the DRI hospital cost index for the most
21recent 12-month period for which data are available or (ii)
22the percentage increase in the statewide average hospital
23payment rate over the previous year's statewide average
24hospital payment rate.
25    (f) Children's hospital inpatient adjustment payments. For
26children's hospitals, as defined in clause (5) of paragraph



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1(b), the adjustment payments required pursuant to paragraphs
2(c) and (d) shall be multiplied by 2.0.
3    (g) County hospital inpatient adjustment payments. For
4county hospitals, as defined in subsection (c) of Section 15-1
5of this Code, there shall be an adjustment payment as
6determined by rules issued by the Illinois Department.
7    (h) For the purposes of this Section the following terms
8shall be defined as follows:
9        (1) "Medicaid inpatient utilization rate" means a
10    fraction, the numerator of which is the number of a
11    hospital's inpatient days provided in a given 12-month
12    period to patients who, for such days, were eligible for
13    Medicaid under Title XIX of the federal Social Security
14    Act, and the denominator of which is the total number of
15    the hospital's inpatient days in that same period.
16        (2) "Mean Medicaid inpatient utilization rate" means
17    the total number of Medicaid inpatient days provided by
18    all Illinois Medicaid-participating hospitals divided by
19    the total number of inpatient days provided by those same
20    hospitals.
21        (3) "Medicaid obstetrical inpatient utilization rate"
22    means the ratio of Medicaid obstetrical inpatient days to
23    total Medicaid inpatient days for all Illinois hospitals
24    receiving Medicaid payments from the Illinois Department.
25    (i) Inpatient adjustment payment limit. In order to meet
26the limits of Public Law 102-234 and Public Law 103-66, the



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1Illinois Department shall by rule adjust disproportionate
2share adjustment payments.
3    (j) University of Illinois Hospital inpatient adjustment
4payments. For hospitals organized under the University of
5Illinois Hospital Act, there shall be an adjustment payment as
6determined by rules adopted by the Illinois Department.
7    (k) The Illinois Department may by rule establish criteria
8for and develop methodologies for adjustment payments to
9hospitals participating under this Article.
10    (l) On and after July 1, 2012, the Department shall reduce
11any rate of reimbursement for services or other payments or
12alter any methodologies authorized by this Code to reduce any
13rate of reimbursement for services or other payments in
14accordance with Section 5-5e.
15    (m) The Department shall establish a cost-based
16reimbursement methodology for determining payments to
17hospitals for approved graduate medical education (GME)
18programs for dates of service on and after July 1, 2018.
19        (1) As used in this subsection, "hospitals" means the
20    University of Illinois Hospital as defined in the
21    University of Illinois Hospital Act and a county hospital
22    in a county of over 3,000,000 inhabitants.
23        (2) An amendment to the Illinois Title XIX State Plan
24    defining GME shall maximize reimbursement, shall not be
25    limited to the education programs or special patient care
26    payments allowed under Medicare, and shall include:



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1            (A) inpatient days;
2            (B) outpatient days;
3            (C) direct costs;
4            (D) indirect costs;
5            (E) managed care days;
6            (F) all stages of medical training and education
7        including students, interns, residents, and fellows
8        with no caps on the number of persons who may qualify;
9        and
10            (G) patient care payments related to the
11        complexities of treating Medicaid enrollees including
12        clinical and social determinants of health.
13        (3) The Department shall make all GME payments
14    directly to hospitals including such costs in support of
15    clients enrolled in Medicaid managed care entities.
16        (4) The Department shall promptly take all actions
17    necessary for reimbursement to be effective for dates of
18    service on and after July 1, 2018 including publishing all
19    appropriate public notices, amendments to the Illinois
20    Title XIX State Plan, and adoption of administrative rules
21    if necessary.
22        (5) As used in this subsection, "managed care days"
23    means costs associated with services rendered to enrollees
24    of Medicaid managed care entities. "Medicaid managed care
25    entities" means any entity which contracts with the
26    Department to provide services paid for on a capitated



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1    basis. "Medicaid managed care entities" includes a managed
2    care organization and a managed care community network.
3        (6) All payments under this Section are contingent
4    upon federal approval of changes to the Illinois Title XIX
5    State Plan, if that approval is required.
6        (7) The Department may adopt rules necessary to
7    implement Public Act 100-581 through the use of emergency
8    rulemaking in accordance with subsection (aa) of Section
9    5-45 of the Illinois Administrative Procedure Act. For
10    purposes of that Act, the General Assembly finds that the
11    adoption of rules to implement Public Act 100-581 is
12    deemed an emergency and necessary for the public interest,
13    safety, and welfare.
14(Source: P.A. 100-580, eff. 3-12-18; 100-581, eff. 3-12-18;
15101-81, eff. 7-12-19.)
16    (305 ILCS 5/14-12)
17    Sec. 14-12. Hospital rate reform payment system. The
18hospital payment system pursuant to Section 14-11 of this
19Article shall be as follows:
20    (a) Inpatient hospital services. Effective for discharges
21on and after July 1, 2014, reimbursement for inpatient general
22acute care services shall utilize the All Patient Refined
23Diagnosis Related Grouping (APR-DRG) software, version 30,
24distributed by 3MTM Health Information System.
25        (1) The Department shall establish Medicaid weighting



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



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1    Section. The Department shall publish these hospitals'
2    inpatient rates on its website no later than 10 calendar
3    days prior to their effective date.
4        (6) Beginning July 1, 2014 and ending on June 30,
5    2024, in addition to the statewide-standardized amount,
6    the Department shall develop an adjustor to adjust the
7    rate of reimbursement for safety-net hospitals defined in
8    Section 5-5e.1 of this Code excluding pediatric hospitals.
9        (7) Beginning July 1, 2014, in addition to the
10    statewide-standardized amount, the Department shall
11    develop an adjustor to adjust the rate of reimbursement
12    for Illinois freestanding inpatient psychiatric hospitals
13    that are not designated as children's hospitals by the
14    Department but are primarily treating patients under the
15    age of 21.
16        (7.5) (Blank).
17        (8) Beginning July 1, 2018, in addition to the
18    statewide-standardized amount, the Department shall adjust
19    the rate of reimbursement for hospitals designated by the
20    Department of Public Health as a Perinatal Level II or II+
21    center by applying the same adjustor that is applied to
22    Perinatal and Obstetrical care cases for Perinatal Level
23    III centers, as of December 31, 2017.
24        (9) Beginning July 1, 2018, in addition to the
25    statewide-standardized amount, the Department shall apply
26    the same adjustor that is applied to trauma cases as of



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1    December 31, 2017 to inpatient claims to treat patients
2    with burns, including, but not limited to, APR-DRGs 841,
3    842, 843, and 844.
4        (10) Beginning July 1, 2018, the
5    statewide-standardized amount for inpatient general acute
6    care services shall be uniformly increased so that base
7    claims projected reimbursement is increased by an amount
8    equal to the funds allocated in paragraph (1) of
9    subsection (b) of Section 5A-12.6, less the amount
10    allocated under paragraphs (8) and (9) of this subsection
11    and paragraphs (3) and (4) of subsection (b) multiplied by
12    40%.
13        (11) Beginning July 1, 2018, the reimbursement for
14    inpatient rehabilitation services shall be increased by
15    the addition of a $96 per day add-on.
16    (b) Outpatient hospital services. Effective for dates of
17service on and after July 1, 2014, reimbursement for
18outpatient services shall utilize the Enhanced Ambulatory
19Procedure Grouping (EAPG) software, version 3.7 distributed by
203MTM Health Information System.
21        (1) The Department shall establish Medicaid weighting
22    factors to be used in the reimbursement system established
23    under this subsection. The initial weighting factors shall
24    be the weighting factors as published by 3M Health
25    Information System, associated with Version 3.7.
26        (2) The Department shall establish service specific



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



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1    increase annual expenditures associated with this adjustor
2    by $79,200,000, based on the State Fiscal Year 2015 base
3    year data and this adjustor shall apply to public
4    hospitals, except for large public hospitals, as defined
5    under 89 Ill. Adm. Code 148.25(a).
6        (4) Beginning July 1, 2018, in addition to the
7    statewide standardized amounts, the Department shall make
8    an add-on payment for outpatient expensive devices and
9    drugs. This add-on payment shall at least apply to claim
10    lines that: (i) are assigned with one of the following
11    EAPGs: 490, 1001 to 1020, and coded with one of the
12    following revenue codes: 0274 to 0276, 0278; or (ii) are
13    assigned with one of the following EAPGs: 430 to 441, 443,
14    444, 460 to 465, 495, 496, 1090. The add-on payment shall
15    be calculated as follows: the claim line's covered charges
16    multiplied by the hospital's total acute cost to charge
17    ratio, less the claim line's EAPG payment plus $1,000,
18    multiplied by 0.8.
19        (5) Beginning July 1, 2018, the statewide-standardized
20    amounts for outpatient services shall be increased by a
21    uniform percentage so that base claims projected
22    reimbursement is increased by an amount equal to no less
23    than the funds allocated in paragraph (1) of subsection
24    (b) of Section 5A-12.6, less the amount allocated under
25    paragraphs (8) and (9) of subsection (a) and paragraphs
26    (3) and (4) of this subsection multiplied by 46%.



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1        (6) Effective for dates of service on or after July 1,
2    2018, the Department shall establish adjustments to the
3    statewide-standardized amounts for each Critical Access
4    Hospital, as designated by the Department of Public Health
5    in accordance with 42 CFR 485, Subpart F, such that each
6    Critical Access Hospital's standardized amount for
7    outpatient services shall be increased by the applicable
8    uniform percentage determined pursuant to paragraph (5) of
9    this subsection. It is the intent of the General Assembly
10    that the adjustments required under this paragraph (6) by
11    Public Act 100-1181 shall be applied retroactively to
12    claims for dates of service provided on or after July 1,
13    2018.
14        (7) Effective for dates of service on or after March
15    8, 2019 (the effective date of Public Act 100-1181), the
16    Department shall recalculate and implement an updated
17    statewide-standardized amount for outpatient services
18    provided by hospitals that are not Critical Access
19    Hospitals to reflect the applicable uniform percentage
20    determined pursuant to paragraph (5).
21            (1) Any recalculation to the
22        statewide-standardized amounts for outpatient services
23        provided by hospitals that are not Critical Access
24        Hospitals shall be the amount necessary to achieve the
25        increase in the statewide-standardized amounts for
26        outpatient services increased by a uniform percentage,



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



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1        (9) Within 60 days after federal approval of the
2    change made to the assessment in Section 5A-2 by this
3    amendatory Act of the 101st General Assembly, the
4    Department shall incorporate into the EAPG system for
5    outpatient services those services performed by hospitals
6    currently billed through the Non-Institutional Provider
7    billing system.
8    (c) In consultation with the hospital community, the
9Department is authorized to replace 89 Ill. Admin. Code
10152.150 as published in 38 Ill. Reg. 4980 through 4986 within
1112 months of June 16, 2014 (the effective date of Public Act
1298-651). If the Department does not replace these rules within
1312 months of June 16, 2014 (the effective date of Public Act
1498-651), the rules in effect for 152.150 as published in 38
15Ill. Reg. 4980 through 4986 shall remain in effect until
16modified by rule by the Department. Nothing in this subsection
17shall be construed to mandate that the Department file a
18replacement rule.
19    (d) Transition period. There shall be a transition period
20to the reimbursement systems authorized under this Section
21that shall begin on the effective date of these systems and
22continue until June 30, 2018, unless extended by rule by the
23Department. To help provide an orderly and predictable
24transition to the new reimbursement systems and to preserve
25and enhance access to the hospital services during this
26transition, the Department shall allocate a transitional



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1hospital access pool of at least $290,000,000 annually so that
2transitional hospital access payments are made to hospitals.
3        (1) After the transition period, the Department may
4    begin incorporating the transitional hospital access pool
5    into the base rate structure; however, the transitional
6    hospital access payments in effect on June 30, 2018 shall
7    continue to be paid, if continued under Section 5A-16.
8        (2) After the transition period, if the Department
9    reduces payments from the transitional hospital access
10    pool, it shall increase base rates, develop new adjustors,
11    adjust current adjustors, develop new hospital access
12    payments based on updated information, or any combination
13    thereof by an amount equal to the decreases proposed in
14    the transitional hospital access pool payments, ensuring
15    that the entire transitional hospital access pool amount
16    shall continue to be used for hospital payments.
17    (d-5) Hospital and health care transformation program. The
18Department shall develop a hospital and health care
19transformation program to provide financial assistance to
20hospitals in transforming their services and care models to
21better align with the needs of the communities they serve. The
22payments authorized in this Section shall be subject to
23approval by the federal government.
24        (1) Phase 1. In State fiscal years 2019 through 2020,
25    the Department shall allocate funds from the transitional
26    access hospital pool to create a hospital transformation



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1    pool of at least $262,906,870 annually and make hospital
2    transformation payments to hospitals. Subject to Section
3    5A-16, in State fiscal years 2019 and 2020, an Illinois
4    hospital that received either a transitional hospital
5    access payment under subsection (d) or a supplemental
6    payment under subsection (f) of this Section in State
7    fiscal year 2018, shall receive a hospital transformation
8    payment as follows:
9            (A) If the hospital's Rate Year 2017 Medicaid
10        inpatient utilization rate is equal to or greater than
11        45%, the hospital transformation payment shall be
12        equal to 100% of the sum of its transitional hospital
13        access payment authorized under subsection (d) and any
14        supplemental payment authorized under subsection (f).
15            (B) If the hospital's Rate Year 2017 Medicaid
16        inpatient utilization rate is equal to or greater than
17        25% but less than 45%, the hospital transformation
18        payment shall be equal to 75% of the sum of its
19        transitional hospital access payment authorized under
20        subsection (d) and any supplemental payment authorized
21        under subsection (f).
22            (C) If the hospital's Rate Year 2017 Medicaid
23        inpatient utilization rate is less than 25%, the
24        hospital transformation payment shall be equal to 50%
25        of the sum of its transitional hospital access payment
26        authorized under subsection (d) and any supplemental



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1        payment authorized under subsection (f).
2        (2) Phase 2.
3            (A) The funding amount from phase one shall be
4        incorporated into directed payment and pass-through
5        payment methodologies described in Section 5A-12.7.
6            (B) Because there are communities in Illinois that
7        experience significant health care disparities due to
8        systemic racism, as recently emphasized by the
9        COVID-19 pandemic, aggravated by social determinants
10        of health and a lack of sufficiently allocated
11        healthcare resources, particularly community-based
12        services, preventive care, obstetric care, chronic
13        disease management, and specialty care, the Department
14        shall establish a health care transformation program
15        that shall be supported by the transformation funding
16        pool. It is the intention of the General Assembly that
17        innovative partnerships funded by the pool must be
18        designed to establish or improve integrated health
19        care delivery systems that will provide significant
20        access to the Medicaid and uninsured populations in
21        their communities, as well as improve health care
22        equity. It is also the intention of the General
23        Assembly that partnerships recognize and address the
24        disparities revealed by the COVID-19 pandemic, as well
25        as the need for post-COVID care. During State fiscal
26        years 2021 through 2027, the hospital and health care



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



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1        safety-net designation of certain hospitals, racial
2        equity, and a regional partnership to bring additional
3        specialty services to communities.
4            (C) As provided in paragraph (9) of Section 3 of
5        the Illinois Health Facilities Planning Act, any
6        hospital participating in the transformation program
7        may be excluded from the requirements of the Illinois
8        Health Facilities Planning Act for those projects
9        related to the hospital's transformation. To be
10        eligible, the hospital must submit to the Health
11        Facilities and Services Review Board approval from the
12        Department that the project is a part of the
13        hospital's transformation.
14            (D) As provided in subsection (a-20) of Section
15        32.5 of the Emergency Medical Services (EMS) Systems
16        Act, a hospital that received hospital transformation
17        payments under this Section may convert to a
18        freestanding emergency center. To be eligible for such
19        a conversion, the hospital must submit to the
20        Department of Public Health approval from the
21        Department that the project is a part of the
22        hospital's transformation.
23            (E) Criteria for proposals. To be eligible for
24        funding under this Section, a transformation proposal
25        shall meet all of the following criteria:
26                (i) the proposal shall be designed based on



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1            community needs assessment completed by either a
2            University partner or other qualified entity with
3            significant community input;
4                (ii) the proposal shall be a collaboration
5            among providers across the care and community
6            spectrum, including preventative care, primary
7            care specialty care, hospital services, mental
8            health and substance abuse services, as well as
9            community-based entities that address the social
10            determinants of health;
11                (iii) the proposal shall be specifically
12            designed to improve healthcare outcomes and reduce
13            healthcare disparities, and improve the
14            coordination, effectiveness, and efficiency of
15            care delivery;
16                (iv) the proposal shall have specific
17            measurable metrics related to disparities that
18            will be tracked by the Department and made public
19            by the Department;
20                (v) the proposal shall include a commitment to
21            include Business Enterprise Program certified
22            vendors or other entities controlled and managed
23            by minorities or women; and
24                (vi) the proposal shall specifically increase
25            access to primary, preventive, or specialty care.
26            (F) Entities eligible to be funded.



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1                (i) Proposals for funding should come from
2            collaborations operating in one of the most
3            distressed communities in Illinois as determined
4            by the U.S. Centers for Disease Control and
5            Prevention's Social Vulnerability Index for
6            Illinois and areas disproportionately impacted by
7            COVID-19 or from rural areas of Illinois.
8                (ii) The Department shall prioritize
9            partnerships from distressed communities, which
10            include Business Enterprise Program certified
11            vendors or other entities controlled and managed
12            by minorities or women and also include one or
13            more of the following: safety-net hospitals,
14            critical access hospitals, the campuses of
15            hospitals that have closed since January 1, 2018,
16            or other healthcare providers designed to address
17            specific healthcare disparities, including the
18            impact of COVID-19 on individuals and the
19            community and the need for post-COVID care. All
20            funded proposals must include specific measurable
21            goals and metrics related to improved outcomes and
22            reduced disparities which shall be tracked by the
23            Department.
24                (iii) The Department should target the funding
25            in the following ways: $30,000,000 of
26            transformation funds to projects that are a



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1            collaboration between a safety-net hospital,
2            particularly community safety-net hospitals, and
3            other providers and designed to address specific
4            healthcare disparities, $20,000,000 of
5            transformation funds to collaborations between
6            safety-net hospitals and a larger hospital partner
7            that increases specialty care in distressed
8            communities, $30,000,000 of transformation funds
9            to projects that are a collaboration between
10            hospitals and other providers in distressed areas
11            of the State designed to address specific
12            healthcare disparities, $15,000,000 to
13            collaborations between critical access hospitals
14            and other providers designed to address specific
15            healthcare disparities, and $15,000,000 to
16            cross-provider collaborations designed to address
17            specific healthcare disparities, and $5,000,000 to
18            collaborations that focus on workforce
19            development.
20                (iv) The Department may allocate up to
21            $5,000,000 for planning, racial equity analysis,
22            or consulting resources for the Department or
23            entities without the resources to develop a plan
24            to meet the criteria of this Section. Any contract
25            for consulting services issued by the Department
26            under this subparagraph shall comply with the



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1            provisions of Section 5-45 of the State Officials
2            and Employees Ethics Act. Based on availability of
3            federal funding, the Department may directly
4            procure consulting services or provide funding to
5            the collaboration. The provision of resources
6            under this subparagraph is not a guarantee that a
7            project will be approved.
8                (v) The Department shall take steps to ensure
9            that safety-net hospitals operating in
10            under-resourced communities receive priority
11            access to hospital and healthcare transformation
12            funds, including consulting funds, as provided
13            under this Section.
14            (G) Process for submitting and approving projects
15        for distressed communities. The Department shall issue
16        a template for application. The Department shall post
17        any proposal received on the Department's website for
18        at least 2 weeks for public comment, and any such
19        public comment shall also be considered in the review
20        process. Applicants may request that proprietary
21        financial information be redacted from publicly posted
22        proposals and the Department in its discretion may
23        agree. Proposals for each distressed community must
24        include all of the following:
25                (i) A detailed description of how the project
26            intends to affect the goals outlined in this



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1            subsection, describing new interventions, new
2            technology, new structures, and other changes to
3            the healthcare delivery system planned.
4                (ii) A detailed description of the racial and
5            ethnic makeup of the entities' board and
6            leadership positions and the salaries of the
7            executive staff of entities in the partnership
8            that is seeking to obtain funding under this
9            Section.
10                (iii) A complete budget, including an overall
11            timeline and a detailed pathway to sustainability
12            within a 5-year period, specifying other sources
13            of funding, such as in-kind, cost-sharing, or
14            private donations, particularly for capital needs.
15            There is an expectation that parties to the
16            transformation project dedicate resources to the
17            extent they are able and that these expectations
18            are delineated separately for each entity in the
19            proposal.
20                (iv) A description of any new entities formed
21            or other legal relationships between collaborating
22            entities and how funds will be allocated among
23            participants.
24                (v) A timeline showing the evolution of sites
25            and specific services of the project over a 5-year
26            period, including services available to the



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1            community by site.
2                (vi) Clear milestones indicating progress
3            toward the proposed goals of the proposal as
4            checkpoints along the way to continue receiving
5            funding. The Department is authorized to refine
6            these milestones in agreements, and is authorized
7            to impose reasonable penalties, including
8            repayment of funds, for substantial lack of
9            progress.
10                (vii) A clear statement of the level of
11            commitment the project will include for minorities
12            and women in contracting opportunities, including
13            as equity partners where applicable, or as
14            subcontractors and suppliers in all phases of the
15            project.
16                (viii) If the community study utilized is not
17            the study commissioned and published by the
18            Department, the applicant must define the
19            methodology used, including documentation of clear
20            community participation.
21                (ix) A description of the process used in
22            collaborating with all levels of government in the
23            community served in the development of the
24            project, including, but not limited to,
25            legislators and officials of other units of local
26            government.



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1                (x) Documentation of a community input process
2            in the community served, including links to
3            proposal materials on public websites.
4                (xi) Verifiable project milestones and quality
5            metrics that will be impacted by transformation.
6            These project milestones and quality metrics must
7            be identified with improvement targets that must
8            be met.
9                (xii) Data on the number of existing employees
10            by various job categories and wage levels by the
11            zip code of the employees' residence and
12            benchmarks for the continued maintenance and
13            improvement of these levels. The proposal must
14            also describe any retraining or other workforce
15            development planned for the new project.
16                (xiii) If a new entity is created by the
17            project, a description of how the board will be
18            reflective of the community served by the
19            proposal.
20                (xiv) An explanation of how the proposal will
21            address the existing disparities that exacerbated
22            the impact of COVID-19 and the need for post-COVID
23            care in the community, if applicable.
24                (xv) An explanation of how the proposal is
25            designed to increase access to care, including
26            specialty care based upon the community's needs.



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1            (H) The Department shall evaluate proposals for
2        compliance with the criteria listed under subparagraph
3        (G). Proposals meeting all of the criteria may be
4        eligible for funding with the areas of focus
5        prioritized as described in item (ii) of subparagraph
6        (F). Based on the funds available, the Department may
7        negotiate funding agreements with approved applicants
8        to maximize federal funding. Nothing in this
9        subsection requires that an approved project be funded
10        to the level requested. Agreements shall specify the
11        amount of funding anticipated annually, the
12        methodology of payments, the limit on the number of
13        years such funding may be provided, and the milestones
14        and quality metrics that must be met by the projects in
15        order to continue to receive funding during each year
16        of the program. Agreements shall specify the terms and
17        conditions under which a health care facility that
18        receives funds under a purchase of care agreement and
19        closes in violation of the terms of the agreement must
20        pay an early closure fee no greater than 50% of the
21        funds it received under the agreement, prior to the
22        Health Facilities and Services Review Board
23        considering an application for closure of the
24        facility. Any project that is funded shall be required
25        to provide quarterly written progress reports, in a
26        form prescribed by the Department, and at a minimum



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1        shall include the progress made in achieving any
2        milestones or metrics or Business Enterprise Program
3        commitments in its plan. The Department may reduce or
4        end payments, as set forth in transformation plans, if
5        milestones or metrics or Business Enterprise Program
6        commitments are not achieved. The Department shall
7        seek to make payments from the transformation fund in
8        a manner that is eligible for federal matching funds.
9            In reviewing the proposals, the Department shall
10        take into account the needs of the community, data
11        from the study commissioned by the Department from the
12        University of Illinois-Chicago if applicable, feedback
13        from public comment on the Department's website, as
14        well as how the proposal meets the criteria listed
15        under subparagraph (G). Alignment with the
16        Department's overall strategic initiatives shall be an
17        important factor. To the extent that fiscal year
18        funding is not adequate to fund all eligible projects
19        that apply, the Department shall prioritize
20        applications that most comprehensively and effectively
21        address the criteria listed under subparagraph (G).
22        (3) (Blank).
23        (4) Hospital Transformation Review Committee. There is
24    created the Hospital Transformation Review Committee. The
25    Committee shall consist of 14 members. No later than 30
26    days after March 12, 2018 (the effective date of Public



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1    Act 100-581), the 4 legislative leaders shall each appoint
2    3 members; the Governor shall appoint the Director of
3    Healthcare and Family Services, or his or her designee, as
4    a member; and the Director of Healthcare and Family
5    Services shall appoint one member. Any vacancy shall be
6    filled by the applicable appointing authority within 15
7    calendar days. The members of the Committee shall select a
8    Chair and a Vice-Chair from among its members, provided
9    that the Chair and Vice-Chair cannot be appointed by the
10    same appointing authority and must be from different
11    political parties. The Chair shall have the authority to
12    establish a meeting schedule and convene meetings of the
13    Committee, and the Vice-Chair shall have the authority to
14    convene meetings in the absence of the Chair. The
15    Committee may establish its own rules with respect to
16    meeting schedule, notice of meetings, and the disclosure
17    of documents; however, the Committee shall not have the
18    power to subpoena individuals or documents and any rules
19    must be approved by 9 of the 14 members. The Committee
20    shall perform the functions described in this Section and
21    advise and consult with the Director in the administration
22    of this Section. In addition to reviewing and approving
23    the policies, procedures, and rules for the hospital and
24    health care transformation program, the Committee shall
25    consider and make recommendations related to qualifying
26    criteria and payment methodologies related to safety-net



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1    hospitals and children's hospitals. Members of the
2    Committee appointed by the legislative leaders shall be
3    subject to the jurisdiction of the Legislative Ethics
4    Commission, not the Executive Ethics Commission, and all
5    requests under the Freedom of Information Act shall be
6    directed to the applicable Freedom of Information officer
7    for the General Assembly. The Department shall provide
8    operational support to the Committee as necessary. The
9    Committee is dissolved on April 1, 2019.
10    (e) Beginning 36 months after initial implementation, the
11Department shall update the reimbursement components in
12subsections (a) and (b), including standardized amounts and
13weighting factors, and at least once every 4 years triennially
14and no more frequently than annually thereafter. The
15Department shall publish these updates on its website no later
16than 30 calendar days prior to their effective date.
17    (f) Continuation of supplemental payments. Any
18supplemental payments authorized under Illinois Administrative
19Code 148 effective January 1, 2014 and that continue during
20the period of July 1, 2014 through December 31, 2014 shall
21remain in effect as long as the assessment imposed by Section
225A-2 that is in effect on December 31, 2017 remains in effect.
23    (g) Notwithstanding subsections (a) through (f) of this
24Section and notwithstanding the changes authorized under
25Section 5-5b.1, any updates to the system shall not result in
26any diminishment of the overall effective rates of



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1reimbursement as of the implementation date of the new system
2(July 1, 2014). These updates shall not preclude variations in
3any individual component of the system or hospital rate
4variations. Nothing in this Section shall prohibit the
5Department from increasing the rates of reimbursement or
6developing payments to ensure access to hospital services.
7Nothing in this Section shall be construed to guarantee a
8minimum amount of spending in the aggregate or per hospital as
9spending may be impacted by factors, including, but not
10limited to, the number of individuals in the medical
11assistance program and the severity of illness of the
13    (h) The Department shall have the authority to modify by
14rulemaking any changes to the rates or methodologies in this
15Section as required by the federal government to obtain
16federal financial participation for expenditures made under
17this Section.
18    (i) Except for subsections (g) and (h) of this Section,
19the Department shall, pursuant to subsection (c) of Section
205-40 of the Illinois Administrative Procedure Act, provide for
21presentation at the June 2014 hearing of the Joint Committee
22on Administrative Rules (JCAR) additional written notice to
23JCAR of the following rules in order to commence the second
24notice period for the following rules: rules published in the
25Illinois Register, rule dated February 21, 2014 at 38 Ill.
26Reg. 4559 (Medical Payment), 4628 (Specialized Health Care



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1Delivery Systems), 4640 (Hospital Services), 4932 (Diagnostic
2Related Grouping (DRG) Prospective Payment System (PPS)), and
34977 (Hospital Reimbursement Changes), and published in the
4Illinois Register dated March 21, 2014 at 38 Ill. Reg. 6499
5(Specialized Health Care Delivery Systems) and 6505 (Hospital
7    (j) Out-of-state hospitals. Beginning July 1, 2018, for
8purposes of determining for State fiscal years 2019 and 2020
9and subsequent fiscal years the hospitals eligible for the
10payments authorized under subsections (a) and (b) of this
11Section, the Department shall include out-of-state hospitals
12that are designated a Level I pediatric trauma center or a
13Level I trauma center by the Department of Public Health as of
14December 1, 2017.
15    (k) The Department shall notify each hospital and managed
16care organization, in writing, of the impact of the updates
17under this Section at least 30 calendar days prior to their
18effective date.
19(Source: P.A. 100-581, eff. 3-12-18; 100-1181, eff. 3-8-19;
20101-81, eff. 7-12-19; 101-650, eff. 7-7-20; 101-655, eff.
22    Section 99. Effective date. This Act takes effect upon
23becoming law.".