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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 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,
17    1992, the Illinois Department shall reimburse hospitals
18    for inpatient services under the reimbursement
19    methodologies in effect for each hospital, and at the
20    inpatient payment rate calculated for each hospital, as of
21    June 30, 1992. For purposes of this paragraph,
22    "reimbursement methodologies" means all reimbursement
23    methodologies that pertain to the provision of inpatient



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1    hospital services, including, but not limited to, any
2    adjustments for disproportionate share, targeted access,
3    critical care access and uncompensated care, as defined by
4    the Illinois Department on June 30, 1992.
5        (2) For the purpose of calculating the inpatient
6    payment rate for each hospital eligible to receive
7    quarterly adjustment payments for targeted access and
8    critical care, as defined by the Illinois Department on
9    June 30, 1992, the adjustment payment for the period July
10    1, 1992 through September 30, 1992, shall be 25% of the
11    annual adjustment payments calculated for each eligible
12    hospital, as of June 30, 1992. The Illinois Department
13    shall determine by rule the adjustment payments for
14    targeted access and critical care beginning October 1,
15    1992.
16        (3) For the purpose of calculating the inpatient
17    payment rate for each hospital eligible to receive
18    quarterly adjustment payments for uncompensated care, as
19    defined by the Illinois Department on June 30, 1992, the
20    adjustment payment for the period August 1, 1992 through
21    September 30, 1992, shall be one-sixth of the total
22    uncompensated care adjustment payments calculated for each
23    eligible hospital for the uncompensated care rate year, as
24    defined by the Illinois Department, ending on July 31,
25    1992. The Illinois Department shall determine by rule the
26    adjustment payments for uncompensated care beginning



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1    October 1, 1992.
2    (b) Inpatient payments. For inpatient services provided on
3or after October 1, 1993, in addition to rates paid for
4hospital inpatient services pursuant to the Illinois Health
5Finance Reform Act, as now or hereafter amended, or the
6Illinois Department's prospective reimbursement methodology,
7or any other methodology used by the Illinois Department for
8inpatient services, the Illinois Department shall make
9adjustment payments, in an amount calculated pursuant to the
10methodology described in paragraph (c) of this Section, to
11hospitals that the Illinois Department determines satisfy any
12one of the following requirements:
13        (1) Hospitals that are described in Section 1923 of
14    the federal Social Security Act, as now or hereafter
15    amended, except that for rate year 2015 and after a
16    hospital described in Section 1923(b)(1)(B) of the federal
17    Social Security Act and qualified for the payments
18    described in subsection (c) of this Section for rate year
19    2014 provided the hospital continues to meet the
20    description in Section 1923(b)(1)(B) in the current
21    determination year; or
22        (2) Illinois hospitals that have a Medicaid inpatient
23    utilization rate which is at least one-half a standard
24    deviation above the mean Medicaid inpatient utilization
25    rate for all hospitals in Illinois receiving Medicaid
26    payments from the Illinois Department; or



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1        (3) Illinois hospitals that on July 1, 1991 had a
2    Medicaid inpatient utilization rate, as defined in
3    paragraph (h) of this Section, that was at least the mean
4    Medicaid inpatient utilization rate for all hospitals in
5    Illinois receiving Medicaid payments from the Illinois
6    Department and which were located in a planning area with
7    one-third or fewer excess beds as determined by the Health
8    Facilities and Services Review Board, and that, as of June
9    30, 1992, were located in a federally designated Health
10    Manpower Shortage Area; or
11        (4) Illinois hospitals that:
12            (A) have a Medicaid inpatient utilization rate
13        that is at least equal to the mean Medicaid inpatient
14        utilization rate for all hospitals in Illinois
15        receiving Medicaid payments from the Department; and
16            (B) also have a Medicaid obstetrical inpatient
17        utilization rate that is at least one standard
18        deviation above the mean Medicaid obstetrical
19        inpatient utilization rate for all hospitals in
20        Illinois receiving Medicaid payments from the
21        Department for obstetrical services; or
22        (5) Any children's hospital, which means a hospital
23    devoted exclusively to caring for children. A hospital
24    which includes a facility devoted exclusively to caring
25    for children shall be considered a children's hospital to
26    the degree that the hospital's Medicaid care is provided



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1    to children if either (i) the facility devoted exclusively
2    to caring for children is separately licensed as a
3    hospital by a municipality prior to February 28, 2013;
4    (ii) the hospital has been designated by the State as a
5    Level III perinatal care facility, has a Medicaid
6    Inpatient Utilization rate greater than 55% for the rate
7    year 2003 disproportionate share determination, and has
8    more than 10,000 qualified children days as defined by the
9    Department in rulemaking; (iii) the hospital has been
10    designated as a Perinatal Level III center by the State as
11    of December 1, 2017, is a Pediatric Critical Care Center
12    designated by the State as of December 1, 2017 and has a
13    2017 Medicaid inpatient utilization rate equal to or
14    greater than 45%; or (iv) the hospital has been designated
15    as a Perinatal Level II center by the State as of December
16    1, 2017, has a 2017 Medicaid Inpatient Utilization Rate
17    greater than 70%, and has at least 10 pediatric beds as
18    listed on the IDPH 2015 calendar year hospital profile; or
19    .
20        (6) A hospital that reopens a previously closed
21    hospital facility within 3 calendar years of the hospital
22    facility's closure, if the previously closed hospital
23    facility qualified for payments under paragraph (c) at the
24    time of closure, until utilization data for the new
25    facility is available for the Medicaid inpatient
26    utilization rate calculation. For purposes of this clause,



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1    a "closed hospital facility" shall include hospitals that
2    have been terminated from participation in the medical
3    assistance program in accordance with Section 12-4.25 of
4    this Code.
5    (c) Inpatient adjustment payments. The adjustment payments
6required by paragraph (b) shall be calculated based upon the
7hospital's Medicaid inpatient utilization rate as follows:
8        (1) hospitals with a Medicaid inpatient utilization
9    rate below the mean shall receive a per day adjustment
10    payment equal to $25;
11        (2) hospitals with a Medicaid inpatient utilization
12    rate that is equal to or greater than the mean Medicaid
13    inpatient utilization rate but less than one standard
14    deviation above the mean Medicaid inpatient utilization
15    rate shall receive a per day adjustment payment equal to
16    the sum of $25 plus $1 for each one percent that the
17    hospital's Medicaid inpatient utilization rate exceeds the
18    mean Medicaid inpatient utilization rate;
19        (3) hospitals with a Medicaid inpatient utilization
20    rate that is equal to or greater than one standard
21    deviation above the mean Medicaid inpatient utilization
22    rate but less than 1.5 standard deviations above the mean
23    Medicaid inpatient utilization rate shall receive a per
24    day adjustment payment equal to the sum of $40 plus $7 for
25    each one percent that the hospital's Medicaid inpatient
26    utilization rate exceeds one standard deviation above the



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1    mean Medicaid inpatient utilization rate; and
2        (4) hospitals with a Medicaid inpatient utilization
3    rate that is equal to or greater than 1.5 standard
4    deviations above the mean Medicaid inpatient utilization
5    rate shall receive a per day adjustment payment equal to
6    the sum of $90 plus $2 for each one percent that the
7    hospital's Medicaid inpatient utilization rate exceeds 1.5
8    standard deviations above the mean Medicaid inpatient
9    utilization rate; and .
10        (5) Hospitals qualifying under clause (6) of paragraph
11    (b) shall have the rate assigned to the previously closed
12    hospital facility at the date of closure, until
13    utilization data for the new facility is available for the
14    Medicaid inpatient utilization rate calculation.
15    (d) Supplemental adjustment payments. In addition to the
16adjustment payments described in paragraph (c), hospitals as
17defined in clauses (1) through (6) (5) of paragraph (b),
18excluding county hospitals (as defined in subsection (c) of
19Section 15-1 of this Code) and a hospital organized under the
20University of Illinois Hospital Act, shall be paid
21supplemental inpatient adjustment payments of $60 per day. For
22purposes of Title XIX of the federal Social Security Act,
23these supplemental adjustment payments shall not be classified
24as adjustment payments to disproportionate share hospitals.
25    (e) The inpatient adjustment payments described in
26paragraphs (c) and (d) shall be increased on October 1, 1993



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1and annually thereafter by a percentage equal to the lesser of
2(i) the increase in the DRI hospital cost index for the most
3recent 12 month period for which data are available, or (ii)
4the percentage increase in the statewide average hospital
5payment rate over the previous year's statewide average
6hospital payment rate. The sum of the inpatient adjustment
7payments under paragraphs (c) and (d) to a hospital, other
8than a county hospital (as defined in subsection (c) of
9Section 15-1 of this Code) or a hospital organized under the
10University of Illinois Hospital Act, however, shall not exceed
11$275 per day; that limit shall be increased on October 1, 1993
12and annually thereafter by a percentage equal to the lesser of
13(i) the increase in the DRI hospital cost index for the most
14recent 12-month period for which data are available or (ii)
15the percentage increase in the statewide average hospital
16payment rate over the previous year's statewide average
17hospital payment rate.
18    (f) Children's hospital inpatient adjustment payments. For
19children's hospitals, as defined in clause (5) of paragraph
20(b), the adjustment payments required pursuant to paragraphs
21(c) and (d) shall be multiplied by 2.0.
22    (g) County hospital inpatient adjustment payments. For
23county hospitals, as defined in subsection (c) of Section 15-1
24of this Code, there shall be an adjustment payment as
25determined by rules issued by the Illinois Department.
26    (h) For the purposes of this Section the following terms



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1shall be defined as follows:
2        (1) "Medicaid inpatient utilization rate" means a
3    fraction, the numerator of which is the number of a
4    hospital's inpatient days provided in a given 12-month
5    period to patients who, for such days, were eligible for
6    Medicaid under Title XIX of the federal Social Security
7    Act, and the denominator of which is the total number of
8    the hospital's inpatient days in that same period.
9        (2) "Mean Medicaid inpatient utilization rate" means
10    the total number of Medicaid inpatient days provided by
11    all Illinois Medicaid-participating hospitals divided by
12    the total number of inpatient days provided by those same
13    hospitals.
14        (3) "Medicaid obstetrical inpatient utilization rate"
15    means the ratio of Medicaid obstetrical inpatient days to
16    total Medicaid inpatient days for all Illinois hospitals
17    receiving Medicaid payments from the Illinois Department.
18    (i) Inpatient adjustment payment limit. In order to meet
19the limits of Public Law 102-234 and Public Law 103-66, the
20Illinois Department shall by rule adjust disproportionate
21share adjustment payments.
22    (j) University of Illinois Hospital inpatient adjustment
23payments. For hospitals organized under the University of
24Illinois Hospital Act, there shall be an adjustment payment as
25determined by rules adopted by the Illinois Department.
26    (k) The Illinois Department may by rule establish criteria



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1for and develop methodologies for adjustment payments to
2hospitals participating under this Article.
3    (l) On and after July 1, 2012, the Department shall reduce
4any rate of reimbursement for services or other payments or
5alter any methodologies authorized by this Code to reduce any
6rate of reimbursement for services or other payments in
7accordance with Section 5-5e.
8    (m) The Department shall establish a cost-based
9reimbursement methodology for determining payments to
10hospitals for approved graduate medical education (GME)
11programs for dates of service on and after July 1, 2018.
12        (1) As used in this subsection, "hospitals" means the
13    University of Illinois Hospital as defined in the
14    University of Illinois Hospital Act and a county hospital
15    in a county of over 3,000,000 inhabitants.
16        (2) An amendment to the Illinois Title XIX State Plan
17    defining GME shall maximize reimbursement, shall not be
18    limited to the education programs or special patient care
19    payments allowed under Medicare, and shall include:
20            (A) inpatient days;
21            (B) outpatient days;
22            (C) direct costs;
23            (D) indirect costs;
24            (E) managed care days;
25            (F) all stages of medical training and education
26        including students, interns, residents, and fellows



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1        with no caps on the number of persons who may qualify;
2        and
3            (G) patient care payments related to the
4        complexities of treating Medicaid enrollees including
5        clinical and social determinants of health.
6        (3) The Department shall make all GME payments
7    directly to hospitals including such costs in support of
8    clients enrolled in Medicaid managed care entities.
9        (4) The Department shall promptly take all actions
10    necessary for reimbursement to be effective for dates of
11    service on and after July 1, 2018 including publishing all
12    appropriate public notices, amendments to the Illinois
13    Title XIX State Plan, and adoption of administrative rules
14    if necessary.
15        (5) As used in this subsection, "managed care days"
16    means costs associated with services rendered to enrollees
17    of Medicaid managed care entities. "Medicaid managed care
18    entities" means any entity which contracts with the
19    Department to provide services paid for on a capitated
20    basis. "Medicaid managed care entities" includes a managed
21    care organization and a managed care community network.
22        (6) All payments under this Section are contingent
23    upon federal approval of changes to the Illinois Title XIX
24    State Plan, if that approval is required.
25        (7) The Department may adopt rules necessary to
26    implement Public Act 100-581 through the use of emergency



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1    rulemaking in accordance with subsection (aa) of Section
2    5-45 of the Illinois Administrative Procedure Act. For
3    purposes of that Act, the General Assembly finds that the
4    adoption of rules to implement Public Act 100-581 is
5    deemed an emergency and necessary for the public interest,
6    safety, and welfare.
7(Source: P.A. 100-580, eff. 3-12-18; 100-581, eff. 3-12-18;
8101-81, eff. 7-12-19.)
9    (305 ILCS 5/14-12)
10    Sec. 14-12. Hospital rate reform payment system. The
11hospital payment system pursuant to Section 14-11 of this
12Article shall be as follows:
13    (a) Inpatient hospital services. Effective for discharges
14on and after July 1, 2014, reimbursement for inpatient general
15acute care services shall utilize the All Patient Refined
16Diagnosis Related Grouping (APR-DRG) software, version 30,
17distributed by 3MTM Health Information System.
18        (1) The Department shall establish Medicaid weighting
19    factors to be used in the reimbursement system established
20    under this subsection. Initial weighting factors shall be
21    the weighting factors as published by 3M Health
22    Information System, associated with Version 30.0 adjusted
23    for the Illinois experience.
24        (2) The Department shall establish a
25    statewide-standardized amount to be used in the inpatient



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1    reimbursement system. The Department shall publish these
2    amounts on its website no later than 10 calendar days
3    prior to their effective date.
4        (3) In addition to the statewide-standardized amount,
5    the Department shall develop adjusters to adjust the rate
6    of reimbursement for critical Medicaid providers or
7    services for trauma, transplantation services, perinatal
8    care, and Graduate Medical Education (GME).
9        (4) The Department shall develop add-on payments to
10    account for exceptionally costly inpatient stays,
11    consistent with Medicare outlier principles. Outlier fixed
12    loss thresholds may be updated to control for excessive
13    growth in outlier payments no more frequently than on an
14    annual basis, but at least once every 4 years triennially.
15    Upon updating the fixed loss thresholds, the Department
16    shall be required to update base rates within 12 months.
17        (5) The Department shall define those hospitals or
18    distinct parts of hospitals that shall be exempt from the
19    APR-DRG reimbursement system established under this
20    Section. The Department shall publish these hospitals'
21    inpatient rates on its website no later than 10 calendar
22    days prior to their effective date.
23        (6) Beginning July 1, 2014 and ending on June 30,
24    2024, in addition to the statewide-standardized amount,
25    the Department shall develop an adjustor to adjust the
26    rate of reimbursement for safety-net hospitals defined in



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1    Section 5-5e.1 of this Code excluding pediatric hospitals.
2        (7) Beginning July 1, 2014, in addition to the
3    statewide-standardized amount, the Department shall
4    develop an adjustor to adjust the rate of reimbursement
5    for Illinois freestanding inpatient psychiatric hospitals
6    that are not designated as children's hospitals by the
7    Department but are primarily treating patients under the
8    age of 21.
9        (7.5) (Blank).
10        (8) Beginning July 1, 2018, in addition to the
11    statewide-standardized amount, the Department shall adjust
12    the rate of reimbursement for hospitals designated by the
13    Department of Public Health as a Perinatal Level II or II+
14    center by applying the same adjustor that is applied to
15    Perinatal and Obstetrical care cases for Perinatal Level
16    III centers, as of December 31, 2017.
17        (9) Beginning July 1, 2018, in addition to the
18    statewide-standardized amount, the Department shall apply
19    the same adjustor that is applied to trauma cases as of
20    December 31, 2017 to inpatient claims to treat patients
21    with burns, including, but not limited to, APR-DRGs 841,
22    842, 843, and 844.
23        (10) Beginning July 1, 2018, the
24    statewide-standardized amount for inpatient general acute
25    care services shall be uniformly increased so that base
26    claims projected reimbursement is increased by an amount



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1    equal to the funds allocated in paragraph (1) of
2    subsection (b) of Section 5A-12.6, less the amount
3    allocated under paragraphs (8) and (9) of this subsection
4    and paragraphs (3) and (4) of subsection (b) multiplied by
5    40%.
6        (11) Beginning July 1, 2018, the reimbursement for
7    inpatient rehabilitation services shall be increased by
8    the addition of a $96 per day add-on.
9    (b) Outpatient hospital services. Effective for dates of
10service on and after July 1, 2014, reimbursement for
11outpatient services shall utilize the Enhanced Ambulatory
12Procedure Grouping (EAPG) software, version 3.7 distributed by
133MTM Health Information System.
14        (1) The Department shall establish Medicaid weighting
15    factors to be used in the reimbursement system established
16    under this subsection. The initial weighting factors shall
17    be the weighting factors as published by 3M Health
18    Information System, associated with Version 3.7.
19        (2) The Department shall establish service specific
20    statewide-standardized amounts to be used in the
21    reimbursement system.
22            (A) The initial statewide standardized amounts,
23        with the labor portion adjusted by the Calendar Year
24        2013 Medicare Outpatient Prospective Payment System
25        wage index with reclassifications, shall be published
26        by the Department on its website no later than 10



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1        calendar days prior to their effective date.
2            (B) The Department shall establish adjustments to
3        the statewide-standardized amounts for each Critical
4        Access Hospital, as designated by the Department of
5        Public Health in accordance with 42 CFR 485, Subpart
6        F. For outpatient services provided on or before June
7        30, 2018, the EAPG standardized amounts are determined
8        separately for each critical access hospital such that
9        simulated EAPG payments using outpatient base period
10        paid claim data plus payments under Section 5A-12.4 of
11        this Code net of the associated tax costs are equal to
12        the estimated costs of outpatient base period claims
13        data with a rate year cost inflation factor applied.
14        (3) In addition to the statewide-standardized amounts,
15    the Department shall develop adjusters to adjust the rate
16    of reimbursement for critical Medicaid hospital outpatient
17    providers or services, including outpatient high volume or
18    safety-net hospitals. Beginning July 1, 2018, the
19    outpatient high volume adjustor shall be increased to
20    increase annual expenditures associated with this adjustor
21    by $79,200,000, based on the State Fiscal Year 2015 base
22    year data and this adjustor shall apply to public
23    hospitals, except for large public hospitals, as defined
24    under 89 Ill. Adm. Code 148.25(a).
25        (4) Beginning July 1, 2018, in addition to the
26    statewide standardized amounts, the Department shall make



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1    an add-on payment for outpatient expensive devices and
2    drugs. This add-on payment shall at least apply to claim
3    lines that: (i) are assigned with one of the following
4    EAPGs: 490, 1001 to 1020, and coded with one of the
5    following revenue codes: 0274 to 0276, 0278; or (ii) are
6    assigned with one of the following EAPGs: 430 to 441, 443,
7    444, 460 to 465, 495, 496, 1090. The add-on payment shall
8    be calculated as follows: the claim line's covered charges
9    multiplied by the hospital's total acute cost to charge
10    ratio, less the claim line's EAPG payment plus $1,000,
11    multiplied by 0.8.
12        (5) Beginning July 1, 2018, the statewide-standardized
13    amounts for outpatient services shall be increased by a
14    uniform percentage so that base claims projected
15    reimbursement is increased by an amount equal to no less
16    than the funds allocated in paragraph (1) of subsection
17    (b) of Section 5A-12.6, less the amount allocated under
18    paragraphs (8) and (9) of subsection (a) and paragraphs
19    (3) and (4) of this subsection multiplied by 46%.
20        (6) Effective for dates of service on or after July 1,
21    2018, the Department shall establish adjustments to the
22    statewide-standardized amounts for each Critical Access
23    Hospital, as designated by the Department of Public Health
24    in accordance with 42 CFR 485, Subpart F, such that each
25    Critical Access Hospital's standardized amount for
26    outpatient services shall be increased by the applicable



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1    uniform percentage determined pursuant to paragraph (5) of
2    this subsection. It is the intent of the General Assembly
3    that the adjustments required under this paragraph (6) by
4    Public Act 100-1181 shall be applied retroactively to
5    claims for dates of service provided on or after July 1,
6    2018.
7        (7) Effective for dates of service on or after March
8    8, 2019 (the effective date of Public Act 100-1181), the
9    Department shall recalculate and implement an updated
10    statewide-standardized amount for outpatient services
11    provided by hospitals that are not Critical Access
12    Hospitals to reflect the applicable uniform percentage
13    determined pursuant to paragraph (5).
14            (1) Any recalculation to the
15        statewide-standardized amounts for outpatient services
16        provided by hospitals that are not Critical Access
17        Hospitals shall be the amount necessary to achieve the
18        increase in the statewide-standardized amounts for
19        outpatient services increased by a uniform percentage,
20        so that base claims projected reimbursement is
21        increased by an amount equal to no less than the funds
22        allocated in paragraph (1) of subsection (b) of
23        Section 5A-12.6, less the amount allocated under
24        paragraphs (8) and (9) of subsection (a) and
25        paragraphs (3) and (4) of this subsection, for all
26        hospitals that are not Critical Access Hospitals,



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1        multiplied by 46%.
2            (2) It is the intent of the General Assembly that
3        the recalculations required under this paragraph (7)
4        by Public Act 100-1181 shall be applied prospectively
5        to claims for dates of service provided on or after
6        March 8, 2019 (the effective date of Public Act
7        100-1181) and that no recoupment or repayment by the
8        Department or an MCO of payments attributable to
9        recalculation under this paragraph (7), issued to the
10        hospital for dates of service on or after July 1, 2018
11        and before March 8, 2019 (the effective date of Public
12        Act 100-1181), shall be permitted.
13        (8) The Department shall ensure that all necessary
14    adjustments to the managed care organization capitation
15    base rates necessitated by the adjustments under
16    subparagraph (6) or (7) of this subsection are completed
17    and applied retroactively in accordance with Section
18    5-30.8 of this Code within 90 days of March 8, 2019 (the
19    effective date of Public Act 100-1181).
20        (9) Within 60 days after federal approval of the
21    change made to the assessment in Section 5A-2 by this
22    amendatory Act of the 101st General Assembly, the
23    Department shall incorporate into the EAPG system for
24    outpatient services those services performed by hospitals
25    currently billed through the Non-Institutional Provider
26    billing system.



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1    (c) In consultation with the hospital community, the
2Department is authorized to replace 89 Ill. Admin. Code
3152.150 as published in 38 Ill. Reg. 4980 through 4986 within
412 months of June 16, 2014 (the effective date of Public Act
598-651). If the Department does not replace these rules within
612 months of June 16, 2014 (the effective date of Public Act
798-651), the rules in effect for 152.150 as published in 38
8Ill. Reg. 4980 through 4986 shall remain in effect until
9modified by rule by the Department. Nothing in this subsection
10shall be construed to mandate that the Department file a
11replacement rule.
12    (d) Transition period. There shall be a transition period
13to the reimbursement systems authorized under this Section
14that shall begin on the effective date of these systems and
15continue until June 30, 2018, unless extended by rule by the
16Department. To help provide an orderly and predictable
17transition to the new reimbursement systems and to preserve
18and enhance access to the hospital services during this
19transition, the Department shall allocate a transitional
20hospital access pool of at least $290,000,000 annually so that
21transitional hospital access payments are made to hospitals.
22        (1) After the transition period, the Department may
23    begin incorporating the transitional hospital access pool
24    into the base rate structure; however, the transitional
25    hospital access payments in effect on June 30, 2018 shall
26    continue to be paid, if continued under Section 5A-16.



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1        (2) After the transition period, if the Department
2    reduces payments from the transitional hospital access
3    pool, it shall increase base rates, develop new adjustors,
4    adjust current adjustors, develop new hospital access
5    payments based on updated information, or any combination
6    thereof by an amount equal to the decreases proposed in
7    the transitional hospital access pool payments, ensuring
8    that the entire transitional hospital access pool amount
9    shall continue to be used for hospital payments.
10    (d-5) Hospital and health care transformation program. The
11Department shall develop a hospital and health care
12transformation program to provide financial assistance to
13hospitals in transforming their services and care models to
14better align with the needs of the communities they serve. The
15payments authorized in this Section shall be subject to
16approval by the federal government.
17        (1) Phase 1. In State fiscal years 2019 through 2020,
18    the Department shall allocate funds from the transitional
19    access hospital pool to create a hospital transformation
20    pool of at least $262,906,870 annually and make hospital
21    transformation payments to hospitals. Subject to Section
22    5A-16, in State fiscal years 2019 and 2020, an Illinois
23    hospital that received either a transitional hospital
24    access payment under subsection (d) or a supplemental
25    payment under subsection (f) of this Section in State
26    fiscal year 2018, shall receive a hospital transformation



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1    payment as follows:
2            (A) If the hospital's Rate Year 2017 Medicaid
3        inpatient utilization rate is equal to or greater than
4        45%, the hospital transformation payment shall be
5        equal to 100% of the sum of its transitional hospital
6        access payment authorized under subsection (d) and any
7        supplemental payment authorized under subsection (f).
8            (B) If the hospital's Rate Year 2017 Medicaid
9        inpatient utilization rate is equal to or greater than
10        25% but less than 45%, the hospital transformation
11        payment shall be equal to 75% of the sum of its
12        transitional hospital access payment authorized under
13        subsection (d) and any supplemental payment authorized
14        under subsection (f).
15            (C) If the hospital's Rate Year 2017 Medicaid
16        inpatient utilization rate is less than 25%, the
17        hospital transformation payment shall be equal to 50%
18        of the sum of its transitional hospital access payment
19        authorized under subsection (d) and any supplemental
20        payment authorized under subsection (f).
21        (2) Phase 2.
22            (A) The funding amount from phase one shall be
23        incorporated into directed payment and pass-through
24        payment methodologies described in Section 5A-12.7.
25            (B) Because there are communities in Illinois that
26        experience significant health care disparities due to



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1        systemic racism, as recently emphasized by the
2        COVID-19 pandemic, aggravated by social determinants
3        of health and a lack of sufficiently allocated
4        healthcare resources, particularly community-based
5        services, preventive care, obstetric care, chronic
6        disease management, and specialty care, the Department
7        shall establish a health care transformation program
8        that shall be supported by the transformation funding
9        pool. It is the intention of the General Assembly that
10        innovative partnerships funded by the pool must be
11        designed to establish or improve integrated health
12        care delivery systems that will provide significant
13        access to the Medicaid and uninsured populations in
14        their communities, as well as improve health care
15        equity. It is also the intention of the General
16        Assembly that partnerships recognize and address the
17        disparities revealed by the COVID-19 pandemic, as well
18        as the need for post-COVID care. During State fiscal
19        years 2021 through 2027, the hospital and health care
20        transformation program shall be supported by an annual
21        transformation funding pool of up to $150,000,000,
22        pending federal matching funds, to be allocated during
23        the specified fiscal years for the purpose of
24        facilitating hospital and health care transformation.
25        No disbursement of moneys for transformation projects
26        from the transformation funding pool described under



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1        this Section shall be considered an award, a grant, or
2        an expenditure of grant funds. Funding agreements made
3        in accordance with the transformation program shall be
4        considered purchases of care under the Illinois
5        Procurement Code, and funds shall be expended by the
6        Department in a manner that maximizes federal funding
7        to expend the entire allocated amount.
8            The Department shall convene, within 30 days after
9        the effective date of this amendatory Act of the 101st
10        General Assembly, a workgroup that includes subject
11        matter experts on healthcare disparities and
12        stakeholders from distressed communities, which could
13        be a subcommittee of the Medicaid Advisory Committee,
14        to review and provide recommendations on how
15        Department policy, including health care
16        transformation, can improve health disparities and the
17        impact on communities disproportionately affected by
18        COVID-19. The workgroup shall consider and make
19        recommendations on the following issues: a community
20        safety-net designation of certain hospitals, racial
21        equity, and a regional partnership to bring additional
22        specialty services to communities.
23            (C) As provided in paragraph (9) of Section 3 of
24        the Illinois Health Facilities Planning Act, any
25        hospital participating in the transformation program
26        may be excluded from the requirements of the Illinois



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1        Health Facilities Planning Act for those projects
2        related to the hospital's transformation. To be
3        eligible, the hospital must submit to the Health
4        Facilities and Services Review Board approval from the
5        Department that the project is a part of the
6        hospital's transformation.
7            (D) As provided in subsection (a-20) of Section
8        32.5 of the Emergency Medical Services (EMS) Systems
9        Act, a hospital that received hospital transformation
10        payments under this Section may convert to a
11        freestanding emergency center. To be eligible for such
12        a conversion, the hospital must submit to the
13        Department of Public Health approval from the
14        Department that the project is a part of the
15        hospital's transformation.
16            (E) Criteria for proposals. To be eligible for
17        funding under this Section, a transformation proposal
18        shall meet all of the following criteria:
19                (i) the proposal shall be designed based on
20            community needs assessment completed by either a
21            University partner or other qualified entity with
22            significant community input;
23                (ii) the proposal shall be a collaboration
24            among providers across the care and community
25            spectrum, including preventative care, primary
26            care specialty care, hospital services, mental



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1            health and substance abuse services, as well as
2            community-based entities that address the social
3            determinants of health;
4                (iii) the proposal shall be specifically
5            designed to improve healthcare outcomes and reduce
6            healthcare disparities, and improve the
7            coordination, effectiveness, and efficiency of
8            care delivery;
9                (iv) the proposal shall have specific
10            measurable metrics related to disparities that
11            will be tracked by the Department and made public
12            by the Department;
13                (v) the proposal shall include a commitment to
14            include Business Enterprise Program certified
15            vendors or other entities controlled and managed
16            by minorities or women; and
17                (vi) the proposal shall specifically increase
18            access to primary, preventive, or specialty care.
19            (F) Entities eligible to be funded.
20                (i) Proposals for funding should come from
21            collaborations operating in one of the most
22            distressed communities in Illinois as determined
23            by the U.S. Centers for Disease Control and
24            Prevention's Social Vulnerability Index for
25            Illinois and areas disproportionately impacted by
26            COVID-19 or from rural areas of Illinois.



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1                (ii) The Department shall prioritize
2            partnerships from distressed communities, which
3            include Business Enterprise Program certified
4            vendors or other entities controlled and managed
5            by minorities or women and also include one or
6            more of the following: safety-net hospitals,
7            critical access hospitals, the campuses of
8            hospitals that have closed since January 1, 2018,
9            or other healthcare providers designed to address
10            specific healthcare disparities, including the
11            impact of COVID-19 on individuals and the
12            community and the need for post-COVID care. All
13            funded proposals must include specific measurable
14            goals and metrics related to improved outcomes and
15            reduced disparities which shall be tracked by the
16            Department.
17                (iii) The Department should target the funding
18            in the following ways: $30,000,000 of
19            transformation funds to projects that are a
20            collaboration between a safety-net hospital,
21            particularly community safety-net hospitals, and
22            other providers and designed to address specific
23            healthcare disparities, $20,000,000 of
24            transformation funds to collaborations between
25            safety-net hospitals and a larger hospital partner
26            that increases specialty care in distressed



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1            communities, $30,000,000 of transformation funds
2            to projects that are a collaboration between
3            hospitals and other providers in distressed areas
4            of the State designed to address specific
5            healthcare disparities, $15,000,000 to
6            collaborations between critical access hospitals
7            and other providers designed to address specific
8            healthcare disparities, and $15,000,000 to
9            cross-provider collaborations designed to address
10            specific healthcare disparities, and $5,000,000 to
11            collaborations that focus on workforce
12            development.
13                (iv) The Department may allocate up to
14            $5,000,000 for planning, racial equity analysis,
15            or consulting resources for the Department or
16            entities without the resources to develop a plan
17            to meet the criteria of this Section. Any contract
18            for consulting services issued by the Department
19            under this subparagraph shall comply with the
20            provisions of Section 5-45 of the State Officials
21            and Employees Ethics Act. Based on availability of
22            federal funding, the Department may directly
23            procure consulting services or provide funding to
24            the collaboration. The provision of resources
25            under this subparagraph is not a guarantee that a
26            project will be approved.



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1                (v) The Department shall take steps to ensure
2            that safety-net hospitals operating in
3            under-resourced communities receive priority
4            access to hospital and healthcare transformation
5            funds, including consulting funds, as provided
6            under this Section.
7            (G) Process for submitting and approving projects
8        for distressed communities. The Department shall issue
9        a template for application. The Department shall post
10        any proposal received on the Department's website for
11        at least 2 weeks for public comment, and any such
12        public comment shall also be considered in the review
13        process. Applicants may request that proprietary
14        financial information be redacted from publicly posted
15        proposals and the Department in its discretion may
16        agree. Proposals for each distressed community must
17        include all of the following:
18                (i) A detailed description of how the project
19            intends to affect the goals outlined in this
20            subsection, describing new interventions, new
21            technology, new structures, and other changes to
22            the healthcare delivery system planned.
23                (ii) A detailed description of the racial and
24            ethnic makeup of the entities' board and
25            leadership positions and the salaries of the
26            executive staff of entities in the partnership



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1            that is seeking to obtain funding under this
2            Section.
3                (iii) A complete budget, including an overall
4            timeline and a detailed pathway to sustainability
5            within a 5-year period, specifying other sources
6            of funding, such as in-kind, cost-sharing, or
7            private donations, particularly for capital needs.
8            There is an expectation that parties to the
9            transformation project dedicate resources to the
10            extent they are able and that these expectations
11            are delineated separately for each entity in the
12            proposal.
13                (iv) A description of any new entities formed
14            or other legal relationships between collaborating
15            entities and how funds will be allocated among
16            participants.
17                (v) A timeline showing the evolution of sites
18            and specific services of the project over a 5-year
19            period, including services available to the
20            community by site.
21                (vi) Clear milestones indicating progress
22            toward the proposed goals of the proposal as
23            checkpoints along the way to continue receiving
24            funding. The Department is authorized to refine
25            these milestones in agreements, and is authorized
26            to impose reasonable penalties, including



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1            repayment of funds, for substantial lack of
2            progress.
3                (vii) A clear statement of the level of
4            commitment the project will include for minorities
5            and women in contracting opportunities, including
6            as equity partners where applicable, or as
7            subcontractors and suppliers in all phases of the
8            project.
9                (viii) If the community study utilized is not
10            the study commissioned and published by the
11            Department, the applicant must define the
12            methodology used, including documentation of clear
13            community participation.
14                (ix) A description of the process used in
15            collaborating with all levels of government in the
16            community served in the development of the
17            project, including, but not limited to,
18            legislators and officials of other units of local
19            government.
20                (x) Documentation of a community input process
21            in the community served, including links to
22            proposal materials on public websites.
23                (xi) Verifiable project milestones and quality
24            metrics that will be impacted by transformation.
25            These project milestones and quality metrics must
26            be identified with improvement targets that must



SB1040 Enrolled- 32 -LRB102 04858 KTG 14877 b

1            be met.
2                (xii) Data on the number of existing employees
3            by various job categories and wage levels by the
4            zip code of the employees' residence and
5            benchmarks for the continued maintenance and
6            improvement of these levels. The proposal must
7            also describe any retraining or other workforce
8            development planned for the new project.
9                (xiii) If a new entity is created by the
10            project, a description of how the board will be
11            reflective of the community served by the
12            proposal.
13                (xiv) An explanation of how the proposal will
14            address the existing disparities that exacerbated
15            the impact of COVID-19 and the need for post-COVID
16            care in the community, if applicable.
17                (xv) An explanation of how the proposal is
18            designed to increase access to care, including
19            specialty care based upon the community's needs.
20            (H) The Department shall evaluate proposals for
21        compliance with the criteria listed under subparagraph
22        (G). Proposals meeting all of the criteria may be
23        eligible for funding with the areas of focus
24        prioritized as described in item (ii) of subparagraph
25        (F). Based on the funds available, the Department may
26        negotiate funding agreements with approved applicants



SB1040 Enrolled- 33 -LRB102 04858 KTG 14877 b

1        to maximize federal funding. Nothing in this
2        subsection requires that an approved project be funded
3        to the level requested. Agreements shall specify the
4        amount of funding anticipated annually, the
5        methodology of payments, the limit on the number of
6        years such funding may be provided, and the milestones
7        and quality metrics that must be met by the projects in
8        order to continue to receive funding during each year
9        of the program. Agreements shall specify the terms and
10        conditions under which a health care facility that
11        receives funds under a purchase of care agreement and
12        closes in violation of the terms of the agreement must
13        pay an early closure fee no greater than 50% of the
14        funds it received under the agreement, prior to the
15        Health Facilities and Services Review Board
16        considering an application for closure of the
17        facility. Any project that is funded shall be required
18        to provide quarterly written progress reports, in a
19        form prescribed by the Department, and at a minimum
20        shall include the progress made in achieving any
21        milestones or metrics or Business Enterprise Program
22        commitments in its plan. The Department may reduce or
23        end payments, as set forth in transformation plans, if
24        milestones or metrics or Business Enterprise Program
25        commitments are not achieved. The Department shall
26        seek to make payments from the transformation fund in



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1        a manner that is eligible for federal matching funds.
2            In reviewing the proposals, the Department shall
3        take into account the needs of the community, data
4        from the study commissioned by the Department from the
5        University of Illinois-Chicago if applicable, feedback
6        from public comment on the Department's website, as
7        well as how the proposal meets the criteria listed
8        under subparagraph (G). Alignment with the
9        Department's overall strategic initiatives shall be an
10        important factor. To the extent that fiscal year
11        funding is not adequate to fund all eligible projects
12        that apply, the Department shall prioritize
13        applications that most comprehensively and effectively
14        address the criteria listed under subparagraph (G).
15        (3) (Blank).
16        (4) Hospital Transformation Review Committee. There is
17    created the Hospital Transformation Review Committee. The
18    Committee shall consist of 14 members. No later than 30
19    days after March 12, 2018 (the effective date of Public
20    Act 100-581), the 4 legislative leaders shall each appoint
21    3 members; the Governor shall appoint the Director of
22    Healthcare and Family Services, or his or her designee, as
23    a member; and the Director of Healthcare and Family
24    Services shall appoint one member. Any vacancy shall be
25    filled by the applicable appointing authority within 15
26    calendar days. The members of the Committee shall select a



SB1040 Enrolled- 35 -LRB102 04858 KTG 14877 b

1    Chair and a Vice-Chair from among its members, provided
2    that the Chair and Vice-Chair cannot be appointed by the
3    same appointing authority and must be from different
4    political parties. The Chair shall have the authority to
5    establish a meeting schedule and convene meetings of the
6    Committee, and the Vice-Chair shall have the authority to
7    convene meetings in the absence of the Chair. The
8    Committee may establish its own rules with respect to
9    meeting schedule, notice of meetings, and the disclosure
10    of documents; however, the Committee shall not have the
11    power to subpoena individuals or documents and any rules
12    must be approved by 9 of the 14 members. The Committee
13    shall perform the functions described in this Section and
14    advise and consult with the Director in the administration
15    of this Section. In addition to reviewing and approving
16    the policies, procedures, and rules for the hospital and
17    health care transformation program, the Committee shall
18    consider and make recommendations related to qualifying
19    criteria and payment methodologies related to safety-net
20    hospitals and children's hospitals. Members of the
21    Committee appointed by the legislative leaders shall be
22    subject to the jurisdiction of the Legislative Ethics
23    Commission, not the Executive Ethics Commission, and all
24    requests under the Freedom of Information Act shall be
25    directed to the applicable Freedom of Information officer
26    for the General Assembly. The Department shall provide



SB1040 Enrolled- 36 -LRB102 04858 KTG 14877 b

1    operational support to the Committee as necessary. The
2    Committee is dissolved on April 1, 2019.
3    (e) Beginning 36 months after initial implementation, the
4Department shall update the reimbursement components in
5subsections (a) and (b), including standardized amounts and
6weighting factors, and at least once every 4 years triennially
7and no more frequently than annually thereafter. The
8Department shall publish these updates on its website no later
9than 30 calendar days prior to their effective date.
10    (f) Continuation of supplemental payments. Any
11supplemental payments authorized under Illinois Administrative
12Code 148 effective January 1, 2014 and that continue during
13the period of July 1, 2014 through December 31, 2014 shall
14remain in effect as long as the assessment imposed by Section
155A-2 that is in effect on December 31, 2017 remains in effect.
16    (g) Notwithstanding subsections (a) through (f) of this
17Section and notwithstanding the changes authorized under
18Section 5-5b.1, any updates to the system shall not result in
19any diminishment of the overall effective rates of
20reimbursement as of the implementation date of the new system
21(July 1, 2014). These updates shall not preclude variations in
22any individual component of the system or hospital rate
23variations. Nothing in this Section shall prohibit the
24Department from increasing the rates of reimbursement or
25developing payments to ensure access to hospital services.
26Nothing in this Section shall be construed to guarantee a



SB1040 Enrolled- 37 -LRB102 04858 KTG 14877 b

1minimum amount of spending in the aggregate or per hospital as
2spending may be impacted by factors, including, but not
3limited to, the number of individuals in the medical
4assistance program and the severity of illness of the
6    (h) The Department shall have the authority to modify by
7rulemaking any changes to the rates or methodologies in this
8Section as required by the federal government to obtain
9federal financial participation for expenditures made under
10this Section.
11    (i) Except for subsections (g) and (h) of this Section,
12the Department shall, pursuant to subsection (c) of Section
135-40 of the Illinois Administrative Procedure Act, provide for
14presentation at the June 2014 hearing of the Joint Committee
15on Administrative Rules (JCAR) additional written notice to
16JCAR of the following rules in order to commence the second
17notice period for the following rules: rules published in the
18Illinois Register, rule dated February 21, 2014 at 38 Ill.
19Reg. 4559 (Medical Payment), 4628 (Specialized Health Care
20Delivery Systems), 4640 (Hospital Services), 4932 (Diagnostic
21Related Grouping (DRG) Prospective Payment System (PPS)), and
224977 (Hospital Reimbursement Changes), and published in the
23Illinois Register dated March 21, 2014 at 38 Ill. Reg. 6499
24(Specialized Health Care Delivery Systems) and 6505 (Hospital
26    (j) Out-of-state hospitals. Beginning July 1, 2018, for



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1purposes of determining for State fiscal years 2019 and 2020
2and subsequent fiscal years the hospitals eligible for the
3payments authorized under subsections (a) and (b) of this
4Section, the Department shall include out-of-state hospitals
5that are designated a Level I pediatric trauma center or a
6Level I trauma center by the Department of Public Health as of
7December 1, 2017.
8    (k) The Department shall notify each hospital and managed
9care organization, in writing, of the impact of the updates
10under this Section at least 30 calendar days prior to their
11effective date.
12(Source: P.A. 100-581, eff. 3-12-18; 100-1181, eff. 3-8-19;
13101-81, eff. 7-12-19; 101-650, eff. 7-7-20; 101-655, eff.
15    Section 99. Effective date. This Act takes effect upon
16becoming law.