Section 124: Hospital and Payer Payments for Uncompensated Care Pool

Notwithstanding any general or special law to the contrary, in hospital fiscal year 2007, the division of health care finance and policy may administer, as provided in this section, the Uncompensated Care Trust Fund, established by section 18 of chapter 118G of the General Laws, to collect assessments as specified in this section for deposit to the fund, and to make certain payments to acute hospitals and community health centers from the uncompensated care pool to offset the costs of services provided to uninsured or low income residents. The division and the executive office of health and human services may promulgate regulations to implement this section.

The division, in consultation with the executive office, shall ensure that assessment liability to the fund and payments from the uncompensated care pool are structured in a manner to secure for the General Fund the maximum allowable federal reimbursement under Title XIX, XXI, or any successor federal law.

In hospital fiscal year 2007, the total liability of all acute care hospitals to the fund shall be $160,000,000. The division shall calculate an assessment percentage rate by dividing $160,000,000 by the projected annual aggregate private sector charges in the fiscal year for all acute care hospitals. Each acute care hospital's liability to the fund shall be equal to the product of the percentage rate and its private sector charges.

In hospital fiscal year 2007, the total surcharge liability of surcharge payers to the Uncompensated Care Trust Fund shall be $160,000,000. The surcharge amount for each surcharge payer shall be equal to the product of: (a) the surcharge percentage, and (b) the amounts paid for services of an acute hospital or ambulatory surgical center by each surcharge payer. The division shall calculate the surcharge percentage by dividing $160,000,000 by the projected annual aggregate payments subject to surcharge, as the term "payment subject to surcharge" is defined in said section 1 of said chapter 118G.

All Title XIX federal financial participation revenue generated by hospital payments funded by the Uncompensated Care Trust Fund, whether the payments are made by the division or the executive office, shall be credited to the General Fund.

All hospital payments made under this section shall be subject to federal approval and conditioned on the receipt of full federal financial participation. All such payments shall be established under Title XIX of the Social Security Act, or any successor federal law, any regulations promulgated thereunder and the commonwealth's Title XIX state plan.

The division shall calculate an annual payment liability from the uncompensated care pool to each acute care hospital for fiscal year 2007. In determining the liability amount, the division shall:

(a) (1) calculate the projected allowable uncompensated care charges for each hospital using the best and latest available data on allowable uncompensated care reported by the hospital times its ratio of costs to charges calculated using the most recent available data; and?(2) take into account such factors as the financial burden of hospitals that provide proportionately the largest volume of free care and the situation of any free-standing pediatric hospital with a disproportionately low volume of Title XVIII payments; and?(b) allocate the available funds in a manner that pays to each hospital the highest possible fixed percentage of its projected free care costs for hospital fiscal year 2007, as determined by the division using prior year data and considering the total funds available for the purpose. This fixed percentage shall not be less than 85 per cent of free care costs, as defined in said section 1 of said chapter 118G, for the 2 disproportionate share hospitals with the highest relative volume of free care costs in hospital fiscal year 2004, and not less than 88 per cent of free care costs, as defined in said section 1 of said chapter 118G, for the 14 acute hospitals with the next-highest relative volume of free care costs in that year. In order to identify these 16 hospitals, the division shall rank all hospitals based on the percentage of each hospital's free care costs divided by the total free care costs of all hospitals in the commonwealth. All other acute care hospitals shall receive the highest possible percentage of free care costs given available remaining funds. The hospital fiscal year 2007 annual liability amount to each hospital shall be funded by the trust fund. This liability may be satisfied through either a disproportionate share payment or an adjustment to Title XIX service rate adjustment payment, or a combination thereof, under the terms provided for in an agreement entered into by an acute care hospital and the executive office. The comptroller, in consultation with the division and the executive office, shall transfer funds from the trust fund to the executive office for the purpose of the Title XIX service rate adjustment payments.?The executive office may use other federally permissible funding mechanisms available for publicly operated hospitals and hospitals with an affiliation with a publicly operated health care entity to reimburse up to $70,000,000 of uncompensated care costs at the hospitals using sources distinct from the funding made available to the trust fund under this section.?The executive office shall make payments from the uncompensated care pool for services provided by community health centers to low income residents. The executive office shall structure such payments to maximize allowable federal reimbursement under Title XIX. Under section 117 of chapter 140 of the acts of 2003, all Title XIX federal financial participation revenue generated by community health center payments funded by the Uncompensated Care Trust Fund, whether the payments are made by the division or the executive office, shall be deposited into the General Fund.?In hospital fiscal year 2007, $550,000,000 from the trust fund shall be credited to the uncompensated care pool for payments to acute hospitals provided for in this section, provided that, of this amount, $70,000,000 shall be used to reimburse uncompensated care costs at the 2 disproportionate share hospitals, as defined by section 1 of chapter 118G of the General Laws, with the highest relative volume of free care costs for hospital year 2007, as determined by the division of health care finance and policy. In addition, $56,000,000 from the trust fund shall be credited to the pool for payments to community health centers provided for in this section and $4,000,000 shall be credited for administrative expenses, including demonstration projects under sections 21 and 22 of chapter 47 of the acts of 1997, as amended by sections 156, 157, and 158 of chapter 184 of the acts of 2002.?Not later than April 1, 2007, the division of health care finance and policy, in consultation with the secretary of health and human services, shall submit to the house and senate committees on ways and means a report on a new methodology for equitably allocating free care reimbursements from the Uncompensated Care Trust Fund to hospitals and community health centers beginning in hospital fiscal year 2008.

Summary: 
Establishes hospital and surcharge payer liability and hospital payments for the Uncompensated Care pool for fiscal year 2007.