(a) There shall be established within the division of health care finance and policy a health safety net office which shall be under the supervision and control of a director. The director shall be appointed by the commissioner, in consultation with the secretary of health and human services and the Medicaid director, and shall be a person of skill and experience in the field of health care finance and administration. The director shall be the executive and administrative head of the office and shall be responsible for administering and enforcing the provisions of law relative to the office and to each administrative unit thereof. The director shall receive such salary as may be determined by law, and shall devote his full time to the duties of his office. In the case of an absence or vacancy in the office of the director, or in the case of disability as determined by the commissioner, the commissioner may designate an acting director to serve as director until the vacancy is filled or the absence or disability ceases. The acting director shall have all the powers and duties of the director and shall have similar qualifications as the director.

(b) The office shall have the following powers and duties: (1) to administer the Health Safety Net Trust Fund, established under section 36, and to require payments to the fund consistent with acute hospitals' and surcharge payors' liability to the fund, as determined under sections 37 and 38, and any further regulations promulgated by the office; (2) to set, after consultation with the office of Medicaid, reimbursement rates for payments from the fund to acute hospitals and community health centers for reimbursable health services provided to uninsured and underinsured patients and to disburse monies from the fund consistent with such rates; provided that the office shall implement a fee-for-service reimbursement system for acute hospitals; (3) to promulgate regulations further defining: (a) eligibility criteria for reimbursable health services; (b) the scope of health services that are eligible for reimbursement by the Health Safety Net Trust Fund; (c) standards for medical hardship; and (d) standards for reasonable efforts to collect payments for the costs of emergency care. The office shall implement procedures for verification of eligibility using the eligibility system of the office of Medicaid and other appropriate sources to determine the eligibility of uninsured and underinsured patients for reimbursable health services and shall establish other procedures to ensure that payments from the fund are made for health services for which there is no other public or private third party payer, including disallowance of payments to acute hospitals and community health centers for health services provided to individuals if reimbursement is available from other public or private sources; (4) to develop programs and guidelines to encourage maximum enrollment of uninsured individuals who receive health services reimbursed by the fund into health care plans and programs of health insurance offered by public and private sources and to promote the delivery of care in the most appropriate setting, provided that the programs and guidelines are developed in consultation with the commonwealth health insurance connector, established under chapter 176Q. These programs shall not deny payments from the fund because services should have been provided in a more appropriate setting if the hospital was required to provided the services under 42 U.S.C. 1395 (dd); (5) to conduct a utilization review program designed to monitor the appropriateness of services for which payments were made by the fund and to promote the delivery of care in the most appropriate setting; and to administer demonstration programs that reduce health safety net trust fund liability to acute hospitals, including a demonstration program to enable disease management for patients with chronic diseases, substance abuse and psychiatric disorders through enrollment of patients in community health centers and community mental health centers and through coordination between these centers and acute hospitals, provided, that the office shall report the results of these reviews annually to the joint committee on health care financing and the house and senate committees on ways and means; (6) to administer, in consultation with the office of Medicaid, the Essential Community Provider Trust Fund, established under section 2PPP of chapter 29, and to make expenditures from that fund without further appropriation for the purpose of improving and enhancing the ability of acute hospitals and community health centers to serve populations in need more efficiently and effectively, including, but not limited to, the ability to provide community-based care, clinical support, care coordination services, disease management services, primary care services, and pharmacy management services through a grant program. The office shall consider applications from acute hospitals and community health centers in awarding the grants. The criteria for selection shall include, but not be limited to, the following: (a) the financial performance of the provider as determined, in the case of applications from acute hospitals, quarterly by the division of health care finance and policy and by consulting other appropriate measurements of financial performance; (b) the percentage of patients with mental or substance abuse disorders served by a provider; (c) the numbers of patients served by a provider who are chronically ill, elderly, or disabled; (d) the payer mix of the provider, with preference given to acute hospitals where a minimum of 63 per cent of the acute hospital's gross patient service revenue is attributable to Title XVIII and Title XIX of the federal Social Security Act or other governmental payors, including reimbursements from the Health Safety Net Trust Fund; (e) the percentage of total annual operating revenue that funding received in fiscal years 2005 and 2006 from the Distressed Provider Expendable Trust Fund comprised for the provider; and (f) the cultural and linguistic challenges presented by the populations served by the provider; (7) to enter into agreements or transactions with any federal, state or municipal agency or other public institution or with a private individual, partnership, firm, corporation, association or other entity, and to make contracts and execute all instruments necessary or convenient for the carrying on of its business; (8) to secure payment, without imposing undue hardship upon any individual, for unpaid bills owed to acute hospitals by individuals for health services that are ineligible for reimbursement from the Health Safety Net Trust Fund which have been accounted for as bad debt by the hospital and which are voluntarily referred by a hospital to the department for collection; provided, however that such unpaid charges shall be considered debts owed to the commonwealth and all payments received shall be credited to the fund; and provided, further, that all actions to secure such payments shall be conducted in compliance with a protocol previously submitted by the office to the joint committee on health care financing; (9) to require hospitals and community health centers to submit to the office data that it reasonably considers necessary; (10) to make, amend and repeal rules and regulations to effectuate the efficient use of monies from the Health Safety Net Trust Fund; provided, however, that the regulations shall be promulgated only after notice and hearing and only upon consultation with the board of the commonwealth health insurance connector, the secretary of health and human services, the director of the office of Medicaid and representatives of the Massachusetts Hospital Association, the Massachusetts Council of Community Hospitals, the Alliance of Massachusetts Safety Net Hospitals and the Massachusetts League of Community Health Centers; and (11) to provide an annual report at the close of each fund fiscal year, in consultation with the office of Medicaid, to the joint committee on health care financing and the house and senate committees on ways and means, evaluating the processes used to determine eligibility for reimbursable health services, including the Virtual Gateway. The report shall include, but not be limited to, the following: (i) an analysis of the effectiveness of these processes in enforcing eligibility requirements for publicly-funded health programs and in enrolling uninsured residents into programs of health insurance offered by public and private sources; (ii) an assessment of the impact of these processes on the level of reimbursable health services by providers; and (iii) recommendations for ongoing improvements that will enhance the performance of eligibility determination systems and reduce hospital administrative costs.

(c) The office shall enter into an interdepartmental service agreement with the office of Medicaid to develop and implement a plan to enhance oversight and improve the operations, management, payment processes and data integrity of the Health Safety Net Trust Fund, consistent with clauses (2) to (5), inclusive, of subsection (b).

The plan shall include: (i) an analysis of free care and emergency bad debt claims submitted in the most recent 3-year period to determine patterns most appropriate and promising for targeted audits and reviews; (ii) a cost-effective approach to maximizing the identification of all sources of third-party liability for patients receiving free care or emergency services; (iii) a cost-effective approach to establishing an ongoing claims and utilization review system for uncompensated care claims that effectively identifies and disallows inappropriate claims, but also takes into consideration the practicality of that approach considering the small volume of claims relative to other payers that make routine use of claims and utilization review systems; (iv) an approach that maximizes the use of existing eligibility determination and review systems, coordination of benefits, claims review and provider integrity systems, interdepartmental service agreements and related program and provider integrity contracts available to the office of Medicaid for achieving the management improvements required under this section; and (v) a proposed timeline for implementation.

The health safety net office shall annually submit a progress report on the plan to the general court by filing it with the clerks of the senate and house of representatives, the joint committee on health care financing and the house and senate committees on ways and means.