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Arkansas House Bill HB1969

Arkansas 2025 Regular Session

Arkansas House Bill HB1969 Compare Versions

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33 State of Arkansas 1
44 95th General Assembly A Bill 2
55 Regular Session, 2025 HOUSE BILL 1969 3
66 4
77 By: Representatives L. Johnson, Achor 5
88 By: Senator J. Boyd 6
99 7
1010 For An Act To Be Entitled 8
1111 AN ACT TO IMPROVE THE QUALITY OF HEALTHCARE ACCESS IN 9
1212 THIS STATE; TO AMEND THE LAW CONCERNING ASSESSMENT 10
1313 FEES ON HOSPITALS; TO CREATE THE HOSPITAL DIRECTED 11
1414 PAYMENT ASSESSMENT; TO CREATE THE GRADUATE MEDICAL 12
1515 EDUCATION EXPANSION PROGRAM; AND FOR OTHER PURPOSES. 13
1616 14
1717 15
1818 Subtitle 16
1919 TO IMPROVE THE QUALITY OF HEALTHCARE 17
2020 ACCESS; TO AMEND THE ASSESSMENT FEES ON 18
2121 HOSPITALS; AND TO CREATE THE HOSPITAL 19
2222 DIRECTED PAYMENT ASSESSMENT. 20
2323 21
2424 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS: 22
2525 23
2626 SECTION 1. Arkansas Code Title 20, Chapter 77, Subchapter 1, is 24
2727 amended to add an additional section to read as follows: 25
2828 20-77-154. Graduate Medical Education Expansion Account — Graduate 26
2929 Medical Education Expansion Program. 27
3030 (a) There is created within the Arkansas Medicaid Program Trust Fund a 28
3131 designated account known as the "Graduate Medical Education Expansion 29
3232 Account". 30
3333 (b) Moneys in the Graduate Medical Education Expansion Account shall 31
3434 consist of all moneys collected or received by the Division of Medical 32
3535 Services from § 26-57-610(b)(6)(B)(ii). 33
3636 (c) The Graduate Medical Education Expansion Account shall be separate 34
3737 and distinct from the General Revenue Fund Account of the State Apportionment 35
3838 Fund and shall be supplementary to the Arkansas Medicaid Program Trust Fund. 36 HB1969
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4141 (d) Moneys in the Graduate Medical Education Expansion Account shall 1
4242 supplement, but not supplant, funding appropriated to the Graduate Medical 2
4343 Education Fund under § 19 -5-1265. 3
4444 (e) The Graduate Medical Education Expansion Account shall be exempt 4
4545 from budgetary cuts, reductions, or eliminations caused by a deficiency of 5
4646 general revenues. 6
4747 (f) The moneys in the Graduate Medical Education Expansion Account 7
4848 shall be used only to make payments to eligible hospital providers for the 8
4949 direct costs of graduate medical education programs for eligible residency 9
5050 and fellowship positions added on or after July 1, 2025. 10
5151 (g) The Graduate Medical Education Expansion Account shall retain 11
5252 account balances remaining at the end of each year. 12
5353 (h) The division shall promulgate rules to create and implement the 13
5454 "Graduate Medical Education Expansion Program" to provide payments to 14
5555 eligible hospital providers. 15
5656 16
5757 SECTION 2. Arkansas Code § 20 -77-1901(3), concerning the definition of 17
5858 "Medicare Cost Report" relating to the assessment fee on hospitals 18
5959 participating in the Arkansas Medicaid Program, is amended to read as 19
6060 follows: 20
6161 (3) “Medicare Cost Report” means CMS-2552-96, the Cost report 21
6262 for Electronic Filing of Hospitals as it existed on January 1, 2009 CMS-2552-22
6363 10, as existing on January 1, 2025 ; 23
6464 24
6565 SECTION 3. Arkansas Code § 20 -77-1901(9) and (10), concerning the 25
6666 definitions for upper payment limit and upper payment limit gap, are amended 26
6767 to read as follows: 27
6868 (9) “Upper payment limit” means the maximum ceiling imposed by 28
6969 federal regulation on privately owned hospital fee-for-service Medicaid 29
7070 reimbursement for inpatient services under 42 C.F.R § 447.272 and outpatient 30
7171 services under 42 C.F.R § 447.321; and 31
7272 (10)(A) “Upper payment limit gap” means the difference between 32
7373 the upper payment limit and fee-for-service Medicaid payments not financed 33
7474 using hospital assessments made to all privately operated hospitals. 34
7575 (B) The upper payment limit gap shall be calculated 35
7676 separately for hospital inpatient and fee-for-service outpatient services. 36 HB1969
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7979 (C) Medicaid disproportionate share payments shall be 1
8080 excluded from the calculation of the upper payment limit gap. 2
8181 3
8282 SECTION 4. Arkansas Code Title 20, Chapter 77 is amended to add an 4
8383 additional subchapter to read as follows: 5
8484 Subchapter 29 – Hospital Directed Payment Assessment 6
8585 7
8686 20-77-2901. Purpose. 8
8787 The purpose of this subchapter is to: 9
8888 (1) Maximize reimbursement for hospital services to Medicaid 10
8989 patients in this state; 11
9090 (2) Ensure the financial sustainability of healthcare in this 12
9191 state, including in rural areas; and 13
9292 (3) Support access and quality of care for residents of this 14
9393 state. 15
9494 16
9595 20-77-2902. Definitions. 17
9696 As used in this subchapter: 18
9797 (1) “Contract year” means the capitation rating period of 19
9898 January 1 through December 31 of each year in which a contracted entity 20
9999 enters into a capitated contract with the Department of Human Services under 21
100100 the Medicaid Provider -Led Organized Care Act, § 20 -77-2701 et seq., or any 22
101101 other Medicaid managed care programs for which the Department of Human 23
102102 Services contracts; 24
103103 (2)(A) “Contracted entity” means an organization or entity that 25
104104 enters into or will enter into a capitated contract with the Department of 26
105105 Human Services for the delivery of services under the Medicaid Provider -Led 27
106106 Organized Care Act, § 20 -77-2701 et seq., or any successor Medicaid managed 28
107107 care program, that will assume financial risk, operational accountability, 29
108108 and statewide or regional functionality in managing comprehensive health 30
109109 outcomes of Medicaid beneficiaries. 31
110110 (B) “Contracted entity” includes without limitation an 32
111111 accountable care organization, a risk -based provider organization, a 33
112112 provider-led entity, a commercial plan, a dental benefit manager, a managed 34
113113 care organization, or any other entity as determined by the Department of 35
114114 Human Services; 36 HB1969
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117117 (3) “Directed payment” means payment arrangements under 42 1
118118 C.F.R. § 438.6(c), as existing on January 1, 2025, that permit states to 2
119119 direct specific payments made by contracted entities to providers under 3
120120 certain circumstances and can assist states in furthering the goals and 4
121121 priorities of Medicaid managed care programs; 5
122122 (4) “Directed payment preprint” means the materials required 6
123123 under 42 C.F.R. § 438.6(c), as existing on January 1, 2025, to be submitted 7
124124 to the Centers for Medicare & Medicaid Services for review and written 8
125125 approval prior to implementing directed payments; 9
126126 (5) “Hospital” means a healthcare facility licensed as a 10
127127 hospital by the Department of Health under § 20 -9-213; 11
128128 (6)(A) “Managed care gap” means the difference between: 12
129129 (i) The maximum amount that can be paid for hospital 13
130130 inpatient and outpatient services to Medicaid managed care enrollees; and 14
131131 (ii) The total amount of Medicaid managed care 15
132132 payments for hospital inpatient and outpatient services. 16
133133 (B) In calculating the managed care gap, the Department of 17
134134 Human Services shall use whatever methodology and data source permitted under 18
135135 42 C.F.R. § 438.6(c)(2)(ii) and (iii), as existing on January 1, 2025, that 19
136136 would result in the highest payment rate for hospital services under § 20 -77-20
137137 2910; 21
138138 (7) “Managed care program” means a Medicaid managed care 22
139139 delivery system operated under a contract between the Department of Human 23
140140 Services and a contracted entity as authorized under sections 1915(a), 24
141141 1915(b), 1932(a), or 1115(a) of the Social Security Act; 25
142142 (8) “Medicare cost report” means CMS -2552-10, the Hospital and 26
143143 Hospital Health Care Complex Cost Report, or the cost report for electronic 27
144144 filing of hospitals; 28
145145 (9) “Pass-through payment” means a managed care program payment 29
146146 arrangement implemented in accordance with 42 C.F.R. § 438.6(d)(6), as 30
147147 existing on January 1, 2025, for services transitioned from a fee -for-service 31
148148 program to a managed care program on or after January 1, 2026, for the 32
149149 purposes of ensuring that payments to individual hospitals are not adversely 33
150150 affected by transition of services to managed care programs; and 34
151151 (10) “State government -owned hospital” means a hospital that is 35
152152 owned by an agency or unit of state government, including the University of 36 HB1969
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155155 Arkansas for Medical Sciences. 1
156156 2
157157 20-77-2903. Hospital managed care reimbursement. 3
158158 On and after January 1, 2026, the Division of Medical Services of the 4
159159 Department of Human Services shall ensure that all hospital services to 5
160160 Medicaid managed care program enrollees be reimbursed at the highest rate 6
161161 permitted by federal law through the implementation of directed payments 7
162162 programs and other mechanisms authorized by this subchapter. 8
163163 9
164164 20-77-2904. Hospital directed payment assessment. 10
165165 (a) There is created the hospital directed payment assessment, which 11
166166 shall be a directed payment assessment imposed on each hospital, except those 12
167167 exempted by the Division of Medical Services under the authority in § 20 -77-13
168168 2907, for each contract year in accordance with rules adopted by the 14
169169 division. 15
170170 (b) The hospital directed payment assessment rates under subsection 16
171171 (a) of this section shall be determined annually to generate the non -federal 17
172172 portion of the managed care gap plus the annual fee under § 20 -77-18
173173 2906(f)(1)(C), but in no case at rates that would cause the combined 19
174174 assessment proceeds under this subchapter and § 20 -77-1902 to exceed the 20
175175 indirect guarantee threshold set forth in 42 C.F.R. § 433.68(f)(3)(i), as 21
176176 existing on January 1, 2025. 22
177177 (c)(1) The assessment basis under this section shall be adopted by 23
178178 rule and calculated using the data from each hospital’s most recent audited 24
179179 Medicare cost report available at the time of the calculation, including data 25
180180 for hospitals assessed under this section and hospitals exempted from the 26
181181 assessment under § 20 -77-2907. 27
182182 (2) The inpatient and outpatient portions of assessment basis 28
183183 under this subsection shall be determined through methods adopted by rule. 29
184184 (d) This subchapter does not authorize a unit of county or local 30
185185 government to license for revenue or impose a tax or assessment upon 31
186186 hospitals or a tax or assessment measured by the income or earnings of a 32
187187 hospital. 33
188188 34
189189 20-77-2905. Hospital directed payment assessment administration. 35
190190 (a) The Director of the Division of Medical Services shall administer 36 HB1969
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193193 the hospital directed payment assessment created in this subchapter. 1
194194 (b)(1) The Division of Medical Services shall adopt rules to implement 2
195195 this subchapter. 3
196196 (2) The rules adopted under this section shall specify any 4
197197 exceptions to or exemptions from the hospital directed payment assessment in 5
198198 accordance with authorities in § 20 -77-2907. 6
199199 (3) The rules adopted under this section shall include any 7
200200 necessary forms for: 8
201201 (A) Proper imposition and collection of the hospital 9
202202 directed payment assessment imposed under § 20 -77-2904; 10
203203 (B) Enforcement of this subchapter, including without 11
204204 limitation letters of caution or sanctions; and 12
205205 (C) Reporting of inpatient and outpatient portions of the 13
206206 assessment basis. 14
207207 (c) To the extent practicable, the division shall administer and 15
208208 enforce this subchapter and collect the assessments, interest, and penalty 16
209209 assessments imposed under this subchapter using procedures generally employed 17
210210 in the administration of the division’s other powers, duties, and functions. 18
211211 19
212212 20-77-2906. Hospital Directed Payment Assessment Account. 20
213213 (a)(1) There is created within the Arkansas Medicaid Program Trust 21
214214 Fund a designated account known as the "Hospital Directed Payment Assessment 22
215215 Account". 23
216216 (2) The hospital directed payment assessments imposed under § 24
217217 20-77-2904 shall be deposited into the Hospital Directed Payment Assessment 25
218218 Account. 26
219219 (b) Moneys in the Hospital Directed Payment Assessment Account shall 27
220220 consist of: 28
221221 (1) All moneys collected or received by the Division of Medical 29
222222 Services from hospital directed payment program assessments under § 20 -77-30
223223 2904; and 31
224224 (2) Any interest or penalties levied in conjunction with the 32
225225 administration of this subchapter. 33
226226 (c) The Hospital Directed Payment Assessment Account shall be separate 34
227227 and distinct from the General Revenue Fund Account of the State Apportionment 35
228228 Fund and shall be supplementary to the Arkansas Medicaid Program Trust Fund. 36 HB1969
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231231 (d) Moneys in the Hospital Directed Payment Assessment Account shall 1
232232 not be used to: 2
233233 (1) Replace any general revenues appropriated and funded by the 3
234234 General Assembly or other revenues used to support Medicaid, including 4
235235 appropriations for cost settlements and other payments that may be reduced or 5
236236 eliminated as a result of any transition of populations or services to 6
237237 Medicaid managed care; 7
238238 (2) Reduce hospital payment rates under the Arkansas Medicaid 8
239239 Program, including negotiated rates paid by contracted entities, below the 9
240240 hospital rates in effect on the date on the effective date of this 10
241241 subchapter; or 11
242242 (3)(A) Fund directed payments for state government -owned 12
243243 hospitals. 13
244244 (B) A state government -owned hospital may separately fund 14
245245 directed payments through intergovernmental transfers. 15
246246 (e) The Hospital Directed Payment Assessment Account shall be exempt 16
247247 from budgetary cuts, reductions, or eliminations caused by a deficiency of 17
248248 general revenues. 18
249249 (f)(1) Except as necessary to reimburse any funds borrowed to 19
250250 supplement funds in the Hospital Directed Payment Assessment Account, the 20
251251 moneys in the Hospital Directed Payment Assessment Account shall be used only 21
252252 to: 22
253253 (A) Make inpatient and outpatient hospital directed 23
254254 payments under § 20-77-2910; 24
255255 (B) Reimburse moneys collected by the division from 25
256256 hospitals through error or mistake or under this subchapter; 26
257257 (C) Pay an annual fee to the division in the amount of 27
258258 three and three-quarters percent (3.75%) of the assessments collected from 28
259259 hospitals under § 20 -77-2904 each contract year; or 29
260260 (D) Make hospital pass -through payments under § 20 -77-30
261261 2911, in amounts deemed necessary by the division, to ensure Medicaid 31
262262 payments to individual hospitals are not adversely impacted by transitioning 32
263263 delivery of services from fee -for-service programs to managed care programs 33
264264 on and after January 1, 2026. 34
265265 (2)(A) The Hospital Directed Payment Assessment Account shall 35
266266 retain account balances remaining at the end of each contract year. 36 HB1969
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269269 (B) At the end of each contract year, any positive balance 1
270270 remaining in the Hospital Directed Payment Assessment Account shall be 2
271271 factored into the calculation of the new assessment rate by reducing the 3
272272 amount of hospital directed payment assessment funds that must be generated 4
273273 during the subsequent contract year. 5
274274 (3) A hospital shall not be guaranteed that its inpatient and 6
275275 outpatient hospital directed payment access payments will equal or exceed the 7
276276 amount of its hospital directed payment assessment. 8
277277 9
278278 20-77-2907. Exemptions. 10
279279 (a) The Division of Medical Services may establish hospital assessment 11
280280 exemptions or varied assessment rates as needed to effectuate the purpose of 12
281281 the hospital directed payment assessment as established in this subchapter. 13
282282 (b) In addition to any exemptions established in accordance with 14
283283 subsection (a) of this section, the division shall exempt from the hospital 15
284284 directed payment assessment under § 20 -77-2904 any state government -owned 16
285285 hospital. 17
286286 18
287287 20-77-2908. Quarterly notice and collection. 19
288288 (a)(1) The annual hospital directed payment assessment imposed under § 20
289289 20-77-2904 shall be due and payable on a quarterly basis. 21
290290 (2) However, an installment payment of a hospital directed 22
291291 payment assessment imposed by § 20 -77-2904 shall not be due and payable 23
292292 until: 24
293293 (A) The Division of Medical Services issues the written 25
294294 notice required by § 20 -77-2909 stating that the payment methodologies to 26
295295 hospitals required under § 20 -77-2910 have been approved by the Centers for 27
296296 Medicare & Medicaid Services and the waiver under 42 C.F.R. § 433.68 for the 28
297297 hospital directed payment assessment imposed by § 20 -77-2904, if necessary, 29
298298 has been granted by the Centers for Medicare & Medicaid Services; 30
299299 (B) The thirty-day verification period required by § 20 -31
300300 77-2909(b) has expired; and 32
301301 (C) The division has made all quarterly installments of 33
302302 inpatient and outpatient hospital directed payment access payments to 34
303303 contracted entities that were otherwise due under § 20 -77-2910 consistent 35
304304 with the effective date of the approved directed payment preprint and waiver. 36 HB1969
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307307 (3) After the initial installment has been paid under this 1
308308 section, each subsequent quarterly installment payment of the hospital 2
309309 directed payment assessment imposed by § 20 -77-2904 shall be due and payable 3
310310 within ten (10) business days after the hospital has received its inpatient 4
311311 and outpatient hospital directed payment access payments due under § 20 -77-5
312312 2910 for the applicable quarter. 6
313313 (b) The payment by the hospital of the hospital directed payment 7
314314 assessment created in this subchapter shall be reported as an allowable cost 8
315315 for Medicaid reimbursement purposes. 9
316316 (c)(1) If a hospital fails to timely pay the full amount of a 10
317317 quarterly hospital directed payment assessment, the division may add to the 11
318318 assessment: 12
319319 (A) A penalty assessment equal to five percent (5%) of the 13
320320 quarterly amount not paid on or before the due date; and 14
321321 (B) On the last day of each quarter after the due date 15
322322 until the assessed amount and the penalty imposed under subsection (c)(1)(A) 16
323323 of this section are paid in full, an additional five percent (5%) penalty 17
324324 assessment on any unpaid quarterly and unpaid penalty assessment amounts. 18
325325 (2) Payments shall be credited first to unpaid quarterly 19
326326 amounts, rather than to penalty or interest amounts, beginning with the most 20
327327 delinquent installment. 21
328328 (3) If the division is unable to recoup from Medicaid payments 22
329329 the full amount of any unpaid hospital directed payment assessment or penalty 23
330330 assessment, or both, the division may file suit in a court of competent 24
331331 jurisdiction to collect up to double the amount due, the division’s costs 25
332332 related to the suit, and reasonable attorney’s fees. 26
333333 27
334334 20-77-2909. Notice of hospital directed payment assessment. 28
335335 (a)(1) The Division of Medical Services shall send a notice of 29
336336 hospital directed payment assessment to each hospital informing the hospital 30
337337 of the hospital directed payment assessment rate, the hospital’s assessment 31
338338 basis calculation, and the estimated hospital directed payment assessment 32
339339 amount owed by the hospital for the applicable contract year. 33
340340 (2) Except as set forth in subdivision (a)(3) of this section, 34
341341 the annual notices of hospital directed payment assessment under subdivision 35
342342 (a)(1) of this section shall be sent at least forty -five (45) days before the 36 HB1969
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345345 due date for the first quarterly hospital directed payment assessment payment 1
346346 of each contract year. 2
347347 (3) The first notice of the hospital directed payment assessment 3
348348 under subdivision (a)(1) of this section shall be sent within fifteen (15) 4
349349 days after receipt by the division of notification from the Centers for 5
350350 Medicare & Medicaid Services for the payments required under § 20 -77-2910 6
351351 and, if necessary, the waiver granted under 42 C.F.R. § 433.68 have been 7
352352 approved. 8
353353 (b) The hospital shall have thirty (30) days from the date of its 9
354354 receipt of a notice of the hospital directed payment assessment under 10
355355 subdivision (a)(1) of this section to review and verify the hospital directed 11
356356 payment assessment rate, the hospital’s assessment basis calculation, and the 12
357357 hospital directed payment assessment amount. 13
358358 (c)(1) If a hospital provider operates, conducts, or maintains more 14
359359 than one (1) hospital in the state, the hospital provider shall pay the 15
360360 hospital directed payment assessment rate for each hospital separately. 16
361361 (2) However, if the hospital provider under subdivision (c)(1) 17
362362 of this section operates more than one (1) hospital under one (1) Medicaid 18
363363 provider number, the hospital provider may pay the hospital directed payment 19
364364 assessment for the hospitals in the aggregate. 20
365365 (d)(1) For a hospital subject to the hospital directed payment 21
366366 assessment under § 20 -77-2904 that ceases to conduct hospital operations or 22
367367 maintain its state license or did not conduct hospital operations throughout 23
368368 a contract year, the hospital directed payment assessment for the contract 24
369369 year in which the cessation occurs shall be adjudicated by multiplying the 25
370370 annual hospital directed payment assessment computed under § 20 -77-2904 by a 26
371371 fraction, the numerator of which is the number of days during the year that 27
372372 the hospital operated and the denominator of which is three hundred sixty -28
373373 five (365). 29
374374 (2)(A) Immediately upon ceasing to operate, the hospital shall 30
375375 pay the adjusted hospital directed payment assessment for that contract year 31
376376 to the extent not previously paid. 32
377377 (B) The hospital also shall receive payments under § 20 -33
378378 77-2910 for the contract year in which the cessation occurs, which shall be 34
379379 adjusted by the same fraction as its annual hospital directed payment 35
380380 assessment. 36 HB1969
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383383 (e) A hospital subject to a hospital directed payment assessment under 1
384384 this subchapter that has not been previously licensed as a hospital in 2
385385 Arkansas and that commences hospital operations during a contract year shall 3
386386 pay the required hospital directed payment assessment computed under § 20 -77-4
387387 2904 and shall be eligible for hospital directed payment access payments 5
388388 under § 20-77-2910 on the date specified in rules promulgated by the division 6
389389 under the Arkansas Administrative Procedure Act, § 25 -15-201 et seq. 7
390390 (f) A hospital that is exempt from payment of the hospital directed 8
391391 payment assessment under § 20 -77-2907 at the beginning of a contract year but 9
392392 during the contract year experiences a change in status so that it becomes 10
393393 subject to a hospital directed payment assessment shall pay the required 11
394394 hospital directed payment assessment computed under § 20 -77-2904 and shall be 12
395395 eligible for hospital directed payment access payments under § 20 -77-2910 on 13
396396 the date specified in rules promulgated by the division. 14
397397 (g) A hospital that is subject to payment of the hospital directed 15
398398 payment assessment computed under § 20 -77-2904 at the beginning of a contract 16
399399 year but during the contract year experiences a change in status so that it 17
400400 becomes exempted from payment under § 20 -77-2907 shall be relieved of its 18
401401 obligation to pay the hospital directed payment assessment and shall become 19
402402 ineligible for hospital directed payment access payments under § 20 -77-2910 20
403403 on the date specified in rules promulgated by the division. 21
404404 22
405405 20-77-2910. Hospital directed payment access payments. 23
406406 (a) To preserve and improve access to quality hospital services, for 24
407407 hospital inpatient and outpatient services rendered on or after January 1, 25
408408 2026, the Division of Medical Services shall make hospital directed payment 26
409409 access payments as set forth in this section. 27
410410 (b) The division shall calculate the total hospital directed payment 28
411411 access payment amount as the lesser of: 29
412412 (1) The amount equal to the managed care gap for inpatient and 30
413413 outpatient hospital services; or 31
414414 (2) The amount that can be financed with a level of non -federal 32
415415 funds generated through hospital directed payment assessments imposed under § 33
416416 20-77-2904 that causes the combined assessment proceeds under § 20 -77-1902 34
417417 and § 20-77-2904 to equal the indirect guarantee threshold set forth in 42 35
418418 C.F.R. § 433.68(f)(3)(i), as existing on January 1, 2025. 36 HB1969
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421421 (c)(1) All hospitals shall be eligible for inpatient and outpatient 1
422422 hospital directed payment access payments through contracted entities each 2
423423 contract year as set forth in this subsection other than state government -3
424424 owned hospitals. 4
425425 (2)(A) A portion of the hospital directed payment access payment 5
426426 amount, not to exceed the managed care gap for inpatient services, shall be 6
427427 designated as the inpatient hospital directed payment access payment pool. 7
428428 (B) Inpatient hospital directed payment access payments 8
429429 shall be paid as a uniform percentage rate increase or uniform add -on to base 9
430430 Medicaid managed care reimbursement to eligible hospitals. 10
431431 (3)(A) A portion of the hospital directed payment access payment 11
432432 amount, not to exceed the managed care gap for outpatient hospital services, 12
433433 shall be designated as the outpatient hospital directed payment access 13
434434 payment pool. 14
435435 (B) Outpatient hospital directed payment access payments 15
436436 shall be paid as a uniform percentage rate increase or uniform add -on to base 16
437437 Medicaid managed care reimbursement to eligible hospitals. 17
438438 (4)(A) The hospital directed payment access payment shall be 18
439439 administered through a separate payment term and lump -sum payments that are 19
440440 paid no later than thirty (30) days after the end of each quarter for which 20
441441 the lump-sum payment is attributable, provided that the Centers for Medicare 21
442442 & Medicaid Services permit the use of this payment mechanism. 22
443443 (B)(i) In the event that the Centers for Medicare & 23
444444 Medicaid Services does not permit use of a separate payment term and lump -sum 24
445445 payments under subdivision (c)(4)(A) of this section, the division shall 25
446446 include directed payments in capitation rates and require contracted entities 26
447447 to make add-on payments in hospital claims. 27
448448 (ii) The division shall require contracted entities 28
449449 to clearly delineate for hospitals the portion of reimbursement attributable 29
450450 to directed payments from the portion of reimbursement paid at negotiated 30
451451 rates. 31
452452 (d) A hospital directed payment access payment shall not be used to 32
453453 offset any other payment by contracted entities for hospital inpatient or 33
454454 outpatient services to Medicaid managed care beneficiaries, including without 34
455455 limitation any fee-for-service, per diem, private hospital inpatient 35
456456 adjustment, Medicaid managed care, or cost -settlement payment. 36 HB1969
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459459 1
460460 20-77-2911. Managed Care Pass -Through Payment Pool Account. 2
461461 (a) There is created within the Arkansas Medicaid Program Trust Fund a 3
462462 designated account known as the "Managed Care Pass -Through Payment Pool 4
463463 Account". 5
464464 (b) Moneys in the Managed Care Pass -Through Payment Pool Account shall 6
465465 consist of all moneys collected or received by the Division of Medical 7
466466 Services under § 20-77-2906(f)(1)(D). 8
467467 (c) The Managed Care Pass -Through Payment Pool Account shall be 9
468468 separate and distinct from the General Revenue Fund Account of the State 10
469469 Apportionment Fund and shall be supplementary to the Arkansas Medicaid 11
470470 Program Trust Fund. 12
471471 (d) Moneys in the Managed Care Pass -Through Payment Pool Account shall 13
472472 not be used to: 14
473473 (1) Replace any general revenues appropriated and funded by the 15
474474 General Assembly or other revenues used to support Medicaid, including 16
475475 appropriations for cost settlements and other payments that may be reduced or 17
476476 eliminated as a result of any transition of populations or services to 18
477477 managed care; 19
478478 (2) Reduce provider payment rates under the Arkansas Medicaid 20
479479 Program, including negotiated rates paid by contracted entities, below the 21
480480 provider payment rates in effect on the effective date of this subchapter; or 22
481481 (3)(A) Fund managed care pass -through payments for state 23
482482 government-owned hospitals. 24
483483 (B) A state government -owned hospital may separately fund 25
484484 managed care pass-through payments through intergovernmental transfers. 26
485485 (e) The Managed Care Pass -Through Payment Pool Account shall be exempt 27
486486 from budgetary cuts, reductions, or eliminations caused by a deficiency of 28
487487 general revenues or special revenues allocated for Medicaid. 29
488488 (f)(1) Except as necessary to reimburse any funds borrowed to 30
489489 supplement funds in the Hospital Directed Payment Assessment Account, the 31
490490 moneys in the Managed Care Pass -Through Payment Pool Account shall be used 32
491491 only to: 33
492492 (A) Make pass-through payments to individual hospitals, as 34
493493 deemed necessary by the Department of Human Services, to ensure payments to 35
494494 individual hospitals are not adversely impacted by the transition of any 36 HB1969
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497497 services from fee-for-service programs to managed care programs, on and after 1
498498 January 1, 2026; or 2
499499 (B) Reimburse moneys collected by the division from 3
500500 hospitals through error or mistake under this subchapter. 4
501501 (2) The Managed Care Pass -Through Payment Pool Account shall 5
502502 retain all account balances at the end of each contract year. 6
503503 7
504504 20-77-2912. Managed Care Provider Incentive Pool Account. 8
505505 (a) There is created within the Arkansas Medicaid Program Trust Fund a 9
506506 designated account known as the "Managed Care Provider Incentive Pool 10
507507 Account". 11
508508 (b) Moneys in the Managed Care Provider Incentive Pool Account shall 12
509509 consist of all moneys collected or received by the Division of Medical 13
510510 Services from § 26-57-610(b)(6)(B)(i). 14
511511 (c) The Managed Care Provider Incentive Pool Account shall be separate 15
512512 and distinct from the General Revenue Fund Account of the State Apportionment 16
513513 Fund and shall be supplementary to the Arkansas Medicaid Program Trust Fund. 17
514514 (d) Moneys in the Managed Care Provider Incentive Pool Account shall 18
515515 not be used to: 19
516516 (1) Replace any general revenues appropriated and funded by the 20
517517 General Assembly or other revenues used to support Medicaid, including 21
518518 appropriations for cost settlements and other payments that may be reduced or 22
519519 eliminated as a result of any transition of populations or services to 23
520520 managed care; 24
521521 (2) Reduce provider payment rates under the Arkansas Medicaid 25
522522 Program, including negotiated rates paid by contracted entities, below the 26
523523 provider payment rates in effect on the effective date of this subchapter; or 27
524524 (3)(A) Fund managed care provider incentive pool payments for 28
525525 state government-owned hospitals. 29
526526 (B) A state government -owned hospital may separately fund 30
527527 managed care provider incentive pool payments through intergovernmental 31
528528 transfers. 32
529529 (e) The Managed Care Provider Incentive Pool Account shall be exempt 33
530530 from budgetary cuts, reductions, or eliminations caused by a deficiency of 34
531531 general revenues. 35
532532 (f)(1) Except as necessary to reimburse any funds borrowed to 36 HB1969
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535535 supplement funds in the Hospital Directed Payment Assessment Account, the 1
536536 moneys in the Managed Care Provider Incentive Pool Account shall be used only 2
537537 to: 3
538538 (A) Make incentive payments to Medicaid providers to 4
539539 improve access and quality of care under § 20 -77-2914; or 5
540540 (B) Reimburse moneys collected by the division from 6
541541 hospitals through error or mistake or under this subchapter. 7
542542 (2) The Managed Care Provider Incentive Pool Account shall 8
543543 retain account balances remaining at the end of each contract year. 9
544544 10
545545 20-77-2913. Medicaid Sustainability Advisory Committee — Medicaid 11
546546 Quality Advisory Committee. 12
547547 (a) To ensure providers have a voice in the direction and operation of 13
548548 the Medicaid programs contemplated by this subchapter, the Division of 14
549549 Medical Services shall establish a Medicaid Sustainability Advisory Committee 15
550550 and the Medicaid Quality Advisory Committee. 16
551551 (b)(1) The Medicaid Sustainability Advisory Committee shall be 17
552552 comprised of: 18
553553 (A) Two (2) members appointed by the division; 19
554554 (B) Four (4) members appointed by hospitals and integrated 20
555555 health systems; 21
556556 (C) One (1) member appointed by the University of Arkansas 22
557557 for Medical Sciences; 23
558558 (D) One (1) member appointed by the Arkansas Hospital 24
559559 Association, Inc.; and 25
560560 (E) Two (2) other representatives of the healthcare 26
561561 provider community. 27
562562 (2) The Medicaid Sustainability Advisory Committee shall make 28
563563 recommendations to the division and the General Assembly regarding any 29
564564 proposed legislative, programmatic, regulatory, or policy change that impacts 30
565565 hospitals’ participation in directed payments, pass -through payments, 31
566566 hospital assessments, graduate medical education, provider incentives, and 32
567567 managed care programs. 33
568568 (c)(1) The Medicaid Quality Advisory Committee shall be comprised of: 34
569569 (A) Two (2) members appointed by the division; 35
570570 (B) Four (4) members appointed by hospitals and integrated 36 HB1969
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573573 health systems; 1
574574 (C) One (1) member appointed by University of Arkansas for 2
575575 Medical Sciences; and 3
576576 (D) Two (2) other representatives of the healthcare 4
577577 provider community. 5
578578 (2) The Medicaid Quality Advisory Committee shall review quality 6
579579 improvement needs and recommend initiatives supported by the Managed Care 7
580580 Provider Incentive Program. 8
581581 9
582582 20-77-2914. Managed Care Provider Incentive Program. 10
583583 (a)(1) The Division of Medical Services shall promulgate rules to 11
584584 create and implement the "Managed Care Provider Incentive Program" to support 12
585585 healthcare quality assurance and access improvement initiatives. 13
586586 (2) For state fiscal years ending on or before June 30, 2030, 14
587587 the Managed Care Provider Incentive Program shall be dedicated to initiatives 15
588588 that support improved access to maternal health and primary care providers. 16
589589 (3) For state fiscal years starting on or after July 1, 2030, 17
590590 the Managed Care Provider Incentive Program shall be dedicated to other 18
591591 initiatives approved by a majority vote of the Medicaid Sustainability 19
592592 Advisory Committee. 20
593593 (b) For state fiscal years starting on or after July 1, 2030, all 21
594594 initiatives supported by the Managed Care Provider Incentive Program shall be 22
595595 approved by a majority vote of the members of the Medicaid Quality Advisory 23
596596 Committee. 24
597597 25
598598 20-77-2915. Processing directed payments through contracted entities. 26
599599 The Division of Medical Services may process directed payments through 27
600600 contracted entities only if: 28
601601 (1) The division provides each contracted entity with a detailed 29
602602 list of hospital directed payment access payments, specifying the amounts to 30
603603 be paid to each eligible hospital as required by this subchapter; 31
604604 (2) Each contracted entity disburses the hospital directed 32
605605 payment access payments to eligible hospitals within five (5) business days 33
606606 of receiving a supplemental capitation payment; 34
607607 (3) Contracted entities are prohibited from withholding or 35
608608 delaying the payment of a hospital directed payment access payment for any 36 HB1969
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611611 reason; and 1
612612 (4) The division exercises administrative discretion to ensure 2
613613 that each eligible hospital receives the full payment of all hospital 3
614614 directed payment access payments, utilizing appropriate payment mechanisms as 4
615615 necessary. 5
616616 6
617617 20-77-2916. Effectiveness and cessation. 7
618618 (a) The hospital directed payment assessment imposed under § 20 -77-8
619619 2904 shall cease to be imposed, the Medicaid hospital directed payment access 9
620620 payments made under § 20 -77-2910 shall cease to be paid, and any moneys 10
621621 remaining in the Hospital Directed Payment Assessment Account and the Managed 11
622622 Care Provider Incentive Pool Account that were derived from the hospital 12
623623 directed payment assessment imposed under § 20 -77-2904 shall be refunded to 13
624624 hospitals in proportion to the amounts paid by the hospitals if the inpatient 14
625625 or outpatient hospital directed payment access payments required under § 20 -15
626626 77-2910 are not approved or the hospital directed payments assessments 16
627627 imposed under § 20-77-2904 are not eligible for federal matching funds under 17
628628 Title XIX of the Social Security Act, 42 U.S.C. § 1396 et seq., or Title XXI 18
629629 of the Social Security Act, 42 U.S.C. § 1397aa et seq. 19
630630 (b)(1) The hospital directed payment assessment imposed under § 20 -77-20
631631 2904 shall cease to be imposed and the hospital directed payment access 21
632632 payments under § 20-77-2910 shall cease to be paid if the assessment is 22
633633 determined to be impermissible under Title XIX of the Social Security Act, 42 23
634634 U.S.C. § 1396 et seq. 24
635635 (2) Moneys in the Hospital Directed Payment Assessment Account 25
636636 in the Arkansas Medicaid Program Trust Fund derived from assessments imposed 26
637637 before the determination described in subdivision (b)(1) of this section 27
638638 shall be disbursed under § 20 -77-2910 to the extent federal matching is not 28
639639 reduced due to the impermissibility of the assessments, and any remaining 29
640640 moneys shall be refunded to hospitals in proportion to the amounts paid by 30
641641 the hospitals. 31
642642 32
643643 20-77-2917. Directed payment preprint. 33
644644 (a)(1) The Division of Medical Services shall seek approval of the 34
645645 hospital directed payment access payments under § 20 -77-2910 from the Centers 35
646646 for Medicare & Medicaid Services for each contract year by submitting a 36 HB1969
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649649 directed payment preprint and any information required under 42 C.F.R.§ 1
650650 438.6(c) to the Centers for Medicare & Medicaid Services at least ninety (90) 2
651651 days before the start of each contract year. 3
652652 (2) The division shall prepare the annual 42 C.F.R. § 438.6(c) 4
653653 directed payment preprint or amendment in collaboration with the Arkansas 5
654654 Hospital Association, Inc. 6
655655 (3) To the extent the directed payment preprint or amendment 7
656656 that the division plans to submit to the Centers for Medicare & Medicaid 8
657657 Services for approval would result in a reduction to the payment rate to 9
658658 eligible hospitals as compared to the federally approved rates for the prior 10
659659 year or directed payment preprint submission, the division shall provide the 11
660660 Medicaid Sustainability Advisory Committee at least thirty (30) days to 12
661661 review and propose an alternative methodology. 13
662662 (4) The division shall use the methodology proposed by the 14
663663 Medicaid Sustainability Advisory Committee for the directed payment preprint 15
664664 submission unless the division obtains written confirmation from the Centers 16
665665 for Medicare & Medicaid Services that the proposed alternative methodology 17
666666 cannot be approved as proposed and that no modifications are possible to 18
667667 obtain approval for the alternative methodology. 19
668668 (5) The division shall make the written confirmation available 20
669669 to the Medicaid Sustainability Advisory Committee. 21
670670 (b)(1) The directed payment preprint shall not condition hospital 22
671671 eligibility for directed payments upon hospital compliance with initiatives 23
672672 and policies that are not related to quality measures identified in the 24
673673 Medicaid managed care quality strategy or otherwise require hospitals to 25
674674 spend a portion of their directed payment or other revenues as prescribed by 26
675675 the division to remain eligible for directed payments. 27
676676 (2) All inpatient and outpatient hospital services paid by 28
677677 contracted entities for services shall be eligible for the directed payment, 29
678678 regardless of whether the hospital is in -network with the contracted entity. 30
679679 (c) If the directed payment preprint is not approved by the Centers 31
680680 for Medicare & Medicaid Services, the division shall: 32
681681 (1) Not implement the hospital directed payment assessment 33
682682 imposed under § 20-77-2904; and 34
683683 (2) Return any hospital directed payment assessment fees to the 35
684684 hospitals that paid the fees if hospital directed payment assessment fees 36 HB1969
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687687 have been collected. 1
688688 2
689689 20-77-2918. Continuation of hospital access payments. 3
690690 The Department of Human Services shall continue to pay the maximum 4
691691 upper payment limit hospital access payments for inpatient and outpatient 5
692692 hospital services delivered to fee -for-service Medicaid populations to the 6
693693 full extent authorized under § 20 -77-1901 et seq., until Medicaid populations 7
694694 or program services are transferred from a fee -for-service to a managed care 8
695695 delivery model. 9
696696 10
697697 SECTION 5. Arkansas Code § 26 -57-610(b), concerning the disposition of 11
698698 insurance premium taxes, is amended to add an additional subdivision to read 12
699699 as follows: 13
700700 (6) The taxes based on premiums collected under the Arkansas 14
701701 Medicaid Program, other than the premiums collected for coverage under 15
702702 subdivisions (b)(2) and (b)(5) of this section at the levels of coverage that 16
703703 existed as of January 1, 2025, shall be: 17
704704 (A) At the time of deposit, separately certified by the 18
705705 commissioner to the Treasurer of State for classification and distribution 19
706706 under this section; and 20
707707 (B) Transferred in amounts equal to: 21
708708 (i) Fifty percent (50%) of the taxes for deposit 22
709709 into the Managed Care Provider Incentive Pool Account under § 20 -77-2912; 23
710710 (ii) Ten percent (10%) of the taxes for deposit into 24
711711 the Graduate Medical Education Expansion Account set forth in § 20 -77-154; 25
712712 and 26
713713 (iii) Forty percent (40%) of the taxes for deposit 27
714714 into the General Revenue Fund Account to be used in a manner authorized by 28
715715 the General Assembly for the purposes set forth in the Revenue Stabilization 29
716716 Law, § 19-5-101 et seq. 30
717717 31
718718 SECTION 6. DO NOT CODIFY. Contingent effective date. 32
719719 Sections 1, 4, and 5 of this act are effective on and after the date 33
720720 that the Secretary of the Department of Human Services: 34
721721 (1) Determines that the: 35
722722 (1) Fee-for-service Medicaid populations are added as a 36 HB1969
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725725 covered populations to be served by a risk -based provider organization under 1
726726 the Medicaid Provider -Led Organized Care Act, § 20 -77-2701 et seq.; 2
727727 (2) Fee-for-service Medicaid populations are transitioned 3
728728 to a Medicaid managed care program approved by the Centers for Medicare & 4
729729 Medicaid Services; 5
730730 (3) Individuals in the eligibility category created by 6
731731 section 1902(a)(10)(A)(i)(VIII) of the Social Security Act, 42 U.S.C. § 7
732732 1396a, as existing on January 1, 2025, are transitioned to a Medicaid managed 8
733733 care program approved by the Centers for Medicare & Medicaid Services; or 9
734734 (4) Individuals in the eligibility category created by 10
735735 section 1902(a)(10)(A)(i)(VIII) of the Social Security Act, 42 U.S.C. § 11
736736 1396a, as existing on January 1, 2025, are transitioned to a risk -based 12
737737 provider organization under the Medicaid Provider -Led Organized Care Act, § 13
738738 20-77-2701 et seq.; and 14
739739 (2) Notifies the Legislative Council and the Director of the 15
740740 Bureau of Legislative Research that one (1) of the contingencies listed in 16
741741 subdivision (1) of this section has occurred. 17
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