Stricken language would be deleted from and underlined language would be added to present law.
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State of Arkansas 1
95th General Assembly A Bill 2
Regular Session, 2025 HOUSE BILL 1969 3
4
By: Representatives L. Johnson, Achor 5
By: Senator J. Boyd 6
7
For An Act To Be Entitled 8
AN ACT TO IMPROVE THE QUALITY OF HEALTHCARE ACCESS IN 9
THIS STATE; TO AMEND THE LAW CONCERNING ASSESSMENT 10
FEES ON HOSPITALS; TO CREATE THE HOSPITAL DIRECTED 11
PAYMENT ASSESSMENT; TO CREATE THE GRADUATE MEDICAL 12
EDUCATION EXPANSION PROGRAM; AND FOR OTHER PURPOSES. 13
14
15
Subtitle 16
TO IMPROVE THE QUALITY OF HEALTHCARE 17
ACCESS; TO AMEND THE ASSESSMENT FEES ON 18
HOSPITALS; AND TO CREATE THE HOSPITAL 19
DIRECTED PAYMENT ASSESSMENT. 20
21
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS: 22
23
SECTION 1. Arkansas Code Title 20, Chapter 77, Subchapter 1, is 24
amended to add an additional section to read as follows: 25
20-77-154. Graduate Medical Education Expansion Account — Graduate 26
Medical Education Expansion Program. 27
(a) There is created within the Arkansas Medicaid Program Trust Fund a 28
designated account known as the "Graduate Medical Education Expansion 29
Account". 30
(b) Moneys in the Graduate Medical Education Expansion Account shall 31
consist of all moneys collected or received by the Division of Medical 32
Services from § 26-57-610(b)(6)(B)(ii). 33
(c) The Graduate Medical Education Expansion Account shall be separate 34
and distinct from the General Revenue Fund Account of the State Apportionment 35
Fund and shall be supplementary to the Arkansas Medicaid Program Trust Fund. 36 HB1969
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(d) Moneys in the Graduate Medical Education Expansion Account shall 1
supplement, but not supplant, funding appropriated to the Graduate Medical 2
Education Fund under § 19 -5-1265. 3
(e) The Graduate Medical Education Expansion Account shall be exempt 4
from budgetary cuts, reductions, or eliminations caused by a deficiency of 5
general revenues. 6
(f) The moneys in the Graduate Medical Education Expansion Account 7
shall be used only to make payments to eligible hospital providers for the 8
direct costs of graduate medical education programs for eligible residency 9
and fellowship positions added on or after July 1, 2025. 10
(g) The Graduate Medical Education Expansion Account shall retain 11
account balances remaining at the end of each year. 12
(h) The division shall promulgate rules to create and implement the 13
"Graduate Medical Education Expansion Program" to provide payments to 14
eligible hospital providers. 15
16
SECTION 2. Arkansas Code § 20 -77-1901(3), concerning the definition of 17
"Medicare Cost Report" relating to the assessment fee on hospitals 18
participating in the Arkansas Medicaid Program, is amended to read as 19
follows: 20
(3) “Medicare Cost Report” means CMS-2552-96, the Cost report 21
for Electronic Filing of Hospitals as it existed on January 1, 2009 CMS-2552-22
10, as existing on January 1, 2025 ; 23
24
SECTION 3. Arkansas Code § 20 -77-1901(9) and (10), concerning the 25
definitions for upper payment limit and upper payment limit gap, are amended 26
to read as follows: 27
(9) “Upper payment limit” means the maximum ceiling imposed by 28
federal regulation on privately owned hospital fee-for-service Medicaid 29
reimbursement for inpatient services under 42 C.F.R § 447.272 and outpatient 30
services under 42 C.F.R § 447.321; and 31
(10)(A) “Upper payment limit gap” means the difference between 32
the upper payment limit and fee-for-service Medicaid payments not financed 33
using hospital assessments made to all privately operated hospitals. 34
(B) The upper payment limit gap shall be calculated 35
separately for hospital inpatient and fee-for-service outpatient services. 36 HB1969
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(C) Medicaid disproportionate share payments shall be 1
excluded from the calculation of the upper payment limit gap. 2
3
SECTION 4. Arkansas Code Title 20, Chapter 77 is amended to add an 4
additional subchapter to read as follows: 5
Subchapter 29 – Hospital Directed Payment Assessment 6
7
20-77-2901. Purpose. 8
The purpose of this subchapter is to: 9
(1) Maximize reimbursement for hospital services to Medicaid 10
patients in this state; 11
(2) Ensure the financial sustainability of healthcare in this 12
state, including in rural areas; and 13
(3) Support access and quality of care for residents of this 14
state. 15
16
20-77-2902. Definitions. 17
As used in this subchapter: 18
(1) “Contract year” means the capitation rating period of 19
January 1 through December 31 of each year in which a contracted entity 20
enters into a capitated contract with the Department of Human Services under 21
the Medicaid Provider -Led Organized Care Act, § 20 -77-2701 et seq., or any 22
other Medicaid managed care programs for which the Department of Human 23
Services contracts; 24
(2)(A) “Contracted entity” means an organization or entity that 25
enters into or will enter into a capitated contract with the Department of 26
Human Services for the delivery of services under the Medicaid Provider -Led 27
Organized Care Act, § 20 -77-2701 et seq., or any successor Medicaid managed 28
care program, that will assume financial risk, operational accountability, 29
and statewide or regional functionality in managing comprehensive health 30
outcomes of Medicaid beneficiaries. 31
(B) “Contracted entity” includes without limitation an 32
accountable care organization, a risk -based provider organization, a 33
provider-led entity, a commercial plan, a dental benefit manager, a managed 34
care organization, or any other entity as determined by the Department of 35
Human Services; 36 HB1969
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(3) “Directed payment” means payment arrangements under 42 1
C.F.R. § 438.6(c), as existing on January 1, 2025, that permit states to 2
direct specific payments made by contracted entities to providers under 3
certain circumstances and can assist states in furthering the goals and 4
priorities of Medicaid managed care programs; 5
(4) “Directed payment preprint” means the materials required 6
under 42 C.F.R. § 438.6(c), as existing on January 1, 2025, to be submitted 7
to the Centers for Medicare & Medicaid Services for review and written 8
approval prior to implementing directed payments; 9
(5) “Hospital” means a healthcare facility licensed as a 10
hospital by the Department of Health under § 20 -9-213; 11
(6)(A) “Managed care gap” means the difference between: 12
(i) The maximum amount that can be paid for hospital 13
inpatient and outpatient services to Medicaid managed care enrollees; and 14
(ii) The total amount of Medicaid managed care 15
payments for hospital inpatient and outpatient services. 16
(B) In calculating the managed care gap, the Department of 17
Human Services shall use whatever methodology and data source permitted under 18
42 C.F.R. § 438.6(c)(2)(ii) and (iii), as existing on January 1, 2025, that 19
would result in the highest payment rate for hospital services under § 20 -77-20
2910; 21
(7) “Managed care program” means a Medicaid managed care 22
delivery system operated under a contract between the Department of Human 23
Services and a contracted entity as authorized under sections 1915(a), 24
1915(b), 1932(a), or 1115(a) of the Social Security Act; 25
(8) “Medicare cost report” means CMS -2552-10, the Hospital and 26
Hospital Health Care Complex Cost Report, or the cost report for electronic 27
filing of hospitals; 28
(9) “Pass-through payment” means a managed care program payment 29
arrangement implemented in accordance with 42 C.F.R. § 438.6(d)(6), as 30
existing on January 1, 2025, for services transitioned from a fee -for-service 31
program to a managed care program on or after January 1, 2026, for the 32
purposes of ensuring that payments to individual hospitals are not adversely 33
affected by transition of services to managed care programs; and 34
(10) “State government -owned hospital” means a hospital that is 35
owned by an agency or unit of state government, including the University of 36 HB1969
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Arkansas for Medical Sciences. 1
2
20-77-2903. Hospital managed care reimbursement. 3
On and after January 1, 2026, the Division of Medical Services of the 4
Department of Human Services shall ensure that all hospital services to 5
Medicaid managed care program enrollees be reimbursed at the highest rate 6
permitted by federal law through the implementation of directed payments 7
programs and other mechanisms authorized by this subchapter. 8
9
20-77-2904. Hospital directed payment assessment. 10
(a) There is created the hospital directed payment assessment, which 11
shall be a directed payment assessment imposed on each hospital, except those 12
exempted by the Division of Medical Services under the authority in § 20 -77-13
2907, for each contract year in accordance with rules adopted by the 14
division. 15
(b) The hospital directed payment assessment rates under subsection 16
(a) of this section shall be determined annually to generate the non -federal 17
portion of the managed care gap plus the annual fee under § 20 -77-18
2906(f)(1)(C), but in no case at rates that would cause the combined 19
assessment proceeds under this subchapter and § 20 -77-1902 to exceed the 20
indirect guarantee threshold set forth in 42 C.F.R. § 433.68(f)(3)(i), as 21
existing on January 1, 2025. 22
(c)(1) The assessment basis under this section shall be adopted by 23
rule and calculated using the data from each hospital’s most recent audited 24
Medicare cost report available at the time of the calculation, including data 25
for hospitals assessed under this section and hospitals exempted from the 26
assessment under § 20 -77-2907. 27
(2) The inpatient and outpatient portions of assessment basis 28
under this subsection shall be determined through methods adopted by rule. 29
(d) This subchapter does not authorize a unit of county or local 30
government to license for revenue or impose a tax or assessment upon 31
hospitals or a tax or assessment measured by the income or earnings of a 32
hospital. 33
34
20-77-2905. Hospital directed payment assessment administration. 35
(a) The Director of the Division of Medical Services shall administer 36 HB1969
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the hospital directed payment assessment created in this subchapter. 1
(b)(1) The Division of Medical Services shall adopt rules to implement 2
this subchapter. 3
(2) The rules adopted under this section shall specify any 4
exceptions to or exemptions from the hospital directed payment assessment in 5
accordance with authorities in § 20 -77-2907. 6
(3) The rules adopted under this section shall include any 7
necessary forms for: 8
(A) Proper imposition and collection of the hospital 9
directed payment assessment imposed under § 20 -77-2904; 10
(B) Enforcement of this subchapter, including without 11
limitation letters of caution or sanctions; and 12
(C) Reporting of inpatient and outpatient portions of the 13
assessment basis. 14
(c) To the extent practicable, the division shall administer and 15
enforce this subchapter and collect the assessments, interest, and penalty 16
assessments imposed under this subchapter using procedures generally employed 17
in the administration of the division’s other powers, duties, and functions. 18
19
20-77-2906. Hospital Directed Payment Assessment Account. 20
(a)(1) There is created within the Arkansas Medicaid Program Trust 21
Fund a designated account known as the "Hospital Directed Payment Assessment 22
Account". 23
(2) The hospital directed payment assessments imposed under § 24
20-77-2904 shall be deposited into the Hospital Directed Payment Assessment 25
Account. 26
(b) Moneys in the Hospital Directed Payment Assessment Account shall 27
consist of: 28
(1) All moneys collected or received by the Division of Medical 29
Services from hospital directed payment program assessments under § 20 -77-30
2904; and 31
(2) Any interest or penalties levied in conjunction with the 32
administration of this subchapter. 33
(c) The Hospital Directed Payment Assessment Account shall be separate 34
and distinct from the General Revenue Fund Account of the State Apportionment 35
Fund and shall be supplementary to the Arkansas Medicaid Program Trust Fund. 36 HB1969
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(d) Moneys in the Hospital Directed Payment Assessment Account shall 1
not be used to: 2
(1) Replace any general revenues appropriated and funded by the 3
General Assembly or other revenues used to support Medicaid, including 4
appropriations for cost settlements and other payments that may be reduced or 5
eliminated as a result of any transition of populations or services to 6
Medicaid managed care; 7
(2) Reduce hospital payment rates under the Arkansas Medicaid 8
Program, including negotiated rates paid by contracted entities, below the 9
hospital rates in effect on the date on the effective date of this 10
subchapter; or 11
(3)(A) Fund directed payments for state government -owned 12
hospitals. 13
(B) A state government -owned hospital may separately fund 14
directed payments through intergovernmental transfers. 15
(e) The Hospital Directed Payment Assessment Account shall be exempt 16
from budgetary cuts, reductions, or eliminations caused by a deficiency of 17
general revenues. 18
(f)(1) Except as necessary to reimburse any funds borrowed to 19
supplement funds in the Hospital Directed Payment Assessment Account, the 20
moneys in the Hospital Directed Payment Assessment Account shall be used only 21
to: 22
(A) Make inpatient and outpatient hospital directed 23
payments under § 20-77-2910; 24
(B) Reimburse moneys collected by the division from 25
hospitals through error or mistake or under this subchapter; 26
(C) Pay an annual fee to the division in the amount of 27
three and three-quarters percent (3.75%) of the assessments collected from 28
hospitals under § 20 -77-2904 each contract year; or 29
(D) Make hospital pass -through payments under § 20 -77-30
2911, in amounts deemed necessary by the division, to ensure Medicaid 31
payments to individual hospitals are not adversely impacted by transitioning 32
delivery of services from fee -for-service programs to managed care programs 33
on and after January 1, 2026. 34
(2)(A) The Hospital Directed Payment Assessment Account shall 35
retain account balances remaining at the end of each contract year. 36 HB1969
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(B) At the end of each contract year, any positive balance 1
remaining in the Hospital Directed Payment Assessment Account shall be 2
factored into the calculation of the new assessment rate by reducing the 3
amount of hospital directed payment assessment funds that must be generated 4
during the subsequent contract year. 5
(3) A hospital shall not be guaranteed that its inpatient and 6
outpatient hospital directed payment access payments will equal or exceed the 7
amount of its hospital directed payment assessment. 8
9
20-77-2907. Exemptions. 10
(a) The Division of Medical Services may establish hospital assessment 11
exemptions or varied assessment rates as needed to effectuate the purpose of 12
the hospital directed payment assessment as established in this subchapter. 13
(b) In addition to any exemptions established in accordance with 14
subsection (a) of this section, the division shall exempt from the hospital 15
directed payment assessment under § 20 -77-2904 any state government -owned 16
hospital. 17
18
20-77-2908. Quarterly notice and collection. 19
(a)(1) The annual hospital directed payment assessment imposed under § 20
20-77-2904 shall be due and payable on a quarterly basis. 21
(2) However, an installment payment of a hospital directed 22
payment assessment imposed by § 20 -77-2904 shall not be due and payable 23
until: 24
(A) The Division of Medical Services issues the written 25
notice required by § 20 -77-2909 stating that the payment methodologies to 26
hospitals required under § 20 -77-2910 have been approved by the Centers for 27
Medicare & Medicaid Services and the waiver under 42 C.F.R. § 433.68 for the 28
hospital directed payment assessment imposed by § 20 -77-2904, if necessary, 29
has been granted by the Centers for Medicare & Medicaid Services; 30
(B) The thirty-day verification period required by § 20 -31
77-2909(b) has expired; and 32
(C) The division has made all quarterly installments of 33
inpatient and outpatient hospital directed payment access payments to 34
contracted entities that were otherwise due under § 20 -77-2910 consistent 35
with the effective date of the approved directed payment preprint and waiver. 36 HB1969
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(3) After the initial installment has been paid under this 1
section, each subsequent quarterly installment payment of the hospital 2
directed payment assessment imposed by § 20 -77-2904 shall be due and payable 3
within ten (10) business days after the hospital has received its inpatient 4
and outpatient hospital directed payment access payments due under § 20 -77-5
2910 for the applicable quarter. 6
(b) The payment by the hospital of the hospital directed payment 7
assessment created in this subchapter shall be reported as an allowable cost 8
for Medicaid reimbursement purposes. 9
(c)(1) If a hospital fails to timely pay the full amount of a 10
quarterly hospital directed payment assessment, the division may add to the 11
assessment: 12
(A) A penalty assessment equal to five percent (5%) of the 13
quarterly amount not paid on or before the due date; and 14
(B) On the last day of each quarter after the due date 15
until the assessed amount and the penalty imposed under subsection (c)(1)(A) 16
of this section are paid in full, an additional five percent (5%) penalty 17
assessment on any unpaid quarterly and unpaid penalty assessment amounts. 18
(2) Payments shall be credited first to unpaid quarterly 19
amounts, rather than to penalty or interest amounts, beginning with the most 20
delinquent installment. 21
(3) If the division is unable to recoup from Medicaid payments 22
the full amount of any unpaid hospital directed payment assessment or penalty 23
assessment, or both, the division may file suit in a court of competent 24
jurisdiction to collect up to double the amount due, the division’s costs 25
related to the suit, and reasonable attorney’s fees. 26
27
20-77-2909. Notice of hospital directed payment assessment. 28
(a)(1) The Division of Medical Services shall send a notice of 29
hospital directed payment assessment to each hospital informing the hospital 30
of the hospital directed payment assessment rate, the hospital’s assessment 31
basis calculation, and the estimated hospital directed payment assessment 32
amount owed by the hospital for the applicable contract year. 33
(2) Except as set forth in subdivision (a)(3) of this section, 34
the annual notices of hospital directed payment assessment under subdivision 35
(a)(1) of this section shall be sent at least forty -five (45) days before the 36 HB1969
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due date for the first quarterly hospital directed payment assessment payment 1
of each contract year. 2
(3) The first notice of the hospital directed payment assessment 3
under subdivision (a)(1) of this section shall be sent within fifteen (15) 4
days after receipt by the division of notification from the Centers for 5
Medicare & Medicaid Services for the payments required under § 20 -77-2910 6
and, if necessary, the waiver granted under 42 C.F.R. § 433.68 have been 7
approved. 8
(b) The hospital shall have thirty (30) days from the date of its 9
receipt of a notice of the hospital directed payment assessment under 10
subdivision (a)(1) of this section to review and verify the hospital directed 11
payment assessment rate, the hospital’s assessment basis calculation, and the 12
hospital directed payment assessment amount. 13
(c)(1) If a hospital provider operates, conducts, or maintains more 14
than one (1) hospital in the state, the hospital provider shall pay the 15
hospital directed payment assessment rate for each hospital separately. 16
(2) However, if the hospital provider under subdivision (c)(1) 17
of this section operates more than one (1) hospital under one (1) Medicaid 18
provider number, the hospital provider may pay the hospital directed payment 19
assessment for the hospitals in the aggregate. 20
(d)(1) For a hospital subject to the hospital directed payment 21
assessment under § 20 -77-2904 that ceases to conduct hospital operations or 22
maintain its state license or did not conduct hospital operations throughout 23
a contract year, the hospital directed payment assessment for the contract 24
year in which the cessation occurs shall be adjudicated by multiplying the 25
annual hospital directed payment assessment computed under § 20 -77-2904 by a 26
fraction, the numerator of which is the number of days during the year that 27
the hospital operated and the denominator of which is three hundred sixty -28
five (365). 29
(2)(A) Immediately upon ceasing to operate, the hospital shall 30
pay the adjusted hospital directed payment assessment for that contract year 31
to the extent not previously paid. 32
(B) The hospital also shall receive payments under § 20 -33
77-2910 for the contract year in which the cessation occurs, which shall be 34
adjusted by the same fraction as its annual hospital directed payment 35
assessment. 36 HB1969
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(e) A hospital subject to a hospital directed payment assessment under 1
this subchapter that has not been previously licensed as a hospital in 2
Arkansas and that commences hospital operations during a contract year shall 3
pay the required hospital directed payment assessment computed under § 20 -77-4
2904 and shall be eligible for hospital directed payment access payments 5
under § 20-77-2910 on the date specified in rules promulgated by the division 6
under the Arkansas Administrative Procedure Act, § 25 -15-201 et seq. 7
(f) A hospital that is exempt from payment of the hospital directed 8
payment assessment under § 20 -77-2907 at the beginning of a contract year but 9
during the contract year experiences a change in status so that it becomes 10
subject to a hospital directed payment assessment shall pay the required 11
hospital directed payment assessment computed under § 20 -77-2904 and shall be 12
eligible for hospital directed payment access payments under § 20 -77-2910 on 13
the date specified in rules promulgated by the division. 14
(g) A hospital that is subject to payment of the hospital directed 15
payment assessment computed under § 20 -77-2904 at the beginning of a contract 16
year but during the contract year experiences a change in status so that it 17
becomes exempted from payment under § 20 -77-2907 shall be relieved of its 18
obligation to pay the hospital directed payment assessment and shall become 19
ineligible for hospital directed payment access payments under § 20 -77-2910 20
on the date specified in rules promulgated by the division. 21
22
20-77-2910. Hospital directed payment access payments. 23
(a) To preserve and improve access to quality hospital services, for 24
hospital inpatient and outpatient services rendered on or after January 1, 25
2026, the Division of Medical Services shall make hospital directed payment 26
access payments as set forth in this section. 27
(b) The division shall calculate the total hospital directed payment 28
access payment amount as the lesser of: 29
(1) The amount equal to the managed care gap for inpatient and 30
outpatient hospital services; or 31
(2) The amount that can be financed with a level of non -federal 32
funds generated through hospital directed payment assessments imposed under § 33
20-77-2904 that causes the combined assessment proceeds under § 20 -77-1902 34
and § 20-77-2904 to equal the indirect guarantee threshold set forth in 42 35
C.F.R. § 433.68(f)(3)(i), as existing on January 1, 2025. 36 HB1969
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(c)(1) All hospitals shall be eligible for inpatient and outpatient 1
hospital directed payment access payments through contracted entities each 2
contract year as set forth in this subsection other than state government -3
owned hospitals. 4
(2)(A) A portion of the hospital directed payment access payment 5
amount, not to exceed the managed care gap for inpatient services, shall be 6
designated as the inpatient hospital directed payment access payment pool. 7
(B) Inpatient hospital directed payment access payments 8
shall be paid as a uniform percentage rate increase or uniform add -on to base 9
Medicaid managed care reimbursement to eligible hospitals. 10
(3)(A) A portion of the hospital directed payment access payment 11
amount, not to exceed the managed care gap for outpatient hospital services, 12
shall be designated as the outpatient hospital directed payment access 13
payment pool. 14
(B) Outpatient hospital directed payment access payments 15
shall be paid as a uniform percentage rate increase or uniform add -on to base 16
Medicaid managed care reimbursement to eligible hospitals. 17
(4)(A) The hospital directed payment access payment shall be 18
administered through a separate payment term and lump -sum payments that are 19
paid no later than thirty (30) days after the end of each quarter for which 20
the lump-sum payment is attributable, provided that the Centers for Medicare 21
& Medicaid Services permit the use of this payment mechanism. 22
(B)(i) In the event that the Centers for Medicare & 23
Medicaid Services does not permit use of a separate payment term and lump -sum 24
payments under subdivision (c)(4)(A) of this section, the division shall 25
include directed payments in capitation rates and require contracted entities 26
to make add-on payments in hospital claims. 27
(ii) The division shall require contracted entities 28
to clearly delineate for hospitals the portion of reimbursement attributable 29
to directed payments from the portion of reimbursement paid at negotiated 30
rates. 31
(d) A hospital directed payment access payment shall not be used to 32
offset any other payment by contracted entities for hospital inpatient or 33
outpatient services to Medicaid managed care beneficiaries, including without 34
limitation any fee-for-service, per diem, private hospital inpatient 35
adjustment, Medicaid managed care, or cost -settlement payment. 36 HB1969
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1
20-77-2911. Managed Care Pass -Through Payment Pool Account. 2
(a) There is created within the Arkansas Medicaid Program Trust Fund a 3
designated account known as the "Managed Care Pass -Through Payment Pool 4
Account". 5
(b) Moneys in the Managed Care Pass -Through Payment Pool Account shall 6
consist of all moneys collected or received by the Division of Medical 7
Services under § 20-77-2906(f)(1)(D). 8
(c) The Managed Care Pass -Through Payment Pool Account shall be 9
separate and distinct from the General Revenue Fund Account of the State 10
Apportionment Fund and shall be supplementary to the Arkansas Medicaid 11
Program Trust Fund. 12
(d) Moneys in the Managed Care Pass -Through Payment Pool Account shall 13
not be used to: 14
(1) Replace any general revenues appropriated and funded by the 15
General Assembly or other revenues used to support Medicaid, including 16
appropriations for cost settlements and other payments that may be reduced or 17
eliminated as a result of any transition of populations or services to 18
managed care; 19
(2) Reduce provider payment rates under the Arkansas Medicaid 20
Program, including negotiated rates paid by contracted entities, below the 21
provider payment rates in effect on the effective date of this subchapter; or 22
(3)(A) Fund managed care pass -through payments for state 23
government-owned hospitals. 24
(B) A state government -owned hospital may separately fund 25
managed care pass-through payments through intergovernmental transfers. 26
(e) The Managed Care Pass -Through Payment Pool Account shall be exempt 27
from budgetary cuts, reductions, or eliminations caused by a deficiency of 28
general revenues or special revenues allocated for Medicaid. 29
(f)(1) Except as necessary to reimburse any funds borrowed to 30
supplement funds in the Hospital Directed Payment Assessment Account, the 31
moneys in the Managed Care Pass -Through Payment Pool Account shall be used 32
only to: 33
(A) Make pass-through payments to individual hospitals, as 34
deemed necessary by the Department of Human Services, to ensure payments to 35
individual hospitals are not adversely impacted by the transition of any 36 HB1969
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services from fee-for-service programs to managed care programs, on and after 1
January 1, 2026; or 2
(B) Reimburse moneys collected by the division from 3
hospitals through error or mistake under this subchapter. 4
(2) The Managed Care Pass -Through Payment Pool Account shall 5
retain all account balances at the end of each contract year. 6
7
20-77-2912. Managed Care Provider Incentive Pool Account. 8
(a) There is created within the Arkansas Medicaid Program Trust Fund a 9
designated account known as the "Managed Care Provider Incentive Pool 10
Account". 11
(b) Moneys in the Managed Care Provider Incentive Pool Account shall 12
consist of all moneys collected or received by the Division of Medical 13
Services from § 26-57-610(b)(6)(B)(i). 14
(c) The Managed Care Provider Incentive Pool Account shall be separate 15
and distinct from the General Revenue Fund Account of the State Apportionment 16
Fund and shall be supplementary to the Arkansas Medicaid Program Trust Fund. 17
(d) Moneys in the Managed Care Provider Incentive Pool Account shall 18
not be used to: 19
(1) Replace any general revenues appropriated and funded by the 20
General Assembly or other revenues used to support Medicaid, including 21
appropriations for cost settlements and other payments that may be reduced or 22
eliminated as a result of any transition of populations or services to 23
managed care; 24
(2) Reduce provider payment rates under the Arkansas Medicaid 25
Program, including negotiated rates paid by contracted entities, below the 26
provider payment rates in effect on the effective date of this subchapter; or 27
(3)(A) Fund managed care provider incentive pool payments for 28
state government-owned hospitals. 29
(B) A state government -owned hospital may separately fund 30
managed care provider incentive pool payments through intergovernmental 31
transfers. 32
(e) The Managed Care Provider Incentive Pool Account shall be exempt 33
from budgetary cuts, reductions, or eliminations caused by a deficiency of 34
general revenues. 35
(f)(1) Except as necessary to reimburse any funds borrowed to 36 HB1969
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supplement funds in the Hospital Directed Payment Assessment Account, the 1
moneys in the Managed Care Provider Incentive Pool Account shall be used only 2
to: 3
(A) Make incentive payments to Medicaid providers to 4
improve access and quality of care under § 20 -77-2914; or 5
(B) Reimburse moneys collected by the division from 6
hospitals through error or mistake or under this subchapter. 7
(2) The Managed Care Provider Incentive Pool Account shall 8
retain account balances remaining at the end of each contract year. 9
10
20-77-2913. Medicaid Sustainability Advisory Committee — Medicaid 11
Quality Advisory Committee. 12
(a) To ensure providers have a voice in the direction and operation of 13
the Medicaid programs contemplated by this subchapter, the Division of 14
Medical Services shall establish a Medicaid Sustainability Advisory Committee 15
and the Medicaid Quality Advisory Committee. 16
(b)(1) The Medicaid Sustainability Advisory Committee shall be 17
comprised of: 18
(A) Two (2) members appointed by the division; 19
(B) Four (4) members appointed by hospitals and integrated 20
health systems; 21
(C) One (1) member appointed by the University of Arkansas 22
for Medical Sciences; 23
(D) One (1) member appointed by the Arkansas Hospital 24
Association, Inc.; and 25
(E) Two (2) other representatives of the healthcare 26
provider community. 27
(2) The Medicaid Sustainability Advisory Committee shall make 28
recommendations to the division and the General Assembly regarding any 29
proposed legislative, programmatic, regulatory, or policy change that impacts 30
hospitals’ participation in directed payments, pass -through payments, 31
hospital assessments, graduate medical education, provider incentives, and 32
managed care programs. 33
(c)(1) The Medicaid Quality Advisory Committee shall be comprised of: 34
(A) Two (2) members appointed by the division; 35
(B) Four (4) members appointed by hospitals and integrated 36 HB1969
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health systems; 1
(C) One (1) member appointed by University of Arkansas for 2
Medical Sciences; and 3
(D) Two (2) other representatives of the healthcare 4
provider community. 5
(2) The Medicaid Quality Advisory Committee shall review quality 6
improvement needs and recommend initiatives supported by the Managed Care 7
Provider Incentive Program. 8
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20-77-2914. Managed Care Provider Incentive Program. 10
(a)(1) The Division of Medical Services shall promulgate rules to 11
create and implement the "Managed Care Provider Incentive Program" to support 12
healthcare quality assurance and access improvement initiatives. 13
(2) For state fiscal years ending on or before June 30, 2030, 14
the Managed Care Provider Incentive Program shall be dedicated to initiatives 15
that support improved access to maternal health and primary care providers. 16
(3) For state fiscal years starting on or after July 1, 2030, 17
the Managed Care Provider Incentive Program shall be dedicated to other 18
initiatives approved by a majority vote of the Medicaid Sustainability 19
Advisory Committee. 20
(b) For state fiscal years starting on or after July 1, 2030, all 21
initiatives supported by the Managed Care Provider Incentive Program shall be 22
approved by a majority vote of the members of the Medicaid Quality Advisory 23
Committee. 24
25
20-77-2915. Processing directed payments through contracted entities. 26
The Division of Medical Services may process directed payments through 27
contracted entities only if: 28
(1) The division provides each contracted entity with a detailed 29
list of hospital directed payment access payments, specifying the amounts to 30
be paid to each eligible hospital as required by this subchapter; 31
(2) Each contracted entity disburses the hospital directed 32
payment access payments to eligible hospitals within five (5) business days 33
of receiving a supplemental capitation payment; 34
(3) Contracted entities are prohibited from withholding or 35
delaying the payment of a hospital directed payment access payment for any 36 HB1969
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reason; and 1
(4) The division exercises administrative discretion to ensure 2
that each eligible hospital receives the full payment of all hospital 3
directed payment access payments, utilizing appropriate payment mechanisms as 4
necessary. 5
6
20-77-2916. Effectiveness and cessation. 7
(a) The hospital directed payment assessment imposed under § 20 -77-8
2904 shall cease to be imposed, the Medicaid hospital directed payment access 9
payments made under § 20 -77-2910 shall cease to be paid, and any moneys 10
remaining in the Hospital Directed Payment Assessment Account and the Managed 11
Care Provider Incentive Pool Account that were derived from the hospital 12
directed payment assessment imposed under § 20 -77-2904 shall be refunded to 13
hospitals in proportion to the amounts paid by the hospitals if the inpatient 14
or outpatient hospital directed payment access payments required under § 20 -15
77-2910 are not approved or the hospital directed payments assessments 16
imposed under § 20-77-2904 are not eligible for federal matching funds under 17
Title XIX of the Social Security Act, 42 U.S.C. § 1396 et seq., or Title XXI 18
of the Social Security Act, 42 U.S.C. § 1397aa et seq. 19
(b)(1) The hospital directed payment assessment imposed under § 20 -77-20
2904 shall cease to be imposed and the hospital directed payment access 21
payments under § 20-77-2910 shall cease to be paid if the assessment is 22
determined to be impermissible under Title XIX of the Social Security Act, 42 23
U.S.C. § 1396 et seq. 24
(2) Moneys in the Hospital Directed Payment Assessment Account 25
in the Arkansas Medicaid Program Trust Fund derived from assessments imposed 26
before the determination described in subdivision (b)(1) of this section 27
shall be disbursed under § 20 -77-2910 to the extent federal matching is not 28
reduced due to the impermissibility of the assessments, and any remaining 29
moneys shall be refunded to hospitals in proportion to the amounts paid by 30
the hospitals. 31
32
20-77-2917. Directed payment preprint. 33
(a)(1) The Division of Medical Services shall seek approval of the 34
hospital directed payment access payments under § 20 -77-2910 from the Centers 35
for Medicare & Medicaid Services for each contract year by submitting a 36 HB1969
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directed payment preprint and any information required under 42 C.F.R.§ 1
438.6(c) to the Centers for Medicare & Medicaid Services at least ninety (90) 2
days before the start of each contract year. 3
(2) The division shall prepare the annual 42 C.F.R. § 438.6(c) 4
directed payment preprint or amendment in collaboration with the Arkansas 5
Hospital Association, Inc. 6
(3) To the extent the directed payment preprint or amendment 7
that the division plans to submit to the Centers for Medicare & Medicaid 8
Services for approval would result in a reduction to the payment rate to 9
eligible hospitals as compared to the federally approved rates for the prior 10
year or directed payment preprint submission, the division shall provide the 11
Medicaid Sustainability Advisory Committee at least thirty (30) days to 12
review and propose an alternative methodology. 13
(4) The division shall use the methodology proposed by the 14
Medicaid Sustainability Advisory Committee for the directed payment preprint 15
submission unless the division obtains written confirmation from the Centers 16
for Medicare & Medicaid Services that the proposed alternative methodology 17
cannot be approved as proposed and that no modifications are possible to 18
obtain approval for the alternative methodology. 19
(5) The division shall make the written confirmation available 20
to the Medicaid Sustainability Advisory Committee. 21
(b)(1) The directed payment preprint shall not condition hospital 22
eligibility for directed payments upon hospital compliance with initiatives 23
and policies that are not related to quality measures identified in the 24
Medicaid managed care quality strategy or otherwise require hospitals to 25
spend a portion of their directed payment or other revenues as prescribed by 26
the division to remain eligible for directed payments. 27
(2) All inpatient and outpatient hospital services paid by 28
contracted entities for services shall be eligible for the directed payment, 29
regardless of whether the hospital is in -network with the contracted entity. 30
(c) If the directed payment preprint is not approved by the Centers 31
for Medicare & Medicaid Services, the division shall: 32
(1) Not implement the hospital directed payment assessment 33
imposed under § 20-77-2904; and 34
(2) Return any hospital directed payment assessment fees to the 35
hospitals that paid the fees if hospital directed payment assessment fees 36 HB1969
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have been collected. 1
2
20-77-2918. Continuation of hospital access payments. 3
The Department of Human Services shall continue to pay the maximum 4
upper payment limit hospital access payments for inpatient and outpatient 5
hospital services delivered to fee -for-service Medicaid populations to the 6
full extent authorized under § 20 -77-1901 et seq., until Medicaid populations 7
or program services are transferred from a fee -for-service to a managed care 8
delivery model. 9
10
SECTION 5. Arkansas Code § 26 -57-610(b), concerning the disposition of 11
insurance premium taxes, is amended to add an additional subdivision to read 12
as follows: 13
(6) The taxes based on premiums collected under the Arkansas 14
Medicaid Program, other than the premiums collected for coverage under 15
subdivisions (b)(2) and (b)(5) of this section at the levels of coverage that 16
existed as of January 1, 2025, shall be: 17
(A) At the time of deposit, separately certified by the 18
commissioner to the Treasurer of State for classification and distribution 19
under this section; and 20
(B) Transferred in amounts equal to: 21
(i) Fifty percent (50%) of the taxes for deposit 22
into the Managed Care Provider Incentive Pool Account under § 20 -77-2912; 23
(ii) Ten percent (10%) of the taxes for deposit into 24
the Graduate Medical Education Expansion Account set forth in § 20 -77-154; 25
and 26
(iii) Forty percent (40%) of the taxes for deposit 27
into the General Revenue Fund Account to be used in a manner authorized by 28
the General Assembly for the purposes set forth in the Revenue Stabilization 29
Law, § 19-5-101 et seq. 30
31
SECTION 6. DO NOT CODIFY. Contingent effective date. 32
Sections 1, 4, and 5 of this act are effective on and after the date 33
that the Secretary of the Department of Human Services: 34
(1) Determines that the: 35
(1) Fee-for-service Medicaid populations are added as a 36 HB1969
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covered populations to be served by a risk -based provider organization under 1
the Medicaid Provider -Led Organized Care Act, § 20 -77-2701 et seq.; 2
(2) Fee-for-service Medicaid populations are transitioned 3
to a Medicaid managed care program approved by the Centers for Medicare & 4
Medicaid Services; 5
(3) Individuals in the eligibility category created by 6
section 1902(a)(10)(A)(i)(VIII) of the Social Security Act, 42 U.S.C. § 7
1396a, as existing on January 1, 2025, are transitioned to a Medicaid managed 8
care program approved by the Centers for Medicare & Medicaid Services; or 9
(4) Individuals in the eligibility category created by 10
section 1902(a)(10)(A)(i)(VIII) of the Social Security Act, 42 U.S.C. § 11
1396a, as existing on January 1, 2025, are transitioned to a risk -based 12
provider organization under the Medicaid Provider -Led Organized Care Act, § 13
20-77-2701 et seq.; and 14
(2) Notifies the Legislative Council and the Director of the 15
Bureau of Legislative Research that one (1) of the contingencies listed in 16
subdivision (1) of this section has occurred. 17
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