HLS 18RS-429 ORIGINAL
2018 Regular Session
HOUSE BILL NO. 350
BY REPRESENTATIVE JAY MORRIS
MEDICAID: Provides for a Medicaid hospital payment methodology
1 AN ACT
2To enact Subpart E of Part I of Chapter 5-E of Title 40 of the Louisiana Revised Statutes of
3 1950, to be comprised of R.S. 40:1248.1 through 1248.5, relative to the Medicaid
4 hospital program; to provide for duties of the Louisiana Department of Health in
5 administering such program; to provide relative to the system of Medicaid payments
6 to hospitals; to require implementation of a specific hospital payment methodology;
7 to require the Louisiana Department of Health to submit reports concerning the
8 payment methodology to the legislative auditor and certain legislative committees;
9 to provide for administrative rulemaking; and to provide for related matters.
10Be it enacted by the Legislature of Louisiana:
11 Section 1. Subpart E of Part I of Chapter 5-E of Title 40 of the Louisiana Revised
12Statutes of 1950, comprised of R.S. 40:1248.1 through 1248.5, is hereby enacted to read as
13follows:
14 SUBPART E. MEDICAID HOSPITAL PROGRAM - REIMBURSEMENT
15 METHODOLOGY
16 §1248.1. Definitions
17 As used in this Subpart, the following terms have the meaning ascribed in this
18 Section:
19 (1) "Department" means the Louisiana Department of Health.
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1 (2) "Diagnosis-related groups" refers to a classification system that groups
2 patients according to diagnosis, type of treatment, age, and other relevant criteria.
3 (3) "Supplemental payments" means payments made through the Medicaid
4 disproportionate share hospital program, upper payment limit programs, full
5 Medicaid pricing programs, and any Medicaid hospital payments other than base-rate
6 payments which are expended pursuant to special arrangements with individual
7 hospitals or groups of hospitals.
8 §1248.2. Medicaid hospital program; system of hospital reimbursement
9 A. The secretary of the department shall ensure that the hospital
10 reimbursement system of the Medicaid program of this state adheres to all of the
11 following principles:
12 (1) Hospital payments are made according to a "money follows the person"
13 model which minimizes or eliminates disparities in reimbursement to different
14 hospitals for the same service provided to the same Medicaid patient.
15 (2) Hospital payments are value-based and tied to clinical outcomes.
16 (3) Medicaid reimbursement adequately funds the cost of care that a hospital
17 provides to a Medicaid patient.
18 (4) Medicaid payments are equitable across the various hospitals of this
19 state.
20 (5) The reimbursement system promotes access to care for Medicaid
21 beneficiaries.
22 B. To the maximum extent practicable, the Medicaid hospital reimbursement
23 system shall rely upon base-rate payments in order to minimize the exposure of this
24 state to risks associated with utilization of supplemental payments.
25 §1248.3. Hospital payment methodology based on diagnosis-related groups;
26 implementation
27 A. The legislature hereby finds and declares all of the following with respect
28 to hospital payment methodologies that utilize diagnosis-related groups:
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1 (1) Payment by diagnosis-related groups encourages access to care, rewards
2 efficiency, improves transparency, and improves fairness by paying similarly across
3 hospitals for similar care.
4 (2) Payment by diagnosis-related groups simplifies the payment process,
5 encourages administrative efficiency, and bases payments on patient acuity and
6 hospital resources rather than length of stay.
7 (3) With a payment methodology based upon diagnosis-related groups,
8 payment follows the patient regardless of the individual hospital at which the patient
9 is treated.
10 B.(1) The secretary of the department shall design and implement a payment
11 methodology for hospital inpatient services provided to Medicaid beneficiaries based
12 upon diagnosis-related groups in accordance with the provisions of this Subsection.
13 (2) The payment methodology based upon diagnosis-related groups shall
14 account, at minimum, for all of the following:
15 (a) Hospital peer groups.
16 (b) Hospitals with high Medicaid volume.
17 (c) Capital costs.
18 (d) Applicable provisions of the Rural Hospital Preservation Act, R.S.
19 40:1189.1 et seq.
20 (e) Psychiatric hospitals.
21 (f) Rehabilitation hospitals.
22 (g) Outlier payments.
23 (h) Patient transfers.
24 §1248.4. Reports; submission to legislative auditor and legislative committees
25 A. On a semiannual basis, the department shall submit a report to the
26 legislative auditor concerning the implementation of the hospital payment
27 methodology provided for in this Subpart. The report shall feature data on the fiscal
28 impact of the implementation of the payment methodology, and may feature
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1 recommendations for legislation and other policy changes which would facilitate
2 greater transparency in the state's overall system of Medicaid payments to hospitals.
3 B. The department shall submit each report prepared in accordance with
4 Subsection A of this Section to the House Committee on Appropriations, the Senate
5 Committee on Finance, and the House and Senate committees on health and welfare
6 no fewer than thirty days after transmitting the report to the legislative auditor.
7 §1248.5. Rulemaking
8 The secretary of the department shall promulgate in rule, in accordance with
9 the Administrative Procedure Act, the hospital payment methodology provided for
10 in this Subpart and all other rules and regulations as are necessary to implement the
11 provisions of this Subpart.
12 Section 2. The secretary of the Louisiana Department of Health shall take such
13actions as are necessary to cause the payment methodology for hospital inpatient services
14provided to Medicaid beneficiaries required by R.S. 40:1248.3, as enacted by Section 1 of
15this Act, to be implemented on or before September 1, 2018.
16 Section 3. The secretary of the Louisiana Department of Health shall submit to the
17legislative auditor the first semiannual report required by the provisions of R.S.
1840:1248.4(A), as enacted by Section 1 of this Act, on or before December 31, 2018.
DIGEST
The digest printed below was prepared by House Legislative Services. It constitutes no part
of the legislative instrument. The keyword, one-liner, abstract, and digest do not constitute
part of the law or proof or indicia of legislative intent. [R.S. 1:13(B) and 24:177(E)]
HB 350 Original 2018 Regular Session Jay Morris
Abstract: Provides for implementation of a specific hospital payment methodology in the
Medicaid hospital program.
Proposed law requires the secretary of the La. Department of Health (LDH) to ensure that
the hospital reimbursement system of the Medicaid program of this state adheres to all of the
following principles:
(1)Hospital payments are made according to a "money follows the person" model which
minimizes or eliminates disparities in reimbursement to different hospitals for the
same service provided to the same Medicaid patient.
(2)Hospital payments are value-based and tied to clinical outcomes.
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(3)Medicaid reimbursement adequately funds the cost of care that a hospital provides
to a Medicaid patient.
(4)Medicaid payments are equitable across the various hospitals of this state.
(5)The reimbursement system promotes access to care for Medicaid beneficiaries.
Proposed law requires the Medicaid hospital reimbursement system, to the maximum extent
practicable, to rely upon base-rate payments in order to minimize the exposure of this state
to risks associated with utilization of supplemental payments.
Proposed law requires that on or before Sept. 1, 2018, the secretary of LDH shall design and
implement a payment methodology for hospital inpatient services provided to Medicaid
beneficiaries based upon diagnosis-related groups in accordance with the provisions of
proposed law this Subsection. Provides that the payment methodology shall account, at
minimum, for all of the following:
(1)Hospital peer groups.
(2)Hospitals with high Medicaid volume.
(3)Capital costs.
(4)Applicable provisions of present law known as the Rural Hospital Preservation Act.
(5)Psychiatric hospitals.
(6)Rehabilitation hospitals.
(7)Outlier payments.
(8)Patient transfers.
Proposed law requires that on or before December 31, 2018, and on a semiannual basis
thereafter, LDH shall submit a report to the legislative auditor concerning the
implementation of the hospital payment methodology provided for in proposed law and
provides for the content of the report. Requires that LDH submit each such report to the
House Committee on Appropriations, the Senate Committee on Finance, and the House and
Senate committees on health and welfare no fewer than 30 days after transmitting the report
to the legislative auditor.
Proposed law requires that LDH promulgate in rule the hospital payment methodology
provided for in proposed law.
(Adds R.S. 40:1248.1-1248.5)
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