GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2025
H 1
HOUSE BILL 242
Short Title: Add Psychiatric Hospitals to Medicaid HASP. (Public)
Sponsors: Representatives Lambeth, Potts, White, and Reeder (Primary Sponsors).
For a complete list of sponsors, refer to the North Carolina General Assembly web site.
Referred to: Health, if favorable, Finance, if favorable, Rules, Calendar, and Operations of the
House
March 3, 2025
*H242 -v-1*
A BILL TO BE ENTITLED 1
AN ACT TO INCLUDE FREESTANDING PSYCHIATR IC HOSPITALS AS HOSPITALS 2
THAT ARE ELIGIBLE TO RECEIVE PAYMENTS UN DER THE MEDICAID 3
HEALTHCARE ACCESS AN D STABILIZATION PROG RAM AND TO PROVIDE 4
FUNDING FOR THOSE PA YMENTS THROUGH INCRE ASED HOSPITAL 5
ASSESSMENTS. 6
The General Assembly of North Carolina enacts: 7
SECTION 1.(a) G.S. 108A-148.1(a) reads as rewritten: 8
"(a) The healthcare access and stabilization program is a directed payment program that 9
provides acute care hospitals with increased reimbursements funded through hospital 10
assessments in accordance with this section. Upon the approval of CMS, the healthcare access 11
and stabilization program directed payment program shall additionally provide qualifying 12
freestanding psychiatric hospitals with increased reimbursements funded through hospital 13
assessments. A qualifying freestanding psychiatric hospital is a freestanding psychiatric hospital 14
as defined in G.S. 108A-145.3 that is Medicare-certified and submits Hospital Cost Report 15
Information System cost report data to CMS." 16
SECTION 1.(b) The Department of Health and Human Services shall submit a 42 17
C.F.R. § 438.6(c) preprint requesting approval to include freestanding psychiatric hospitals in 18
the healthcare access and stabilization program (HASP) authorized under G.S. 108A-148.1, as 19
amended by subsection (a) of this section. 20
SECTION 1.(c) This section is effective when it becomes law. 21
SECTION 2.(a) G.S. 108A-145.3 reads as rewritten: 22
"§ 108A-145.3. Definitions. 23
The following definitions apply in this Article: 24
… 25
(6c) Freestanding psychiatric hospital. – A hospital facility that is (i) licensed 26
under Article 2 of Chapter 122C of the General Statutes, (ii) primarily engaged 27
in providing to inpatients, by or under the supervision of a physician, 28
psychiatric services for the diagnosis and treatment of individuals with mental 29
illnesses, and (iii) not State-owned and State-operated. 30
(6d) HASP directed payments. – Payments made by the Department to prepaid 31
health plans to be used for (i) increased reimbursements to hospitals under the 32
HASP program and (ii) the costs to prepaid health plans from the gross 33 General Assembly Of North Carolina Session 2025
Page 2 House Bill 242-First Edition
premiums tax under G.S. 105-228.5 and the insurance regulatory charge under 1
G.S. 58-6-25 associated with those hospital reimbursements. 2
(6d)(6e) Healthcare access and stabilization program (HASP). – The directed 3
payment program providing increased reimbursements to acute care hospitals 4
and freestanding psychiatric hospitals as approved by CMS and authorized by 5
G.S. 108A-148.1. 6
…." 7
SECTION 2.(b) G.S. 108A-146.1 reads as rewritten: 8
"§ 108A-146.1. Public hospital modernized assessment. 9
(a) The public hospital modernized assessment imposed under this Part shall apply to all 10
public acute care hospitals. 11
(b) The public hospital modernized assessment shall be assessed as a percentage of each 12
public acute care hospital's hospital costs. The assessment percentage shall be calculated 13
quarterly by the Department of Health and Human Services in accordance with this Part. The 14
percentage for each quarter shall equal the aggregate acute care hospital modernized assessment 15
collection amount under G.S. 108A-146.5 multiplied by the public hospital historical assessment 16
share and divided by the total hospital costs for all public acute care hospitals holding a license 17
on the first day of the assessment quarter." 18
SECTION 2.(c) G.S. 108A-146.3 reads as rewritten: 19
"§ 108A-146.3. Private hospital modernized assessment. 20
(a) The private hospital modernized assessment imposed under this Part shall apply to all 21
private acute care hospitals. 22
(b) The private hospital modernized assessment shall be assessed as a percentage of each 23
private acute care hospital's hospital costs. The assessment percentage shall be calculated 24
quarterly by the Department of Health and Human Services in accordance with this Part. The 25
percentage for each quarter shall equal the aggregate acute care hospital modernized assessment 26
collection amount under G.S. 108A-146.5 multiplied by the private hospital historical assessment 27
share and divided by the total hospital costs for all private acute care hospitals holding a license 28
on the first day of the assessment quarter." 29
SECTION 2.(d) Part 2 of Article 7B of Chapter 108A of the General Statutes is 30
amended by adding a new section to read: 31
"§ 108A-146.4. Freestanding psychiatric hospital modernized assessment. 32
(a) The freestanding psychiatric hospital modernized assessment imposed under this Part 33
shall apply to all freestanding psychiatric hospitals. 34
(b) The freestanding psychiatric hospital modernized assessment shall be assessed as a 35
percentage of each freestanding psychiatric hospital's hospital costs. The assessment percentage 36
shall be calculated quarterly by the Department of Health and Human Services in accordance 37
with this Part. The percentage for each quarter shall equal the modernized freestanding 38
psychiatric hospital HASP component under G.S. 108A-146.10A divided by the total hospital 39
costs for all freestanding psychiatric hospitals holding a license on the first day of the assessment 40
quarter." 41
SECTION 2.(e) G.S. 108A-146.5 reads as rewritten: 42
"§ 108A-146.5. Aggregate acute care hospital modernized assessment collection amount. 43
(a) The aggregate modernized assessment collection amount is an amount of money that 44
is calculated by subtracting the modernized intergovernmental transfer adjustment component 45
under G.S. 108A-146.13 from the total modernized nonfederal receipts under subsection (b) of 46
this section and then adding the positive or negative amount of the modernized IGT actual 47
receipts adjustment component under G.S. 108A-146.14. 48
(b) The total modernized nonfederal receipts is the sum of all of the following: 49
(1) One-fourth of the State's annual Medicaid payment. 50
(2) The managed care component under G.S. 108A-146.7. 51 General Assembly Of North Carolina Session 2025
House Bill 242-First Edition Page 3
(3) The fee-for-service component under G.S. 108A-146.9. 1
(3a) The modernized acute care hospital HASP component under 2
G.S. 108A-146.10. 3
(3b) The modernized freestanding psychiatric hospital HASP component under 4
G.S. 108A-146.10A. 5
(4) The GME component under G.S. 108A-146.11. 6
(5) Beginning April 1, 2022, and ending March 31, 2027, the postpartum 7
coverage component under G.S. 108A-146.12. 8
(6) Beginning April 1, 2024, the home and community-based services component 9
under G.S. 108A-146.12A. 10
(c) The aggregate acute care hospital modernized assessment collection amount is an 11
amount of money equal to the aggregate modernized assessment collection amount under 12
subsection (a) of this section minus the modernized freestanding psychiatric hospital HASP 13
component under G.S. 108A-146.10A." 14
SECTION 2.(f) G.S. 108A-146.10 reads as rewritten: 15
"§ 108A-146.10. Modernized acute care hospital HASP component. 16
The modernized acute care hospital HASP component is an amount of money that is 17
calculated each quarter by multiplying the aggregate amount of HASP directed payments due to 18
PHPs in the current quarter for hospital reimbursements to acute care hospitals that are not 19
attributable to newly eligible individuals by the nonfederal share for not newly eligible 20
individuals." 21
SECTION 2.(g) Part 2 of Article 7B of Chapter 108A of the General Statutes is 22
amended by adding a new section to read: 23
"§ 108A-146.10A. Modernized freestanding psychiatric hospital HASP component. 24
The modernized freestanding psychiatric hospital HASP component is an amount of money 25
that is calculated each quarter by multiplying the aggregate amount of HASP directed payments 26
due to PHPs in the current quarter for reimbursements to freestanding psychiatric hospitals that 27
are not attributable to newly eligible individuals by the nonfederal share for not newly eligible 28
individuals." 29
SECTION 2.(h) G.S. 108A-146.13 reads as rewritten: 30
"§ 108A-146.13. Modernized presumptive IGT adjustment component. 31
… 32
(c) The modernized presumptive IGT adjustment component is an amount of money 33
equal to the sum of all of the following subcomponents: 34
(1) The public hospital IGT subcomponent is the total of the following amounts: 35
a. Sixteen and forty-three hundredths percent (16.43%) of the amount of 36
money that is equal to the total modernized nonfederal receipts under 37
G.S. 108A-146.5(b) for the current quarter minus the modernized 38
acute care hospital HASP component under G.S. 108A-146.10 for the 39
current quarter and minus the modernized freestanding psychiatric 40
hospital HASP component under G.S. 108A-146.10A for the current 41
quarter. 42
b. Sixty percent (60%) of the nonfederal share for not newly eligible 43
individuals of the aggregate amount of HASP directed payments due 44
to PHPs in the current quarter for reimbursements to public acute care 45
hospitals and that are not attributable to newly eligible individuals. 46
(2) The UNC Health Care System IGT subcomponent is the total of the following 47
amounts: 48
a. Four and sixty-two hundredths percent (4.62%) of the difference of 49
amount of money that is equal to the total modernized nonfederal 50
receipts under G.S. 108A-146.5(b) for the current quarter minus the 51 General Assembly Of North Carolina Session 2025
Page 4 House Bill 242-First Edition
modernized acute care hospital HASP component under 1
G.S. 108A-146.10 for the current quarter and minus the modernized 2
freestanding psychiatric hospital HASP component under 3
G.S. 108A-146.10A for the current quarter. 4
b. The nonfederal share for not newly eligible individuals of the 5
aggregate amount of HASP directed payments due to PHPs in the 6
current quarter for reimbursements to UNC Health Care System 7
hospitals that are not attributable to newly eligible individuals. 8
(3) The East Carolina University IGT subcomponent is the total of the following 9
amounts: 10
a. One and four hundredths percent (1.04%) of the difference of amount 11
of money that is equal to the total modernized nonfederal receipts 12
under G.S. 108A-146.5(b) for the current quarter minus the 13
modernized acute care hospital HASP component under 14
G.S. 108A-146.10 for the current quarter and minus the modernized 15
freestanding psychiatric hospital HASP component under 16
G.S. 108A-146.10A for the current quarter. 17
b. The nonfederal share for not newly eligible individuals of the 18
aggregate amount of HASP directed payments due to PHPs in the 19
current quarter for reimbursements to the primary affiliated teaching 20
hospital for the East Carolina University Brody School of Medicine 21
that are not attributable to newly eligible individuals." 22
SECTION 3.(a) G.S. 108A-147.1 reads as rewritten: 23
"§ 108A-147.1. Public hospital health advancement assessment. 24
(a) The public hospital health advancement assessment imposed under this Part shall 25
apply to all public acute care hospitals. 26
(b) The public hospital health advancement assessment shall be assessed as a percentage 27
of each public acute care hospital's hospital costs. The assessment percentage shall be calculated 28
quarterly by the Department in accordance with this Part. The percentage for each quarter shall 29
equal the aggregate acute care hospital health advancement assessment collection amount 30
calculated under G.S. 108A-147.3 multiplied by the public hospital historical assessment share 31
and divided by the total hospital costs for all public acute care hospitals holding a license on the 32
first day of the assessment quarter." 33
SECTION 3.(b) G.S. 108A-147.2 reads as rewritten: 34
"§ 108A-147.2. Private hospital health advancement assessment. 35
(a) The private hospital health advancement assessment imposed under this Part shall 36
apply to all private acute care hospitals. 37
(b) The private hospital health advancement assessment shall be assessed as a percentage 38
of each private acute care hospital's hospital costs. The assessment percentage shall be calculated 39
quarterly by the Department in accordance with this Part. The percentage for each quarter shall 40
equal the aggregate acute care hospital health advancement assessment collection amount 41
calculated under G.S. 108A-147.3 multiplied by the private hospital historical assessment share 42
and divided by the total hospital costs for all private acute care hospitals holding a license on the 43
first day of the assessment quarter." 44
SECTION 3.(c) Part 3 of Article 7B of Chapter 108A of the General Statutes is 45
amended by adding a new section to read: 46
"§ 108A-147.2A. Freestanding psychiatric hospital health advancement assessment. 47
(a) The freestanding psychiatric hospital health advancement assessment imposed under 48
this Part shall apply to all freestanding psychiatric hospitals. 49
(b) The freestanding psychiatric hospital health advancement assessment shall be 50
assessed as a percentage of each freestanding psychiatric hospital's hospital costs. The assessment 51 General Assembly Of North Carolina Session 2025
House Bill 242-First Edition Page 5
percentage shall be calculated quarterly by the Department in accordance with this Part. The 1
percentage for each quarter shall equal the health advancement freestanding psychiatric hospital 2
HASP component calculated under G.S. 108A-147.6A divided by the total hospital costs for all 3
freestanding psychiatric hospitals holding a license on the first day of the assessment quarter." 4
SECTION 3.(d) G.S. 108A-147.3 reads as rewritten: 5
"§ 108A-147.3. Aggregate acute care hospital health advancement assessment collection 6
amount. 7
(a) The aggregate health advancement assessment collection amount is an amount of 8
money that is calculated quarterly by adjusting the total nonfederal receipts for health 9
advancement calculated under subsection (b) of this section by (i) subtracting the health 10
advancement presumptive IGT adjustment component calculated under G.S. 108A-147.9, (ii) 11
adding the positive or negative health advancement IGT actual receipts adjustment component 12
calculated under G.S. 108A-147.10, and (iii) subtracting the positive or negative IGT share of 13
the reconciliation adjustment component calculated under G.S. 108A-147.11(b). 14
(b) The total nonfederal receipts for health advancement is an amount of money that is 15
calculated quarterly by adding all of the following: 16
(1) The presumptive service cost component calculated under G.S. 108A-147.5. 17
(2) The HASP health advancement acute care hospital HASP component 18
calculated under G.S. 108A-147.6. 19
(2a) The health advancement freestanding psychiatric hospital HASP component 20
calculated under G.S. 108A-147.6A. 21
(3) The administration component calculated under G.S. 108A-147.7. 22
(4) The State retention component under G.S. 108A-147.9. 23
(5) The positive or negative health advancement reconciliation adjustment 24
component calculated under G.S. 108A-147.11(a). 25
(c) The aggregate acute care hospital health advancement assessment collection amount 26
is an amount of money equal to the aggregate health advancement assessment collection amount 27
under subsection (a) of this section minus the health advancement freestanding psychiatric 28
hospital HASP component under G.S. 108A-147.6A." 29
SECTION 3.(e) G.S. 108A-147.5 reads as rewritten: 30
"§ 108A-147.5. Presumptive service cost component. 31
(a) For every State fiscal quarter prior to the fiscal quarter in which G.S. 108A-54.3A(24) 32
becomes effective, the presumptive service cost component is zero. 33
(b) For the State fiscal quarter in which G.S. 108A-54.3A(24) becomes effective, the 34
presumptive service cost component is the product of forty-eight million seven hundred fifty 35
thousand dollars ($48,750,000) multiplied by the number of months in that State fiscal quarter in 36
which G.S. 108A-54.3A(24) is effective during any part of the month. 37
(c) For the first State fiscal quarter after the State fiscal quarter in which 38
G.S. 108A-54.3A(24) becomes effective, the presumptive service cost component is one hundred 39
forty-six million two hundred fifty thousand dollars ($146,250,000). 40
(d) For the second State fiscal quarter after the State fiscal quarter in which 41
G.S. 108A-54.3A(24) becomes effective, and for each State fiscal quarter thereafter, the 42
presumptive service cost component is an amount of money that is the greatest of the following: 43
(1) The prior quarter's presumptive service cost component amount. 44
(2) The prior quarter's presumptive service cost component amount increased by 45
a percentage that is the sum of each monthly percentage change in the 46
Consumer Price Index: Medical Care for the most recent three months 47
available on the first day of the current quarter. 48
(3) The prior quarter's presumptive service cost component amount increased by 49
the percentage change in the weighted average of the base capitation rates for 50
standard benefit plans for all rating groups associated with newly eligible 51 General Assembly Of North Carolina Session 2025
Page 6 House Bill 242-First Edition
individuals compared to the prior quarter. The weight for each rating group 1
shall be calculated using member months documented in the Medicaid 2
managed care capitation rate certification for standard benefit plans. 3
(4) The prior quarter's presumptive service cost component amount increased by 4
the percentage change in the weighted average of the base capitation rates for 5
BH IDD tailored plans for all rating groups associated with newly eligible 6
individuals compared to the prior quarter. The weight for each rating group 7
shall be calculated using member months documented in the Medicaid 8
managed care capitation rate certification for BH IDD tailored plans. 9
(5) The amount produced from multiplying 1.15 by the highest amount produced 10
when calculating, for each quarter that is at least two and not more than five 11
quarters prior to the current quarter, the actual nonfederal expenditures for the 12
applicable quarter minus the HASP health advancement acute care hospital 13
HASP component calculated under G.S. 108A-147.6 for the applicable 14
quarter and minus the health advancement freestanding psychiatric hospital 15
HASP component calculated under G.S. 108A-147.6A for the applicable 16
quarter." 17
SECTION 3.(f) G.S. 108A-147.6 reads as rewritten: 18
"§ 108A-147.6. HASP health Health advancement acute care hospital HASP component. 19
The HASP health advancement acute care hospital HASP component is an amount of money 20
that is calculated by multiplying the aggregate amount of HASP directed payments due to PHPs 21
in the current quarter for hospital reimbursements to acute care hospitals attributable to newly 22
eligible individuals by the nonfederal share for newly eligible individuals." 23
SECTION 3.(g) Part 3 of Article 7B of Chapter 108A of the General Statutes is 24
amended by adding a new section to read: 25
"§ 108A-147.6A. Health advancement freestanding psychiatric hospital HASP component. 26
The health advancement freestanding psychiatric hospital HASP component is an amount of 27
money that is calculated by multiplying the aggregate amount of HASP directed payments due 28
to PHPs in the current quarter for reimbursements to freestanding psychiatric hospitals 29
attributable to newly eligible individuals by the nonfederal share for newly eligible individuals." 30
SECTION 3.(h) G.S. 108A-147.11 reads as rewritten: 31
"§ 108A-147.11. Health advancement reconciliation adjustment component. 32
(a) The health advancement reconciliation adjustment component is a positive or 33
negative dollar amount equal to the actual nonfederal expenditures for the quarter that is two 34
quarters prior to the current quarter minus the sum of the following specified amounts: 35
(1) The presumptive service cost component calculated under G.S. 108A-147.5 36
for the quarter that is two quarters prior to the current quarter. 37
(2) The positive or negative gross premiums tax offset amount calculated under 38
G.S. 108A-147.12(b). 39
(3) The HASP health advancement acute care hospital HASP component 40
calculated under G.S. 108A-147.6 for the quarter that is two quarters prior to 41
the current quarter. 42
(4) The health advancement freestanding psychiatric hospital HASP component 43
calculated under G.S. 108A-147.6A for the quarter that is two quarters prior 44
to the current quarter. 45
(b) The IGT share of the reconciliation adjustment component is a positive or negative 46
dollar amount that is calculated by multiplying the health advancement reconciliation adjustment 47
component calculated under subsection (a) of this section by the share of public hospital costs 48
calculated under subsection (c) of this section. 49
(c) The share of public hospital costs is calculated by adding total hospital costs for the 50
UNC Health Care System, total hospital costs for the primary affiliated teaching hospital for the 51 General Assembly Of North Carolina Session 2025
House Bill 242-First Edition Page 7
East Carolina University Brody School of Medicine, and sixty percent (60%) of the total hospital 1
costs for all public acute care hospitals and dividing that sum by the total hospital costs for all 2
acute care hospitals except for critical access hospitals." 3
SECTION 4. Except as otherwise provided, this act is effective on the first day of 4
the next assessment quarter after the date this act becomes law and applies to assessments 5
imposed on or after that date. 6