GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2025
S 1
SENATE BILL 177
Short Title: Add Psychiatric Hospitals to Medicaid HASP. (Public)
Sponsors: Senators Hise, Burgin, and Sawrey (Primary Sponsors).
Referred to: Rules and Operations of the Senate
February 27, 2025
*S177 -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
premiums tax under G.S. 105-228.5 and the insurance regulatory charge under 34
G.S. 58-6-25 associated with those hospital reimbursements. 35 General Assembly Of North Carolina Session 2025
Page 2 Senate Bill 177-First Edition
(6d)(6e) Healthcare access and stabilization program (HASP). – The directed 1
payment program providing increased reimbursements to acute care hospitals 2
and freestanding psychiatric hospitals as approved by CMS and authorized by 3
G.S. 108A-148.1. 4
…." 5
SECTION 2.(b) G.S. 108A-146.1 reads as rewritten: 6
"§ 108A-146.1. Public hospital modernized assessment. 7
(a) The public hospital modernized assessment imposed under this Part shall apply to all 8
public acute care hospitals. 9
(b) The public hospital modernized assessment shall be assessed as a percentage of each 10
public acute care hospital's hospital costs. The assessment percentage shall be calculated 11
quarterly by the Department of Health and Human Services in accordance with this Part. The 12
percentage for each quarter shall equal the aggregate acute care hospital modernized assessment 13
collection amount under G.S. 108A-146.5 multiplied by the public hospital historical assessment 14
share and divided by the total hospital costs for all public acute care hospitals holding a license 15
on the first day of the assessment quarter." 16
SECTION 2.(c) G.S. 108A-146.3 reads as rewritten: 17
"§ 108A-146.3. Private hospital modernized assessment. 18
(a) The private hospital modernized assessment imposed under this Part shall apply to all 19
private acute care hospitals. 20
(b) The private hospital modernized assessment shall be assessed as a percentage of each 21
private acute care hospital's hospital costs. The assessment percentage shall be calculated 22
quarterly by the Department of Health and Human Services in accordance with this Part. The 23
percentage for each quarter shall equal the aggregate acute care hospital modernized assessment 24
collection amount under G.S. 108A-146.5 multiplied by the private hospital historical assessment 25
share and divided by the total hospital costs for all private acute care hospitals holding a license 26
on the first day of the assessment quarter." 27
SECTION 2.(d) Part 2 of Article 7B of Chapter 108A of the General Statutes is 28
amended by adding a new section to read: 29
"§ 108A-146.4. Freestanding psychiatric hospital modernized assessment. 30
(a) The freestanding psychiatric hospital modernized assessment imposed under this Part 31
shall apply to all freestanding psychiatric hospitals. 32
(b) The freestanding psychiatric hospital modernized assessment shall be assessed as a 33
percentage of each freestanding psychiatric hospital's hospital costs. The assessment percentage 34
shall be calculated quarterly by the Department of Health and Human Services in accordance 35
with this Part. The percentage for each quarter shall equal the modernized freestanding 36
psychiatric hospital HASP component under G.S. 108A-146.10A divided by the total hospital 37
costs for all freestanding psychiatric hospitals holding a license on the first day of the assessment 38
quarter." 39
SECTION 2.(e) G.S. 108A-146.5 reads as rewritten: 40
"§ 108A-146.5. Aggregate acute care hospital modernized assessment collection amount. 41
(a) The aggregate modernized assessment collection amount is an amount of money that 42
is calculated by subtracting the modernized intergovernmental transfer adjustment component 43
under G.S. 108A-146.13 from the total modernized nonfederal receipts under subsection (b) of 44
this section and then adding the positive or negative amount of the modernized IGT actual 45
receipts adjustment component under G.S. 108A-146.14. 46
(b) The total modernized nonfederal receipts is the sum of all of the following: 47
(1) One-fourth of the State's annual Medicaid payment. 48
(2) The managed care component under G.S. 108A-146.7. 49
(3) The fee-for-service component under G.S. 108A-146.9. 50 General Assembly Of North Carolina Session 2025
Senate Bill 177-First Edition Page 3
(3a) The modernized acute care hospital HASP component under 1
G.S. 108A-146.10. 2
(3b) The modernized freestanding psychiatric hospital HASP component under 3
G.S. 108A-146.10A. 4
(4) The GME component under G.S. 108A-146.11. 5
(5) Beginning April 1, 2022, and ending March 31, 2027, the postpartum 6
coverage component under G.S. 108A-146.12. 7
(6) Beginning April 1, 2024, the home and community-based services component 8
under G.S. 108A-146.12A. 9
(c) The aggregate acute care hospital modernized assessment collection amount is an 10
amount of money equal to the aggregate modernized assessment collection amount under 11
subsection (a) of this section minus the modernized freestanding psychiatric hospital HASP 12
component under G.S. 108A-146.10A." 13
SECTION 2.(f) G.S. 108A-146.10 reads as rewritten: 14
"§ 108A-146.10. Modernized acute care hospital HASP component. 15
The modernized acute care hospital HASP component is an amount of money that is 16
calculated each quarter by multiplying the aggregate amount of HASP directed payments due to 17
PHPs in the current quarter for hospital reimbursements to acute care hospitals that are not 18
attributable to newly eligible individuals by the nonfederal share for not newly eligible 19
individuals." 20
SECTION 2.(g) Part 2 of Article 7B of Chapter 108A of the General Statutes is 21
amended by adding a new section to read: 22
"§ 108A-146.10A. Modernized freestanding psychiatric hospital HASP component. 23
The modernized freestanding psychiatric hospital HASP component is an amount of money 24
that is calculated each quarter by multiplying the aggregate amount of HASP directed payments 25
due to PHPs in the current quarter for reimbursements to freestanding psychiatric hospitals that 26
are not attributable to newly eligible individuals by the nonfederal share for not newly eligible 27
individuals." 28
SECTION 2.(h) G.S. 108A-146.13 reads as rewritten: 29
"§ 108A-146.13. Modernized presumptive IGT adjustment component. 30
… 31
(c) The modernized presumptive IGT adjustment component is an amount of money 32
equal to the sum of all of the following subcomponents: 33
(1) The public hospital IGT subcomponent is the total of the following amounts: 34
a. Sixteen and forty-three hundredths percent (16.43%) of the amount of 35
money that is equal to the total modernized nonfederal receipts under 36
G.S. 108A-146.5(b) for the current quarter minus the modernized 37
acute care hospital HASP component under G.S. 108A-146.10 for the 38
current quarter and minus the modernized freestanding psychiatric 39
hospital HASP component under G.S. 108A-146.10A for the current 40
quarter. 41
b. Sixty percent (60%) of the nonfederal share for not newly eligible 42
individuals of the aggregate amount of HASP directed payments due 43
to PHPs in the current quarter for reimbursements to public acute care 44
hospitals and that are not attributable to newly eligible individuals. 45
(2) The UNC Health Care System IGT subcomponent is the total of the following 46
amounts: 47
a. Four and sixty-two hundredths percent (4.62%) of the difference of 48
amount of money that is equal to the total modernized nonfederal 49
receipts under G.S. 108A-146.5(b) for the current quarter minus the 50
modernized acute care hospital HASP component under 51 General Assembly Of North Carolina Session 2025
Page 4 Senate Bill 177-First Edition
G.S. 108A-146.10 for the current quarter and minus the modernized 1
freestanding psychiatric hospital HASP component under 2
G.S. 108A-146.10A for the current quarter. 3
b. The nonfederal share for not newly eligible individuals of the 4
aggregate amount of HASP directed payments due to PHPs in the 5
current quarter for reimbursements to UNC Health Care System 6
hospitals that are not attributable to newly eligible individuals. 7
(3) The East Carolina University IGT subcomponent is the total of the following 8
amounts: 9
a. One and four hundredths percent (1.04%) of the difference of amount 10
of money that is equal to the total modernized nonfederal receipts 11
under G.S. 108A-146.5(b) for the current quarter minus the 12
modernized acute care hospital HASP component under 13
G.S. 108A-146.10 for the current quarter and minus the modernized 14
freestanding psychiatric hospital HASP component under 15
G.S. 108A-146.10A for the current quarter. 16
b. The nonfederal share for not newly eligible individuals of the 17
aggregate amount of HASP directed payments due to PHPs in the 18
current quarter for reimbursements to the primary affiliated teaching 19
hospital for the East Carolina University Brody School of Medicine 20
that are not attributable to newly eligible individuals." 21
SECTION 3.(a) G.S. 108A-147.1 reads as rewritten: 22
"§ 108A-147.1. Public hospital health advancement assessment. 23
(a) The public hospital health advancement assessment imposed under this Part shall 24
apply to all public acute care hospitals. 25
(b) The public hospital health advancement assessment shall be assessed as a percentage 26
of each public acute care hospital's hospital costs. The assessment percentage shall be calculated 27
quarterly by the Department in accordance with this Part. The percentage for each quarter shall 28
equal the aggregate acute care hospital health advancement assessment collection amount 29
calculated under G.S. 108A-147.3 multiplied by the public hospital historical assessment share 30
and divided by the total hospital costs for all public acute care hospitals holding a license on the 31
first day of the assessment quarter." 32
SECTION 3.(b) G.S. 108A-147.2 reads as rewritten: 33
"§ 108A-147.2. Private hospital health advancement assessment. 34
(a) The private hospital health advancement assessment imposed under this Part shall 35
apply to all private acute care hospitals. 36
(b) The private hospital health advancement assessment shall be assessed as a percentage 37
of each private acute care hospital's hospital costs. The assessment percentage shall be calculated 38
quarterly by the Department in accordance with this Part. The percentage for each quarter shall 39
equal the aggregate acute care hospital health advancement assessment collection amount 40
calculated under G.S. 108A-147.3 multiplied by the private hospital historical assessment share 41
and divided by the total hospital costs for all private acute care hospitals holding a license on the 42
first day of the assessment quarter." 43
SECTION 3.(c) Part 3 of Article 7B of Chapter 108A of the General Statutes is 44
amended by adding a new section to read: 45
"§ 108A-147.2A. Freestanding psychiatric hospital health advancement assessment. 46
(a) The freestanding psychiatric hospital health advancement assessment imposed under 47
this Part shall apply to all freestanding psychiatric hospitals. 48
(b) The freestanding psychiatric hospital health advancement assessment shall be 49
assessed as a percentage of each freestanding psychiatric hospital's hospital costs. The assessment 50
percentage shall be calculated quarterly by the Department in accordance with this Part. The 51 General Assembly Of North Carolina Session 2025
Senate Bill 177-First Edition Page 5
percentage for each quarter shall equal the health advancement freestanding psychiatric hospital 1
HASP component calculated under G.S. 108A-147.6A divided by the total hospital costs for all 2
freestanding psychiatric hospitals holding a license on the first day of the assessment quarter." 3
SECTION 3.(d) G.S. 108A-147.3 reads as rewritten: 4
"§ 108A-147.3. Aggregate acute care hospital health advancement assessment collection 5
amount. 6
(a) The aggregate health advancement assessment collection amount is an amount of 7
money that is calculated quarterly by adjusting the total nonfederal receipts for health 8
advancement calculated under subsection (b) of this section by (i) subtracting the health 9
advancement presumptive IGT adjustment component calculated under G.S. 108A-147.9, (ii) 10
adding the positive or negative health advancement IGT actual receipts adjustment component 11
calculated under G.S. 108A-147.10, and (iii) subtracting the positive or negative IGT share of 12
the reconciliation adjustment component calculated under G.S. 108A-147.11(b). 13
(b) The total nonfederal receipts for health advancement is an amount of money that is 14
calculated quarterly by adding all of the following: 15
(1) The presumptive service cost component calculated under G.S. 108A-147.5. 16
(2) The HASP health advancement acute care hospital HASP component 17
calculated under G.S. 108A-147.6. 18
(2a) The health advancement freestanding psychiatric hospital HASP component 19
calculated under G.S. 108A-147.6A. 20
(3) The administration component calculated under G.S. 108A-147.7. 21
(4) The State retention component under G.S. 108A-147.9. 22
(5) The positive or negative health advancement reconciliation adjustment 23
component calculated under G.S. 108A-147.11(a). 24
(c) The aggregate acute care hospital health advancement assessment collection amount 25
is an amount of money equal to the aggregate health advancement assessment collection amount 26
under subsection (a) of this section minus the health advancement freestanding psychiatric 27
hospital HASP component under G.S. 108A-147.6A." 28
SECTION 3.(e) G.S. 108A-147.5 reads as rewritten: 29
"§ 108A-147.5. Presumptive service cost component. 30
(a) For every State fiscal quarter prior to the fiscal quarter in which G.S. 108A-54.3A(24) 31
becomes effective, the presumptive service cost component is zero. 32
(b) For the State fiscal quarter in which G.S. 108A-54.3A(24) becomes effective, the 33
presumptive service cost component is the product of forty-eight million seven hundred fifty 34
thousand dollars ($48,750,000) multiplied by the number of months in that State fiscal quarter in 35
which G.S. 108A-54.3A(24) is effective during any part of the month. 36
(c) For the first State fiscal quarter after the State fiscal quarter in which 37
G.S. 108A-54.3A(24) becomes effective, the presumptive service cost component is one hundred 38
forty-six million two hundred fifty thousand dollars ($146,250,000). 39
(d) For the second State fiscal quarter after the State fiscal quarter in which 40
G.S. 108A-54.3A(24) becomes effective, and for each State fiscal quarter thereafter, the 41
presumptive service cost component is an amount of money that is the greatest of the following: 42
(1) The prior quarter's presumptive service cost component amount. 43
(2) The prior quarter's presumptive service cost component amount increased by 44
a percentage that is the sum of each monthly percentage change in the 45
Consumer Price Index: Medical Care for the most recent three months 46
available on the first day of the current quarter. 47
(3) The prior quarter's presumptive service cost component amount increased by 48
the percentage change in the weighted average of the base capitation rates for 49
standard benefit plans for all rating groups associated with newly eligible 50
individuals compared to the prior quarter. The weight for each rating group 51 General Assembly Of North Carolina Session 2025
Page 6 Senate Bill 177-First Edition
shall be calculated using member months documented in the Medicaid 1
managed care capitation rate certification for standard benefit plans. 2
(4) The prior quarter's presumptive service cost component amount increased by 3
the percentage change in the weighted average of the base capitation rates for 4
BH IDD tailored plans for all rating groups associated with newly eligible 5
individuals compared to the prior quarter. The weight for each rating group 6
shall be calculated using member months documented in the Medicaid 7
managed care capitation rate certification for BH IDD tailored plans. 8
(5) The amount produced from multiplying 1.15 by the highest amount produced 9
when calculating, for each quarter that is at least two and not more than five 10
quarters prior to the current quarter, the actual nonfederal expenditures for the 11
applicable quarter minus the HASP health advancement acute care hospital 12
HASP component calculated under G.S. 108A-147.6 for the applicable 13
quarter and minus the health advancement freestanding psychiatric hospital 14
HASP component calculated under G.S. 108A-147.6A for the applicable 15
quarter." 16
SECTION 3.(f) G.S. 108A-147.6 reads as rewritten: 17
"§ 108A-147.6. HASP health Health advancement acute care hospital HASP component. 18
The HASP health advancement acute care hospital HASP component is an amount of money 19
that is calculated by multiplying the aggregate amount of HASP directed payments due to PHPs 20
in the current quarter for hospital reimbursements to acute care hospitals attributable to newly 21
eligible individuals by the nonfederal share for newly eligible individuals." 22
SECTION 3.(g) Part 3 of Article 7B of Chapter 108A of the General Statutes is 23
amended by adding a new section to read: 24
"§ 108A-147.6A. Health advancement freestanding psychiatric hospital HASP component. 25
The health advancement freestanding psychiatric hospital HASP component is an amount of 26
money that is calculated by multiplying the aggregate amount of HASP directed payments due 27
to PHPs in the current quarter for reimbursements to freestanding psychiatric hospitals 28
attributable to newly eligible individuals by the nonfederal share for newly eligible individuals." 29
SECTION 3.(h) G.S. 108A-147.11 reads as rewritten: 30
"§ 108A-147.11. Health advancement reconciliation adjustment component. 31
(a) The health advancement reconciliation adjustment component is a positive or 32
negative dollar amount equal to the actual nonfederal expenditures for the quarter that is two 33
quarters prior to the current quarter minus the sum of the following specified amounts: 34
(1) The presumptive service cost component calculated under G.S. 108A-147.5 35
for the quarter that is two quarters prior to the current quarter. 36
(2) The positive or negative gross premiums tax offset amount calculated under 37
G.S. 108A-147.12(b). 38
(3) The HASP health advancement acute care hospital HASP component 39
calculated under G.S. 108A-147.6 for the quarter that is two quarters prior to 40
the current quarter. 41
(4) The health advancement freestanding psychiatric hospital HASP component 42
calculated under G.S. 108A-147.6A for the quarter that is two quarters prior 43
to the current quarter. 44
(b) The IGT share of the reconciliation adjustment component is a positive or negative 45
dollar amount that is calculated by multiplying the health advancement reconciliation adjustment 46
component calculated under subsection (a) of this section by the share of public hospital costs 47
calculated under subsection (c) of this section. 48
(c) The share of public hospital costs is calculated by adding total hospital costs for the 49
UNC Health Care System, total hospital costs for the primary affiliated teaching hospital for the 50
East Carolina University Brody School of Medicine, and sixty percent (60%) of the total hospital 51 General Assembly Of North Carolina Session 2025
Senate Bill 177-First Edition Page 7
costs for all public acute care hospitals and dividing that sum by the total hospital costs for all 1
acute care hospitals except for critical access hospitals." 2
SECTION 4. Except as otherwise provided, this act is effective on the first day of 3
the next assessment quarter after the date this act becomes law and applies to assessments 4
imposed on or after that date. 5