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STATE OF OKLAHOMA
1st Session of the 58th Legislature (2021)
SENATE BILL 890 By: Jett
AS INTRODUCED
An Act relating to the Supplemental Hospital Of fset
Payment Program; amending 63 O.S. 20 11, Section
3241.2, as last amended by Section 1, C hapter 56,
O.S.L. 2019 (63 O.S. Supp. 2020, Section 3241.2),
which relates to definitions; adding definitions;
making language gender neutral; amending 63 O.S.
2011, Section 3241.3, as last amended by Sect ion 2,
Chapter 56, O.S.L. 2019 (63 O.S. Supp. 2020, Section
3241.3), which relates to hospital assessment;
modifying certain exemptions; modifying assessment
methodology; fixing certain rates for specified
fiscal year; directing certain redetermination;
amending 63 O.S. 2011, Section 3241.4, as last
amended by Section 3, Chapter 345, O.S.L. 2016 (63
O.S. Supp. 2020, Section 3241.4), which relates to
Supplemental Hospital Offset Payment Program Fund;
modifying certain transfer authority; directing
certain notices to be sent; modifying allowable
expenses; providing an effective date; and declaring
an emergency.
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. AMENDATORY 63 O.S. 2011, Section 3241.2, as
last amended by Section 1, Chapter 56, O.S.L. 2019 (63 O.S. Supp.
2020, Section 3241.2), is amended to read as follows:
Section 3241.2. As used in the Supplemental Hospital Offset
Payment Program Act:
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1. “Authority” means the Oklahoma Health Care Authority;
2. “Base year” means a hospital’s fiscal year as reported in
the Medicare Cost Report o r as determined by the Authority if the
hospital’s data is not included in the Medicare Cost Report. The
base year data will be use d in all assessment calculations;
3. “Net hospital patient revenue ” means the gross hospital
revenue as reported on Workshe et G-2 (Columns 1 and 2, Lines “Total
inpatient routine care services ”, “Ancillary services”, and
“Outpatient services”) of the Medicare Cost Report, multiplied by
the hospital’s ratio of total net to gross revenue, as r eported on
Worksheet G-3 (Column 1, Line “Net patient revenues”) and Worksheet
G-2 (Part I, Column 3, Line “Total patient revenues ”);
4. “Hospital” means an institution licensed by the State
Department of Health as a hospital pursuant to Section 1 -701 of this
title maintained primarily for the diagnosis, treatment, or care of
patients;
5. “Hospital Advisory Committee ” means the Committee
established for the purposes of advising the Oklahoma Health Care
Authority and recommending provisions within and appr oval of any
state plan amendment or waiver affecting hospital reimbursement made
necessary or advisable by the Supplemental Hospital Offset Payment
Program Act. In ord er to expedite the submission of the state plan
amendment required by Section 3241.6 of this title, the Committee
shall initially be appointed by the Executive Director of the
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Authority from recommendations submitted by a statewide association
representing rural and urban hospitals. The perm anent Committee
shall be appointed no later than th irty (30) days after November 1,
2011, and shall be composed of five (5) members to serve until
December 31, 2025, from lists of names submitted by a statewide
association representing rural and urban hosp itals, as follows:
a. one member, appointed by the Governor, who shall serve
as chairman chair, and
b. two members, appointed each by the Pre sident Pro
Tempore of the Oklahoma State Senate and the Speaker
of the Oklahoma House of Representatives.
Membership shall be extended until December 31, 2025, for th ose
members who are serving as of Dec ember 31, 2019;
6. “Medicaid” means the medical assi stance program established
in Title XIX of the federal Social Security Act and administered in
this state by the Ok lahoma Health Care Authority;
7. “Medicare Cost Report” means the Hospital Cost Report, Form
CMS-2552-96 or subsequent versions;
8. “Upper payment limit” means the maximum ceiling imposed by
42 C.F.R., Sections 447.272 and 447.321 on hospital Medicaid
reimbursement for inpatient and outpatient services, other than to
hospitals owned or oper ated by state government ; and
9. “Upper payment limit gap” means the difference between the
upper payment limit and Medicaid paymen ts not financed using
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hospital assessments made to all hospitals other than hospitals
owned or operated by state government.
10. “Medicaid Expansion” may include enrollment of the newly
eligible Medicaid population, increases in enrollment from those
currently eligible but not enrolled and increased administrative
costs; and
11. “Newly eligible Medicaid population ” means those
individuals over age eighteen (18) and under age sixty -five (65)
whose income does not exceed one hundred thirty -three percent (133%)
of the Federal Poverty Level gui delines, as described by and using
the income methodology provided in 42 U.S.C. Sectio n 1396 et seq.,
whose coverage is eligible for enhanced federal financial
participation.
SECTION 2. AMENDATORY 63 O.S. 2011, Section 3241.3, as
last amended by Section 2, Chapter 56, O.S.L. 2019 (63 O.S. Supp.
2020, Section 3241.3), is amended to read as follows:
Section 3241.3. A. For the purpose of assuring access to
quality care for Oklahoma Medicaid co nsumers, the Oklahoma Health
Care Authority, after considering input and recommendations fr om the
Hospital Advisory Committe e, shall assess hospitals licensed in
Oklahoma, unless exempt under subsection B of this section, a
supplemental hospital offset pay ment program fee.
B. The following hosp itals shall be exempt from the
supplemental hospita l offset payment program fee:
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1. A hospital that is owned or operated by the state or a state
agency, the federal government , a federally recognized Indian tribe ,
or the Indian Health Service;
2. A hospital, located within the geographical boundaries of a
city with a population of less than fifty thousand (50,000),
according to the latest Fed eral Decennial Census, that provides more
than fifty percent (50%) of its inp atient days under a contract with
a state agency other than the Authority;
3. A hospital for, located within the geographical bo undaries
of a city with a population of less than fifty thousand (50,000),
according to the latest Fed eral Decennial Census, which the majority
of its inpatient days are for any one of the following services, as
determined by the Authority using the Inpatient Discharge Data File
published by the Oklahoma State Department of Health, or in the case
of a hospital, not included in the Inpatien t Discharge Data File,
using substantially equivalent data prov ided by the hospital:
a. treatment of a neurological injury,
b. treatment of cancer,
c. treatment of cardiovascular disease,
d. obstetrical or childbirth services,
e. surgical care, except that this exemption shall not
apply to any hospital located in a ci ty of less than
five hundred thousand (500,000) population an d for
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which the majority of inpatient days are for back,
neck, or spine surgery;
4. A hospital that is certified by the federal Cen ters for
Medicaid and Medicar e Services as a long-term acute care hospital or
as a children’s hospital; and
5. A hospital that is certified by the fede ral Centers for
Medicaid and Medicare Services as a critical access hospital.
C. The supplemental hospi tal offset payment program fe e shall
be an assessment imposed o n each hospital, except those exempted
under subsection B of this section, for each calen dar year in an
amount calculated as a percentage of each hospital ’s net patient
revenue.
1. The assessment rate shall be determined annually based upon
the percentage of net hospital patient revenue needed to generate an
amount up to the sum of:
a. the nonfederal portion of the upper payment limit gap,
plus
b. the annual fee to be paid to the Authority unde r
subparagraph c of paragraph 1 of subsection G of
Section 3241.4 of this title, plus
c. the amount to be transferred by the Authority to the
Medical Payments Cash Management Improvement Act
Programs Disbursing Fund under subsection C of Section
3241.4 of this title.
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2. The assessment rate until December 31, 2012, sh all be fixed
at two and one-half percent (2.5%).
a. At no time in subsequent years shall the annual
effective assessment rate exceed four percent (4%) .
b. For the state fiscal year ending June 30, 2022, for
those hospitals not exempted in subsection B of this
section, and located within the geographical
boundaries of a city with a population of fifty
thousand (50,000) or greater, according to the latest
Federal Decennial Census, the assessment rate shall be
fixed at four percent (4%).
c. For the state fiscal year ending Jun e 30, 2022, for
those hospitals not exempted in subsection B of this
section, and located within the geographical
boundaries of a city with a population of less than
fifty thousand (50,000), according to the latest
Federal Decennial Census, the assessment rate shall be
fixed at two and five-tenths percent (2.5%).
d. Funds shall be disbursed with priority given to the
supplemental payment as provided by subsection F of
Section 3241.4 of this title.
3. Net hospital patient revenue shall be determined using t he
data from each hospital ’s Medicare Cost Repo rt contained in the
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Centers for Medicare and Medicaid Services ’ Healthcare Cost Report
Information System file.
a. Through 2013, the base year for assessment shall be
the hospital’s fiscal year that ended in 2 009, as
contained in the Healthcare Cost Report Information
System file dated December 31, 2010.
b. For years after 2013, the base year for assessment
shall be determined by rul es established by the
Authority.
4. If a hospital’s applicable Medicare Cost R eport is not
contained in the Centers for Medic are and Medicaid Services’
Healthcare Cost Report Information System file, the hospital shall
submit a copy of the hospital’s applicable Medicare Cost Report to
the Authority in order to allow the Authority to determine the
hospital’s net hospital patient revenue for the base year.
5. If a hospital commenced operations after the due date for a
Medicare Cost Report, the hospital shal l submit its initial Medicar e
Cost Report to the Authority in order to allow th e Authority to
determine the hospital ’s net patient revenue for the base year.
6. Partial year reports may be prorated for an annual basis.
7. In the event that a hospital doe s not file a uniform cost
report under 42 U.S.C., Section 1396a(a)(40), the Aut hority shall
establish a uniform cost report fo r such facility subject to the
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Supplemental Hospital Offset Payment Program provided for in this
section.
8. The Authority shall review what hospitals are in cluded in
the Supplemental Hospital Offset Payment Program provided for in
this subsection and wha t hospitals are exempted from the
Supplemental Hospital Offset Payment Program pursuant to subsection
B of this section. Such rev iew shall occur at a fixed p eriod of
time. This review and decision shall occu r within twenty (20) days
of the time of federa l approval and annually thereafter in November
of each year.
9. The Authority shall review and determine the amount of the
annual assessment. Such review an d determination shall occur within
the twenty (20) days of federal approval and annually thereafte r in
November of each year. Within sixty (60) days of the effective date
of this act, the Authority shall redetermine the assessme nt amount
to include the nonfederal portion of Medicaid expansion for the
state fiscal year ending June 30, 202 2, only.
D. A hospital may not charge any patient for any portion of the
supplemental hospital offset payment program fee.
E. Closure, merger a nd new hospitals.
1. If a hospital ceases to operate as a hospital or for any
reason ceases to be subject t o the fee imposed under the
Supplemental Hospital Offset Payment Program Act, the assessm ent for
the year in which the cessation occurs shall be adj usted by
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multiplying the annual assessment by a fraction, the numerator of
which is the number of days in th e year during which the hospital is
subject to the assessment and the denominator of whic h is 365.
Immediately upon ceasing to operate as a hospita l, or otherwise
ceasing to be subject to the supplemental hospital offset paym ent
program fee, the hospital shall pay the assessment for the year as
so adjusted, to the extent not previously paid.
2. In the case of a hospital that did not operate as a hos pital
throughout the base y ear, its assessment and any potential receipt
of a hospital access payment will c ommence in accordance with rules
for implementation and enforcement promulgated by the Au thority,
after consideration of the input and recommendatio ns of the Hospital
Advisory Committee.
F. 1. In the event that federal finan cial participation
pursuant to Title XIX of the Social Security Act is not available to
the Oklahoma Medicaid program f or purposes of matching expenditures
from the Supplemental Hospital Offset Payment Pro gram Fund at the
approved federal medical assistanc e percentage for the applicabl e
year, the supplemental hospital offset payment program fee shall be
null and void as of the date of the nonavailability of such federal
funding through and during any period of nonavailability.
2. In the event of an invalid ation of the Supplemental Hosp ital
Offset Payment Program Act by any court of last resort, the
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supplemental hospital of fset payment program fee shall be null and
void as of the effective date of that inval idation.
3. In the event that the supplemental hos pital offset payment
program fee is determined to be null and void for any of the reasons
enumerated in this subsection , any supplemental hospital offset
payment program fee asse ssed and collected for any period after such
invalidation shall be returned in full within twenty (20) days by
the Authority to the hospital from which it was collected.
G. The Authority, after co nsidering the input and
recommendations of the Hospital Adv isory Committee, shall prom ulgate
rules for the implementation and enforcement of the supplemental
hospital offset payment program fee. Unless otherwise provided, the
rules adopted under this subs ection shall not grant any exceptions
to or exemptions from the hospital assessment im posed under this
section.
H. The Authority shall p rovide for administrative pena lties in
the event a hospital fails to:
1. Submit the supplemental hospital offset payme nt program fee;
2. Submit the fee in a timely manner;
3. Submit reports as required by this section; or
4. Submit reports timely.
I. The supplemental hospital offs et payment program fee shall
terminate effective December 31, 2025.
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J. The Authority sha ll have the power to promulgate emergency
rules to enact the provisions of this act the Supplemental Hospital
Offset Payment Program Act .
SECTION 3. AMENDATORY 63 O.S. 2011, Section 3241.4, as
last amended by Section 3, Chapter 345, O.S.L. 2016 (63 O.S. Supp.
2020, Section 3241.4), is amended to read as follows:
Section 3241.4. A. There is hereby created in the S tate
Treasury a revolving fund to be designated the “Supplemental
Hospital Offset Payment Program Fund ”.
B. The fund shall be a continuing fund, not subje ct to fiscal
year limitations, be interest bearing and consisting of:
1. All monies received by the Oklahoma Health Care Authority
from hospitals pursu ant to the Supplemental Hospital Offset Payment
Program Act and otherwise specified or authorized by law ;
2. Any interest or pena lties levied and collect ed in
conjunction with the administration of this s ection; and
3. All interest attributable to invest ment of money in the
fund.
C. 1. Notwithstanding any other provisions of law, each fiscal
quarter the Oklahoma Health Care Aut hority is authorized to
transfer:
a. Seven Million Five Hundred Thousand Doll ars
($7,500,000.00) each fiscal quarter to fund the
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nonfederal portion of the existing Medicaid
population, and
b. Thirty-three Million Dollars ($33,000,000.00) to fund
the nonfederal portion of the Medicaid expansion for
enrollees receiving services on or after July 1, 2021,
from the Supplemental Hospita l Offset Payment Program
Fund to the Authority ’s Medical Payments Cash
Management Improvement Act Programs Disburs ing Fund.
D. Notice of Assessment.
1. The Authority shall send a notice of assessment to e ach
hospital informing the hospital of the assessm ent rate, the
hospital’s net patient revenue calculation , and the assessment
amount owed by the hospital for the a pplicable year.
2. Annual notices of ass essment shall be sent at least thirty
(30) days before the due date for the first quarterly assessmen t
payment of each year. Within sixty (60) days of the effective date
of this act, the Authority shall send notices of the redetermined
assessment amount including the nonfederal portion of Medicaid
expansion for the state fiscal year ending June 30, 2022, only.
3. The first notice of assessment shall be sent within forty -
five (45) days after receipt by the Authority of notification f rom
the Centers for Medicare and Medicaid Services that the assessments
and payments required under the Supplemental Hospital Offset Payment
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Program Act and, if necessary, the waiver granted under 42 C.F.R.,
Section 433.68 have been approved.
4. The hospital shall have thirty ( 30) days from the date of
its receipt of a notice o f assessment to review and verify the
assessment rate, the hospital’s net patient revenue calculation , and
the assessment amount.
5. A hospital subject to an assessment under the Su pplemental
Hospital Offset Payment Program Act that has not been previousl y
licensed as a hospital in Oklahoma and that commen ces hospital
operations during a year shall pay the required assessment computed
under subsection E of Section 3241.3 of this titl e and shall be
eligible for hospital access payments under subsection E of this
section on the date specified in rules promulg ated by the Authority
after consideration of input and recommendations of the Hospital
Advisory Committee.
E. Quarterly Notice an d Collection.
1. The annual assessment imposed under subsection A of Sect ion
3241.3 of this title shall be due and payable on a quarterly basis.
However, the first installment payment of an assessment imposed by
the Supplemental Hospital Offset Payment P rogram Act shall not be
due and payable until:
a. the Authority issues wri tten notice stating that the
assessment and payment methodologies required under
the Supplemental Hospital Offset Payment Program Act
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have been approved by the Centers for Medicare a nd
Medicaid Services an d the waiver under 42 C.F.R.,
Section 433.68, if ne cessary, has been granted by the
Centers for Medicare and Medicaid Services,
b. the thirty-day verification period required by
paragraph 4 of subse ction D of this section has
expired, and
c. the Authority issues a notice giving a due date for
the first payment.
2. After the initial installment of an annual assessment has
been paid under this section, each subsequent quarterly installment
payment shall be due and payable by the fiftee nth day of the first
month of the applicable quarter.
3. If a hospital fa ils to timely pay the full amount of a
quarterly assessment, the Authority shall add to the assessment:
a. a penalty assessment equal to five perce nt (5%) of the
quarterly amount not paid on or before the due date,
and
b. on the last day of each quarter af ter the due date
until the assessed amount and the p enalty imposed
under subparagraph a of this paragraph are paid in
full, an additional five -percent penalty assessment on
any unpaid quarterly and unpaid penalty assessment
amounts.
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4. The quarterly asses sment including applicable penalties and
interest must be paid regardless of any appeals action requested by
the facility. If a provider fails to pay the Authority the
assessment within the time frames no ted on the invoice to the
provider, the assessment, applicable penalty, and interest will be
deducted from the facility’s payment. Any change in payment amount
resulting from an appeals decision wi ll be adjusted in future
payments.
F. Medicaid Hospital Access Payments.
1. To preserve the quality and imp rove access to hospital
services for hospital inpati ent and outpatient services rendered on
or after the effective date of this act August 26, 2011, the
Authority shall make hospital access payments as set forth in this
section.
2. The Authority shall pay all quarterly hospital a ccess
payments within ten (10) calendar day s of the due date for quarterly
assessment payments established in subsection E of this section .
3. The Authority shall calculate the hospital access payment
amount up to but not to excee d the upper payment limit gap for
inpatient and outpatient services.
4. All hospitals shall be eligible for inpatient and outpatient
hospital access payments each year as set forth in this subsecti on
except hospitals described in paragraph 1, 2, 3 or 4 of subsection B
of Section 3241.3 of this title.
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5. A portion of the hospital access payment amount, not to
exceed the upper payment limit gap for inpatient service s, shall be
designated as the inpat ient hospital access payment pool.
a. In addition to any o ther funds paid to hospit als for
inpatient hospital services to Medi caid patients, each
eligible hospital shall receive inpatient hospital
access payments each yea r equal to the hospital ’s pro
rata share of the inpatient hospital access payment
pool based upon the hospital’s Medicaid payments for
inpatient services divided by the total Medicaid
payments for inpatient services of all eligible.
b. Inpatient hospital a ccess payments shall be made on a
quarterly basis.
6. A portion of the hospital access payme nt amount, not to
exceed the upper payment limit gap for outpatient services, shall be
designated as the outpatient hospital access payment pool.
a. In addition to any other funds paid to hospitals for
outpatient hospital services to Medicaid patients,
each eligible hospital shall receive outpatient
hospital access payment s each year equal to the
hospital’s pro rata share of the outpatient hospital
access payment pool based upon the hospital ’s Medicaid
payments for outpatient services divided by the total
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Medicaid payments for outp atient services of all
eligible.
b. Outpatient hospital access payments shall be made on a
quarterly basis.
7. A portion of the inpatient hospital access payment pool and
of the outpatient hospital access payment pool shall be des ignated
as the critical access hospital payment pool.
a. In addition to any other funds paid to critical access
hospitals for inpatient and outpatient hospital
services to Medicaid patients, each cr itical access
hospital shall receive hospital access payme nts equal
to the amount by which the payment for these services
was less than one hundred one percent (101%) of the
hospital’s cost of providing these services, as
determined using the Medicare Cost Report.
b. The Authority shall calculate hospital access payments
for critical access hospitals and deduct these
payments from the inpatient hospital access payment
pool and the outpatient hospital access payment pool
before allocating the remaining balan ce in each pool
as provided in subparagraph a of paragraph 5 and
subparagraph a of paragraph 6 of this subsection.
c. Critical access hospital payments shall be made on a
quarterly basis.
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8. A hospital access payment sha ll not be used to offset any
other payment by Medicaid for hospital inpatient or outpatient
services to Medicaid benef iciaries, including without limitation any
fee-for-service, per diem, private hospital inpatient adjustment , or
cost-settlement payment.
9. If the Centers for Medicare and Medicaid Services finds that
the Authority has made paymen ts to hospitals that exce ed the upper
payment limits determined in a ccordance with 42 C.F.R. 447.272 and
42 C.F.R. 447.321, hospitals shall refund to the Authority a share
of the recouped federal fu nds that is proportionate to the
hospitals’ positive contribution to the upper paym ent limit.
G. All monies accruing to the c redit of the Supplemental
Hospital Offset Payment Program Fund are hereby appropriated and
shall be budgeted and expended by the A uthority after consideration
of the input and recommendati on of the Hospital Adviso ry Committee.
1. Monies in the Supplementa l Hospital Offset Payment Program
Fund shall be used only for:
a. transfers to the Medical Paym ents Cash Management
Improvement Act Programs Disbursing Fund (Fund 340)
for the state share of supplemental payments for
Medicaid and SCHIP inpatient and outpat ient services
to hospitals that participate in the assessment,
b. transfers to the Medical Paym ents Cash Management
Improvement Act Programs Disbursing Fund (Fund 340)
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for the state share of supplemental payments for
Critical Access Hospitals,
c. transfers to the Administrative Revolving Fund (Fund
200) for the state share of payment of administrati ve
expenses incurred by the Authori ty or its agents and
employees in performing the activitie s authorized by
the Supplemental Hospital Offset Payment Program Act
but not more than Two Hundred Thousand Dollars
($200,000.00) each year,
d. transfers to the Medical Payments Cash Management
Improvement Act Programs Disbursing Fund (Fund 340) in
an amount not to exceed Seven Mi llion Five Hundred
Thousand Dollars ($7,500 ,000.00) each fiscal quarter ,
and to fund the nonfederal portion of the existing
Medicaid population,
e. transfers to the Medical Payments Cash Management
Improvement Act Programs Disbursi ng Fund (Fund 340) in
an amount not to exceed Thirty -three Million Dollars
($33,000,000.00) each fiscal quarter to fund the
nonfederal portion of Medicaid expansion for enrollees
receiving services on or after July 1, 2021, and
f. the reimbursement of moni es collected by the Autho rity
from hospitals through error or mistak e in performing
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the activities authorized under the Supplemental
Hospital Offset Payment Program Act.
2. The Authority shall pay from the Supplemental Hospital
Offset Payment Program Fund quarterly installment pa yments to
hospitals of amounts available fo r supplemental inpatient and
outpatient payments, and supplemental payments for Critical Access
Hospitals.
3. Except for the tran sfers described in subsection C of this
section, monies in the Supplemental Hospita l Offset Payment Program
Fund shall not be used to replace other general revenues
appropriated and funded by the Legislature or other revenues used to
support Medicaid.
4. The Supplemental Hospital Offset Payment Program Fund and
the program specified in the Supplemental Hospital Offset Payment
Program Act are exempt from budgetary reductions or eliminations
caused by the lack of general revenue funds or other funds
designated for or appropriated to the Authority.
5. No hospital shall be guaranteed, expre ssly or otherwise,
that any additional cost s reimbursed to the facility will equal or
exceed the amount of the supplemental hospital offset payment
program fee paid by the h ospital.
H. After considering input and recommendations f rom the
Hospital Advisory Committee, the Authority shall promulgate
regulations that:
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1. Allow for an appeal of the annual assessment of the
Supplemental Hospital Offset Payment Program payable und er this act
the Supplemental Hospital Offset Payment Progr am Act; and
2. Allow for an appeal of an assessment of any fees or
penalties determined.
SECTION 4. This act shall become effective July 1, 2021.
SECTION 5. It being immediately necessary for the preservation
of the public peace, health or safety, an emergency is hereby
declared to exist, by reason whereof this act shall take effect and
be in full force from and after its passage and approval.
58-1-1637 WR 1/21/2021 4:18:25 PM