2025 -- H 6095
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LC002404
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S T A T E O F R H O D E I S L A N D
IN GENERAL ASSEMBLY
JANUARY SESSION, A.D. 2025
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A N A C T
RELATING TO HEALTH AND SAFETY -- LICENSING OF HEALTHCARE FACILITIES
Introduced By: Representatives Bennett, Edwards, Hull, Chippendale, Corvese,
Azzinaro, Diaz, Casimiro, Kazarian, and Fellela
Date Introduced: March 14, 2025
Referred To: House Finance
It is enacted by the General Assembly as follows:
SECTION 1. Section 23-17-38.1 of the General Laws in Chapter 23-17 entitled "Licensing 1
of Healthcare Facilities" is hereby amended to read as follows: 2
23-17-38.1. Hospitals — Licensing fee. 3
(a) There is imposed a hospital licensing fee for state fiscal year 2023 against each hospital 4
in the state. The hospital licensing fee is equal to five and forty-two hundredths percent (5.42%) of 5
the net patient-services revenue of every hospital for the hospital’s first fiscal year ending on or 6
after January 1, 2021, except that the license fee for all hospitals located in Washington County, 7
Rhode Island shall be discounted by thirty-seven percent (37%). The discount for Washington 8
County hospitals is subject to approval by the Secretary of the U.S. Department of Health and 9
Human Services of a state plan amendment submitted by the executive office of health and human 10
services for the purpose of pursuing a waiver of the uniformity requirement for the hospital license 11
fee. This licensing fee shall be administered and collected by the tax administrator, division of 12
taxation within the department of revenue, and all the administration, collection, and other 13
provisions of chapter 51 of title 44 shall apply. Every hospital shall pay the licensing fee to the tax 14
administrator on or before June 30, 2023, and payments shall be made by electronic transfer of 15
monies to the general treasurer and deposited to the general fund. Every hospital shall, on or before 16
May 25, 2023, make a return to the tax administrator containing the correct computation of net 17
patient-services revenue for the hospital fiscal year ending September 30, 2021, and the licensing 18
fee due upon that amount. All returns shall be signed by the hospital’s authorized representative, 19
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subject to the pains and penalties of perjury. 1
(b)(a) There is also imposed a hospital licensing fee described in subsections (c) through 2
(f) for state fiscal years 2024 and 2025 against net patient-services revenue of every non-3
government owned hospital as defined herein for the hospital’s first fiscal year ending on or after 4
January 1, 2022. The hospital licensing fee shall have three (3) tiers with differing fees based on 5
inpatient and outpatient net patient-services revenue. The executive office of health and human 6
services, in consultation with the tax administrator, shall identify the hospitals in each tier, subject 7
to the definitions in this section, by July 15, 2023, and shall notify each hospital of its tier by August 8
1, 2023. 9
(b) There is also imposed a hospital licensing fee described in subsections (c) through (f) 10
of this section for state fiscal year 2026 against net patient-services revenue of every non-11
government owned hospital as defined herein for the hospital's first fiscal year ending on or after 12
January 1, 2024. The hospital licensing fee shall have three (3) tiers with differing fees based on 13
inpatient and outpatient net patient-services revenue. The executive office of health and human 14
services, in consultation with the tax administrator, shall identify the hospitals in each tier, subject 15
to the definitions in this section, by July 15, 2025, and shall notify each hospital of its assigned tier 16
by August 1, 2025. 17
(c) Tier 1 is composed of hospitals that do not meet the description of either Tier 2 or Tier 18
3. 19
(1) The inpatient hospital licensing fee for Tier 1 is equal to thirteen and twelve hundredths 20
percent (13.12%) of the inpatient net patient-services revenue derived from inpatient net patient-21
services revenue of every Tier 1 hospital. 22
(2) The outpatient hospital licensing fee for Tier 1 is equal to thirteen and thirty hundredths 23
percent (13.30%) of the net patient-services revenue derived from outpatient net patient-services 24
revenue of every Tier 1 hospital. 25
(d) Tier 2 is composed of high Medicaid/uninsured cost hospitals and independent 26
hospitals. 27
(1) The inpatient hospital licensing fee for Tier 2 is equal to two and sixty-three hundredths 28
percent (2.63%) of the inpatient net patient-services revenue derived from inpatient net patient-29
services revenue of every Tier 2 hospital. 30
(2) The outpatient hospital licensing fee for Tier 2 is equal to two and sixty-six hundredths 31
percent (2.66%) of the outpatient net patient-services revenue derived from outpatient net patient-32
services revenue of every Tier 2 hospital. 33
(e) Tier 3 is composed of hospitals that are Medicare-designated low-volume hospitals and 34
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rehabilitative hospitals. 1
(1) The inpatient hospital licensing fee for Tier 3 is equal to one and thirty-one hundredths 2
percent (1.31%) of the inpatient net patient-services revenue derived from inpatient net patient-3
services revenue of every Tier 3 hospital. 4
(2) The outpatient hospital licensing fee for Tier 3 is equal to one and thirty-three 5
hundredths percent (1.33%) of the outpatient net patient-services revenue derived from outpatient 6
net patient-services revenue of every Tier 3 hospital. 7
(f) There is also imposed a hospital licensing fee for state fiscal year 2024 against state-8
government owned and operated hospitals in the state as defined herein. The hospital licensing fee 9
is equal to five and twenty-five hundredths percent (5.25%) of the net patient-services revenue of 10
every hospital for the hospital’s first fiscal year ending on or after January 1, 2022. There is also 11
imposed a hospital licensing fee for state fiscal year 2025 against state-government owned and 12
operated hospitals in the state as defined herein equal to five and twenty-five hundredths percent 13
(5.25%) of the net patient-services revenue of every hospital for the hospital’s first fiscal year 14
ending on or after January 1, 2023. 15
(g) The hospital licensing fee described in subsections (b) through (f) is subject to U.S. 16
Department of Health and Human Services approval of a request to waive the requirement that 17
healthcare-related taxes be imposed uniformly as contained in 42 C.F.R. § 433.68(d). 18
(h) This hospital licensing fee shall be administered and collected by the tax administrator, 19
division of taxation within the department of revenue, and all the administration, collection, and 20
other provisions of chapter 51 of title 44 shall apply. Every hospital shall pay the licensing fee to 21
the tax administrator before June 30 of each fiscal year, and payments shall be made by electronic 22
transfer of monies to the tax administrator and deposited to the general fund. Every hospital shall, 23
on or before August 1, 2023 2025, make a return to the tax administrator containing the correct 24
computation of inpatient and outpatient net patient-services revenue for the hospital fiscal year 25
ending in 2022 2024, and the licensing fee due upon that amount. All returns shall be signed by the 26
hospital’s authorized representative, subject to the pains and penalties of perjury. 27
(i) Any funds collected pursuant to this provision in excess of ninety million dollars 28
($90,000,000) shall be used to increase Medicaid reimbursement for hospitals under managed care 29
and fee-for-service for all of the following subject to approval by the federal Centers for Medicare 30
and Medicaid Services: 31
(1) Fee-for-service upper payment limit payments for inpatient hospital services and 32
outpatient hospital services as authorized in § 40-8.3-10; 33
(2) Disproportionate share hospital payments for hospitals that are eligible to participate 34
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and receive payments in the disproportionate share hospital program as authorized in § 40-8.3-3; 1
(3) Medicaid rate increases for inpatient hospital services and outpatient hospital services 2
as directed in § 40-8-13.4; and 3
(4) State directed managed care payments as authorized by § 42-12.4-10. 4
(i)(j) For purposes of this section the following words and phrases have the following 5
meanings: 6
(1) “Gross patient-services revenue” means the gross revenue related to patient care 7
services. 8
(2) “High Medicaid/uninsured cost hospital” means a hospital for which the hospital’s total 9
uncompensated care, as calculated pursuant to § 40-8.3-2(4), divided by the hospital’s total net 10
patient-services revenues, is equal to six percent (6.0%) or greater. 11
(3) “Hospital” means the actual facilities and buildings in existence in Rhode Island, 12
licensed pursuant to § 23-17-1 et seq. on June 30, 2010, and thereafter any premises included on 13
that license, regardless of changes in licensure status pursuant to chapter 17.14 of this title (hospital 14
conversions) and § 23-17-6(b) (change in effective control), that provides short-term acute inpatient 15
and/or outpatient care to persons who require definitive diagnosis and treatment for injury, illness, 16
disabilities, or pregnancy. Notwithstanding the preceding language, the negotiated Medicaid 17
managed care payment rates for a court-approved purchaser that acquires a hospital through 18
receivership, special mastership, or other similar state insolvency proceedings (which court-19
approved purchaser is issued a hospital license after January 1, 2013) shall be based upon the newly 20
negotiated rates between the court-approved purchaser and the health plan, and such rates shall be 21
effective as of the date that the court-approved purchaser and the health plan execute the initial 22
agreement containing the newly negotiated rate. The rate-setting methodology for inpatient hospital 23
payments and outpatient hospital payments set forth in §§ 40-8-13.4(b) and 40-8-13.4(b)(2), 24
respectively, shall thereafter apply to negotiated increases for each annual twelve-month (12) 25
period as of July 1 following the completion of the first full year of the court-approved purchaser’s 26
initial Medicaid managed care contract. 27
(4) “Independent hospitals” means a hospital not part of a multi-hospital system. 28
(5) “Inpatient net patient-services revenue” means the charges related to inpatient care 29
services less (i) Charges attributable to charity care; (ii) Bad debt expenses; and (iii) Contractual 30
allowances. 31
(6) “Medicare-designated low-volume hospital” means a hospital that qualifies under 42 32
C.F.R. 412.101(b)(2) for additional Medicare payments to qualifying hospitals for the higher 33
incremental costs associated with a low volume of discharges. 34
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(7) “Net patient-services revenue” means the charges related to patient care services less 1
(i) Charges attributable to charity care; (ii) Bad debt expenses; and (iii) Contractual allowances. 2
(8) “Non-government owned hospitals” means a hospital not owned and operated by the 3
state of Rhode Island. 4
(9) “Outpatient net patient-services revenue” means the charges related to outpatient care 5
services less (i) Charges attributable to charity care; (ii) Bad debt expenses; and (iii) Contractual 6
allowances. 7
(10) “Rehabilitative hospital” means Rehabilitation Hospital Center licensed by the Rhode 8
Island department of health. 9
(11) “State-government owned and operated hospitals” means a hospital facility licensed 10
by the Rhode Island department of health, owned and operated by the state of Rhode Island. 11
(j)(k) The tax administrator in consultation with the executive office of health and human 12
services shall make and promulgate any rules, regulations, and procedures not inconsistent with 13
state law and fiscal procedures that he or she deems necessary for the proper administration of this 14
section and to carry out the provisions, policy, and purposes of this section. 15
(k)(l) The licensing fee imposed by subsection (a) shall apply to hospitals as defined herein 16
that are duly licensed on July 1, 2022, and shall be in addition to the inspection fee imposed by § 17
23-17-38 and to any licensing fees previously imposed in accordance with this section. 18
(l)(m) The licensing fees imposed by subsections (b) through (f) shall apply to hospitals as 19
defined herein that are duly licensed on July 1, 2023 2024, and shall be in addition to the inspection 20
fee imposed by § 23-17-38 and to any licensing fees previously imposed in accordance with this 21
section. 22
SECTION 2. Chapter 42-12.4 of the General Laws entitled "The Rhode Island Medicaid 23
Reform Act of 2008" is hereby amended by adding thereto the following section: 24
42-12.4-10. Hospital state directed managed care payments. 25
The executive office of health and human services is hereby authorized and directed to 26
maintain and enforce the practice, in effect since July 1, 2023, of amending its regulations for 27
reimbursement to Medicaid Managed Care Organizations (MMCO) and directing MMCOs to make 28
quarterly state-directed payments each year to hospitals for inpatient and outpatient services. Such 29
payments shall be made in accordance with the payment methodology contained in the approved 30
CMS preprint for hospital state-directed payments. 31
SECTION 3. This act shall take effect upon passage. 32
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EXPLANATION
BY THE LEGISLATIVE COUNCIL
OF
A N A C T
RELATING TO HEALTH AND SAFETY -- LICENSING OF HEALTHCARE FACILITIES
***
This act would impose a hospital licensing fee for state fiscal year 2026 against net patient-1
services revenue of every non-government owned hospital for the hospital’s first fiscal year ending 2
on or after January 1, 2024. The hospital licensing fee would have three (3) tiers with differing fees 3
based on inpatient and outpatient net patient-services revenue. The executive office of health and 4
human services, in consultation with the tax administrator, would identify the hospitals in each tier, 5
by July 15, 2025, and would notify each hospital of its assigned tier by August 1, 2025. 6
This act would take effect upon passage. 7
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LC002404
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