Chapter 29 of the General Laws is hereby amended by striking section 2TTTT, as appearing in the 2016 Official Edition, and inserting in place thereof the following section:-

Section 2TTTT. (a) For the purposes of this section the following words shall have the following meanings:

“Case mix”, the description and categorization of a hospital’s patient population according to criteria determined by the center for health information and analysis including, but not limited to, primary and secondary diagnoses, primary and secondary procedures, illness severity, patient age and source of payment.

“Commercial volume”, the proportion of patients that seek care at an acute care hospital that are insured by private carriers.

“Dispersed service area,” a geographic area of the commonwealth in which a provider organization delivers health care services.

“Major service category”, a set of service categories as specified by the center for health information and analysis, including: (i) acute hospital inpatient services, by major diagnostic category; (ii) outpatient and ambulatory services, by categories as defined by the Centers for Medicare and Medicaid Services, or as specified by the center for health information and analysis, including a residual category for “all other” outpatient and ambulatory services that do not fall within a defined category; (iii) behavioral health services; (iv) professional services, by categories as defined by the Centers for Medicare and Medicaid Services, or as specified by the center for health information and analysis; and (v) sub-acute services, by major service line or clinical offering, as specified by the center for health information and analysis.

“Medicaid volume”, the proportion of patients that seek care at an acute care hospital that are insured by a state medicaid program.

“Primary service area”, a geographic area of the commonwealth in which consumers are likely to travel to obtain health services.

“Relative price”, the contractually negotiated amounts paid to providers by each private and public carrier for health care services, including non-claims related payments and expressed in the aggregate relative to the payer’s network-wide average amount paid to providers, as calculated pursuant to section 10 of chapter 12C.

(b) There shall be established and set upon the books of the commonwealth a separate fund to be known as the Community Hospital Reinvestment Trust Fund. Funds shall be expended, without further appropriation, by the secretary of health and human services. The fund shall consist of money from public and private sources, such as gifts, grants and donations, interest earned on such revenues, any other money authorized by the general court and specifically designated to be credited to the fund, and any funds provided from other sources. Money in the fund shall be used to provide annual financial support, consistent with the terms of this section, to eligible acute care hospitals. The secretary of health and human services, as trustee, shall administer the fund and shall make expenditures from the fund consistent with this section.

(c) The secretary of health and human services may incur expenses and the comptroller may certify amounts for payment in anticipation of expected receipts; provided, however, that no expenditure shall be made from the fund which shall cause the fund to be deficient at the close of a fiscal year. Revenues deposited in the fund that are unexpended at the end of a fiscal year shall not revert to the general fund and shall be available for expenditure in the following fiscal year.

(d) The secretary of health and human services shall annually direct payments from the fund to eligible acute care hospitals. To be eligible to receive payment from the fund, an acute care hospital shall be licensed under section 51 of chapter 111, and shall not be a hospital with relative prices that are at or above the 90th percentile of the statewide average relative price. In directing payments, the secretary of health and human services shall allocate payments to eligible acute care hospitals based on the proportion of each eligible acute care hospital's total gross patient service revenue to the combined gross patient service revenue of all eligible acute care hospitals in the prior hospital rate year; provided, however, that payments shall be adjusted to allocate proportionally greater payments to eligible acute care hospitals with relative prices that fall farthest below the 90th percentile of the statewide average relative price and shall also consider: (i) medicaid volume; (ii) commercial volume; (iii) major service categories not readily offered by providers within the same primary service areas and dispersed service areas; (iv) case mix; (v) affiliation status; and (vi) geography.

(e) The secretary of health and human services shall annually direct payments from the fund to eligible acute care hospitals. To be eligible to receive payment from the fund, an acute care hospital shall be licensed under section 51 of chapter 111. In directing payments, the secretary of health and human services shall allocate payments to eligible acute care hospitals based on the proportion of each eligible acute care hospital's total gross patient service revenue to the combined gross patient service revenue of all eligible acute care hospitals in the prior hospital rate year and shall also consider: (i) medicaid volume; (ii) commercial volume; (iii) major service categories not readily offered by providers within the same primary service areas and dispersed service areas; (iv) case mix; (v) affiliation status; (vi) geography; and (vii) relative price.

(f) The secretary of health and human services shall promulgate regulations necessary to carry out this section, including regulations establishing a formula to allocate payments pursuant to subsection (e).

(g) Not later than 30 days after payments are allocated to eligible acute care hospitals under this section, the secretary of health and human services shall file a report with the joint committee on health care financing and the house and senate committees on ways and means detailing the allocation and recipient of each payment.