Amendment #70 to H4601

Massachusetts Hospital Assessment Structure and Health Safety Net Financing

Mr. Lawn of Watertown moves to amend the bill by adding the following sections:

Section A. Section 2AAAAA of chapter 29, as amended by section 19 of chapter 126 of the acts of 2022, is hereby amended by striking out the second paragraph and inserting in place thereof the following paragraph:

There shall be credited to the fund: (i) any transfers from the Health Safety Net Trust Fund established in section 66 of chapter 118E; (ii) any revenue from appropriations or other money authorized by the general court and specifically designated to be credited to the fund; (iii) an amount equal to any federal financial participation revenues claimed and received by the commonwealth for eligible expenditures made from the fund; and (iv) interest earned on any money in the fund. Money from the fund shall be expended for payments to providers that qualify under an approved federal waiver and in accordance with said waiver. Amounts credited to the fund shall not be subject to further appropriation. At the end of each fiscal year, the secretary of health and human services shall determine, in the secretary's sole discretion, the amount of any money in the fund that is in excess of the money needed to make payments from the fund in accordance with said waiver; provided, however, that the money needed to make such payments shall include any money needed to make any payments that are unearned as of the end of such year, but potentially earned in a subsequent year. Subject to the terms of said waiver, (A) for periods applicable to the waiver beginning on or after January 1, 2025, the secretary of health and human services shall transfer to the Health Safety Net Trust Fund established in said section 66 of said chapter 118E the state share of any such excess money, excluding any federal funds; and (B) for periods applicable to the waiver through December 31, 2024, the secretary of health and human services shall transfer to said Health Safety Net Trust Fund the state share of any such excess money, multiplied by a fraction, the numerator of which is $62,500,000 and the denominator of which is the total amount transferred to or deposited in the fund for such fund year, excluding federal funds. Money remaining in the fund at the end of a fiscal year shall not revert to the General Fund and shall be available for expenditure in subsequent fiscal years. To accommodate timing discrepancies between the receipt of revenue and related expenditures, the comptroller may certify for payment amounts not to exceed the most recent revenue estimates as certified by the secretary of health and human services to be transferred, credited or deposited under this section.

SECTION B.  Section 2TTTTT of said chapter 29, as amended by section 51 of chapter 140 of the acts of 2024, is hereby amended by striking out subsection (c) and inserting in place thereof the following subsection:

(c)(1) The secretary shall expend money in the fund, including all amounts credited to the fund, for payments to qualifying acute hospital providers under contract with the executive office of health and human services or under subcontracts with care organizations that contract with the executive office in connection with the MassHealth program as provided in this subsection.

(2) The secretary shall annually expend amounts from the fund averaging, for the 2-year period from October 1, 2025 to September 30, 2027, inclusive, not less than $2,264,500,000 per year; provided, however, that all such payments shall fall into 1 of the following categories: (i) health equity incentive payments; (ii) clinical quality incentive payments; (iii) other incentive payments; (iv) rate payments for services provided to MassHealth members; (v) targeted payments to: (A) freestanding pediatric acute hospitals; (B) nonprofit teaching acute hospitals that provide medical, surgical, emergency and obstetrical services and are affiliated with a state-owned medical school; (C) freestanding cancer hospitals; (D) the acute hospital that had the lowest statewide commercial relative price in fiscal year 2019 as reported by the center for health information and analysis;  (E) the independent group 1 safety net hospital that had the largest percentile of operating loss in fiscal year 2022 as reported by the center for health information and analysis; (F) the acute hospital that had the highest statewide public payer mix in fiscal year 2023 as determined by the secretary; (G) the acute hospital affiliated with a health system with two or more critical access hospitals operating in the commonwealth in calendar year 2025, as determined by the secretary; or (H) to any non-state-owned public hospital in the commonwealth, as determined by the secretary. The secretary may determine funding allocations among and within each such category within a given year; provided, however, that such allocations shall be consistent with all approved federal waivers and state plan provisions; and provided further, that the secretary shall allocate an average of not less than $1,280,000,000 per year, for the 2-year period from October 1, 2025 to September 30, 2027, for the rate payments described in clause (iv), with an average of not less than $92,000,000 allocated for group 1 safety net hospitals for such 2-year period, an average of not less than $460,000,000 allocated for group 2 safety net hospitals for such 2-year period and an average of not less than $728,000,000 allocated across all acute hospitals for such 2-year period.

(3) Of the targeted payments described in clause (v) of the first sentence of paragraph (2), the secretary shall expend annually from the fund: (i) $70,000,000 to freestanding pediatric acute hospitals, of which at least 98 per cent shall be paid to the freestanding pediatric hospital that had the largest volume of inpatient discharges in fiscal year 2019; (ii) $35,000,000 to nonprofit teaching acute hospitals that provide medical, surgical, emergency and obstetrical services and are affiliated with a state-owned medical school; (iii) $14,000,000 to the acute hospital that had the lowest statewide commercial relative price in fiscal year 2019 as reported by the center for health information and analysis; (iv) $6,000,000 to freestanding cancer hospitals;  (v) $10,000,000 to the independent group 1 safety net hospital that had the largest operating percentile loss in fiscal year 2022 as reported by the center for health information and analysis; (vi) $6,000,000 to the acute hospital that had the highest statewide public payer mix in fiscal year 2023, as determined by the secretary; (vii) $6,000,000 to the acute hospital affiliated with a health system with two or more critical access hospitals operating in the commonwealth in calendar year 2025, as determined by the secretary; and (viii) $2,000,000 to any non-state-owned public hospital in the commonwealth, as determined by the secretary.

(4) Of the incentive payments described in clauses (i) and (ii) of paragraph (2), the secretary shall make interim payments to qualifying hospitals based on the secretary’s estimate of each such hospital’s final payment for the measurement period. As soon as practicable after the close of the measurement period, the secretary shall determine the final amount of each qualifying hospital’s incentive payments and shall reconcile each hospital’s interim payment with its final payment.

(5) If, in any fiscal year, the commonwealth fails to secure federal financial participation necessary to make expenditures described in this section, or if the total hospital assessment amount described in section 67 of chapter 118E is insufficient to support the distributions to the fund required to be made from the Health Safety Net Trust Fund established in section 66 of chapter 118E, or if such distributions are otherwise not made due to limitations on federal matching, applicable payment ceilings, or other restrictions under state or federal law, then the expenditures otherwise required to be made from the fund shall be reduced proportionally based on the total amount available for expenditure.

Section C.  Subsection (c) of section 2UUUUU of said chapter 29, as amended by section 186 of chapter 126 of the acts of 2022, is hereby by amended by inserting at the end thereof the following paragraph:

(3) If, in any fiscal year, the commonwealth fails to secure federal financial participation necessary to make expenditures described in this section, or if the total hospital assessment amount described in section 67 of chapter 118E is insufficient to support the distributions to the fund required to be made from the Health Safety Net Trust Fund established in section 66 of chapter 118E, or if such distributions are otherwise not made due to limitations on federal matching, applicable payment ceilings, or other restrictions under state or federal law, then the expenditures otherwise required to be made from the fund shall be reduced proportionally based on the total amount available for expenditure.

Section D. Section 64 of said chapter 118E, as appearing in the 2022 Official Edition, is hereby amended by striking out the definition of “Assessed Charges” and inserting in place thereof:-

''Assessed charges'', gross patient service revenue attributable to all patients less gross patient service revenue attributable to Title XVIII, XIX and XXI programs, as such revenues are reported to the center for health information and analysis and as determined by the secretary.

SECTION E. Said section 64 of said chapter 118E of the general laws, as amended by section 125 of chapter 140 of the acts of 2024, is hereby amended by striking out the figure “$1,484,050,000” and inserting in place thereof the following figure:- $1,534,050,000.

SECTION F. Section 66 of said chapter 118E, as amended by the by section 126 of chapter 140 of the acts of 2024, is hereby amended by striking out subsection (b) and inserting in its place thereof the following 2 subsections:-

(b) The fund shall consist of: (i) all amounts paid by hospitals and managed care organizations under sections 67 and 68; (ii) all appropriations for the purpose of payments to acute hospitals or community health centers for health services provided to uninsured and underinsured residents; (iii) any transfers from the Commonwealth Care Trust Fund established in section 2OOO of chapter 29; (iv) any transfers from the Safety Net Provider Trust Fund established in section 2AAAAA of chapter 29; (v) any transfers from the Hospital Investment and Performance Trust Fund established in section 2TTTTT of chapter 29; (vi) any transfers from the Managed Care Organization Services Reinvestment Fund established in section 2FFFFFF of chapter 29;, and (vii) all property and securities acquired by and through the use of money belonging to the fund and all interest thereon. There shall also be credited to the fund an amount equal to any federal financial participation claimed and received by the commonwealth for eligible expenditures made from the fund and financed by money transferred from the Hospital Investment and Performance Trust Fund established in section 2TTTTT of chapter 29, the Managed Care Organization Services Reinvestment Fund established in section 2FFFFFF of chapter 29, or from, the Safety Net Provider Trust Fund established in section 2AAAAA of chapter 29. To accommodate timing discrepancies between the receipt of such revenue and related expenditures, the comptroller may certify for payment amounts not to exceed the most recent revenue estimates as certified by the secretary of health and human services to be transferred, credited or deposited under this subsection. Annually, the office shall transfer from the non-federal money in the fund: (A) $149,300,000 to the Safety Net Provider Trust Fund established in section 2AAAAA of chapter 29; (B) $1,041,170,000 to the Hospital Investment and Performance Trust Fund established in section 2TTTTT of chapter 29; (C) $115,500,000 to the Population Health Investment Trust Fund established in section 2UUUUU of chapter 29; (D) $ 33,169,685 to the Non-Acute Care Hospital Reimbursement Trust Fund established in section 2WWWW of chapter 29; (E) an amount equal to the managed care organization reinvestment revenue amount to the Managed Care Organization Services Reinvestment Fund established in section 2FFFFFF of chapter 29; (F) an amount equal to the Massachusetts Child Psychiatry Access Project revenue amount to the Massachusetts Child Psychiatry Access Project Fund established in section 2EEEEEE of chapter 29; (G) an amount equal to the health policy commission revenue amount to the Healthcare Payment Reform Fund established in section 7 of chapter 6D; (H) an amount equal to the immunization revenue amount to the Vaccine Purchase Fund established in section 24N of chapter 111; (I) $33,700,000 to the Behavioral Health Access and Crisis Intervention Trust Fund established in section 2WWWWW of chapter 29; (J) an amount equal to the center for health information and analysis revenue amount to the Center for Health Information and Analysis Fund established in section 7A of chapter 12C; and (K) $35,000,000 to the Essential Community Provider Trust Fund established in section 2PPP of chapter 29. The office shall expend amounts in the fund, except for amounts transferred to the Safety Net Provider Trust Fund, the Hospital Investment and Performance Trust Fund, the Population Health Investment Trust Fund, the Non-Acute Care Hospital Reimbursement Trust Fund, the Managed Care Organization Services Reinvestment Fund, the Massachusetts Child Psychiatry Access Project Fund, the Vaccine Purchase Fund, the Center for Health and Information Analysis Fund, the Healthcare Payment Reform Fund and the Behavioral Health Access and Crisis Intervention Trust Fund, for payments to hospitals and community health centers for reimbursable health services provided to uninsured and underinsured residents, consistent with the requirements of this section, section 69 and the regulations adopted by the office. The amount collected pursuant to clause (viii) of the definition of the total managed care organization services assessment amount in section 64 shall be dedicated to reducing the shortfall, as described in subsection (b) of section 69, for the year prior to the assessment year. The office shall also annually expend money from the fund for the expenses of the executive office, including the health safety net office under subsection (a), for the administration of the health safety net and related assessments. The office shall also expend not more than $6,000,000 annually from the fund for demonstration projects that use case management and other methods to reduce the liability of the fund to acute hospitals. All interest earned on the amounts in the fund shall be deposited or retained in the fund. The director shall from time-to-time requisition from the fund amounts that the director considers necessary to meet the current obligations of the office for the purposes of the fund and estimated obligations for a reasonable future period.

(c) For each fiscal year, in the event that federal financial participation is not available for any of the Medicaid expenditures made or to be made from this fund or from amounts transferred from the fund pursuant to paragraphs (A), (B), (C), (D), or (K),  of this subsection, or hospital assessment funding serving as the non-federal share of such expenditures is not available due to the application of any federal law, regulation or policy, such as federal expenditure limits or federal health care-related tax rules, or for any other reason, the amount of each such forementioned transfer from the fund shall be reduced on a pro-rata basis by multiplying each such expenditure or transfer by a fraction, the numerator of which is the aggregate amount of the transfers from the fund pursuant to paragraphs (A), (B), (C), (D), or (K)  of this subsection for which federal financial participation will be available and the denominator of which is the aggregate amount the expenditures and transfers from the fund pursuant to paragraphs (A), (B), (C), (D), and or (K)  of this subsection that would otherwise be made.

SECTION G.  Said chapter 118E is hereby further amended by striking out section 67, as amended by the by chapter 140 of the acts of 2024, and inserting in place thereof the following section:-

Section 67. (a) Subject to all required federal approvals, including any required waivers under 42 CFR 433.68, a hospital’s annual liability to the fund shall be calculated in accordance with this section. The annual aggregate liability of all hospitals to the fund shall equal the total hospital assessment amount.

(b) [reserved].

(c) The office shall promulgate regulations establishing an appropriate mechanism for enforcing each hospital’s liability to the fund if a hospital does not make a scheduled payment to the fund.

(d) For the purposes of the assessment in this section, all hospitals in the commonwealth shall be divided into the following groups, as determined by the secretary: (i) large group 1 safety net hospitals which, for the purposes of this section, shall mean, any group 1 safety net hospital that had not less than 355 staffed beds in fiscal year 2022, as reported by the center for health information and analysis; (ii) small group 1 safety net hospitals which, for the purposes of this section, shall mean any group 1 safety net hospital that had less than 355 staffed beds in fiscal year 2022 as reported by the center for health information and analysis; (iii) large group 2 safety net hospitals which, for the purposes of this section, shall mean any group 2 safety net hospital that had not less than 355 staffed beds in fiscal year 2022 as reported by the center for health information and analysis; (iv) small group 2 safety net hospitals which, for the purposes of this section, shall mean any group 2 safety net hospital that had less than 355 staffed beds in fiscal year 2022 as reported by the center for health information and analysis; (v) freestanding pediatric acute hospitals; (vi) academic, teaching and specialty hospitals which, for the purposes of this section, shall mean an academic medical center, teaching hospital or specialty hospital as determined by the center for health information and analysis as of September 30, 2019, but excluding any high public payer hospital; (vii) private acute hospitals which, for the purposes of this section, shall mean a private hospital licensed under section 51 of chapter 111 that contains a majority of medical-surgical, pediatric, obstetric and maternity beds as defined by the department of public health and operating as of September 30, 2019, but excluding any safety net hospital or academic, teaching and specialty hospital; (viii) non-state public hospitals which, for the purposes of this section, shall mean any non-state-owned public hospital in the commonwealth as determined by the secretary; and (ix) non-acute hospitals which, for the purposes of this section shall mean any nonpublic hospital licensed by the department of public health under said section 51 of said chapter 111; provided, however, that non-acute hospital shall not include an acute care hospital under section 25B of said chapter 111 or a nonpublic hospital licensed as an inpatient facility by the department of mental health under section 19 of chapter 19 and regulations promulgated thereunder but not categorized as a class VII licensee under the regulations.

(e) Each of the groups described in subsection (d) shall be subject to the following assessment rates: (i) large group 1 safety net hospitals shall be subject to a rate of 16.510per cent for inpatient services and 8.000 per cent for outpatient services; (ii) small group 1 safety net hospitals shall be subject to a rate of 14.500 per cent for inpatient services and 5.500 per cent for outpatient services; (iii) large group 2 safety net hospitals shall be subject to a rate of 8.100 per cent for inpatient services and 16.200 per cent for outpatient services; (iv) small group 2 safety net hospitals shall be subject to a rate of 16.450 per cent for inpatient services and 9.100 per cent for outpatient services; (v) freestanding pediatric acute hospitals shall be subject to a rate of 3.300 per cent for inpatient services and 2.600 per cent for outpatient services; (vi) academic, teaching and specialty hospitals shall be subject to a rate of 4.675 per cent for inpatient services and 1.290 per cent for outpatient services; (vii) private acute hospitals shall be subject to a rate of 8.299 per cent for inpatient services and 0.720 per cent for outpatient services; (viii) non-state public hospitals shall be subject to a rate of 1.250 per cent for inpatient services and 1.250 per cent for outpatient services; and (ix) non-acute hospitals shall be subject to a rate of 3.300 per cent for inpatient services and 3.300 per cent for outpatient services; provided, however, that the office shall increase each such rate by the amount necessary to generate 50 per cent of the estimated cost as determined by the secretary of administration and finance, of administering the health safety net and related assessments in accordance with sections 65 to 69, inclusive. If hospital closures or hospital changes in status to a different type of provider would result in a reduction of total hospital assessment amount, the secretary may, by regulation, adjust the assessment rates to ensure the total hospital assessment amount is not reduced by more than $10,000,000 on an annual basis; provided, however, that any such adjustments to the rates shall ensure the rates remain in the same proportion to each other as established herein. If the total hospital assessment amount collected for the hospital assessment year exceeds the amount necessary to support the non-federal share of amounts transferred pursuant to paragraphs (A), (B), (C), (D), or (K) of subsection (b) of section 66, the secretary shall, by regulation, adjust the assessment rates for the subsequent hospital assessment year to ensure the total hospital assessment amount does not exceed the amount necessary to support such expenditures; provided, however, that any such adjustments shall ensure the rates remain in the same proportion to each other as established herein and provided that any such adjustment does not jeopardize federal financial participation. In order to adjust the assessment rates by regulation as described in this subsection, the secretary of health and human services shall seek all required federal approvals the secretary deems necessary.

(f) The assessment rates described in subsection (e) shall be applied to each hospital’s fiscal year 2023 assessed charges for inpatient and outpatient services as determined by the secretary of health and human services; provided, however, that the term “assessed charges” shall have the meaning ascribed to it in section 64. The total of the resulting products shall equal a hospital’s annual assessment liability.

(g) Subject to receipt of all required federal approvals, the executive office shall implement the assessment structure described in this section and shall promulgate regulations, after prior consultation with the Massachusetts Health and Hospital Association, Inc., necessary to support implementation of said assessment structure . In promulgating such regulations, and in consultation with the Massachusetts Health and Hospital Association, Inc. the executive office shall, at a minimum: (i) specify an appropriate mechanism for determination and payment of an acute hospital's liability to the fund; (ii) identify the hospitals that belong to each group identified in subsection (d); (iii) specify an appropriate mechanism for the determination of a hospital’s liability in cases of merger or transfer of ownership; and (iv) specify an appropriate mechanism by which any amounts paid by a hospital in excess of a hospital’s total annual assessment liability may be refunded or otherwise credited to the hospital. The executive office shall also publish or otherwise make available to the Massachusetts Health and Hospital Association, Inc., the data and methodology used in setting the tax rates and group classification prior to the promulgation of any such regulations.

(h) The secretary of health and human services may enforce the payment of required assessments under this section: (i) for hospitals licensed by the department of health, by notifying the department of the unpaid assessments and such information shall be considered by the department in determining suitability in accordance with section 51 of chapter 111 for the hospital or its affiliate provider entities; (ii) by offsetting payments from the office of Medicaid against the claims for payment by the delinquent hospital, against other hospitals or MassHealth-contracted entities under common ownership as the delinquent hospital or against any successor in interest to the hospital or such provider entities under common ownership, in the amount of the delinquent fees owed, including any interest, penalties and reasonable attorneys’ fees, and by transferring such funds into the fund; or (iii) creating, after demand for payment, a lien in favor of the commonwealth in an amount not to exceed the delinquent fees owed, including any interest, penalties and reasonable attorneys’ fees, encumbering the building in which the delinquent hospital is located, encumbering the real property upon which the delinquent hospital is located, including fixtures, equipment or goods used in the operation of the delinquent hospital, or encumbering any real property in which the delinquent hospital holds an interest.

SECTION H. Notwithstanding any general or special law to the contrary, the secretary of health and human services shall seek all required federal approvals the secretary deems necessary to implement sections A,B, C, D, E, F, and G, including any required waivers under 42 CFR § 433.68 necessary to implement the updates to the hospital assessment described in section 67 of chapter 118E of the General Laws. If, after having received any required federal approval necessary to implement said sections A, B, C, D, E, F, and G, such approval is withdrawn or is otherwise not in effect or if the secretary determines that a change in federal law or regulations or the administration of any such federal law or regulation requires a modification to the hospital assessment described in said section 67 of said chapter 118E or to the implementation of the Health Safety Net Trust Fund established in section 66 of said chapter 118E, the Non-Acute Care Hospital Reimbursement Trust Fund established in section 2WWWW of chapter 29 of the General Laws, the Safety Net Provider Trust Fund established in section 2AAAAA of said chapter 29, the Hospital Investment and Performance Trust Fund established in section 2TTTTT of said chapter 29 or the Population Health Investment Trust Fund established in section 2UUUUU of said chapter 29, the secretary shall provide written notification to the joint committee on health care financing and the house and senate committees on ways and means and shall collaborate with the Massachusetts Health and Hospital Association to develop, and prior to implementing, alternatives.

Not later than February 15, 2026, and annually thereafter, the secretary shall report to the joint committee on health care financing and the house and senate committees on ways and means: (i) the amount of the assessment made and collected from each hospital pursuant to said section 67 of said chapter 118E; and (ii) the amounts transferred to, deposited in, expended from and transferred from the Hospital Investment and Performance Trust Fund established in said section 2TTTTT of said chapter 29 and the Population Health Investment Trust Fund established in said section 2UUUUU of said chapter 29.

SECTION H. Notwithstanding any general or special law to the contrary, the comptroller, at the direction of the secretary of administration and finance, shall transfer in both fiscal year 2026 and 2027 $50,000,000 each such fiscal year from the Commonwealth Care Trust Fund established in section 2OOO of chapter 29 of the General Laws to the Health Safety Net Trust Fund established in section 66 of chapter 118E of the General Laws; provided, that such transfers shall be in addition to any other transfers from said Commonwealth Care Trust Fund to said Health Safety Net Trust Fund required in fiscal years 2026 or 2027; provided further, that such funds must be used first to reduce the shortfall, as described in subsection (b) of section 69 of said chapter 118E, for health safety net fiscal years 2026 and 2027, and that any remaining funds may be used to reduce the shortfall in any other open health safety net fiscal year; and provided further, that the amount equal to any federal financial participation revenues claimed and received by the commonwealth for eligible expenditures made from said Health Safety Net Trust Fund with these funds transferred from said Commonwealth Care Trust Fund shall be credited to said Health Safety Net Trust Fund.

SECTION X. Sections A, B, C, D, E, F, G and H shall take effect upon the later of (i) the date on which the secretary receives all federal approvals deemed necessary to implement said sections; or (ii) October 1, 2025.

SECTION Y. Section I shall take effect October 1, 2025.

Additional co-sponsor(s) added to Amendment #70, as changed to H4601

Massachusetts Hospital Assessment Structure and Health Safety Net Financing