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The 193rd General Court of the Commonwealth of Massachusetts

Section 2GGGG: Distressed Hospital Trust Fund

Section 2GGGG. (a) There shall be established and set upon the books of the commonwealth a separate fund to be known as the Distressed Hospital Trust Fund to be expended, without further appropriation, by the health policy commission. The fund shall consist public and private sources such as gifts, grants and donations, interest earned on such revenues and any funds provided from other sources.

The board of the health policy commission, as trustee, shall administer the fund and shall make expenditures from the fund consistent with this section; provided, however, that not more than 10 per cent of the amounts held in the fund in any 1 year shall be used by the commission for the combined cost of program administration, technical assistance to grantees or program evaluation.

(b) Revenues deposited in the fund that are unexpended at the end of the fiscal year shall not revert to the General Fund and shall be available for expenditure in the following fiscal year.

(c) All expenditures from the Distressed Hospital Trust Fund shall support the state's efforts to meet the health care cost growth benchmark established in section 9 of chapter 6D and shall be consistent with any activities funded by the e-Health Institute, the Healthcare Payment Reform Fund, and any delivery system transformation initiative funds authorized by the federal government. All expenditures shall have 1 or more of the following purposes: (1) to improve and enhance the ability of community hospitals to serve populations efficiently and effectively; (2) to advance the adoption of health information technology, including interoperable electronic health records systems; (3) to accelerate the ability to electronically exchange information with other providers in the community to ensure continuity of care; (4) to support infrastructure investments necessary for the transition to alternative payment methodologies, including technology investments in data analysis functions and performance management programs, including systems to promote provider price transparency, necessary to aggregate and analyze clinical data on a population level; (5) to aid in the development of care practices and other operational standards necessary for certification as an ACO under section 15 and 6D; and (6) to improve the affordability and quality of care.

(d) The commission shall annually award a grant by a competitive grant process to qualified acute hospitals. To be eligible to receive a grant under this subsection, a qualified acute hospital shall not include: (1) any hospital that is a teaching hospital; (2) any hospital whose relative prices are above the statewide median relative price, as determined by the center for health information analysis; or, (3) a for-profit hospital or a hospital that is part of a for-profit hospital system.

(e) A grant proposal submitted under subsection (d) shall include, but not be limited to: (1) a plan that defines specific goals for improving the efficiency and affordability of hospital care over a multi-year period; (2) the evidence-based programs the applicant shall use to meet the goals; (3) a budget necessary to implement the plan, including a detailed description of any funding or in-kind contributions the applicant or applicants will be providing in support of the proposal; (4) a plan for sustaining any investments after the expiration of grant funds; and (5) any other private funding or private sector participation the applicant anticipates in support of the proposal.

In reviewing the grant applications, the commission shall consider, among other factors: (1) the financial health of the qualified acute hospital and the demonstrated need for investment, taking into account all resources available to the particular provider including the relationship or affiliation of the particular provider to a health care delivery system and the capacity of the system to provide financial support for the acute hospital; (2) the anticipated return on investment, as measured by improved health care coordination and a reduction in health care costs; (3) whether the investment will support innovative health care delivery and payment models as identified by the health care policy commission; and (4) geographic need and population need. In assessing financial health, the commission shall, in consultation with the center for health information and analysis, take into account days cash on hand, net working capital and earnings before income tax, payer mix, uncompensated care, and depreciation and amortization, and access to working capital. If the commission determines that no suitable proposals have been received, such that the specific needs remain unmet, the commission may work directly with qualified acute hospitals to develop grant proposals.

(f) All approved grants shall contain a limit on the amount an acute hospital may spend on administrative or overhead spending related to the approved project, as determined by the commission.

(g) Funding for all approved interoperable health information technology projects for qualified acute hospitals shall be prioritized from any available funds in the Distressed Hospital Trust Fund before any funds from the e-Health Institute Trust Fund may be utilized.

(h) As a condition of an award, the commission may require a qualified hospital to agree to an independent financial and operational audit to recommend steps to increase sustainability and efficiency of the acute hospital.

(i) The commission shall develop guidelines for an annual review of the progress being made by each grantee. Each grantee shall participate in any evaluation or accountability process implemented or authorized by the commission. In the event that any recipient of grant monies from this trust does not utilize funding in a manner consistent with the approved grant application, the recipient shall be required to repay to the commission all or some portion, as determined by the commission, of the grant funds previously provided to the recipient under this section.

(j) The commission shall, annually on or before January 31, report on expenditures from the Distressed Hospital Trust Fund. The report shall include, but not be limited to: (1) the revenue credited to the fund; (2) the amount of fund expenditures attributable to the administrative costs of the commission; (3) an itemized list of the funds expended through the competitive grant process and a description of the grantee activities; and (4) the results of the evaluation of the effectiveness of the activities funded through grants. The report shall be provided to the chairpersons of the house and senate committees on ways and means and the joint committee on health care financing and shall be posted on the commission's website.

(k) The commission shall promulgate regulations necessary to carry out this section.