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art.008/6/008/5/008/4/008/3/008/2/008/1

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ARTICLE 8 AS AMENDED

RELATING TO MEDICAL ASSISTANCE

SECTION 1. Section 23-17-38.1 of the General Laws in Chapter 23-17 entitled "Licensing

of Healthcare Facilities" is hereby amended to read as follows:

23-17-38.1. Hospitals — Licensing fee.

(a) There is imposed a hospital licensing fee for state fiscal year 2023 against each hospital

in the state. The hospital licensing fee is equal to five and forty-two hundredths percent (5.42%) of

the net patient-services revenue of every hospital for the hospital’s first fiscal year ending on or

after January 1, 2021, except that the license fee for all hospitals located in Washington County,

Rhode Island shall be discounted by thirty-seven percent (37%). The discount for Washington

County hospitals is subject to approval by the Secretary of the U.S. Department of Health and

Human Services of a state plan amendment submitted by the executive office of health and human

services for the purpose of pursuing a waiver of the uniformity requirement for the hospital license

fee. This licensing fee shall be administered and collected by the tax administrator, division of

taxation within the department of revenue, and all the administration, collection, and other

provisions of chapter 51 of title 44 shall apply. Every hospital shall pay the licensing fee to the tax

administrator on or before June 30, 2023, and payments shall be made by electronic transfer of

monies to the general treasurer and deposited to the general fund. Every hospital shall, on or before

May 25, 2023, make a return to the tax administrator containing the correct computation of net

patient-services revenue for the hospital fiscal year ending September 30, 2021, and the licensing

fee due upon that amount. All returns shall be signed by the hospital’s authorized representative,

subject to the pains and penalties of perjury.

(b)(a) There is also imposed a hospital licensing fee described in subsections (c) through

(f) for state fiscal years 2024 and 2025 against net patient-services revenue of every non-

government owned hospital as defined herein for the hospital’s first fiscal year ending on or after

January 1, 2022. The hospital licensing fee shall have three (3) tiers with differing fees based on

inpatient and outpatient net patient-services revenue. The executive office of health and human

services, in consultation with the tax administrator, shall identify the hospitals in each tier, subject

to the definitions in this section, by July 15, 2023, and shall notify each hospital of its tier by August

1, 2023.

(b) There is also imposed a hospital licensing fee described in subsections (c) through (f)

for state fiscal year 2026 against net patient-services revenue of every non-government owned

hospital as defined herein for the hospital’s first fiscal year ending on or after January 1, 2023. The

hospital licensing fee shall have three (3) tiers with differing fees based on inpatient and outpatient

net patient-services revenue. The executive office of health and human services, in consultation

with the tax administrator, shall identify the hospitals in each tier, subject to the definitions in this

section, by July 15, 2025, and shall notify each hospital of its assigned tier by August 1, 2025.

(1) The inpatient hospital licensing fee for Tier 1 is equal to thirteen and twelve hundredths

percent (13.12%) of the inpatient net patient-services revenue derived from inpatient net patient-

services revenue of every Tier 1 hospital.

(2) The outpatient hospital licensing fee for Tier 1 is equal to thirteen and thirty hundredths

percent (13.30%) of the net patient-services revenue derived from outpatient net patient-services

revenue of every Tier 1 hospital.

(d) Tier 2 is composed of high Medicaid/uninsured cost hospitals and independent

hospitals.

(1) The inpatient hospital licensing fee for Tier 2 is equal to two and sixty-three hundredths

percent (2.63%) of the inpatient net patient-services revenue derived from inpatient net patient-

services revenue of every Tier 2 hospital.

(2) The outpatient hospital licensing fee for Tier 2 is equal to two and sixty-six hundredths

percent (2.66%) of the outpatient net patient-services revenue derived from outpatient net patient-

services revenue of every Tier 2 hospital.

(e) Tier 3 is composed of hospitals that are Medicare-designated low-volume hospitals and

rehabilitative hospitals.

(1) The inpatient hospital licensing fee for Tier 3 is equal to one and thirty-one hundredths

percent (1.31%) of the inpatient net patient-services revenue derived from inpatient net patient-

services revenue of every Tier 3 hospital.

(2) The outpatient hospital licensing fee for Tier 3 is equal to one and thirty-three

hundredths percent (1.33%) of the outpatient net patient-services revenue derived from outpatient

net patient-services revenue of every Tier 3 hospital.

(f) There is also imposed a hospital licensing fee for state fiscal year 2024 against state-

government owned and operated hospitals in the state as defined herein. The hospital licensing fee

is equal to five and twenty-five hundredths percent (5.25%) of the net patient-services revenue of

every hospital for the hospital’s first fiscal year ending on or after January 1, 2022. There is also

imposed a hospital licensing fee for state fiscal year years 2025 and 2026 against state-government

owned and operated hospitals in the state as defined herein equal to five and twenty-five hundredths

percent (5.25%) of the net patient-services revenue of every hospital for the hospital’s first fiscal

year ending on or after January 1, 2023.

(g) The hospital licensing fee described in subsections (b) through (f) is subject to U.S.

Department of Health and Human Services approval of a request to waive the requirement that

healthcare-related taxes be imposed uniformly as contained in 42 C.F.R. § 433.68(d).

(h) This hospital licensing fee shall be administered and collected by the tax administrator,

division of taxation within the department of revenue, and all the administration, collection, and

other provisions of chapter 51 of title 44 shall apply. Every hospital shall pay the licensing fee to

the tax administrator before June 30 June 25 of each fiscal year, and payments shall be made by

electronic transfer of monies to the tax administrator and deposited to the general fund. Every

hospital shall, on or before August 1, 2023 of each fiscal year, make a return to the tax administrator

containing the correct computation of inpatient and outpatient net patient-services revenue for the

hospital fiscal year ending in 2022 data referenced in subsection (a) and/or (b), and the licensing

fee due upon that amount. All returns shall be signed by the hospital’s authorized representative,

subject to the pains and penalties of perjury.

(i) For purposes of this section the following words and phrases have the following

meanings:

(1) “Gross patient-services revenue” means the gross revenue related to patient care

services.

(2) “High Medicaid/uninsured cost hospital” means a hospital for which the hospital’s total

uncompensated care, as calculated pursuant to § 40-8.3-2(4), divided by the hospital’s total net

patient-services revenues, is equal to six percent (6.0%) or greater.

(3) “Hospital” means the actual facilities and buildings in existence in Rhode Island,

licensed pursuant to § 23-17-1 et seq. on June 30, 2010, and thereafter any premises included on

that license, regardless of changes in licensure status pursuant to chapter 17.14 of this title (hospital

conversions) and § 23-17-6(b) (change in effective control), that provides short-term acute inpatient

and/or outpatient care to persons who require definitive diagnosis and treatment for injury, illness,

disabilities, or pregnancy. Notwithstanding the preceding language, the negotiated Medicaid

managed care payment rates for a court-approved purchaser that acquires a hospital through

receivership, special mastership, or other similar state insolvency proceedings (which court-

approved purchaser is issued a hospital license after January 1, 2013) shall be based upon the newly

negotiated rates between the court-approved purchaser and the health plan, and such rates shall be

effective as of the date that the court-approved purchaser and the health plan execute the initial

agreement containing the newly negotiated rate. The rate-setting methodology for inpatient hospital

payments and outpatient hospital payments set forth in §§ 40-8-13.4(b) and 40-8-13.4(b)(2),

respectively, shall thereafter apply to negotiated increases for each annual twelve-month (12)

period as of July 1 following the completion of the first full year of the court-approved purchaser’s

initial Medicaid managed care contract.

(4) “Independent hospitals” means a hospital not part of a multi-hospital system.

(5) “Inpatient net patient-services revenue” means the charges related to inpatient care

services less (i) Charges attributable to charity care; (ii) Bad debt expenses; and (iii) Contractual

allowances.

(6) “Medicare-designated low-volume hospital” means a hospital that qualifies under 42

C.F.R. 412.101(b)(2) for additional Medicare payments to qualifying hospitals for the higher

incremental costs associated with a low volume of discharges.

(7) “Net patient-services revenue” means the charges related to patient care services less

(i) Charges attributable to charity care; (ii) Bad debt expenses; and (iii) Contractual allowances.

(8) “Non-government owned hospitals” means a hospital not owned and operated by the

state of Rhode Island.

(9) “Outpatient net patient-services revenue” means the charges related to outpatient care

services less (i) Charges attributable to charity care; (ii) Bad debt expenses; and (iii) Contractual

allowances.

(10) “Rehabilitative hospital” means Rehabilitation Hospital Center licensed by the Rhode

Island department of health.

(11) “State-government owned and operated hospitals” means a hospital facility licensed

by the Rhode Island department of health, owned and operated by the state of Rhode Island.

(j) The tax administrator in consultation with the executive office of health and human

services shall make and promulgate any rules, regulations, and procedures not inconsistent with

state law and fiscal procedures that he or she deems necessary for the proper administration of this

section and to carry out the provisions, policy, and purposes of this section.

(k) The licensing fee imposed by subsection subsections (a) through (f) shall apply to

hospitals as defined herein that are duly licensed on July 1, 2022 2024, and shall be in addition to

the inspection fee imposed by § 23-17-38 and to any licensing fees previously imposed in

accordance with this section.

(l) The licensing fees imposed by subsections (b) through (f) shall apply to hospitals as

defined herein that are duly licensed on July 1, 2023, and shall be in addition to the inspection fee

imposed by § 23-17-38 and to any licensing fees previously imposed in accordance with this

section.

SECTION 2. Section 35-17-1 of the General Laws in Chapter 35-17 entitled "Medical

Assistance and Public Assistance Caseload Estimating Conferences" is hereby amended to read as

follows:

35-17-1. Purpose and membership.

(a) In order to provide for a more stable and accurate method of financial planning and

budgeting, it is hereby declared the intention of the legislature that there be a procedure for the

determination of official estimates of anticipated medical assistance expenditures and public

assistance caseloads, upon which the executive budget shall be based and for which appropriations

by the general assembly shall be made.

(b) The state budget officer, the house fiscal advisor, and the senate fiscal advisor shall

meet in regularly scheduled caseload estimating conferences (C.E.C.). These conferences shall be

open public meetings.

budget officer, the house fiscal advisor, and the senate fiscal advisor, hereinafter referred to as

principals. The schedule shall be arranged so that no chairperson shall preside over two (2)

successive regularly scheduled conferences on the same subject.

(d) Representatives of all state agencies are to participate in all conferences for which their

input is germane.

(e) The department of human services shall provide monthly data to the members of the

caseload estimating conference by the fifteenth day of the following month. Monthly data shall

include, but is not limited to, actual caseloads and expenditures for the following case assistance

programs: Rhode Island Works, SSI state program, general public assistance, and child care. For

individuals eligible to receive the payment under § 40-6-27(a)(1)(vi) [repealed], the report shall

include the number of individuals enrolled in a managed care plan receiving long-term care services

and supports and the number receiving fee-for-service benefits. The executive office of health and

human services shall report relevant caseload information and expenditures for the following

medical assistance categories: hospitals, long-term care, managed care, pharmacy, and other

medical services. In the category of managed care, caseload information and expenditures for the

following populations shall be separately identified and reported: children with disabilities,

children in foster care, and children receiving adoption assistance and RIte Share enrollees under §

40-8.4-12(j). The information shall include the number of Medicaid recipients whose estate may

be subject to a recovery and the anticipated amount to be collected from those subject to recovery,

the total recoveries collected each month and number of estates attached to the collections and each

month, the number of open cases and the number of cases that have been open longer than three

months. The executive office will also report separately the amount that the Medicaid expenditures

have been reduced by third-party liability payments to providers, supplemental income verification

tools, the department of administration's office of internal audit and program integrity unit, and

recoveries from ABLE accounts.

(f) Beginning July 1, 2021, the department of behavioral healthcare, developmental

disabilities and hospitals shall provide monthly data to the members of the caseload estimating

conference by the twenty-fifth day of the following month. Monthly data shall include, but is not

limited to, actual caseloads and expenditures for the private community developmental disabilities

services program. Information shall include, but not be limited to: the number of cases and

expenditures from the beginning of the fiscal year at the beginning of the prior month; cases added

and denied during the prior month; expenditures made; and the number of cases and expenditures

at the end of the month. The information concerning cases added and denied shall include summary

information and profiles of the service-demand request for eligible adults meeting the state statutory

definition for services from the division of developmental disabilities as determined by the division,

including age, Medicaid eligibility and agency selection placement with a list of the services

provided, and the reasons for the determinations of ineligibility for those cases denied. The

department shall also provide, monthly, the number of individuals in a shared-living arrangement

and how many may have returned to a twenty-four-hour (24) residential placement in that month.

The department shall also report, monthly, any and all information for the consent decree that has

been submitted to the federal court as well as the number of unduplicated individuals employed;

the place of employment; and the number of hours working. The department shall also provide the

amount of funding allocated to individuals above the assigned resource levels; the number of

individuals and the assigned resource level; and the reasons for the approved additional resources.

The department will also collect and forward to the house fiscal advisor, the senate fiscal advisor,

and the state budget officer, by November 1 of each year, the annual cost reports for each

community-based provider for the prior fiscal year. The department shall also provide the amount

of patient liability to be collected and the amount collected as well as the number of individuals

who have a financial obligation. The department will also provide a list of community-based

providers awarded an advanced payment for residential and community-based day programs; the

address for each property; and the value of the advancement. If the property is sold, the department

must report the final sale, including the purchaser, the value of the sale, and the name of the agency

that operated the facility. If residential property, the department must provide the number of

individuals residing in the home at the time of sale and identify the type of residential placement

that the individual(s) will be moving to. The department must report if the property will continue

to be licensed as a residential facility. The department will also report any newly licensed twenty-

four-hour (24) group home; the provider operating the facility; and the number of individuals

residing in the facility. Prior to December 1, 2017, the department will provide the authorizations

for community-based and day programs, including the unique number of individuals eligible to

receive the services and at the end of each month the unique number of individuals who participated

in the programs and claims processed.

(g) The executive office of health and human services shall provide direct assistance to the

department of behavioral healthcare, developmental disabilities and hospitals to facilitate

compliance with the monthly reporting requirements in addition to preparation for the caseload

estimating conferences.

SECTION 3. Section 40-6-9.1 of the General Laws in Chapter 40-6 entitled "Public

Assistance Act" is hereby amended to read as follows:

40-6-9.1. Data matching — Healthcare coverages.

(a) For purposes of this section, the term “medical assistance program” shall mean medical

assistance provided in whole or in part by the department of human services executive office of

health and human services pursuant to chapters 5.1, 8, 8.4 of this title, 12.3 of title 42 and/or Title

XIX or XXI of the federal Social Security Act, as amended, 42 U.S.C. § 1396 et seq. and 42 U.S.C.

§ 1397aa et seq., respectively. Any references to the department office shall be to the department

of human services executive office of health and human services.

(b) In furtherance of the assignment of rights to medical support to the department of

human services executive office of health and human services under § 40-6-9(b), (c), (d), and (e),

and in order to determine the availability of other sources of healthcare insurance or coverage for

beneficiaries of the medical assistance program, and to determine potential third-party liability for

medical assistance paid out by the department office, all health insurers, health-maintenance

organizations, including managed care organizations, and third-party administrators, self-insured

plans, pharmacy benefit managers (PBM), and other parties that are by statute, contract, or

agreement, legally responsible for payment of a claim for a healthcare item of service doing

business in the state of Rhode Island shall permit and participate in data matching with the

department of human services executive office of health and human services, as provided in this

section, to assist the department office to identify medical assistance program applicants,

beneficiaries, and/or persons responsible for providing medical support for applicants and

beneficiaries who may also have healthcare insurance or coverage in addition to that provided, or

to be provided, by the medical assistance program and to determine any third-party liability in

accordance with this section.

The department office shall take all reasonable measures to determine the legal liability of

all third parties (including health insurers, self-insured plans, group health plans (as defined in §

607(1) of the Employee Retirement Income Security Act of 1974 [29 U.S.C. § 1167(1)]), service

benefit plans, health-maintenance organizations, managed care organizations, pharmacy benefit

managers, or other parties that are, by statute, contract, or agreement, legally responsible for

payment of a claim for a healthcare item or service), to pay for care and services on behalf of a

medical assistance recipient, including collecting sufficient information to enable the department

office to pursue claims against such third parties.

In any case where such a legal liability is found to exist and medical assistance has been

made available on behalf of the individual (beneficiary), the department office shall seek

reimbursement for the assistance to the extent of the legal liability and in accordance with the

assignment described in § 40-6-9.

To the extent that payment has been made by the department office for medical assistance

to a beneficiary in any case where a third party has a legal liability to make payment for the

assistance, and to the extent that payment has been made by the department office for medical

assistance for healthcare items or services furnished to an individual, the department office (state)

is considered to have acquired the rights of the individual to payment by any other party for the

healthcare items or services in accordance with § 40-6-9.

Any health insurer (including a group health plan, as defined in § 607(1) of the Employee

Retirement Income Security Act of 1974 [29 U.S.C. § 1167(1)], a self-insured plan, a service-

benefit plan, a managed care organization, a pharmacy benefit manager, or other party that is, by

statute, contract, or agreement, legally responsible for payment of a claim for a healthcare item or

service), in enrolling an individual, or in making any payments for benefits to the individual or on

the individual’s behalf, is prohibited from taking into account that the individual is eligible for, or

is provided, medical assistance under a plan under 42 U.S.C. § 1396 et seq. for this state, or any

other state.

maintenance organizations, third-party administrators, nonprofit medical-service corporations,

nonprofit hospital-service corporations, subject to the provisions of chapters 18, 19, 20, and 41 of

title 27, as well as, self-insured plans, group health plans (as defined in § 607(1) of the Employee

Retirement Income Security Act of 1974 [29 U.S.C. § 1167(1)]), service-benefit plans, managed

care organizations, pharmacy benefit managers, or other parties that are, by statute, contract, or

agreement, legally responsible for payment of a claim for a healthcare item or service) doing

business in this state shall:

(1) Provide member information within fourteen (14) calendar days of the request to the

department office to enable the medical assistance program to identify medical assistance program

recipients, applicants and/or persons responsible for providing medical support for those recipients

and applicants who are, or could be, enrollees or beneficiaries under any individual or group health

insurance contract, plan, or policy available or in force and effect in the state;

(2) With respect to individuals who are eligible for, or are provided, medical assistance by

the department office, upon the request of the department office, provide member information

within fourteen (14) calendar days of the request to determine during what period the individual or

his or hertheir spouse or dependents may be (or may have been) covered by a health insurer and

the nature of the coverage that is, or was provided by the health insurer (including the name,

address, and identifying number of the plan);

(3) Accept the state’s right of recovery and the assignment to the state of any right of an

individual or other entity to payment from the party for an item or service for which payment has

been made by the department office;

(4) Respond to any inquiry by the department office regarding a claim for payment for any

healthcare item or service that is submitted not later than three (3) years after the date of the

provision of the healthcare item or service; and

(5) Agree not to deny a claim submitted by the state based solely on procedural reasons,

such as on the basis of the date of submission of the claim, the type or format of the claim form,

failure to obtain a prior authorization, or a failure to present proper documentation at the point-of-

sale that is the basis of the claim, if—:

(i) The claim is submitted by the state within the three-year (3) period beginning on the

date on which the item or service was furnished; and

(ii) Any action by the state to enforce its rights with respect to the claim is commenced

within six (6) years of the state’s submission of such claim.;

(6) Agree to respond to any inquiry regarding claims within sixty (60) business days after

receipt of the written documentation by the Medicaid recipient.; and

(7) Agree to not deny a claim for failure to obtain prior authorization for an item or service.

In the case of a responsible third party that requires prior authorization for an item or service

furnished to an individual eligible to receive medical assistance under the state Medicaid program,

the third-party health insurer shall accept authorization provided by the state medical assistance

program that the item or service is covered by Medicaid as if that authorization is a prior

authorization made by the third-party health insurer for the item or service.

(d) This information shall be made available by these insurers and health-maintenance

organizations and used by the department of human services executive office of health and human

services only for the purposes of, and to the extent necessary for, identifying these persons,

determining the scope and terms of coverage, and ascertaining third-party liability. The department

of human services executive office of health and human services shall provide information to the

health insurers, including health insurers, self-insured plans, group health plans (as defined in §

607(1) of the Employee Retirement Income Security Act of 1974 [29 U.S.C. § 1167(1)]), service-

benefit plans, managed care organizations, pharmacy benefit managers, or other parties that are, by

statute, contract, or agreement, legally responsible for payment of a claim for a healthcare item or

service) only for the purposes described herein.

(e) No health insurer, health-maintenance organization, or third-party administrator that

provides, or makes arrangements to provide, information pursuant to this section shall be liable in

any civil or criminal action or proceeding brought by beneficiaries or members on account of this

action for the purposes of violating confidentiality obligations under the law.

(f) The department office shall submit any appropriate and necessary state plan provisions.

(g) The department of human services executive office of health and human services is

authorized and directed to promulgate regulations necessary to ensure the effectiveness of this

section.

SECTION 4. Section 40-8-19 of the General Laws in Chapter 40-8 entitled "Medical

Assistance" is hereby amended to read as follows:

40-8-19. Rates of payment to nursing facilities.

(a) Rate reform.

(1) The rates to be paid by the state to nursing facilities licensed pursuant to chapter 17 of

title 23, and certified to participate in Title XIX of the Social Security Act for services rendered to

Medicaid-eligible residents, shall be reasonable and adequate to meet the costs that must be

incurred by efficiently and economically operated facilities in accordance with 42 U.S.C. §

1396a(a)(13). The executive office of health and human services (“executive office”) shall

promulgate or modify the principles of reimbursement for nursing facilities in effect as of July 1,

2011, to be consistent with the provisions of this section and Title XIX, 42 U.S.C. § 1396 et seq.,

of the Social Security Act.

(2) The executive office shall review the current methodology for providing Medicaid

payments to nursing facilities, including other long-term care services providers, and is authorized

to modify the principles of reimbursement to replace the current cost-based methodology rates with

rates based on a price-based methodology to be paid to all facilities with recognition of the acuity

of patients and the relative Medicaid occupancy, and to include the following elements to be

developed by the executive office:

(i) A direct-care rate adjusted for resident acuity;

(ii) An indirect-care and other direct-care rate comprised of a base per diem for all facilities;

(iii) Revision of rates as necessary based on increases in direct and indirect costs beginning

October 2024 utilizing data from the most recent finalized year of facility cost report. The per diem

rate components deferred in subsections (a)(2)(i) and (a)(2)(ii) of this section shall be adjusted

accordingly to reflect changes in direct and indirect care costs since the previous rate review;

(iv) Application of a fair-rental value system;

(v) Application of a pass-through system; and

(vi) Adjustment of rates by the change in a recognized national nursing home inflation

index to be applied on October 1 of each year, beginning October 1, 2012. This adjustment will not

occur on October 1, 2013, October 1, 2014, or October 1, 2015, but will occur on April 1, 2015.

The adjustment of rates will also not occur on October 1, 2017, October 1, 2018, October 1, 2019,

and October 2022. Effective July 1, 2018, rates paid to nursing facilities from the rates approved

by the Centers for Medicare and Medicaid Services and in effect on October 1, 2017, both fee-for-

service and managed care, will be increased by one and one-half percent (1.5%) and further

increased by one percent (1%) on October 1, 2018, and further increased by one percent (1%) on

October 1, 2019. Effective October 1, 2022, rates paid to nursing facilities from the rates approved

by the Centers for Medicare and Medicaid Services and in effect on October 1, 2021, both fee-for-

service and managed care, will be increased by three percent (3%). In addition to the annual nursing

home inflation index adjustment, there shall be a base rate staffing adjustment of one-half percent

(0.5%) on October 1, 2021, one percent (1.0%) on October 1, 2022, and one and one-half percent

(1.5%) on October 1, 2023. For the twelve-(12)month (12) period beginning October 1, 2025, rates

paid to nursing facilities from the rates approved by the Centers for Medicare and Medicaid

Services and in effect on October 1, 2024, both fee-for-service and managed care, will be increased

by two and three-tenths percent (2.3%). There shall also be a base rate staffing adjustment of three

percent (3%) effective October 1, 2025. Not less than one hundred percent (100%) of this base-rate

staffing adjustment shall be expended by each nursing facility to increase compensation, wages,

benefits, and related employer costs, for eligible direct-care staff, including the cost of hiring

additional eligible direct-care positions, as defined in this subsection (a)(2)(vi). The inflation index

shall be applied without regard for the transition factors in subsections (b)(1) and (b)(2). For

purposes of October 1, 2016, adjustment only, any rate increase that results from application of the

inflation index to subsections (a)(2)(i) and (a)(2)(ii) shall be dedicated to increase compensation

for direct-care workers in the following manner: Not less than85%eighty-five (85%) of this

aggregate amount shall be expended to fund an increase in wages, benefits, or related employer

costs of direct-care staff of nursing homes. For purposes of this section, direct-care staff shall

include registered nurses (RNs), licensed practical nurses (LPNs), certified nursing assistants

(CNAs), certified medical technicians, housekeeping staff, laundry staff, dietary staff, or other

similar employees providing direct-care services; provided, however, that this definition of direct-

care staff shall not include: (i) RNs and LPNs who are classified as “exempt employees” under the

federal Fair Labor Standards Act (29 U.S.C. § 201 et seq.); or (ii) CNAs, certified medical

technicians, RNs, or LPNs who are contracted, or subcontracted, through a third-party vendor or

staffing agency. By July 31, 2017, nursing facilities shall submit to the secretary, or designee, a

certification that they have complied with the provisions of this subsection (a)(2)(vi) with respect

to the inflation index applied on October 1, 2016. Any facility that does not comply with the terms

of such certification shall be subjected to a clawback, paid by the nursing facility to the state, in the

amount of increased reimbursement subject to this provision that was not expended in compliance

with that certification.

(3) Commencing on October 1, 2021, eighty percent (80%) of any rate increase that results

from application of the inflation index to subsections (a)(2)(i) and (a)(2)(ii) of this section shall be

dedicated to increase compensation for all eligible direct-care workers in the following manner on

October 1, of each year.

(i) For purposes of this subsection, compensation increases shall include base salary or

hourly wage increases, benefits, other compensation, and associated payroll tax increases for

eligible direct-care workers. This application of the inflation index shall apply for Medicaid

reimbursement in nursing facilities for both managed care and fee-for-service. For purposes of this

subsection, direct-care staff shall include registered nurses (RNs), licensed practical nurses (LPNs),

certified nursing assistants (CNAs), certified medication technicians, licensed physical therapists,

licensed occupational therapists, licensed speech-language pathologists, mental health workers

who are also certified nurse assistants, physical therapist assistants, social workerworkers, or any

nurse aideaides with a valid license, even if it is probationary, housekeeping staff, laundry staff,

dietary staff, or other similar employees providing direct-care services; provided, however that this

definition of direct-care staff shall not include:

(A) RNs and LPNs who are classified as “exempt employees” under the federal Fair Labor

Standards Act (29 U.S.C. § 201 et seq.); or

(B) CNAs, certified medication technicians, RNs, or LPNs who are contracted or

subcontracted through a third-party vendor or staffing agency.

(4)(i) By July 31, 2021, and July 31 of each year thereafter, nursing facilities shall submit

to the secretary or designee a certification that they have complied with the provisions of subsection

(a)(3) of this section with respect to the inflation index applied on October 1. The executive office

of health and human services (EOHHS) shall create the certification form nursing facilities must

complete with information on how each individual eligible employee’s compensation increased,

including information regarding hourly wages prior to the increase and after the compensation

increase, hours paid after the compensation increase, and associated increased payroll taxes. A

collective bargaining agreement can be used in lieu of the certification form for represented

employees. All data reported on the compliance form is subject to review and audit by EOHHS.

The audits may include field or desk audits, and facilities may be required to provide additional

supporting documents including, but not limited to, payroll records.

(ii) Any facility that does not comply with the terms of certification shall be subjected to a

clawback and twenty-five percent (25%) penalty of the unspent or impermissibly spent funds, paid

by the nursing facility to the state, in the amount of increased reimbursement subject to this

provision that was not expended in compliance with that certification.

(iii) In any calendar year where no inflationary index is applied, eighty percent (80%) of

the base rate staffing adjustment in that calendar year pursuant to subsection (a)(2)(vi) of this

section shall be dedicated to increase compensation for all eligible direct-care workers in the

manner referenced in subsections (a)(3)(i), (a)(3)(i)(A), and (a)(3)(i)(B) of this section.

(b) Transition to full implementation of rate reform. For no less than four (4) years after

the initial application of the price-based methodology described in subsection (a)(2) to payment

rates, the executive office of health and human services shall implement a transition plan to

moderate the impact of the rate reform on individual nursing facilities. The transition shall include

the following components:

(1) No nursing facility shall receive reimbursement for direct-care costs that is less than

the rate of reimbursement for direct-care costs received under the methodology in effect at the time

of passage of this act; for the year beginning October 1, 2017, the reimbursement for direct-care

costs under this provision will be phased out in twenty-five-percent (25%) increments each year

until October 1, 2021, when the reimbursement will no longer be in effect; and

(2) No facility shall lose or gain more than five dollars ($5.00) in its total, per diem rate the

first year of the transition. An adjustment to the per diem loss or gain may be phased out by twenty-

five percent (25%) each year; except, however, for the years beginning October 1, 2015, there shall

be no adjustment to the per diem gain or loss, but the phase out shall resume thereafter; and

(3) The transition plan and/or period may be modified upon full implementation of facility

per diem rate increases for quality of care-related measures. Said modifications shall be submitted

in a report to the general assembly at least six (6) months prior to implementation.

(4) Notwithstanding any law to the contrary, for the twelve-month (12) period beginning

July 1, 2015, Medicaid payment rates for nursing facilities established pursuant to this section shall

not exceed ninety-eight percent (98%) of the rates in effect on April 1, 2015. Consistent with the

other provisions of this chapter, nothing in this provision shall require the executive office to restore

the rates to those in effect on April 1, 2015, at the end of this twelve-month (12) period.

SECTION 5. Sections 40-8.3-2 and 40-8.3-3 of the General Laws in Chapter 40-8.3 entitled

"Uncompensated Care" are hereby amended to read as follows:

40-8.3-2. Definitions.

As used in this chapter:

(1) “Base year” means, for the purpose of calculating a disproportionate share payment for

any fiscal year ending after September 30, 2023 2024, the period from October 1, 2021 2022,

through September 30, 2022 2023, and for any fiscal year ending after September 30, 2024 2025,

the period from October 1, 2022 2023, through September 30, 2023 2024.

(2) “Medicaid inpatient utilization rate for a hospital” means a fraction (expressed as a

percentage), the numerator of which is the hospital’s number of inpatient days during the base year

attributable to patients who were eligible for medical assistance during the base year and the

denominator of which is the total number of the hospital’s inpatient days in the base year.

(3) “Participating hospital” means any nongovernment and nonpsychiatric hospital that:

(i) Was licensed as a hospital in accordance with chapter 17 of title 23 during the base year

and shall mean the actual facilities and buildings in existence in Rhode Island, licensed pursuant to

§ 23-17-1 et seq. on June 30, 2010, and thereafter any premises included on that license, regardless

of changes in licensure status pursuant to chapter 17.14 of title 23 (hospital conversions) and § 23-

17-6(b) (change in effective control), that provides short-term, acute inpatient and/or outpatient

care to persons who require definitive diagnosis and treatment for injury, illness, disabilities, or

pregnancy. Notwithstanding the preceding language, the negotiated Medicaid managed care

payment rates for a court-approved purchaser that acquires a hospital through receivership, special

mastership, or other similar state insolvency proceedings (which court-approved purchaser is issued

a hospital license after January 1, 2013), shall be based upon the newly negotiated rates between

the court-approved purchaser and the health plan, and the rates shall be effective as of the date that

the court-approved purchaser and the health plan execute the initial agreement containing the newly

negotiated rate. The rate-setting methodology for inpatient hospital payments and outpatient

hospital payments set forth in §§ 40-8-13.4(b)(1)(ii)(C) and 40-8-13.4(b)(2), respectively, shall

thereafter apply to negotiated increases for each annual twelve-month (12) period as of July 1

following the completion of the first full year of the court-approved purchaser’s initial Medicaid

managed care contract;

(ii) Achieved a medical assistance inpatient utilization rate of at least one percent (1%)

during the base year; and

(iii) Continues to be licensed as a hospital in accordance with chapter 17 of title 23 during

the payment year.

(4) “Uncompensated-care costs” means, as to any hospital, the sum of: (i) The cost incurred

by the hospital during the base year for inpatient or outpatient services attributable to charity care

(free care and bad debts) for which the patient has no health insurance or other third-party coverage

less payments, if any, received directly from such patients; (ii) The cost incurred by the hospital

during the base year for inpatient or outpatient services attributable to Medicaid beneficiaries less

any Medicaid reimbursement received therefor; and (iii) the sum of subsections (4)(i) and (4)(ii) of

this section shall be offset by the estimated hospital’s commercial equivalent rates state directed

payment for the current SFY in which the disproportionate share hospital (DSH) payment is made.

The sum of subsections (4)(i), (4)(ii), and (4)(iii) of this section shall be multiplied by the

uncompensated care index.

(5) “Uncompensated-care index” means the annual percentage increase for hospitals

established pursuant to § 27-19-14 [repealed] for each year after the base year, up to and including

the payment year; provided, however, that the uncompensated-care index for the payment year

ending September 30, 2007, shall be deemed to be five and thirty-eight hundredths percent (5.38%),

and that the uncompensated-care index for the payment year ending September 30, 2008, shall be

deemed to be five and forty-seven hundredths percent (5.47%), and that the uncompensated-care

index for the payment year ending September 30, 2009, shall be deemed to be five and thirty-eight

hundredths percent (5.38%), and that the uncompensated-care index for the payment years ending

September 30, 2010, September 30, 2011, September 30, 2012, September 30, 2013, September

30, 2014, September 30, 2015, September 30, 2016, September 30, 2017, September 30, 2018,

September 30, 2019, September 30, 2020, September 30, 2021, September 30, 2022, September

30, 2023, September 30, 2024, and September 30, 2025, and September 30, 2026, shall be deemed

to be five and thirty hundredths percent (5.30%).

40-8.3-3. Implementation.

(a) For federal fiscal year 2023, commencing on October 1, 2022, and ending September

30, 2023, the executive office of health and human services shall submit to the Secretary of the

United States Department of Health and Human Services a state plan amendment to the Rhode

Island Medicaid DSH Plan to provide:

(1) That the DSH Plan to all participating hospitals, not to exceed an aggregate limit of

$159.0 million, shall be allocated by the executive office of health and human services to the Pool

D component of the DSH Plan; and

(2) That the Pool D allotment shall be distributed among the participating hospitals in direct

proportion to the individual participating hospital’s uncompensated-care costs for the base year,

inflated by the uncompensated-care index to the total uncompensated-care costs for the base year

inflated by the uncompensated-care index for all participating hospitals. The disproportionate share

payments shall be made on or before June 15, 2023, and are expressly conditioned upon approval

on or before June 23, 2023, by the Secretary of the United States Department of Health and Human

Services, or his or her authorized representative, of all Medicaid state plan amendments necessary

to secure for the state the benefit of federal financial participation in federal fiscal year 2023 for

the disproportionate share payments.

(b)(a) For federal fiscal year 2024, commencing on October 1, 2023, and ending September

30, 2024, the executive office of health and human services shall submit to the Secretary of the

United States Department of Health and Human Services a state plan amendment to the Rhode

Island Medicaid DSH Plan to provide:

(1) That the DSH Plan to all participating hospitals, not to exceed an aggregate limit of

$14.8 million, shall be allocated by the executive office of health and human services to the Pool

D component of the DSH Plan; and

(2) That the Pool D allotment shall be distributed among the participating hospitals in direct

proportion to the individual participating hospital’s uncompensated-care costs for the base year,

inflated by the uncompensated-care index to the total uncompensated-care costs for the base year

inflated by the uncompensated-care index for all participating hospitals. The disproportionate share

payments shall be made on or before June 30, 2024, and are expressly conditioned upon approval

on or before June 23, 2024, by the Secretary of the United States Department of Health and Human

Services, or his or hertheir authorized representative, of all Medicaid state plan amendments

necessary to secure for the state the benefit of federal financial participation in federal fiscal year

2024 for the disproportionate share payments.

(c)(b) For federal fiscal year 2025, commencing on October 1, 2024, and ending September

30, 2025, the executive office of health and human services shall submit to the Secretary of the

United States Department of Health and Human Services a state plan amendment to the Rhode

Island Medicaid DSH plan to provide:

(1) The creation of Pool C which allots no more than nineteen million nine hundred

thousand dollars ($19,900,000) twelve million nine hundred thousand dollars ($12,900,000) to

Medicaid eligible government-owned hospitals;

(2) That the DSH plan to all participating hospitals, not to exceed an aggregate limit of

$34.7 $27.7 million, shall be allocated by the executive office of health and human services to the

Pool C and D components of the DSH plan;

(3) That the Pool D allotment shall be distributed among the participating hospitals in direct

proportion to the individual participating hospital’s uncompensated-care costs for the base year,

inflated by the uncompensated-care index to the total uncompensated-care costs for the base year

inflated by the uncompensated-care index of all participating hospitals. The disproportionate share

payments shall be made on or before June 30, 2025, and are expressly conditioned upon approval

on or before June 23, 2025, by the Secretary of the United States Department of Health and Human

Services, or their authorized representative, of all Medicaid state plan amendments necessary to

secure for the state the benefit of federal financial participation in federal fiscal year 2025 for the

disproportionate share payments; and

(4) That the Pool C allotment shall be distributed among the participating hospitals in direct

proportion to the individual participating hospital’s uncompensated-care costs for the base year,

inflated by the uncompensated-care index to the total uncompensated-care cost for the base year

inflated by the uncompensated-care index of all participating hospitals. The disproportionate share

payments shall be made on or before June 30, 2025, and are expressly conditioned upon approval

on or before June 23, 2025, by the Secretary of the United States Department of Health and Human

Services, or their authorized representative, of all Medicaid state plan amendments necessary to

secure for the state the benefit of federal financial participation in federal fiscal year 2025 for the

disproportionate share payments.

30, 2026, the executive office of health and human services shall submit to the Secretary of the

United States Department of Health and Human Services a state plan amendment to the Rhode

Island Medicaid DSH plan to provide:

(1) That the DSH plan to all participating hospitals, not to exceed an aggregate limit of

$13.9 million, shall be allocated by the executive office of health and human services to the Pool

C and D components of the DSH plan. Pool C shall not exceed an aggregate limit of $12.9 million.

Pool D shall not exceed an aggregate limit of $1.0 million.;

(2) That the Pool C allotment shall be distributed among the participating hospitals in direct

proportion to the individual participating hospital’s uncompensated-care costs for the base year,

inflated by the uncompensated-care index to the total uncompensated-care cost for the base year

inflated by the uncompensated-care index of all participating hospitals. The disproportionate share

payments shall be made on or before June 30, 2026, and are expressly conditioned upon approval

on or before June 23, 2026, by the Secretary of the United States Department of Health and Human

Services, or their authorized representative, of all Medicaid state plan amendments necessary to

secure for the state the benefit of federal financial participation in federal fiscal year 2026 for the