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1 State of Arkansas A Bill
2 95th General Assembly
3 Regular Session, 2025 HOUSE BILL 1969
4
5 By: Representatives L. Johnson, Achor
6 By: Senator J. Boyd
7
8 For An Act To Be Entitled
9 AN ACT TO IMPROVE THE QUALITY OF HEALTHCARE ACCESS IN
10 THIS STATE; TO AMEND THE LAW CONCERNING ASSESSMENT
11 FEES ON HOSPITALS; TO CREATE THE HOSPITAL DIRECTED
12 PAYMENT ASSESSMENT; TO CREATE THE GRADUATE MEDICAL
13 EDUCATION EXPANSION PROGRAM; AND FOR OTHER PURPOSES.
14
15
16 Subtitle
17 TO IMPROVE THE QUALITY OF HEALTHCARE
18 ACCESS; TO AMEND THE ASSESSMENT FEES ON
19 HOSPITALS; AND TO CREATE THE HOSPITAL
20 DIRECTED PAYMENT ASSESSMENT.
21
22 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS:
23
24 SECTION 1. Arkansas Code Title 20, Chapter 77, Subchapter 1, is
25 amended to add an additional section to read as follows:
26 20-77-154. Graduate Medical Education Expansion Account -- Graduate
27 Medical Education Expansion Program.
28 (a) There is created within the Arkansas Medicaid Program Trust Fund a
29 designated account known as the "Graduate Medical Education Expansion
30 Account".
31 (b) Moneys in the Graduate Medical Education Expansion Account shall
32 consist of all moneys collected or received by the Division of Medical
33 Services from � 26-57-610(b)(6)(B)(ii).
34 (c) The Graduate Medical Education Expansion Account shall be separate
35 and distinct from the General Revenue Fund Account of the State Apportionment
36 Fund and shall be supplementary to the Arkansas Medicaid Program Trust Fund.
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1 (d) Moneys in the Graduate Medical Education Expansion Account shall
2 supplement, but not supplant, funding appropriated to the Graduate Medical
3 Education Fund under � 19-5-1265.
4 (e) The Graduate Medical Education Expansion Account shall be exempt
5 from budgetary cuts, reductions, or eliminations caused by a deficiency of
6 general revenues.
7 (f) The moneys in the Graduate Medical Education Expansion Account
8 shall be used only to make payments to eligible hospital providers for the
9 direct costs of graduate medical education programs for eligible residency
10 and fellowship positions added on or after July 1, 2025.
11 (g) The Graduate Medical Education Expansion Account shall retain
12 account balances remaining at the end of each year.
13 (h) The division shall promulgate rules to create and implement the
14 "Graduate Medical Education Expansion Program" to provide payments to
15 eligible hospital providers.
16
17 SECTION 2. Arkansas Code � 20-77-1901(3), concerning the definition of
18 "Medicare Cost Report" relating to the assessment fee on hospitals
19 participating in the Arkansas Medicaid Program, is amended to read as
20 follows:
21 (3) "Medicare Cost Report" means CMS-2552-96, the Cost report
22 for Electronic Filing of Hospitals as it existed on January 1, 2009 CMS-2552-
23 10, as existing on January 1, 2025;
24
25 SECTION 3. Arkansas Code � 20-77-1901(9) and (10), concerning the
26 definitions for upper payment limit and upper payment limit gap, are amended
27 to read as follows:
28 (9) "Upper payment limit" means the maximum ceiling imposed by
29 federal regulation on privately owned hospital fee-for-service Medicaid
30 reimbursement for inpatient services under 42 C.F.R � 447.272 and outpatient
31 services under 42 C.F.R � 447.321; and
32 (10)(A) "Upper payment limit gap" means the difference between
33 the upper payment limit and fee-for-service Medicaid payments not financed
34 using hospital assessments made to all privately operated hospitals.
35 (B) The upper payment limit gap shall be calculated
36 separately for hospital inpatient and fee-for-service outpatient services.
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1 (C) Medicaid disproportionate share payments shall be
2 excluded from the calculation of the upper payment limit gap.
3
4 SECTION 4. Arkansas Code Title 20, Chapter 77 is amended to add an
5 additional subchapter to read as follows:
6 Subchapter 29 � Hospital Directed Payment Assessment
7
8 20-77-2901. Purpose.
9 The purpose of this subchapter is to:
10 (1) Maximize reimbursement for hospital services to Medicaid
11 patients in this state;
12 (2) Ensure the financial sustainability of healthcare in this
13 state, including in rural areas; and
14 (3) Support access and quality of care for residents of this
15 state.
16
17 20-77-2902. Definitions.
18 As used in this subchapter:
19 (1) "Contract year" means the capitation rating period of
20 January 1 through December 31 of each year in which a contracted entity
21 enters into a capitated contract with the Department of Human Services under
22 the Medicaid Provider-Led Organized Care Act, � 20-77-2701 et seq., or any
23 other Medicaid managed care programs for which the Department of Human
24 Services contracts;
25 (2)(A) "Contracted entity" means an organization or entity that
26 enters into or will enter into a capitated contract with the Department of
27 Human Services for the delivery of services under the Medicaid Provider-Led
28 Organized Care Act, � 20-77-2701 et seq., or any successor Medicaid managed
29 care program, that will assume financial risk, operational accountability,
30 and statewide or regional functionality in managing comprehensive health
31 outcomes of Medicaid beneficiaries.
32 (B) "Contracted entity" includes without limitation an
33 accountable care organization, a risk-based provider organization, a
34 provider-led entity, a commercial plan, a dental benefit manager, a managed
35 care organization, or any other entity as determined by the Department of
36 Human Services;
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1 (3) "Directed payment" means payment arrangements under 42
2 C.F.R. � 438.6(c), as existing on January 1, 2025, that permit states to
3 direct specific payments made by contracted entities to providers under
4 certain circumstances and can assist states in furthering the goals and
5 priorities of Medicaid managed care programs;
6 (4) "Directed payment preprint" means the materials required
7 under 42 C.F.R. � 438.6(c), as existing on January 1, 2025, to be submitted
8 to the Centers for Medicare & Medicaid Services for review and written
9 approval prior to implementing directed payments;
10 (5) "Hospital" means a healthcare facility licensed as a
11 hospital by the Department of Health under � 20-9-213;
12 (6)(A) "Managed care gap" means the difference between:
13 (i) The maximum amount that can be paid for hospital
14 inpatient and outpatient services to Medicaid managed care enrollees; and
15 (ii) The total amount of Medicaid managed care
16 payments for hospital inpatient and outpatient services.
17 (B) In calculating the managed care gap, the Department of
18 Human Services shall use whatever methodology and data source permitted under
19 42 C.F.R. � 438.6(c)(2)(ii) and (iii), as existing on January 1, 2025, that
20 would result in the highest payment rate for hospital services under � 20-77-
21 2910;
22 (7) "Managed care program" means a Medicaid managed care
23 delivery system operated under a contract between the Department of Human
24 Services and a contracted entity as authorized under sections 1915(a),
25 1915(b), 1932(a), or 1115(a) of the Social Security Act;
26 (8) "Medicare cost report" means CMS-2552-10, the Hospital and
27 Hospital Health Care Complex Cost Report, or the cost report for electronic
28 filing of hospitals;
29 (9) "Pass-through payment" means a managed care program payment
30 arrangement implemented in accordance with 42 C.F.R. � 438.6(d)(6), as
31 existing on January 1, 2025, for services transitioned from a fee-for-service
32 program to a managed care program on or after January 1, 2026, for the
33 purposes of ensuring that payments to individual hospitals are not adversely
34 affected by transition of services to managed care programs; and
35 (10) "State government-owned hospital" means a hospital that is
36 owned by an agency or unit of state government, including the University of
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1 Arkansas for Medical Sciences.
2
3 20-77-2903. Hospital managed care reimbursement.
4 On and after January 1, 2026, the Division of Medical Services of the
5 Department of Human Services shall ensure that all hospital services to
6 Medicaid managed care program enrollees be reimbursed at the highest rate
7 permitted by federal law through the implementation of directed payments
8 programs and other mechanisms authorized by this subchapter.
9
10 20-77-2904. Hospital directed payment assessment.
11 (a) There is created the hospital directed payment assessment, which
12 shall be a directed payment assessment imposed on each hospital, except those
13 exempted by the Division of Medical Services under the authority in � 20-77-
14 2907, for each contract year in accordance with rules adopted by the
15 division.
16 (b) The hospital directed payment assessment rates under subsection
17 (a) of this section shall be determined annually to generate the non-federal
18 portion of the managed care gap plus the annual fee under � 20-77-
19 2906(f)(1)(C), but in no case at rates that would cause the combined
20 assessment proceeds under this subchapter and � 20-77-1902 to exceed the
21 indirect guarantee threshold set forth in 42 C.F.R. � 433.68(f)(3)(i), as
22 existing on January 1, 2025.
23 (c)(1) The assessment basis under this section shall be adopted by
24 rule and calculated using the data from each hospital's most recent audited
25 Medicare cost report available at the time of the calculation, including data
26 for hospitals assessed under this section and hospitals exempted from the
27 assessment under � 20-77-2907.
28 (2) The inpatient and outpatient portions of assessment basis
29 under this subsection shall be determined through methods adopted by rule.
30 (d) This subchapter does not authorize a unit of county or local
31 government to license for revenue or impose a tax or assessment upon
32 hospitals or a tax or assessment measured by the income or earnings of a
33 hospital.
34
35 20-77-2905. Hospital directed payment assessment administration.
36 (a) The Director of the Division of Medical Services shall administer
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1 the hospital directed payment assessment created in this subchapter.
2 (b)(1) The Division of Medical Services shall adopt rules to implement
3 this subchapter.
4 (2) The rules adopted under this section shall specify any
5 exceptions to or exemptions from the hospital directed payment assessment in
6 accordance with authorities in � 20-77-2907.
7 (3) The rules adopted under this section shall include any
8 necessary forms for:
9 (A) Proper imposition and collection of the hospital
10 directed payment assessment imposed under � 20-77-2904;
11 (B) Enforcement of this subchapter, including without
12 limitation letters of caution or sanctions; and
13 (C) Reporting of inpatient and outpatient portions of the
14 assessment basis.
15 (c) To the extent practicable, the division shall administer and
16 enforce this subchapter and collect the assessments, interest, and penalty
17 assessments imposed under this subchapter using procedures generally employed
18 in the administration of the division's other powers, duties, and functions.
19
20 20-77-2906. Hospital Directed Payment Assessment Account.
21 (a)(1) There is created within the Arkansas Medicaid Program Trust
22 Fund a designated account known as the "Hospital Directed Payment Assessment
23 Account".
24 (2) The hospital directed payment assessments imposed under �
25 20-77-2904 shall be deposited into the Hospital Directed Payment Assessment
26 Account.
27 (b) Moneys in the Hospital Directed Payment Assessment Account shall
28 consist of:
29 (1) All moneys collected or received by the Division of Medical
30 Services from hospital directed payment program assessments under � 20-77-
31 2904; and
32 (2) Any interest or penalties levied in conjunction with the
33 administration of this subchapter.
34 (c) The Hospital Directed Payment Assessment Account shall be separate
35 and distinct from the General Revenue Fund Account of the State Apportionment
36 Fund and shall be supplementary to the Arkansas Medicaid Program Trust Fund.
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1 (d) Moneys in the Hospital Directed Payment Assessment Account shall
2 not be used to:
3 (1) Replace any general revenues appropriated and funded by the
4 General Assembly or other revenues used to support Medicaid, including
5 appropriations for cost settlements and other payments that may be reduced or
6 eliminated as a result of any transition of populations or services to
7 Medicaid managed care;
8 (2) Reduce hospital payment rates under the Arkansas Medicaid
9 Program, including negotiated rates paid by contracted entities, below the
10 hospital rates in effect on the date on the effective date of this
11 subchapter; or
12 (3)(A) Fund directed payments for state government-owned
13 hospitals.
14 (B) A state government-owned hospital may separately fund
15 directed payments through intergovernmental transfers.
16 (e) The Hospital Directed Payment Assessment Account shall be exempt
17 from budgetary cuts, reductions, or eliminations caused by a deficiency of
18 general revenues.
19 (f)(1) Except as necessary to reimburse any funds borrowed to
20 supplement funds in the Hospital Directed Payment Assessment Account, the
21 moneys in the Hospital Directed Payment Assessment Account shall be used only
22 to:
23 (A) Make inpatient and outpatient hospital directed
24 payments under � 20-77-2910;
25 (B) Reimburse moneys collected by the division from
26 hospitals through error or mistake or under this subchapter;
27 (C) Pay an annual fee to the division in the amount of
28 three and three-quarters percent (3.75%) of the assessments collected from
29 hospitals under � 20-77-2904 each contract year; or
30 (D) Make hospital pass-through payments under � 20-77-
31 2911, in amounts deemed necessary by the division, to ensure Medicaid
32 payments to individual hospitals are not adversely impacted by transitioning
33 delivery of services from fee-for-service programs to managed care programs
34 on and after January 1, 2026.
35 (2)(A) The Hospital Directed Payment Assessment Account shall
36 retain account balances remaining at the end of each contract year.
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1 (B) At the end of each contract year, any positive balance
2 remaining in the Hospital Directed Payment Assessment Account shall be
3 factored into the calculation of the new assessment rate by reducing the
4 amount of hospital directed payment assessment funds that must be generated
5 during the subsequent contract year.
6 (3) A hospital shall not be guaranteed that its inpatient and
7 outpatient hospital directed payment access payments will equal or exceed the
8 amount of its hospital directed payment assessment.
9
10 20-77-2907. Exemptions.
11 (a) The Division of Medical Services may establish hospital assessment
12 exemptions or varied assessment rates as needed to effectuate the purpose of
13 the hospital directed payment assessment as established in this subchapter.
14 (b) In addition to any exemptions established in accordance with
15 subsection (a) of this section, the division shall exempt from the hospital
16 directed payment assessment under � 20-77-2904 any state government-owned
17 hospital.
18
19 20-77-2908. Quarterly notice and collection.
20 (a)(1) The annual hospital directed payment assessment imposed under �
21 20-77-2904 shall be due and payable on a quarterly basis.
22 (2) However, an installment payment of a hospital directed
23 payment assessment imposed by � 20-77-2904 shall not be due and payable
24 until:
25 (A) The Division of Medical Services issues the written
26 notice required by � 20-77-2909 stating that the payment methodologies to
27 hospitals required under � 20-77-2910 have been approved by the Centers for
28 Medicare & Medicaid Services and the waiver under 42 C.F.R. � 433.68 for the
29 hospital directed payment assessment imposed by � 20-77-2904, if necessary,
30 has been granted by the Centers for Medicare & Medicaid Services;
31 (B) The thirty-day verification period required by � 20-
32 77-2909(b) has expired; and
33 (C) The division has made all quarterly installments of
34 inpatient and outpatient hospital directed payment access payments to
35 contracted entities that were otherwise due under � 20-77-2910 consistent
36 with the effective date of the approved directed payment preprint and waiver.
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1 (3) After the initial installment has been paid under this
2 section, each subsequent quarterly installment payment of the hospital
3 directed payment assessment imposed by � 20-77-2904 shall be due and payable
4 within ten (10) business days after the hospital has received its inpatient
5 and outpatient hospital directed payment access payments due under � 20-77-
6 2910 for the applicable quarter.
7 (b) The payment by the hospital of the hospital directed payment
8 assessment created in this subchapter shall be reported as an allowable cost
9 for Medicaid reimbursement purposes.
10 (c)(1) If a hospital fails to timely pay the full amount of a
11 quarterly hospital directed payment assessment, the division may add to the
12 assessment:
13 (A) A penalty assessment equal to five percent (5%) of the
14 quarterly amount not paid on or before the due date; and
15 (B) On the last day of each quarter after the due date
16 until the assessed amount and the penalty imposed under subsection (c)(1)(A)
17 of this section are paid in full, an additional five percent (5%) penalty
18 assessment on any unpaid quarterly and unpaid penalty assessment amounts.
19 (2) Payments shall be credited first to unpaid quarterly
20 amounts, rather than to penalty or interest amounts, beginning with the most
21 delinquent installment.
22 (3) If the division is unable to recoup from Medicaid payments
23 the full amount of any unpaid hospital directed payment assessment or penalty
24 assessment, or both, the division may file suit in a court of competent
25 jurisdiction to collect up to double the amount due, the division's costs
26 related to the suit, and reasonable attorney's fees.
27
28 20-77-2909. Notice of hospital directed payment assessment.
29 (a)(1) The Division of Medical Services shall send a notice of
30 hospital directed payment assessment to each hospital informing the hospital
31 of the hospital directed payment assessment rate, the hospital's assessment
32 basis calculation, and the estimated hospital directed payment assessment
33 amount owed by the hospital for the applicable contract year.
34 (2) Except as set forth in subdivision (a)(3) of this section,
35 the annual notices of hospital directed payment assessment under subdivision
36 (a)(1) of this section shall be sent at least forty-five (45) days before the
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1 due date for the first quarterly hospital directed payment assessment payment
2 of each contract year.
3 (3) The first notice of the hospital directed payment assessment
4 under subdivision (a)(1) of this section shall be sent within fifteen (15)
5 days after receipt by the division of notification from the Centers for
6 Medicare & Medicaid Services for the payments required under � 20-77-2910
7 and, if necessary, the waiver granted under 42 C.F.R. � 433.68 have been
8 approved.
9 (b) The hospital shall have thirty (30) days from the date of its
10 receipt of a notice of the hospital directed payment assessment under
11 subdivision (a)(1) of this section to review and verify the hospital directed
12 payment assessment rate, the hospital's assessment basis calculation, and the
13 hospital directed payment assessment amount.
14 (c)(1) If a hospital provider operates, conducts, or maintains more
15 than one (1) hospital in the state, the hospital provider shall pay the
16 hospital directed payment assessment rate for each hospital separately.
17 (2) However, if the hospital provider under subdivision (c)(1)
18 of this section operates more than one (1) hospital under one (1) Medicaid
19 provider number, the hospital provider may pay the hospital directed payment
20 assessment for the hospitals in the aggregate.
21 (d)(1) For a hospital subject to the hospital directed payment
22 assessment under � 20-77-2904 that ceases to conduct hospital operations or
23 maintain its state license or did not conduct hospital operations throughout
24 a contract year, the hospital directed payment assessment for the contract
25 year in which the cessation occurs shall be adjudicated by multiplying the
26 annual hospital directed payment assessment computed under � 20-77-2904 by a
27 fraction, the numerator of which is the number of days during the year that
28 the hospital operated and the denominator of which is three hundred sixty-
29 five (365).
30 (2)(A) Immediately upon ceasing to operate, the hospital shall
31 pay the adjusted hospital directed payment assessment for that contract year
32 to the extent not previously paid.
33 (B) The hospital also shall receive payments under � 20-
34 77-2910 for the contract year in which the cessation occurs, which shall be
35 adjusted by the same fraction as its annual hospital directed payment
36 assessment.
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1 (e) A hospital subject to a hospital directed payment assessment under
2 this subchapter that has not been previously licensed as a hospital in
3 Arkansas and that commences hospital operations during a contract year shall
4 pay the required hospital directed payment assessment computed under � 20-77-
5 2904 and shall be eligible for hospital directed payment access payments
6 under � 20-77-2910 on the date specified in rules promulgated by the division
7 under the Arkansas Administrative Procedure Act, � 25-15-201 et seq.
8 (f) A hospital that is exempt from payment of the hospital directed
9 payment assessment under � 20-77-2907 at the beginning of a contract year but
10 during the contract year experiences a change in status so that it becomes
11 subject to a hospital directed payment assessment shall pay the required
12 hospital directed payment assessment computed under � 20-77-2904 and shall be
13 eligible for hospital directed payment access payments under � 20-77-2910 on
14 the date specified in rules promulgated by the division.
15 (g) A hospital that is subject to payment of the hospital directed
16 payment assessment computed under � 20-77-2904 at the beginning of a contract
17 year but during the contract year experiences a change in status so that it
18 becomes exempted from payment under � 20-77-2907 shall be relieved of its
19 obligation to pay the hospital directed payment assessment and shall become
20 ineligible for hospital directed payment access payments under � 20-77-2910
21 on the date specified in rules promulgated by the division.
22
23 20-77-2910. Hospital directed payment access payments.
24 (a) To preserve and improve access to quality hospital services, for
25 hospital inpatient and outpatient services rendered on or after January 1,
26 2026, the Division of Medical Services shall make hospital directed payment
27 access payments as set forth in this section.
28 (b) The division shall calculate the total hospital directed payment
29 access payment amount as the lesser of:
30 (1) The amount equal to the managed care gap for inpatient and
31 outpatient hospital services; or
32 (2) The amount that can be financed with a level of non-federal
33 funds generated through hospital directed payment assessments imposed under �
34 20-77-2904 that causes the combined assessment proceeds under � 20-77-1902
35 and � 20-77-2904 to equal the indirect guarantee threshold set forth in 42
36 C.F.R. � 433.68(f)(3)(i), as existing on January 1, 2025.
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1 (c)(1) All hospitals shall be eligible for inpatient and outpatient
2 hospital directed payment access payments through contracted entities each
3 contract year as set forth in this subsection other than state government-
4 owned hospitals.
5 (2)(A) A portion of the hospital directed payment access payment
6 amount, not to exceed the managed care gap for inpatient services, shall be
7 designated as the inpatient hospital directed payment access payment pool.
8 (B) Inpatient hospital directed payment access payments
9 shall be paid as a uniform percentage rate increase or uniform add-on to base
10 Medicaid managed care reimbursement to eligible hospitals.
11 (3)(A) A portion of the hospital directed payment access payment
12 amount, not to exceed the managed care gap for outpatient hospital services,
13 shall be designated as the outpatient hospital directed payment access
14 payment pool.
15 (B) Outpatient hospital directed payment access payments
16 shall be paid as a uniform percentage rate increase or uniform add-on to base
17 Medicaid managed care reimbursement to eligible hospitals.
18 (4)(A) The hospital directed payment access payment shall be
19 administered through a separate payment term and lump-sum payments that are
20 paid no later than thirty (30) days after the end of each quarter for which
21 the lump-sum payment is attributable, provided that the Centers for Medicare
22 & Medicaid Services permit the use of this payment mechanism.
23 (B)(i) In the event that the Centers for Medicare &
24 Medicaid Services does not permit use of a separate payment term and lump-sum
25 payments under subdivision (c)(4)(A) of this section, the division shall
26 include directed payments in capitation rates and require contracted entities
27 to make add-on payments in hospital claims.
28 (ii) The division shall require contracted entities
29 to clearly delineate for hospitals the portion of reimbursement attributable
30 to directed payments from the portion of reimbursement paid at negotiated
31 rates.
32 (d) A hospital directed payment access payment shall not be used to
33 offset any other payment by contracted entities for hospital inpatient or
34 outpatient services to Medicaid managed care beneficiaries, including without
35 limitation any fee-for-service, per diem, private hospital inpatient
36 adjustment, Medicaid managed care, or cost-settlement payment.
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1
2 20-77-2911. Managed Care Pass-Through Payment Pool Account.
3 (a) There is created within the Arkansas Medicaid Program Trust Fund a
4 designated account known as the "Managed Care Pass-Through Payment Pool
5 Account".
6 (b) Moneys in the Managed Care Pass-Through Payment Pool Account shall
7 consist of all moneys collected or received by the Division of Medical
8 Services under � 20-77-2906(f)(1)(D).
9 (c) The Managed Care Pass-Through Payment Pool Account shall be
10 separate and distinct from the General Revenue Fund Account of the State
11 Apportionment Fund and shall be supplementary to the Arkansas Medicaid
12 Program Trust Fund.
13 (d) Moneys in the Managed Care Pass-Through Payment Pool Account shall
14 not be used to:
15 (1) Replace any general revenues appropriated and funded by the
16 General Assembly or other revenues used to support Medicaid, including
17 appropriations for cost settlements and other payments that may be reduced or
18 eliminated as a result of any transition of populations or services to
19 managed care;
20 (2) Reduce provider payment rates under the Arkansas Medicaid
21 Program, including negotiated rates paid by contracted entities, below the
22 provider payment rates in effect on the effective date of this subchapter; or
23 (3)(A) Fund managed care pass-through payments for state
24 government-owned hospitals.
25 (B) A state government-owned hospital may separately fund
26 managed care pass-through payments through intergovernmental transfers.
27 (e) The Managed Care Pass-Through Payment Pool Account shall be exempt
28 from budgetary cuts, reductions, or eliminations caused by a deficiency of
29 general revenues or special revenues allocated for Medicaid.
30 (f)(1) Except as necessary to reimburse any funds borrowed to
31 supplement funds in the Hospital Directed Payment Assessment Account, the
32 moneys in the Managed Care Pass-Through Payment Pool Account shall be used
33 only to:
34 (A) Make pass-through payments to individual hospitals, as
35 deemed necessary by the Department of Human Services, to ensure payments to
36 individual hospitals are not adversely impacted by the transition of any
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1 services from fee-for-service programs to managed care programs, on and after
2 January 1, 2026; or
3 (B) Reimburse moneys collected by the division from
4 hospitals through error or mistake under this subchapter.
5 (2) The Managed Care Pass-Through Payment Pool Account shall
6 retain all account balances at the end of each contract year.
7
8 20-77-2912. Managed Care Provider Incentive Pool Account.
9 (a) There is created within the Arkansas Medicaid Program Trust Fund a
10 designated account known as the "Managed Care Provider Incentive Pool
11 Account".
12 (b) Moneys in the Managed Care Provider Incentive Pool Account shall
13 consist of all moneys collected or received by the Division of Medical
14 Services from � 26-57-610(b)(6)(B)(i).
15 (c) The Managed Care Provider Incentive Pool Account shall be separate
16 and distinct from the General Revenue Fund Account of the State Apportionment
17 Fund and shall be supplementary to the Arkansas Medicaid Program Trust Fund.
18 (d) Moneys in the Managed Care Provider Incentive Pool Account shall
19 not be used to:
20 (1) Replace any general revenues appropriated and funded by the
21 General Assembly or other revenues used to support Medicaid, including
22 appropriations for cost settlements and other payments that may be reduced or
23 eliminated as a result of any transition of populations or services to
24 managed care;
25 (2) Reduce provider payment rates under the Arkansas Medicaid
26 Program, including negotiated rates paid by contracted entities, below the
27 provider payment rates in effect on the effective date of this subchapter; or
28 (3)(A) Fund managed care provider incentive pool payments for
29 state government-owned hospitals.
30 (B) A state government-owned hospital may separately fund
31 managed care provider incentive pool payments through intergovernmental
32 transfers.
33 (e) The Managed Care Provider Incentive Pool Account shall be exempt
34 from budgetary cuts, reductions, or eliminations caused by a deficiency of
35 general revenues.
36 (f)(1) Except as necessary to reimburse any funds borrowed to
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1 supplement funds in the Hospital Directed Payment Assessment Account, the
2 moneys in the Managed Care Provider Incentive Pool Account shall be used only
3 to:
4 (A) Make incentive payments to Medicaid providers to
5 improve access and quality of care under � 20-77-2914; or
6 (B) Reimburse moneys collected by the division from
7 hospitals through error or mistake or under this subchapter.
8 (2) The Managed Care Provider Incentive Pool Account shall
9 retain account balances remaining at the end of each contract year.
10
11 20-77-2913. Medicaid Sustainability Advisory Committee -- Medicaid
12 Quality Advisory Committee.
13 (a) To ensure providers have a voice in the direction and operation of
14 the Medicaid programs contemplated by this subchapter, the Division of
15 Medical Services shall establish a Medicaid Sustainability Advisory Committee
16 and the Medicaid Quality Advisory Committee.
17 (b)(1) The Medicaid Sustainability Advisory Committee shall be
18 comprised of:
19 (A) Two (2) members appointed by the division;
20 (B) Four (4) members appointed by hospitals and integrated
21 health systems;
22 (C) One (1) member appointed by the University of Arkansas
23 for Medical Sciences;
24 (D) One (1) member appointed by the Arkansas Hospital
25 Association, Inc.; and
26 (E) Two (2) other representatives of the healthcare
27 provider community.
28 (2) The Medicaid Sustainability Advisory Committee shall make
29 recommendations to the division and the General Assembly regarding any
30 proposed legislative, programmatic, regulatory, or policy change that impacts
31 hospitals' participation in directed payments, pass-through payments,
32 hospital assessments, graduate medical education, provider incentives, and
33 managed care programs.
34 (c)(1) The Medicaid Quality Advisory Committee shall be comprised of:
35 (A) Two (2) members appointed by the division;
36 (B) Four (4) members appointed by hospitals and integrated
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1 health systems;
2 (C) One (1) member appointed by University of Arkansas for
3 Medical Sciences; and
4 (D) Two (2) other representatives of the healthcare
5 provider community.
6 (2) The Medicaid Quality Advisory Committee shall review quality
7 improvement needs and recommend initiatives supported by the Managed Care
8 Provider Incentive Program.
9
10 20-77-2914. Managed Care Provider Incentive Program.
11 (a)(1) The Division of Medical Services shall promulgate rules to
12 create and implement the "Managed Care Provider Incentive Program" to support
13 healthcare quality assurance and access improvement initiatives.
14 (2) For state fiscal years ending on or before June 30, 2030,
15 the Managed Care Provider Incentive Program shall be dedicated to initiatives
16 that support improved access to maternal health and primary care providers.
17 (3) For state fiscal years starting on or after July 1, 2030,
18 the Managed Care Provider Incentive Program shall be dedicated to other
19 initiatives approved by a majority vote of the Medicaid Sustainability
20 Advisory Committee.
21 (b) For state fiscal years starting on or after July 1, 2030, all
22 initiatives supported by the Managed Care Provider Incentive Program shall be
23 approved by a majority vote of the members of the Medicaid Quality Advisory
24 Committee.
25
26 20-77-2915. Processing directed payments through contracted entities.
27 The Division of Medical Services may process directed payments through
28 contracted entities only if:
29 (1) The division provides each contracted entity with a detailed
30 list of hospital directed payment access payments, specifying the amounts to
31 be paid to each eligible hospital as required by this subchapter;
32 (2) Each contracted entity disburses the hospital directed
33 payment access payments to eligible hospitals within five (5) business days
34 of receiving a supplemental capitation payment;
35 (3) Contracted entities are prohibited from withholding or
36 delaying the payment of a hospital directed payment access payment for any
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1 reason; and
2 (4) The division exercises administrative discretion to ensure
3 that each eligible hospital receives the full payment of all hospital
4 directed payment access payments, utilizing appropriate payment mechanisms as
5 necessary.
6
7 20-77-2916. Effectiveness and cessation.
8 (a) The hospital directed payment assessment imposed under � 20-77-
9 2904 shall cease to be imposed, the Medicaid hospital directed payment access
10 payments made under � 20-77-2910 shall cease to be paid, and any moneys
11 remaining in the Hospital Directed Payment Assessment Account and the Managed
12 Care Provider Incentive Pool Account that were derived from the hospital
13 directed payment assessment imposed under � 20-77-2904 shall be refunded to
14 hospitals in proportion to the amounts paid by the hospitals if the inpatient
15 or outpatient hospital directed payment access payments required under � 20-
16 77-2910 are not approved or the hospital directed payments assessments
17 imposed under � 20-77-2904 are not eligible for federal matching funds under
18 Title XIX of the Social Security Act, 42 U.S.C. � 1396 et seq., or Title XXI
19 of the Social Security Act, 42 U.S.C. � 1397aa et seq.
20 (b)(1) The hospital directed payment assessment imposed under � 20-77-
21 2904 shall cease to be imposed and the hospital directed payment access
22 payments under � 20-77-2910 shall cease to be paid if the assessment is
23 determined to be impermissible under Title XIX of the Social Security Act, 42
24 U.S.C. � 1396 et seq.
25 (2) Moneys in the Hospital Directed Payment Assessment Account
26 in the Arkansas Medicaid Program Trust Fund derived from assessments imposed
27 before the determination described in subdivision (b)(1) of this section
28 shall be disbursed under � 20-77-2910 to the extent federal matching is not
29 reduced due to the impermissibility of the assessments, and any remaining
30 moneys shall be refunded to hospitals in proportion to the amounts paid by
31 the hospitals.
32
33 20-77-2917. Directed payment preprint.
34 (a)(1) The Division of Medical Services shall seek approval of the
35 hospital directed payment access payments under � 20-77-2910 from the Centers
36 for Medicare & Medicaid Services for each contract year by submitting a
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1 directed payment preprint and any information required under 42 C.F.R.�
2 438.6(c) to the Centers for Medicare & Medicaid Services at least ninety (90)
3 days before the start of each contract year.
4 (2) The division shall prepare the annual 42 C.F.R. � 438.6(c)
5 directed payment preprint or amendment in collaboration with the Arkansas
6 Hospital Association, Inc.
7 (3) To the extent the directed payment preprint or amendment
8 that the division plans to submit to the Centers for Medicare & Medicaid
9 Services for approval would result in a reduction to the payment rate to
10 eligible hospitals as compared to the federally approved rates for the prior
11 year or directed payment preprint submission, the division shall provide the
12 Medicaid Sustainability Advisory Committee at least thirty (30) days to
13 review and propose an alternative methodology.
14 (4) The division shall use the methodology proposed by the
15 Medicaid Sustainability Advisory Committee for the directed payment preprint
16 submission unless the division obtains written confirmation from the Centers
17 for Medicare & Medicaid Services that the proposed alternative methodology
18 cannot be approved as proposed and that no modifications are possible to
19 obtain approval for the alternative methodology.
20 (5) The division shall make the written confirmation available
21 to the Medicaid Sustainability Advisory Committee.
22 (b)(1) The directed payment preprint shall not condition hospital
23 eligibility for directed payments upon hospital compliance with initiatives
24 and policies that are not related to quality measures identified in the
25 Medicaid managed care quality strategy or otherwise require hospitals to
26 spend a portion of their directed payment or other revenues as prescribed by
27 the division to remain eligible for directed payments.
28 (2) All inpatient and outpatient hospital services paid by
29 contracted entities for services shall be eligible for the directed payment,
30 regardless of whether the hospital is in-network with the contracted entity.
31 (c) If the directed payment preprint is not approved by the Centers
32 for Medicare & Medicaid Services, the division shall:
33 (1) Not implement the hospital directed payment assessment
34 imposed under � 20-77-2904; and
35 (2) Return any hospital directed payment assessment fees to the
36 hospitals that paid the fees if hospital directed payment assessment fees
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1 have been collected.
2
3 20-77-2918. Continuation of hospital access payments.
4 The Department of Human Services shall continue to pay the maximum
5 upper payment limit hospital access payments for inpatient and outpatient
6 hospital services delivered to fee-for-service Medicaid populations to the
7 full extent authorized under � 20-77-1901 et seq., until Medicaid populations
8 or program services are transferred from a fee-for-service to a managed care
9 delivery model.
10
11 SECTION 5. Arkansas Code � 26-57-610(b), concerning the disposition of
12 insurance premium taxes, is amended to add an additional subdivision to read
13 as follows:
14 (6) The taxes based on premiums collected under the Arkansas
15 Medicaid Program, other than the premiums collected for coverage under
16 subdivisions (b)(2) and (b)(5) of this section at the levels of coverage that
17 existed as of January 1, 2025, shall be:
18 (A) At the time of deposit, separately certified by the
19 commissioner to the Treasurer of State for classification and distribution
20 under this section; and
21 (B) Transferred in amounts equal to:
22 (i) Fifty percent (50%) of the taxes for deposit
23 into the Managed Care Provider Incentive Pool Account under � 20-77-2912;
24 (ii) Ten percent (10%) of the taxes for deposit into
25 the Graduate Medical Education Expansion Account set forth in � 20-77-154;
26 and
27 (iii) Forty percent (40%) of the taxes for deposit
28 into the General Revenue Fund Account to be used in a manner authorized by
29 the General Assembly for the purposes set forth in the Revenue Stabilization
30 Law, � 19-5-101 et seq.
31
32 SECTION 6. DO NOT CODIFY. Contingent effective date.
33 Sections 1, 4, and 5 of this act are effective on and after the date
34 that the Secretary of the Department of Human Services:
35 (1) Determines that the:
36 (1) Fee-for-service Medicaid populations are added as a
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1 covered populations to be served by a risk-based provider organization under
2 the Medicaid Provider-Led Organized Care Act, � 20-77-2701 et seq.;
3 (2) Fee-for-service Medicaid populations are transitioned
4 to a Medicaid managed care program approved by the Centers for Medicare &
5 Medicaid Services;
6 (3) Individuals in the eligibility category created by
7 section 1902(a)(10)(A)(i)(VIII) of the Social Security Act, 42 U.S.C. �
8 1396a, as existing on January 1, 2025, are transitioned to a Medicaid managed
9 care program approved by the Centers for Medicare & Medicaid Services; or
10 (4) Individuals in the eligibility category created by
11 section 1902(a)(10)(A)(i)(VIII) of the Social Security Act, 42 U.S.C. �
12 1396a, as existing on January 1, 2025, are transitioned to a risk-based
13 provider organization under the Medicaid Provider-Led Organized Care Act, �
14 20-77-2701 et seq.; and
15 (2) Notifies the Legislative Council and the Director of the
16 Bureau of Legislative Research that one (1) of the contingencies listed in
17 subdivision (1) of this section has occurred.
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20 04/01/2025 5:48:35 PM JMB373Every fact on this page links to its source, starting with the official bill record.