Shown verbatim: the complete text as captured from the official PDF posted by the Kentucky General Assembly, fetched 2026-09-25. Page and line markers are part of the official record; nothing is edited or removed. This is the current version. The official bill page.
UNOFFICIAL COPY 26 RS HB 689/EN
1 AN ACT relating to the establishment of a Medicaid state-directed payment
2 program.
3 Be it enacted by the General Assembly of the Commonwealth of Kentucky:
4 Section 1. KRS 205.6412 is amended to read as follows:
5 To the extent permitted under federal law and in addition to, and separate from, the
6 programs developed pursuant to KRS 205.6406, the department shall develop
7 programs[a program] to improve quality of and access to care for residents of the
8 Commonwealth enrolled in the state's Medicaid program by increasing Medicaid
9 reimbursement rates for qualifying hospitals in accordance with the following:
10 (1)[ (a)] A qualifying hospital shall be eligible to earn enhanced add-on payments from
11 Medicaid managed care organizations based on the qualifying hospital's average
12 commercial rate for services provided, including but not limited to inpatient
13 hospital services, outpatient hospital services, and professional services, if the
14 qualifying hospital:
15 (a) 1. [a. ]Is a participant in the hospital rate improvement program
16 developed pursuant to KRS 205.6406;
17 2.[b.] Is a Level II, III, or IV trauma center;
18 3.[c.] Is located in a county in which the percentage of the county's population
19 enrolled in the state's Medicaid program exceeds the statewide median
20 Medicaid enrollment percentage for all counties as posted by the
21 Cabinet for Health and Family Services in the December edition of the
22 Monthly Medicaid Counts by County report for the calendar year
23 preceding the year in which the preprint is submitted; and
24 4.[d.] Has an agreement for clinical rotations to train providers with a
25 university-affiliated graduate medical education program; or
26 (b)[2.] Is a pediatric teaching hospital as defined in KRS 205.565, except that a
27 hospital qualifying for enhanced add-on payments under this subparagraph
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UNOFFICIAL COPY 26 RS HB 689/EN
1 shall only be eligible to receive enhanced add-on payments for services
2 delivered to a patient who is eighteen (18) years of age or younger;
3 (2) (a) Within sixty (60) days after the effective date of this Act, the Department for
4 Medicaid Services shall submit a Medicaid preprint with a January 1, 2026,
5 effective date to the federal Centers for Medicare and Medicaid Services
6 seeking authorization to implement the state-directed payment program
7 described in this subsection.
8 (b) If the preprint required to be submitted under paragraph (a) of this
9 subsection is approved by the federal Centers for Medicare and Medicaid
10 Services, a qualifying hospital shall be eligible to earn enhanced add-on
11 payments from Medicaid managed care organizations based on the
12 equivalent Medicare rate for services, including but not limited to physician
13 and nonphysician professional services, provided to Medicaid beneficiaries
14 by the qualifying hospital's affiliated physician groups or physicians or
15 other professionals employed by or contracted with the qualifying hospital if
16 the qualifying hospital has an agreement to train providers with a state-
17 owned university-affiliated graduate medical education program;
18 (3) For state-directed payments authorized under this section:
19 (a)[(b)] There shall be an identified source of funding, which shall be separate
20 from the assessment authorized in KRS 205.6406 and shall not be from the
21 general fund, for the nonfederal share that is in compliance with the
22 requirements of the United States Centers for Medicare and Medicaid
23 Services;
24 (b)[(c)] A qualifying hospital shall be required to report the same quality
25 measures as are applicable under:
26 1. The state university teaching hospital Medicaid directed payment plan
27 for the payment program authorized under subsection (1) of this
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UNOFFICIAL COPY 26 RS HB 689/EN
1 section; and
2 2. Similarly approved payment programs active in the Commonwealth
3 for the payment program authorized under subsection (2) of this
4 section; and
5 (c)[(d)] Reimbursement for qualifying hospitals under this section shall only
6 apply to patients covered by a Medicaid managed care organization;[.]
7 (4)[(2)] The state-directed[ directed] payment programs[program] authorized under
8 this section shall be separate and distinct from any state-directed[ directed] payment
9 program authorized under KRS 205.6406, and the department shall only implement
10 the program described in this section if:
11 (a) Medicaid documentation required for federal financial participation is
12 approved by the United States Centers for Medicare and Medicaid Services;[
13 and]
14 (b) The United States Centers for Medicare and Medicaid Services agrees to
15 consider the program through its own preprint and without affecting or
16 altering any other state-directed[ directed] payment program; and[.]
17 (c) 1. A source of funding that complies with subsection (3)(a) of this section
18 has been identified and is available to meet the requirement for the
19 nonfederal share or state match funds for a state-directed payment
20 program.
21 2. If a source of funding for the nonfederal share or state match funds
22 required for a state-directed payment program becomes unavailable,
23 the department shall terminate the state-directed payment program;
24 (5)[(3)] If the federal Centers for Medicare and Medicaid Services or any other
25 federal agency at any time after the effective date of this Act seeks, for any
26 reason, to recoup funds associated with a state-directed payment program
27 authorized under this section:
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UNOFFICIAL COPY 26 RS HB 689/EN
1 (a) The state shall not be liable for providing reimbursement to the federal
2 government; and
3 (b) The qualifying hospitals that received a state-directed payment under this
4 section shall be liable for all reimbursement that may be owed to the federal
5 Centers for Medicare and Medicaid Services or any other federal agency;
6 and
7 (6) The department shall promulgate administrative regulations in accordance with
8 KRS Chapter 13A to implement the programs[program] described in this section.
9 Section 2. If the Medicaid preprint required to be submitted under subsection
10 (2) of Section 1 of this Act is approved by the federal Centers for Medicaid and Medicare
11 Services with a retroactive effective date of January 1, 2026, the Department for
12 Medicaid Services shall, upon receipt of approval from the federal Centers for Medicare
13 and Medicaid Services, direct each Medicaid managed care organization with which the
14 department has contracted for delivery of Medicaid services to make retroactive
15 enhanced add-on payments to qualifying hospitals for any previously paid Medicaid
16 claims for physician and nonphysician professional services provided to a Medicaid
17 beneficiary on or after January 1, 2026, by the qualifying hospital's affiliated physician
18 groups or physicians or other professionals employed by or contracted with the qualifying
19 hospital.
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