HOUSE OF REPRESENTATIVES

H.B. NO.

1954

TWENTY-SIXTH LEGISLATURE, 2012

 

STATE OF HAWAII

 

 

 

 

 

 

A BILL FOR AN ACT

 

 

RELATING TO HEALTH.

 

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 


     SECTION 1.  Hawaii's health care system consists of a myriad of services that must be coordinated and integrated to ensure access to quality care at an appropriate level for all Hawaii residents.  An individual often accesses different healthcare providers who deliver different products and services and the individual may transition from one level of care to another over time.  The legislature believes it is important to effectively manage patient transition to facilities that provide an appropriate level of care to maintain an availability of services at all levels, more accurately address patient needs, and ensure efficient and cost-effective service delivery.

     The legislature finds that such a transition has been particularly difficult between acute care hospitals and long-term care facilities.  Often, patients who no longer need hospitalization but require medical services are waitlisted for long-term care due to the shortage of available space in long-term care facilities.  The result is a shortage of available space and service delivery at acute care hospitals.  Moreover, acute care hospitals face great financial hardship due to the manner in which medicaid reimbursements are allocated.

     When a medicaid-eligible patient is treated by an acute care hospital, medicaid pays a rate based on the level of care needed by the patient.  When the patient is well enough to be transferred to long-term care, the medicaid reimbursement is reduced to a rate that is twenty to thirty per cent of the actual cost of acute care hospitalization.  If the hospital is unable to transfer the patient to long-term care, it must absorb the financial loss, thus creating a fiscal burden on the acute care hospital as its cost of care is generally more fixed due to stringent regulatory and quality-control requirements.

     At any time, a total of about two hundred patients in Hawaii's hospitals are waiting to be transferred to a long-term care facility.  Patients with certain conditions have been waitlisted for up to a year.  The total loss to hospitals is estimated at about $75,000,000 annually, with a significant portion of that loss due to underpayment by medicaid and its contracted health plans.  Medicaid is, in effect, a public-private partnership because the public sector provides the funding and the private sector provides the services.  Unfortunately, medicaid reimbursements seldom cover the actual cost of services provided, thus resulting in fiscally-weakened healthcare facilities and instability in the healthcare system as a whole.

     In the past, acute care hospitals were able to absorb medicaid losses using payments from commercial and other payers to offset under-funded medicaid reimbursements.  However, as the cost of healthcare has increased and significant developments in medical technology has required acute care hospitals to increase their capital investments, even these payments are no longer adequate to bridge the fiscal gap.  The result for many of these hospitals is financial failure such as the case of Kahuku hospital which would have ceased operations because of bankruptcy if it had not been transferred to the Hawaii health systems corporation, which is subsidized by the State.  The legislature finds that underpayment by medicaid is one of the major reasons that led to Kahuku hospital's dire financial difficulties.

     The legislature further finds that long-term care facilities also face financial hardship due to inappropriate medical reimbursements.  Therefore, payments for patients with complex medical conditions who require additional care should be cost-based rather than acuity-based to address disparities in the cost of services and service delivery.

     The purpose of this Act is to provide fair compensation to:

(1)  Acute care hospitals for services they provide to medicaid patients who have been treated for acute illnesses and injuries and who have recovered sufficiently but for whom long-term care is not available; and

(2)  Long-term care facilities for patients with medically- complex conditions when their level of care changes from acute to long-term care.

     SECTION 2.  Chapter 346, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

     "§346-    Medicaid reimbursements.  (a)  Reimbursements by medicaid and its contracted health plans to hospitals for patients occupying acute-licensed beds who are on a waitlist for long-term care shall be at least equal to the rate paid for acute care services.

     (b)  Reimbursements by medicaid and its contracted health plans to facilities with long-term care beds for patients with medically-complex conditions who, prior to admission to the facility, were receiving acute care services in an acute care hospital, shall be at least equal to the rate paid for subacute care.

     (c)  As used in this section:

     "Medically-complex condition" means a combination of chronic physical conditions, illnesses, or other medically- related factors that significantly impact an individual's health and manner of living and cause reliance upon technological, pharmacological, and other therapeutic interventions to sustain life.

     "Subacute care" means a level of care that is needed by a patient not requiring acute care, but who needs more intensive skilled nursing care than is provided to the majority of patients in a skilled nursing facility."

     SECTION 3.  Section 346D-1.5, Hawaii Revised Statutes, is amended to read as follows:

     "§346D-1.5  Medicaid reimbursement equity.  Not later than July 1, 2008, there shall be no distinction between hospital-based and nonhospital-based reimbursement rates for institutionalized long-term care under medicaid.  Reimbursement for institutionalized intermediate care facilities and institutionalized skilled nursing facilities shall be based solely on the level of care rather than the location.  This section shall not apply to critical access hospitals[.] or to reimbursements made in accordance with section 346-  ."

     SECTION 4.  There is appropriated out of the general revenues of the State of Hawaii the sum of $          or so much thereof as may be necessary for fiscal year 2012-2013 for increased medicaid reimbursement in accordance with this Act.

     The sum appropriated shall be expended by the department of human services for the purposes of this Act.

     SECTION 5.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 6.  This Act shall take effect on July 1, 2012.

 

INTRODUCED BY:

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Report Title:

Medicaid Reimbursements

 

Description:

Provides reimbursements by medicaid and its contracted health plans to hospitals for patients occupying acute-licensed beds who are waitlisted for long-term care and to facilities with long-term care beds for patients with medically-complex conditions who prior to admission to the facility were receiving acute care services in an acute care hospital.  Effective July 1, 2012.

 

 

 

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.