PRINTER'S NO. 579
No. 502 Session of 2001
INTRODUCED BY GERLACH, KASUNIC, TOMLINSON, JUBELIRER, BELL,
LOGAN, M. WHITE, BRIGHTBILL, O'PAKE, D. WHITE, MURPHY, WAUGH,
DENT, GREENLEAF, CORMAN, ARMSTRONG, FUMO, PUNT, WENGER,
HELFRICK, CONTI, COSTA, PICCOLA, MOWERY, MADIGAN, KUKOVICH,
WAGNER, LEMMOND, RHOADES, SCHWARTZ, SCARNATI, LAVALLE AND
ROBBINS, FEBRUARY 27, 2001
REFERRED TO PUBLIC HEALTH AND WELFARE, FEBRUARY 27, 2001
AN ACT
1 Establishing the Hospital Uncompensated Care Program and the
2 Hospital Extraordinary Expense Program in the Department of
3 Public Welfare.
4 The General Assembly of the Commonwealth of Pennsylvania
5 hereby enacts as follows:
6 Section 1. Short title.
7 This act shall be known and may be cited as the Hospital
8 Uncompensated Care Act.
9 Section 2. Definitions.
10 The following words and phrases when used in this act shall
11 have the meanings given to them in this section unless the
12 context clearly indicates otherwise:
13 "Bad debt expense." The cost of care for which a hospital
14 expected payment from the patient or a third-party payor, but
15 which the hospital subsequently determines to be uncollectible.
16 "Charity care expense." The cost of care for which a
1 hospital ordinarily charges a fee but which is provided free or
2 at a reduced rate to patients who cannot afford to pay but who
3 are not eligible for public programs, and from whom the hospital
4 did not expect payment in accordance with the hospital's charity
5 care policy.
6 "Children's Health Insurance Program." The insurance program
7 established by Article XXIII of the act of May 17, 1921
8 (P.L.682, No.284), known as The Insurance Company Law of 1921.
9 "Council." The Health Care Cost Containment Council
10 established under the act of July 8, 1986 (P.L.408, No.89),
11 known as the Health Care Cost Containment Act.
12 "Department." The Department of Public Welfare of the
13 Commonwealth.
14 "Emergent medically necessary services." Immediate medical
15 care consistent with the definition of emergency service as set
16 forth in section 2116 of the act of May 17, 1921 (P.L.682,
17 No.284), known as The Insurance Company Law of 1921.
18 "Extraordinary expenses." The cost of hospital inpatient
19 services provided to an uninsured patient, which exceeds twice
20 the hospital's average cost per stay for all patients.
21 "Fund." The Tobacco Settlement Fund established by the act
22 of (P.L. , No. ), known as the Pennsylvania
23 Health Investment Act.
24 "Hospital." A health care facility licensed as a hospital
25 pursuant to the act of July 19, 1979 (P.L.130, No.48), known as
26 the Health Care Facilities Act or pursuant to Article X of the
27 act of June 13, 1967 (P.L.31, No.21), known as the Public
28 Welfare Code.
29 "Inpatient day." A billing unit corresponding to each day an
30 individual stays in a hospital as a patient.
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1 "Insurer." Any insurance company, association, reciprocal,
2 health maintenance organization, fraternal benefits society or a
3 risk-bearing preferred provider organization, that offers health
4 care benefits and is subject to regulation under the act of May
5 17, 1921 (P.L.682, No.284), known as The Insurance Company Law
6 of 1921 or the act of December 29, 1972 (P.L.1701, No.364),
7 known as the Health Maintenance Organization Act. The term
8 includes an entity and its subsidiaries that operate subject to
9 the provisions of 40 Pa.C.S. Ch. 61 (relating to hospital plan
10 corporations) or 63 (relating to professional health services
11 plan corporations).
12 "Medical assistance." The State program of medical
13 assistance established under Article IV(f) of the act of June
14 13, 1967 (P.L.31, No.21), known as the Public Welfare Code.
15 "Medical assistance day." An inpatient day provided by a
16 hospital to a patient enrolled in the State program of medical
17 assistance established under the act of June 13, 1967 (P.L.31,
18 No.21), known as the Public Welfare Code, or for a similar
19 program in other states.
20 "Medicare SSI day." An inpatient day provided by a hospital
21 to a patient enrolled in both Medicare Part A and supplemental
22 security income (SSI) as determined by the Health Care Financing
23 Administration.
24 "Net patient revenue." The estimated net realized amounts
25 from patients, third-party payors and others for health care
26 services rendered, including estimated retroactive adjustments
27 due to future audits, reviews, settlements and investigations.
28 Retroactive adjustments are accrued on an estimated basis in the
29 period the relative services are rendered and adjusted in future
30 periods as adjustments become known. This amount shall be equal
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1 to the amount presented in the most current audited financial
2 statement as filed with the council.
3 "Publicly funded health care program." Care or services
4 rendered by a government entity or any facility thereof or
5 health care services for which payment is made directly or
6 indirectly by a government entity, including, but not limited
7 to, Medicare and medical assistance or by their fiscal
8 intermediary.
9 "Qualified hospital." An eligible hospital which has an
10 uncompensated care score at or exceeding the median score of all
11 eligible hospitals.
12 "Uncompensated care." The cost of care provided to patients
13 financially unable or unwilling to pay for services provided by
14 a hospital. This cost shall be determined by the council
15 utilizing reported data and the hospital's cost to charge ratio
16 and shall include charity care expense and bad debt expense.
17 "Uninsured." An individual who has no health insurance
18 coverage, whose coverage does not reimburse for the medically
19 necessary services provided by a hospital or who does not
20 receive benefits under a publicly funded health care program.
21 Section 3. Hospital uncompensated care payments.
22 (a) Program establishment.--There is established in the
23 department the Hospital Uncompensated Care Program.
24 Appropriations from the fund to the department for the Hospital
25 Uncompensated Care Program shall be used to annually compensate
26 hospitals in accordance with section 4 for a portion of the
27 uncompensated care provided to patients. In addition, any other
28 money which may become available for the Hospital Uncompensated
29 Care Program shall be added to the total amount to be
30 distributed.
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1 (b) Department responsibilities.--The department has the
2 following powers and duties:
3 (1) Administer the Hospital Uncompensated Care Program.
4 (2) Determine the eligibility of hospitals on an annual
5 basis in accordance with section 4(b). Notice of eligibility
6 shall be published in the Pennsylvania Bulletin by April 1
7 for the forthcoming fiscal year.
8 (3) Calculate uncompensated care scores for eligible
9 hospitals under section 4(c).
10 (4) Calculate and make payments to qualified hospitals
11 under section 4(d).
12 (5) Seek Federal matching funds under medical assistance
13 to supplement payments made under section 4.
14 (6) Prepare and submit a report no later than November
15 1, 2001, and annually thereafter to the chairman and the
16 minority chairman of the Public Health and Welfare Committee
17 and the chairman and minority chairman of the Appropriations
18 Committee of the Senate and the chairman and minority
19 chairman of the Health and Human Services Committee and the
20 chairman and minority chairman of the Appropriations
21 Committee of the House of Representatives. The annual report
22 shall also be made available for public inspection and be
23 posted on the department's publicly accessible World Wide Web
24 site. The report shall list all of the following:
25 (i) The name and address of each eligible hospital.
26 (ii) The name, address and payment amount for each
27 qualified hospital.
28 (iii) The health system affiliation of each
29 qualified hospital.
30 (iv) The uncompensated care score for each qualified
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1 hospital.
2 (v) The methodology utilized to compute the
3 uncompensated care score for each eligible hospital.
4 (7) No later than June 30, 2003, the department shall
5 contract with an independent entity to evaluate the payment
6 methodology to determine the extent to which payments under
7 this section are made to hospitals with the greatest
8 uncompensated care burden. The report shall contain
9 recommendations to the Governor, the department and the
10 General Assembly concerning the payment methodology.
11 (c) Information collection.--The department shall:
12 (1) Collect data and information as necessary to
13 determine hospital eligibility for payment under this act,
14 including the department's medical assistance data for
15 medical assistance inpatient days percentage, the
16 uncompensated care percentage data from the council and the
17 net patient revenue and data from the Health Care Financing
18 Administration or its designee regarding Medicare SSI days
19 percentage.
20 (2) Contact the appropriate data source if there is
21 missing data and obtain the necessary information.
22 (d) Reporting requirements.--
23 (1) Within 60 days of the effective date of this act,
24 the department, in consultation with the council, shall
25 establish an advisory committee, comprised of nine
26 individuals with expertise in hospital administration,
27 hospital finance and reimbursement and hospital patient
28 accounts management, including a representative of the
29 department and representative of the council. The purpose of
30 the advisory committee shall be to assist the department and
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1 the council in improving the accuracy, consistency and
2 timeliness of the information collected and used to determine
3 payments to hospitals under the Hospital Uncompensated Care
4 Program. The advisory committee shall make recommendations to
5 the department concerning the information that is required to
6 more accurately measure the amount of bad debt expense
7 incurred and charity care expense provided by hospitals to
8 uninsured patients in this Commonwealth.
9 (2) Within 180 days of the effective date of this act,
10 the department shall develop and provide public notice to
11 hospitals of the uniform reporting requirements for
12 uncompensated care, which shall address both charity care
13 expense and bad debt expense components. The uniform
14 reporting requirements for charity care expense shall
15 incorporate the recommendations of the advisory committee and
16 addresses the following:
17 (i) Patient eligibility for other public or private
18 coverage.
19 (ii) Income eligibility threshold based on family
20 size.
21 (iii) Consideration of other resources available to
22 a patient or responsible party.
23 (iv) Patient or responsible party employment status
24 and earning capacity.
25 (v) Other financial obligations of the patient or
26 responsible party.
27 (vi) Other sources of funds available to the
28 hospital such as endowments or donations specified for
29 charity care.
30 The uniform reporting requirements for bad debt expense shall
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1 incorporate the recommendations of the advisory committee and
2 shall address hospital collection procedures for unpaid
3 patient responsibility, including deductibles, coinsurance,
4 copayments and noncovered services. Patients are presumed to
5 be able to pay for medically necessary services until and
6 unless information is obtained to indicate an inability or
7 refusal to pay.
8 (3) For fiscal years beginning on or after January 1,
9 2002, hospitals shall report uncompensated care information
10 to the council in accordance with the reporting requirements
11 set forth in this section in order to receive payments under
12 the Hospital Uncompensated Care Program.
13 Section 4. Eligibility and payment.
14 (a) Determination of eligibility.--The department shall
15 determine the eligibility of each hospital from information
16 collected under section 3.
17 (b) Requirements for hospitals.--A hospital is eligible to
18 apply for payment from the Hospital Uncompensated Care Program
19 if the hospital has a plan in place to serve the uninsured and:
20 (1) Accepts all individuals, regardless of the ability
21 to pay for emergent medically necessary services within the
22 scope of the hospital's service.
23 (2) Seeks collection of a claim, including collection
24 from an insurer or payment arrangements with the person who
25 is responsible for payment of the care rendered.
26 (3) Attempts to obtain health care coverage for
27 patients, including assisting patients in applying for
28 medical assistance, the Children's Health Insurance Program
29 or the Adult Basic Coverage Insurance Program established by
30 the act of (P.L. No. ) known as the Health Investment
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1 Insurance Act, when applicable.
2 (4) Ensures that an emergency admission or treatment is
3 not delayed or denied pending determination of coverage or
4 requirement for prepayment or deposit.
5 (5) Posts adequate notice of the availability of medical
6 services and the obligations of hospitals to provide free
7 services.
8 (6) Provides data to the council in accordance with
9 section 3.
10 (c) Uncompensated care scoring.--The department shall
11 annually calculate the uncompensated care score of each eligible
12 hospital from collected data. If information necessary to
13 determine the uncompensated care score of an eligible hospital
14 is unavailable due to the refusal of the hospital to provide the
15 information, the hospital shall not be eligible for payment from
16 the Hospital Uncompensated Care Program. If the department
17 determines that such data cannot be provided after due
18 diligence, the department shall use the average of the collected
19 data. An eligible hospital's uncompensated care score shall be
20 the sum of the following, using three-year average data as
21 determined by the department:
22 (1) The amount of uncompensated care provided as a
23 percentage of net patient revenue based on the most recent
24 hospital financial analysis data reported to the council in
25 accordance with the act of July 8, 1986 (P.L.408, No.89),
26 known as the Health Care Cost Containment Act.
27 (2) The number of Medicare SSI days as a percentage of
28 total inpatient days based on the most recent data available
29 to the department.
30 (3) The number of medical assistance days as a
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1 percentage of total inpatient days based on the most recent
2 data available to the department.
3 (d) Payment calculation.--A payment to a qualified hospital
4 shall be calculated as follows:
5 (1) Multiplying each qualified hospital's uncompensated
6 care score by the three-year average of its total reported
7 inpatient days.
8 (2) Dividing the product under paragraph (1) for each
9 qualified hospital by the sum of the products under paragraph
10 (1) for all qualified hospitals.
11 (3) Multiplying the quotient under paragraph (2) by the
12 moneys available for the Hospital Uncompensated Care Program.
13 (e) Limitations.--Except as stated in section 6:
14 (1) In no case shall the sum of payments to a qualified
15 hospital under this section and payments under the medical
16 assistance program exceed the aggregate cost of the inpatient
17 and outpatient services furnished to:
18 (i) recipients entitled to medical benefits under
19 Title XIX of the Social Security Act (49 Stat. 620, 42
20 U.S.C. § 1396 et seq.);
21 (ii) recipients entitled to medical benefits under
22 section 441.1 of the act of June 13, 1967 (P.L.31,
23 No.21), known as the Public Welfare Code; and
24 (iii) patients receiving uncompensated care.
25 (2) In no case shall payments made under this section in
26 a fiscal year exceed the amount of money available to the
27 department for the Hospital Uncompensated Care Program for
28 that fiscal year.
29 (3) In no case shall payment under this section
30 constitute an entitlement derived from the Commonwealth or a
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1 claim on any other funds of the Commonwealth.
2 (f) Three-year average.--For purposes of this section, for
3 fiscal years up to and including 2002-2003, the term "three-year
4 average" shall be determined by the department. For fiscal years
5 2003-2004 and thereafter, the term "three-year average" shall be
6 the average of the immediately preceding three years.
7 Section 5. Reimbursement for extraordinary expense.
8 (a) Program establishment.--There is established in the
9 department a Hospital Extraordinary Expense Program.
10 Appropriations to the department for the Hospital Extraordinary
11 Expense Program shall be used to reimburse hospitals for
12 extraordinary expenses in treating the uninsured on an inpatient
13 hospital basis.
14 (b) Department responsibilities.--The department has the
15 following powers and duties:
16 (1) Administer the Hospital Extraordinary Expense
17 Program.
18 (2) Collect the data necessary to administer this
19 section, including data from the council.
20 (3) Contact the appropriate data source if there is
21 missing data and obtain the necessary information.
22 (4) Determine the eligibility of hospitals from
23 information collected under paragraph (2).
24 (5) Pay eligible hospitals by October 1 of each fiscal
25 year an amount consistent with subsection (d).
26 (6) Seek Federal matching funds under the medical
27 assistance program to supplement payments under this act.
28 (7) Prepare and submit a report no later than November
29 1, 2001, and annually thereafter to the chairman and the
30 minority chairman of the Public Health and Welfare Committee
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1 and the chairman and minority chairman of the Appropriations
2 Committee of the Senate and the chairman and minority
3 chairman of the Health and Human Services Committee and the
4 chairman and minority chairman of the Appropriations
5 Committee of the House of Representatives. The annual report
6 shall also be made available for public inspection and be
7 posted on the department's publicly accessible World Wide Web
8 site. The report shall list all of the following:
9 (i) The name, address and payment amount for each
10 eligible hospital.
11 (ii) The health system affiliation of each eligible
12 hospital.
13 (iii) The methodology and data utilized to determine
14 the eligibility of each hospital.
15 (c) Eligibility.--
16 (1) Except as provided in paragraph (3), a hospital may
17 receive payment under this section if the hospital does not
18 qualify for payment under section 4 and the hospital provided
19 uncompensated care to a patient with extraordinary expenses
20 in the most recent fiscal year for which data is available.
21 (2) A hospital receiving payment under this section
22 shall meet all the requirements of section 4(b).
23 (3) A hospital may elect to receive payment under this
24 section in lieu of payment under section 4.
25 (d) Payment methodology.--Payment to a hospital under this
26 section shall equal the lesser of the cost of:
27 (1) the extraordinary expense claim; or
28 (2) the prorated amount of each hospital's percentage of
29 extraordinary expense costs as compared to all eligible
30 hospitals' extraordinary expense costs, as applied to the
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1 total funds available in the Hospital Extraordinary Expense
2 Program for the fiscal year.
3 (e) Limitations.--Except as provided in section 6:
4 (1) In no case shall payments to a hospital under this
5 section exceed the aggregate cost of services furnished to
6 patients with extraordinary expenses.
7 (2) In no case shall the aggregate amount of
8 extraordinary expense payments in any fiscal year exceed the
9 amount of the appropriation to the department for the
10 Hospital Extraordinary Expense Program. The provision of
11 extraordinary expense payments under this section shall not
12 constitute an entitlement derived from the Commonwealth or a
13 claim on any other funds of the Commonwealth.
14 Section 6. Amounts.
15 (a) General rule.--The total amount of funds received by a
16 hospital under this act shall not exceed the uncompensated care
17 amount reported to the council.
18 (b) Allocation.--Of the funds appropriated for this act, 85%
19 shall be used for payments to hospitals under section 3 and 15%
20 shall be used for payments to hospitals under section 5.
21 Section 7. Federal funds.
22 The department shall seek to maximize any Federal funds,
23 including Title XIX of the Social Security Act (49 Stat. 620, 42
24 U.S.C. § 1396 et seq.), available for the Hospital Uncompensated
25 Care Program.
26 Section 8. Effective date.
27 This act shall take effect July 1, 2001, or immediately,
28 whichever is later.
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