PRIOR PRINTER'S NO. 579 PRINTER'S NO. 686
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, ROBBINS, KITCHEN AND TILGHMAN, FEBRUARY 27, 2001
SENATOR MOWERY, PUBLIC HEALTH AND WELFARE, AS AMENDED, MARCH 14, 2001
AN ACT 1 Establishing the Hospital Uncompensated Care Program and the 2 Hospital Extraordinary Expense Program in the Department of 3 Public Welfare; AND IMPOSING PENALTIES. <-- 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. 20010S0502B0686 - 2 -
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 20010S0502B0686 - 3 -
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. 20010S0502B0686 - 4 -
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) ON AN ANNUAL BASIS. <-- 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 20010S0502B0686 - 5 -
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 AND NET PATIENT REVENUE data <--
17 from the council and the net patient revenue and data from <--
18 the Health Care Financing Administration or its designee
19 regarding Medicare SSI days 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 ADDRESS 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 20010S0502B0686 - 8 -
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 20010S0502B0686 - 9 -
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 20010S0502B0686 - 10 -
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 (G) MERGERS AND SEPARATIONS.--THE DEPARTMENT SHALL COMBINE <-- 8 PAYMENTS FOR HOSPITALS WHICH HAVE MERGED INTO A SINGLE ENTITY. 9 THE DEPARTMENT SHALL FAIRLY ALLOCATE PAYMENTS FOR A HOSPITAL 10 WHICH SEPARATED INTO TWO OR MORE ENTITIES, AS APPROPRIATE. 11 Section 5. Reimbursement for extraordinary expense. 12 (a) Program establishment.--There is established in the 13 department a Hospital Extraordinary Expense Program. 14 Appropriations to the department for the Hospital Extraordinary 15 Expense Program shall be used to reimburse hospitals for 16 extraordinary expenses in treating the uninsured on an inpatient 17 hospital basis. 18 (b) Department responsibilities.--The department has the 19 following powers and duties: 20 (1) Administer the Hospital Extraordinary Expense 21 Program. 22 (2) Collect the data necessary to administer this 23 section, including data from the council. 24 (3) Contact the appropriate data source if there is 25 missing data and obtain the necessary information. 26 (4) Determine the eligibility of hospitals from 27 information collected under paragraph (2). 28 (5) Pay eligible hospitals by October 1 of each fiscal 29 year an amount consistent with subsection (d). 30 (6) Seek Federal matching funds under the medical 20010S0502B0686 - 11 -
1 assistance program to supplement payments under this act.
2 (7) Prepare and submit a report no later than November <--
3 DECEMBER 1, 2001, and annually thereafter to the chairman and <--
4 the minority chairman of the Public Health and Welfare
5 Committee and the chairman and minority chairman of the
6 Appropriations Committee of the Senate and the chairman and
7 minority chairman of the Health and Human Services Committee
8 and the chairman and minority chairman of the Appropriations
9 Committee of the House of Representatives. The annual report
10 shall also be made available for public inspection and be
11 posted on the department's publicly accessible World Wide Web
12 site. The report shall list all of the following:
13 (i) The name, address and payment amount for each
14 eligible hospital.
15 (ii) The health system affiliation of each eligible
16 hospital.
17 (iii) The methodology and data utilized to determine
18 the eligibility of each hospital.
19 (c) Eligibility.--
20 (1) Except as provided in paragraph (3), a hospital may
21 receive payment under this section if the hospital does not
22 qualify for payment under section 4 and the hospital provided
23 uncompensated care to a patient with extraordinary expenses
24 in the most recent fiscal year for which data is available.
25 (2) A hospital receiving payment under this section
26 shall meet all the requirements of section 4(b).
27 (3) A hospital may elect to receive payment under this
28 section in lieu of payment under section 4.
29 (d) Payment methodology.--Payment to a hospital under this
30 section shall equal the lesser of the cost of:
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1 (1) the extraordinary expense claim; or 2 (2) the prorated amount of each hospital's percentage of 3 extraordinary expense costs as compared to all eligible 4 hospitals' extraordinary expense costs, as applied to the 5 total funds available in the Hospital Extraordinary Expense 6 Program for the fiscal year. 7 (e) Limitations.--Except as provided in section 6: 8 (1) In no case shall payments to a hospital under this 9 section exceed the aggregate cost of services furnished to 10 patients with extraordinary expenses. 11 (2) In no case shall the aggregate amount of 12 extraordinary expense payments in any fiscal year exceed the 13 amount of the appropriation to the department for the 14 Hospital Extraordinary Expense Program. The provision of 15 extraordinary expense payments under this section shall not 16 constitute an entitlement derived from the Commonwealth or a 17 claim on any other funds of the Commonwealth. 18 Section 6. Amounts. 19 (a) General rule.--The total amount of funds received by a 20 hospital under this act shall not exceed the uncompensated care 21 amount reported to the council. 22 (b) Allocation.--Of the funds appropriated for this act, 85% 23 shall be used for payments to hospitals under section 3 and 15% 24 shall be used for payments to hospitals under section 5. 25 Section 7. Federal funds. 26 The department shall seek to maximize any Federal funds, 27 including Title XIX of the Social Security Act (49 Stat. 620, 42 28 U.S.C. § 1396 et seq.), available for the Hospital Uncompensated 29 Care Program AND THE HOSPITAL EXTRAORDINARY EXPENSE PROGRAM. <-- 30 SECTION 8. PENALTIES. 20010S0502B0686 - 13 -
1 (A) ASSESSMENT.--THE DEPARTMENT MAY ASSESS AN ADMINISTRATIVE
2 PENALTY AGAINST A HOSPITAL WHICH NEGLIGENTLY VIOLATES A
3 REQUIREMENT SET FORTH IN THIS ACT.
4 (B) AMOUNT.--THE AMOUNT OF THE PENALTY SHALL BE:
5 (1) NOT MORE THAN $25,000 FOR A HOSPITAL WITH LESS THAN
6 100 BEDS; AND
7 (2) NOT MORE THAN $50,000 FOR A HOSPITAL WITH AT LEAST
8 100 BEDS.
9 (C) PROCEDURE.--A PENALTY UNDER THIS SECTION IS SUBJECT TO 2
10 PA.C.S. CH. 5 SUBCH. A (RELATING TO PRACTICE AND PROCEDURE OF
11 COMMONWEALTH AGENCIES) AND CH. 7 SUBCH. A (RELATING TO JUDICIAL
12 REVIEW OF COMMONWEALTH AGENCY ACTION).
13 Section 8 9. Effective date. <--
14 This act shall take effect July 1, 2001, or immediately,
15 whichever is later.
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