Bill Text: IL SB1763 | 2023-2024 | 103rd General Assembly | Introduced

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Bill Title: Amends the Hospital Services Trust Fund Article of the Illinois Public Aid Code. Increases by 20% hospital reimbursement rates for dates of service on and after January 1, 2024, for specified services, including, but not limited to: inpatient general acute care services; inpatient psychiatric services for safety-net hospitals; general acute care hospitals that are not safety-net hospitals; and outpatient general acute care services. Provides that the rates for the listed services shall be increased, beginning on January 1, 2025 and each January 1 thereafter, based on the annual increase in the national hospital market basket price proxies (DRI) hospital cost index from the midpoint of the calendar year 2 years prior to the current year, to the midpoint of the preceding calendar year. Provides that in no instance shall the adjustment result in a reduction to the rates in place at the time of the required adjustment. Provides that if the federal Centers for Medicare and Medicaid Services finds that the increases required under the amendatory Act would result in rates of reimbursement which exceed the federal maximum limits applicable to hospital payments, then the payments and assessment tax imposed on hospital providers shall be reduced as provided in the Hospital Provider Funding Article. Requires the Department of Healthcare and Family Services to promptly take all actions necessary to ensure the changes authorized in the amendatory Act are in effect for dates of service on and after January 1, 2024. Requires the Department to ensure that all necessary adjustments to the managed care organization capitation base rates necessitated by the adjustments in the amendatory Act are completed, published, and applied 90 days prior to the implementation date of the changes required under the amendatory Act. Provides that, by October 1, 2023, the Department shall by rule implement a methodology effective for dates of service beginning on and after January 1, 2024 to reimburse hospitals for extended stays in a hospital emergency department. Amends the Illinois Administrative Procedure Act. Grants the Department emergency rulemaking authority. Effective immediately.

Spectrum: Slight Partisan Bill (Democrat 18-10)

Status: (Introduced) 2024-04-15 - Chief Sponsor Changed to Sen. Don Harmon [SB1763 Detail]

Download: Illinois-2023-SB1763-Introduced.html

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103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 SB1763 Introduced 2/9/2023, by Sen. Ann Gillespie SYNOPSIS AS INTRODUCED:
See Index
Amends the Hospital Services Trust Fund Article of the Illinois Public Aid Code. Increases by 20% hospital reimbursement rates for dates of service on and after January 1, 2024, for specified services, including, but not limited to: inpatient general acute care services; inpatient psychiatric services for safety-net hospitals; general acute care hospitals that are not safety-net hospitals; and outpatient general acute care services. Provides that the rates for the listed services shall be increased, beginning on January 1, 2025 and each January 1 thereafter, based on the annual increase in the national hospital market basket price proxies (DRI) hospital cost index from the midpoint of the calendar year 2 years prior to the current year, to the midpoint of the preceding calendar year. Provides that in no instance shall the adjustment result in a reduction to the rates in place at the time of the required adjustment. Provides that if the federal Centers for Medicare and Medicaid Services finds that the increases required under the amendatory Act would result in rates of reimbursement which exceed the federal maximum limits applicable to hospital payments, then the payments and assessment tax imposed on hospital providers shall be reduced as provided in the Hospital Provider Funding Article. Requires the Department of Healthcare and Family Services to promptly take all actions necessary to ensure the changes authorized in the amendatory Act are in effect for dates of service on and after January 1, 2024. Requires the Department to ensure that all necessary adjustments to the managed care organization capitation base rates necessitated by the adjustments in the amendatory Act are completed, published, and applied 90 days prior to the implementation date of the changes required under the amendatory Act. Provides that, by October 1, 2023, the Department shall by rule implement a methodology effective for dates of service beginning on and after January 1, 2024 to reimburse hospitals for extended stays in a hospital emergency department. Amends the Illinois Administrative Procedure Act. Grants the Department emergency rulemaking authority. Effective immediately.
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A BILL FOR
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AN ACT concerning public aid.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 1. The Illinois Administrative Procedure Act is
amended by adding Section 5-45.35 as follows:
(5 ILCS 100/5-45.35 new)
Sec. 5-45.35. Emergency rulemaking; Medicaid reimbursement
rates for hospital inpatient and outpatient services. To
provide for the expeditious and timely implementation of the
changes made by this amendatory Act of the 103rd General
Assembly to Sections 5-5.05, 14-12, 14-12.5, and 14-13 of the
Illinois Public Aid Code, emergency rules implementing the
changes made by this amendatory Act of the 103rd General
Assembly to Sections 5-5.05, 14-12, 14-12.5, and 14-13 of the
Illinois Public Aid Code may be adopted in accordance with
Section 5-45 by the Department of Healthcare and Family
Services. The adoption of emergency rules authorized by
Section 5-45 and this Section is deemed to be necessary for the
public interest, safety, and welfare.
This Section is repealed one year after the effective date
of this amendatory Act of the 103rd General Assembly.
Section 5. The Illinois Public Aid Code is amended by

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changing Sections 5-5.05, 14-12, and 14-13 and by adding
Section 14-12.5 as follows:
(305 ILCS 5/5-5.05)
Sec. 5-5.05. Hospitals; psychiatric services.
(a) On and after July 1, 2008, the inpatient, per diem rate
to be paid to a hospital for inpatient psychiatric services
shall be not less than $363.77.
(b) For purposes of this Section, "hospital" means the
following:
(1) Advocate Christ Hospital, Oak Lawn, Illinois.
(2) Barnes-Jewish Hospital, St. Louis, Missouri.
(3) BroMenn Healthcare, Bloomington, Illinois.
(4) Jackson Park Hospital, Chicago, Illinois.
(5) Katherine Shaw Bethea Hospital, Dixon, Illinois.
(6) Lawrence County Memorial Hospital, Lawrenceville,
Illinois.
(7) Advocate Lutheran General Hospital, Park Ridge,
Illinois.
(8) Mercy Hospital and Medical Center, Chicago,
Illinois.
(9) Methodist Medical Center of Illinois, Peoria,
Illinois.
(10) Provena United Samaritans Medical Center,
Danville, Illinois.
(11) Rockford Memorial Hospital, Rockford, Illinois.

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(12) Sarah Bush Lincoln Health Center, Mattoon,
Illinois.
(13) Provena Covenant Medical Center, Urbana,
Illinois.
(14) Rush-Presbyterian-St. Luke's Medical Center,
Chicago, Illinois.
(15) Mt. Sinai Hospital, Chicago, Illinois.
(16) Gateway Regional Medical Center, Granite City,
Illinois.
(17) St. Mary of Nazareth Hospital, Chicago, Illinois.
(18) Provena St. Mary's Hospital, Kankakee, Illinois.
(19) St. Mary's Hospital, Decatur, Illinois.
(20) Memorial Hospital, Belleville, Illinois.
(21) Swedish Covenant Hospital, Chicago, Illinois.
(22) Trinity Medical Center, Rock Island, Illinois.
(23) St. Elizabeth Hospital, Chicago, Illinois.
(24) Richland Memorial Hospital, Olney, Illinois.
(25) St. Elizabeth's Hospital, Belleville, Illinois.
(26) Samaritan Health System, Clinton, Iowa.
(27) St. John's Hospital, Springfield, Illinois.
(28) St. Mary's Hospital, Centralia, Illinois.
(29) Loretto Hospital, Chicago, Illinois.
(30) Kenneth Hall Regional Hospital, East St. Louis,
Illinois.
(31) Hinsdale Hospital, Hinsdale, Illinois.
(32) Pekin Hospital, Pekin, Illinois.

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(33) University of Chicago Medical Center, Chicago,
Illinois.
(34) St. Anthony's Health Center, Alton, Illinois.
(35) OSF St. Francis Medical Center, Peoria, Illinois.
(36) Memorial Medical Center, Springfield, Illinois.
(37) A hospital with a distinct part unit for
psychiatric services that begins operating on or after
July 1, 2008.
For purposes of this Section, "inpatient psychiatric
services" means those services provided to patients who are in
need of short-term acute inpatient hospitalization for active
treatment of an emotional or mental disorder.
(b-5) Notwithstanding any other provision of this Section,
and subject to appropriation, the inpatient, per diem rate to
be paid to all safety-net hospitals for inpatient psychiatric
services on and after January 1, 2021 shall be at least $630,
subject to the provisions of Section 14-12.5.
(b-10) Notwithstanding any other provision of this
Section, effective with dates of service on and after January
1, 2022, any general acute care hospital with more than 9,500
inpatient psychiatric Medicaid days in any calendar year shall
be paid the inpatient per diem rate of no less than $630,
subject to the provisions of Section 14-12.5.
(c) No rules shall be promulgated to implement this
Section. For purposes of this Section, "rules" is given the
meaning contained in Section 1-70 of the Illinois

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Administrative Procedure Act.
(d) (Blank). This Section shall not be in effect during
any period of time that the State has in place a fully
operational hospital assessment plan that has been approved by
the Centers for Medicare and Medicaid Services of the U.S.
Department of Health and Human Services.
(e) On and after July 1, 2012, the Department shall reduce
any rate of reimbursement for services or other payments or
alter any methodologies authorized by this Code to reduce any
rate of reimbursement for services or other payments in
accordance with Section 5-5e.
(Source: P.A. 102-4, eff. 4-27-21; 102-674, eff. 11-30-21.)
(305 ILCS 5/14-12)
Sec. 14-12. Hospital rate reform payment system. The
hospital payment system pursuant to Section 14-11 of this
Article shall be as follows:
(a) Inpatient hospital services. Effective for discharges
on and after July 1, 2014, reimbursement for inpatient general
acute care services shall utilize the All Patient Refined
Diagnosis Related Grouping (APR-DRG) software, version 30,
distributed by 3MTM Health Information System.
(1) The Department shall establish Medicaid weighting
factors to be used in the reimbursement system established
under this subsection. Initial weighting factors shall be
the weighting factors as published by 3M Health

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Information System, associated with Version 30.0 adjusted
for the Illinois experience.
(2) The Department shall establish a
statewide-standardized amount to be used in the inpatient
reimbursement system. The Department shall publish these
amounts on its website no later than 10 calendar days
prior to their effective date.
(3) In addition to the statewide-standardized amount,
the Department shall develop adjusters to adjust the rate
of reimbursement for critical Medicaid providers or
services for trauma, transplantation services, perinatal
care, and Graduate Medical Education (GME).
(4) The Department shall develop add-on payments to
account for exceptionally costly inpatient stays,
consistent with Medicare outlier principles. Outlier fixed
loss thresholds may be updated to control for excessive
growth in outlier payments no more frequently than on an
annual basis, but at least once every 4 years. Upon
updating the fixed loss thresholds, the Department shall
be required to update base rates within 12 months.
(5) The Department shall define those hospitals or
distinct parts of hospitals that shall be exempt from the
APR-DRG reimbursement system established under this
Section. The Department shall publish these hospitals'
inpatient rates on its website no later than 10 calendar
days prior to their effective date.

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(6) Beginning July 1, 2014 and ending on June 30,
2024, in addition to the statewide-standardized amount,
the Department shall develop an adjustor to adjust the
rate of reimbursement for safety-net hospitals defined in
Section 5-5e.1 of this Code excluding pediatric hospitals,
subject to the provisions of Section 14-12.5.
(7) Beginning July 1, 2014, in addition to the
statewide-standardized amount, the Department shall
develop an adjustor to adjust the rate of reimbursement
for Illinois freestanding inpatient psychiatric hospitals
that are not designated as children's hospitals by the
Department but are primarily treating patients under the
age of 21.
(7.5) (Blank).
(8) Beginning July 1, 2018, in addition to the
statewide-standardized amount, the Department shall adjust
the rate of reimbursement for hospitals designated by the
Department of Public Health as a Perinatal Level II or II+
center by applying the same adjustor that is applied to
Perinatal and Obstetrical care cases for Perinatal Level
III centers, as of December 31, 2017.
(9) Beginning July 1, 2018, in addition to the
statewide-standardized amount, the Department shall apply
the same adjustor that is applied to trauma cases as of
December 31, 2017 to inpatient claims to treat patients
with burns, including, but not limited to, APR-DRGs 841,

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842, 843, and 844.
(10) Beginning July 1, 2018, the
statewide-standardized amount for inpatient general acute
care services shall be uniformly increased so that base
claims projected reimbursement is increased by an amount
equal to the funds allocated in paragraph (1) of
subsection (b) of Section 5A-12.6, less the amount
allocated under paragraphs (8) and (9) of this subsection
and paragraphs (3) and (4) of subsection (b) multiplied by
40%.
(11) Beginning July 1, 2018, the reimbursement for
inpatient rehabilitation services shall be increased by
the addition of a $96 per day add-on.
(b) Outpatient hospital services. Effective for dates of
service on and after July 1, 2014, reimbursement for
outpatient services shall utilize the Enhanced Ambulatory
Procedure Grouping (EAPG) software, version 3.7 distributed by
3MTM Health Information System.
(1) The Department shall establish Medicaid weighting
factors to be used in the reimbursement system established
under this subsection. The initial weighting factors shall
be the weighting factors as published by 3M Health
Information System, associated with Version 3.7.
(2) The Department shall establish service specific
statewide-standardized amounts to be used in the
reimbursement system.

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(A) The initial statewide standardized amounts,
with the labor portion adjusted by the Calendar Year
2013 Medicare Outpatient Prospective Payment System
wage index with reclassifications, shall be published
by the Department on its website no later than 10
calendar days prior to their effective date.
(B) The Department shall establish adjustments to
the statewide-standardized amounts for each Critical
Access Hospital, as designated by the Department of
Public Health in accordance with 42 CFR 485, Subpart
F. For outpatient services provided on or before June
30, 2018, the EAPG standardized amounts are determined
separately for each critical access hospital such that
simulated EAPG payments using outpatient base period
paid claim data plus payments under Section 5A-12.4 of
this Code net of the associated tax costs are equal to
the estimated costs of outpatient base period claims
data with a rate year cost inflation factor applied.
(3) In addition to the statewide-standardized amounts,
the Department shall develop adjusters to adjust the rate
of reimbursement for critical Medicaid hospital outpatient
providers or services, including outpatient high volume or
safety-net hospitals. Beginning July 1, 2018, the
outpatient high volume adjustor shall be increased to
increase annual expenditures associated with this adjustor
by $79,200,000, based on the State Fiscal Year 2015 base

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year data and this adjustor shall apply to public
hospitals, except for large public hospitals, as defined
under 89 Ill. Adm. Code 148.25(a).
(4) Beginning July 1, 2018, in addition to the
statewide standardized amounts, the Department shall make
an add-on payment for outpatient expensive devices and
drugs. This add-on payment shall at least apply to claim
lines that: (i) are assigned with one of the following
EAPGs: 490, 1001 to 1020, and coded with one of the
following revenue codes: 0274 to 0276, 0278; or (ii) are
assigned with one of the following EAPGs: 430 to 441, 443,
444, 460 to 465, 495, 496, 1090. The add-on payment shall
be calculated as follows: the claim line's covered charges
multiplied by the hospital's total acute cost to charge
ratio, less the claim line's EAPG payment plus $1,000,
multiplied by 0.8.
(5) Beginning July 1, 2018, the statewide-standardized
amounts for outpatient services shall be increased by a
uniform percentage so that base claims projected
reimbursement is increased by an amount equal to no less
than the funds allocated in paragraph (1) of subsection
(b) of Section 5A-12.6, less the amount allocated under
paragraphs (8) and (9) of subsection (a) and paragraphs
(3) and (4) of this subsection multiplied by 46%.
(6) Effective for dates of service on or after July 1,
2018, the Department shall establish adjustments to the

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statewide-standardized amounts for each Critical Access
Hospital, as designated by the Department of Public Health
in accordance with 42 CFR 485, Subpart F, such that each
Critical Access Hospital's standardized amount for
outpatient services shall be increased by the applicable
uniform percentage determined pursuant to paragraph (5) of
this subsection. It is the intent of the General Assembly
that the adjustments required under this paragraph (6) by
Public Act 100-1181 shall be applied retroactively to
claims for dates of service provided on or after July 1,
2018.
(7) Effective for dates of service on or after March
8, 2019 (the effective date of Public Act 100-1181), the
Department shall recalculate and implement an updated
statewide-standardized amount for outpatient services
provided by hospitals that are not Critical Access
Hospitals to reflect the applicable uniform percentage
determined pursuant to paragraph (5).
(1) Any recalculation to the
statewide-standardized amounts for outpatient services
provided by hospitals that are not Critical Access
Hospitals shall be the amount necessary to achieve the
increase in the statewide-standardized amounts for
outpatient services increased by a uniform percentage,
so that base claims projected reimbursement is
increased by an amount equal to no less than the funds

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allocated in paragraph (1) of subsection (b) of
Section 5A-12.6, less the amount allocated under
paragraphs (8) and (9) of subsection (a) and
paragraphs (3) and (4) of this subsection, for all
hospitals that are not Critical Access Hospitals,
multiplied by 46%.
(2) It is the intent of the General Assembly that
the recalculations required under this paragraph (7)
by Public Act 100-1181 shall be applied prospectively
to claims for dates of service provided on or after
March 8, 2019 (the effective date of Public Act
100-1181) and that no recoupment or repayment by the
Department or an MCO of payments attributable to
recalculation under this paragraph (7), issued to the
hospital for dates of service on or after July 1, 2018
and before March 8, 2019 (the effective date of Public
Act 100-1181), shall be permitted.
(8) The Department shall ensure that all necessary
adjustments to the managed care organization capitation
base rates necessitated by the adjustments under
subparagraph (6) or (7) of this subsection are completed
and applied retroactively in accordance with Section
5-30.8 of this Code within 90 days of March 8, 2019 (the
effective date of Public Act 100-1181).
(9) Within 60 days after federal approval of the
change made to the assessment in Section 5A-2 by Public

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Act 101-650 this amendatory Act of the 101st General
Assembly, the Department shall incorporate into the EAPG
system for outpatient services those services performed by
hospitals currently billed through the Non-Institutional
Provider billing system.
(b-5) Notwithstanding any other provision of this Section,
beginning with dates of service on and after January 1, 2023,
any general acute care hospital with more than 500 outpatient
psychiatric Medicaid services to persons under 19 years of age
in any calendar year shall be paid the outpatient add-on
payment of no less than $113.
(c) In consultation with the hospital community, the
Department is authorized to replace 89 Ill. Adm. Admin. Code
152.150 as published in 38 Ill. Reg. 4980 through 4986 within
12 months of June 16, 2014 (the effective date of Public Act
98-651). If the Department does not replace these rules within
12 months of June 16, 2014 (the effective date of Public Act
98-651), the rules in effect for 152.150 as published in 38
Ill. Reg. 4980 through 4986 shall remain in effect until
modified by rule by the Department. Nothing in this subsection
shall be construed to mandate that the Department file a
replacement rule.
(d) Transition period. There shall be a transition period
to the reimbursement systems authorized under this Section
that shall begin on the effective date of these systems and
continue until June 30, 2018, unless extended by rule by the

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Department. To help provide an orderly and predictable
transition to the new reimbursement systems and to preserve
and enhance access to the hospital services during this
transition, the Department shall allocate a transitional
hospital access pool of at least $290,000,000 annually so that
transitional hospital access payments are made to hospitals.
(1) After the transition period, the Department may
begin incorporating the transitional hospital access pool
into the base rate structure; however, the transitional
hospital access payments in effect on June 30, 2018 shall
continue to be paid, if continued under Section 5A-16.
(2) After the transition period, if the Department
reduces payments from the transitional hospital access
pool, it shall increase base rates, develop new adjustors,
adjust current adjustors, develop new hospital access
payments based on updated information, or any combination
thereof by an amount equal to the decreases proposed in
the transitional hospital access pool payments, ensuring
that the entire transitional hospital access pool amount
shall continue to be used for hospital payments.
(d-5) Hospital and health care transformation program. The
Department shall develop a hospital and health care
transformation program to provide financial assistance to
hospitals in transforming their services and care models to
better align with the needs of the communities they serve. The
payments authorized in this Section shall be subject to

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approval by the federal government.
(1) Phase 1. In State fiscal years 2019 through 2020,
the Department shall allocate funds from the transitional
access hospital pool to create a hospital transformation
pool of at least $262,906,870 annually and make hospital
transformation payments to hospitals. Subject to Section
5A-16, in State fiscal years 2019 and 2020, an Illinois
hospital that received either a transitional hospital
access payment under subsection (d) or a supplemental
payment under subsection (f) of this Section in State
fiscal year 2018, shall receive a hospital transformation
payment as follows:
(A) If the hospital's Rate Year 2017 Medicaid
inpatient utilization rate is equal to or greater than
45%, the hospital transformation payment shall be
equal to 100% of the sum of its transitional hospital
access payment authorized under subsection (d) and any
supplemental payment authorized under subsection (f).
(B) If the hospital's Rate Year 2017 Medicaid
inpatient utilization rate is equal to or greater than
25% but less than 45%, the hospital transformation
payment shall be equal to 75% of the sum of its
transitional hospital access payment authorized under
subsection (d) and any supplemental payment authorized
under subsection (f).
(C) If the hospital's Rate Year 2017 Medicaid

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inpatient utilization rate is less than 25%, the
hospital transformation payment shall be equal to 50%
of the sum of its transitional hospital access payment
authorized under subsection (d) and any supplemental
payment authorized under subsection (f).
(2) Phase 2.
(A) The funding amount from phase one shall be
incorporated into directed payment and pass-through
payment methodologies described in Section 5A-12.7.
(B) Because there are communities in Illinois that
experience significant health care disparities due to
systemic racism, as recently emphasized by the
COVID-19 pandemic, aggravated by social determinants
of health and a lack of sufficiently allocated
healthcare resources, particularly community-based
services, preventive care, obstetric care, chronic
disease management, and specialty care, the Department
shall establish a health care transformation program
that shall be supported by the transformation funding
pool. It is the intention of the General Assembly that
innovative partnerships funded by the pool must be
designed to establish or improve integrated health
care delivery systems that will provide significant
access to the Medicaid and uninsured populations in
their communities, as well as improve health care
equity. It is also the intention of the General

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Assembly that partnerships recognize and address the
disparities revealed by the COVID-19 pandemic, as well
as the need for post-COVID care. During State fiscal
years 2021 through 2027, the hospital and health care
transformation program shall be supported by an annual
transformation funding pool of up to $150,000,000,
pending federal matching funds, to be allocated during
the specified fiscal years for the purpose of
facilitating hospital and health care transformation.
No disbursement of moneys for transformation projects
from the transformation funding pool described under
this Section shall be considered an award, a grant, or
an expenditure of grant funds. Funding agreements made
in accordance with the transformation program shall be
considered purchases of care under the Illinois
Procurement Code, and funds shall be expended by the
Department in a manner that maximizes federal funding
to expend the entire allocated amount.
The Department shall convene, within 30 days after
March 12, 2021 (the effective date of Public Act
101-655) this amendatory Act of the 101st General
Assembly, a workgroup that includes subject matter
experts on healthcare disparities and stakeholders
from distressed communities, which could be a
subcommittee of the Medicaid Advisory Committee, to
review and provide recommendations on how Department

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policy, including health care transformation, can
improve health disparities and the impact on
communities disproportionately affected by COVID-19.
The workgroup shall consider and make recommendations
on the following issues: a community safety-net
designation of certain hospitals, racial equity, and a
regional partnership to bring additional specialty
services to communities.
(C) As provided in paragraph (9) of Section 3 of
the Illinois Health Facilities Planning Act, any
hospital participating in the transformation program
may be excluded from the requirements of the Illinois
Health Facilities Planning Act for those projects
related to the hospital's transformation. To be
eligible, the hospital must submit to the Health
Facilities and Services Review Board approval from the
Department that the project is a part of the
hospital's transformation.
(D) As provided in subsection (a-20) of Section
32.5 of the Emergency Medical Services (EMS) Systems
Act, a hospital that received hospital transformation
payments under this Section may convert to a
freestanding emergency center. To be eligible for such
a conversion, the hospital must submit to the
Department of Public Health approval from the
Department that the project is a part of the

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hospital's transformation.
(E) Criteria for proposals. To be eligible for
funding under this Section, a transformation proposal
shall meet all of the following criteria:
(i) the proposal shall be designed based on
community needs assessment completed by either a
University partner or other qualified entity with
significant community input;
(ii) the proposal shall be a collaboration
among providers across the care and community
spectrum, including preventative care, primary
care specialty care, hospital services, mental
health and substance abuse services, as well as
community-based entities that address the social
determinants of health;
(iii) the proposal shall be specifically
designed to improve healthcare outcomes and reduce
healthcare disparities, and improve the
coordination, effectiveness, and efficiency of
care delivery;
(iv) the proposal shall have specific
measurable metrics related to disparities that
will be tracked by the Department and made public
by the Department;
(v) the proposal shall include a commitment to
include Business Enterprise Program certified

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vendors or other entities controlled and managed
by minorities or women; and
(vi) the proposal shall specifically increase
access to primary, preventive, or specialty care.
(F) Entities eligible to be funded.
(i) Proposals for funding should come from
collaborations operating in one of the most
distressed communities in Illinois as determined
by the U.S. Centers for Disease Control and
Prevention's Social Vulnerability Index for
Illinois and areas disproportionately impacted by
COVID-19 or from rural areas of Illinois.
(ii) The Department shall prioritize
partnerships from distressed communities, which
include Business Enterprise Program certified
vendors or other entities controlled and managed
by minorities or women and also include one or
more of the following: safety-net hospitals,
critical access hospitals, the campuses of
hospitals that have closed since January 1, 2018,
or other healthcare providers designed to address
specific healthcare disparities, including the
impact of COVID-19 on individuals and the
community and the need for post-COVID care. All
funded proposals must include specific measurable
goals and metrics related to improved outcomes and

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reduced disparities which shall be tracked by the
Department.
(iii) The Department should target the funding
in the following ways: $30,000,000 of
transformation funds to projects that are a
collaboration between a safety-net hospital,
particularly community safety-net hospitals, and
other providers and designed to address specific
healthcare disparities, $20,000,000 of
transformation funds to collaborations between
safety-net hospitals and a larger hospital partner
that increases specialty care in distressed
communities, $30,000,000 of transformation funds
to projects that are a collaboration between
hospitals and other providers in distressed areas
of the State designed to address specific
healthcare disparities, $15,000,000 to
collaborations between critical access hospitals
and other providers designed to address specific
healthcare disparities, and $15,000,000 to
cross-provider collaborations designed to address
specific healthcare disparities, and $5,000,000 to
collaborations that focus on workforce
development.
(iv) The Department may allocate up to
$5,000,000 for planning, racial equity analysis,

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or consulting resources for the Department or
entities without the resources to develop a plan
to meet the criteria of this Section. Any contract
for consulting services issued by the Department
under this subparagraph shall comply with the
provisions of Section 5-45 of the State Officials
and Employees Ethics Act. Based on availability of
federal funding, the Department may directly
procure consulting services or provide funding to
the collaboration. The provision of resources
under this subparagraph is not a guarantee that a
project will be approved.
(v) The Department shall take steps to ensure
that safety-net hospitals operating in
under-resourced communities receive priority
access to hospital and healthcare transformation
funds, including consulting funds, as provided
under this Section.
(G) Process for submitting and approving projects
for distressed communities. The Department shall issue
a template for application. The Department shall post
any proposal received on the Department's website for
at least 2 weeks for public comment, and any such
public comment shall also be considered in the review
process. Applicants may request that proprietary
financial information be redacted from publicly posted

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proposals and the Department in its discretion may
agree. Proposals for each distressed community must
include all of the following:
(i) A detailed description of how the project
intends to affect the goals outlined in this
subsection, describing new interventions, new
technology, new structures, and other changes to
the healthcare delivery system planned.
(ii) A detailed description of the racial and
ethnic makeup of the entities' board and
leadership positions and the salaries of the
executive staff of entities in the partnership
that is seeking to obtain funding under this
Section.
(iii) A complete budget, including an overall
timeline and a detailed pathway to sustainability
within a 5-year period, specifying other sources
of funding, such as in-kind, cost-sharing, or
private donations, particularly for capital needs.
There is an expectation that parties to the
transformation project dedicate resources to the
extent they are able and that these expectations
are delineated separately for each entity in the
proposal.
(iv) A description of any new entities formed
or other legal relationships between collaborating

SB1763 - 24 - LRB103 27744 KTG 54122 b
entities and how funds will be allocated among
participants.
(v) A timeline showing the evolution of sites
and specific services of the project over a 5-year
period, including services available to the
community by site.
(vi) Clear milestones indicating progress
toward the proposed goals of the proposal as
checkpoints along the way to continue receiving
funding. The Department is authorized to refine
these milestones in agreements, and is authorized
to impose reasonable penalties, including
repayment of funds, for substantial lack of
progress.
(vii) A clear statement of the level of
commitment the project will include for minorities
and women in contracting opportunities, including
as equity partners where applicable, or as
subcontractors and suppliers in all phases of the
project.
(viii) If the community study utilized is not
the study commissioned and published by the
Department, the applicant must define the
methodology used, including documentation of clear
community participation.
(ix) A description of the process used in

SB1763 - 25 - LRB103 27744 KTG 54122 b
collaborating with all levels of government in the
community served in the development of the
project, including, but not limited to,
legislators and officials of other units of local
government.
(x) Documentation of a community input process
in the community served, including links to
proposal materials on public websites.
(xi) Verifiable project milestones and quality
metrics that will be impacted by transformation.
These project milestones and quality metrics must
be identified with improvement targets that must
be met.
(xii) Data on the number of existing employees
by various job categories and wage levels by the
zip code of the employees' residence and
benchmarks for the continued maintenance and
improvement of these levels. The proposal must
also describe any retraining or other workforce
development planned for the new project.
(xiii) If a new entity is created by the
project, a description of how the board will be
reflective of the community served by the
proposal.
(xiv) An explanation of how the proposal will
address the existing disparities that exacerbated

SB1763 - 26 - LRB103 27744 KTG 54122 b
the impact of COVID-19 and the need for post-COVID
care in the community, if applicable.
(xv) An explanation of how the proposal is
designed to increase access to care, including
specialty care based upon the community's needs.
(H) The Department shall evaluate proposals for
compliance with the criteria listed under subparagraph
(G). Proposals meeting all of the criteria may be
eligible for funding with the areas of focus
prioritized as described in item (ii) of subparagraph
(F). Based on the funds available, the Department may
negotiate funding agreements with approved applicants
to maximize federal funding. Nothing in this
subsection requires that an approved project be funded
to the level requested. Agreements shall specify the
amount of funding anticipated annually, the
methodology of payments, the limit on the number of
years such funding may be provided, and the milestones
and quality metrics that must be met by the projects in
order to continue to receive funding during each year
of the program. Agreements shall specify the terms and
conditions under which a health care facility that
receives funds under a purchase of care agreement and
closes in violation of the terms of the agreement must
pay an early closure fee no greater than 50% of the
funds it received under the agreement, prior to the

SB1763 - 27 - LRB103 27744 KTG 54122 b
Health Facilities and Services Review Board
considering an application for closure of the
facility. Any project that is funded shall be required
to provide quarterly written progress reports, in a
form prescribed by the Department, and at a minimum
shall include the progress made in achieving any
milestones or metrics or Business Enterprise Program
commitments in its plan. The Department may reduce or
end payments, as set forth in transformation plans, if
milestones or metrics or Business Enterprise Program
commitments are not achieved. The Department shall
seek to make payments from the transformation fund in
a manner that is eligible for federal matching funds.
In reviewing the proposals, the Department shall
take into account the needs of the community, data
from the study commissioned by the Department from the
University of Illinois-Chicago if applicable, feedback
from public comment on the Department's website, as
well as how the proposal meets the criteria listed
under subparagraph (G). Alignment with the
Department's overall strategic initiatives shall be an
important factor. To the extent that fiscal year
funding is not adequate to fund all eligible projects
that apply, the Department shall prioritize
applications that most comprehensively and effectively
address the criteria listed under subparagraph (G).

SB1763 - 28 - LRB103 27744 KTG 54122 b
(3) (Blank).
(4) Hospital Transformation Review Committee. There is
created the Hospital Transformation Review Committee. The
Committee shall consist of 14 members. No later than 30
days after March 12, 2018 (the effective date of Public
Act 100-581), the 4 legislative leaders shall each appoint
3 members; the Governor shall appoint the Director of
Healthcare and Family Services, or his or her designee, as
a member; and the Director of Healthcare and Family
Services shall appoint one member. Any vacancy shall be
filled by the applicable appointing authority within 15
calendar days. The members of the Committee shall select a
Chair and a Vice-Chair from among its members, provided
that the Chair and Vice-Chair cannot be appointed by the
same appointing authority and must be from different
political parties. The Chair shall have the authority to
establish a meeting schedule and convene meetings of the
Committee, and the Vice-Chair shall have the authority to
convene meetings in the absence of the Chair. The
Committee may establish its own rules with respect to
meeting schedule, notice of meetings, and the disclosure
of documents; however, the Committee shall not have the
power to subpoena individuals or documents and any rules
must be approved by 9 of the 14 members. The Committee
shall perform the functions described in this Section and
advise and consult with the Director in the administration

SB1763 - 29 - LRB103 27744 KTG 54122 b
of this Section. In addition to reviewing and approving
the policies, procedures, and rules for the hospital and
health care transformation program, the Committee shall
consider and make recommendations related to qualifying
criteria and payment methodologies related to safety-net
hospitals and children's hospitals. Members of the
Committee appointed by the legislative leaders shall be
subject to the jurisdiction of the Legislative Ethics
Commission, not the Executive Ethics Commission, and all
requests under the Freedom of Information Act shall be
directed to the applicable Freedom of Information officer
for the General Assembly. The Department shall provide
operational support to the Committee as necessary. The
Committee is dissolved on April 1, 2019.
(e) Beginning 36 months after initial implementation, the
Department shall update the reimbursement components in
subsections (a) and (b), including standardized amounts and
weighting factors, and at least once every 4 years and no more
frequently than annually thereafter. The Department shall
publish these updates on its website no later than 30 calendar
days prior to their effective date.
(f) Continuation of supplemental payments. Any
supplemental payments authorized under Illinois Administrative
Code 148 effective January 1, 2014 and that continue during
the period of July 1, 2014 through December 31, 2014 shall
remain in effect as long as the assessment imposed by Section

SB1763 - 30 - LRB103 27744 KTG 54122 b
5A-2 that is in effect on December 31, 2017 remains in effect.
(g) Notwithstanding subsections (a) through (f) of this
Section and notwithstanding the changes authorized under
Section 5-5b.1, any updates to the system shall not result in
any diminishment of the overall effective rates of
reimbursement as of the implementation date of the new system
(July 1, 2014). These updates shall not preclude variations in
any individual component of the system or hospital rate
variations. Nothing in this Section shall prohibit the
Department from increasing the rates of reimbursement or
developing payments to ensure access to hospital services.
Nothing in this Section shall be construed to guarantee a
minimum amount of spending in the aggregate or per hospital as
spending may be impacted by factors, including, but not
limited to, the number of individuals in the medical
assistance program and the severity of illness of the
individuals.
(h) The Department shall have the authority to modify by
rulemaking any changes to the rates or methodologies in this
Section as required by the federal government to obtain
federal financial participation for expenditures made under
this Section.
(i) Except for subsections (g) and (h) of this Section,
the Department shall, pursuant to subsection (c) of Section
5-40 of the Illinois Administrative Procedure Act, provide for
presentation at the June 2014 hearing of the Joint Committee

SB1763 - 31 - LRB103 27744 KTG 54122 b
on Administrative Rules (JCAR) additional written notice to
JCAR of the following rules in order to commence the second
notice period for the following rules: rules published in the
Illinois Register, rule dated February 21, 2014 at 38 Ill.
Reg. 4559 (Medical Payment), 4628 (Specialized Health Care
Delivery Systems), 4640 (Hospital Services), 4932 (Diagnostic
Related Grouping (DRG) Prospective Payment System (PPS)), and
4977 (Hospital Reimbursement Changes), and published in the
Illinois Register dated March 21, 2014 at 38 Ill. Reg. 6499
(Specialized Health Care Delivery Systems) and 6505 (Hospital
Services).
(j) Out-of-state hospitals. Beginning July 1, 2018, for
purposes of determining for State fiscal years 2019 and 2020
and subsequent fiscal years the hospitals eligible for the
payments authorized under subsections (a) and (b) of this
Section, the Department shall include out-of-state hospitals
that are designated a Level I pediatric trauma center or a
Level I trauma center by the Department of Public Health as of
December 1, 2017.
(k) The Department shall notify each hospital and managed
care organization, in writing, of the impact of the updates
under this Section at least 30 calendar days prior to their
effective date.
(l) This Section is subject to Section 14-12.5.
(Source: P.A. 101-81, eff. 7-12-19; 101-650, eff. 7-7-20;
101-655, eff. 3-12-21; 102-682, eff. 12-10-21; 102-1037, eff.

SB1763 - 32 - LRB103 27744 KTG 54122 b
6-2-22; revised 8-22-22.)
(305 ILCS 5/14-12.5 new)
Sec. 14-12.5. Hospital preservation and stabilization rate
update.
(a) Notwithstanding any other provision of this Code, the
hospital rates of reimbursement authorized under Sections
5-5.05, 14-12, and 14-13 of this Code shall be adjusted in
accordance with the provisions of this Section.
(b) Notwithstanding any other provision of this Code,
effective for dates of service on and after January 1, 2024,
hospital reimbursement rates shall be revised as follows:
(1) For inpatient general acute care services, the
statewide-standardized amount in effect January 1, 2023 as
published by the Department on December 1, 2022, shall be
increased by 20%.
(2) For inpatient psychiatric services:
(A) For safety-net hospitals, the per diem rates
in effect January 1, 2023, shall be increased by 20%,
and the minimum per diem rate of $630, authorized in
subsection (b-5) of Section 5-5.05 of this Code, shall
be increased by 20%.
(B) For all general acute care hospitals that are
not safety-net hospitals, the per diem rates in effect
January 1, 2023 shall be increased by 20%, except that
all rates shall be at least 90% of the minimum

SB1763 - 33 - LRB103 27744 KTG 54122 b
inpatient per diem rate for safety-net hospitals as
authorized in subsection (b-5) of Section 5-5.05 of
this Code, including the adjustment authorized in this
Section.
(C) For all psychiatric specialty hospitals, the
per diem rates in effect January 1, 2023, shall be
increased by 20%, and the statewide default per diem
rates for new psychiatric specialty hospitals shall be
increased by 20%.
(3) For inpatient rehabilitative services, the per
diem rates in effect January 1, 2023, shall be increased
by 20%, and the statewide default inpatient rehabilitative
services per diem rates, for general acute care hospitals
and for rehabilitation specialty hospitals respectively,
shall be increased by 20%.
(4) The statewide-standardized amount for outpatient
general acute care services in effect January 1, 2023, as
published by the Department on December 1, 2022, shall be
increased by 20%.
(5) The statewide-standardized amount for outpatient
psychiatric care services in effect January 1, 2023, as
published by the Department on December 1, 2022, shall be
increased by 20%.
(6) The statewide-standardized amount for outpatient
rehabilitative care services in effect January 1, 2023, as
published by the Department on December 1, 2022, shall be

SB1763 - 34 - LRB103 27744 KTG 54122 b
increased by 20%.
(7) The per diem rate in effect January 1, 2023, as
authorized in subsection (a) of Section 14-13 shall be
increased by 20%.
(8) The per diem add-on payment for safety-net
hospitals authorized in paragraph (6) of subsection (a) of
Section 14-12, as in effect on January 1, 2023, shall be
increased to $115.
(c) Beginning on January 1, 2025 and each January 1
thereafter, all rates identified in paragraphs (1) through (8)
of subsection (b) in effect December 31st of the year
preceding the January 1 adjustment shall be increased based on
the annual increase in the national hospital market basket
price proxies (DRI) hospital cost index from the midpoint of
the calendar year 2 years prior to the current year, to the
midpoint of the preceding calendar year. In no instance shall
the adjustment required in this subsection result in a
reduction to the rates in place at the time of the required
adjustment.
(d) If the federal Centers for Medicare and Medicaid
Services finds that the increases required under this Section
would result in rates of reimbursement which exceed the
federal maximum limits applicable to hospital payments, then
the payments and assessment tax authorized under Article V-A
of this Code shall be reduced in accordance with Section 5A-15
of this Code.

SB1763 - 35 - LRB103 27744 KTG 54122 b
(e) The Department shall promptly take all actions
necessary to ensure the changes authorized in this amendatory
Act of the 103rd General Assembly are in effect for dates of
service on and after January 1, 2024, including publishing all
appropriate public notices, applying for federal approval of
amendments to the Illinois Title XIX State Plan, and adopting
administrative rules if necessary.
(f) The Department of Healthcare and Family Services may
adopt rules necessary to implement the changes made by this
amendatory Act of the 103rd General Assembly through the use
of emergency rulemaking in accordance with Section 5-45 of the
Illinois Administrative Procedure Act. The 24-month limitation
on the adoption of emergency rules does not apply to rules
adopted under this Section. The General Assembly finds that
the adoption of rules to implement the changes made by this
amendatory Act of the 103rd General Assembly is deemed an
emergency and necessary for the public interest, safety, and
welfare.
(g) The Department shall ensure that all necessary
adjustments to the managed care organization capitation base
rates necessitated by the adjustments in this Section are
completed, published, and applied in accordance with Section
5-30.8 of this Code 90 days prior to the implementation date of
the changes required under this amendatory Act of the 103rd
General Assembly.

SB1763 - 36 - LRB103 27744 KTG 54122 b
(305 ILCS 5/14-13)
Sec. 14-13. Reimbursement for inpatient stays extended
beyond medical necessity.
(a) By October 1, 2019, the Department shall by rule
implement a methodology effective for dates of service July 1,
2019 and later to reimburse hospitals for inpatient stays
extended beyond medical necessity due to the inability of the
Department or the managed care organization in which a
recipient is enrolled or the hospital discharge planner to
find an appropriate placement after discharge from the
hospital. The Department shall evaluate the effectiveness of
the current reimbursement rate for inpatient hospital stays
beyond medical necessity.
(a-5) By October 1, 2023, the Department shall by rule
implement a methodology effective for dates of service
beginning on and after January 1, 2024 to reimburse hospitals
for extended stays in a hospital emergency department due to
the inability of the Department or the managed care
organization in which a recipient is enrolled or the hospital
discharge planner to find an appropriate placement or transfer
to an appropriate facility other than the hospital to which
the patient presented. The per diem rate established shall be
equal to 2 times the per diem rate paid for stays identified in
subsection (a), prorated in hourly increments for each new
hour beyond the 4th hour after the time that the patient is
determined to be ready for transfer or admission. The rate

SB1763 - 37 - LRB103 27744 KTG 54122 b
established under this subsection shall be paid based on the
entire length of the stay in the hospital emergency department
awaiting transfer.
(b) The methodology shall provide reasonable compensation
for the services provided attributable to the days of the
extended stay for which the prevailing rate methodology
provides no reimbursement. The Department may use a day
outlier program to satisfy this requirement. The reimbursement
rate shall be set at a level so as not to act as an incentive
to avoid transfer to the appropriate level of care needed or
placement, after discharge.
(c) The Department shall require managed care
organizations to adopt this methodology or an alternative
methodology that pays at least as much as the Department's
adopted methodology unless otherwise mutually agreed upon
contractual language is developed by the provider and the
managed care organization for a risk-based or innovative
payment methodology.
(d) Days beyond medical necessity shall not be eligible
for per diem add-on payments under the Medicaid High Volume
Adjustment (MHVA) or the Medicaid Percentage Adjustment (MPA)
programs.
(e) For services covered by the fee-for-service program,
reimbursement under this Section shall only be made for days
beyond medical necessity that occur after the hospital has
notified the Department of the need for post-discharge

SB1763 - 38 - LRB103 27744 KTG 54122 b
placement. For services covered by a managed care
organization, hospitals shall notify the appropriate managed
care organization of an admission within 24 hours of
admission. For every 24-hour period beyond the initial 24
hours after admission that the hospital fails to notify the
managed care organization of the admission, reimbursement
under this subsection shall be reduced by one day.
(Source: P.A. 101-209, eff. 8-5-19; 102-4, eff. 4-27-21.)
Section 99. Effective date. This Act takes effect upon
becoming law.
SB1763 - 39 - LRB103 27744 KTG 54122 b
INDEX
Statutes amended in order of appearance