Illinois hospital tax program update becomes law – Health Care News

on Mar13

12 March 2018 | 6:00 pm

Gov. Bruce Rauner has signed into law a bill that modernizes a vastly outdated hospital tax program that generates $3.5 billion for Illinois Medicaid.

Senate Bill 1773 updates the hospital assessment program. Under the initiative, nearly every medical center across the state pays into a pot of money that Illinois takes to the federal government to generate more matching dollars for Medicaid, the public health insurance program for the poor and disabled.

Hospital lobbyists, state lawmakers and officials have been hustling for months to overhaul the program, which expires July 1 and needs federal approval to change.

“Our teams worked hard to make sure our most vulnerable citizens can continue to receive quality medical services and to keep hospitals in underserved communities,” Rauner said in a statement.

The shake-up in how much hospitals in Illinois will pay into the new assessment program, and how much they will get back, has caused major anxiety. In particular, CEOs of facilities where doctors treat a large number of poor and uninsured patients worry they will lose funding in the new program.

Here’s why officials changed it. The federal Centers for Medicare & Medicaid Services, which matches dollars that hospitals contribute to the assessment program, for years has been concerned with how the program in Illinois operates. For example, hospitals now are paid a fixed amount of money based on a formula that accounts for how many beds were full in 2005 and how much outpatient revenue was grossed in 2009.

That doesn’t reflect how health care has shifted away from hospitals to cheaper outpatient sites, like doctors’ offices, or how Medicaid patients have switched providers.

In the new program, more dollars will follow patients, and hospitals that treat a large portion of Medicaid patients will get additional funding. Hospitals also can tap a $263 million fund to change their business model, such as converting to a free-standing emergency center.

Rauner also signed into law Senate Bill 1573, which adds more reporting requirements to private insurers overseeing the management of Medicaid recipients. Rauner is expanding managed care in Illinois, betting private insurers can improve the health of Medicaid enrollees and ultimately save the state money. The new managed care program began on Jan. 1 and will cost an estimated $60 billion in contracts to insurers over four years.

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