REPORT TITLE:
Hawaii Health Systems Corp.



DESCRIPTION:
Provides for the reimbursement to critical access hospitals on a
cost basis under the Medicaid programs using matching federal
funds.  (SD1)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        2875
THE SENATE                              S.B. NO.           S.D. 1
TWENTIETH LEGISLATURE, 2000                                
STATE OF HAWAII                                            
                                                             
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                   A  BILL  FOR  AN  ACT

RELATING TO CRITICAL ACCESS HOSPITALS.



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

 1      SECTION 1.  The legislature finds that the rural hospitals
 
 2 of this State are essential to the provision of health care to
 
 3 all of our citizens.  All hospitals are hurt by reimbursement
 
 4 trends but the rural facilities are especially disadvantaged due
 
 5 to the low volume of patients and high expense of providing care
 
 6 in the remote areas of our State. In recognition of this fact,
 
 7 the federal government has passed 42 U.S.C. 1395i-4, which
 
 8 establishes the Medicare Rural Hospital Flexibility Program, a
 
 9 national program designed to assist states and rural communities
 
10 in improving access to essential health care services through the
 
11 establishment of limited service hospitals and rural health
 
12 networks.  The program creates the critical access hospital as a
 
13 limited service hospital eligible for Medicare certification and
 
14 reimbursement and supports the development of rural health
 
15 networks consisting of critical access hospitals, acute general
 
16 hospitals, and other health care providers.
 
17      The department of health has developed a Hawaii Rural Health
 
18 Plan for the Medicare Rural Hospital Flexibility Program ("Rural
 
19 Plan") to guide the implementation of the federal Medicare Rural
 

 
Page 2                                                     2875
                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1 Hospital Flexibility Program.  In order to optimize the benefits
 
 2 of this initiative, the legislature intends that this Act serve
 
 3 to modify current law by changing the methodology for calculating
 
 4 Medicaid reimbursements to the critical access hospitals.
 
 5 Pursuant to the Act, Medicaid reimbursements to critical access
 
 6 hospitals shall be calculated on a cost basis using Medicare
 
 7 reasonable cost principles.  The Act shall not be applied in a
 
 8 manner that requires reduction in reimbursement to other long
 
 9 term care providers.  The State's share of the matching funds
 
10 shall be provided through Hawaii health systems corporation
 
11 appropriations to the extent funds are available.
 
12      To ensure federal reimbursement, the federal government must
 
13 approve the Rural Plan and the Medicaid payment methodology and
 
14 other modifications to the State Medicaid Plan.
 
15      SECTION 2.  Section 346-1, Hawaii Revised Statutes, is
 
16 amended by adding a new definition to be appropriately inserted
 
17 and to read as follows:
 
18      ""Critical access hospital" means a hospital located in the
 
19 State of Hawaii that is included in the Hawaii rural health plan
 
20 approved by the federal Health Care Financing Administration and
 
21 approved as a critical access hospital by the department of
 
22 health as provided in the Rural Plan, as defined by 42 United
 
23 States Code section 1395i-4."
 

 
Page 3                                                     2875
                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1      SECTION 3.  Section 346-59, Hawaii Revised Statutes, is
 
 2 amended by amending subsection (a) to read as follows:
 
 3      "(a)  The department shall adopt rules under chapter 91
 
 4 concerning payment to providers of medical care.  The department
 
 5 shall determine the rates of payment due to all providers of
 
 6 medical care, and pay such amounts in accordance with the
 
 7 requirements of the appropriations act and the Social Security
 
 8 Act.  Payments to critical access hospitals for services rendered
 
 9 to Medicaid beneficiaries shall be calculated on a cost basis
 
10 using Medicare reasonable cost principles."
 
11      SECTION 4.  Section 346D-1, Hawaii Revised Statutes, is
 
12 amended by adding a new definition to be appropriately inserted
 
13 and to read as follows:
 
14      ""Critical access hospital" means a hospital located in the
 
15 State of Hawaii that is included in the Hawaii rural health plan
 
16 approved by the federal Health Care Financing Administration and
 
17 approved as a critical access hospital by the department of
 
18 health as provided in the Rural Plan, as defined by 42 United
 
19 States Code section 1395i-4."
 
20      SECTION 5.  Section 346D-1.5, Hawaii Revised Statutes, is
 
21 amended to read as follows:
 
22      "[[]§346D-1.5[]] Medicaid reimbursement equity.  Not later
 
23 than June 30, 2003, there shall be no distinction between
 

 
Page 4                                                     2875
                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1 hospital- based and nonhospital-based reimbursement rates for
 
 2 institutionalized long-term care under medicaid.  Reimbursement
 
 3 for institutionalized intermediate care facilities and
 
 4 institutionalized skilled nursing facilities shall be based
 
 5 solely on the level of care rather than the location.  This
 
 6 section is not applicable to critical access hospitals."
 
 7      SECTION 6.  The State's share of matching funds shall be
 
 8 provided through Hawaii health systems corporation and other
 
 9 designated critical access hospital appropriations to the extent
 
10 funding is available.  If funding is not available, Medicaid
 
11 reimbursement to critical access hospitals shall revert back to
 
12 the existing Medicaid payment methodology.
 
13      SECTION 7.  Statutory material to be repealed is bracketed.
 
14 New statutory material is underscored.
 
15      SECTION 8.  This Act shall take effect on July 1, 2000, and
 
16 shall be repealed effective June 30, 2004, provided that sections
 
17 346-59(a) and 346D-1.5 shall be reenacted in the form in which
 
18 they read on the day before the effective date of this Act.