SB1132

SECTION 1. The healthcare system in the State faces major financial challenges in ensuring access to quality healthcare for Hawaii residents due to the COVID-19 pandemic and related financial and budgetary pressures. Additional federal funding to help financially sustain Hawaii's healthcare system and medicaid program may be accessed through a provider fee.

Provider fees are used in forty-nine states and the District of Columbia as a means of drawing down federal funds to sustain state medicaid programs due to rising state budget deficits, increasing health care costs, and expanding medicaid enrollment. Of these, sixteen states use health insurer provider fees to draw down federal funds.

Medicaid is jointly financed by federal and state governments by statutory formula. The federal government pays between fifty per cent and seventy-four per cent of medicaid costs incurred by a state for care delivered to its medicaid beneficiaries. Federal assistance percentages vary by state, with states that have lower per capita incomes receiving higher federal matching rates. Under federal rules, the state share must be paid through public funds that are not federal funds.

Provider fees, which are collected from specific categories of health care providers, may be imposed on different classes of health care services, including the revenue of health insurers.

In Hawaii, a medicaid sustainability fee assessed on health insurers would help guarantee access to critical medicaid benefits such as supportive housing, behavioral health, vaccinations, preventive health, primary care, and home- and community-based services at a time when constraints on the State's budget due to the COVID-19 pandemic may force reductions in payments. As such, the provider fee would help preserve access to health care for the medicaid population, which would benefit health insurers in the State. Medicaid coverage helps reduce uncompensated care costs that lead to higher costs for health care insurance premiums. Medicaid helps sustain the State's entire healthcare system as a whole.

The purpose of this Act is to ensure access to health care for medicaid recipients by:

(1) Establishing a medicaid sustainability fee assessed on health insurers;

(2) Establishing a medicaid sustainability program special fund to receive money from the medicaid sustainability fee and federal medicaid matching funds; and

(3) Providing for the use of the money in the medicaid sustainability program special fund.

SECTION 2. The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:

"CHAPTER

MEDICAID SUSTAINABILITY PROGRAM

§ -1 Title. This chapter shall be known and may be cited as the "Medicaid Sustainability Program Act".

§ -2 Findings and declaration of necessity. It is the intent of the legislature to establish a medicaid sustainability program that would assess a medicaid fee on health insurers, establish a special fund within the state treasury to receive revenue from the medicaid sustainability fee to be administered by the department, and use the revenue from the fee and associated federal medicaid matching funds to fund healthcare services covered under medicaid and for other purposes as set forth in this chapter.

§ -3 Definitions. As used in this chapter:

"Department" means the department of human services.

"Fiscal year" means a twelve-month period from July 1 of a particular calendar year to June 30 of the following calendar year, inclusive.

"Health insurer" means a self-insured plan, a group health plan as defined in section 607(1) of the Employee Retirement Income Security Act of 1974, a health service benefit plan, a mutual benefit society, a health maintenance organization, a managed care organization, or other party that is, by statute, contract, or agreement, legally responsible for payment of a claim for a health care item or service.

"Member month" means the total number of individuals for whom the health insurer has recognized revenue for one month. If revenue is for only part of a month for an individual, a prorated partial member month may be counted. Member months are determined by the insurance division of the department of commerce and consumer protection and do not include individuals enrolled in short-term medical, noncomprehensive medical, specified disease, limited benefit, accident only, accidental death and dismemberment, disability income, long-term care, medicare supplemental, stand-alone dental, dental, pharmacy benefit manager, medicare, medicare advantage, medicare part D, vision, prescription, tri-care, other federal insurance, and other individual medical insurance.

§ -4 Medicaid sustainability program special fund. (a) There is created in the state treasury the medicaid sustainability program special fund to be administered by the department into which shall be deposited all moneys collected under this chapter.

(b) Moneys in the medicaid sustainability program special fund shall consist of:

(1) All revenue received by the department from the medicaid sustainability fee;

(2) All federal medicaid funds received by the department as a result of matching expenditures made with the medicaid sustainability fee;

(3) Any interest or penalties levied in conjunction with the administration of this chapter; and

(4) Any designated appropriations, federal funds, donations, gifts, or moneys from any other sources.

(c) Moneys in the medicaid sustainability program special fund shall be used exclusively to fund healthcare services covered under medicaid and operations to support the administration of the medicaid program.

§ -5 Medicaid sustainability fee. (a) Effective July 1, 2021, or the effective date of any necessary federal approvals, whichever date is later, the department shall charge and collect provider fees, to be known as the medicaid sustainability fee, on health insurers.

(b) The medicaid sustainability fee shall be based on the number of member months of health insurers located within this State, during the year ending December 31 of the preceding year.

(c) The department shall assess fees based on the four tiers of member months as follows: tier 1 is zero to 75,000 member months; tier two is 75,001 to 375,000 member months; tier three is 375,001 to 500,000 member months; and tier four is 500,000 to 4,000,000 member months.

(d) The department shall adopt rules on the health insurer fees. The fees may be assessed up to $12 for tier one per medicaid member months and up to $15 for tier two medicaid member months; and $1.00 for tier one non-medicaid member months.

(e) The department may modify the fees assessed for the medicaid sustainability program if such modification is necessary to obtain federal waiver approval consistent with the requirements of 42 Code of Federal Regulations section 433.68(e)(2).

§ -6 Medicaid sustainability fee assessments. (a) Health insurers shall pay the medicaid sustainability fee to the department in accordance with this chapter. The fee shall be divided and paid in twelve equal installments on a monthly basis.

(b) The department shall collect, and each health insurer shall pay, the medicaid sustainability fee not later than the thirtieth day after the end of each calendar month.

§ -7 Federal approval. The department shall seek waivers and any additional approvals from the Centers for Medicare and Medicaid Services that may be necessary to implement the medicaid sustainability program.

§ -8 Penalties for failure to pay the medicaid sustainability fee. If a health insurer fails to pay the full amount of any medicaid sustainability fee when due, the health insurer shall pay a penalty equal to prime plus two per cent of the fee that was not paid when due. Any subsequent payments shall be credited first to unpaid fee amounts beginning with the most delinquent installment rather than to penalty or interest amounts. The department may waive the fees of this section for reasonable cause.

§ -9 Special designation of medicaid sustainability program special fund. Notwithstanding section 37-53, and any law or any administrative rule to the contrary, the specific purposes set out in section -4(c) are established as being the exclusive uses of the medicaid sustainability program special fund. The medicaid sustainability program special fund shall not and may not be used for any other purposes, notwithstanding any authority granted to the governor or any other state official by any other statutory provisions relating to the allocation or reallocation of funds."

SECTION 3. Section 36-27, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) Except as provided in this section, and notwithstanding any other law to the contrary, from time to time, the director of finance, for the purpose of defraying the prorated estimate of central service expenses of government in relation to all special funds, except the:

(1) Special out-of-school time instructional program fund under section 302A-1310;

(2) School cafeteria special funds of the department of education;

(3) Special funds of the University of Hawaii;

(4) State educational facilities improvement special fund;

(5) Convention center enterprise special fund under section 201B-8;

(6) Special funds established by section 206E-6;

(7) Aloha Tower fund created by section 206J-17;

(8) Funds of the employees' retirement system created by section 88-109;

(9) Hawaii hurricane relief fund established under chapter 431P;

(10) Hawaii health systems corporation special funds and the subaccounts of its regional system boards;

(11) Tourism special fund established under section 201B-11;

(12) Universal service fund established under section 269-42;

(13) Emergency and budget reserve fund under section 328L-3;

(14) Public schools special fees and charges fund under section 302A-1130;

(15) Sport fish special fund under section 187A-9.5;

[[](16)[]] Neurotrauma special fund under section 321H-4;

[[](17)[]] Glass advance disposal fee established by section 342G-82;

[[](18)[]] Center for nursing special fund under section 304A-2163;

[[](19)[]] Passenger facility charge special fund established by section 261-5.5;

[[](20)[]] Solicitation of funds for charitable purposes special fund established by section 467B-15;

[[](21)[]] Land conservation fund established by section 173A-5;

[[](22)[]] Court interpreting services revolving fund under section 607-1.5;

[[](23)[]] Trauma system special fund under section 321-22.5;

[[](24)[]] Hawaii cancer research special fund;

[[](25)[]] Community health centers special fund;

[[](26)[]] Emergency medical services special fund;

[[](27)[]] Rental motor vehicle customer facility charge special fund established under section 261-5.6;

[[](28)[]] Shared services technology special fund under section 27-43;

[[](29)[]] Automated victim information and notification system special fund established under section 353-136;

[[](30)[]] Deposit beverage container deposit special fund under section 342G-104;

[[](31)[]] Hospital sustainability program special fund under [[]section 346G-4[]];

[[](32)[]] Nursing facility sustainability program special fund under [[]section 346F-4[]];

[[](33)[]] Hawaii 3R's school improvement fund under section 302A-1502.4;

[[](34)[]] After-school plus program revolving fund under section 302A-1149.5; [~~and~~]

[[](35)[]] Civil monetary penalty special fund under section 321-30.2[,]; and

(36) Medicaid sustainability program special fund under section -4,

shall deduct five per cent of all receipts of all other special funds, which deduction shall be transferred to the general fund of the State and become general realizations of the State. All officers of the State and other persons having power to allocate or disburse any special funds shall cooperate with the director in effecting these transfers. To determine the proper revenue base upon which the central service assessment is to be calculated, the director shall adopt rules pursuant to chapter 91 for the purpose of suspending or limiting the application of the central service assessment of any fund. No later than twenty days prior to the convening of each regular session of the legislature, the director shall report all central service assessments made during the preceding fiscal year."

SECTION 4. Section 36-30, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) Each special fund, except the:

(1) Special out-of-school time instructional program fund under section 302A-1310;

(2) School cafeteria special funds of the department of education;

(3) Special funds of the University of Hawaii;

(4) State educational facilities improvement special fund;

(5) Special funds established by section 206E-6;

(6) Aloha Tower fund created by section 206J-17;

(7) Funds of the employees' retirement system created by section 88-109;

(8) Hawaii hurricane relief fund established under chapter 431P;

(9) Convention center enterprise special fund established under section 201B-8;

(10) Hawaii health systems corporation special funds and the subaccounts of its regional system boards;

(11) Tourism special fund established under section 201B-11;

(12) Universal service fund established under section 269-42;

(13) Emergency and budget reserve fund under section 328L-3;

(14) Public schools special fees and charges fund under section 302A-1130;

(15) Sport fish special fund under section 187A-9.5;

[[](16)[]] Neurotrauma special fund under section 321H-4;

[[](17)[]] Center for nursing special fund under section 304A-2163;

[[](18)[]] Passenger facility charge special fund established by section 261-5.5;

[[](19)[]] Court interpreting services revolving fund under section 607-1.5;

[[](20)[]] Trauma system special fund under section 321-22.5;

[[](21)[]] Hawaii cancer research special fund;

[[](22)[]] Community health centers special fund;

[[](23)[]] Emergency medical services special fund;

[[](24)[]] Rental motor vehicle customer facility charge special fund established under section 261-5.6;

[[](25)[]] Shared services technology special fund under section 27-43;

[[](26)[]] Nursing facility sustainability program special fund established pursuant to [[]section 346F-4[]];

[[](27)[]] Automated victim information and notification system special fund established under section 353-136;

[[](28)[]] Hospital sustainability program special fund under [[]section 346G-4[]]; [~~and~~]

[[](29)[]] Civil monetary penalty special fund under section 321-30.2[,]; and

(30) Medicaid sustainability program special fund under section -4,

shall be responsible for its pro rata share of the administrative expenses incurred by the department responsible for the operations supported by the special fund concerned."

SECTION 5. There is appropriated out of the medicaid sustainability program special fund the sum of $100,000,000 or so much thereof as may be necessary for fiscal year 2021-2022 and the same sum or so much thereof as may be necessary for fiscal year 2022-2023 for the purposes of the medicaid sustainability program.

The sums appropriated shall be expended by the department of human services for the purposes of this Act.

SECTION 6. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 7. This Act, upon its approval, shall take effect on July 1, 2021, and shall be repealed on December 31, 2023; provided that section -4, Hawaii Revised Statutes, in section 2 of this Act and section 3 and section 4 of this Act shall be repealed on June 30, 2024, and section 36-27(a) and 36-30(a), Hawaii Revised Statutes, shall be reenacted on June 30, 2024, in the form in which they read on the day before the effective date of this Act.

INTRODUCED BY:	_____________________________
	BY REQUEST

THE SENATE	S.B. NO.	1132
THIRTY-FIRST LEGISLATURE, 2021
STATE OF HAWAII