State Accountability, Flexibility, and Equity for Hospitals Act of 2021 or the SAFE Hospitals Act of 2021
This bill alters Medicaid requirements relating to payment for inpatient hospital services that are provided by disproportionate share hospitals (DSHs). (DSHs are hospitals that receive additional payment under Medicaid for treating a large share of low-income patients.)
Among other changes, the bill requires state Medicaid programs to adopt a payment methodology that meets certain criteria, including by prioritizing payments based on the DSH tier for which the hospital qualifies; tiers are determined based on factors such as the hospital's Medicaid inpatient utilization rate.
The bill also incorporates state poverty ratios (i.e., the number of qualifying low-income individuals in a state compared to all states) into the formula for determining state DSH allotments under Medicaid. The bill phases in application of the revised formula over the course of 10 to 15 years.
[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3806 Introduced in House (IH)]
<DOC>
117th CONGRESS
1st Session
H. R. 3806
To amend title XIX of the Social Security Act to establish a
methodology for determining State allotments for Medicaid
disproportionate share hospital payments that is based on State poverty
levels, to require States to prioritize disproportionate share hospital
payments on the basis of Medicaid inpatient utilization and low-income
utilization rates, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
June 11, 2021
Mr. Bilirakis introduced the following bill; which was referred to the
Committee on Energy and Commerce
_______________________________________________________________________
A BILL
To amend title XIX of the Social Security Act to establish a
methodology for determining State allotments for Medicaid
disproportionate share hospital payments that is based on State poverty
levels, to require States to prioritize disproportionate share hospital
payments on the basis of Medicaid inpatient utilization and low-income
utilization rates, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``State Accountability, Flexibility,
and Equity for Hospitals Act of 2021'', or the ``SAFE Hospitals Act of
2021''.
SEC. 2. DETERMINATION OF STATE DSH ALLOTMENTS BASED ON STATE POVERTY
LEVELS.
Section 1923(f) of the Social Security Act (42 U.S.C. 1396r-4(f))
is amended--
(1) in paragraph (3)--
(A) in the paragraph heading, by striking ``year
2003 and thereafter'' and inserting ``years 2003
through 2023'';
(B) in subparagraph (A)--
(i) by striking ``, (7), and (8)'' and
inserting ``and (7)''; and
(ii) by inserting ``through fiscal year
2023'' after ``each succeeding fiscal year'';
(C) in subparagraph (C)(ii), by inserting ``through
fiscal year 2023'' after ``each succeeding fiscal
year''; and
(D) in subparagraph (E)(i)(III), by inserting ``or
paragraph (7), as applicable,'' after ``this
paragraph'';
(2) in paragraph (4)(C), by inserting ``or paragraph (7),
as applicable,'' after ``paragraph (3)'';
(3) in paragraph (5)(B)--
(A) in the subparagraph heading, by striking ``and
subsequent fiscal years'' and inserting ``through
fiscal year 2023''; and
(B) in clause (iii), by inserting ``through fiscal
year 2023'' after ``any subsequent fiscal year'';
(4) in paragraph (6)--
(A) in clause (vi) of subparagraph (A)--
(i) in the clause heading, by striking
``2025'' and inserting ``2023''; and
(ii) by striking ``fiscal year 2025'' and
inserting ``fiscal year 2023''; and
(B) in clause (iii) of subparagraph (B)--
(i) in the clause heading, by inserting
``through fiscal year 2023'' after ``succeeding
fiscal years''; and
(ii) in subclause (II)--
(I) in the subclause heading, by
inserting ``through fiscal year 2023''
after ``succeeding fiscal years''; and
(II) by inserting ``through fiscal
year 2023'' after ``each fiscal year
thereafter'';
(5) by striking paragraphs (7) and (8) and inserting the
following:
``(7) State dsh allotments for fiscal years after fiscal
year 2023.--
``(A) In general.--Subject to subparagraphs (B),
(C), and (D), beginning with fiscal year 2024, the DSH
allotment for a State and fiscal year shall be the
amount equal to the product of--
``(i) the State poverty ratio (as
determined under subparagraph (E)(ii)) for the
State and fiscal year; and
``(ii) the DSH allotment cap (as determined
under subparagraph (E)(i)) for the fiscal year.
``(B) Phase-in of poverty-based formula.--
``(i) In general.--During the period of
fiscal years described in clause (ii), the
Secretary shall phase in the application of the
determination of DSH allotments under
subparagraph (A) in a manner that ensures
that--
``(I) in no case is the DSH
allotment for a State for a fiscal year
during such period less than 90 percent
of the DSH allotment for the State for
the previous fiscal year (without
regard to whether the State used the
full amount of the DSH allotment for
the previous fiscal year); and
``(II) the total amount of DSH
allotments made to all States for any
fiscal year during such period does not
exceed the DSH allotment cap determined
for the fiscal year under subparagraph
(E)(i).
``(ii) Phase-in period.--The period of
fiscal years described in this clause is the
period that begins with fiscal year 2024 and
ends with--
``(I) fiscal year 2033; or
``(II) at the Secretary's
discretion, any of fiscal years 2034
through 2038.
``(iii) Development of methodology.--The
Secretary shall promulgate final regulations
that establish the methodology for determining
State DSH allotments under clause (i) not later
than January 1, 2023.
``(C) State allotment flexibility option.--
``(i) In general.--A State may elect to
increase or reduce the amount of the DSH
allotment for the State and a fiscal year (as
otherwise determined under this paragraph) for
the purpose of providing certainty or more
consistent DSH funding in subsequent fiscal
years in accordance with this subparagraph.
``(ii) State option to reserve allotment
amounts.--For any fiscal year after fiscal year
2023, a State may request that the DSH
allotment for the State and fiscal year (as
otherwise determined under this paragraph) be
reduced by an amount that shall not exceed 10
percent of the amount of the allotment as so
determined.
``(iii) State option to increase dsh
allotment from allotment reserve.--For any
fiscal year after fiscal year 2024, a State may
request that the DSH allotment for the State
and fiscal year (as otherwise determined under
this paragraph) be increased by an amount that
shall not exceed the DSH reserve amount for the
State and fiscal year.
``(iv) DSH reserve amount.--
``(I) In general.--Subject to
subclause (II), the DSH reserve amount
for a State and fiscal year shall be
equal to the sum of the amounts, if
any, of any reductions to the State's
DSH allotment (as otherwise determined
under this paragraph) made in each of
the preceding 5 fiscal years pursuant
to a request under clause (ii).
``(II) Subtraction of increases
from dsh reserve amount.--The amount of
any increase to a State's DSH allotment
for a fiscal year made pursuant to a
request under clause (iii) shall be
subtracted from the State's DSH reserve
amount for such year and shall not be
available to the State in subsequent
fiscal years.
``(III) Rule of application.--In
the case of an increase to a State's
DSH allotment for a fiscal year that is
less than the State's DSH reserve
amount for such year, the Secretary
shall apply subclause (II) in a manner
that maximizes the DSH reserve amount
that will remain available to the State
in subsequent fiscal years.
``(v) Disregard of adjustments.--Any
increase or reduction under this subparagraph
to the DSH allotment of a State for a fiscal
year shall be disregarded when otherwise
determining State DSH allotments under this
paragraph.
``(D) Treatment of waivers.--
``(i) In general.--Subject to clause (ii),
with respect to a State and a fiscal year, if
the State has in effect on the date of
enactment of the SAFE Hospitals Act of 2021 a
statewide waiver of requirements of this title
under section 1115 or other law and any part of
the fiscal year occurs during the period of the
waiver (as approved as of such date), the DSH
allotment determined under this paragraph for
such State and fiscal year shall not be less
than the DSH allotment that would have been
determined for such State and fiscal year under
this section as in effect on the day before the
date of enactment of the SAFE Hospitals Act of
2021, reduced, in the case of each of fiscal
years 2024 through 2027, by the amount of the
State's share of the reductions which would
have been applicable for the fiscal year under
paragraph (7) of this subsection (as so in
effect), as estimated by the Secretary.
``(ii) Total allotments not to exceed dsh
allotment cap.--The Secretary shall apply this
subparagraph in such a manner that the total
amount of DSH allotments determined for all
States for a fiscal year under this paragraph
does not exceed DSH allotment cap determined
for the fiscal year under subparagraph (E)(i).
``(iii) Nonapplication.--Clause (i) shall
not apply--
``(I) with respect to a State that
has in effect a waiver described in
such clause if the State elects,
through a revision of such waiver, that
such clause will not apply; or
``(II) with respect to any part of
a fiscal year that occurs after the
expiration (determined without regard
to any extension approved after the
date of the enactment of the State
Accountability, Flexibility, and Equity
for Hospitals Act of 2021) of such a
waiver.
``(iv) No effect on waiver authority.--
Nothing in this subsection shall be construed
as preventing the Secretary from approving a
waiver under section 1115 or other law with
respect to requirements under this title
related to a State's use of its DSH allotment
for a fiscal year.
``(E) Definitions.--In this paragraph:
``(i) DSH allotment cap.--The term `DSH
allotment cap' means, with respect to a fiscal
year, the amount equal to the total amount of
the DSH allotments that would have been
determined for all States for the fiscal year
under this section as in effect on the day
before the date of enactment of the SAFE
Hospitals Act of 2021, reduced, in the case of
fiscal years 2024 through 2027, by the
aggregate amount of the reductions which would
have been applicable for the fiscal year under
paragraph (7) of this subsection (as so in
effect).
``(ii) State poverty ratio.--The term
`State poverty ratio' means, with respect to a
State and fiscal year, the ratio of--
``(I) the number of individuals in
the State in the most recent fiscal
year for which census data are
available whose income (as determined
under section 1902(e)(14) (relating to
modified adjusted gross income) and
without regard to whether an
individual's income eligibility for
medical assistance is determined under
such section) was less than 100 percent
of the poverty line (as defined in
section 2110(c)(5)) applicable to a
family of the size involved; to
``(II) the number of individuals in
all States in the most recent fiscal
year for which census data are
available whose income (as so
determined) was less than 100 percent
of the poverty line (as so defined)
applicable to the family of the size
involved.''; and
(6) by redesignating paragraph (9) as paragraph (8).
SEC. 3. PRIORITIZING DISPROPORTIONATE SHARE HOSPITAL PAYMENTS BASED ON
MEDICAID INPATIENT UTILIZATION AND LOW-INCOME UTILIZATION
RATES.
(a) In General.--Section 1923 of the Social Security Act (42 U.S.C.
1396r-4) is amended--
(1) in subsection (a)(2)(D), by inserting ``(which, as of
October 1, 2023, shall meet the requirements of subsection
(k))'' after ``methodology'';
(2) in subsection (c), by striking ``and (g)'' and
inserting ``, (g), and, beginning on October 1, 2021, (k)'';
(3) in subsection (d)(2)(A)--
(A) in clause (i), by striking ``; or'' and
inserting a semicolon;
(B) in clause (ii), by striking the period at the
end and inserting ``; or''; and
(C) by adding at the end the following new clause:
``(iii) that is an institution for mental
diseases.''; and
(4) by adding at the end the following new subsection:
``(k) State Methodology Requirements.--
``(1) In general.--Subject to paragraph (4), a State
methodology for identifying and making payments to
disproportionate share hospitals meets the requirements of this
subsection if--
``(A) the methodology is uniformly applied
statewide;
``(B) the methodology identifies each hospital in
the State that is described in a disproportionate share
hospital tier (as defined in paragraph (2)); and
``(C) in making payments to disproportionate share
hospitals, the methodology meets the requirements of
paragraph (3).
``(2) Disproportionate share hospital tiers.--The term
`disproportionate share hospital tier' means each of the
following:
``(A) Tier 1 hospitals.--A category of hospitals
(referred to in this section as `tier 1 hospitals') in
which each hospital satisfies--
``(i) each of the criteria described in
clause (ii) of subparagraph (B); and
``(ii) one or more of the following
criteria:
``(I) The hospital has a Medicaid
inpatient utilization rate (as defined
in subsection (b)(2)) that is not less
than 2 standard deviations above the
mean Medicaid inpatient utilization
rate for hospitals receiving Medicaid
payments in the State.
``(II) The hospital has a low-
income utilization rate (as defined in
subsection (b)(3)) of not less than 40
percent.
``(III) More than 70 percent of the
inpatient days for which payments are
received by the hospital are paid for
under the Medicare program under title
XVIII, the Medicaid program under this
title, or the Children's Health
Insurance Program under title XXI.
``(B) Tier 2 hospitals.--A category of hospitals
(referred to in this section as `tier 2 hospitals') in
which each hospital--
``(i) is not described in the previous
subparagraph; and
``(ii) satisfies one or more of the
following criteria:
``(I) The hospital has a Medicaid
inpatient utilization rate (as defined
in subsection (b)(2)) that is not less
than 1.5 standard deviations above the
mean Medicaid inpatient utilization
rate for hospitals receiving Medicaid
payments in the State.
``(II) The hospital has a low-
income utilization rate (as defined in
subsection (b)(3)) of not less than 35
percent.
``(III) The hospital has the
largest number of inpatient days
attributable to individuals entitled to
benefits under the State plan of any
hospital in such State for the previous
State fiscal year.
``(C) Tier 3 hospitals.--A category of hospitals
(referred to in this section as `tier 3 hospitals') in
which each hospital--
``(i) is not described in a previous
subparagraph; and
``(ii) satisfies one or more of the
following criteria:
``(I) The hospital has a Medicaid
inpatient utilization rate (as defined
in subsection (b)(2)) that is not less
than the mean Medicaid inpatient
utilization rate for hospitals
receiving Medicaid payments in the
State.
``(II) The hospital has a low-
income utilization rate (as defined in
subsection (b)(3)) of not less than 25
percent.
``(D) Tier 4 hospitals.--A category of hospitals
(referred to in this section as `tier 4 hospitals') in
which each hospital--
``(i) is not described in a previous
subparagraph; and
``(ii) satisfies the requirement described
in subsection (d)(3).
``(3) Payment methodology requirements.--
``(A) Prioritization of hospitals.--In making
disproportionate share hospital payments, a State
methodology shall prioritize hospitals in the following
order:
``(i) Tier 1 hospitals shall receive the
highest priority.
``(ii) Tier 2 hospitals shall receive the
second-highest priority.
``(iii) Tier 3 hospitals shall receive the
third-highest priority.
``(iv) Tier 4 hospitals shall receive the
fourth-highest priority.
``(B) Factors.--The methodology specifies the
factors that will be considered in determining the
amount of a disproportionate share hospital payment to
be made to a hospital, which may include--
``(i) the hospital's net operating margins
(including past net operating margins);
``(ii) past disproportionate share hospital
payments to the hospital;
``(iii) whether the hospital was affected
by a major disaster (as declared by the
President under section 401 of the Robert T.
Stafford Disaster Relief and Emergency
Assistance Act) in the 12 months prior to the
payment; and
``(iv) other relevant factors, as
determined by the State (subject to the
approval of the Secretary).
``(C) Consideration of financial circumstances of
high tier hospitals.--
``(i) In general.--The State shall certify
that the State methodology adequately considers
the unique financial circumstances of tier 1
hospitals and tier 2 hospitals, and takes
necessary steps to mitigate net operating
losses by such hospitals.
``(ii) Guidance.--
``(I) In general.--Not later than
18 months after the date of enactment
of the SAFE Hospitals Act of 2021, the
Secretary shall issue guidance to
States outlining methods that States
may use to satisfy the requirement of
this subparagraph.
``(II) State alternatives.--Subject
to the approval of the Secretary, a
State may develop an alternative method
for satisfying the requirement of this
subparagraph.
``(D) Treatment of imds and cahs.--The State shall
specify how the methodology prioritizes institutions
for mental diseases and critical access hospitals (as
defined in section 1861(mm)(1)), but in no case shall
institutions for mental diseases or critical access
hospitals receive a higher priority than tier 1
hospitals.
``(E) State authority to reclassify hospitals.--
Subject to the approval of the Secretary, for purposes
of prioritizing disproportionate share payments under a
State methodology under this subsection, a State may
treat up to 15 percent of all disproportionate share
hospitals in the State, excluding institutions for
mental diseases, as belonging to a different
disproportionate share hospital tier than the tier in
which the hospitals are described under paragraph (2).
``(F) Rule of construction.--Nothing in this
subsection shall be construed as requiring a State to
apply a uniform payment methodology to all hospitals
within a disproportionate share hospital tier.
``(4) Methodology for states with fewer than 15
disproportionate share hospitals.--
``(A) In general.--In the case of a State that has
fewer than 15 disproportionate share hospitals, the
State shall use the methodology for identifying and
making payments to disproportionate share hospitals
that is developed by the Secretary under subparagraph
(B).
``(B) Development of methodology.--Not later than
18 months after the date of enactment of the SAFE
Hospitals Act of 2021, the Secretary shall develop a
methodology for identifying and making payments to
disproportionate share hospitals for States that have
fewer than 15 disproportionate share hospitals that
prioritizes DSH payments to hospitals with
disproportionately high volumes of Medicaid patients
and low-income patients.
``(5) No effect on waiver authority.--Nothing in this
subsection shall be construed as preventing the Secretary from
approving a waiver under section 1115 or other law with respect
to requirements under this subsection related to the
methodology used by States to identify and make payments to
disproportionate share hospitals.''.
(b) Modification of Cap on Individual DSH Payments.--
(1) In general.--Subparagraph (A)(i) of section 1923(g)(1)
of the Social Security Act (42 U.S.C. 1396r-4(g)(1)), as
amended by section 203(a) of the Consolidated Appropriations
Act, 2021 (Public Law 116-260), is amended by inserting
``(including any costs incurred by the hospital during the year
that are associated with subsidizing a physician or a clinic or
other health center that is owned and operated by, controlled
by, or in common control with the hospital for the purpose of
providing care to such individuals)'' after ``individuals
described in subparagraph (B)''.
(2) Conforming amendment.--Section 1923(g)(2)(A)(ii) of the
Social Security Act (42 U.S.C. 1396r-4(g)(2)), as amended by
section 203(a) of the Consolidated Appropriations Act, 2021
(Public Law 116-260), is amended by inserting ``(except that,
for purposes of this clause, such paragraph as in effect on
such date shall be applied by inserting `, including any costs
incurred by the hospital during the year that are associated
with subsidizing a physician or a clinic or other health center
that is owned and operated by, controlled by, or in common
control with the hospital for the purpose of providing care to
such individuals' at the end of the first sentence)'' before
the period.
(3) Effective date.--The amendments made by this subsection
shall take effect on October 1, 2021.
(c) Modification of DSH Qualification Requirements.--
(1) In general.--Section 1923(d)(3) of the Social Security
Act (42 U.S.C. 1396r-4(d)(3)) is amended by striking ``unless
the hospital'' and all that follows through the period and
inserting the following: ``unless the hospital--
``(A) has a Medicaid inpatient utilization rate (as
defined in subsection (b)(2)) that is not more than 1
standard deviation below the mean Medicaid inpatient
utilization rate for hospitals receiving Medicaid
payments in the State;
``(B) has a low-income utilization rate (as defined
in subsection (b)(3)) that is not less than 10 percent;
or
``(C) is a critical access hospital (as defined in
section 1861(mm)(1)).''.
(2) Effective date.--The amendments made by this subsection
shall take effect on October 1, 2023.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Energy and Commerce.
Referred to the Subcommittee on Health.
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