HF5142

Purpose

• Establish a hospital charity care payment program run by the commissioner of health.
• Deposit money collected from a hospital surcharge into a charity care account in the special revenue fund.
• Use the money to make payments to eligible hospitals for charity care adjustments and to cover program administration.

Key Definitions

• Charity care adjustments: as defined in Minnesota Rules part 4650.0102 subpart 9.
• Commissioner: the commissioner of health.
• Cost-to-charge ratio: hospital total operating expenses (excluding bad debt) divided by the sum of the hospital’s total charges for patient care and the hospital’s operating revenue (as reported in specified rules).
• Eligible hospital: a hospital that is (1) licensed in Minnesota, (2) located in the state, (3) has filed a Medicare cost report with the Healthcare Cost Report Information System (HCRIS), (4) is nonprofit, and (5) is not excluded from eligibility under Subd.4.
• Hospital surcharge: funding source whose collected money goes into the charity care account.
• Charity care account: a new account created in the special revenue fund to hold money for payments to hospitals and for program administration.
• Special revenue fund: the state fund where the charity care account resides.

Program Structure and Funding

• The charity care account is created in the special revenue fund and is annually appropriated to the commissioner of health to:
  • make payments to eligible hospitals for charity care adjustments, and
  • cover program administration costs (up to an annual limit).
• The commissioner must establish and administer the hospital charity care payment program.

Eligibility and Exclusions

• Eligible hospitals may receive payments if they apply for the program in the required form.
• Exclusions from eligibility include:
  • state-owned or state-operated regional treatment centers and all state-operated services,
  • federal Veterans Administration Medical Centers,
  • long-term acute care hospitals.

Applications

• Eligible hospitals seeking payments must apply to the commissioner in the form and manner specified by the commissioner.

Calculations and Payment Amounts

• The payment amount for each eligible hospital is calculated by:
  • First, adjusting each hospital’s charity care adjustments to cost basis by multiplying by the hospital’s cost-to-charge ratio.
  • If the total charity care adjustments from all eligible hospitals for the most recent year data available is less than or equal to the money available in the charity care account, each hospital receives a payment equal to its own charity care adjustments (on a cost basis).
  • If the total charity care adjustments exceed the money available, the commissioner determines each hospital’s share as a percentage of the total adjustments. Each hospital’s payment equals that percentage times the total amount available for payments in that fiscal year.
• The commissioner must use the same cost-to-charge adjusted amounts for payment calculations.

Payments

• Payments must be made to eligible hospitals at least once per fiscal year, but the commissioner may schedule more frequent payments.

Reporting and Evaluation

• Hospitals receiving payments must report to the commissioner, in a form and manner specified by the commissioner, information needed to evaluate the program.

Significance and Changes to Law

• Creates a new hospital charity care payment program and related funding mechanism.
• Amends Minnesota statutes (specific sections referenced in the bill) to authorize the program, funding structure, definitions, and administration.

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Relevant Terms - hospital charity care payment program - charity care adjustments - cost-to-charge ratio - eligible hospital - hospital surcharge - charity care account - special revenue fund - commissioner of health - Medicare cost report - HCRIS - nonprofit hospital - state-owned or state-operated facilities - Veterans Administration Medical Centers - long-term acute care hospitals - annual appropriation - reporting requirements