Federal

SAFE Hospitals Act of 2023

Source: Congress.gov · 4,286 words in original text

What This Bill Does

This bill changes how states distribute Medicaid disproportionate share hospital (DSH) payments. DSH payments are federal funds that help hospitals that treat many low-income and Medicaid patients. The bill ties these payment amounts to each state's poverty level and requires states to prioritize hospitals based on how many Medicaid patients they serve.

Who It Affects

States and their Medicaid programs. Hospitals that receive Medicaid payments, especially those serving large numbers of low-income patients. The federal government (specifically the Secretary of Health and Human Services).

Key Provisions

* Beginning in fiscal year 2026, states must calculate DSH payments based on a poverty-based formula that multiplies the state poverty ratio by a total DSH allotment cap (Sec. 2) * States must phase in this new poverty formula gradually between fiscal years 2026 and 2035 (or up to 2040 at the Secretary's discretion), ensuring no state's DSH payment drops below 90 percent of the previous year's amount (Sec. 2) * States can reduce their DSH allotments by up to 10 percent per year and save those amounts in a reserve fund to increase payments in future years (Sec. 2) * States must categorize hospitals into four tiers based on Medicaid patient volume and low-income patient percentages, then prioritize payments to Tier 1 hospitals first, followed by Tier 2, then Tier 3, then Tier 4 (Sec. 3) * States must submit a methodology by October 1, 2025 that shows how they will identify which hospitals get DSH payments and how much each receives (Sec. 3)

What Changes

The current method for determining state DSH allotments will be replaced with one based on state poverty levels. States will have more flexibility to adjust their DSH payments year to year through reserve accounts. Hospitals will be ranked into tiers based on their Medicaid patient volume and low-income utilization rates, and payments must go to higher-tier hospitals first.

Important Definitions

* **Disproportionate share hospital**: A hospital that serves a high percentage of Medicaid and low-income patients * **Medicaid inpatient utilization rate**: The percentage of a hospital's patient days paid for by Medicaid * **Low-income utilization rate**: The percentage of a hospital's patient days attributed to individuals with incomes below the poverty line and those receiving Medicaid * **State poverty ratio**: The proportion of a state's low-income residents compared to all low-income residents in the United States * **DSH allotment cap**: The total amount of DSH funds available to all states in a given fiscal year

Effective Date

Most changes take effect beginning in fiscal year 2026. The requirement that states use new hospital tier methodology takes effect October 1, 2025. The Secretary must issue guidance on how states can address the financial needs of high-tier hospitals within 18 months of the bill's enactment. Not specified in bill text when the bill itself becomes law.

II 118TH CONGRESS 1ST SESSION S. 407 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 SENATE OF THE UNITED STATES FEBRUARY 14, 2023 Mr. RUBIO introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To amend title XIX of the Social Security Act to establish a methodology for determining State allotments for Med- icaid 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 Representa- 1 tives of the United States of America in Congress assembled, 2 VerDate Sep 11 2014 01:22 Mar 01, 2023 Jkt 039200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S407.IS S407 kjohnson on DSK79L0C42PROD with BILLS 2 •S 407 IS SECTION 1. SHORT TITLE. 1 This Act may be cited as the ‘‘State Accountability, 2 Flexibility, and Equity for Hospitals Act of 2023’’ or the 3 ‘‘SAFE Hospitals Act of 2023’’. 4 SEC. 2. DETERMINATION OF STATE DSH ALLOTMENTS 5 BASED ON STATE POVERTY LEVELS. 6 Section 1923(f) of the Social Security Act (42 U.S.C. 7 1396r–4(f)) is amended— 8 (1) in paragraph (3)— 9 (A) in the paragraph heading, by striking 10 ‘‘YEAR 2003 AND THEREAFTER’’ and inserting 11 ‘‘YEARS 2003 THROUGH 2025’’; 12 (B) in subparagraph (A)— 13 (i) by striking ‘‘, (7), and (8)’’ and in- 14 serting ‘‘and (7)’’; and 15 (ii) by inserting ‘‘through fiscal year 16 2025’’ after ‘‘each succeeding fiscal year’’; 17 (C) in subparagraph (C)(ii), by inserting 18 ‘‘through fiscal year 2025’’ after ‘‘each suc- 19 ceeding fiscal year’’; and 20 (D) in subparagraph (E)(i)(III), by insert- 21 ing ‘‘or paragraph (7), as applicable,’’ after 22 ‘‘this paragraph’’; 23 (2) in paragraph (4)(C), by inserting ‘‘or para- 24 graph (7), as applicable,’’ after ‘‘paragraph (3)’’; 25 (3) in paragraph (5)(B)— 26 VerDate Sep 11 2014 01:22 Mar 01, 2023 Jkt 039200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S407.IS S407 kjohnson on DSK79L0C42PROD with BILLS 3 •S 407 IS (A) in the subparagraph heading, by strik- 1 ing ‘‘AND SUBSEQUENT FISCAL YEARS’’ and in- 2 serting ‘‘THROUGH FISCAL YEAR 2025’’; and 3 (B) in clause (iii), by inserting ‘‘through 4 fiscal year 2025’’ after ‘‘any subsequent fiscal 5 year’’; 6 (4) in clause (iii) of paragraph (6)(B)— 7 (A) in the clause heading, by inserting 8 ‘‘THROUGH FISCAL YEAR 2025’’ after ‘‘SUC- 9 CEEDING FISCAL YEARS’’; and 10 (B) in subclause (II)— 11 (i) in the subclause heading, by insert- 12 ing ‘‘THROUGH FISCAL YEAR 2025’’ after 13 ‘‘SUCCEEDING FISCAL YEARS’’; and 14 (ii) by inserting ‘‘through fiscal year 15 2025’’ after ‘‘each fiscal year thereafter’’; 16 (5) by striking paragraphs (7) and (8) and in- 17 serting the following: 18 ‘‘(7) STATE DSH ALLOTMENTS FOR FISCAL 19 YEARS AFTER FISCAL YEAR 2025.— 20 ‘‘(A) IN GENERAL.—Subject to subpara- 21 graphs (B), (C), and (D), beginning with fiscal 22 year 2026, the DSH allotment for a State and 23 fiscal year shall be the amount equal to the 24 product of— 25 VerDate Sep 11 2014 01:22 Mar 01, 2023 Jkt 039200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S407.IS S407 kjohnson on DSK79L0C42PROD with BILLS 4 •S 407 IS ‘‘(i) the State poverty ratio (as deter- 1 mined under subparagraph (E)(ii)) for the 2 State and fiscal year; and 3 ‘‘(ii) the DSH allotment cap (as de- 4 termined under subparagraph (E)(i)) for 5 the fiscal year. 6 ‘‘(B) PHASE-IN OF POVERTY-BASED FOR- 7 MULA.— 8 ‘‘(i) IN GENERAL.—During the period 9 of fiscal years described in clause (ii), the 10 Secretary shall phase in the application of 11 the determination of DSH allotments 12 under subparagraph (A) in a manner that 13 ensures that— 14 ‘‘(I) in no case is the DSH allot- 15 ment for a State for a fiscal year dur- 16 ing such period less than 90 percent 17 of the DSH allotment for the State 18 for the previous fiscal year (without 19 regard to whether the State used the 20 full amount of the DSH allotment for 21 the previous fiscal year); and 22 ‘‘(II) the total amount of DSH 23 allotments made to all States for any 24 fiscal year during such period does 25 VerDate Sep 11 2014 01:22 Mar 01, 2023 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S407.IS S407 kjohnson on DSK79L0C42PROD with BILLS 5 •S 407 IS not exceed the DSH allotment cap de- 1 termined for the fiscal year under 2 subparagraph (E)(i). 3 ‘‘(ii) PHASE-IN PERIOD.—The period 4 of fiscal years described in this clause is 5 the period that begins with fiscal year 6 2026 and ends with— 7 ‘‘(I) fiscal year 2035; or 8 ‘‘(II) at the Secretary’s discre- 9 tion, any of fiscal years 2036 through 10 2040. 11 ‘‘(iii) DEVELOPMENT OF METHOD- 12 OLOGY.—The Secretary shall promulgate 13 final regulations that establish the method- 14 ology for determining State DSH allot- 15 ments under clause (i) not later than Jan- 16 uary 1, 2025. 17 ‘‘(C) STATE ALLOTMENT FLEXIBILITY OP- 18 TION.— 19 ‘‘(i) IN GENERAL.—A State may elect 20 to increase or reduce the amount of the 21 DSH allotment for the State and a fiscal 22 year (as otherwise determined under this 23 paragraph) for the purpose of providing 24 certainty or more consistent DSH funding 25 VerDate Sep 11 2014 01:22 Mar 01, 2023 Jkt 039200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S407.IS S407 kjohnson on DSK79L0C42PROD with BILLS 6 •S 407 IS in subsequent fiscal years in accordance 1 with this subparagraph. 2 ‘‘(ii) STATE OPTION TO RESERVE AL- 3 LOTMENT AMOUNTS.—For any fiscal year 4 after fiscal year 2025, a State may request 5 that the DSH allotment for the State and 6 fiscal year (as otherwise determined under 7 this paragraph) be reduced by an amount 8 that shall not exceed 10 percent of the 9 amount of the allotment as so determined. 10 ‘‘(iii) STATE OPTION TO INCREASE 11 DSH ALLOTMENT FROM ALLOTMENT RE- 12 SERVE.—For any fiscal year after fiscal 13 year 2026, a State may request that the 14 DSH allotment for the State and fiscal 15 year (as otherwise determined under this 16 paragraph) be increased by an amount 17 that shall not exceed the DSH reserve 18 amount for the State and fiscal year. 19 ‘‘(iv) DSH RESERVE AMOUNT.— 20 ‘‘(I) IN GENERAL.—Subject to 21 subclause (II), the DSH reserve 22 amount for a State and fiscal year 23 shall be equal to the sum of the 24 amounts, if any, of any reductions to 25 VerDate Sep 11 2014 01:22 Mar 01, 2023 Jkt 039200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S407.IS S407 kjohnson on DSK79L0C42PROD with BILLS 7 •S 407 IS the State’s DSH allotment (as other- 1 wise determined under this para- 2 graph) made in each of the preceding 3 5 fiscal years pursuant to a request 4 under clause (ii). 5 ‘‘(II) SUBTRACTION OF IN- 6 CREASES FROM DSH RESERVE 7 AMOUNT.—The amount of any in- 8 crease to a State’s DSH allotment for 9 a fiscal year made pursuant to a re- 10 quest under clause (iii) shall be sub- 11 tracted from the State’s DSH reserve 12 amount for such year and shall not be 13 available to the State in subsequent 14 fiscal years. 15 ‘‘(III) RULE OF APPLICATION.— 16 In the case of an increase to a State’s 17 DSH allotment for a fiscal year that 18 is less than the State’s DSH reserve 19 amount for such year, the Secretary 20 shall apply subclause (II) in a manner 21 that maximizes the DSH reserve 22 amount that will remain available to 23 the State in subsequent fiscal years. 24 VerDate Sep 11 2014 01:22 Mar 01, 2023 Jkt 039200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S407.IS S407 kjohnson on DSK79L0C42PROD with BILLS 8 •S 407 IS ‘‘(v) DISREGARD OF ADJUSTMENTS.— 1 Any increase or reduction under this sub- 2 paragraph to the DSH allotment of a 3 State for a fiscal year shall be disregarded 4 when otherwise determining State DSH al- 5 lotments under this paragraph. 6 ‘‘(D) TREATMENT OF WAIVERS.— 7 ‘‘(i) IN GENERAL.—Subject to clause 8 (ii), with respect to a State and a fiscal 9 year, if the State has in effect on the date 10 of enactment of the SAFE Hospitals Act 11 of 2023 a statewide waiver of requirements 12 of this title under section 1115 or other 13 law and any part of the fiscal year occurs 14 during the period of the waiver (as ap- 15 proved as of such date), the DSH allot- 16 ment determined under this paragraph for 17 such State and fiscal year shall not be less 18 than the DSH allotment that would have 19 been determined for such State and fiscal 20 year under this section as in effect on the 21 day before the date of enactment of the 22 SAFE Hospitals Act of 2023, reduced, in 23 the case of each of fiscal years 2026 24 through 2029, by the amount of the 25 VerDate Sep 11 2014 01:22 Mar 01, 2023 Jkt 039200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S407.IS S407 kjohnson on DSK79L0C42PROD with BILLS 9 •S 407 IS State’s share of the reductions which 1 would have been applicable for the fiscal 2 year under paragraph (7) of this sub- 3 section (as so in effect), as estimated by 4 the Secretary. 5 ‘‘(ii) TOTAL ALLOTMENTS NOT TO EX- 6 CEED DSH ALLOTMENT CAP.—The Sec- 7 retary shall apply this subparagraph in 8 such a manner that the total amount of 9 DSH allotments determined for all States 10 for a fiscal year under this paragraph does 11 not exceed DSH allotment cap determined 12 for the fiscal year under subparagraph 13 (E)(i). 14 ‘‘(iii) NONAPPLICATION.—Clause (i) 15 shall not apply— 16 ‘‘(I) with respect to a State that 17 has in effect a waiver described in 18 such clause if the State elects, 19 through a revision of such waiver, 20 that such clause will not apply; or 21 ‘‘(II) with respect to any part of 22 a fiscal year that occurs after the ex- 23 piration (determined without regard 24 to any extension approved after the 25 VerDate Sep 11 2014 01:22 Mar 01, 2023 Jkt 039200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S407.IS S407 kjohnson on DSK79L0C42PROD with BILLS 10 •S 407 IS date of the enactment of the State Ac- 1 countability, Flexibility, and Equity 2 for Hospitals Act of 2023) of such a 3 waiver. 4 ‘‘(iv) NO EFFECT ON WAIVER AU- 5 THORITY.—Nothing in this subsection shall 6 be construed as preventing the Secretary 7 from approving a waiver under section 8 1115 or other law with respect to require- 9 ments under this title related to a State’s 10 use of its DSH allotment for a fiscal year. 11 ‘‘(E) DEFINITIONS.—In this paragraph: 12 ‘‘(i) DSH ALLOTMENT CAP.—The 13 term ‘DSH allotment cap’ means, with re- 14 spect to a fiscal year, the amount equal to 15 the total amount of the DSH allotments 16 that would have been determined for all 17 States for the fiscal year under this section 18 as in effect on the day before the date of 19 enactment of the SAFE Hospitals Act of 20 2023, reduced, in the case of fiscal years 21 2026 through 2029, by the aggregate 22 amount of the reductions which would have 23 been applicable for the fiscal year under 24 VerDate Sep 11 2014 01:22 Mar 01, 2023 Jkt 039200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S407.IS S407 kjohnson on DSK79L0C42PROD with BILLS 11 •S 407 IS paragraph (7) of this subsection (as so in 1 effect). 2 ‘‘(ii) STATE POVERTY RATIO.—The 3 term ‘State poverty ratio’ means, with re- 4 spect to a State and fiscal year, the ratio 5 of— 6 ‘‘(I) the number of individuals in 7 the State in the most recent fiscal 8 year for which census data are avail- 9 able whose income (as determined 10 under section 1902(e)(14) (relating to 11 modified adjusted gross income) and 12 without regard to whether an individ- 13 ual’s income eligibility for medical as- 14 sistance is determined under such sec- 15 tion) was less than 100 percent of the 16 poverty line (as defined in section 17 2110(c)(5)) applicable to a family of 18 the size involved; to 19 ‘‘(II) the number of individuals 20 in all States in the most recent fiscal 21 year for which census data are avail- 22 able whose income (as so determined) 23 was less than 100 percent of the pov- 24 VerDate Sep 11 2014 01:22 Mar 01, 2023 Jkt 039200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S407.IS S407 kjohnson on DSK79L0C42PROD with BILLS 12 •S 407 IS erty line (as so defined) applicable to 1 the family of the size involved.’’; and 2 (6) by redesignating paragraph (9) as para- 3 graph (8). 4 SEC. 3. PRIORITIZING DISPROPORTIONATE SHARE HOS- 5 PITAL PAYMENTS BASED ON MEDICAID INPA- 6 TIENT UTILIZATION AND LOW-INCOME UTILI- 7 ZATION RATES. 8 (a) IN GENERAL.—Section 1923 of the Social Secu- 9 rity Act (42 U.S.C. 1396r–4) is amended— 10 (1) in subsection (a)(2)(D), by inserting 11 ‘‘(which, as of October 1, 2025, shall meet the re- 12 quirements of subsection (k))’’ after ‘‘methodology’’; 13 (2) in subsection (c), by striking ‘‘and (g)’’ and 14 inserting ‘‘, (g), and, beginning on October 1, 2025, 15 (k)’’; 16 (3) in subsection (d)(2)(A)— 17 (A) in clause (i), by striking ‘‘; or’’ and in- 18 serting a semicolon; 19 (B) in clause (ii), by striking the period at 20 the end and inserting ‘‘; or’’; and 21 (C) by adding at the end the following new 22 clause: 23 ‘‘(iii) that is an institution for mental 24 diseases.’’; and 25 VerDate Sep 11 2014 01:22 Mar 01, 2023 Jkt 039200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\S407.IS S407 kjohnson on DSK79L0C42PROD with BILLS 13 •S 407 IS (4) by adding at the end the following new sub- 1 section: 2 ‘‘(k) STATE METHODOLOGY REQUIREMENTS.— 3 ‘‘(1) IN GENERAL.—Subject to paragraph (4), a 4 State methodology for identifying and making pay- 5 ments to disproportionate share hospitals meets the 6 requirements of this subsection if— 7 ‘‘(A) the methodology is uniformly applied 8 statewide; 9 ‘‘(B) the methodology identifies each hos- 10 pital in the State that is described in a dis- 11 proportionate share hospital tier (as defined in 12 paragraph (2)); and 13 ‘‘(C) in making payments to dispropor- 14 tionate share hospitals, the methodology meets 15 the requirements of paragraph (3). 16 ‘‘(2) DISPROPORTIONATE SHARE HOSPITAL 17 TIERS.—The term ‘disproportionate share hospital 18 tier’ means each of the following: 19 ‘‘(A) TIER 1 HOSPITALS.—A category of 20 hospitals (referred to in this section as ‘tier 1 21 hospitals’) in which each hospital satisfies— 22 ‘‘(i) each of the criteria described in 23 clause (ii) of subparagraph (B); and 24 VerDate Sep 11 2014 01:22 Mar 01, 2023 Jkt 039200 PO 00000 Frm 00013 Fmt 6652 Sfmt 6201 E:\BILLS\S407.IS S4 [Text truncated for display. Full text available on Congress.gov.]

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