Hospital Assessment Program

Rep. Greg Harris • Assistant Majority Leader

Springfield Update • February 7, 2018


Hospital Assessment Program


Last night I filed legislation to modernize the Hospital Assessment Program, which at $3.5 Billion is one of the largest funders of our Medicaid system, and also provides critical funding directly to our hospitals across Illinois.


The program was instituted in 1992 to capture federal dollars based on inpatient care in Illinois, and was expanded later to include outpatient care payments, and then again to include the newly eligible population under the ACA, as well as creating new ways to capture federal dollars to match not only traditional fee for service payments, but also payments to managed care organizations which flowed to hospitals for service delivery.  In Illinois, we also have similar systems to maximize federal dollars for nursing homes and Supportive Living Facilities (SLFs) as well.


There is a federal and state sunset at the end of the current fiscal year (June 30) for much of the hospital assessment program.  In addition, since these programs were started over 20 years ago, there have been massive changes in the entire world of healthcare and insurance that are not reflected in the current payments.  Major change drivers have been the massive movement from inpatient care to outpatient care, the move from fee for service to capitated rates, and the addition of over 600,000 newly eligible Medicaid members through the ACA.  Also, the current payment system was based on data as old as 2005 and 2009 which are obsolete.


To reform and modernize this massive and complex system a working group was formed by the legislative leaders including members from both caucuses in the House and Senate.  We worked with the Dept. of Healthcare and Family Services, the Illinois Hospital Association, the Association of Safety Net Hospitals, the Health Care Council of Illinois, the Illinois Association of Medicaid Health Plans as well as groups of academic medical centers, publicly owned hospitals, psychiatric hospitals, investor owned hospitals, pediatric hospitals, Rural Critical Access Hospitals, and out of state hospitals bordering Illinois, among others.


You can read a working draft of SB1773 House Amendment #4 here (not final version, subject to change):


Each legislative caucus also came with its own priorities, the House Democrats priorities were: 1) ensuring the stability of safety net and rural critical access hospitals, 2) increasing transparency, accountability and an appeals process for denied claims, rejected claims, denied prior authorizations and unreasonable processing or authorization time frames and 3) ensuring that such a massive change in a multi-billion dollar program of our most critical health infrastructure maintained stability, prevented sudden disruptions and had regular review to recognize and mitigate any unintended consequences.


The scope of the proposal is limited by the size of what is called the Upper Payment Limit (UPL) which caps the amount of additional federal funding the State can obtain.  Initially DHFS maintained that only $200 million in additional UPL was available.  Other healthcare organizations’ actuaries and consultants after doing independent reviews of the data, projected there could be another $500 million in UPL. After many months of negotiation and review based on actuarial analysis, DHFS agreed on a $360 million UPL figure.


The data used to calculate the plan was based on the most recent dataset that DHFS would release. The year they chose was FY2015.  While it is important to use more current data for building the model, virtually every provider was concerned about the cleanness of the data for this year, since it was the first year of transition for hundreds of thousands of patients to managed care.  The startup of this new system produced an inordinately high number of claims denials, rejections and other problems.  There was great concern, particularly among safety net and smaller hospitals that the high denial rates would have a negative effect on their modeling under the new plan.  Some changes were made to adjust and correct for some of these problems, but also there was an agreement to update and change to the most recent dataset at the end of the first 2 year phase.


At the end of the first 2 year phase, House Dems would like a careful review for unintended consequences and an opportunity to mitigate any problems found and make necessary corrections going forward into the future years.


As you can tell by reviewing the draft legislation, there are many elements to this plan, a few of the highlights include:

  • Progressive payment model giving the most support to hospitals with the highest Medicaid volumes, and payments benefiting hospitals where Medicaid is by far the largest member of their payer mix
  • Supplemental payments for added services in trauma care and emergency, higher level pediatric services, behavioral health, high cost drugs and medical devices, Graduate Medical Education and others
  • Requiring increasing transparency around claims payments, denials, rejections and prior authorizations
  • A Transformation Pool to provide hospitals who are having difficulty with their traditional model of full-service inpatient care a way to transform into different models to serve unmet needs in their community and in collaboration with nearby healthcare providers.
  • Having DHFS file an application with the Federal CMS which reviews all assessment plans for a “Bridge Program”. The Bridge Program would keep the current assessment system in place past the end of June until the federal government has approved a new program model.


There are still several open items being negotiated within our legislative working group and among stakeholders.  We are hoping to have those issues resolved soon.


Lastly……just a personal note.


In a time in our national politics where everything seems to be about conflict and partisanship, I really want to thank the members of the legislative working group who have worked for months together in a collaborative, bi-partisan way.  We worked hard, made tough compromises but showed that the system can work like voters expect it to work.  Here are the members of all the caucuses who have been part of the working group with me:


House Democrats: Sara Feigenholtz, Robyn Gabel, Juliana Stratton

House Republicans: Patti Bellock, Tom Demmer, Ryan Spain

Senate Democrats: Heather Steans, Donne Trotter, Emil Jones III, Omar Aquino

Senate Republicans: Dave Syverson, Dale Righter