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LEGISLATURE
OF
THE
STATE
OF
IDAHO
Sixty-eighth
Legislature
Second
Regular
Session
-
2026
IN
THE
HOUSE
OF
REPRESENTATIVES
HOUSE
BILL
NO.
863
BY
HEALTH
AND
WELFARE
COMMITTEE
AN
ACT
1
RELATING
TO
PUBLIC
ASSISTANCE;
PROVIDING
LEGISLATIVE
FINDINGS
AND
INTENT;
2
AMENDING
SECTION
56
-
265,
IDAHO
CODE,
TO
REVISE
PROVISIONS
REGARDING
3
PROVIDER
PAYMENT;
PROVIDING
THAT
CERTAIN
ADMINISTRATIVE
RULES
CON
-
4
TAINED
IN
IDAPA
16.03.26
SHALL
BE
NULL,
VOID,
AND
OF
NO
FORCE
AND
EFFECT;
5
AND
DECLARING
AN
EMERGENCY.
6
Be
It
Enacted
by
the
Legislature
of
the
State
of
Idaho:
7
SECTION
1.
LEGISLATIVE
FINDINGS
AND
INTENT.
The
Legislature
finds
8
that
providing
oversight
of
Medicaid
rates
paid
to
residential
habilitation
9
providers
and
increasing
transparency
for
taxpayers
is
one
of
the
most
im
-
10
portant
functions
the
Legislature
provides.
Currently,
the
state
pays
more
1
1
than
$176.5
million
from
the
general
fund
through
Medicaid
to
help
people
12
with
disabilities
live
independently
with
residential
habilitation
and
13
other
home
and
community
-
based
services.
In
2022,
the
Legislature
approved
14
a
line
item
for
$70,393,100
to
increase
provider
rates
for
adult
develop
-
15
mental
disabilities
in
residential
habilitation
settings
in
Chapter
252,
16
Laws
of
2022.
Those
provider
rate
increases
were
related
to
a
line
item
of
17
$66,663,200
providing
service
enhancements
and
a
new
budget
tool
stemming
18
from
the
KW
v.
Armstrong
lawsuit.
A
new
court
order
halted
the
implemen
-
19
tation
of
that
budget
tool,
and
as
a
result,
the
service
enhancements
have
20
not
gone
into
effect.
The
state
general
fund
match
for
the
rate
increases
21
related
to
the
service
enhancement
is
approximately
$21,800,000
and
can
be
22
reduced
from
the
current
budget.
To
support
accountability
and
transparency
23
for
taxpayers
and
improve
legislative
oversight
of
provider
payments,
this
24
statute
change
is
necessary.
25
SECTION
2.
That
Section
56
-
265,
Idaho
Code,
be,
and
the
same
is
hereby
26
amended
to
read
as
follows:
27
56
-
265.
PROVIDER
PAYMENT.
(1)
Where
there
is
an
equivalent,
the
pay
-
28
ment
to
medicaid
providers:
29
(a)
May
be
up
to
but
shall
not
exceed
one
hundred
percent
(100%)
of
the
30
current
medicare
rate
for
primary
care
procedure
codes
as
defined
by
the
31
centers
for
medicare
and
medicaid
services;
and
32
(b)
Shall
be
ninety
percent
(90%)
of
the
current
medicare
rate
for
all
33
other
procedure
codes.
34
(2)
Where
there
is
no
medicare
equivalent,
the
payment
rate
to
medicaid
35
providers
shall
be
prescribed
by
rule.
Where
there
is
no
medicare
equiva
-
36
lent,
the
department
may
promulgate
rules,
subject
to
legislative
approval,
37
for
payment
rates.
Residential
habilitation,
personal
care
services,
de
-
38
velopmental
disability
agency
services,
community
-
supported
employment,
39
and
targeted
service
coordination
shall
be
cost
-
surveyed
annually
with
fif
-
40
teen
percent
(15%)
or
more
of
responses
being
audited.
The
department
shall
41
2
use
information
from
the
cost
surveys
and
other
sources
to
develop
payment
1
rates,
subject
to
legislative
appropriation.
Payment
rates
shall
be
devel
-
2
oped
to
include
allocations
to
direct
care
worker
wages,
employee
-
related
3
expenses,
program
-
related
expenses,
and
general
and
administrative
costs.
4
(a)
Providers
are
required
on
an
annual
basis
to
expend
at
least
the
5
appropriated
amount
allocated
to
direct
care
workers
and
employee
-
re
-
6
lated
expenses
to
these
categories.
7
(b)
Failure
of
the
provider
to
meet
the
requirement
in
paragraph
(a)
of
8
this
subsection
may
result
in
a
department
-
approved
corrective
action
9
plan,
closure
of
intake,
or
termination
of
the
provider
agreement.
10
(c)
The
department
shall
summarize
the
required
cost
survey
audits
in
1
1
a
publicly
available
report
no
later
than
December
31
of
each
calendar
12
year,
with
the
first
report
being
delivered
by
December
31,
2027.
13
(3)
Notwithstanding
any
other
provision
of
this
chapter,
if
the
14
services
are
provided
by
a
private,
freestanding
mental
health
hospital
15
facility
that
is
an
institution
for
mental
disease
as
defined
in
42
U.S.C.
16
1396d(i),
the
department
shall
reimburse
for
inpatient
services
at
a
rate
17
not
to
exceed
ninety
-
one
percent
(91%)
of
the
current
medicare
rate
within
18
federally
allowed
reimbursement
under
the
medicaid
program.
The
reimburse
-
19
ment
provided
for
in
this
subsection
shall
be
effective
until
July
1,
2021.
20
(4)
The
department
shall,
through
the
annual
budget
process,
include
21
a
line
-
item
request
for
adjustments
to
provider
rates.
All
changes
to
22
provider
payment
rates
shall
be
subject
to
approval
of
the
legislature
by
23
appropriation.
24
(5)
Notwithstanding
any
other
provision
of
this
chapter,
the
depart
-
25
ment
may
enter
into
agreements
with
providers
to
pay
for
services
based
on
26
their
value
in
terms
of
measurable
health
care
quality
and
positive
impacts
27
to
participant
health.
28
(a)
Any
such
agreement
shall
be
designed
to
be
cost
-
neutral
or
cost
-
29
saving
compared
to
other
payment
methodologies.
30
(b)
The
department
is
authorized
to
pursue
waiver
agreements
with
the
31
federal
government
as
needed
to
support
value
-
based
payment
arrange
-
32
ments,
up
to
and
including
fully
capitated
provider
-
based
managed
care.
33
(c)
Beginning
with
the
2024
performance
period
and
for
all
future
per
-
34
formance
periods
thereafter,
federally
qualified
health
centers
and
35
any
organization
owned
and
controlled
by
a
federally
qualified
health
36
center
shall
be
exempt
from
any
financial
risk
in
value
-
based
payment
37
agreements
created
pursuant
to
this
section.
38
(6)
Medicaid
reimbursement
for
critical
access,
out
-
of
-
state,
and
39
state
-
owned
hospitals
shall
be
as
follows:
40
(a)
In
-
state,
critical
access
hospitals
as
designated
according
to
42
41
U.S.C.
1395i
-
4(c)(2)(B)
shall
be
reimbursed
at
one
hundred
one
percent
42
(101%)
of
cost;
43
(b)
Out
-
of
-
state
hospitals
shall
be
reimbursed
at
eighty
-
seven
percent
44
(87%)
of
cost;
45
(c)
State
-
owned
hospitals
shall
be
reimbursed
at
one
hundred
percent
46
(100%)
of
cost;
and
47
(d)
Out
-
of
-
state
hospital
institutions
for
mental
disease
as
defined
48
in
42
U.S.C.
1396d(i)
shall
be
reimbursed
at
a
per
diem
equivalent
to
49
ninety
-
five
percent
(95%)
of
cost.
50
3
(7)
The
department
shall
equitably
reduce
net
reimbursements
for
all
1
hospital
services,
including
in
-
state
institutions
for
mental
disease
but
2
excluding
all
hospitals
and
institutions
described
in
subsection
(6)
of
3
this
section,
by
amounts
targeted
to
reduce
general
fund
needs
for
hospital
4
payments
by
three
million
one
hundred
thousand
dollars
($3,100,000)
in
state
5
fiscal
year
2020
and
eight
million
seven
hundred
twenty
thousand
dollars
6
($8,720,000)
in
state
fiscal
year
2021.
7
(8)
The
department
shall
work
with
all
Idaho
hospitals,
including
in
-
8
stitutions
for
mental
disease
as
defined
in
42
U.S.C.
1396d(i),
to
establish
9
value
-
based
payment
methods
for
inpatient
and
outpatient
hospital
services
10
to
replace
existing
cost
-
based
reimbursement
methods
for
in
-
state
hospi
-
1
1
tals,
other
than
those
hospitals
and
institutions
described
in
subsection
12
(6)
of
this
section,
effective
July
1,
2021.
Budgets
for
hospital
payments
13
shall
be
subject
to
prospective
legislative
approval.
14
(9)
The
department
shall
work
with
Idaho
hospitals
to
establish
a
15
quality
payment
program
for
inpatient
and
outpatient
adjustment
payments
16
described
in
section
56
-
1406,
Idaho
Code.
Inpatient
and
outpatient
adjust
-
17
ment
payments
shall
be
subject
to
increase
or
reduction
based
on
hospital
18
service
quality
measures
established
by
the
department
in
consultation
with
19
Idaho
hospitals.
20
SECTION
3.
The
rules
contained
in
IDAPA
16.03.26,
Department
of
Health
21
and
Welfare,
relating
to
Medicaid
Plan
Benefits,
Section
051.;
and
Section
22
052.,
shall
be
null,
void,
and
of
no
force
and
effect
on
and
after
July
1,
23
2026.
24
SECTION
4.
An
emergency
existing
therefor,
which
emergency
is
hereby
25
declared
to
exist,
this
act
shall
be
in
full
force
and
effect
on
and
after
its
26
passage
and
approval.
27