MEDICAID-HOSP ACCESS PAYMENTS

Illinois General Assembly - Full Text of HB5442

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104TH GENERAL ASSEMBLY
State of Illinois
2025 and 2026
HB5442

Introduced 2/13/2026, by Rep. Norine K. Hammond

SYNOPSIS AS INTRODUCED:

305 ILCS 5/5A-12.7

Amends the Hospital Provider Funding Article of the Illinois Public
Aid Code. In provisions requiring the Department to establish the fixed
pool directed payment amounts for specific classes of hospitals listed in
the Code, provides that, beginning January 1, 2027, the Department of
Healthcare and Family Services shall remove from the list the following
hospital classes: (i) hospital inpatient services for public hospitals and
(ii) hospital outpatient services for public hospitals. Requires the
Department to instead, subject to any necessary federal approval, enter
into intergovernmental agreements with the respective governing bodies to
ensure continued access for those services in rural areas of the State.
Provides that the Department shall reinstate the described hospital
classes if federal approval is not received. Effective January 1, 2027.
LRB104 20236 KTG 33687 b

A BILL FOR

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1

AN ACT concerning public aid.

2

Be it enacted by the People of the State of Illinois,
3
represented in the General Assembly:

4

Section 5.
The Illinois Public Aid Code is amended by
5
changing Section 5A-12.7 as follows:

6

(305 ILCS 5/5A-12.7)
7

Sec. 5A-12.7.
Continuation of hospital access payments on
8
and after July 1, 2020.
9

(a) To preserve and improve access to hospital services,
10
for hospital services rendered on and after July 1, 2020, the
11
Department shall, except for hospitals described in subsection
12
(b) of Section 5A-3, make payments to hospitals or require
13
capitated managed care organizations to make payments as set
14
forth in this Section. Payments under this Section are not due
15
and payable, however, until: (i) the methodologies described
16
in this Section are approved by the federal government in an
17
appropriate State Plan amendment or directed payment preprint;
18
and (ii) the assessment imposed under this Article is
19
determined to be a permissible tax under Title XIX of the
20
Social Security Act. In determining the hospital access
21
payments authorized under subsection (g) of this Section, if a
22
hospital ceases to qualify for payments from the pool, the
23
payments for all hospitals continuing to qualify for payments

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1
from such pool shall be uniformly adjusted to fully expend the
2
aggregate net amount of the pool, with such adjustment being
3
effective on the first day of the second month following the
4
date the hospital ceases to receive payments from such pool.
5

(b) Amounts moved into claims-based rates and distributed
6
in accordance with Section 14-12 shall remain in those
7
claims-based rates.
8

(c) Graduate medical education.
9

(1) The calculation of graduate medical education
10

payments shall be based on the hospital's Medicare cost
11

report ending in Calendar Year 2018, as reported in the
12

Healthcare Cost Report Information System file, release
13

date September 30, 2019. An Illinois hospital reporting
14

intern and resident cost on its Medicare cost report shall
15

be eligible for graduate medical education payments.
16

(2) Each hospital's annualized Medicaid Intern
17

Resident Cost is calculated using annualized intern and
18

resident total costs obtained from Worksheet B Part I,
19

Columns 21 and 22 the sum of Lines 30-43, 50-76, 90-93,
20

96-98, and 105-112 multiplied by the percentage that the
21

hospital's Medicaid days (Worksheet S3 Part I, Column 7,
22

Lines 2, 3, 4, 14, 16-18, and 32) comprise of the
23

hospital's total days (Worksheet S3 Part I, Column 8,
24

Lines 14, 16-18, and 32).
25

(3) An annualized Medicaid indirect medical education
26

(IME) payment is calculated for each hospital using its

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1

IME payments (Worksheet E Part A, Line 29, Column 1)
2

multiplied by the percentage that its Medicaid days
3

(Worksheet S3 Part I, Column 7, Lines 2, 3, 4, 14, 16-18,
4

and 32) comprise of its Medicare days (Worksheet S3 Part
5

I, Column 6, Lines 2, 3, 4, 14, and 16-18).
6

(4) For each hospital, its annualized Medicaid Intern
7

Resident Cost and its annualized Medicaid IME payment are
8

summed, and, except as capped at 120% of the average cost
9

per intern and resident for all qualifying hospitals as
10

calculated under this paragraph, is multiplied by the
11

applicable reimbursement factor as described in this
12

paragraph, to determine the hospital's final graduate
13

medical education payment. Each hospital's average cost
14

per intern and resident shall be calculated by summing its
15

total annualized Medicaid Intern Resident Cost plus its
16

annualized Medicaid IME payment and dividing that amount
17

by the hospital's total Full Time Equivalent Residents and
18

Interns. If the hospital's average per intern and resident
19

cost is greater than 120% of the same calculation for all
20

qualifying hospitals, the hospital's per intern and
21

resident cost shall be capped at 120% of the average cost
22

for all qualifying hospitals.
23

(A) For the period of July 1, 2020 through
24

December 31, 2022, the applicable reimbursement factor
25

shall be 22.6%.
26

(B) Beginning January 1, 2023, the applicable

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reimbursement factor shall be 35% for all qualified
2

safety-net hospitals, as defined in Section 5-5e.1 of
3

this Code, and all hospitals with 100 or more Full Time
4

Equivalent Residents and Interns, as reported on the
5

hospital's Medicare cost report ending in Calendar
6

Year 2018, and for all other qualified hospitals the
7

applicable reimbursement factor shall be 30%.
8

(d) Fee-for-service supplemental payments. For the period
9
of July 1, 2020 through December 31, 2022, each Illinois
10
hospital shall receive an annual payment equal to the amounts
11
below, to be paid in 12 equal installments on or before the
12
seventh State business day of each month, except that no
13
payment shall be due within 30 days after the later of the date
14
of notification of federal approval of the payment
15
methodologies required under this Section or any waiver
16
required under 42 CFR 433.68, at which time the sum of amounts
17
required under this Section prior to the date of notification
18
is due and payable.
19

(1) For critical access hospitals, $385 per covered
20

inpatient day contained in paid fee-for-service claims and
21

$530 per paid fee-for-service outpatient claim for dates
22

of service in Calendar Year 2019 in the Department's
23

Enterprise Data Warehouse as of May 11, 2020.
24

(2) For safety-net hospitals, $960 per covered
25

inpatient day contained in paid fee-for-service claims and
26

$625 per paid fee-for-service outpatient claim for dates

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of service in Calendar Year 2019 in the Department's
2

Enterprise Data Warehouse as of May 11, 2020.
3

(3) For long term acute care hospitals, $295 per
4

covered inpatient day contained in paid fee-for-service
5

claims for dates of service in Calendar Year 2019 in the
6

Department's Enterprise Data Warehouse as of May 11, 2020.
7

(4) For freestanding psychiatric hospitals, $125 per
8

covered inpatient day contained in paid fee-for-service
9

claims and $130 per paid fee-for-service outpatient claim
10

for dates of service in Calendar Year 2019 in the
11

Department's Enterprise Data Warehouse as of May 11, 2020.
12

(5) For freestanding rehabilitation hospitals, $355
13

per covered inpatient day contained in paid
14

fee-for-service claims for dates of service in Calendar
15

Year 2019 in the Department's Enterprise Data Warehouse as
16

of May 11, 2020.
17

(6) For all general acute care hospitals and high
18

Medicaid hospitals as defined in subsection (f), $350 per
19

covered inpatient day for dates of service in Calendar
20

Year 2019 contained in paid fee-for-service claims and
21

$620 per paid fee-for-service outpatient claim in the
22

Department's Enterprise Data Warehouse as of May 11, 2020.
23

(7) Alzheimer's treatment access payment. Each
24

Illinois academic medical center or teaching hospital, as
25

defined in Section 5-5e.2 of this Code, that is identified
26

as the primary hospital affiliate of one of the Regional

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Alzheimer's Disease Assistance Centers, as designated by
2

the Alzheimer's Disease Assistance Act and identified in
3

the Department of Public Health's Alzheimer's Disease
4

State Plan dated December 2016, shall be paid an
5

Alzheimer's treatment access payment equal to the product
6

of the qualifying hospital's State Fiscal Year 2018 total
7

inpatient fee-for-service days multiplied by the
8

applicable Alzheimer's treatment rate of $226.30 for
9

hospitals located in Cook County and $116.21 for hospitals
10

located outside Cook County.
11

(d-2) Fee-for-service supplemental payments. Beginning
12
January 1, 2023, each Illinois hospital shall receive an
13
annual payment equal to the amounts listed below, to be paid in
14
12 equal installments on or before the seventh State business
15
day of each month, except that no payment shall be due within
16
30 days after the later of the date of notification of federal
17
approval of the payment methodologies required under this
18
Section or any waiver required under 42 CFR 433.68, at which
19
time the sum of amounts required under this Section prior to
20
the date of notification is due and payable. The Department
21
may adjust the rates in paragraphs (1) through (7) to comply
22
with the federal upper payment limits, with such adjustments
23
being determined so that the total estimated spending by
24
hospital class, under such adjusted rates, remains
25
substantially similar to the total estimated spending under
26
the original rates set forth in this subsection.

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(1) For critical access hospitals, as defined in
2

subsection (f), $750 per covered inpatient day contained
3

in paid fee-for-service claims and $750 per paid
4

fee-for-service outpatient claim for dates of service in
5

Calendar Year 2019 in the Department's Enterprise Data
6

Warehouse as of August 6, 2021.
7

(2) For safety-net hospitals, as described in
8

subsection (f), $1,350 per inpatient day contained in paid
9

fee-for-service claims and $1,350 per paid fee-for-service
10

outpatient claim for dates of service in Calendar Year
11

2019 in the Department's Enterprise Data Warehouse as of
12

August 6, 2021.
13

(3) For long term acute care hospitals, $550 per
14

covered inpatient day contained in paid fee-for-service
15

claims for dates of service in Calendar Year 2019 in the
16

Department's Enterprise Data Warehouse as of August 6,
17

2021.
18

(4) For freestanding psychiatric hospitals, $200 per
19

covered inpatient day contained in paid fee-for-service
20

claims and $200 per paid fee-for-service outpatient claim
21

for dates of service in Calendar Year 2019 in the
22

Department's Enterprise Data Warehouse as of August 6,
23

2021.
24

(5) For freestanding rehabilitation hospitals, $550
25

per covered inpatient day contained in paid
26

fee-for-service claims and $125 per paid fee-for-service

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outpatient claim for dates of service in Calendar Year
2

2019 in the Department's Enterprise Data Warehouse as of
3

August 6, 2021.
4

(6) For all general acute care hospitals and high
5

Medicaid hospitals as defined in subsection (f), $500 per
6

covered inpatient day for dates of service in Calendar
7

Year 2019 contained in paid fee-for-service claims and
8

$500 per paid fee-for-service outpatient claim in the
9

Department's Enterprise Data Warehouse as of August 6,
10

2021.
11

(7) For public hospitals, as defined in subsection
12

(f), $275 per covered inpatient day contained in paid
13

fee-for-service claims and $275 per paid fee-for-service
14

outpatient claim for dates of service in Calendar Year
15

2019 in the Department's Enterprise Data Warehouse as of
16

August 6, 2021.
17

(8) Alzheimer's treatment access payment. Each
18

Illinois academic medical center or teaching hospital, as
19

defined in Section 5-5e.2 of this Code, that is identified
20

as the primary hospital affiliate of one of the Regional
21

Alzheimer's Disease Assistance Centers, as designated by
22

the Alzheimer's Disease Assistance Act and identified in
23

the Department of Public Health's Alzheimer's Disease
24

State Plan dated December 2016, shall be paid an
25

Alzheimer's treatment access payment equal to the product
26

of the qualifying hospital's Calendar Year 2019 total

HB5442
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inpatient fee-for-service days, in the Department's
2

Enterprise Data Warehouse as of August 6, 2021, multiplied
3

by the applicable Alzheimer's treatment rate of $244.37
4

for hospitals located in Cook County and $312.03 for
5

hospitals located outside Cook County.
6

(e) The Department shall require managed care
7
organizations (MCOs) to make directed payments and
8
pass-through payments according to this Section. Each calendar
9
year, the Department shall require MCOs to pay the maximum
10
amount out of these funds as allowed as pass-through payments
11
under federal regulations. The Department shall require MCOs
12
to make such pass-through payments as specified in this
13
Section. The Department shall require the MCOs to pay the
14
remaining amounts as directed Payments as specified in this
15
Section. The Department shall issue payments to the
16
Comptroller by the seventh business day of each month for all
17
MCOs that are sufficient for MCOs to make the directed
18
payments and pass-through payments according to this Section.
19
The Department shall require the MCOs to make pass-through
20
payments and directed payments using electronic funds
21
transfers (EFT), if the hospital provides the information
22
necessary to process such EFTs, in accordance with directions
23
provided monthly by the Department, within 7 business days of
24
the date the funds are paid to the MCOs, as indicated by the
25
"Paid Date" on the website of the Office of the Comptroller if
26
the funds are paid by EFT and the MCOs have received directed

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payment instructions. If funds are not paid through the
2
Comptroller by EFT, payment must be made within 7 business
3
days of the date actually received by the MCO. The MCO will be
4
considered to have paid the pass-through payments when the
5
payment remittance number is generated or the date the MCO
6
sends the check to the hospital, if EFT information is not
7
supplied. If an MCO is late in paying a pass-through payment or
8
directed payment as required under this Section (including any
9
extensions granted by the Department), it shall pay a penalty,
10
unless waived by the Department for reasonable cause, to the
11
Department equal to 5% of the amount of the pass-through
12
payment or directed payment not paid on or before the due date
13
plus 5% of the portion thereof remaining unpaid on the last day
14
of each 30-day period thereafter. Payments to MCOs that would
15
be paid consistent with actuarial certification and enrollment
16
in the absence of the increased capitation payments under this
17
Section shall not be reduced as a consequence of payments made
18
under this subsection. The Department shall publish and
19
maintain on its website for a period of no less than 8 calendar
20
quarters, the quarterly calculation of directed payments and
21
pass-through payments owed to each hospital from each MCO. All
22
calculations and reports shall be posted no later than the
23
first day of the quarter for which the payments are to be
24
issued.
25

(f)(1) For purposes of allocating the funds included in
26
capitation payments to MCOs, Illinois hospitals shall be

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1
divided into the following classes as defined in
2
administrative rules:
3

(A) Beginning July 1, 2020 through December 31, 2022,
4

critical access hospitals. Beginning January 1, 2023,
5

"critical access hospital" means a hospital designated by
6

the Department of Public Health as a critical access
7

hospital, excluding any hospital meeting the definition of
8

a public hospital in subparagraph (F).
9

(B) Safety-net hospitals, except that stand-alone
10

children's hospitals that are not specialty children's
11

hospitals, safety-net hospitals that elect not to be
12

included as provided in item (i), and, for calendar years
13

2025 and 2026 only, hospitals with over 9,000 Medicaid
14

acute care inpatient admissions per calendar year,
15

excluding admissions for Medicare-Medicaid dual eligible
16

patients, will not be included. For the calendar year
17

beginning January 1, 2023, and each calendar year
18

thereafter, assignment to the safety-net class shall be
19

based on the annual safety-net rate year beginning 15
20

months before the beginning of the first Payout Quarter of
21

the calendar year.
22

(i) Beginning calendar year 2026, all hospitals
23

qualifying as a safety-net hospital under subsection
24

(a) of Section 5-5e.1 for rates years beginning on and
25

after October 1, 2024 shall be permitted to elect to
26

remain in the high Medicaid hospital class as defined

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in subparagraph (G) for purposes of the State directed
2

payments described in subsection (r) instead of being
3

assigned to the safety-net fixed pool directed
4

payments class as described in subsection (g).
5

(ii) If a hospital elects assignment in the high
6

Medicaid hospital class as defined in subparagraph
7

(G), the hospital must remain in the high Medicaid
8

hospital class for the entire calendar year.
9

(C) Long term acute care hospitals.
10

(D) Freestanding psychiatric hospitals.
11

(E) Freestanding rehabilitation hospitals.
12

(F) Beginning January 1, 2023, "public hospital" means
13

a hospital that is owned or operated by an Illinois
14

Government body or municipality, excluding a hospital
15

provider that is a State agency, a State university, or a
16

county with a population of 3,000,000 or more.
17

(G) High Medicaid hospitals.
18

(i) As used in this Section, "high Medicaid
19

hospital" means a general acute care hospital that:
20

(I) For the payout periods July 1, 2020
21

through December 31, 2022, is not a safety-net
22

hospital or critical access hospital and that has
23

a Medicaid Inpatient Utilization Rate above 30% or
24

a hospital that had over 35,000 inpatient Medicaid
25

days during the applicable period. For the period
26

July 1, 2020 through December 31, 2020, the

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applicable period for the Medicaid Inpatient
2

Utilization Rate (MIUR) is the rate year 2020 MIUR
3

and for the number of inpatient days it is State
4

fiscal year 2018. Beginning in calendar year 2021,
5

the Department shall use the most recently
6

determined MIUR, as defined in subsection (h) of
7

Section 5-5.02, and for the inpatient day
8

threshold, the State fiscal year ending 18 months
9

prior to the beginning of the calendar year. For
10

purposes of calculating MIUR under this Section,
11

children's hospitals and affiliated general acute
12

care hospitals shall be considered a single
13

hospital.
14

(II) For the calendar year beginning January
15

1, 2023, and each calendar year thereafter, is not
16

a public hospital, safety-net hospital, or
17

critical access hospital and that qualifies as a
18

regional high volume hospital or is a hospital
19

that has a Medicaid Inpatient Utilization Rate
20

(MIUR) above 30%. As used in this item, "regional
21

high volume hospital" means a hospital which ranks
22

in the top 2 quartiles based on total hospital
23

services volume, of all eligible general acute
24

care hospitals, when ranked in descending order
25

based on total hospital services volume, within
26

the same Medicaid managed care region, as

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LRB104 20236 KTG 33687 b
1

designated by the Department, as of January 1,
2

2022. As used in this item, "total hospital
3

services volume" means the total of all Medical
4

Assistance hospital inpatient admissions plus all
5

Medical Assistance hospital outpatient visits. For
6

purposes of determining regional high volume
7

hospital inpatient admissions and outpatient
8

visits, the Department shall use dates of service
9

provided during State Fiscal Year 2020 for the
10

Payout Quarter beginning January 1, 2023. The
11

Department shall use dates of service from the
12

State fiscal year ending 18 month before the
13

beginning of the first Payout Quarter of the
14

subsequent annual determination period.
15

(ii) For the calendar year beginning January 1,
16

2023, the Department shall use the Rate Year 2022
17

Medicaid inpatient utilization rate (MIUR), as defined
18

in subsection (h) of Section 5-5.02. For each
19

subsequent annual determination, the Department shall
20

use the MIUR applicable to the rate year ending
21

September 30 of the year preceding the beginning of
22

the calendar year.
23

(H) General acute care hospitals. As used under this
24

Section, "general acute care hospitals" means all other
25

Illinois hospitals not identified in subparagraphs (A)
26

through (G).

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1

(2) Hospitals' qualification for each class shall be
2
assessed prior to the beginning of each calendar year and the
3
new class designation shall be effective January 1 of the next
4
year. The Department shall publish by rule the process for
5
establishing class determination.
6

(3) Beginning January 1, 2024, the Department may reassign
7
hospitals or entire hospital classes as defined above, if
8
federal limits on the payments to the class to which the
9
hospitals are assigned based on the criteria in this
10
subsection prevent the Department from making payments to the
11
class that would otherwise be due under this Section. The
12
Department shall publish the criteria and composition of each
13
new class based on the reassignments, and the projected impact
14
on payments to each hospital under the new classes on its
15
website by November 15 of the year before the year in which the
16
class changes become effective.
17

(g) Fixed pool directed payments. Beginning July 1, 2020,
18
the Department shall issue payments to MCOs which shall be
19
used to issue directed payments to qualified Illinois
20
safety-net hospitals and critical access hospitals on a
21
monthly basis in accordance with this subsection. Prior to the
22
beginning of each Payout Quarter beginning July 1, 2020, the
23
Department shall use encounter claims data from the
24
Determination Quarter, accepted by the Department's Medicaid
25
Management Information System for inpatient and outpatient
26
services rendered by safety-net hospitals and critical access

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1
hospitals to determine a quarterly uniform per unit add-on for
2
each hospital class.
3

(1) Inpatient per unit add-on. A quarterly uniform per
4

diem add-on shall be derived by dividing the quarterly
5

Inpatient Directed Payments Pool amount allocated to the
6

applicable hospital class by the total inpatient days
7

contained on all encounter claims received during the
8

Determination Quarter, for all hospitals in the class.
9

(A) Each hospital in the class shall have a
10

quarterly inpatient directed payment calculated that
11

is equal to the product of the number of inpatient days
12

attributable to the hospital used in the calculation
13

of the quarterly uniform class per diem add-on,
14

multiplied by the calculated applicable quarterly
15

uniform class per diem add-on of the hospital class.
16

(B) Each hospital shall be paid 1/3 of its
17

quarterly inpatient directed payment in each of the 3
18

months of the Payout Quarter, in accordance with
19

directions provided to each MCO by the Department.
20

(2) Outpatient per unit add-on. A quarterly uniform
21

per claim add-on shall be derived by dividing the
22

quarterly Outpatient Directed Payments Pool amount
23

allocated to the applicable hospital class by the total
24

outpatient encounter claims received during the
25

Determination Quarter, for all hospitals in the class.
26

(A) Each hospital in the class shall have a

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1

quarterly outpatient directed payment calculated that
2

is equal to the product of the number of outpatient
3

encounter claims attributable to the hospital used in
4

the calculation of the quarterly uniform class per
5

claim add-on, multiplied by the calculated applicable
6

quarterly uniform class per claim add-on of the
7

hospital class.
8

(B) Each hospital shall be paid 1/3 of its
9

quarterly outpatient directed payment in each of the 3
10

months of the Payout Quarter, in accordance with
11

directions provided to each MCO by the Department.
12

(3) Each MCO shall pay each hospital the Monthly
13

Directed Payment as identified by the Department on its
14

quarterly determination report.
15

(4) Definitions. As used in this subsection:
16

(A) "Payout Quarter" means each 3 month calendar
17

quarter, beginning July 1, 2020.
18

(B) "Determination Quarter" means each 3 month
19

calendar quarter, which ends 3 months prior to the
20

first day of each Payout Quarter.
21

(5) For the period July 1, 2020 through December 2020,
22

the following amounts shall be allocated to the following
23

hospital class directed payment pools for the quarterly
24

development of a uniform per unit add-on:
25

(A) $2,894,500 for hospital inpatient services for
26

critical access hospitals.

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1

(B) $4,294,374 for hospital outpatient services
2

for critical access hospitals.
3

(C) $29,109,330 for hospital inpatient services
4

for safety-net hospitals.
5

(D) $35,041,218 for hospital outpatient services
6

for safety-net hospitals.
7

(6) For the period January 1, 2023 through December
8

31, 2023, the Department shall establish the amounts that
9

shall be allocated to the hospital class directed payment
10

fixed pools identified in this paragraph for the quarterly
11

development of a uniform per unit add-on. The Department
12

shall establish such amounts so that the total amount of
13

payments to each hospital under this Section in calendar
14

year 2023 is projected to be substantially similar to the
15

total amount of such payments received by the hospital
16

under this Section in calendar year 2021, adjusted for
17

increased funding provided for fixed pool directed
18

payments under subsection (g) in calendar year 2022,
19

assuming that the volume and acuity of claims are held
20

constant. The Department shall publish the directed
21

payment fixed pool amounts to be established under this
22

paragraph on its website by November 15, 2022.
Beginning
23

January 1, 2027, the Department shall remove the hospital
24

classes described in subparagraphs (C) and (D) and
25

instead, subject to any necessary federal approval, enter
26

into intergovernmental agreements with the respective

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1

governing bodies to ensure continued access for those
2

services in rural areas of the State. The Department shall
3

reinstate the hospital classes described in subparagraphs
4

(C) and (D) if approval is not received for such
5

reimbursement by the federal Centers for Medicare and
6

Medicaid Services.

7

(A) Hospital inpatient services for critical
8

access hospitals.
9

(B) Hospital outpatient services for critical
10

access hospitals.
11

(C) Hospital inpatient services for public
12

hospitals.
13

(D) Hospital outpatient services for public
14

hospitals.
15

(E) Hospital inpatient services for safety-net
16

hospitals.
17

(F) Hospital outpatient services for safety-net
18

hospitals.
19

(7) Semi-annual rate maintenance review. The
20

Department shall ensure that hospitals assigned to the
21

fixed pools in paragraph (6) are paid no less than 95% of
22

the annual initial rate for each 6-month period of each
23

annual payout period. For each calendar year, the
24

Department shall calculate the annual initial rate per day
25

and per visit for each fixed pool hospital class listed in
26

paragraph (6), by dividing the total of all applicable

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1

inpatient or outpatient directed payments issued in the
2

preceding calendar year to the hospitals in each fixed
3

pool class for the calendar year, plus any increase
4

resulting from the annual adjustments described in
5

subsection (i), by the actual applicable total service
6

units for the preceding calendar year which were the basis
7

of the total applicable inpatient or outpatient directed
8

payments issued to the hospitals in each fixed pool class
9

in the calendar year, except that for calendar year 2023,
10

the service units from calendar year 2021 shall be used.
11

(A) The Department shall calculate the effective
12

rate, per day and per visit, for the payout periods of
13

January to June and July to December of each year, for
14

each fixed pool listed in paragraph (6), by dividing
15

50% of the annual pool by the total applicable
16

reported service units for the 2 applicable
17

determination quarters.
18

(B) If the effective rate calculated in
19

subparagraph (A) is less than 95% of the annual
20

initial rate assigned to the class for each pool under
21

paragraph (6), the Department shall adjust the payment
22

for each hospital to a level equal to no less than 95%
23

of the annual initial rate, by issuing a retroactive
24

adjustment payment for the 6-month period under review
25

as identified in subparagraph (A).
26

(h) Fixed rate directed payments. Effective July 1, 2020,

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1
the Department shall issue payments to MCOs which shall be
2
used to issue directed payments to Illinois hospitals not
3
identified in paragraph (g) on a monthly basis. Prior to the
4
beginning of each Payout Quarter beginning July 1, 2020, the
5
Department shall use encounter claims data from the
6
Determination Quarter, accepted by the Department's Medicaid
7
Management Information System for inpatient and outpatient
8
services rendered by hospitals in each hospital class
9
identified in paragraph (f) and not identified in paragraph
10
(g). For the period July 1, 2020 through December 2020, the
11
Department shall direct MCOs to make payments as follows:
12

(1) For general acute care hospitals an amount equal
13

to $1,750 multiplied by the hospital's category of service
14

20 case mix index for the determination quarter multiplied
15

by the hospital's total number of inpatient admissions for
16

category of service 20 for the determination quarter.
17

(2) For general acute care hospitals an amount equal
18

to $160 multiplied by the hospital's category of service
19

21 case mix index for the determination quarter multiplied
20

by the hospital's total number of inpatient admissions for
21

category of service 21 for the determination quarter.
22

(3) For general acute care hospitals an amount equal
23

to $80 multiplied by the hospital's category of service 22
24

case mix index for the determination quarter multiplied by
25

the hospital's total number of inpatient admissions for
26

category of service 22 for the determination quarter.

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1

(4) For general acute care hospitals an amount equal
2

to $375 multiplied by the hospital's category of service
3

24 case mix index for the determination quarter multiplied
4

by the hospital's total number of category of service 24
5

paid EAPG (EAPGs) for the determination quarter.
6

(5) For general acute care hospitals an amount equal
7

to $240 multiplied by the hospital's category of service
8

27 and 28 case mix index for the determination quarter
9

multiplied by the hospital's total number of category of
10

service 27 and 28 paid EAPGs for the determination
11

quarter.
12

(6) For general acute care hospitals an amount equal
13

to $290 multiplied by the hospital's category of service
14

29 case mix index for the determination quarter multiplied
15

by the hospital's total number of category of service 29
16

paid EAPGs for the determination quarter.
17

(7) For high Medicaid hospitals an amount equal to
18

$1,800 multiplied by the hospital's category of service 20
19

case mix index for the determination quarter multiplied by
20

the hospital's total number of inpatient admissions for
21

category of service 20 for the determination quarter.
22

(8) For high Medicaid hospitals an amount equal to
23

$160 multiplied by the hospital's category of service 21
24

case mix index for the determination quarter multiplied by
25

the hospital's total number of inpatient admissions for
26

category of service 21 for the determination quarter.

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1

(9) For high Medicaid hospitals an amount equal to $80
2

multiplied by the hospital's category of service 22 case
3

mix index for the determination quarter multiplied by the
4

hospital's total number of inpatient admissions for
5

category of service 22 for the determination quarter.
6

(10) For high Medicaid hospitals an amount equal to
7

$400 multiplied by the hospital's category of service 24
8

case mix index for the determination quarter multiplied by
9

the hospital's total number of category of service 24 paid
10

EAPG outpatient claims for the determination quarter.
11

(11) For high Medicaid hospitals an amount equal to
12

$240 multiplied by the hospital's category of service 27
13

and 28 case mix index for the determination quarter
14

multiplied by the hospital's total number of category of
15

service 27 and 28 paid EAPGs for the determination
16

quarter.
17

(12) For high Medicaid hospitals an amount equal to
18

$290 multiplied by the hospital's category of service 29
19

case mix index for the determination quarter multiplied by
20

the hospital's total number of category of service 29 paid
21

EAPGs for the determination quarter.
22

(13) For long term acute care hospitals the amount of
23

$495 multiplied by the hospital's total number of
24

inpatient days for the determination quarter.
25

(14) For psychiatric hospitals the amount of $210
26

multiplied by the hospital's total number of inpatient

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1

days for category of service 21 for the determination
2

quarter.
3

(15) For psychiatric hospitals the amount of $250
4

multiplied by the hospital's total number of outpatient
5

claims for category of service 27 and 28 for the
6

determination quarter.
7

(16) For rehabilitation hospitals the amount of $410
8

multiplied by the hospital's total number of inpatient
9

days for category of service 22 for the determination
10

quarter.
11

(17) For rehabilitation hospitals the amount of $100
12

multiplied by the hospital's total number of outpatient
13

claims for category of service 29 for the determination
14

quarter.
15

(18) Effective for the Payout Quarter beginning
16

January 1, 2023, for the directed payments to hospitals
17

required under this subsection, the Department shall
18

establish the amounts that shall be used to calculate such
19

directed payments using the methodologies specified in
20

this paragraph. The Department shall use a single, uniform
21

rate, adjusted for acuity as specified in paragraphs (1)
22

through (12), for all categories of inpatient services
23

provided by each class of hospitals and a single uniform
24

rate, adjusted for acuity as specified in paragraphs (1)
25

through (12), for all categories of outpatient services
26

provided by each class of hospitals. The Department shall

HB5442
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1

establish such amounts so that the total amount of
2

payments to each hospital under this Section in calendar
3

year 2023 is projected to be substantially similar to the
4

total amount of such payments received by the hospital
5

under this Section in calendar year 2021, adjusted for
6

increased funding provided for fixed pool directed
7

payments under subsection (g) in calendar year 2022,
8

assuming that the volume and acuity of claims are held
9

constant. The Department shall publish the directed
10

payment amounts to be established under this subsection on
11

its website by November 15, 2022.
12

(19) Each hospital shall be paid 1/3 of their
13

quarterly inpatient and outpatient directed payment in
14

each of the 3 months of the Payout Quarter, in accordance
15

with directions provided to each MCO by the Department.
16

(20) Each MCO shall pay each hospital the Monthly
17

Directed Payment amount as identified by the Department on
18

its quarterly determination report.
19

Notwithstanding any other provision of this subsection, if
20
the Department determines that the actual total hospital
21
utilization data that is used to calculate the fixed rate
22
directed payments is substantially different than anticipated
23
when the rates in this subsection were initially determined
24
for unforeseeable circumstances (such as the COVID-19 pandemic
25
or some other public health emergency), the Department may
26
adjust the rates specified in this subsection so that the

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1
total directed payments approximate the total spending amount
2
anticipated when the rates were initially established.
3

Definitions. As used in this subsection:
4

(A) "Payout Quarter" means each calendar quarter,
5

beginning July 1, 2020.
6

(B) "Determination Quarter" means each calendar
7

quarter which ends 3 months prior to the first day of
8

each Payout Quarter.
9

(C) "Case mix index" means a hospital specific
10

calculation. For inpatient claims the case mix index
11

is calculated each quarter by summing the relative
12

weight of all inpatient Diagnosis-Related Group (DRG)
13

claims for a category of service in the applicable
14

Determination Quarter and dividing the sum by the
15

number of sum total of all inpatient DRG admissions
16

for the category of service for the associated claims.
17

The case mix index for outpatient claims is calculated
18

each quarter by summing the relative weight of all
19

paid EAPGs in the applicable Determination Quarter and
20

dividing the sum by the sum total of paid EAPGs for the
21

associated claims.
22

(i) Beginning January 1, 2021, the rates for directed
23
payments shall be recalculated in order to spend the
24
additional funds for directed payments that result from
25
reduction in the amount of pass-through payments allowed under
26
federal regulations. The additional funds for directed

HB5442
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1
payments shall be allocated proportionally to each class of
2
hospitals based on that class' proportion of services.
3

(1) Beginning January 1, 2024, the fixed pool directed
4

payment amounts and the associated annual initial rates
5

referenced in paragraph (6) of subsection (f) for each
6

hospital class shall be uniformly increased by a ratio of
7

not less than, the ratio of the total pass-through
8

reduction amount pursuant to paragraph (4) of subsection
9

(j), for the hospitals comprising the hospital fixed pool
10

directed payment class for the next calendar year, to the
11

total inpatient and outpatient directed payments for the
12

hospitals comprising the hospital fixed pool directed
13

payment class paid during the preceding calendar year.
14

(2) Beginning January 1, 2024, the fixed rates for the
15

directed payments referenced in paragraph (18) of
16

subsection (h) for each hospital class shall be uniformly
17

increased by a ratio of not less than, the ratio of the
18

total pass-through reduction amount pursuant to paragraph
19

(4) of subsection (j), for the hospitals comprising the
20

hospital directed payment class for the next calendar
21

year, to the total inpatient and outpatient directed
22

payments for the hospitals comprising the hospital fixed
23

rate directed payment class paid during the preceding
24

calendar year.
25

(j) Pass-through payments.
26

(1) For the period July 1, 2020 through December 31,

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1

2020, the Department shall assign quarterly pass-through
2

payments to each class of hospitals equal to one-fourth of
3

the following annual allocations:
4

(A) $390,487,095 to safety-net hospitals.
5

(B) $62,553,886 to critical access hospitals.
6

(C) $345,021,438 to high Medicaid hospitals.
7

(D) $551,429,071 to general acute care hospitals.
8

(E) $27,283,870 to long term acute care hospitals.
9

(F) $40,825,444 to freestanding psychiatric
10

hospitals.
11

(G) $9,652,108 to freestanding rehabilitation
12

hospitals.
13

(2) For the period of July 1, 2020 through December
14

31, 2020, the pass-through payments shall at a minimum
15

ensure hospitals receive a total amount of monthly
16

payments under this Section as received in calendar year
17

2019 in accordance with this Article and paragraph (1) of
18

subsection (d-5) of Section 14-12, exclusive of amounts
19

received through payments referenced in subsection (b).
20

(3) For the calendar year beginning January 1, 2023,
21

the Department shall establish the annual pass-through
22

allocation to each class of hospitals and the pass-through
23

payments to each hospital so that the total amount of
24

payments to each hospital under this Section in calendar
25

year 2023 is projected to be substantially similar to the
26

total amount of such payments received by the hospital

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1

under this Section in calendar year 2021, adjusted for
2

increased funding provided for fixed pool directed
3

payments under subsection (g) in calendar year 2022,
4

assuming that the volume and acuity of claims are held
5

constant. The Department shall publish the pass-through
6

allocation to each class and the pass-through payments to
7

each hospital to be established under this subsection on
8

its website by November 15, 2022.
9

(4) For the calendar years beginning January 1, 2021
10

and January 1, 2022, each hospital's pass-through payment
11

amount shall be reduced proportionally to the reduction of
12

all pass-through payments required by federal regulations.
13

Beginning January 1, 2024, the Department shall reduce
14

total pass-through payments by the minimum amount
15

necessary to comply with federal regulations. Pass-through
16

payments to safety-net hospitals, as defined in Section
17

5-5e.1 of this Code, shall not be reduced until all
18

pass-through payments to other hospitals have been
19

eliminated. All other hospitals shall have their
20

pass-through payments reduced proportionally.
21

(k) At least 30 days prior to each calendar year, the
22
Department shall notify each hospital of changes to the
23
payment methodologies in this Section, including, but not
24
limited to, changes in the fixed rate directed payment rates,
25
the aggregate pass-through payment amount for all hospitals,
26
and the hospital's pass-through payment amount for the

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1
upcoming calendar year.
2

(l) Notwithstanding any other provisions of this Section,
3
the Department may adopt rules to change the methodology for
4
directed and pass-through payments as set forth in this
5
Section, but only to the extent necessary to obtain federal
6
approval of a necessary State Plan amendment or Directed
7
Payment Preprint or to otherwise conform to federal law or
8
federal regulation.
9

(m) As used in this subsection, "managed care
10
organization" or "MCO" means an entity which contracts with
11
the Department to provide services where payment for medical
12
services is made on a capitated basis, excluding contracted
13
entities for dual eligible or Department of Children and
14
Family Services youth populations.
15

(n) In order to address the escalating infant mortality
16
rates among minority communities in Illinois, the State shall,
17
subject to appropriation, create a pool of funding of at least
18
$50,000,000 annually to be disbursed among safety-net
19
hospitals that maintain perinatal designation from the
20
Department of Public Health. The funding shall be used to
21
preserve or enhance OB/GYN services or other specialty
22
services at the receiving hospital, with the distribution of
23
funding to be established by rule and with consideration to
24
perinatal hospitals with safe birthing levels and quality
25
metrics for healthy mothers and babies.
26

(o) In order to address the growing challenges of

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1
providing stable access to healthcare in rural Illinois,
2
including perinatal services, behavioral healthcare including
3
substance use disorder services (SUDs) and other specialty
4
services, and to expand access to telehealth services among
5
rural communities in Illinois, the Department of Healthcare
6
and Family Services shall administer a program to provide at
7
least $10,000,000 in financial support annually to critical
8
access hospitals for delivery of perinatal and OB/GYN
9
services, behavioral healthcare including SUDS, other
10
specialty services and telehealth services. The funding shall
11
be used to preserve or enhance perinatal and OB/GYN services,
12
behavioral healthcare including SUDS, other specialty
13
services, as well as the explanation of telehealth services by
14
the receiving hospital, with the distribution of funding to be
15
established by rule.
16

(p) For calendar year 2023, the final amounts, rates, and
17
payments under subsections (c), (d-2), (g), (h), and (j) shall
18
be established by the Department, so that the sum of the total
19
estimated annual payments under subsections (c), (d-2), (g),
20
(h), and (j) for each hospital class for calendar year 2023, is
21
no less than:
22

(1) $858,260,000 to safety-net hospitals.
23

(2) $86,200,000 to critical access hospitals.
24

(3) $1,765,000,000 to high Medicaid hospitals.
25

(4) $673,860,000 to general acute care hospitals.
26

(5) $48,330,000 to long term acute care hospitals.

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LRB104 20236 KTG 33687 b
1

(6) $89,110,000 to freestanding psychiatric hospitals.
2

(7) $24,300,000 to freestanding rehabilitation
3

hospitals.
4

(8) $32,570,000 to public hospitals.
5

(q) Hospital Pandemic Recovery Stabilization Payments. The
6
Department shall disburse a pool of $460,000,000 in stability
7
payments to hospitals prior to April 1, 2023. The allocation
8
of the pool shall be based on the hospital directed payment
9
classes and directed payments issued, during Calendar Year
10
2022 with added consideration to safety net hospitals, as
11
defined in subdivision (f)(1)(B) of this Section, and critical
12
access hospitals.
13

(r) Directed payment update. For calendar year 2025, and
14
each calendar year thereafter, the final amounts, rates, and
15
payments for the fixed pool directed payments described in
16
subsection (g) and the fixed rate directed payments described
17
in subsection (h) shall be established by the Department at no
18
less than the following:
19

(1) $579,261,585 for inpatient services at safety-net
20

hospitals.
21

(2) $763,418,138 for outpatient services at safety-net
22

hospitals.
23

(3) $12,389,160 for inpatient services at critical
24

access hospitals.
25

(4) $137,437,866 for outpatient services at critical
26

access hospitals.

HB5442
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LRB104 20236 KTG 33687 b
1

(5) $5,418 as a base fixed rate per admit prior to
2

adjusting for acuity, for inpatient services at high
3

Medicaid hospitals.
4

(6) $1,512 as a base fixed rate per paid E-APG prior to
5

adjusting for acuity, for outpatient services at high
6

Medicaid hospitals.
7

(7) $3,898 as a base fixed rate per admit prior to
8

adjusting for acuity, for inpatient services at other
9

acute care hospitals.
10

(8) $1,322 as a base fixed rate per E-APG prior to
11

adjusting for acuity, for outpatient services at other
12

acute hospitals.
13

(9) $773 per day for inpatient services at long term
14

acute care hospitals.
15

(10) $206 per day for inpatient services at
16

freestanding psychiatric hospitals.
17

(11) $223 per claim for outpatient services at
18

freestanding psychiatric hospitals.
19

(12) $776 per day for inpatient services at
20

freestanding rehabilitation hospitals.
21

(13) $252 per claim for outpatient services at
22

freestanding rehabilitation hospitals.
23

(14) $7,793,812 for inpatient services at public
24

hospitals.
25

(15) $26,849,592 for outpatient services at public
26

hospitals.

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LRB104 20236 KTG 33687 b
1

Implementation of the rate increases described in this
2
subsection (r) shall be contingent on federal approval. The
3
rates for fixed pool directed payments as described in
4
subsection (g) and for fixed rate directed payments as
5
described in subsection (h) shall remain as published by the
6
Department on November 27, 2024 until the Department receives
7
federal approval for the updated rates described in this
8
subsection (r).
9

(s) If, in order to secure approval by the Centers for
10
Medicare and Medicaid Services, the rates under subsection (r)
11
are reduced, the Department may submit a State Plan amendment
12
to increase rates in place at the time of the reduction
13
pertaining to subsection (d-2) to offset the annual amount of
14
reduction to the rates under subsection (r), in amounts equal
15
to the required reduction on a class-specific basis to ensure
16
that funds are not reallocated from one class to another; or
17
the rates in subsection (r) shall be reduced uniformly to the
18
amounts necessary to achieve approval and the assessments
19
imposed by subsection (a) or (b-5) of Section 5A-2 shall be
20
reduced uniformly to achieve a total annual reduction across
21
both assessments equal to the product of the total annual
22
reduction to payments and .3853. In addition, the assessments
23
shall further be reduced uniformly to achieve a total annual
24
reduction across both assessments equal to the difference of
25
subtracting the product calculated in the previous sentence
26
from the resulting quotient of dividing the product described

HB5442
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LRB104 20236 KTG 33687 b
1
in the previous sentence by .92 for a reduction to the
2
transfers in subsection 7.16 and 7.17 of Section 5A-8.
3

(t) To provide for the expeditious and timely
4
implementation of the changes made to this Section by this
5
amendatory Act of the 104th General Assembly, the Department
6
may adopt emergency rules as authorized by Section 5-45 of the
7
Illinois Administrative Procedure Act. The adoption of
8
emergency rules is deemed to be necessary for the public
9
interest, safety, and welfare.
10
(Source: P.A. 103-102, eff. 6-16-23; 103-593, eff. 6-7-24;
11
103-605, eff. 7-1-24; 104-7, eff. 6-16-25.)

12

Section 99.
Effective date.
This Act takes effect January
13
1, 2027.

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