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104TH GENERAL ASSEMBLY
State of Illinois
2025 and 2026
SB4012

Introduced 2/6/2026, by Sen. Adriane Johnson

SYNOPSIS AS INTRODUCED:

305 ILCS 5/5-5.02

from Ch. 23, par. 5-5.02

Amends the Medical Assistance Article of the Illinois Public Aid
Code. Provides that beginning October 1, 2026, for rate year 2027 and
thereafter, the Medicaid inpatient utilization rate, as defined and used
in the determination of eligibility for specified inpatient adjustment
payments to hospitals, shall be modified to exclude, from both the
numerator and denominator, all days reimbursed by the Department of Human
Services for mental health services provided under a specified provision
of the Code of Criminal Procedure of 1963 as contracted by the Department
of Healthcare and Family Services. Effective immediately.
LRB104 18660 KTG 32103 b

A BILL FOR

SB4012
LRB104 18660 KTG 32103 b
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 5-5.02 as follows:

6

(305 ILCS 5/5-5.02)

(from Ch. 23, par. 5-5.02)
7

Sec. 5-5.02.
Hospital reimbursements.
8

(a) Reimbursement to hospitals; July 1, 1992 through
9
September 30, 1992. Notwithstanding any other provisions of
10
this Code or the Illinois Department's Rules promulgated under
11
the Illinois Administrative Procedure Act, reimbursement to
12
hospitals for services provided during the period July 1, 1992
13
through September 30, 1992, shall be as follows:
14

(1) For inpatient hospital services rendered, or if
15

applicable, for inpatient hospital discharges occurring,
16

on or after July 1, 1992 and on or before September 30,
17

1992, the Illinois Department shall reimburse hospitals
18

for inpatient services under the reimbursement
19

methodologies in effect for each hospital, and at the
20

inpatient payment rate calculated for each hospital, as of
21

June 30, 1992. For purposes of this paragraph,
22

"reimbursement methodologies" means all reimbursement
23

methodologies that pertain to the provision of inpatient

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LRB104 18660 KTG 32103 b
1

hospital services, including, but not limited to, any
2

adjustments for disproportionate share, targeted access,
3

critical care access and uncompensated care, as defined by
4

the Illinois Department on June 30, 1992.
5

(2) For the purpose of calculating the inpatient
6

payment rate for each hospital eligible to receive
7

quarterly adjustment payments for targeted access and
8

critical care, as defined by the Illinois Department on
9

June 30, 1992, the adjustment payment for the period July
10

1, 1992 through September 30, 1992, shall be 25% of the
11

annual adjustment payments calculated for each eligible
12

hospital, as of June 30, 1992. The Illinois Department
13

shall determine by rule the adjustment payments for
14

targeted access and critical care beginning October 1,
15

1992.
16

(3) For the purpose of calculating the inpatient
17

payment rate for each hospital eligible to receive
18

quarterly adjustment payments for uncompensated care, as
19

defined by the Illinois Department on June 30, 1992, the
20

adjustment payment for the period August 1, 1992 through
21

September 30, 1992, shall be one-sixth of the total
22

uncompensated care adjustment payments calculated for each
23

eligible hospital for the uncompensated care rate year, as
24

defined by the Illinois Department, ending on July 31,
25

1992. The Illinois Department shall determine by rule the
26

adjustment payments for uncompensated care beginning

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LRB104 18660 KTG 32103 b
1

October 1, 1992.
2

(b) Inpatient payments. For inpatient services provided on
3
or after October 1, 1993, in addition to rates paid for
4
hospital inpatient services pursuant to the Illinois Health
5
Finance Reform Act, as now or hereafter amended, or the
6
Illinois Department's prospective reimbursement methodology,
7
or any other methodology used by the Illinois Department for
8
inpatient services, the Illinois Department shall make
9
adjustment payments, in an amount calculated pursuant to the
10
methodology described in paragraph (c) of this Section, to
11
hospitals that the Illinois Department determines satisfy any
12
one of the following requirements:
13

(1) Hospitals that are described in Section 1923 of
14

the federal Social Security Act, as now or hereafter
15

amended, except that for rate year 2015 and after a
16

hospital described in Section 1923(b)(1)(B) of the federal
17

Social Security Act and qualified for the payments
18

described in subsection (c) of this Section for rate year
19

2014 provided the hospital continues to meet the
20

description in Section 1923(b)(1)(B) in the current
21

determination year; or
22

(2) Illinois hospitals that have a Medicaid inpatient
23

utilization rate which is at least one-half a standard
24

deviation above the mean Medicaid inpatient utilization
25

rate for all hospitals in Illinois receiving Medicaid
26

payments from the Illinois Department; or

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LRB104 18660 KTG 32103 b
1

(3) Illinois hospitals that on July 1, 1991 had a
2

Medicaid inpatient utilization rate, as defined in
3

paragraph (h) of this Section, that was at least the mean
4

Medicaid inpatient utilization rate for all hospitals in
5

Illinois receiving Medicaid payments from the Illinois
6

Department and which were located in a planning area with
7

one-third or fewer excess beds as determined by the Health
8

Facilities and Services Review Board, and that, as of June
9

30, 1992, were located in a federally designated Health
10

Manpower Shortage Area; or
11

(4) Illinois hospitals that:
12

(A) have a Medicaid inpatient utilization rate
13

that is at least equal to the mean Medicaid inpatient
14

utilization rate for all hospitals in Illinois
15

receiving Medicaid payments from the Department; and
16

(B) also have a Medicaid obstetrical inpatient
17

utilization rate that is at least one standard
18

deviation above the mean Medicaid obstetrical
19

inpatient utilization rate for all hospitals in
20

Illinois receiving Medicaid payments from the
21

Department for obstetrical services; or
22

(5) Any children's hospital, which means a hospital
23

devoted exclusively to caring for children. A hospital
24

which includes a facility devoted exclusively to caring
25

for children shall be considered a children's hospital to
26

the degree that the hospital's Medicaid care is provided

SB4012
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LRB104 18660 KTG 32103 b
1

to children if either (i) the facility devoted exclusively
2

to caring for children is separately licensed as a
3

hospital by a municipality prior to February 28, 2013;
4

(ii) the hospital has been designated by the State as a
5

Level III perinatal care facility, has a Medicaid
6

Inpatient Utilization rate greater than 55% for the rate
7

year 2003 disproportionate share determination, and has
8

more than 10,000 qualified children days as defined by the
9

Department in rulemaking; (iii) the hospital has been
10

designated as a Perinatal Level III center by the State as
11

of December 1, 2017, is a Pediatric Critical Care Center
12

designated by the State as of December 1, 2017 and has a
13

2017 Medicaid inpatient utilization rate equal to or
14

greater than 45%; or (iv) the hospital has been designated
15

as a Perinatal Level II center by the State as of December
16

1, 2017, has a 2017 Medicaid Inpatient Utilization Rate
17

greater than 70%, and has at least 10 pediatric beds as
18

listed on the IDPH 2015 calendar year hospital profile; or
19

(6) A hospital that reopens a previously closed
20

hospital facility within 4 calendar years of the hospital
21

facility's closure, if the previously closed hospital
22

facility qualified for payments under paragraph (c) at the
23

time of closure, until utilization data for the new
24

facility is available for the Medicaid inpatient
25

utilization rate calculation. For purposes of this clause,
26

a "closed hospital facility" shall include hospitals that

SB4012
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LRB104 18660 KTG 32103 b
1

have been terminated from participation in the medical
2

assistance program in accordance with Section 12-4.25 of
3

this Code.
4

(c) Inpatient adjustment payments. The adjustment payments
5
required by paragraph (b) shall be calculated based upon the
6
hospital's Medicaid inpatient utilization rate as follows:
7

(1) hospitals with a Medicaid inpatient utilization
8

rate below the mean shall receive a per day adjustment
9

payment equal to $25;
10

(2) hospitals with a Medicaid inpatient utilization
11

rate that is equal to or greater than the mean Medicaid
12

inpatient utilization rate but less than one standard
13

deviation above the mean Medicaid inpatient utilization
14

rate shall receive a per day adjustment payment equal to
15

the sum of $25 plus $1 for each one percent that the
16

hospital's Medicaid inpatient utilization rate exceeds the
17

mean Medicaid inpatient utilization rate;
18

(3) hospitals with a Medicaid inpatient utilization
19

rate that is equal to or greater than one standard
20

deviation above the mean Medicaid inpatient utilization
21

rate but less than 1.5 standard deviations above the mean
22

Medicaid inpatient utilization rate shall receive a per
23

day adjustment payment equal to the sum of $40 plus $7 for
24

each one percent that the hospital's Medicaid inpatient
25

utilization rate exceeds one standard deviation above the
26

mean Medicaid inpatient utilization rate;

SB4012
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LRB104 18660 KTG 32103 b
1

(4) hospitals with a Medicaid inpatient utilization
2

rate that is equal to or greater than 1.5 standard
3

deviations above the mean Medicaid inpatient utilization
4

rate shall receive a per day adjustment payment equal to
5

the sum of $90 plus $2 for each one percent that the
6

hospital's Medicaid inpatient utilization rate exceeds 1.5
7

standard deviations above the mean Medicaid inpatient
8

utilization rate; and
9

(5) hospitals qualifying under clause (6) of paragraph
10

(b) shall have the rate assigned to the previously closed
11

hospital facility at the date of closure, until
12

utilization data for the new facility is available for the
13

Medicaid inpatient utilization rate calculation.
14

(c-1) Beginning October 1, 2026, for rate year 2027 and
15
thereafter, the Medicaid inpatient utilization rate, as
16
defined in paragraph (1) of subsection (h) and used in the
17
determination of eligibility for payments under paragraph (c),
18
shall be modified to exclude, from both the numerator and
19
denominator, all days reimbursed by the Department of Human
20
Services for services provided under Section 104-17 of the
21
Code of Criminal Procedure of 1963 as contracted by the
22
Department.

23

(d) Supplemental adjustment payments. In addition to the
24
adjustment payments described in paragraph (c), hospitals as
25
defined in clauses (1) through (6) of paragraph (b), excluding
26
county hospitals (as defined in subsection (c) of Section 15-1

SB4012
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LRB104 18660 KTG 32103 b
1
of this Code) and a hospital organized under the University of
2
Illinois Hospital Act, shall be paid supplemental inpatient
3
adjustment payments of $60 per day. For purposes of Title XIX
4
of the federal Social Security Act, these supplemental
5
adjustment payments shall not be classified as adjustment
6
payments to disproportionate share hospitals.
7

(e) The inpatient adjustment payments described in
8
paragraphs (c) and (d) shall be increased on October 1, 1993
9
and annually thereafter by a percentage equal to the lesser of
10
(i) the increase in the DRI hospital cost index for the most
11
recent 12 month period for which data are available, or (ii)
12
the percentage increase in the statewide average hospital
13
payment rate over the previous year's statewide average
14
hospital payment rate. The sum of the inpatient adjustment
15
payments under paragraphs (c) and (d) to a hospital, other
16
than a county hospital (as defined in subsection (c) of
17
Section 15-1 of this Code) or a hospital organized under the
18
University of Illinois Hospital Act, however, shall not exceed
19
$275 per day; that limit shall be increased on October 1, 1993
20
and annually thereafter by a percentage equal to the lesser of
21
(i) the increase in the DRI hospital cost index for the most
22
recent 12-month period for which data are available or (ii)
23
the percentage increase in the statewide average hospital
24
payment rate over the previous year's statewide average
25
hospital payment rate.
26

(f) Children's hospital inpatient adjustment payments. For

SB4012
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LRB104 18660 KTG 32103 b
1
children's hospitals, as defined in clause (5) of paragraph
2
(b), the adjustment payments required pursuant to paragraphs
3
(c) and (d) shall be multiplied by 2.0.
4

(g) County hospital inpatient adjustment payments. For
5
county hospitals, as defined in subsection (c) of Section 15-1
6
of this Code, there shall be an adjustment payment as
7
determined by rules issued by the Illinois Department.
8

(h) For the purposes of this Section the following terms
9
shall be defined as follows:
10

(1) "Medicaid inpatient utilization rate" means a
11

fraction, the numerator of which is the number of a
12

hospital's inpatient days provided in a given 12-month
13

period to patients who, for such days, were eligible for
14

Medicaid under Title XIX of the federal Social Security
15

Act, and the denominator of which is the total number of
16

the hospital's inpatient days in that same period.
17

(2) "Mean Medicaid inpatient utilization rate" means
18

the total number of Medicaid inpatient days provided by
19

all Illinois Medicaid-participating hospitals divided by
20

the total number of inpatient days provided by those same
21

hospitals.
22

(3) "Medicaid obstetrical inpatient utilization rate"
23

means the ratio of Medicaid obstetrical inpatient days to
24

total Medicaid inpatient days for all Illinois hospitals
25

receiving Medicaid payments from the Illinois Department.
26

(i) Inpatient adjustment payment limit. In order to meet

SB4012
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LRB104 18660 KTG 32103 b
1
the limits of Public Law 102-234 and Public Law 103-66, the
2
Illinois Department shall by rule adjust disproportionate
3
share adjustment payments.
4

(j) University of Illinois Hospital inpatient adjustment
5
payments. For hospitals organized under the University of
6
Illinois Hospital Act, there shall be an adjustment payment as
7
determined by rules adopted by the Illinois Department.
8

(k) The Illinois Department may by rule establish criteria
9
for and develop methodologies for adjustment payments to
10
hospitals participating under this Article.
11

(l) On and after July 1, 2012, the Department shall reduce
12
any rate of reimbursement for services or other payments or
13
alter any methodologies authorized by this Code to reduce any
14
rate of reimbursement for services or other payments in
15
accordance with Section 5-5e.
16

(m) The Department shall establish a cost-based
17
reimbursement methodology for determining payments to
18
hospitals for approved graduate medical education (GME)
19
programs for dates of service on and after July 1, 2018.
20

(1) As used in this subsection, "hospitals" means the
21

University of Illinois Hospital as defined in the
22

University of Illinois Hospital Act and a county hospital
23

in a county of over 3,000,000 inhabitants.
24

(2) An amendment to the Illinois Title XIX State Plan
25

defining GME shall maximize reimbursement, shall not be
26

limited to the education programs or special patient care

SB4012
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LRB104 18660 KTG 32103 b
1

payments allowed under Medicare, and shall include:
2

(A) inpatient days;
3

(B) outpatient days;
4

(C) direct costs;
5

(D) indirect costs;
6

(E) managed care days;
7

(F) all stages of medical training and education
8

including students, interns, residents, and fellows
9

with no caps on the number of persons who may qualify;
10

and
11

(G) patient care payments related to the
12

complexities of treating Medicaid enrollees including
13

clinical and social determinants of health.
14

(3) The Department shall make all GME payments
15

directly to hospitals including such costs in support of
16

clients enrolled in Medicaid managed care entities.
17

(4) The Department shall promptly take all actions
18

necessary for reimbursement to be effective for dates of
19

service on and after July 1, 2018 including publishing all
20

appropriate public notices, amendments to the Illinois
21

Title XIX State Plan, and adoption of administrative rules
22

if necessary.
23

(5) As used in this subsection, "managed care days"
24

means costs associated with services rendered to enrollees
25

of Medicaid managed care entities. "Medicaid managed care
26

entities" means any entity which contracts with the

SB4012
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LRB104 18660 KTG 32103 b
1

Department to provide services paid for on a capitated
2

basis. "Medicaid managed care entities" includes a managed
3

care organization and a managed care community network.
4

(6) All payments under this Section are contingent
5

upon federal approval of changes to the Illinois Title XIX
6

State Plan, if that approval is required.
7

(7) The Department may adopt rules necessary to
8

implement Public Act 100-581 through the use of emergency
9

rulemaking in accordance with subsection (aa) of Section
10

5-45 of the Illinois Administrative Procedure Act. For
11

purposes of that Act, the General Assembly finds that the
12

adoption of rules to implement Public Act 100-581 is
13

deemed an emergency and necessary for the public interest,
14

safety, and welfare.
15
(Source: P.A. 101-81, eff. 7-12-19; 102-682, eff. 12-10-21;
16
102-886, eff. 5-17-22.)

17

Section 99.
Effective date.
This Act takes effect upon
18
becoming law.

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