Read the full stored bill text
UNOFFICIAL COPY 26 RS HB 689/EN
Page 1 of 4
HB068920.100 - 2051 - XXXX 3/31/2026 7:52 PM Engrossed
AN ACT relating to the establishment of a Medicaid state -directed payment 1
program. 2
Be it enacted by the General Assembly of the Commonwealth of Kentucky: 3
Section 1. KRS 205.6412 is amended to read as follows: 4
To the extent permitted under federal law and in addition to, and separate from, the 5
programs developed pursuant to KRS 205.6406, the department shall develop 6
programs[a program] to improve quality of and access to care for residents of the 7
Commonwealth en rolled in the state's Medicaid program by increasing Medicaid 8
reimbursement rates for qualifying hospitals in accordance with the following: 9
(1)[ (a)] A qualifying hospital shall be eligible to earn enhanced add-on payments from 10
Medicaid managed care organ izations based on the qualifying hospital's average 11
commercial rate for services provided, including but not limited to inpatient 12
hospital services, outpatient hospital services, and professional services, if the 13
qualifying hospital: 14
(a) 1. [a. ]Is a parti cipant in the hospital rate improvement program 15
developed pursuant to KRS 205.6406; 16
2.[b.] Is a Level II, III, or IV trauma center; 17
3.[c.] Is located in a county in which the percentage of the county's population 18
enrolled in the state's Medicaid program exceeds the statewide median 19
Medicaid enrollment percentage for all counties as posted by the 20
Cabinet for Health and Family Services in the D ecember edition of the 21
Monthly Medicaid Counts by County report for the calendar year 22
preceding the year in which the preprint is submitted; and 23
4.[d.] Has an agreement for clinical rotations to train providers with a 24
university-affiliated graduate medical education program; or 25
(b)[2.] Is a pediatric teaching hospital as defined in KRS 205.565, except that a 26
hospital qualifying for enhanced add -on payments under this subparagraph 27
UNOFFICIAL COPY 26 RS HB 689/EN
Page 2 of 4
HB068920.100 - 2051 - XXXX 3/31/2026 7:52 PM Engrossed
shall only be eligible to receive enhanced add -on payments for services 1
delivered to a patient who is eighteen (18) years of age or younger; 2
(2) (a) Within sixty (60) days after the effective date of this Act, the Department for 3
Medicaid Services shall submit a Medicaid preprint with a January 1, 2026, 4
effective date to the federal Centers for Medicare and Medicaid Services 5
seeking authorization to implement the state -directed payment program 6
described in this subsection. 7
(b) If the preprint required to be submitted under paragraph (a) of this 8
subsection is approved by the federal Ce nters for Medicare and Medicaid 9
Services, a qualifying hospital shall be eligible to earn enhanced add -on 10
payments from Medicaid managed care organizations based on the 11
equivalent Medicare rate for services, including but not limited to physician 12
and nonphysician professional services, provided to Medicaid beneficiaries 13
by the qualifying hospital's affiliated physician groups or physicians or 14
other professionals employed by or contracted with the qualifying hospital if 15
the qualifying hospital has an agreeme nt to train providers with a state -16
owned university-affiliated graduate medical education program; 17
(3) For state-directed payments authorized under this section: 18
(a)[(b)] There shall be an identified source of funding, which shall be separate 19
from the asse ssment authorized in KRS 205.6406 and shall not be from the 20
general fund, for the nonfederal share that is in compliance with the 21
requirements of the United States Centers for Medicare and Medicaid 22
Services; 23
(b)[(c)] A qualifying hospital shall be required to report the same quality 24
measures as are applicable under: 25
1. The state university teaching hospital Medicaid directed payment plan 26
for the payment program authorized under subsection (1) of this 27
UNOFFICIAL COPY 26 RS HB 689/EN
Page 3 of 4
HB068920.100 - 2051 - XXXX 3/31/2026 7:52 PM Engrossed
section; and 1
2. Similarly approved payment programs activ e in the Commonwealth 2
for the payment program authorized under subsection (2) of this 3
section; and 4
(c)[(d)] Reimbursement for qualifying hospitals under this section shall only 5
apply to patients covered by a Medicaid managed care organization;[.] 6
(4)[(2)] The state -directed[ directed] payment programs[program] authorized under 7
this section shall be separate and distinct from any state-directed[ directed] payment 8
program authorized under KRS 205.6406, and the department shall only implement 9
the program described in this section if: 10
(a) Medicaid documentation required for federal financial participation is 11
approved by the United States Centers for Medicare and Medicaid Services; [ 12
and] 13
(b) The United States Centers for Medicare and Medicaid Services agrees to 14
consider the program through its own preprint and without affecting or 15
altering any other state-directed[ directed] payment program; and[.] 16
(c) 1. A source of funding that complies with subsection (3)(a) of this section 17
has been identified and is available to meet the requirement for the 18
nonfederal share or state match funds for a state -directed payment 19
program. 20
2. If a source of funding for the nonfederal share or state match funds 21
required for a state -directed payment program becomes unavailable, 22
the department shall terminate the state-directed payment program; 23
(5)[(3)] If the federal Centers for Medicare and Medicaid Services or any other 24
federal agency at any time after the effective date of this Act seeks, for any 25
reason, to recoup funds associated with a state -directed payment program 26
authorized under this section: 27
UNOFFICIAL COPY 26 RS HB 689/EN
Page 4 of 4
HB068920.100 - 2051 - XXXX 3/31/2026 7:52 PM Engrossed
(a) The state shall not be liable for providing reimbursement to the federal 1
government; and 2
(b) The qualifying hospitals that received a state -directed payment under this 3
section shall be liable for all reimbursement that may be owed to the federal 4
Centers for Medicare and Medicaid Services or any other federal agency; 5
and 6
(6) The department shall promulgate administrative regulations in accordance with 7
KRS Chapter 13A to implement the programs[program] described in this section. 8
Section 2. If the Medicaid preprint required to be submitted under subsection 9
(2) of Section 1 of this Act is approved by the federal Centers for Medicaid and Medicare 10
Services with a retroactive effective date of January 1, 2026, the Department for 11
Medicaid Services shall, upon receipt of approval from t he federal Centers for Medicare 12
and Medicaid Services, direct each Medicaid managed care organization with which the 13
department has contracted for delivery of Medicaid services to make retroactive 14
enhanced add -on payments to qualifying hospitals for any pr eviously paid Medicaid 15
claims for physician and nonphysician professional services provided to a Medicaid 16
beneficiary on or after January 1, 2026, by the qualifying hospital's affiliated physician 17
groups or physicians or other professionals employed by or contracted with the qualifying 18
hospital. 19