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EMR H06007'26_HB6116_INTR_1 zbdpgh
HOUSE BILL NO. 6116
A bill to create a hospital cost review board and to prescribe
its powers and duties; to regulate certain hospital functions; to
provide for certain grants; to impose assessments against certain
hospitals; to provide for the powers and duties of certain state
and local governmental officers and entities; and to require the
promulgation of rules.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 1. (1) This act may be cited as the "hospital cost review 1
board act". 2
June 18, 2026, Introduced by Reps. Hall, Harris and DeBoyer and referred to Committee on
Government Operations.
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(2) As used in this act, the words and phrases defined in 1
sections 3 to 4 have the meanings ascribed to them in those 2
sections. 3
Sec. 3. As used in this act: 4
(a) "Board" means the hospital cost review board created in 5
section 5. 6
(b) "Consumer Price Index" means the most comprehensive index 7
of consumer prices available for the Detroit-Warren-Dearborn area 8
from the Bureau of Labor Statistics of the United States Department 9
of Labor. 10
(c) "Department" means the department of licensing and 11
regulatory affairs. 12
(d) "Director" means the director of the department or the 13
director's designee. 14
(e) "Health facility" means any of the following: 15
(i) A health facility or agency licensed under article 17 of 16
the public health code, 1978 PA 368, MCL 333.20101 to 333.22260, 17
including, but not limited to, a hospital. 18
(ii) Any other facility or agency where a health professional 19
provides a health service to a patient as a primary function of the 20
facility or agency. 21
(f) "Health professional" means an individual who is licensed, 22
registered, or otherwise authorized to provide a health service in 23
the ordinary course of business or practice of a health profession. 24
Health professional does not include a veterinarian. 25
(g) "Health service" means any of the following: 26
(i) Any care, service, or procedure provided by a health 27
professional to diagnose, treat, or maintain a patient's physical 28
condition, or that affects the structure or function of the human 29
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body. 1
(ii) Any ancillary product or service that is provided with a 2
care, service, or procedure described in subparagraph (i). 3
(h) "Hospital" means that term as defined in section 20106 of 4
the public health code, 1978 PA 368, MCL 333.20106. 5
(i) "Income tax exemption" means any exemption from income tax 6
under the income tax act of 1967, 1967 PA 281, MCL 206.1 to 7
206.847. 8
(j) "Medicaid" means the program of medical assistance 9
established under title XIX of the social security act, 42 USC 1396 10
to 1396w-9, and administered under the social welfare act, 1939 PA 11
280, MCL 400.1 to 400.119b. 12
(k) "Medicare" means the federal Medicare program established 13
under title XVIII of the social security act, 42 USC 1395 to 14
1395mmm. 15
Sec. 4. (a) "Nonprofit hospital" means a hospital that meets 16
both of the following requirements: 17
(i) Is incorporated in this state under the nonprofit 18
corporation act, 1982 PA 162, MCL 450.2101 to 450.3192. 19
(ii) Is recognized as tax exempt under section 501(c)(3) of the 20
internal revenue code of 1986, 26 USC 501. 21
(b) "Person" means a corporation, partnership, association, 22
governmental entity, or any other legal entity. 23
(c) "Property tax exemption" means any exemption from ad 24
valorem property taxation under the general property tax act, 1893 25
PA 206, MCL 211.1 to 211.155. 26
(d) "Prosperity region" means that term as defined in section 27
9130 of the public health code, 1978 PA 368, MCL 333.9130. 28
(e) "Qualified hospital" means a nonprofit hospital that meets 29
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any of the following: 1
(i) Is designated by the Centers for Medicare and Medicaid 2
Services as a critical access hospital. 3
(ii) Is designated by the Centers for Medicare and Medicaid 4
Services as a rural emergency hospital. 5
(iii) Is designated by the Centers for Medicare and Medicaid 6
Services as a sole community hospital. 7
(iv) Is located in a rural area. 8
(f) "Qualified third-party payer" means Medicare, Medicaid, or 9
other public health care payment or benefits program. 10
(g) "Rule" means a rule promulgated under the administrative 11
procedures act of 1969, 1969 PA 306, MCL 24.201 to 24.328. 12
(h) "Rural area" means a county designated as rural by the 13
Federal Office of Rural Health Policy. 14
(i) "Sales tax exemption" means any exemption under the 15
general sales tax act, 1933 PA 167, MCL 205.51 to 205.78, 16
applicable to purchases made by the nonprofit hospital. 17
(j) "Third-party payer" means a public or private health care 18
payment or benefits program, including, but not limited to, all of 19
the following: 20
(i) A health insurer. 21
(ii) A nonprofit health care corporation. 22
(iii) A health maintenance organization. 23
(iv) A preferred provider organization. 24
(v) A nonprofit dental care corporation. 25
(vi) A group health plan as that term is defined in section 26
21501 of the public health code, 1978 PA 368, MCL 333.21501. 27
(vii) Medicaid or Medicare. 28
(k) "Use tax exemption" means any exemption under the use tax 29
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act, 1937 PA 94, MCL 205.91 to 205.111, applicable to the use, 1
storage, or consumption of tangible personal property or taxable 2
services by the nonprofit hospital. 3
Sec. 5. (1) The hospital cost review board is created in the 4
department. 5
(2) Subject to subsection (3), the board must consist of the 6
following 5 members: 7
(a) One member appointed by the governor. 8
(b) One member appointed by the governor from a list of 9
nominees submitted by the speaker of the house of representatives. 10
(c) One member appointed by the governor from a list of 11
nominees submitted by the senate majority leader. 12
(d) One member appointed by the governor from a list of 13
nominees submitted by the minority leader of the house of 14
representatives. 15
(e) One member appointed by the governor from a list of 16
nominees submitted by the senate minority leader. 17
(3) Each member of the board must possess the following 18
qualifications: 19
(a) Have knowledge in health care policy or health care 20
delivery or have expertise in business, finance, or accounting. 21
(b) Have knowledge and experience that complements the other 22
members appointed to the board. 23
(c) Be impartial and have the ability to remain free from 24
undue influence by a personal, business, or professional 25
relationship with a person that is subject to the supervision of 26
the board. 27
(4) The governor shall appoint the first members of the board 28
not later than 90 days after the effective date of this act. 29
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(5) The governor shall appoint the first members of the board 1
to the following terms: 2
(a) If the member is appointed under subsection (2)(d) or (e), 3
to a 2-year term. 4
(b) If the member is appointed under subsection (2)(a), (b), 5
or (c), to a 4-year term. 6
(6) After the first appointments to the board, the term of a 7
member of the board is 4 years or until a successor is appointed 8
under subsection (2), whichever is later. 9
(7) If a vacancy occurs on the board, the governor shall 10
appoint an individual to fill the vacancy for the balance of the 11
term in the same manner as the original appointment. 12
(8) The governor may remove a member of the board for 13
incompetence, dereliction of duty, malfeasance, misfeasance, or 14
nonfeasance in office, or any other good cause. 15
(9) The director shall call the first meeting of the board. At 16
the first meeting, the board shall elect a member as a chairperson 17
and may elect other officers that it considers necessary or 18
appropriate. The board shall meet at least quarterly, or more 19
frequently at the call of the chairperson or at the request of 3 or 20
more members. 21
(10) Three members of the board constitute a quorum for 22
transacting business. A vote in favor by 3 members of the board 23
serving is required for any action of the board. 24
(11) The board shall conduct its business in compliance with 25
the open meetings act, 1976 PA 267, MCL 15.261 to 15.275. 26
(12) Unless otherwise provided by law, confidential business 27
information possessed or retained by the board in performing an 28
official function is exempt from disclosure under the freedom of 29
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information act, 1976 PA 442, MCL 15.231 to 15.246. As used in this 1
subsection, "confidential business information" means information 2
that has not been publicly disseminated or that is unavailable from 3
other sources, the release of which might cause a hospital harm. 4
(13) A member of the board is not entitled to compensation for 5
service on the board, but the board may reimburse a member for 6
actual and necessary expenses incurred in serving. 7
(14) The board shall perform the duties required of the board 8
under this act and may perform any other duty or function provided 9
to the board by law. 10
Sec. 7. (1) Beginning January 1, 2027, a nonprofit hospital 11
shall annually submit to the board all of the following information 12
in a form and manner required by the board by rule: 13
(a) The nonprofit hospital's financial information, including, 14
but not limited to, all of the following, for the preceding 15
calendar year: 16
(i) Expenditures. 17
(ii) Costs of operations. 18
(iii) Revenues. 19
(iv) Assets. 20
(v) Liabilities. 21
(vi) Information about payments to payers and purchasers, 22
including, but not limited to, rates and charges, consistent with 23
information subject to public disclosure under 45 CFR part 180. 24
(vii) Labor costs by units of service and budget category. 25
(b) Information on the scope of health services and volume of 26
health service, including inpatient services, outpatient services, 27
and ancillary services by type of service provider. 28
(c) Utilization information. 29
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(d) An explanation for each category described in subdivision 1
(a), outlining the changes in the year-over-year results and the 2
actions that the hospital has taken and will take in the coming 3
year to review the nonprofit hospital's budget. 4
(e) The most recently available Medicare cost report. 5
(f) All of the following: 6
(i) An estimate of the total value of property tax exemptions 7
received by the nonprofit hospital during the preceding calendar 8
year, including exemptions for real and personal property. 9
(ii) An estimate of the total value of sales tax exemptions and 10
use tax exemptions claimed by the nonprofit hospital during the 11
preceding calendar year for tangible personal property and services 12
purchased or used, stored, or consumed. 13
(iii) The amount of income taxes levied under the income tax act 14
of 1967, 1967 PA 281, MCL 206.1 to 206.847, during the preceding 15
calendar year. 16
(iv) An estimate of the total value of income tax exemptions 17
claimed by the nonprofit hospital during the preceding calendar 18
year. 19
(v) An estimate of the total value of any other state or 20
federal tax exemption received by the nonprofit hospital during the 21
preceding calendar year. 22
(vi) A description of the methodology used to calculate the 23
estimates under subparagraphs (i), (ii), (iv), and (v). 24
(g) The number of hospital beds currently operated by the 25
owner of the nonprofit hospital in this state and by prosperity 26
region. 27
(h) A summary of any other health facilities that the owner of 28
the nonprofit hospital currently owns, operates, or governs in this 29
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state and by prosperity region, divided by type of health facility. 1
(i) Expenditures related to an acquisition or merger in 2
accordance with the health facility consolidation prevention act. 3
(j) Total capital investments and expenditures for maintaining 4
and improving existing health facilities, and total expenditures 5
for the purchase of new health facilities. 6
(k) The most recent Form 990 filing with the Internal Revenue 7
Service. 8
(l) Any other information the board determines necessary or 9
appropriate to fulfill its functions under this act. 10
(2) Beginning January 1, 2027, a nonprofit hospital shall 11
submit an audited financial statement to the board not later than 12
30 days after the audited financial statement becomes finalized. A 13
nonprofit hospital shall submit an audited financial statement in a 14
form and manner required by the board by rule. 15
(3) A nonprofit hospital may submit with the information 16
required under subsection (1), a clear and concise explanation of 17
any of the following that led to an increase in a rate or charge by 18
the nonprofit hospital: 19
(a) A price increase by a medical device or equipment 20
manufacturer. 21
(b) A price increase by a drug manufacturer for a drug based 22
on the actual payment made by the nonprofit hospital to the drug 23
manufacturer. 24
(c) Increased labor costs. 25
(d) Any other cost increase that the nonprofit hospital 26
considers relevant. 27
(4) The information submitted under this section must comply 28
with both of the following: 29
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(a) Include detailed and unambiguous data on increases in 1
rates and charges across all health services and by each third-2
party payer or other person with which the nonprofit hospital has 3
entered into a contract that regulates a rate or charge paid for a 4
health service to the nonprofit hospital. 5
(b) If the information is for an expenditure or cost, reflect 6
the actual costs paid by the nonprofit hospital after all rebates 7
and discounts. 8
Sec. 9. (1) The board shall do all of the following: 9
(a) Analyze and consider the information and audited financial 10
statements submitted under section 7. 11
(b) Meet with each nonprofit hospital in this state to review 12
and discuss the nonprofit hospital's budget information. 13
(c) Consider the salaries for the nonprofit hospital's 14
executive and clinical leadership, whose compensation is publicly 15
disclosed in the nonprofit hospital's Form 990 filings with the 16
Internal Revenue Service. 17
(d) Offer the public the opportunity to provide comment on 18
nonprofit hospital budgets and other aspects of nonprofit hospital 19
costs in this state. 20
(e) Analyze and consider any other information received by the 21
board under this act. 22
(2) After performing its duties under subsection (1), the 23
board may develop a written report making recommendations to the 24
legislature on how to reduce nonprofit hospital spending in this 25
state while promoting efficient and economic operations of 26
nonprofit hospitals and maintaining the ability of nonprofit 27
hospitals to meet their financial obligations and to provide 28
quality care. 29
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(3) Unless otherwise prohibited or restricted by law, the 1
department of health and human services, the department of 2
insurance and financial services, and any other state department 3
shall cooperate with the board and provide the board with 4
information at the board's request. 5
Sec. 11. (1) Subject to section 17, a nonprofit hospital shall 6
comply with all of the following: 7
(a) Except as otherwise provided in this subdivision, the 8
total price increase for all health services provided by the 9
nonprofit hospital during the preceding calendar year must be 10
uniformly applied to each third-party payer and other person with 11
which the nonprofit hospital has entered into a contract that 12
regulates a rate or charge paid for a health service and be 13
justified by the nonprofit hospital's increased costs during the 14
preceding calendar year. A total price increase is justified if the 15
nonprofit hospital demonstrates to the board that the total price 16
increase is directly caused by an increase in the cost of providing 17
health services. This subdivision does not apply to a qualified 18
third-party payer. 19
(b) Except as otherwise provided in this subdivision, each 20
price increase for a health service provided by the nonprofit 21
hospital during the preceding calendar year that is applied to a 22
third-party payer or other person with which the nonprofit hospital 23
has entered into a contract that regulates the rate or charge paid 24
for that health service, must be justified by the nonprofit 25
hospital's increased costs during the preceding calendar year. A 26
price increase is justified if the nonprofit hospital demonstrates 27
to the board that the price increase is directly caused by an 28
increase in the cost of providing the health service that is the 29
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subject of the price increase. This subdivision does not apply to a 1
qualified third-party payer. 2
(c) Notwithstanding whether the total price increase is 3
justified under subdivision (a), the total price increase for all 4
health services provided by the nonprofit hospital during the 5
preceding calendar year must not exceed the rate of inflation. As 6
used in this subdivision, "rate of inflation" means the annual 7
percentage change in the Consumer Price Index, as determined by the 8
department, for the preceding calendar year. 9
(2) If, after performing the functions described in section 9, 10
the board determines that there is reason to believe that a 11
nonprofit hospital is in violation of subsection (1), the board 12
shall, within 30 days of that determination, notify the nonprofit 13
hospital. The board shall endeavor to correct the violation through 14
informal methods. If, after 30 business days, the board is unable 15
to correct the violation through informal methods, the board may 16
commence a hearing under subsection (3) to determine whether a 17
violation has occurred. 18
(3) A hearing under this section must be conducted as a 19
contested case under chapter 4 of the administrative procedures act 20
of 1969, 1969 PA 306, MCL 24.271 to 24.288. 21
(4) If, after notice and a hearing, it is determined that a 22
nonprofit hospital is in violation of subsection (1), the board 23
shall issue an order directing the nonprofit hospital to pay an 24
assessment in the amount of the estimated tax exemptions received 25
by the hospital as reported to the board under section 7. 26
(5) An order of the board following a hearing under this 27
section is subject to judicial review as provided under chapter 6 28
of the administrative procedures act of 1969, 1969 PA 306, MCL 29
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24.301 to 24.306. 1
Sec. 13. (1) Except as otherwise provided in this section and 2
subject to section 17, not later than 14 days after the effective 3
date of this act, a nonprofit hospital shall reduce its total 4
prices for health services covered by third-party payers and other 5
persons with which the nonprofit hospital has entered into a 6
contract that regulates a rate or charge paid for a health service 7
by 10%. The nonprofit hospital shall ensure that the reduction 8
required under this subsection is uniformly applied to each third-9
party payer and other person with which the nonprofit hospital has 10
entered into a contract that regulates a rate or charge paid for a 11
health service. 12
(2) Not later than 120 days after the effective date of this 13
act, a nonprofit hospital shall submit documentation to the board 14
on the nonprofit hospital's previous prices for health services and 15
the adjusted total prices for health services under subsection (1) 16
to verify its compliance with this section. The documentation must 17
be submitted in a form and manner required by the board. 18
(3) Subsection (1) does not apply to a qualified third-party 19
payer. 20
Sec. 15. (1) If a third-party payer is not paying in whole or 21
in part for a health service provided to a patient at a nonprofit 22
hospital, whether provided by an employee of the nonprofit hospital 23
or by a health professional working in the nonprofit hospital, the 24
nonprofit hospital shall not charge the patient more than 150% of 25
the amount that Medicare would pay for the health service provided 26
to the patient. 27
(2) If a third-party payer is paying in whole or in part for a 28
health service provided to a patient at a nonprofit hospital, 29
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whether provided by an employee of the nonprofit hospital or by a 1
health professional working in the nonprofit hospital, the 2
nonprofit hospital shall not charge the patient more than 200% of 3
the amount that Medicare would pay for the health service provided 4
to the patient. 5
(3) This section is subject to section 17 and does not apply 6
if no Medicare payment information exists for the health service 7
provided to the patient. 8
Sec. 17. If a contract is in effect as of the date of this act 9
and that contract prevents compliance with section 11, 13, or 15, 10
then section 11, 13, or 15, as applicable, does not apply until 11
after the expiration of that contract. 12
Sec. 19. The department shall deposit an assessment collected 13
under this act with the state treasurer for deposit in the health 14
care cost reduction fund created in the health care cost reduction 15
fund act. 16
Sec. 21. (1) The health care cost grant program is created, to 17
be administered by the board. The board shall award grants to 18
qualified hospitals that the board determines are experiencing 19
unsustainable losses. A qualified hospital is considered to be 20
experiencing an unsustainable loss if the qualified hospital has 21
suffered a negative operating profit margin of not less than 3% for 22
at least 3 consecutive years and the qualified hospital is not 23
showing a clear sign of recovery, as determined by the board. In 24
determining whether a hospital has suffered a negative operating 25
profit margin, the board shall not consider a qualified hospital's 26
losses on investment income. 27
(2) A qualified hospital may apply for a grant under the grant 28
program by completing an application on a form provided by the 29
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department. 1
(3) The board shall prioritize the award of grants under this 2
section to qualified hospitals that the board determines have the 3
greatest need based on all of the following factors: 4
(a) The number of patients served. 5
(b) Whether the qualified hospital provides services that are 6
unique to the area that the qualified hospital serves, the 7
availability of other health care providers in the area served by 8
the qualified hospital, and the distance that patients would have 9
to travel if the qualified hospital closed. 10
(c) The size and duration of the qualified hospital's 11
operating losses. 12
(d) The likelihood that a grant awarded under this section 13
could prevent the closure of the qualified hospital. 14
(e) The likelihood that the qualified hospital will return to 15
a sustainable operation without receiving a grant under this 16
section. 17
(4) As a condition of receiving a grant under this section, a 18
qualified hospital must agree to all of the following: 19
(a) That the qualified hospital will not transfer the award to 20
another health care provider. 21
(b) That the qualified hospital will enter into a performance 22
improvement agreement with the board. The performance improvement 23
agreement may contain benchmarks for the qualified hospital based 24
on information submitted to and reviewed by the board under this 25
act. 26
(c) That the qualified hospital will provide the board with 27
information on the grant's impact on the qualified hospital's 28
operating losses. 29
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(5) As used in this section, "health care provider" means a 1
health professional and a health facility. 2
Sec. 23. (1) By not later than April 1 of each year, the board 3
shall submit a report to the department and the house of 4
representatives and senate standing committees on health policy on 5
the activities conducted by the board under this act. The report 6
must include at least all of the following information: 7
(a) For each qualified hospital awarded a grant under section 8
21, all of the following information: 9
(i) The number of grants awarded to the qualified hospital 10
during the year preceding the date of the report and the amount of 11
each grant. 12
(ii) The details of the performance improvement agreement. 13
(iii) The impact of the grant on the qualified hospital's 14
operating losses. 15
(b) The number of violations of section 11, by hospital 16
system. 17
(c) The total price increases, by hospital system, and the 18
justifications provided for the price increases under section 11. 19
(d) The market share of hospital beds that each hospital 20
system has by prosperity region and in this state. 21
(e) Expenditures, by hospital system, related to capital 22
investments for maintaining and improving existing facilities and 23
the purchase of new facilities. 24
(2) The department shall post a copy of the report required 25
under this section on the department's website in an area that is 26
accessible to the public. 27
Sec. 25. The board shall promulgate rules to implement this 28
act. The rules must include a schedule for nonprofit hospitals to 29
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submit the information required under this act, provide for uniform 1
submission criteria, and promote the consistency of information 2
provided by nonprofit hospitals under this act. 3
Enacting section 1. This act does not take effect unless all 4
of the following bills of the 103rd Legislature are enacted into 5
law: 6
(a) House Bill No. 6117 (request no. H06751'26). 7
(b) House Bill No. 6118 (request no. H06780'26). 8