SB 3797

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Full Text of SB3797
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	SB3797 - 104th General Assembly
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104TH GENERAL ASSEMBLY
State of Illinois
2025 and 2026
SB3797
Introduced 2/5/2026, by Sen. Paul Faraci
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 on and after October 1, 2026, for rate year 2027 and thereafter, the Medicaid inpatient utilization rate used in the determination of eligibility for inpatient adjustment payments provided under the Code shall be modified to exclude from both the numerator and denominator all days of care funded by the U.S. Department of Veterans Affairs at a hospital approved to conduct its operations from more than one location within contiguous counties under a single license, if at the time of its licensing application the hospital was located in a county with fewer than 125,000 inhabitants and the hospital's second facility is located in a contiguous county with fewer than 235,000 inhabitants. Provides that, for purposes of the amendatory Act, days of care funded by the U.S. Department of Veterans Affairs include authorized VA community care provided at non-VA hospitals. Effective immediately.
LRB104 20706 KTG 34206 b
A BILL FOR
		SB3797		LRB104 20706 KTG 34206 b
1    AN ACT concerning public aid.
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4    Section 5. The Illinois Public Aid Code is amended by
5changing 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
9September 30, 1992. Notwithstanding any other provisions of
10this Code or the Illinois Department's Rules promulgated under
11the Illinois Administrative Procedure Act, reimbursement to
12hospitals for services provided during the period July 1, 1992
13through 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
		SB3797	- 2 -	LRB104 20706 KTG 34206 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
		SB3797	- 3 -	LRB104 20706 KTG 34206 b
1    October 1, 1992.
2    (b) Inpatient payments. For inpatient services provided on
3or after October 1, 1993, in addition to rates paid for
4hospital inpatient services pursuant to the Illinois Health
5Finance Reform Act, as now or hereafter amended, or the
6Illinois Department's prospective reimbursement methodology,
7or any other methodology used by the Illinois Department for
8inpatient services, the Illinois Department shall make
9adjustment payments, in an amount calculated pursuant to the
10methodology described in paragraph (c) of this Section, to
11hospitals that the Illinois Department determines satisfy any
12one 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
		SB3797	- 4 -	LRB104 20706 KTG 34206 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
		SB3797	- 5 -	LRB104 20706 KTG 34206 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
		SB3797	- 6 -	LRB104 20706 KTG 34206 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
5required by paragraph (b) shall be calculated based upon the
6hospital'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;
		SB3797	- 7 -	LRB104 20706 KTG 34206 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 on and after October 1, 2026, for rate 
15year 2027 and thereafter, the Medicaid inpatient utilization 
16rate used in the determination of eligibility for payments 
17under paragraph (c) shall be modified to exclude from both the 
18numerator and denominator all days of care funded by the U.S. 
19Department of Veterans Affairs at a hospital approved to 
20conduct its operations from more than one location within 
21contiguous counties under a single license, if at the time of 
22its licensing application the hospital was located in a county 
23with fewer than 125,000 inhabitants and the hospital's second 
24facility is located in a contiguous county with fewer than 
25235,000 inhabitants. For purposes of this subsection, days of 
26care funded by the U.S. Department of Veterans Affairs include 
		SB3797	- 8 -	LRB104 20706 KTG 34206 b
1authorized VA community care provided at non-VA hospitals.
2    (d) Supplemental adjustment payments. In addition to the
3adjustment payments described in paragraph (c), hospitals as
4defined in clauses (1) through (6) of paragraph (b), excluding
5county hospitals (as defined in subsection (c) of Section 15-1
6of this Code) and a hospital organized under the University of
7Illinois Hospital Act, shall be paid supplemental inpatient
8adjustment payments of $60 per day. For purposes of Title XIX
9of the federal Social Security Act, these supplemental
10adjustment payments shall not be classified as adjustment
11payments to disproportionate share hospitals.
12    (e) The inpatient adjustment payments described in
13paragraphs (c) and (d) shall be increased on October 1, 1993
14and annually thereafter by a percentage equal to the lesser of
15(i) the increase in the DRI hospital cost index for the most
16recent 12 month period for which data are available, or (ii)
17the percentage increase in the statewide average hospital
18payment rate over the previous year's statewide average
19hospital payment rate. The sum of the inpatient adjustment
20payments under paragraphs (c) and (d) to a hospital, other
21than a county hospital (as defined in subsection (c) of
22Section 15-1 of this Code) or a hospital organized under the
23University of Illinois Hospital Act, however, shall not exceed
24$275 per day; that limit shall be increased on October 1, 1993
25and annually thereafter by a percentage equal to the lesser of
26(i) the increase in the DRI hospital cost index for the most
		SB3797	- 9 -	LRB104 20706 KTG 34206 b
1recent 12-month period for which data are available or (ii)
2the percentage increase in the statewide average hospital
3payment rate over the previous year's statewide average
4hospital payment rate.
5    (f) Children's hospital inpatient adjustment payments. For
6children's hospitals, as defined in clause (5) of paragraph
7(b), the adjustment payments required pursuant to paragraphs
8(c) and (d) shall be multiplied by 2.0.
9    (g) County hospital inpatient adjustment payments. For
10county hospitals, as defined in subsection (c) of Section 15-1
11of this Code, there shall be an adjustment payment as
12determined by rules issued by the Illinois Department.
13    (h) For the purposes of this Section the following terms
14shall be defined as follows:
15        (1) "Medicaid inpatient utilization rate" means a
16    fraction, the numerator of which is the number of a
17    hospital's inpatient days provided in a given 12-month
18    period to patients who, for such days, were eligible for
19    Medicaid under Title XIX of the federal Social Security
20    Act, and the denominator of which is the total number of
21    the hospital's inpatient days in that same period.
22        (2) "Mean Medicaid inpatient utilization rate" means
23    the total number of Medicaid inpatient days provided by
24    all Illinois Medicaid-participating hospitals divided by
25    the total number of inpatient days provided by those same
26    hospitals.
		SB3797	- 10 -	LRB104 20706 KTG 34206 b
1        (3) "Medicaid obstetrical inpatient utilization rate"
2    means the ratio of Medicaid obstetrical inpatient days to
3    total Medicaid inpatient days for all Illinois hospitals
4    receiving Medicaid payments from the Illinois Department.
5    (i) Inpatient adjustment payment limit. In order to meet
6the limits of Public Law 102-234 and Public Law 103-66, the
7Illinois Department shall by rule adjust disproportionate
8share adjustment payments.
9    (j) University of Illinois Hospital inpatient adjustment
10payments. For hospitals organized under the University of
11Illinois Hospital Act, there shall be an adjustment payment as
12determined by rules adopted by the Illinois Department.
13    (k) The Illinois Department may by rule establish criteria
14for and develop methodologies for adjustment payments to
15hospitals participating under this Article.
16    (l) On and after July 1, 2012, the Department shall reduce
17any rate of reimbursement for services or other payments or
18alter any methodologies authorized by this Code to reduce any
19rate of reimbursement for services or other payments in
20accordance with Section 5-5e.
21    (m) The Department shall establish a cost-based
22reimbursement methodology for determining payments to
23hospitals for approved graduate medical education (GME)
24programs for dates of service on and after July 1, 2018.
25        (1) As used in this subsection, "hospitals" means the
26    University of Illinois Hospital as defined in the
		SB3797	- 11 -	LRB104 20706 KTG 34206 b
1    University of Illinois Hospital Act and a county hospital
2    in a county of over 3,000,000 inhabitants.
3        (2) An amendment to the Illinois Title XIX State Plan
4    defining GME shall maximize reimbursement, shall not be
5    limited to the education programs or special patient care
6    payments allowed under Medicare, and shall include:
7            (A) inpatient days;
8            (B) outpatient days;
9            (C) direct costs;
10            (D) indirect costs;
11            (E) managed care days;
12            (F) all stages of medical training and education
13        including students, interns, residents, and fellows
14        with no caps on the number of persons who may qualify;
15        and
16            (G) patient care payments related to the
17        complexities of treating Medicaid enrollees including
18        clinical and social determinants of health.
19        (3) The Department shall make all GME payments
20    directly to hospitals including such costs in support of
21    clients enrolled in Medicaid managed care entities.
22        (4) The Department shall promptly take all actions
23    necessary for reimbursement to be effective for dates of
24    service on and after July 1, 2018 including publishing all
25    appropriate public notices, amendments to the Illinois
26    Title XIX State Plan, and adoption of administrative rules
		SB3797	- 12 -	LRB104 20706 KTG 34206 b
1    if necessary.
2        (5) As used in this subsection, "managed care days"
3    means costs associated with services rendered to enrollees
4    of Medicaid managed care entities. "Medicaid managed care
5    entities" means any entity which contracts with the
6    Department to provide services paid for on a capitated
7    basis. "Medicaid managed care entities" includes a managed
8    care organization and a managed care community network.
9        (6) All payments under this Section are contingent
10    upon federal approval of changes to the Illinois Title XIX
11    State Plan, if that approval is required.
12        (7) The Department may adopt rules necessary to
13    implement Public Act 100-581 through the use of emergency
14    rulemaking in accordance with subsection (aa) of Section
15    5-45 of the Illinois Administrative Procedure Act. For
16    purposes of that Act, the General Assembly finds that the
17    adoption of rules to implement Public Act 100-581 is
18    deemed an emergency and necessary for the public interest,
19    safety, and welfare.
20(Source: P.A. 101-81, eff. 7-12-19; 102-682, eff. 12-10-21;
21102-886, eff. 5-17-22.)
22    Section 99. Effective date. This Act takes effect upon
23becoming law.