S 1312

                    LEGISLATURE OF THE STATE OF IDAHO
 Sixty-eighth Legislature  Second Regular Session - 2026
                                 IN THE SENATE
                             SENATE BILL NO. 1312
                       BY HEALTH AND WELFARE COMMITTEE
1AN ACT
2  RELATING TO PUBLIC ASSISTANCE; AMENDING SECTION 56-265, IDAHO CODE, TO RE-
3      VISE PROVISIONS REGARDING PROVIDER PAYMENT; PROVIDING THAT CERTAIN AD-
4      MINISTRATIVE RULES CONTAINED IN IDAPA 16.03.26 SHALL BE NULL, VOID, AND
5      OF NO FORCE AND EFFECT; AND DECLARING AN EMERGENCY.
6  Be It Enacted by the Legislature of the State of Idaho:
7      SECTION 1. That Section 56-265, Idaho Code, be, and the same is hereby
8  amended to read as follows:
9      56-265. PROVIDER PAYMENT. (1) Where there is an equivalent, the pay-
10 ment to medicaid providers:
11     (a) May be up to but shall not exceed one hundred percent (100%) of the
12     current medicare rate for primary care procedure codes as defined by the
13     centers for medicare and medicaid services; and
14     (b) Shall be ninety percent (90%) of the current medicare rate for all
15     other procedure codes.
16     (2) Where there is no medicare equivalent, the payment rate to med-
17 icaid providers shall be prescribed by rule. All home and community-based
18 services without a medicare equivalent rate shall be cost-surveyed annu-
19 ally with fifteen percent (15%) or more of responses being audited. The
20 department shall use information from the cost surveys and other sources
21 to evaluate rate adequacy. Payment rates shall be developed to include
22 allocations to direct care worker wages, employee-related expenses, pro-
23 gram-related expenses, and general and administrative costs.
24     (a) On an annual basis, providers are required to expend at least the
25     amount allocated to direct care worker wages and employee-related ex-
26     penses to these categories.
27     (b) Failure of the provider to meet the requirement in paragraph (a) of
28     this subsection may result in a department-approved corrective action
29     plan, closure of intake, or termination of the provider agreement.
30     (c) The department shall summarize this audited cost survey work by
31     provider type and service in a publicly available report no later than
32     December 31 of each calendar year.
33     (3)    Notwithstanding any other provision of this chapter, if the
34 services are provided by a private, freestanding mental health hospital
35 facility that is an institution for mental disease as defined in 42 U.S.C.
36 1396d(i), the department shall reimburse for inpatient services at a rate
37 not to exceed ninety-one percent (91%) of the current medicare rate within
38 federally allowed reimbursement under the medicaid program. The reimburse-
39 ment provided for in this subsection shall be effective until July 1, 2021.
40     (4) The department shall, through the annual budget process, include
41 a line-item request for adjustments to provider rates. All changes to
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1  provider payment rates shall be subject to approval of the legislature by
2  appropriation.
3(5) Notwithstanding any other provision of this chapter, the depart-
4  ment may enter into agreements with providers to pay for services based on
5  their value in terms of measurable health care quality and positive impacts
6  to participant health.
7(a) Any such agreement shall be designed to be cost-neutral or cost-
8saving compared to other payment methodologies.
9(b) The department is authorized to pursue waiver agreements with the
10      federal government as needed to support value-based payment arrange-
11      ments, up to and including fully capitated provider-based managed care.
12      (c) Beginning with the 2024 performance period and for all future per-
13      formance periods thereafter, federally qualified health centers and
14      any organization owned and controlled by a federally qualified health
15      center shall be exempt from any financial risk in value-based payment
16      agreements created pursuant to this section.
17      (6) Medicaid reimbursement for critical access, out-of-state, and
18 state-owned hospitals shall be as follows:
19      (a) In-state, critical access hospitals as designated according to 42
20      U.S.C. 1395i-4(c)(2)(B) shall be reimbursed at one hundred one percent
21      (101%) of cost;
22      (b) Out-of-state hospitals shall be reimbursed at eighty-seven percent
23      (87%) of cost;
24      (c) State-owned hospitals shall be reimbursed at one hundred percent
25      (100%) of cost; and
26      (d) Out-of-state hospital institutions for mental disease as defined
27      in 42 U.S.C. 1396d(i) shall be reimbursed at a per diem equivalent to
28      ninety-five percent (95%) of cost.
29      (7) The department shall equitably reduce net reimbursements for all
30 hospital services, including in-state institutions for mental disease but
31 excluding all hospitals and institutions described in subsection (6) of
32 this section, by amounts targeted to reduce general fund needs for hospital
33 payments by three million one hundred thousand dollars ($3,100,000) in state
34 fiscal year 2020 and eight million seven hundred twenty thousand dollars
35 ($8,720,000) in state fiscal year 2021.
36      (8) The department shall work with all Idaho hospitals, including in-
37 stitutions for mental disease as defined in 42 U.S.C. 1396d(i), to establish
38 value-based payment methods for inpatient and outpatient hospital services
39 to replace existing cost-based reimbursement methods for in-state hospi-
40 tals, other than those hospitals and institutions described in subsection
41 (6) of this section, effective July 1, 2021. Budgets for hospital payments
42 shall be subject to prospective legislative approval.
43      (9) The department shall work with Idaho hospitals to establish a
44 quality payment program for inpatient and outpatient adjustment payments
45 described in section 56-1406, Idaho Code. Inpatient and outpatient adjust-
46 ment payments shall be subject to increase or reduction based on hospital
47 service quality measures established by the department in consultation with
48 Idaho hospitals.
49      SECTION 2. The rules contained in IDAPA 16.03.26, Department of Health
50 and Welfare, relating to Medicaid Plan Benefits, Section 051.; and Section
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1 052., shall be null, void, and of no force and effect on and after July 1,
2 2026.
3     SECTION 3. An emergency existing therefor, which emergency is hereby
4 declared to exist, this act shall be in full force and effect on and after its
5 passage and approval.