SB 305

Enrolled Copy  S.B. 305
1Hospital Quality Incentive Amendments
                                      2026 GENERAL SESSION
                                           STATE OF UTAH
                                  Chief Sponsor: Evan J. Vickers
                                    House Sponsor: Steve Eliason
2
3  LONG TITLE
4  General Description:
5      This bill addresses provisions related to Medicaid hospital provider assessments and
6  payment rates.
7  Highlighted Provisions:
8      This bill:
9      ▸ addresses provisions related to the calculation of:
10●   the Medicaid hospital provider assessment; and
11●   the Medicaid accountable care organization rate structure to include certain quality
12  incentive arrangements;
13      ▸ permits funds from the Hospital Provider Assessment Expendable Revenue Fund to be
14  used to support the implementation of provisions of this bill; and
15      ▸ makes technical and conforming changes.
16  Money Appropriated in this Bill:
17      None
18  Other Special Clauses:
19      None
20  Utah Code Sections Affected:
21  AMENDS:
22      26B-1-316 (Effective 05/06/26), as last amended by Laws of Utah 2024, Chapter 284
23      26B-3-705 (Effective 05/06/26) (Repealed 07/01/28), as last amended by Laws of Utah
24      2024, Chapter 284
25      26B-3-707 (Effective 05/06/26) (Repealed 07/01/28), as last amended by Laws of Utah
26      2024, Chapter 284
27
28  Be it enacted by the Legislature of the state of Utah:
S.B. 305  Enrolled Copy
29Section 1. Section 26B-1-316 is amended to read:
3026B-1-316 (Effective 05/06/26). Hospital Provider Assessment Expendable
31   Revenue Fund.
32   (1) There is created an expendable special revenue fund known as the "Hospital Provider
33Assessment Expendable Revenue Fund."
34   (2) The fund shall consist of:
35(a) the assessments collected by the department under Chapter 3, Part 7, Hospital
36Provider Assessment;
37(b) any interest and penalties levied with the administration of Chapter 3, Part 7,
38Hospital Provider Assessment; and
39(c) any other funds received as donations for the fund and appropriations from other
40sources.
41   (3) Money in the fund shall be used:
42(a) to support capitated rates consistent with Subsection 26B-3-705(1)(d) for
43accountable care organizations as defined in Section 26B-3-701;
44(b) to implement the quality strategies described in Subsection 26B-3-707(2), except that
45the amount under this Subsection (3)(b) may not exceed $211,300 in each fiscal year; [
46and]
47(c) to implement Subsection 26B-3-707(1)(c), including monitoring Medicaid
48accountable care organizations' distribution of funds to hospitals, except that the
49amount under this Subsection (3)(c) may not exceed $200,000 in each fiscal year; and
50[(c)] (d) to reimburse money collected by the division from a hospital, as defined in
51Section 26B-3-701, through a mistake made under Chapter 3, Part 7, Hospital
52Provider Assessment.
53Section 2. Section 26B-3-705 is amended to read:
5426B-3-705 (Effective 05/06/26) (Repealed 07/01/28). Calculation of assessment.
55   (1)(a) An annual assessment is payable on a quarterly basis for each hospital in an
56amount calculated at a uniform assessment rate for each hospital discharge, in
57accordance with this section.
58(b) The uniform assessment rate shall be determined using the total number of hospital
59discharges for assessed hospitals divided into the total non-federal portion in an
60amount consistent with Section 26B-3-707 that is needed to support capitated rates
61and payments under 42 C.F.R. Sec. 438.6(b)(2) for Medicaid accountable care
62organizations for purposes of hospital services provided to Medicaid enrollees.
                                                  -2-
Enrolled Copy  S.B. 305
63      (c) Any quarterly changes to the uniform assessment rate shall be applied uniformly to
64all assessed hospitals.
65      (d) The annual uniform assessment rate may not generate more than:
66(i) $1,000,000 to offset Medicaid mandatory expenditures; and
67(ii) the non-federal share to seed amounts needed to support capitated rates for
68Medicaid accountable care organizations as provided for in Subsection (1)(b).
69  (2)(a) For each state fiscal year, discharges shall be determined using the data from each
70      hospital's Medicare Cost Report contained in the CMS Healthcare Cost Report
71      Information System file. The hospital's discharge data is the hospital's cost report
72      data for the hospital's fiscal year that ended in the state fiscal year two years prior to
73      the assessment fiscal year.
74      (b) If a hospital's fiscal year Medicare Cost Report is not contained in the CMS
75Healthcare Cost Report Information System file:
76(i) the hospital shall submit to the division a copy of the hospital's Medicare Cost
77Report applicable to the assessment year; and
78(ii) the division shall determine the hospital's discharges.
79      (c) If a hospital is not certified by the Medicare program and is not required to file a
80Medicare Cost Report:
81(i) the hospital shall submit to the division its applicable fiscal year discharges with
82supporting documentation;
83(ii) the division shall determine the hospital's discharges from the information
84submitted under Subsection (2)(c)(i); and
85(iii) the failure to submit discharge information shall result in an audit of the
86hospital's records and a penalty equal to 5% of the calculated assessment.
87  (3) Except as provided in Subsection (4), if a hospital is owned by an organization that
88      owns more than one hospital in the state:
89      (a) the assessment for each hospital shall be separately calculated by the department; and
90      (b) each separate hospital shall pay the assessment imposed by this part.
91  (4) Notwithstanding the requirement of Subsection (3), if multiple hospitals use the same
92      Medicaid provider number:
93      (a) the department shall calculate the assessment in the aggregate for the hospitals using
94the same Medicaid provider number; and
95      (b) the hospitals may pay the assessment in the aggregate.
96Section 3. Section 26B-3-707 is amended to read:
                                                 -3-
 S.B. 305  Enrolled Copy
9726B-3-707 (Effective 05/06/26) (Repealed 07/01/28). Medicaid hospital
98   adjustment under Medicaid accountable care organization rates.
99   (1) To preserve and improve access to hospital services, the division shall incorporate into
100the Medicaid accountable care organization rate structure calculation consistent with the
101certified actuarial rate range:
102(a) $154,000,000 to be allocated toward the hospital inpatient directed payments for the
103Medicaid eligibility categories covered in Utah before January 1, 2019; [and]
104(b) an amount equal to the difference between payments made to hospitals by Medicaid
105accountable care organizations for the Medicaid eligibility categories covered in
106Utah, based on submitted encounter data, and the maximum amount that could be
107paid for those services, to be used for directed payments to hospitals for inpatient and
108outpatient services[.] ; and
109(c) up to the maximum amount under 42 C.F.R. Sec. 438.6(b)(2) quality incentive
110arrangements if Medicaid accountable care organizations distribute at least 90% of
111those funds to hospitals.
112   (2)(a) To preserve and improve the quality of inpatient and outpatient hospital services
113authorized under Subsection (1)(b), the division shall amend its quality strategies
114required by 42 C.F.R. Sec. 438.340 to include quality measures selected from the
115CMS hospital quality improvement programs.
116(b) To better address the unique needs of rural and specialty hospitals, the division may
117adopt different quality standards for rural and specialty hospitals.
118(c) The division shall make rules in accordance with Title 63G, Chapter 3, Utah
119Administrative Rulemaking Act, to adopt the selected quality measures and prescribe
120penalties for not meeting the quality standards that are established by the division by
121rule.
122(d) The division shall apply the same quality measures and penalties under this
123Subsection (2) to new directed payments made to the University of Utah Hospital and
124Clinics.
125Section 4. Effective Date.
126   This bill takes effect on May 6, 2026.
                                                    -4-