103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
SB1763
 
Introduced 2/9/2023, by Sen. Ann Gillespie
 
SYNOPSIS AS INTRODUCED:



See Index

 Amends the Hospital Services Trust Fund Article of the Illinois Public Aid Code. Increases by 20% hospital reimbursement rates for dates of service on and after January 1, 2024, for specified services, including, but not limited to: inpatient general acute care services; inpatient psychiatric services for safety-net hospitals; general acute care hospitals that are
not safety-net hospitals; and outpatient
general acute care services. Provides that the rates for the listed services shall be increased, beginning on January 1, 2025 and each January 1
thereafter, based
on the annual increase in the national hospital market basket
price proxies (DRI) hospital cost index from the midpoint of
the calendar year 2 years prior to the current year, to the
midpoint of the preceding calendar year. Provides that in no instance shall
the adjustment result in a
reduction to the rates in place at the time of the required
adjustment. Provides that if the federal Centers for Medicare and Medicaid
Services finds that the increases required under the amendatory Act
would result in rates of reimbursement which exceed the
federal maximum limits applicable to hospital payments, then
the payments and assessment tax imposed on hospital providers shall be reduced as provided in the Hospital Provider Funding Article. Requires the Department of Healthcare and Family Services to promptly take all actions
necessary to ensure the changes authorized in the amendatory Act are in effect for dates of service on and after January 1, 2024. Requires the Department to ensure that all necessary
adjustments to the managed care organization capitation base
rates necessitated by the adjustments in the amendatory Act are
completed, published, and applied 90 days prior to the implementation date of
the changes required under the amendatory Act. Provides that, by October 1, 2023, the Department shall by rule
implement a methodology effective for dates of service
beginning on and after January 1, 2024 to reimburse hospitals
for extended stays in a hospital emergency department. Amends the Illinois Administrative Procedure Act. Grants the Department emergency rulemaking authority. Effective immediately.



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A BILL FOR
 


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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 1. The Illinois Administrative Procedure Act is 
5amended by adding Section 5-45.35 as follows:

6 (5 ILCS 100/5-45.35 new)
7 Sec. 5-45.35. Emergency rulemaking; Medicaid reimbursement 
8rates for hospital inpatient and outpatient services. To 
9provide for the expeditious and timely implementation of the 
10changes made by this amendatory Act of the 103rd General 
11Assembly to Sections 5-5.05, 14-12, 14-12.5, and 14-13 of the 
12Illinois Public Aid Code, emergency rules implementing the 
13changes made by this amendatory Act of the 103rd General 
14Assembly to Sections 5-5.05, 14-12, 14-12.5, and 14-13 of the 
15Illinois Public Aid Code may be adopted in accordance with 
16Section 5-45 by the Department of Healthcare and Family 
17Services. The adoption of emergency rules authorized by 
18Section 5-45 and this Section is deemed to be necessary for the 
19public interest, safety, and welfare.
20 This Section is repealed one year after the effective date 
21of this amendatory Act of the 103rd General Assembly.

22 Section 5. The Illinois Public Aid Code is amended by 
 
 
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1changing Sections 5-5.05, 14-12, and 14-13 and by adding 
2Section 14-12.5 as follows:

3 (305 ILCS 5/5-5.05)
4 Sec. 5-5.05. Hospitals; psychiatric services.
5 (a) On and after July 1, 2008, the inpatient, per diem rate 
6to be paid to a hospital for inpatient psychiatric services 
7shall be not less than $363.77.
8 (b) For purposes of this Section, "hospital" means the 
9following:
10  (1) Advocate Christ Hospital, Oak Lawn, Illinois.
11  (2) Barnes-Jewish Hospital, St. Louis, Missouri.
12  (3) BroMenn Healthcare, Bloomington, Illinois.
13  (4) Jackson Park Hospital, Chicago, Illinois.
14  (5) Katherine Shaw Bethea Hospital, Dixon, Illinois.
15  (6) Lawrence County Memorial Hospital, Lawrenceville, 
16 Illinois.
17  (7) Advocate Lutheran General Hospital, Park Ridge, 
18 Illinois.
19  (8) Mercy Hospital and Medical Center, Chicago, 
20 Illinois.
21  (9) Methodist Medical Center of Illinois, Peoria, 
22 Illinois.
23  (10) Provena United Samaritans Medical Center, 
24 Danville, Illinois.
25  (11) Rockford Memorial Hospital, Rockford, Illinois.
 
 
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1  (12) Sarah Bush Lincoln Health Center, Mattoon, 
2 Illinois.
3  (13) Provena Covenant Medical Center, Urbana, 
4 Illinois.
5  (14) Rush-Presbyterian-St. Luke's Medical Center, 
6 Chicago, Illinois.
7  (15) Mt. Sinai Hospital, Chicago, Illinois.
8  (16) Gateway Regional Medical Center, Granite City, 
9 Illinois.
10  (17) St. Mary of Nazareth Hospital, Chicago, Illinois.
11  (18) Provena St. Mary's Hospital, Kankakee, Illinois.
12  (19) St. Mary's Hospital, Decatur, Illinois.
13  (20) Memorial Hospital, Belleville, Illinois.
14  (21) Swedish Covenant Hospital, Chicago, Illinois.
15  (22) Trinity Medical Center, Rock Island, Illinois.
16  (23) St. Elizabeth Hospital, Chicago, Illinois.
17  (24) Richland Memorial Hospital, Olney, Illinois.
18  (25) St. Elizabeth's Hospital, Belleville, Illinois.
19  (26) Samaritan Health System, Clinton, Iowa.
20  (27) St. John's Hospital, Springfield, Illinois.
21  (28) St. Mary's Hospital, Centralia, Illinois.
22  (29) Loretto Hospital, Chicago, Illinois.
23  (30) Kenneth Hall Regional Hospital, East St. Louis, 
24 Illinois.
25  (31) Hinsdale Hospital, Hinsdale, Illinois.
26  (32) Pekin Hospital, Pekin, Illinois.
 
 
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1  (33) University of Chicago Medical Center, Chicago, 
2 Illinois.
3  (34) St. Anthony's Health Center, Alton, Illinois.
4  (35) OSF St. Francis Medical Center, Peoria, Illinois.
5  (36) Memorial Medical Center, Springfield, Illinois.
6  (37) A hospital with a distinct part unit for 
7 psychiatric services that begins operating on or after 
8 July 1, 2008. 
9 For purposes of this Section, "inpatient psychiatric 
10services" means those services provided to patients who are in 
11need of short-term acute inpatient hospitalization for active 
12treatment of an emotional or mental disorder.
13 (b-5) Notwithstanding any other provision of this Section, 
14and subject to appropriation, the inpatient, per diem rate to 
15be paid to all safety-net hospitals for inpatient psychiatric 
16services on and after January 1, 2021 shall be at least $630, 
17subject to the provisions of Section 14-12.5. 
18 (b-10) Notwithstanding any other provision of this 
19Section, effective with dates of service on and after January 
201, 2022, any general acute care hospital with more than 9,500 
21inpatient psychiatric Medicaid days in any calendar year shall 
22be paid the inpatient per diem rate of no less than $630, 
23subject to the provisions of Section 14-12.5. 
24 (c) No rules shall be promulgated to implement this 
25Section. For purposes of this Section, "rules" is given the 
26meaning contained in Section 1-70 of the Illinois 
 
 
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1Administrative Procedure Act.
2 (d) (Blank). This Section shall not be in effect during 
3any period of time that the State has in place a fully 
4operational hospital assessment plan that has been approved by 
5the Centers for Medicare and Medicaid Services of the U.S. 
6Department of Health and Human Services.

7 (e) On and after July 1, 2012, the Department shall reduce 
8any rate of reimbursement for services or other payments or 
9alter any methodologies authorized by this Code to reduce any 
10rate of reimbursement for services or other payments in 
11accordance with Section 5-5e. 
12(Source: P.A. 102-4, eff. 4-27-21; 102-674, eff. 11-30-21.)

13 (305 ILCS 5/14-12)
14 Sec. 14-12. Hospital rate reform payment system. The 
15hospital payment system pursuant to Section 14-11 of this 
16Article shall be as follows:
17 (a) Inpatient hospital services. Effective for discharges 
18on and after July 1, 2014, reimbursement for inpatient general 
19acute care services shall utilize the All Patient Refined 
20Diagnosis Related Grouping (APR-DRG) software, version 30, 
21distributed by 3MTM Health Information System. 
22  (1) The Department shall establish Medicaid weighting 
23 factors to be used in the reimbursement system established 
24 under this subsection. Initial weighting factors shall be 
25 the weighting factors as published by 3M Health 
 
 
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1 Information System, associated with Version 30.0 adjusted 
2 for the Illinois experience. 
3  (2) The Department shall establish a 
4 statewide-standardized amount to be used in the inpatient 
5 reimbursement system. The Department shall publish these 
6 amounts on its website no later than 10 calendar days 
7 prior to their effective date. 
8  (3) In addition to the statewide-standardized amount, 
9 the Department shall develop adjusters to adjust the rate 
10 of reimbursement for critical Medicaid providers or 
11 services for trauma, transplantation services, perinatal 
12 care, and Graduate Medical Education (GME). 
13  (4) The Department shall develop add-on payments to 
14 account for exceptionally costly inpatient stays, 
15 consistent with Medicare outlier principles. Outlier fixed 
16 loss thresholds may be updated to control for excessive 
17 growth in outlier payments no more frequently than on an 
18 annual basis, but at least once every 4 years. Upon 
19 updating the fixed loss thresholds, the Department shall 
20 be required to update base rates within 12 months.
21  (5) The Department shall define those hospitals or 
22 distinct parts of hospitals that shall be exempt from the 
23 APR-DRG reimbursement system established under this 
24 Section. The Department shall publish these hospitals' 
25 inpatient rates on its website no later than 10 calendar 
26 days prior to their effective date. 
 
 
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1  (6) Beginning July 1, 2014 and ending on June 30, 
2 2024, in addition to the statewide-standardized amount, 
3 the Department shall develop an adjustor to adjust the 
4 rate of reimbursement for safety-net hospitals defined in 
5 Section 5-5e.1 of this Code excluding pediatric hospitals, 
6 subject to the provisions of Section 14-12.5. 
7  (7) Beginning July 1, 2014, in addition to the 
8 statewide-standardized amount, the Department shall 
9 develop an adjustor to adjust the rate of reimbursement 
10 for Illinois freestanding inpatient psychiatric hospitals 
11 that are not designated as children's hospitals by the 
12 Department but are primarily treating patients under the 
13 age of 21. 
14  (7.5) (Blank).
15  (8) Beginning July 1, 2018, in addition to the 
16 statewide-standardized amount, the Department shall adjust 
17 the rate of reimbursement for hospitals designated by the 
18 Department of Public Health as a Perinatal Level II or II+ 
19 center by applying the same adjustor that is applied to 
20 Perinatal and Obstetrical care cases for Perinatal Level 
21 III centers, as of December 31, 2017.
22  (9) Beginning July 1, 2018, in addition to the 
23 statewide-standardized amount, the Department shall apply 
24 the same adjustor that is applied to trauma cases as of 
25 December 31, 2017 to inpatient claims to treat patients 
26 with burns, including, but not limited to, APR-DRGs 841, 
 
 
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1 842, 843, and 844.
2  (10) Beginning July 1, 2018, the 
3 statewide-standardized amount for inpatient general acute 
4 care services shall be uniformly increased so that base 
5 claims projected reimbursement is increased by an amount 
6 equal to the funds allocated in paragraph (1) of 
7 subsection (b) of Section 5A-12.6, less the amount 
8 allocated under paragraphs (8) and (9) of this subsection 
9 and paragraphs (3) and (4) of subsection (b) multiplied by 
10 40%.
11  (11) Beginning July 1, 2018, the reimbursement for 
12 inpatient rehabilitation services shall be increased by 
13 the addition of a $96 per day add-on.
14 (b) Outpatient hospital services. Effective for dates of 
15service on and after July 1, 2014, reimbursement for 
16outpatient services shall utilize the Enhanced Ambulatory 
17Procedure Grouping (EAPG) software, version 3.7 distributed by 
183MTM Health Information System. 
19  (1) The Department shall establish Medicaid weighting 
20 factors to be used in the reimbursement system established 
21 under this subsection. The initial weighting factors shall 
22 be the weighting factors as published by 3M Health 
23 Information System, associated with Version 3.7. 
24  (2) The Department shall establish service specific 
25 statewide-standardized amounts to be used in the 
26 reimbursement system. 
 
 
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1   (A) The initial statewide standardized amounts, 
2 with the labor portion adjusted by the Calendar Year 
3 2013 Medicare Outpatient Prospective Payment System 
4 wage index with reclassifications, shall be published 
5 by the Department on its website no later than 10 
6 calendar days prior to their effective date. 
7   (B) The Department shall establish adjustments to 
8 the statewide-standardized amounts for each Critical 
9 Access Hospital, as designated by the Department of 
10 Public Health in accordance with 42 CFR 485, Subpart 
11 F. For outpatient services provided on or before June 
12 30, 2018, the EAPG standardized amounts are determined 
13 separately for each critical access hospital such that 
14 simulated EAPG payments using outpatient base period 
15 paid claim data plus payments under Section 5A-12.4 of 
16 this Code net of the associated tax costs are equal to 
17 the estimated costs of outpatient base period claims 
18 data with a rate year cost inflation factor applied. 
19  (3) In addition to the statewide-standardized amounts, 
20 the Department shall develop adjusters to adjust the rate 
21 of reimbursement for critical Medicaid hospital outpatient 
22 providers or services, including outpatient high volume or 
23 safety-net hospitals. Beginning July 1, 2018, the 
24 outpatient high volume adjustor shall be increased to 
25 increase annual expenditures associated with this adjustor 
26 by $79,200,000, based on the State Fiscal Year 2015 base 
 
 
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1 year data and this adjustor shall apply to public 
2 hospitals, except for large public hospitals, as defined 
3 under 89 Ill. Adm. Code 148.25(a).
4  (4) Beginning July 1, 2018, in addition to the 
5 statewide standardized amounts, the Department shall make 
6 an add-on payment for outpatient expensive devices and 
7 drugs. This add-on payment shall at least apply to claim 
8 lines that: (i) are assigned with one of the following 
9 EAPGs: 490, 1001 to 1020, and coded with one of the 
10 following revenue codes: 0274 to 0276, 0278; or (ii) are 
11 assigned with one of the following EAPGs: 430 to 441, 443, 
12 444, 460 to 465, 495, 496, 1090. The add-on payment shall 
13 be calculated as follows: the claim line's covered charges 
14 multiplied by the hospital's total acute cost to charge 
15 ratio, less the claim line's EAPG payment plus $1,000, 
16 multiplied by 0.8.
17  (5) Beginning July 1, 2018, the statewide-standardized 
18 amounts for outpatient services shall be increased by a 
19 uniform percentage so that base claims projected 
20 reimbursement is increased by an amount equal to no less 
21 than the funds allocated in paragraph (1) of subsection 
22 (b) of Section 5A-12.6, less the amount allocated under 
23 paragraphs (8) and (9) of subsection (a) and paragraphs 
24 (3) and (4) of this subsection multiplied by 46%. 
25  (6) Effective for dates of service on or after July 1, 
26 2018, the Department shall establish adjustments to the 
 
 
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1 statewide-standardized amounts for each Critical Access 
2 Hospital, as designated by the Department of Public Health 
3 in accordance with 42 CFR 485, Subpart F, such that each 
4 Critical Access Hospital's standardized amount for 
5 outpatient services shall be increased by the applicable 
6 uniform percentage determined pursuant to paragraph (5) of 
7 this subsection. It is the intent of the General Assembly 
8 that the adjustments required under this paragraph (6) by 
9 Public Act 100-1181 shall be applied retroactively to 
10 claims for dates of service provided on or after July 1, 
11 2018. 
12  (7) Effective for dates of service on or after March 
13 8, 2019 (the effective date of Public Act 100-1181), the 
14 Department shall recalculate and implement an updated 
15 statewide-standardized amount for outpatient services 
16 provided by hospitals that are not Critical Access 
17 Hospitals to reflect the applicable uniform percentage 
18 determined pursuant to paragraph (5). 
19   (1) Any recalculation to the 
20 statewide-standardized amounts for outpatient services 
21 provided by hospitals that are not Critical Access 
22 Hospitals shall be the amount necessary to achieve the 
23 increase in the statewide-standardized amounts for 
24 outpatient services increased by a uniform percentage, 
25 so that base claims projected reimbursement is 
26 increased by an amount equal to no less than the funds 
 
 
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1 allocated in paragraph (1) of subsection (b) of 
2 Section 5A-12.6, less the amount allocated under 
3 paragraphs (8) and (9) of subsection (a) and 
4 paragraphs (3) and (4) of this subsection, for all 
5 hospitals that are not Critical Access Hospitals, 
6 multiplied by 46%.
7   (2) It is the intent of the General Assembly that 
8 the recalculations required under this paragraph (7) 
9 by Public Act 100-1181 shall be applied prospectively 
10 to claims for dates of service provided on or after 
11 March 8, 2019 (the effective date of Public Act 
12 100-1181) and that no recoupment or repayment by the 
13 Department or an MCO of payments attributable to 
14 recalculation under this paragraph (7), issued to the 
15 hospital for dates of service on or after July 1, 2018 
16 and before March 8, 2019 (the effective date of Public 
17 Act 100-1181), shall be permitted. 
18  (8) The Department shall ensure that all necessary 
19 adjustments to the managed care organization capitation 
20 base rates necessitated by the adjustments under 
21 subparagraph (6) or (7) of this subsection are completed 
22 and applied retroactively in accordance with Section 
23 5-30.8 of this Code within 90 days of March 8, 2019 (the 
24 effective date of Public Act 100-1181). 
25  (9) Within 60 days after federal approval of the 
26 change made to the assessment in Section 5A-2 by Public 
 
 
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1 Act 101-650 this amendatory Act of the 101st General 
2 Assembly, the Department shall incorporate into the EAPG 
3 system for outpatient services those services performed by 
4 hospitals currently billed through the Non-Institutional 
5 Provider billing system. 
6 (b-5) Notwithstanding any other provision of this Section, 
7beginning with dates of service on and after January 1, 2023, 
8any general acute care hospital with more than 500 outpatient 
9psychiatric Medicaid services to persons under 19 years of age 
10in any calendar year shall be paid the outpatient add-on 
11payment of no less than $113. 
12 (c) In consultation with the hospital community, the 
13Department is authorized to replace 89 Ill. Adm. Admin. Code 
14152.150 as published in 38 Ill. Reg. 4980 through 4986 within 
1512 months of June 16, 2014 (the effective date of Public Act 
1698-651). If the Department does not replace these rules within 
1712 months of June 16, 2014 (the effective date of Public Act 
1898-651), the rules in effect for 152.150 as published in 38 
19Ill. Reg. 4980 through 4986 shall remain in effect until 
20modified by rule by the Department. Nothing in this subsection 
21shall be construed to mandate that the Department file a 
22replacement rule. 
23 (d) Transition period.
There shall be a transition period 
24to the reimbursement systems authorized under this Section 
25that shall begin on the effective date of these systems and 
26continue until June 30, 2018, unless extended by rule by the 
 
 
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1Department. To help provide an orderly and predictable 
2transition to the new reimbursement systems and to preserve 
3and enhance access to the hospital services during this 
4transition, the Department shall allocate a transitional 
5hospital access pool of at least $290,000,000 annually so that 
6transitional hospital access payments are made to hospitals. 
7  (1) After the transition period, the Department may 
8 begin incorporating the transitional hospital access pool 
9 into the base rate structure; however, the transitional 
10 hospital access payments in effect on June 30, 2018 shall 
11 continue to be paid, if continued under Section 5A-16. 
12  (2) After the transition period, if the Department 
13 reduces payments from the transitional hospital access 
14 pool, it shall increase base rates, develop new adjustors, 
15 adjust current adjustors, develop new hospital access 
16 payments based on updated information, or any combination 
17 thereof by an amount equal to the decreases proposed in 
18 the transitional hospital access pool payments, ensuring 
19 that the entire transitional hospital access pool amount 
20 shall continue to be used for hospital payments. 
21 (d-5) Hospital and health care transformation program. The 
22Department shall develop a hospital and health care 
23transformation program to provide financial assistance to 
24hospitals in transforming their services and care models to 
25better align with the needs of the communities they serve. The 
26payments authorized in this Section shall be subject to 
 
 
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1approval by the federal government.
2  (1) Phase 1. In State fiscal years 2019 through 2020, 
3 the Department shall allocate funds from the transitional 
4 access hospital pool to create a hospital transformation 
5 pool of at least $262,906,870 annually and make hospital 
6 transformation payments to hospitals. Subject to Section 
7 5A-16, in State fiscal years 2019 and 2020, an Illinois 
8 hospital that received either a transitional hospital 
9 access payment under subsection (d) or a supplemental 
10 payment under subsection (f) of this Section in State 
11 fiscal year 2018, shall receive a hospital transformation 
12 payment as follows:
13   (A) If the hospital's Rate Year 2017 Medicaid 
14 inpatient utilization rate is equal to or greater than 
15 45%, the hospital transformation payment shall be 
16 equal to 100% of the sum of its transitional hospital 
17 access payment authorized under subsection (d) and any 
18 supplemental payment authorized under subsection (f).
19   (B) If the hospital's Rate Year 2017 Medicaid 
20 inpatient utilization rate is equal to or greater than 
21 25% but less than 45%, the hospital transformation 
22 payment shall be equal to 75% of the sum of its 
23 transitional hospital access payment authorized under 
24 subsection (d) and any supplemental payment authorized 
25 under subsection (f).
26   (C) If the hospital's Rate Year 2017 Medicaid 
 
 
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1 inpatient utilization rate is less than 25%, the 
2 hospital transformation payment shall be equal to 50% 
3 of the sum of its transitional hospital access payment 
4 authorized under subsection (d) and any supplemental 
5 payment authorized under subsection (f).
6  (2) Phase 2. 
7   (A) The funding amount from phase one shall be 
8 incorporated into directed payment and pass-through 
9 payment methodologies described in Section 5A-12.7.
10   (B) Because there are communities in Illinois that 
11 experience significant health care disparities due to 
12 systemic racism, as recently emphasized by the 
13 COVID-19 pandemic, aggravated by social determinants 
14 of health and a lack of sufficiently allocated 
15 healthcare resources, particularly community-based 
16 services, preventive care, obstetric care, chronic 
17 disease management, and specialty care, the Department 
18 shall establish a health care transformation program 
19 that shall be supported by the transformation funding 
20 pool. It is the intention of the General Assembly that 
21 innovative partnerships funded by the pool must be 
22 designed to establish or improve integrated health 
23 care delivery systems that will provide significant 
24 access to the Medicaid and uninsured populations in 
25 their communities, as well as improve health care 
26 equity. It is also the intention of the General 
 
 
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1 Assembly that partnerships recognize and address the 
2 disparities revealed by the COVID-19 pandemic, as well 
3 as the need for post-COVID care. During State fiscal 
4 years 2021 through 2027, the hospital and health care 
5 transformation program shall be supported by an annual 
6 transformation funding pool of up to $150,000,000, 
7 pending federal matching funds, to be allocated during 
8 the specified fiscal years for the purpose of 
9 facilitating hospital and health care transformation. 
10 No disbursement of moneys for transformation projects 
11 from the transformation funding pool described under 
12 this Section shall be considered an award, a grant, or 
13 an expenditure of grant funds. Funding agreements made 
14 in accordance with the transformation program shall be 
15 considered purchases of care under the Illinois 
16 Procurement Code, and funds shall be expended by the 
17 Department in a manner that maximizes federal funding 
18 to expend the entire allocated amount.
19   The Department shall convene, within 30 days after 
20 March 12, 2021 (the effective date of Public Act 
21 101-655) this amendatory Act of the 101st General 
22 Assembly, a workgroup that includes subject matter 
23 experts on healthcare disparities and stakeholders 
24 from distressed communities, which could be a 
25 subcommittee of the Medicaid Advisory Committee, to 
26 review and provide recommendations on how Department 
 
 
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1 policy, including health care transformation, can 
2 improve health disparities and the impact on 
3 communities disproportionately affected by COVID-19. 
4 The workgroup shall consider and make recommendations 
5 on the following issues: a community safety-net 
6 designation of certain hospitals, racial equity, and a 
7 regional partnership to bring additional specialty 
8 services to communities. 
9   (C) As provided in paragraph (9) of Section 3 of 
10 the Illinois Health Facilities Planning Act, any 
11 hospital participating in the transformation program 
12 may be excluded from the requirements of the Illinois 
13 Health Facilities Planning Act for those projects 
14 related to the hospital's transformation. To be 
15 eligible, the hospital must submit to the Health 
16 Facilities and Services Review Board approval from the 
17 Department that the project is a part of the 
18 hospital's transformation.
19   (D) As provided in subsection (a-20) of Section 
20 32.5 of the Emergency Medical Services (EMS) Systems 
21 Act, a hospital that received hospital transformation 
22 payments under this Section may convert to a 
23 freestanding emergency center. To be eligible for such 
24 a conversion, the hospital must submit to the 
25 Department of Public Health approval from the 
26 Department that the project is a part of the 
 
 
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1 hospital's transformation.
2   (E) Criteria for proposals. To be eligible for 
3 funding under this Section, a transformation proposal 
4 shall meet all of the following criteria: 
5    (i) the proposal shall be designed based on 
6 community needs assessment completed by either a 
7 University partner or other qualified entity with 
8 significant community input;
9    (ii) the proposal shall be a collaboration 
10 among providers across the care and community 
11 spectrum, including preventative care, primary 
12 care specialty care, hospital services, mental 
13 health and substance abuse services, as well as 
14 community-based entities that address the social 
15 determinants of health;
16    (iii) the proposal shall be specifically 
17 designed to improve healthcare outcomes and reduce 
18 healthcare disparities, and improve the 
19 coordination, effectiveness, and efficiency of 
20 care delivery;
21    (iv) the proposal shall have specific 
22 measurable metrics related to disparities that 
23 will be tracked by the Department and made public 
24 by the Department;
25    (v) the proposal shall include a commitment to 
26 include Business Enterprise Program certified 
 
 
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1 vendors or other entities controlled and managed 
2 by minorities or women; and 
3    (vi) the proposal shall specifically increase 
4 access to primary, preventive, or specialty care. 
5   (F) Entities eligible to be funded. 
6    (i) Proposals for funding should come from 
7 collaborations operating in one of the most 
8 distressed communities in Illinois as determined 
9 by the U.S. Centers for Disease Control and 
10 Prevention's Social Vulnerability Index for 
11 Illinois and areas disproportionately impacted by 
12 COVID-19 or from rural areas of Illinois.
13    (ii) The Department shall prioritize 
14 partnerships from distressed communities, which 
15 include Business Enterprise Program certified 
16 vendors or other entities controlled and managed 
17 by minorities or women and also include one or 
18 more of the following: safety-net hospitals, 
19 critical access hospitals, the campuses of 
20 hospitals that have closed since January 1, 2018, 
21 or other healthcare providers designed to address 
22 specific healthcare disparities, including the 
23 impact of COVID-19 on individuals and the 
24 community and the need for post-COVID care. All 
25 funded proposals must include specific measurable 
26 goals and metrics related to improved outcomes and 
 
 
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1 reduced disparities which shall be tracked by the 
2 Department.
3    (iii) The Department should target the funding 
4 in the following ways: $30,000,000 of 
5 transformation funds to projects that are a 
6 collaboration between a safety-net hospital, 
7 particularly community safety-net hospitals, and 
8 other providers and designed to address specific 
9 healthcare disparities, $20,000,000 of 
10 transformation funds to collaborations between 
11 safety-net hospitals and a larger hospital partner 
12 that increases specialty care in distressed 
13 communities, $30,000,000 of transformation funds 
14 to projects that are a collaboration between 
15 hospitals and other providers in distressed areas 
16 of the State designed to address specific 
17 healthcare disparities, $15,000,000 to 
18 collaborations between critical access hospitals 
19 and other providers designed to address specific 
20 healthcare disparities, and $15,000,000 to 
21 cross-provider collaborations designed to address 
22 specific healthcare disparities, and $5,000,000 to 
23 collaborations that focus on workforce 
24 development. 
25    (iv) The Department may allocate up to 
26 $5,000,000 for planning, racial equity analysis, 
 
 
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1 or consulting resources for the Department or 
2 entities without the resources to develop a plan 
3 to meet the criteria of this Section. Any contract 
4 for consulting services issued by the Department 
5 under this subparagraph shall comply with the 
6 provisions of Section 5-45 of the State Officials 
7 and Employees Ethics Act. Based on availability of 
8 federal funding, the Department may directly 
9 procure consulting services or provide funding to 
10 the collaboration. The provision of resources 
11 under this subparagraph is not a guarantee that a 
12 project will be approved. 
13    (v) The Department shall take steps to ensure 
14 that safety-net hospitals operating in 
15 under-resourced communities receive priority 
16 access to hospital and healthcare transformation 
17 funds, including consulting funds, as provided 
18 under this Section. 
19   (G) Process for submitting and approving projects 
20 for distressed communities. The Department shall issue 
21 a template for application. The Department shall post 
22 any proposal received on the Department's website for 
23 at least 2 weeks for public comment, and any such 
24 public comment shall also be considered in the review 
25 process. Applicants may request that proprietary 
26 financial information be redacted from publicly posted 
 
 
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1 proposals and the Department in its discretion may 
2 agree. Proposals for each distressed community must 
3 include all of the following: 
4    (i) A detailed description of how the project 
5 intends to affect the goals outlined in this 
6 subsection, describing new interventions, new 
7 technology, new structures, and other changes to 
8 the healthcare delivery system planned.
9    (ii) A detailed description of the racial and 
10 ethnic makeup of the entities' board and 
11 leadership positions and the salaries of the 
12 executive staff of entities in the partnership 
13 that is seeking to obtain funding under this 
14 Section. 
15    (iii) A complete budget, including an overall 
16 timeline and a detailed pathway to sustainability 
17 within a 5-year period, specifying other sources 
18 of funding, such as in-kind, cost-sharing, or 
19 private donations, particularly for capital needs. 
20 There is an expectation that parties to the 
21 transformation project dedicate resources to the 
22 extent they are able and that these expectations 
23 are delineated separately for each entity in the 
24 proposal.
25    (iv) A description of any new entities formed 
26 or other legal relationships between collaborating 
 
 
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1 entities and how funds will be allocated among 
2 participants. 
3    (v) A timeline showing the evolution of sites 
4 and specific services of the project over a 5-year 
5 period, including services available to the 
6 community by site.
7    (vi) Clear milestones indicating progress 
8 toward the proposed goals of the proposal as 
9 checkpoints along the way to continue receiving 
10 funding. The Department is authorized to refine 
11 these milestones in agreements, and is authorized 
12 to impose reasonable penalties, including 
13 repayment of funds, for substantial lack of 
14 progress.
15    (vii) A clear statement of the level of 
16 commitment the project will include for minorities 
17 and women in contracting opportunities, including 
18 as equity partners where applicable, or as 
19 subcontractors and suppliers in all phases of the 
20 project.
21    (viii) If the community study utilized is not 
22 the study commissioned and published by the 
23 Department, the applicant must define the 
24 methodology used, including documentation of clear 
25 community participation.
26    (ix) A description of the process used in 
 
 
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1 collaborating with all levels of government in the 
2 community served in the development of the 
3 project, including, but not limited to, 
4 legislators and officials of other units of local 
5 government.
6    (x) Documentation of a community input process 
7 in the community served, including links to 
8 proposal materials on public websites.
9    (xi) Verifiable project milestones and quality 
10 metrics that will be impacted by transformation. 
11 These project milestones and quality metrics must 
12 be identified with improvement targets that must 
13 be met.
14    (xii) Data on the number of existing employees 
15 by various job categories and wage levels by the 
16 zip code of the employees' residence and 
17 benchmarks for the continued maintenance and 
18 improvement of these levels. The proposal must 
19 also describe any retraining or other workforce 
20 development planned for the new project.
21    (xiii) If a new entity is created by the 
22 project, a description of how the board will be 
23 reflective of the community served by the 
24 proposal. 
25    (xiv) An explanation of how the proposal will 
26 address the existing disparities that exacerbated 
 
 
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1 the impact of COVID-19 and the need for post-COVID 
2 care in the community, if applicable. 
3    (xv) An explanation of how the proposal is 
4 designed to increase access to care, including 
5 specialty care based upon the community's needs. 
6   (H) The Department shall evaluate proposals for 
7 compliance with the criteria listed under subparagraph 
8 (G). Proposals meeting all of the criteria may be 
9 eligible for funding with the areas of focus 
10 prioritized as described in item (ii) of subparagraph 
11 (F). Based on the funds available, the Department may 
12 negotiate funding agreements with approved applicants 
13 to maximize federal funding. Nothing in this 
14 subsection requires that an approved project be funded 
15 to the level requested. Agreements shall specify the 
16 amount of funding anticipated annually, the 
17 methodology of payments, the limit on the number of 
18 years such funding may be provided, and the milestones 
19 and quality metrics that must be met by the projects in 
20 order to continue to receive funding during each year 
21 of the program. Agreements shall specify the terms and 
22 conditions under which a health care facility that 
23 receives funds under a purchase of care agreement and 
24 closes in violation of the terms of the agreement must 
25 pay an early closure fee no greater than 50% of the 
26 funds it received under the agreement, prior to the 
 
 
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1 Health Facilities and Services Review Board 
2 considering an application for closure of the 
3 facility. Any project that is funded shall be required 
4 to provide quarterly written progress reports, in a 
5 form prescribed by the Department, and at a minimum 
6 shall include the progress made in achieving any 
7 milestones or metrics or Business Enterprise Program 
8 commitments in its plan. The Department may reduce or 
9 end payments, as set forth in transformation plans, if 
10 milestones or metrics or Business Enterprise Program 
11 commitments are not achieved. The Department shall 
12 seek to make payments from the transformation fund in 
13 a manner that is eligible for federal matching funds. 
14   In reviewing the proposals, the Department shall 
15 take into account the needs of the community, data 
16 from the study commissioned by the Department from the 
17 University of Illinois-Chicago if applicable, feedback 
18 from public comment on the Department's website, as 
19 well as how the proposal meets the criteria listed 
20 under subparagraph (G). Alignment with the 
21 Department's overall strategic initiatives shall be an 
22 important factor. To the extent that fiscal year 
23 funding is not adequate to fund all eligible projects 
24 that apply, the Department shall prioritize 
25 applications that most comprehensively and effectively 
26 address the criteria listed under subparagraph (G). 
 
 
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1  (3) (Blank).
2  (4) Hospital Transformation Review Committee. There is 
3 created the Hospital Transformation Review Committee. The 
4 Committee shall consist of 14 members. No later than 30 
5 days after March 12, 2018 (the effective date of Public 
6 Act 100-581), the 4 legislative leaders shall each appoint 
7 3 members; the Governor shall appoint the Director of 
8 Healthcare and Family Services, or his or her designee, as 
9 a member; and the Director of Healthcare and Family 
10 Services shall appoint one member. Any vacancy shall be 
11 filled by the applicable appointing authority within 15 
12 calendar days. The members of the Committee shall select a 
13 Chair and a Vice-Chair from among its members, provided 
14 that the Chair and Vice-Chair cannot be appointed by the 
15 same appointing authority and must be from different 
16 political parties. The Chair shall have the authority to 
17 establish a meeting schedule and convene meetings of the 
18 Committee, and the Vice-Chair shall have the authority to 
19 convene meetings in the absence of the Chair. The 
20 Committee may establish its own rules with respect to 
21 meeting schedule, notice of meetings, and the disclosure 
22 of documents; however, the Committee shall not have the 
23 power to subpoena individuals or documents and any rules 
24 must be approved by 9 of the 14 members. The Committee 
25 shall perform the functions described in this Section and 
26 advise and consult with the Director in the administration 
 
 
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1 of this Section. In addition to reviewing and approving 
2 the policies, procedures, and rules for the hospital and 
3 health care transformation program, the Committee shall 
4 consider and make recommendations related to qualifying 
5 criteria and payment methodologies related to safety-net 
6 hospitals and children's hospitals. Members of the 
7 Committee appointed by the legislative leaders shall be 
8 subject to the jurisdiction of the Legislative Ethics 
9 Commission, not the Executive Ethics Commission, and all 
10 requests under the Freedom of Information Act shall be 
11 directed to the applicable Freedom of Information officer 
12 for the General Assembly. The Department shall provide 
13 operational support to the Committee as necessary. The 
14 Committee is dissolved on April 1, 2019. 
15 (e) Beginning 36 months after initial implementation, the 
16Department shall update the reimbursement components in 
17subsections (a) and (b), including standardized amounts and 
18weighting factors, and at least once every 4 years and no more 
19frequently than annually thereafter. The Department shall 
20publish these updates on its website no later than 30 calendar 
21days prior to their effective date. 
22 (f) Continuation of supplemental payments. Any 
23supplemental payments authorized under Illinois Administrative 
24Code 148 effective January 1, 2014 and that continue during 
25the period of July 1, 2014 through December 31, 2014 shall 
26remain in effect as long as the assessment imposed by Section 
 
 
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15A-2 that is in effect on December 31, 2017 remains in effect. 
2 (g) Notwithstanding subsections (a) through (f) of this 
3Section and notwithstanding the changes authorized under 
4Section 5-5b.1, any updates to the system shall not result in 
5any diminishment of the overall effective rates of 
6reimbursement as of the implementation date of the new system 
7(July 1, 2014). These updates shall not preclude variations in 
8any individual component of the system or hospital rate 
9variations. Nothing in this Section shall prohibit the 
10Department from increasing the rates of reimbursement or 
11developing payments to ensure access to hospital services. 
12Nothing in this Section shall be construed to guarantee a 
13minimum amount of spending in the aggregate or per hospital as 
14spending may be impacted by factors, including, but not 
15limited to, the number of individuals in the medical 
16assistance program and the severity of illness of the 
17individuals.
18 (h) The Department shall have the authority to modify by 
19rulemaking any changes to the rates or methodologies in this 
20Section as required by the federal government to obtain 
21federal financial participation for expenditures made under 
22this Section. 
23 (i) Except for subsections (g) and (h) of this Section, 
24the Department shall, pursuant to subsection (c) of Section 
255-40 of the Illinois Administrative Procedure Act, provide for 
26presentation at the June 2014 hearing of the Joint Committee 
 
 
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1on Administrative Rules (JCAR) additional written notice to 
2JCAR of the following rules in order to commence the second 
3notice period for the following rules: rules published in the 
4Illinois Register, rule dated February 21, 2014 at 38 Ill. 
5Reg. 4559 (Medical Payment), 4628 (Specialized Health Care 
6Delivery Systems), 4640 (Hospital Services), 4932 (Diagnostic 
7Related Grouping (DRG) Prospective Payment System (PPS)), and 
84977 (Hospital Reimbursement Changes), and published in the 
9Illinois Register dated March 21, 2014 at 38 Ill. Reg. 6499 
10(Specialized Health Care Delivery Systems) and 6505 (Hospital 
11Services).

12 (j) Out-of-state hospitals. Beginning July 1, 2018, for 
13purposes of determining for State fiscal years 2019 and 2020 
14and subsequent fiscal years the hospitals eligible for the 
15payments authorized under subsections (a) and (b) of this 
16Section, the Department shall include out-of-state hospitals 
17that are designated a Level I pediatric trauma center or a 
18Level I trauma center by the Department of Public Health as of 
19December 1, 2017.
20 (k) The Department shall notify each hospital and managed 
21care organization, in writing, of the impact of the updates 
22under this Section at least 30 calendar days prior to their 
23effective date. 
24 (l) This Section is subject to Section 14-12.5. 
25(Source: P.A. 101-81, eff. 7-12-19; 101-650, eff. 7-7-20; 
26101-655, eff. 3-12-21; 102-682, eff. 12-10-21; 102-1037, eff. 
 
 
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16-2-22; revised 8-22-22.)

2 (305 ILCS 5/14-12.5 new)
3 Sec. 14-12.5. Hospital preservation and stabilization rate 
4update. 
5 (a) Notwithstanding any other provision of this Code, the 
6hospital rates of reimbursement authorized under Sections 
75-5.05, 14-12, and 14-13 of this Code shall be adjusted in 
8accordance with the provisions of this Section.
9 (b) Notwithstanding any other provision of this Code, 
10effective for dates of service on and after January 1, 2024, 
11hospital reimbursement rates shall be revised as follows:
12  (1) For inpatient general acute care services, the 
13 statewide-standardized amount in effect January 1, 2023 as 
14 published by the Department on December 1, 2022, shall be 
15 increased by 20%.
16  (2) For inpatient psychiatric services:
17   (A) For safety-net hospitals, the per diem rates 
18 in effect January 1, 2023, shall be increased by 20%, 
19 and the minimum per diem rate of $630, authorized in 
20 subsection (b-5) of Section 5-5.05 of this Code, shall 
21 be increased by 20%.
22   (B) For all general acute care hospitals that are 
23 not safety-net hospitals, the per diem rates in effect 
24 January 1, 2023 shall be increased by 20%, except that 
25 all rates shall be at least 90% of the minimum 
 
 
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1 inpatient per diem rate for safety-net hospitals as 
2 authorized in subsection (b-5) of Section 5-5.05 of 
3 this Code, including the adjustment authorized in this 
4 Section.
5   (C) For all psychiatric specialty hospitals, the 
6 per diem rates in effect January 1, 2023, shall be 
7 increased by 20%, and the statewide default per diem 
8 rates for new psychiatric specialty hospitals shall be 
9 increased by 20%.
10  (3) For inpatient rehabilitative services, the per 
11 diem rates in effect January 1, 2023, shall be increased 
12 by 20%, and the statewide default inpatient rehabilitative 
13 services per diem rates, for general acute care hospitals 
14 and for rehabilitation specialty hospitals respectively, 
15 shall be increased by 20%.
16  (4) The statewide-standardized amount for outpatient 
17 general acute care services in effect January 1, 2023, as 
18 published by the Department on December 1, 2022, shall be 
19 increased by 20%.
20  (5) The statewide-standardized amount for outpatient 
21 psychiatric care services in effect January 1, 2023, as 
22 published by the Department on December 1, 2022, shall be 
23 increased by 20%.
24  (6) The statewide-standardized amount for outpatient 
25 rehabilitative care services in effect January 1, 2023, as 
26 published by the Department on December 1, 2022, shall be 
 
 
SB1763- 34 -LRB103 27744 KTG 54122 b


1 increased by 20%.
2  (7) The per diem rate in effect January 1, 2023, as 
3 authorized in subsection (a) of Section 14-13 shall be 
4 increased by 20%.
5  (8) The per diem add-on payment for safety-net 
6 hospitals authorized in paragraph (6) of subsection (a) of 
7 Section 14-12, as in effect on January 1, 2023, shall be 
8 increased to $115.
9 (c) Beginning on January 1, 2025 and each January 1 
10thereafter, all rates identified in paragraphs (1) through (8) 
11of subsection (b) in effect December 31st of the year 
12preceding the January 1 adjustment shall be increased based on 
13the annual increase in the national hospital market basket 
14price proxies (DRI) hospital cost index from the midpoint of 
15the calendar year 2 years prior to the current year, to the 
16midpoint of the preceding calendar year. In no instance shall 
17the adjustment required in this subsection result in a 
18reduction to the rates in place at the time of the required 
19adjustment.
20 (d) If the federal Centers for Medicare and Medicaid 
21Services finds that the increases required under this Section 
22would result in rates of reimbursement which exceed the 
23federal maximum limits applicable to hospital payments, then 
24the payments and assessment tax authorized under Article V-A 
25of this Code shall be reduced in accordance with Section 5A-15 
26of this Code.
 
 
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1 (e) The Department shall promptly take all actions 
2necessary to ensure the changes authorized in this amendatory 
3Act of the 103rd General Assembly are in effect for dates of 
4service on and after January 1, 2024, including publishing all 
5appropriate public notices, applying for federal approval of 
6amendments to the Illinois Title
XIX State Plan, and adopting 
7administrative rules if necessary.
8 (f) The Department of Healthcare and Family Services may 
9adopt rules necessary to implement the changes made by this 
10amendatory Act of the 103rd General Assembly through the use 
11of emergency rulemaking in accordance with Section 5-45 of the 
12Illinois Administrative Procedure Act. The 24-month limitation 
13on the adoption of emergency rules does not apply to rules 
14adopted under this Section. The General Assembly finds that 
15the adoption of rules to implement the changes made by this 
16amendatory Act of the 103rd General Assembly is deemed an 
17emergency and necessary for the public interest, safety, and 
18welfare.
19 (g) The Department shall ensure that all necessary 
20adjustments to the managed care organization capitation base 
21rates necessitated by the adjustments in this Section are 
22completed, published, and applied in accordance with Section 
235-30.8 of this Code 90 days prior to the implementation date of 
24the changes required under this amendatory Act of the 103rd 
25General Assembly.

 
 
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1 (305 ILCS 5/14-13)
2 Sec. 14-13. Reimbursement for inpatient stays extended 
3beyond medical necessity.
4 (a) By October 1, 2019, the Department shall by rule 
5implement a methodology effective for dates of service July 1, 
62019 and later to reimburse hospitals for inpatient stays 
7extended beyond medical necessity due to the inability of the 
8Department or the managed care organization in which a 
9recipient is enrolled or the hospital discharge planner to 
10find an appropriate placement after discharge from the 
11hospital. The Department shall evaluate the effectiveness of 
12the current reimbursement rate for inpatient hospital stays 
13beyond medical necessity. 
14 (a-5) By October 1, 2023, the Department shall by rule 
15implement a methodology effective for dates of service 
16beginning on and after January 1, 2024 to reimburse hospitals 
17for extended stays in a hospital emergency department due to 
18the inability of the Department or the managed care 
19organization in which a recipient is enrolled or the hospital 
20discharge planner to find an appropriate placement or transfer 
21to an appropriate facility other than the hospital to which 
22the patient presented. The per diem rate established shall be 
23equal to 2 times the per diem rate paid for stays identified in 
24subsection (a), prorated in hourly increments for each new 
25hour beyond the 4th hour after the time that the patient is 
26determined to be ready for transfer or admission. The rate 
 
 
SB1763- 37 -LRB103 27744 KTG 54122 b


1established under this subsection shall be paid based on the 
2entire length of the stay in the hospital emergency department 
3awaiting transfer. 
4 (b) The methodology shall provide reasonable compensation 
5for the services provided attributable to the days of the 
6extended stay for which the prevailing rate methodology 
7provides no reimbursement. The Department may use a day 
8outlier program to satisfy this requirement. The reimbursement 
9rate shall be set at a level so as not to act as an incentive 
10to avoid transfer to the appropriate level of care needed or 
11placement, after discharge. 
12 (c) The Department shall require managed care 
13organizations to adopt this methodology or an alternative 
14methodology that pays at least as much as the Department's 
15adopted methodology unless otherwise mutually agreed upon 
16contractual language is developed by the provider and the 
17managed care organization for a risk-based or innovative 
18payment methodology. 
19 (d) Days beyond medical necessity shall not be eligible 
20for per diem add-on payments under the Medicaid High Volume 
21Adjustment (MHVA) or the Medicaid Percentage Adjustment (MPA) 
22programs. 
23 (e) For services covered by the fee-for-service program, 
24reimbursement under this Section shall only be made for days 
25beyond medical necessity that occur after the hospital has 
26notified the Department of the need for post-discharge 
 
 
SB1763- 38 -LRB103 27744 KTG 54122 b


1placement. For services covered by a managed care 
2organization, hospitals shall notify the appropriate managed 
3care organization of an admission within 24 hours of 
4admission. For every 24-hour period beyond the initial 24 
5hours after admission that the hospital fails to notify the 
6managed care organization of the admission, reimbursement 
7under this subsection shall be reduced by one day. 

8(Source: P.A. 101-209, eff. 8-5-19; 102-4, eff. 4-27-21.)


9 Section 99. Effective date. This Act takes effect upon 
10becoming law. 


 
 
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1
INDEX

2
Statutes amended in order of appearance