§ 71-5-2005 — [Expires 7/1/2025] Deposits in maintenance of coverage trust fund - Expenditures - Quarterly reports

(a) The funds generated as a result of this part must be deposited in the maintenance of coverage trust fund created by § 71-5-160 , the existence of which is continued as provided in subsection (b). The fund must not be used to replace monies otherwise appropriated to the division's program by the general assembly or to replace monies appropriated outside of the division's program. (b) The maintenance of coverage trust fund must continue without interruption and must be operated in accordance with § 71-5-160 and this section. (c) The maintenance of coverage trust fund consists of: (1) The balance of the trust fund remaining as of June 30, 2024; (2) All annual coverage assessments received by the division; (3) Investment earnings credited to the assets of the maintenance of coverage trust fund; (4) Penalties paid by covered hospitals for late payment of assessment installments imposed by this part or a prior statute authorizing an annual coverage assessment; and (5) Intergovernmental transfer of funds from hospitals determined by the division as eligible to certify public expenditures for the purpose of securing federal medical assistance percentage payments up to three hundred million dollars ($300,000,000). (d) Monies credited or deposited to the maintenance of coverage trust fund, together with all federal matching funds, must be available to and used by the division only for expenditures in the division's program and include the following purposes: (1) Expenditures for benefits and services under the division's program, including those that would have been subject to reduction or elimination from the division's funding for FY 2024-2025, except for the availability of one-time funding for that year only, as follows: (A) Replacement of across-the-board reductions in covered and excluded hospital and professional reimbursement rates described in the governor's recommended budgets since FY 2011, except for reductions that were included on a list for a given year but then funded in a subsequent year with recurring state dollars; (B) Funding virtual DSH payments, funding payments to hospitals for uncompensated care to charity patients, and funding payments to hospitals for quality incentive arrangements, with all of those payments being made in accordance with, and as those categories of payments are defined in, the division's 1115 demonstration waiver from the federal centers for medicare and medicaid services to the maximum amount permitted for each category under that waiver; (C) Maintenance of payments for graduate medical education of at least forty-eight million dollars ($48,000,000); (D) Unless otherwise addressed in a separate appropriation for FY 2024-2025, maintenance of reimbursement for medicare part A crossover claims at the lesser of one hundred percent (100%) of medicare allowable or the billed amount; (E) Avoidance of coverage limitations relative to the number of hospital inpatient days per year or the annual cost of hospital services for a division enrollee; (F) Avoidance of coverage limitations relative to the number of nonemergency outpatient visits per year for a division enrollee; (G) Avoidance of coverage limitations relative to the number of physician office visits per year for a division enrollee; (H) Avoidance of coverage limitations relative to the number of laboratory and diagnostic imaging encounters per year for a division enrollee; (I) Maintenance of coverage for occupational therapy, physical therapy, and speech therapy services; (J) In the total amount of five hundred ninety thousand seven hundred seventy dollars ($590,770) to maintain reimbursement at the same emergency care rate as in FY 2023-2024 for nonemergent care to children twelve (12) to twenty-four (24) months of age; (K) In the total amount of two million one hundred eleven thousand four hundred dollars ($2,111,400) to the division to offset the elimination of the provision in the division's managed care contractor risk agreements for hospitals as follows: CRA 2.12.9.60-Specify in applicable provider agreements that all providers who participate in the federal 340B program give the division MCOs the benefit of 340B pricing; provided, however, if the division obtains approval from CMS for the adjustment to the budget neutrality agreement, as set forth in § 71-5-2003(b)(1)(B) , the expenditure authorized by this subdivision (d)(1)(K) is twenty million, five hundred seventy-nine thousand nine hundred dollars ($20,579,900); (L) In the total amount of one hundred seventy-five thousand dollars ($175,000) to offset a portion of the hospital cost of providing admissions, discharge, and transfer (ADT) messages to the division to support the division's Patient Centered Medical Home initiative; (M) In the total amount of one million four hundred twenty-six thousand seven hundred dollars ($1,426,700) to provide funding for stipends for physicians and other healthcare providers who commit to work in designated medically underserved areas in this state; and (N) In the amount of three million dollars ($3,000,000) to offset the unreimbursed cost of charity care for critical access hospitals to be funded from funds remaining in the trust fund as of June 30, 2024; (2) Directed payments to hospitals for providing services to division patients and the uninsured, as approved by CMS and as set forth in this subdivision (d)(2): (A) Directed payments to hospitals will be made based on claims paid with the division's utilization and encounter data from the managed care organizations during each quarter of FY 2024-2025. A directed payment must be in an amount set by the division in consultation with the Tennessee Hospital Association and dependent on funding available through this section. The directed payment must include a quality program designed and implemented with the partnership and cooperation of the division and the Tennessee Hospital Association; (B) If CMS does not approve either the structure of directed payments set forth in subdivision (d)(2)(A) or provide a budget neutrality adjustment, then payments required by this subdivision (d)(2) must be in accordance with this subdivision (d)(2)(B). Directed payments to hospitals must be based on the claims paid to covered hospitals from the managed care organizations during each quarter of FY 2024-2025. Each covered hospital is entitled to payments for FY 2024-2025 for providing services to division enrollees. The amount of payment to covered hospitals must be no less than thirty-seven percent (37%) of unreimbursed division costs for all hospitals licensed by the state that reported division charges, revenue, and total expenses on the 2022 JAR, excluding state-owned hospitals. As used in this subdivision (d)(2)(B), "unreimbursed division costs" means the excess of the division costs over the division's net revenue. The division's charges and net revenue are calculated using data from Schedule E, items (A)(l)(e) and (A)(l)(f), from the hospital's 2022 JAR filed with the department of health. As used in this subdivision (d)(2)(B), "division costs" means the quotient of a facility's cost-to-charge ratio, calculated as B(3) (total expenses) divided by A(3)(e) (total gross patient charges) from Schedule E of the 2022 JAR, multiplied by the division's charges; (C) If CMS does not approve directed payments to hospitals set forth in either subdivision (d)(2)(A) or (d)(2)(B), but instead approves hospital supplemental pools in the division waiver, then payments must be made from the allocated pools to covered hospitals to offset losses incurred in providing services to division enrollees as first priority before any other supplemental payments authorized in the division waiver are distributed; (D) The payments required by this subdivision (d)(2) must be made in four (4) equal installments. The division shall provide to the Tennessee Hospital Association a schedule showing the payments to each hospital at least seven (7) days in advance of the payments; (E) Payments required by this subdivision (d)(2) may be made by the division directly or by the division managed care organizations with the direction to make payments to hospitals, or by a designee approved by the division, as required by this subsection (d). The payments to a hospital pursuant to this subdivision (d)(2) are not part of the reimbursement a hospital is entitled to under its contract with a division managed care organization; (F) In addition to the items and expenditures set forth in subdivisions (d)(1) and (2), other programs and initiatives developed by the division, in consultation with the Tennessee Hospital Association, to offset the unreimbursed costs of providing services to division enrollees and the financial consequences of the public health emergency. The state portion of the funding for programs and initiatives developed under this subdivision (d)(2)(F) must be used to obtain federal matching funds to raise funds up to three hundred fifty million dollars ($350,000,000); (G) Refunds, in proportion to the amount paid in, to covered hospitals based on: (i) The payment of annual coverage assessments or penalties to the division through error, mistake, or a determination that the annual coverage assessment was invalidly imposed; or (ii) Circumstances where the division, in consultation with the Tennessee Hospital Association, has determined a lower coverage assessment would have been required to carry out the purposes of subdivisions (d)(1) and (2); and (H) Payments authorized under rules promulgated by the division pursuant to § 71-5-2004(k)(2) ; (3) Administrative funding to the division for six (6) full-time state employees to assist with implementation, operationalization, and ongoing management of hospital payment programs in the amount of three hundred eighty-two thousand four hundred dollars ($382,400); and (4) Funding from the trust fund or assessment to offset any public hospital funding shortfalls for state directed payments. (e) The division shall modify the contracts with the division managed care organizations and otherwise take action necessary to assure the use and application of the assets of the maintenance of coverage trust fund, as described in subsection (d). (f) The division shall submit requests to CMS to modify the medicaid state plan, the contractor risk agreements, and an applicable Section 1115 demonstration project, as necessary, to implement this part. (g) At quarterly intervals beginning September 1, 2024, the division shall submit a report to the finance, ways and means committees of the senate and the house of representatives, to the health and welfare committee of the senate, to the health committee of the house of representatives, and to the legislative librarian. The report must include: (1) The status, if applicable, of the determination and approval by CMS set forth in § 71-5-2003(b) of the annual coverage assessment; (2) The balance of funds in the maintenance of coverage trust fund; and (3) The extent to which the maintenance of coverage trust fund has been used to carry out this part. (h) Notwithstanding another law, no part of the maintenance of coverage trust fund must be diverted to the general fund or used for a purpose other than as set forth in this part.

Legislative History

Amended by 2024 Tenn. Acts, ch. 953,s 1, eff. 6/30/2024. Amended by 2024 Tenn. Acts, ch. 953,s 3, eff. 5/9/2024. Amended by 2023 Tenn. Acts, ch. 232, s 2, eff. 4/25/2023. Added by 2023 Tenn. Acts, ch. 232, s 1, eff. 6/30/2023.