Under current federal and state law, Medical Assistance (MA) is a jointly
funded, federal-state program that the Department of Health and Family Services
(DHFS) administers to provide health care services to eligible individuals with very
low incomes and few assets; the state share of MA is paid from a combination of
general purpose revenues, program revenues from hospital assessments, and
segregated funds under the MA trust fund. Under a waiver of federal Medicaid laws
from the federal Department of Health and Human Services, DHFS also administers
under MA the Badger Care Health Care Program (Badger Care). Badger Care
provides health care coverage to certain low-income families and to certain
low-income children who do not reside with a parent.

Under current law, DHFS annually assesses hospitals a total of $1,500,000, in
proportion to each hospital's respective gross private-pay patient revenues during
the hospital's most recent fiscal year. Moneys from the assessments are credited to
a general program revenue appropriation account, from which is paid a portion of MA
program benefits, certain long-term care MA pilot projects, and services under the
Family Care Program.

Currently, under MA, DHFS must distribute not more than $2,256,000 in each
fiscal year to provide supplemental funds to rural hospitals and to critical access
hospitals that have a high utilization of inpatient services by patients whose care is
provided from governmental sources.

This bill eliminates the current hospital assessment and the associated
program revenue appropriation account and, instead, authorizes DHFS to levy,
enforce, and collect an annual assessment on the gross patient revenue of hospitals,
payable quarterly, based on claims information collected by an entity from hospitals
under the laws relating to health care information or based on any other source that
is approved in the state Medicaid plan. Under the bill, the assessments are first due
before September 30, 2008. DHFS must verify the amount of each hospital's gross
patient revenue and determine the amount of the assessment owed by each hospital
based on a uniform rate applicable to total gross patient revenue that DHFS
estimates will yield $210,458,300 in fiscal year 2008-09. DHFS may allow delayed
payment by hospitals that are unable to pay by the quarterly assessment dates; a
DHFS determination that a hospital may not make a delayed payment is not subject
to an administrative appeal process. If DHFS determines that any portion of the
revenue needed to provide MA payment increases for inpatient or outpatient
hospital services as fee for service or through health maintenance organizations

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(HMOs) is not eligible for the federal Medicaid share, DHFS must refund that
amount to hospitals in proportion to each hospital's assessment payment. The
assessments must be deposited into the hospital assessment fund (a separate,
nonlapsible trust fund, as created in the bill).

Moneys from the hospital assessments deposited in the hospital assessment
fund are, under the bill, appropriated to provide the MA nonfederal share for
increased payments, in excess of the aggregate inpatient and outpatient MA hospital
payment rates in effect in fiscal year 2007-08, and refunds to hospitals for services
provided under MA and Badger Care. They are also appropriated to increase
(together with federal Medicaid matching moneys) the amount of moneys DHFS
must distribute to rural hospitals for fiscal year 2008-09 and each fiscal year
thereafter, by $3,000,000. Additionally, they are appropriated to provide $1,500,000
in each fiscal year for a portion of MA program benefits. Lastly, they are transferred
from the hospital assessment fund to the injured patients and families compensation
fund in the amounts of $60,000,000 in fiscal years 2008-09, $65,000,000 in fiscal year
2009-10 and 2010-11, and $10,000,000 in fiscal year 2011-12. The Joint Committee
on Finance of the legislature (JCF) may not transfer moneys from the hospital
assessment fund.

The bill requires HMOs that provide services under MA and Badger Care to
make monthly payments to hospitals in amounts equivalent to any increase in the
capitated rate that DHFS pays HMOs for serving MA and Badger Care recipients,
which increase is intended to cover hospital services and is associated with the
hospital assessment. The bill requires DHFS to determine monthly amounts,
specific to each HMO and hospital, that HMOs must pay hospitals based on data that
DHFS uses to calculate the capitated rates DHFS pays HMOs as well as encounter
data provided by the HMOs. DHFS must redetermine the amounts at least once
annually and must publicly disclose the methodology used to calculate the amounts.
The bill requires that each HMO and hospital reconcile the monthly HMO payments
to the hospital with actual utilization of inpatient and outpatient services by MA and
Badger Care recipients every six months, and that the HMO or hospital, whichever
is applicable, pay the other any difference within 90 days. If an HMO and hospital
cannot reconcile the amount owed, upon the request of either the HMO or hospital,
DHFS must determine the amount. The DHFS determination is subject to
administrative review.

Under the bill, DHFS must report, by December 31, 2009 and by December 31
each year thereafter, to JCF all of the following information for the immediately
previous state fiscal year: (1) the total amount of hospital assessments collected; (2)
the total amount of assessments collected from each hospital; (3) the total amounts
that DHFS determines were paid to HMOs for increased MA and Badger Care
payments to hospitals; (4) the total amount of these payments made to each hospital
by HMOs; (5) the total amount of these payments made to each hospital and the
portion of the capitated payments made to HMOs for inpatient and outpatient
hospital services from general purpose revenues; (6) the total amounts obtained
under (3) and (5); and (7) the results of any audits conducted by DHFS concerning

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these payments to HMOs and any actions taken by DHFS as the result of such an
audit.