S.B. 305 Hospital Quality Incentive Amendments: transcript

I do. Yeah. Thank you Mr. Chair. Yeah, the substitute, uh, caught something that, uh, we had missed in the original draft. We've done hospital assessments in the past and, uh, in those hospital assessments, if there was any cost to the state, we'd included those costs to come out of the hospital assessment portion. And the, so the sub simply does that, so it takes away a fiscal note.

Thank you. It appreciate the opportunity to, to present this. You know, we've done hospital assessment, uh, taxes over the, where the, the hospitals pay a portion and then brings in some additional federal money. Uh, and it's been very beneficial to the hospitals from really, from the small hospitals all the way up to the large hospitals. There was a change, uh, you know, with the big beautiful bill or HR one that, uh, took away a lot of that assessment that was been in place was around $200 million to the state of Utah. They did leave, uh, an opportunity though for us to do some additional, uh, assessment and take, you know, so if you look, you know, the bill allows in the sub, it allows us to go up to what their, that maximum. We had not been up to that maximum cab, but it does allow us to go up to that. So that the long story short, you know, if we, we passed this, it, the hospital would kick in some money, there would be some additional federal money come in. And so we would replace, oh, probably about a third of the money that was lost, uh, you know, in the, in HR one. So that, that's really what the bill does.

With your permission, Uh, thank you, uh, Mr. Chairman, uh, Dave Gessel with the Utah Hospital Association. We strongly support this bill. Just want to add one quick thing. Uh, this money that was mentioned, we've already lost, that will continue to happen. And, uh, if the big beautiful bill isn't amended over the next number of years, and it'll get to the point where the hospitals will collectively lose about a half a billion dollars of federal money. So this is, this is the one avenue the current administration has said that we could do to get some of that money back by, by adding some quality measures, uh, into what we do. So we hope that you'll support this and thank you.

Thank you. I'll move that we pass, uh, Senate Bill 3 0 5 first substitute as favorably to the full Senate.

That's an order. Had a question for the sponsor. How much money is this worth, do you think we're trying to accommodate for the changes in the big beautiful bill?

That Of course. Uh, we're not a hundred percent sure, but roughly the hospitals would put in 30 to 35 million and then we would draw down about a hundred, 105 million. So the net would be about 70 million. So it's about a third of what he said. And a seventh if it gets to the point where they're, you know, they finally take all the money back.

I just note that that that half up to that half a billion is an annual amount, right? So it, it, it's gonna be a, we we do need to recognize our hospitals are the, uh, final kind of, kind of at the end of end of the row when, when we have challenges, not only, uh, those receiving, but those not receiving, you know, that they're uninsured. So we need to be very aware of this, uh, protein issue and work to do the best we can support the bit. And this is one piece, so appreciate the sponsor and the organization. Thank you.

Oh, thank you. Appreciate it. You know, it's this time of the session when you're running, and it could, of course, it couldn't be farther away either, you know, so, you know, it always takes a, it takes a minute to get back. At Least you didn't have to go up to the fourth floor. That's true. I was there a few minutes ago. Oh, were you? Okay. Yeah, we were going back and forth on that one. When you're Running excuse. So thank you Mr. Chair. Appreciate the opportunity to present. Uh, in the past we've allowed, uh, in the state of Utah, we've allowed hospitals to do hospital assessments where they can put in some money and then get a three to one return on the money back from federal government. Uh, that's, that money has been very valuable to the hospitals, especially rural hospitals, but, but really from the smallest to the largest in helping to maintain the, the viability of those hospitals. Um, the big beautiful Bill, I can't remember, it was at HR one or whatever that number was. The, it did a number of things, and one of the things it did is took away those assessments. Um, there was a, but it did allow for an additional provision. So when that took it, that came away, it, it cost us about a net $200 million, uh, which we had been receiving to the ho going to the hospitals. And that was taken away. They did allow for a provision in the bill to go, uh, from the, where we were before up to the cap. And so this bill is simply, uh, a allow requesting that we allow the hospitals to do an assessment for that portion. Uh, that portion would bring in about a net $70 million to the hospitals to allow to try to replace, uh, most, some of that that was, was lost. There's no cost to the state. There is a little bit of a cost to administer it, but that is billed into the hospital assessment portion. So there would be no net cost to the state at all. And with your permission, if I could ask, uh, Mr. Gsel with the hospital association to give you some brief presentation?

For sure. Thank you, Mr. Chairman. Um, in my 30 plus years representing the hospitals, if this might be the first time I've been at this committee, it's not a normal committee, so this is a fairly complex area, but the center did a nice job. Will You, uh, we need you to introduce yourself. Oh, I, I apologize. Your name and who you represent. Dave Ge. Sorry, Mr. Chairman. Dave Guessso, executive Vice President Utah Hospital Association. Um, uh, this is just a very important piece for the hospital. Uh, uh, it's not only just the 200 million we lost this year. Over time, if the big beautiful bill stays in place in about five years, there will be about $500 million less coming into Utah hospitals for Medicaid funding. So it'll still start impacting all of you and all of your areas as well. But the one part we didn't mention so much in here is that this isn't just free money. Yes. It's an assessment or a tax on the hospital, so there's no general fund, and then it comes to you and then the feral match comes. But the door they left open was tied to quality measures. And so this will be tied to some quality measures, work with the Department of Health and the CMS to, for us to get this money. So it's just, uh, very important. We hope you'll, uh, support it. We see some, uh, the chairman of the health committee on here, so I think she knows a little more about this and maybe some of the rest of you. But we hope you can support us on this. Thank you. And that concludes our presentation. Thank you.

Thank you, Mr. Chair. Um, so I'm just trying to understand it a little bit better. Um, so when you say that we can assess the, so can you just explain to me how it works? Let's just do that. Thank, Thank you. And maybe for the whole committee too.

So there's a federal law that allows the states to do this, but what it, it can't just be the state, the hospitals, if you will, giving money to the state. It has to be comply with this federal law. And there are two main components that it has to actually be done by the state through a tax mechanism. They call it an assessment. And secondly, that it has to be broad based. So it has to be on all the hospitals. We can't pick winners and losers, so all the hospitals will pay. So in this, we already have a fairly large assessment. We weren't at the max. As the senator mentioned, the federal government has brought down the max of that. And that's one reason this bill is so late in the process. We didn't know if we had kind of have any room left under what the feds are gonna do. This is about what we have left. We're already paying assessments of roughly 200, more than 200 million a year to draw down that federal match. This will add us about 33 million assessment, and then we will net about 70 above that. So the money will basically, if you pass this bill, there's already a mechanism in place. The Department of Health will do the numbers. They will send out the assessment to the hospitals. They will pay that assessment that will come into the state. Then they will use that money to draw down the federal match funds. I hope that's helpful.

Yes. And so what were you getting before this year? Like what were you, what were you, what was the tax rate on Same thing, just on a larger scale. So what was our total amount? What was the total amount and what was the tax rate?

Uh, boy, those are great questions. Um, the tax rate is just kind of based on what we can, the department does it, what we can actually, there isn't a specific rate, like the income tax's 5%. It's basically what is the level the feds will let us go up to. And then that's kind of divided amongst the hospitals, not evenly like they each pay a hundred dollars, but, but based on how much Medicaid they do each.

Okay. So 'cause my understanding is that the, in the big beautiful bill, like the max was like 6%. Right. Good point. And we weren't near that.

They're, they're starting to come down, uh, starting Next year, and they're gonna go like half a percent every, every Year. And it goes down to about three point half percent. And that's, that's where we think we kind of are now. And it's a moving number because it's based on formulas that if we do more Medicaid is in the hospitals. There's a, there can be a little more room in the assessment, but those are calculations. I, I don't run. And, and, but the department could help you on that.

So I guess my question is if we're at 3.5% right now, and if the big beautiful bill is trying to get everybody down to three point half percent, but we're gonna raise it now.

Well, That portion that we were doing before has gone away though. That's, Yeah. And basically, um, it doesn't go from six to three, three point a half percent overnight. It's like a half percentage. It's like every Year over the next, For like six Years or something. So we're, I don't know if we're over the three point a half percent. That's one reason it got out so late is 'cause we had to work with our consultants and the state's consultants to see if there was room in that. But I would put it this way, this is gonna be the, if the big beautiful bill stays in place and it makes all these reductions by 2032, uh, we will be down to that three point a half percent. And because of some other changes they've made and how much they will reimburse on the federal side. Now that will also take out about 500 million a year from the hospitals, not from the assessment or the state, what the state's putting in general fund, but from what the formula of what the feds were allowing us to take. In other words, the feds got fairly generous the last few years, uh, that they have now said, no, we're not gonna do that anymore. And so the amount that they will match with us is coming down significantly. It's not just a three and a half percent, it's the actual money they would put in to match the state.

Okay. Okay. And I know this is complicated and I'll be happy to, 'cause you're, you're, you'll be very involved in this. We'll be happy maybe after the session to sit down with you specifically and walk through this with you. And, and I think the bill you're doing will show a lot of that as well. That, that you're doing with the ACOs. Yeah. Okay. Thank you. Thank you.

Um, I don't see any other questions, but I have a question, and I don't know if this is germane to the bill, but these quality programs are already in place. What is, what, what does that mean? Quality program and then, uh, adopting rules

for measures and penalties. And So good or bad, there's a number of quality programs dealing with Medicaid and different parts of Medicaid, including hospitals. This is the, for lack of a better way to say it, this is the one area where the Trump administration is saying, we'll allow you to have a little bit more money, but we want a little more say in your quality measures. So this, we don't have them listed in the bill because that will be, if you will, a negotiation between the State Department of Health and Human Services and CMS, which is a federal agency to determine which of those quality measures will be selected for this particular amount of money. I hope that's helpful. There's, there's already some quality measures there, but I think the federal government will be looking at some new ones and or, uh, making it a little tougher, maybe what we already have in place to get this extra money. Great.

Yeah. Motion to pass out favorably SB 3 0 5 for substitute hospital quality incentive amendments. Also what? Oh, hospital quality amendments. I, when you said amendments, I'm like, I don't see an amendment here. Okay. Sorry. My ears are clogged. Um, okay.

Um, I, I think it's been represented well, uh, when we have a lot of work to do to align with federal requirements. Um, this bill definitely represents that and, and, uh, changes a lot of the funding of how we are being accountable. So I appreciate the work in putting this together for, for Utah Utahns to be able to be the recipients of, of this effort. So thank you.

Thank you. Thank you. Um, and, and I appreciate that motion. I'm, I'm probably gonna be a hesitant no on this, right? For now. That doesn't mean I will be on the floor. I just want where it's come out so late and I feel like I haven't had gotten a really great grasp on it. I just wanna take some more time and I'll probably be a yes on the floor, but I, I just wanted to explain my vote.

No, I appreciate the consideration. It, it is an important C component. I've worked with hospitals a number quite a bit during my career up here. And, uh, it's critical to make sure that they have viable funding. Uh, especially when times, uh, when reimbursements and different things vary and fluctuate. It's hard, hard to predict and especially the, the smaller hospitals. So this has been critical and it really affects hospitals all the way up through the chain from the small to the large. But, but it is critical that we continue to have, provide the resources that we can to them to make sure they provide good quality care to our, to us as Utahans. Thank you.

Thank you Mr. President. Uh, in the past we have allowed hospitals to do a hospital assessment where they put some money in and then return, uh, you know, about three times that in, in federal money. Uh, the, and they've been, it's been very, very, very helpful to all of our hospitals, especially rural hospitals. The big, beautiful bill, uh, that was one of the provisions that they took out, but they also left another provision in that. So there was a cap rate that you can go up to. Utah had not gone up to that cap, so they, they lost, we've lost everything that was underneath that, but they do allow us to go up, up above the, up to the cap from where we were before. So what the bill does is simply allow the hospitals to do that same assessment on that, that portion above, which would bring in about, roughly about a third of what was, uh, lost through that, that legislation. So that's what the bill does. The fiscal note is zero because the, there is some cost to it, but the hosp hospital assessment would pick that up. So,

in, we in the past, we've approved hospitals to be able to do certain kinds of assessments where they pay, uh, you can call it whatever you want. It's just an assessment fee. And the federal government then would match that, you know, like three to one bring some additional federal dollars in. That was changed in the, the big beautiful bill that was one P portion that was taken out. Although they do allow to allow a state to go above where they were previously up to the curtain cap. So this is what this bill is simply trying to do, is replace some of that money that was taken back. We lost about $200 million a year. This would replace a net about $70 million a year, no cost to the state. There is a little bit of a fee to administer, but that would be as assumed within the hospital assessment. Open for questions.

Thank you. Every waste submission move the first substitute Senate bill 3 0 5 pass.

Our substitute Senate Bill 3 0 5 Hospital Quality Incentive Amendments by Senator Vickers. This bill was served in law enforcement and criminal justice with the vote. 7 1 3. The House sponsors representative Stevie Steen.

Thank you Mr. Speaker Pro Tem. Uh, this is a pretty straightforward bill that enables, uh, proceeds from the hospital, uh, assessment program to be utilized for a quality incentive program that supports better, uh, health outcomes for Utahans. The legislation leaves the current CMS approved Hospi Hospital assessment structure as is, which is why the bill has a zero fiscal note. Uh, currently, uh, federal law allows, uh, states to make payments above the base capitation rate to support quality and initiatives, and is kind of the, the only current area in, uh, existing federal law that allows those types of payment programs to exist. This new quality incentive program aligns with federal and state efforts to facilitate collaboration between ACOs and providers on advancing quality care for Utahns, um, has no cost to the state. Uh, the, the Federal match component is paid by the current hospital assessment. Um, the bill would benefit all hospitals in Utah, um, from small rural hospitals to, uh, large, uh, our, our largest systems in the state. Um, this is a bit different than kind of the traditional, uh, directed payment program, which has been, uh, uh, capped and frozen, uh, in place. Uh, I think because it's tied to quality metrics, one of which can be providing healthcare services at lower costs. Um, I think that, uh, our rural hospitals are in a difficult position, particularly because of the changes that were made in HR one, while the Rural Health Transformation grant was a significant amount of money over a five year period, it's one time money In October of 2025, the legislature passed a resolution saying those funds can't be used on ongoing costs, which typically in most hospitals, the costs are personnel and those are ongoing costs. So while this won't, um, counterbalance, uh, those changes that our, our rural and large hospitals have to deal with, it will be a, a small step in that the right direction tied to quality initiatives. Thank you, Mr. Speaker, pro Tem

Thank you Mr. Uh, Mr. Speaker Pro Tem. So just a question about the finances on this. Um, we'll, the sponsor yield Oh, thank you.

Sponsor yields. Thank you, Mr. Speaker Pro Tem. So there's quite a bit of money that's moving around because of this bill, and, and we said it's not costing the state anything, but then there was mention of a match, and I suppose I'm not understanding that. And so for me to feel good about this, I kind of need to know what you mean by match. Could you please explain that?

Uh, yes. Thank, thank you, Mr. Speaker. Pro Tem, uh, for, for many years. Um, we have a program in place called, uh, uh, directed Payments. We have a hospital assessment and an IGT for state institutions called an IGT, uh, intergovernmental Transfer, um, from base Medicaid rates. The assumption is, is that no healthcare provider will really provide services at BA base Medicaid rates. So the federal government for many, many years has allowed a system where the state can choose to pay higher, uh, Medicaid rates, but the state has to fund the fmap, that's the, the federal matching component of Medicaid. Uh, them through state dollars, they allow, instead of assessing those increased cost to the taxpayers in general, they said you can actually assess a special tax just on the hospital serving these patients or an IGT to fund the base Medicaid match from the state. So that's been in place for many years. It incentivizes hospitals, physicians, uh, recreational therapists, all the different areas that we fund in Medicaid to, uh, offer those services at a slightly at, at higher rates than just the traditional base Medicaid rates. But because that is funded by hospitals and through an IGT, it doesn't cost the taxpayers anything, but it does, uh, uh, draw down the federal Medicaid funds. I hope that answers the question, Mr. Speaker Pro, Tim, it's kind of technical.

Yeah, it is. I with the sponsor yield to a couple more questions. Yes. Will the sponsor yield a series of questions? Yes. Sponsor yields. Okay. Thank you. So are you saying that in one area of our budget we are paying money, and then in this bill we're talking about federal money that's matching what we're paying somewhere else, so we're just only seeing half of the equation? Is that what you're saying?

Uh, thank you Mr. Speaker Pro ProAm. I think if you look at the fiscal note, it shows the, the flow in of the hospital assessment and the IGT as well as the resulting federal payments that come in. So I think the fiscal note explains the flow of funds, uh, accurately, but the, just to emphasize does not impact the State General Fund.

Okay. Thank you. And then what exactly is this money going to be used for in the rural hospitals? Do they have specific things that they have to use this money for, or is it just kinda whatever they want?

Uh, thank you, Mr. Speaker Pro te, if they meet the, the quality, uh, metrics, then they would be eligible for the enhanced Medicaid rates. Important to note, in our rural communities in Utah and nationwide, the payer mix is much more Medicaid heavy in the rural communities. So on a kind of per capita basis, it generally benefits rural communities better or more than, uh, larger communities, typically because of the payer mix. But it keeps, it, basically, it just keeps the doors open so they're incentivized to continue seeing Medicaid patients.

Okay. Thank you. Speaker Schultz.

Thank you, Mr. Speaker. I rise and supported this bill, uh, representatives due to the big beautiful bill passing, uh, in our earlier, uh, last year. Uh, it will cost the state and hospitals roughly an additional $500 million over the next five years. While this bill doesn't make up the full gap of that, uh, it would make up a significant portion of it. So it is an important, uh, uh, piece of legislation that will help save the state of Utah, uh, money, uh, in making those reimbursements, uh, back to the hospitals into the future. So this is a good piece of legislation that will help the state of Utah's budget. So with that, I'd urge your support on that. Thank you, Mr. Speaker Pro. Tim,

Yeah, thank you, Mr. Speaker Pro Tim. Uh, again, just I think this is a great way. It's a state funding strategy, uh, really to help us, uh, uh, fund dollars, uh, while assessing Medicaid, uh, funds. I worked in this area for a time in my, in my career, and, uh, this is a good strategy and I, I strongly recommend the bill.

Thank you, Mr. Speaker. I just wanna rise in support of this bill. Um, as you mentioned, the big beautiful bill hurt the situation, but the Trump administration's also already authorized several states to, to go this route. It, it'll help every hospital in the state, more so for the rural hospitals, and that's very important, and I think you need to keep that in mind as you cast your vote today, and I'd encourage you to support the bill. Thank you. Thank, Thank

Thank you, Mr. Speaker. Would the sponsor yield to a Question Representative? Les? And will you yield?

Absolutely. Yes, representative.

Thank you. Um, if the one big beautiful bill or the provisions in that bill change, how would it affect this piece of legislation?

Uh, thank you, Mr. Speaker. Um, well, I'm not sure if I completely understood it, because the provisions of HR one, otherwise known as that one big, beautiful bill are in place, and that bill can't change as 'cause it's in place. However, that, uh, HR one did not preclude this, they allowed this quality program to stay in place. Can't ever guess what congress' methodology or reasoning is. My guess is they left this one in place because it is tied to quality, which also is tied to, uh, cost control incentives. So of course, anything could change going into the future, but one really important thing about this is this is simply application for a waiver. If that's granted, then it would go into place, and obviously if Congress changes the rules, which they occasionally do, then this would not be approved.

Thank you. Thank you, Representative.

Thank you, Mr. Speaker. I also rise in support of the bill. I ha have worked in this field and, and live in a very rural area and district. Um, we have passed policy this year that has followed in line with HR one. We're committed to making sure that, that we are on the same page and working for those same results that HR one was working for. This, in my opinion, does not go against HR one. Um, this is, is working for, um, solutions to make sure that we can keep the services that we've had and, and specifically in rural Utah, where our resources are already limited. Thank you, Mr. Speaker.

Uh, I, I think we've had a good discussion on it. And, uh, hope for your support. Thank you. Thank you.