Governor Pritzker Signs Hospital Assessment Program Expansion

Governor Pritzker Signs Hospital Assessment Program Expansion

Chicago — On Tuesday, May 17, Governor JB Pritzker signed HB1950, extending and expanding the Hospital Assessment
Program through 2026. The legislation helps ensure cash-flow predictability for hospitals, tying greater funding to higher Medicaid utilization to protect safety net hospitals. It
also reclassifies certain hospitals to better align with payment and Medicaid needs, as well as offering tax exemptions and waivers to help hospitals recover from the effects of COVID-19.

The renewed Hospital Assessment establishes refined payment structures for each hospital class and maintains the existing
assessment tax structure. The Illinois Department of Healthcare and Family Services (HFS) collects a hospital assessment tax, the federal government provides matching funds, and the dollars are redistributed to hospitals based on the volume and acuity of the Medicaid patients they serve, as well as the class
of hospital.

HFS worked with the General Assembly and stakeholders to distribute funding to hospitals across the state and prioritize hospitals that serve a high number of Medicaid patients. In order to come into compliance with a recent federal mandate, the Hospital Assessment program will gradually shift payments
so that each year a larger share of the payments to hospitals is tied to the volume and acuity of Medicaid patients.

To support recovery from COVID-19 losses, the renewed Hospital Assessment program waives $240,000,000 in the assessment imposed on hospitals, an amount replaced by
General Revenue funds in the budget adopted by the General Assembly and signed into law by Gov. Pritzker.

The current Hospital Assessment program, signed into law in 2020 to run through calendar year 2022, brought additional
funding, and improved Medicaid responsiveness in the areas of Illinois affected most by COVID-19.

The amendments to the act recognize outpatient services to determine qualification as a high Medicaid hospital, allowing more hospitals to qualify. The reclassifications also establish a new class of small government hospitals, to better align their payments with their costs and federal limits. This class
would consist of seventeen critical access hospitals and three small, rural hospitals. This is another commitment to expanding
rural health care following other actions from the Pritzker administration on that front, including the recently signed bills SB3017 and SB1435.

The Hospital Assessment program also provides for more security and reliability to safety-net hospitals, hospitals primarily
serving Medicaid patients, by adding a rate floor for safety net and critical access hospitals ensuring higher payments during periods of higher utilization.

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