AB925: Bill Text

AB925, s. 8 Section 8. 146.37 (1g) of the statutes is amended to read:

AB925,7,23 146.37 (1g) Except as provided in s. 153.85, no person acting in good faith who participates in the review or evaluation of the services of health care providers or facilities or the charges for such services conducted in connection with any program organized and operated to help improve the quality of health care, to avoid improper utilization of the services of health care providers or facilities or to determine the reasonable charges for such services, or who participates in the obtaining of health care information under ch. 153 or in hospital rate-setting activities under subch. III of ch. 150, is liable for any civil damages as a result of any act or omission by such person in the course of such review or evaluation. Acts and omissions to which this subsection applies include, but are not limited to, acts or omissions by peer review committees or hospital governing bodies in censuring, reprimanding, limiting or revoking hospital staff privileges or notifying the medical examining board or podiatrists affiliated credentialing board under s. 50.36 or taking any other disciplinary action against a health care provider or facility and acts or omissions by a medical director, as defined in s. 146.50 (1) (j), in reviewing the performance of emergency medical technicians or ambulance service providers.

AB925, s. 9 Section 9. Subchapter III of chapter 150 [precedes 150.61] of the statutes is created to read:

AB925,8,1 chapter 150

AB925,8,4 subchapter iii Hospital rate setting and capital expenditure review

AB925,8,5 150.61 Definitions. In this subchapter:

AB925,8,6 (1) "Commission" means the hospital rate-setting commission.

AB925,8,7 (2) "Consumer price index" has the meaning given in s. 16.004 (8) (e) 1.

AB925,8,10 (3) Notwithstanding s. 150.01 (12), "hospital" has the meaning given in s. 50.33 (2), except that "hospital" does not include a center for the developmentally disabled, as defined in s. 51.01 (3).

AB925,8,13 (4) "Rates" means individual charges of a hospital for the services that it provides or, if authorized under s. 150.64 (3), the aggregate charges based on case mix measurements.

AB925,8,19 150.612 Prospective rate setting. (1) Beginning on July 1, 2003, the commission shall prescribe maximum hospital rates on a prospective basis. The commission may revise these rates as provided in this subchapter. The commission shall publish biennial reports that contain the proceedings and any information necessary to describe the rate of hospital cost increases and the financial condition of hospitals.

AB925,8,21 (2) No hospital may charge rates that exceed the rates established by the commission under this subchapter.

AB925,8,23 150.615 Rule making. The commission shall promulgate rules to implement this subchapter.

AB925,9,5 150.62 Requests for rate changes. (1) (a) The commission shall create a schedule allowing each hospital to request rate changes annually. Beginning on July 1, 2002, the schedule shall permit a hospital to request a rate change on or after the date the hospital receives its audited financial statements for the most recent fiscal year. Beginning on July 1, 2002, the commission may schedule a review of the hospital's rates and revise the rates on its own initiative or at the request of any person who has good cause for requesting review.

AB925,9,7 (b) A hospital may submit a rate request on or after the date scheduled by the commission.

AB925,9,11 (2) (a) No later than 10 days after a hospital submits a rate request under sub. (1) (a), the hospital shall publish a class 1 notice under ch. 985. If the commission schedules a review under sub. (1), the commission shall publish a class 1 notice under ch. 985 no later than 10 days after the date scheduled for the review.

AB925,9,14 (b) A notice under par. (a) shall contain a summary of the rate-change request and a description of the process by which an interested person may become a party to the review.

AB925,9,16 (c) A person may become a party to the review only by notifying the commission in writing no later than 30 days after the date the notice is published.

AB925,9,24 (3) At the time a hospital requests a rate change, the hospital shall submit to the commission the proposed financial requirements specified under s. 150.625 and, except as provided in s. 150.64 (4) (g), any information that the commission determines is necessary to set and monitor rates. Corporate affiliates of the hospital and other organizations that generate financial requirements of the hospital shall also provide to the commission financial or other statistical information related to the financial requirements that the commission determines is necessary to set and monitor rates.

AB925,10,2 (4) The commission may require hospitals to conform with a uniform reporting system.

AB925,10,4 (5) The commission shall regularly publish a list of the 25 most used charge elements for hospitals.

AB925,10,6 150.625 Financial requirements. (1) The financial requirements that a hospital must submit under s. 150.62 (3) shall include all of the following:

AB925,10,14 (a) Necessary operating expenses, including wages, employee fringe benefits, purchased services, professional fees, repairs and maintenance, dietary and medical supplies, pharmaceuticals, utilities, insurance, standby costs, and applicable taxes. A hospital may include as necessary operating expenses any amount paid to members of a religious order or other organized religious group if the amounts were actually paid to the members and are equivalent to the amounts paid to hospital employees for similar work. The commission may not use previously accumulated depreciation of capitalized assets to offset operating expenses.

AB925,10,20 (b) Interest expenses on debt incurred for capital or operating costs. Interest payments on debts incurred for capital costs shall be offset by income earned on investments unless the income is assigned by the donor. After the sale of a hospital, financial requirements shall include the interest expense on debt incurred for capital costs only if the debt does not exceed the revalued price of the hospital, as specified in sub. (4).

AB925,10,25 (c) Direct and indirect costs of medical education, allied education, and research programs that are approved by the commission as reasonable and necessary to maintain the quality of the programs less any tuition, scholarships, endowments, gifts, grants, and similar sources of revenue that are received by the hospital.

AB925,11,5 (d) Costs of services, facilities, and supplies that organizations related to the hospital by common ownership or control furnish to the hospital. These costs shall be calculated as the charge of the furnishing organization, but may not exceed a reasonable amount in relation to the price of comparable services, facilities, or supplies that could be purchased elsewhere.

AB925,11,8 (e) Unrecovered costs from private parties who fail to pay the full charge for care provided, unless the hospital fails to maintain sound credit and collection policies to minimize the costs.

AB925,11,9 (f) Fees assessed by the commission or other regulatory agencies.

AB925,11,17 (g) Operating fund working capital requirements. In this paragraph, "working capital requirements" means capital in use to operate the hospital at a level sufficient to avoid unnecessary borrowing, including cash, accounts receivable, inventory, and prepaid expenses less accounts payable and accrued interest. Working capital requirements shall be calculated independently of available funds, as defined in par. (i) 1. and be based on the net change in the estimated year-end balance of the hospital's year under review, compared to the year-end balance of the hospital's prior fiscal year, for the following accounts:

AB925,11,18 1. Cash.

AB925,11,19 2. Accounts receivable.

AB925,11,20 3. Inventories.

AB925,11,21 4. Prepaid expenses.

AB925,11,22 5. Trade accounts payable.

AB925,11,23 6. Accrued interest payable.

AB925,12,5 (h) An amount necessary to establish and maintain a contingency fund in cash and investments equal to 2% of the budgeted gross revenue for the hospital's year under review. The hospital shall use cash and investments to establish and maintain its contingency fund and shall use the fund to pay any unexpected expenses. The commission may review any expenditure of contingency funds in a prior year that requires restoration in the hospital's year under review for reasonableness, consistent with the nature of the unexpected expense.

AB925,12,9 (i) Capital requirements, calculated as the greater of historical, straight-line depreciation of plant and equipment or the cost of proposed capital purchases as offset by available funds, plus debt retirement expenses, prospective accumulation, and capitalized interest. In this paragraph:

AB925,12,23 1. "Available funds" includes cash and investments that are not assigned by the donor and are available to meet capital needs and does not include operating fund working capital requirements, prospective accumulations that are authorized by the commission, donor-restricted or creditor-restricted funds, grants, commitments for capital requirements, debt retirement expenses, or the amounts disallowed under s. 150.63 (2) (b). The commission may authorize prospective accumulations if a project that must be appeared under s. 150.71 (1), has lending requirements that necessitate such an accumulation or if the interest costs for the project may be lowered by borrowing, or if financial needs of a hospital occur because of balloon payments. The commission may also authorize prospective accumulations to finance a project that must be approved under s. 150.71 (1), if the cost of the project equals or exceeds 25% of the hospital's gross patient revenue for the current fiscal year, the hospital has submitted a 3-year capital expenditure plan to the commission, and the department indicates that the project is consistent with the projected needs of the community.

AB925,12,25 2. "Capital purchases" includes minor remodeling and the purchase of equipment, land, land improvements, and leasehold improvements.

AB925,13,2 3. "Depreciation" means the rational allocation of the historical cost of capitalized assets throughout the useful lives of those assets.

AB925,13,4 4. "Prospective accumulation" does not include funds that exceed the cost of the capital project for which the funds are accumulated.

AB925,13,7 (j) The amount by which estimated relief payments and medical assistance payments under ch. 49 and medicare payments under 42 USC 1395 to 1395ccc, as determined under s. 150.64 (1) (a), exceed actual payments.

AB925,13,9 (k) Any financial incentives that are authorized by the commission for efficiently operated hospitals.

AB925,13,22 (2) Hospitals may collect revenue from sources other than patients, including gifts and grants, investment income, or income from activities that are incidental to patient care. Revenues from endowment funds or donor-restricted gifts to provide services for designated patients shall offset the cost of those services. No revenue from general endowment funds or unrestricted gifts may be used to offset operating expenses except that revenue from these funds or gifts may be used to offset interest expenses. Revenues received to finance special projects or wages paid to special project employees shall offset the cost of patient services. Revenues from meals sold to visitors or employees, from pharmaceuticals sold to persons who are not patients, from the operation of gift shops or parking lots, or from the provision of televisions, radios, or telephones to patients shall offset the cost of these services, to the extent that the amount of revenue offset from any of these services may not exceed the cost of the service.

AB925,14,5 (3) Purchase discounts, the amount by which actual payments by government payers exceed estimated payments under s. 150.64 (1) (a), and allowances and refunds of expenses shall be subtracted from the calculation of financial requirements under this section. Revenues from invested funds shall also be subtracted from the calculation of financial requirements but may not offset an amount that exceeds the hospital's interest expenses. Any costs of a project that must be approved under s. 150.71 (1) and that does not receive the approval may not be included in the calculation of a hospital's financial requirements.

AB925,14,11 (4) After the sale of a hospital, the commission may calculate depreciation under sub. (1) based on a revaluation of the hospital's plant and equipment to determine its reasonable value. The revaluation shall be based on appraisals conducted by 2 independent appraisers, one of whom shall be selected by the hospital and one of whom shall be selected by the commission. The hospital shall pay the cost of both appraisals.

AB925,14,15 150.63 Initial determinations. (1) The commission and commission staff shall review and evaluate each hospital's proposed financial requirements and rate-change request. In reviewing and evaluating the financial requirements and rate-change request, the commission shall consider all of the following:

AB925,14,18 (a) The need to reduce the rate of hospital cost increases while preserving the quality of health care in all parts of the state and taking into account the financial viability of economically and efficiently operated hospitals.

AB925,14,23 (b) Comparisons with prudently administered hospitals of similar size or providing similar services that offer quality health care with sufficient staff. In classifying hospitals according to size and services, the commission shall consider volume, intensity, and educational programs and special services provided by hospitals.

AB925,14,25 (c) A variety of cost-related trend factors based on nationally or regionally recognized economic models.

AB925,15,1 (d) Special circumstances of rural hospitals and teaching hospitals.

AB925,15,2 (e) Past budget and rate experiences of the hospital.

AB925,15,4 (f) Findings of the utilization review program under s. 150.66 (3) concerning the hospital that submits the rate request.

AB925,15,6 (2) After reviewing a hospital's proposed financial requirements, the commission may disallow any of the following:

AB925,15,8 (a) Costs associated with medical services that a utilization review program under s. 150.66 determines are medically unnecessary or inappropriate.

AB925,15,14 (b) 1. Except as provided in subd. 2., 40% of the amount by which patient revenue generated by the hospital during its previous fiscal year exceeds 104% of the hospital's budgeted patient revenue for that year, if the hospital's annual gross patient revenue, as adjusted under s. 150.68, is less than $5,000,000, or exceeds 102% of the hospital's budgeted patient revenue for that year, if the hospital's annual gross patient revenue, as adjusted under s. 150.68, equals or exceeds $5,000,000.

AB925,15,17 2. The commission shall promulgate rules to specify a procedure under which hospitals whose variable costs exceed 65% are subject to a lesser disallowance under subd. 1.

AB925,15,19 (c) Rate overcharges of the hospital that occurred in a prior year and for which payers have not been reimbursed.

AB925,15,23 (d) The amount by which incremental expenses that are associated with the cost of a project that must be approved under s. 150.71 (1) exceed 105% of the expenses projected in the hospital's application for approval of the project. This paragraph does not apply if any of the following applies:

AB925,15,25 1. The hospital demonstrates to the satisfaction of the commission that the excess was due to conditions beyond its control.

AB925,16,1 2. The excess occurs more than 3 years after completion of the project.

AB925,16,2 (e) Costs that the commission determines are unreasonable.

AB925,16,9 (f) Excessive wages. In determining whether wages are excessive under this paragraph, the commission shall consider the wage levels of hospitals located in a relevant geographic area surrounding the hospital that submitted the rate request as well as wage levels of hospitals that are similar in size or that provide similar services. In addition, the commission shall consider the hospital's ability to attract adequate staff and the wage trends in nonregulated, related sectors of the state economy.

AB925,16,10 (g) Amounts paid for services regulated under s. 111.18 (2) (a) 1.

AB925,16,16 (3) (a) After reviewing the hospital's financial requirements and rate request, the commission staff shall suggest to the commission any disallowances authorized under sub. (2) and shall submit a rate recommendation to the hospital and commission. If the rate recommended by the commission staff differs from the rate request submitted by the hospital, the commission staff shall provide an explanation for the difference.

AB925,16,22 (b) 1. Except as provided in subd. 2., the commission staff shall submit its recommendations under par. (a) no later than 60 days after the date that review commences under s. 150.62 (1), even if the commission staff determines that the data provided by the hospital for a scheduled review are incomplete. The commission staff may, however, recommend a disallowance or an alternate rate, including no rate increase, on the grounds of insufficient data.

AB925,16,25 2. a. The commission staff may extend the deadline specified in subd. 1. by 15 days if it determines that the rate request submitted involves particularly complex issues of fact.

AB925,17,2 b. The deadline specified in subd. 1. may be extended with the consent of the hospital and the commission staff.

AB925,17,11 150.635 Review of rate recommendations. (1) A hospital that disputes any part of a recommendation of the commission staff under s. 150.63 shall, no later than 10 days after the recommendations are submitted under s. 150.63 (3), request a settlement conference with the commission staff for the purpose of resolving the differences in the hospital's rate request and the commission staff's recommendation. The chairperson of the commission, or a commissioner designated by the chairperson, shall preside over the settlement conference. No later than 20 days after the hospital requests a settlement conference, the settlement conference shall be completed.

AB925,17,18 (2) No later than 10 days after completion of the settlement conference under sub. (1), the hospital may request a hearing before the commission under sub. (3). Upon receipt of a request, the commission shall grant a hearing to the hospital. The hospital may present testimony based on any standard for decision making specified in s. 150.63 (1). All questions of fact shall be determined without ascribing greater weight to evidence presented by commission staff than to evidence presented by any other party solely due to its presentation by the staff.

AB925,17,24 (3) (a) Informal hearings shall be conducted before at least 2 commissioners. Sworn testimony is required only if the presiding commissioners so specify. The commissioners may establish time limits for cross-examination of witnesses and rebuttal arguments and may limit the number of persons who may appear at the hearing. Rules of evidence, except the rule that evidence be relevant to the issues presented, do not apply to informal hearings.

AB925,18,8 (b) A hospital that requests an informal hearing shall present the reasons supporting its proposed rate increase and financial requirements. Commission staff shall respond by explaining the alternate recommendations. Within the time limits established under par. (a), the hospital, parties to the review, and commission staff may cross-examine witnesses and rebut arguments presented. The hospital, parties to the review, and the commission staff may employ experts to present their position. The presiding commissioners may impose an overall time limit on the length of the hearing.

AB925,18,10 (c) The commission may conduct a class 1 contested case proceeding under ch. 227 in place of an informal hearing under pars. (a) and (b).

AB925,18,15 (4) The commission shall keep a complete written record of all hearings and investigations conducted under sub. (3). The commission shall provide a transcribed, certified copy of all or any part of the record at the request of any person who is a party to the hearing or investigation. The commission may charge a fee to cover the costs of providing copies of the record.

AB925,18,20 (5) (a) Any person may request a hearing under s. 227.44, regardless of whether any other hearing is authorized by law or is authorized at the discretion of the commission or whether any other proceeding is authorized by rule of the commission, except that no person may receive more than one contested case hearing concerning a particular act or failure to act by the commission.

AB925,18,22 (b) Notwithstanding par. (a), no person may request a hearing under s. 227.44 pertaining to the subject matter of a hearing under sub. (3).

AB925,18,24 (c) The right to a hearing under s. 227.44, as specified in this subsection, applies only to subject matter pertaining to this subchapter.

AB925,19,13 150.64 Commission orders. (1) (a) The commission shall determine allowable financial requirements and disallowances under s. 150.63 (1) and (2) for the hospital. From the difference between these amounts, the commission shall subtract the hospital's estimated relief payments and medical assistance payments under ch. 49 and medicare payments under 42 USC 1395 to 1395ccc, unless the commission determines that the hospital's estimates are incorrect, in which case the commission shall subtract its own estimates of the hospital's relief, medical assistance, and medicare payments. The commission shall, by order, establish maximum rates that allow the hospital to generate revenue sufficient to provide this remainder. The commission shall, by rule, establish acceptable methods for hospitals to use in estimating payments by relief, medical assistance, and medicare under this paragraph. Each hospital shall choose one of the methods and use it consistently unless the commission authorizes the hospital to change the method.

AB925,19,22 (b) Unless the hospital requests a hearing under s. 150.635 (2), the commission shall issue an order under par. (a) no later than 15 days after the commission staff submits its recommendations under s. 150.63 (3) (b) or, if the hospital requests a settlement conference under s. 150.635 (1), no later than 15 days after the commission determines that the hospital will not seek a hearing following the conclusion of the settlement conference. If the hospital disputes only part of the recommendations of the commission staff, the commission may establish maximum rates under par. (a) concerning the recommendations that the hospital agrees with prior to the conclusion of the hearing under s. 150.635 (3).

AB925,20,2 (c) If the commission conducts a hearing under s. 150.635 (3) (c), the commission shall establish by order maximum rates for the hospital's year under review at the conclusion of the hearing. If the commission conducts an informal hearing under s. 150.635 (3) (a) and (b), the commission shall issue its order no later than 50 days after the date on which the hospital requested the hearing.

AB925,20,6 (d) Each order that the commission issues concerning financial requirements and rates shall state findings of fact and the reasons supporting the order. If the commission denies any part of a rate request, the order shall also specify any financial requirements that were disallowed.

AB925,20,25 (e) A hospital may apply an increase in its rates selectively, if the aggregate increase in its rates does not exceed the amount authorized by the commission. No hospital may change a method of applying its rate increase that has received the commission's approval without submitting the changes to the commission for its approval under this paragraph. Prior to increasing rates or changing a method of applying a rate increase, the hospital shall explain to the commission the method of applying the rate increase. If, after 5 working days, as defined in s. 227.01 (14), the commission does not notify the hospital that it has not approved the hospital's rate increase, the hospital may increase its rates as proposed and the commission may not challenge the method prior to the date of a succeeding review under s. 150.62 (1) except as provided in sub. (4) (a). If the commission does not approve the hospital's method of applying the rate increase, the commission shall recommend an alternate method. If the hospital does not modify its method of applying the rate increase, the commission may challenge the method in circuit court. If the hospital's method generates an aggregate increase in the hospital's rates that is inconsistent with the amount authorized by the commission, the hospital is subject to a forfeiture equal to 50% of the amount overcharged and shall comply with the alternate method recommended by the commission or with any other method ordered by the court that the court finds more consistent with the commission's order.

AB925,21,5 (f) A hospital that receives approval of a rate increase that may commence only between the 2nd and 7th months of its fiscal year may make an adjustment to the rate increase for that fiscal year only to generate an amount of revenue equal to the amount that would have been generated if the hospital could have commenced the rate increase beginning with the first month of its fiscal year.

AB925,21,9 (g) Except as provided in s. 150.65, if a party seeks judicial review of a commission order, the affected hospital may continue to bill payers at the rates established by the commission. No hospital that bills payers under this paragraph adversely affects its right to contest the rates established by the commission.

AB925,21,12 (2) Notwithstanding sub. (1) and ss. 150.62, 150.63, and 150.635, at the request of a hospital the commission may waive the procedures for review of a rate request and issue an interim order if the commission determines that an emergency exists.

AB925,21,17 (3) The commission may promulgate rules to establish a system that defines rates as aggregate charges based on case mix measurements if the commission submits its proposed system to the joint committee on finance for review and if the committee approves the system. The system shall be consistent with the standards specified under s. 150.63 (1).

AB925,21,18 (4) The commission may not do any of the following:

AB925,21,22 (a) Reduce rates established prior to the date the commission schedules a review under s. 150.62 (1), unless the hospital misstated a material fact at a prior rate-setting proceeding. Projections on the volume of hospital services utilized do not constitute material facts under this paragraph.

AB925,21,24 (b) Reduce rates established in a previous review under s. 150.62 (1) unless any of the following apply: