Illinois Compiled Statutes
305 ILCS 5/ - Illinois Public Aid Code.
Article XIV - Hospital Services Trust Fund

(305 ILCS 5/Art. XIV heading)

(305 ILCS 5/14-1) (from Ch. 23, par. 14-1)
Sec. 14-1. Definitions. As used in this Article, unless the
context requires otherwise:
"Hospital" means any institution, place, building, or agency, public
or private, whether organized for profit or not-for-profit, which is
located in the State and is subject to licensure by the Illinois
Department of Public Health under the Hospital Licensing Act or any
institution, place, building, or agency, public or private, whether organized
for profit or not-for-profit, which meets all comparable conditions and
requirements of the Hospital Licensing Act in effect for the state in
which it is located, and is required to submit cost reports to the
Illinois Department under Title 89, Part 148, of the Illinois
Administrative Code, but shall not include the University of Illinois
Hospital as defined in
the University of Illinois Hospital Act or a county hospital in a county
of over 3 million population.

(Source: P.A. 93-659, eff. 2-3-04.)

(305 ILCS 5/14-2) (from Ch. 23, par. 14-2)
Sec. 14-2.
(Repealed).

(Source: P.A. 90-372, eff. 7-1-98. Repealed by P.A. 93-659, eff. 2-3-04.)

(305 ILCS 5/14-3) (from Ch. 23, par. 14-3)
Sec. 14-3.
(Repealed).

(Source: P.A. 87-861. Repealed by P.A. 93-659, eff. 2-3-04.)

(305 ILCS 5/14-4) (from Ch. 23, par. 14-4)
Sec. 14-4.
(Repealed).

(Source: P.A. 87-13. Repealed by P.A. 93-659, eff. 2-3-04.)

(305 ILCS 5/14-5) (from Ch. 23, par. 14-5)
Sec. 14-5.
(Repealed).

(Source: P.A. 87-13. Repealed by P.A. 93-659, eff. 2-3-04.)

(305 ILCS 5/14-6) (from Ch. 23, par. 14-6)
Sec. 14-6.
(Repealed).

(Source: P.A. 87-13. Repealed by P.A. 93-659, eff. 2-3-04.)

(305 ILCS 5/14-7) (from Ch. 23, par. 14-7)
Sec. 14-7.
(Repealed).

(Source: P.A. 87-13. Repealed by P.A. 93-659, eff. 2-3-04.)

(305 ILCS 5/14-8) (from Ch. 23, par. 14-8)
Sec. 14-8. Disbursements to Hospitals.
(a) For inpatient hospital services rendered on and after September 1,
1991, the Illinois Department shall reimburse
hospitals for inpatient services at an inpatient payment rate calculated for
each hospital based upon the Medicare Prospective Payment System as set forth
in Sections 1886(b), (d), (g), and (h) of the federal Social Security Act, and
the regulations, policies, and procedures promulgated thereunder, except as
modified by this Section. Payment rates for inpatient hospital services
rendered on or after September 1, 1991 and on or before September 30, 1992
shall be calculated using the Medicare Prospective Payment rates in effect on
September 1, 1991. Payment rates for inpatient hospital services rendered on
or after October 1, 1992 and on or before March 31, 1994 shall be calculated
using the Medicare Prospective Payment rates in effect on September 1, 1992.
Payment rates for inpatient hospital services rendered on or after April 1,
1994 shall be calculated using the Medicare Prospective Payment rates
(including the Medicare grouping methodology and weighting factors as adjusted
pursuant to paragraph (1) of this subsection) in effect 90 days prior to the
date of admission. For services rendered on or after July 1, 1995, the
reimbursement methodology implemented under this subsection shall not include
those costs referred to in Sections 1886(d)(5)(B) and 1886(h) of the Social
Security Act. The additional payment amounts required under Section
1886(d)(5)(F) of the Social Security Act, for hospitals serving a
disproportionate share of low-income or indigent patients, are not required
under this Section. For hospital inpatient services rendered on or after July
1, 1995 and on or before June 30, 2014, the Illinois Department shall
reimburse hospitals using the relative weighting factors and the base payment
rates calculated for each hospital that were in effect on June 30, 1995, less
the portion of such rates attributed by the Illinois Department to the cost of
medical education.
(b) (Blank).
(b-5) Excepting county providers as defined in Article XV of this Code,
hospitals licensed under the University of Illinois Hospital Act, and
facilities operated by the Illinois Department of Mental Health and
Developmental Disabilities (or its successor, the Department of Human
Services), for outpatient services rendered on or after July 1, 1995
and before July 1, 1998 the Illinois Department shall reimburse
children's hospitals, as defined in the Illinois Administrative Code
Section 149.50(c)(3), at the rates in effect on June 30, 1995, less that
portion of such rates attributed by the Illinois Department to the outpatient
indigent volume adjustment and shall reimburse all other hospitals at the rates
in effect on June 30, 1995, less the portions of such rates attributed by the
Illinois Department to the cost of medical education and attributed by the
Illinois Department to the outpatient indigent volume adjustment. For
outpatient services provided on or after July 1, 1998 and on or before June 30, 2014, reimbursement rates
shall be established by rule.
(c) In addition to any other payments under this Code, the Illinois
Department shall develop a hospital disproportionate share reimbursement
methodology that, effective July 1, 1991, through September 30, 1992,
shall reimburse hospitals sufficiently to expend the fee monies described
in subsection (b) of Section 14-3 of this Code and the federal matching
funds received by the Illinois Department as a result of expenditures made
by the Illinois Department as required by this subsection (c) and Section
14-2 that are attributable to fee monies deposited in the Fund, less
amounts applied to adjustment payments under Section 5-5.02.
(d) Critical Care Access Payments.
(e) Inpatient high volume adjustment. For hospital inpatient services,
effective with rate periods beginning on or after October 1, 1993, in
addition to rates paid for inpatient services by the Illinois Department, the
Illinois Department shall make adjustment payments for inpatient services
furnished by Medicaid high volume hospitals. The Illinois Department shall
establish by rule criteria for qualifying as a Medicaid high volume hospital
and shall establish by rule a reimbursement methodology for calculating these
adjustment payments to Medicaid high volume hospitals. No adjustment payment
shall be made under this subsection for services rendered on or after July 1,
1995.
(f) The Illinois Department shall modify its current rules governing
adjustment payments for targeted access, critical care access, and
uncompensated care to classify those adjustment payments as not being payments
to disproportionate share hospitals under Title XIX of the federal Social
Security Act. Rules adopted under this subsection shall not be effective with
respect to services rendered on or after July 1, 1995. The Illinois Department
has no obligation to adopt or implement any rules or make any payments under
this subsection for services rendered on or after July 1, 1995.
(f-5) The State recognizes that adjustment payments to hospitals providing
certain services or incurring certain costs may be necessary to assure that
recipients of medical assistance have adequate access to necessary medical
services. These adjustments include payments for teaching costs and
uncompensated care, trauma center payments, rehabilitation hospital payments,
perinatal center payments, obstetrical care payments, targeted access payments,
Medicaid high volume payments, and outpatient indigent volume payments. On or
before April 1, 1995, the Illinois Department shall issue recommendations
regarding (i) reimbursement mechanisms or adjustment payments to reflect these
costs and services, including methods by which the payments may be calculated
and the method by which the payments may be financed, and (ii) reimbursement
mechanisms or adjustment payments to reflect costs and services of federally
qualified health centers with respect to recipients of medical assistance.
(g) If one or more hospitals file suit in any court challenging any part of
this Article XIV, payments to hospitals under this Article XIV shall be made
only to the extent that sufficient monies are available in the Fund and only to
the extent that any monies in the Fund are not prohibited from disbursement
under any order of the court.
(h) Payments under the disbursement methodology described in this Section
are subject to approval by the federal government in an appropriate State plan
amendment.
(i) The Illinois Department may by rule establish criteria for and develop
methodologies for adjustment payments to hospitals participating under this
Article.
(j) Hospital Residing Long Term Care Services. In addition to any other
payments made under this Code, the Illinois Department may by rule establish
criteria and develop methodologies for payments to hospitals for Hospital
Residing Long Term Care Services.
(k) Critical Access Hospital outpatient payments. In addition to any other payments authorized under this Code, the Illinois Department shall reimburse critical access hospitals, as designated by the Illinois Department of Public Health in accordance with 42 CFR 485, Subpart F, for outpatient services at an amount that is no less than the cost of providing such services, based on Medicare cost principles. Payments under this subsection shall be subject to appropriation.
(l) On and after July 1, 2012, the Department shall reduce any rate of reimbursement for services or other payments or alter any methodologies authorized by this Code to reduce any rate of reimbursement for services or other payments in accordance with Section 5-5e.
(Source: P.A. 97-689, eff. 6-14-12; 98-463, eff. 8-16-13; 98-651, eff. 6-16-14.)

(305 ILCS 5/14-9) (from Ch. 23, par. 14-9)
Sec. 14-9.
(Repealed).

(Source: P.A. 87-13. Repealed by P.A. 93-659, eff. 2-3-04.)

(305 ILCS 5/14-10) (from Ch. 23, par. 14-10)
Sec. 14-10.
(Repealed).

(Source: P.A. 87-861. Repealed by P.A. 93-659, eff. 2-3-04.)

(305 ILCS 5/14-11)
Sec. 14-11. Hospital payment reform.
(a) The Department may, by rule, implement the All Patient Refined Diagnosis Related Groups (APR-DRG) payment system for inpatient services provided on or after July 1, 2013, in a manner consistent with the actions authorized in this Section.
(b) On or before October 1, 2012 and through June 30, 2013, the Department shall begin testing the APR-DRG system. During the testing period the Department shall process and price inpatient services using the APR-DRG system; however, actual payments for those inpatient services shall be made using the current reimbursement system. During the testing period, the Department, in collaboration with the statewide representative of hospitals, shall provide information and technical assistance to hospitals to encourage and facilitate their transition to the APR-DRG system.
(c) The Department may, by rule, implement the Enhanced Ambulatory Procedure Grouping (EAPG) system for outpatient services provided on or after January 1, 2014, in a manner consistent with the actions authorized in this Section. On or before January 1, 2013 and through December 31, 2013, the Department shall begin testing the EAPG system. During the testing period the Department shall process and price outpatient services using the EAPG system; however, actual payments for those outpatient services shall be made using the current reimbursement system. During the testing period, the Department, in collaboration with the statewide representative of hospitals, shall provide information and technical assistance to hospitals to encourage and facilitate their transition to the EAPG system.
(d) The Department in consultation with the current hospital technical advisory group shall review the test claims for inpatient and outpatient services at least monthly, including the estimated impact on hospitals, and, in developing the rules, policies, and procedures to implement the new payment systems, shall consider at least the following issues:
(e) The Department shall provide the association representing the majority of hospitals in Illinois, as the statewide representative of the hospital community, with a monthly file of claims adjudicated under the test system for the purpose of review and analysis as part of the collaboration between the State and the hospital community. The file shall consist of a de-identified extract compliant with the Health Insurance Portability and Accountability Act (HIPAA).
(f) The current hospital technical advisory group shall make recommendations for changes during the testing period and recommendations for changes prior to the effective dates of the new payment systems. The Department shall draft administrative rules to implement the new payment systems and provide them to the technical advisory group at least 90 days prior to the proposed effective dates of the new payment systems.
(g) The payments to hospitals financed by the current hospital assessment, authorized under Article V-A of this Code, are scheduled to sunset on June 30, 2014. The continuation of or revisions to the hospital assessment program shall take into consideration the impact on hospitals and access to care as a result of the changes to the hospital payment system.
(h) Beginning July 1, 2014, the Department may transition current General Revenue funded supplemental payments into the claims based system over a period of no less than 2 years from the implementation date of the new payment systems and no more than 4 years from the implementation date of the new payment systems, provided however that the Department may adopt, by rule, supplemental payments to help ensure access to care in a geographic area or to help ensure access to specialty services. For any supplemental payments that are adopted that are based on historic data, the data shall be no older than 3 years and the supplemental payment shall be effective for no longer than 2 years before requiring the data to be updated.
(i) Any payments authorized under 89 Illinois Administrative Code 148 set to expire in State fiscal year 2012 and that were paid out to hospitals in State fiscal year 2012 shall remain in effect as long as the assessment imposed by Section 5A-2 is in effect.
(j) Subsections (a) and (c) of this Section shall remain operative unless the Auditor General has reported that: (i) the Department has not undertaken the required actions listed in the report required by subsection (a) of Section 2-20 of the Illinois State Auditing Act; or (ii) the Department has failed to comply with the reporting requirements of Section 2-20 of the Illinois State Auditing Act.
(k) Subsections (a) and (c) of this Section shall not be operative until final federal approval by the Centers for Medicare and Medicaid Services of the U.S. Department of Health and Human Services and implementation of all of the payments and assessments in Article V-A in its form as of the effective date of this amendatory Act of the 97th General Assembly or as it may be amended.

(Source: P.A. 97-689, eff. 6-14-12.)

(305 ILCS 5/14-12)
Sec. 14-12. Hospital rate reform payment system. The hospital payment system pursuant to Section 14-11 of this Article shall be as follows:
(a) Inpatient hospital services. Effective for discharges on and after July 1, 2014, reimbursement for inpatient general acute care services shall utilize the All Patient Refined Diagnosis Related Grouping (APR-DRG) software, version 30, distributed by 3MTM Health Information System.
(b) Outpatient hospital services. Effective for dates of service on and after July 1, 2014, reimbursement for outpatient services shall utilize the Enhanced Ambulatory Procedure Grouping (EAPG) software, version 3.7 distributed by 3MTM Health Information System.
(b-5) Notwithstanding any other provision of this Section, beginning with dates of service on and after January 1, 2023, any general acute care hospital with more than 500 outpatient psychiatric Medicaid services to persons under 19 years of age in any calendar year shall be paid the outpatient add-on payment of no less than $113.
(c) In consultation with the hospital community, the Department is authorized to replace 89 Ill. Admin. Code 152.150 as published in 38 Ill. Reg. 4980 through 4986 within 12 months of June 16, 2014 (the effective date of Public Act 98-651). If the Department does not replace these rules within 12 months of June 16, 2014 (the effective date of Public Act 98-651), the rules in effect for 152.150 as published in 38 Ill. Reg. 4980 through 4986 shall remain in effect until modified by rule by the Department. Nothing in this subsection shall be construed to mandate that the Department file a replacement rule.
(d) Transition period.
There shall be a transition period to the reimbursement systems authorized under this Section that shall begin on the effective date of these systems and continue until June 30, 2018, unless extended by rule by the Department. To help provide an orderly and predictable transition to the new reimbursement systems and to preserve and enhance access to the hospital services during this transition, the Department shall allocate a transitional hospital access pool of at least $290,000,000 annually so that transitional hospital access payments are made to hospitals.
(d-5) Hospital and health care transformation program. The Department shall develop a hospital and health care transformation program to provide financial assistance to hospitals in transforming their services and care models to better align with the needs of the communities they serve. The payments authorized in this Section shall be subject to approval by the federal government.
(e) Beginning 36 months after initial implementation, the Department shall update the reimbursement components in subsections (a) and (b), including standardized amounts and weighting factors, and at least once every 4 years and no more frequently than annually thereafter. The Department shall publish these updates on its website no later than 30 calendar days prior to their effective date.
(f) Continuation of supplemental payments. Any supplemental payments authorized under Illinois Administrative Code 148 effective January 1, 2014 and that continue during the period of July 1, 2014 through December 31, 2014 shall remain in effect as long as the assessment imposed by Section 5A-2 that is in effect on December 31, 2017 remains in effect.
(g) Notwithstanding subsections (a) through (f) of this Section and notwithstanding the changes authorized under Section 5-5b.1, any updates to the system shall not result in any diminishment of the overall effective rates of reimbursement as of the implementation date of the new system (July 1, 2014). These updates shall not preclude variations in any individual component of the system or hospital rate variations. Nothing in this Section shall prohibit the Department from increasing the rates of reimbursement or developing payments to ensure access to hospital services. Nothing in this Section shall be construed to guarantee a minimum amount of spending in the aggregate or per hospital as spending may be impacted by factors, including, but not limited to, the number of individuals in the medical assistance program and the severity of illness of the individuals.
(h) The Department shall have the authority to modify by rulemaking any changes to the rates or methodologies in this Section as required by the federal government to obtain federal financial participation for expenditures made under this Section.
(i) Except for subsections (g) and (h) of this Section, the Department shall, pursuant to subsection (c) of Section 5-40 of the Illinois Administrative Procedure Act, provide for presentation at the June 2014 hearing of the Joint Committee on Administrative Rules (JCAR) additional written notice to JCAR of the following rules in order to commence the second notice period for the following rules: rules published in the Illinois Register, rule dated February 21, 2014 at 38 Ill. Reg. 4559 (Medical Payment), 4628 (Specialized Health Care Delivery Systems), 4640 (Hospital Services), 4932 (Diagnostic Related Grouping (DRG) Prospective Payment System (PPS)), and 4977 (Hospital Reimbursement Changes), and published in the Illinois Register dated March 21, 2014 at 38 Ill. Reg. 6499 (Specialized Health Care Delivery Systems) and 6505 (Hospital Services).
(j) Out-of-state hospitals. Beginning July 1, 2018, for purposes of determining for State fiscal years 2019 and 2020 and subsequent fiscal years the hospitals eligible for the payments authorized under subsections (a) and (b) of this Section, the Department shall include out-of-state hospitals that are designated a Level I pediatric trauma center or a Level I trauma center by the Department of Public Health as of December 1, 2017.
(k) The Department shall notify each hospital and managed care organization, in writing, of the impact of the updates under this Section at least 30 calendar days prior to their effective date.
(Source: P.A. 101-81, eff. 7-12-19; 101-650, eff. 7-7-20; 101-655, eff. 3-12-21; 102-682, eff. 12-10-21; 102-1037, eff. 6-2-22.)

(305 ILCS 5/14-13)
Sec. 14-13. Reimbursement for inpatient stays extended beyond medical necessity.
(a) By October 1, 2019, the Department shall by rule implement a methodology effective for dates of service July 1, 2019 and later to reimburse hospitals for inpatient stays extended beyond medical necessity due to the inability of the Department or the managed care organization in which a recipient is enrolled or the hospital discharge planner to find an appropriate placement after discharge from the hospital. The Department shall evaluate the effectiveness of the current reimbursement rate for inpatient hospital stays beyond medical necessity.
(b) The methodology shall provide reasonable compensation for the services provided attributable to the days of the extended stay for which the prevailing rate methodology provides no reimbursement. The Department may use a day outlier program to satisfy this requirement. The reimbursement rate shall be set at a level so as not to act as an incentive to avoid transfer to the appropriate level of care needed or placement, after discharge.
(c) The Department shall require managed care organizations to adopt this methodology or an alternative methodology that pays at least as much as the Department's adopted methodology unless otherwise mutually agreed upon contractual language is developed by the provider and the managed care organization for a risk-based or innovative payment methodology.
(d) Days beyond medical necessity shall not be eligible for per diem add-on payments under the Medicaid High Volume Adjustment (MHVA) or the Medicaid Percentage Adjustment (MPA) programs.
(e) For services covered by the fee-for-service program, reimbursement under this Section shall only be made for days beyond medical necessity that occur after the hospital has notified the Department of the need for post-discharge placement. For services covered by a managed care organization, hospitals shall notify the appropriate managed care organization of an admission within 24 hours of admission. For every 24-hour period beyond the initial 24 hours after admission that the hospital fails to notify the managed care organization of the admission, reimbursement under this subsection shall be reduced by one day.

(Source: P.A. 101-209, eff. 8-5-19; 102-4, eff. 4-27-21.)

(305 ILCS 5/14-14)
Sec. 14-14. Increasing access to primary care in hospitals. The Department of Healthcare and Family Services shall develop a program to facilitate coordination between Federally Qualified Health Centers (FQHCs) and safety net hospitals, with the goal of increasing care coordination, managing chronic diseases, and addressing the social determinants of health on or before December 31, 2021. Coordination between FQHCs and safety hospitals may include, but is not limited to, embedding FQHC staff in hospitals, utilizing health information technology for care coordination, and enabling FQHCs to connect hospital patients to community-based resources when needed to provide whole-person care. In addition, the Department shall develop a payment methodology to allow FQHCs to provide care coordination services, including, but not limited to, chronic disease management and behavioral health services. The Department of Healthcare and Family Services shall develop a payment methodology to allow for FQHC care coordination services by no later than December 31, 2021.

(Source: P.A. 102-4, eff. 4-27-21.)