HB312 Alabama 2025 Session

Summary

Primary Sponsor

Paul W. LeeRepresentative

Republican

Session

2025 Regular Session

Title

Hospitals, private hospital assessment and Medicaid funding program extended for fiscal year 2028

Summary

HB312 extends the Hospital Provider Tax through FY2028 and creates a dedicated Hospital Assessment Account to fund Medicaid hospital payments.

What This Bill Does

The bill extends the hospital provider tax through fiscal year 2028 with an effective date of October 1, 2025. It establishes a Hospital Assessment Account in the Health Care Trust Fund to hold privately operated hospital assessments, as well as interest, penalties, and certain intergovernmental transfers from publicly/state-owned hospitals, all to fund inpatient and outpatient hospital payments. Privately operated hospitals would owe a 6% assessment of net patient revenue for fiscal years 2023–2028, determined using CMS cost reports or hospital submissions when CMS data isn’t available, and these funds would be used to pay hospital payments (base, APR-DRG, OPPS, and access payments) while aiming to maximize federal matching funds. The act also outlines how payments are made (quarterly for inpatient and outpatient), sets limits and safeguards (upper payment limits, refunds, and carryover provisions), and allows contracting with alternate care providers under specific conditions.

Who It Affects

• Privately operated hospitals: subject to a 6% annual assessment of net patient revenue for fiscal years 2023–2028, with payments funded by the Hospital Assessment Account and potential repayments or adjustments if funds are insufficient.
• Publicly owned and state-owned hospitals: participate via intergovernmental transfers to obtain federal matching funds and receive inpatient and outpatient payments (base, access, etc.) up to statutory limits, with transfers capped and governed by federal rules.

Key Provisions

• Extends the Hospital Provider Tax through fiscal year 2028 and sets an effective date of October 1, 2025.
• Creates the Hospital Assessment Account in the Health Care Trust Fund, funded by privately operated hospital assessments, interest, penalties, and intergovernmental transfers from public/state-owned hospitals; the account is separate from the General Fund and cannot be used to replace general revenues.
• Imposes a 6% assessment on net patient revenue for privately operated hospitals for state fiscal years 2023–2028, using Medicare Cost Reports or hospital submissions to determine net patient revenue; annual updates are required.
• Uses the Hospital Assessment Account to fund inpatient and outpatient hospital payments (base payments, APR-DRG, OPPS, and access payments), with quarterly inpatient and outpatient payments; payments are not used to offset other Medicaid payments.
• Publicly owned and state-owned hospitals make intergovernmental transfers to obtain federal matching funds; total transfers are capped and allocated pro rata among hospitals, with the goal of paying hospital payments up to the upper payment limits; adjustments possible to comply with federal rules.
• Payments must comply with federal Upper Payment Limits (UPL) and CMS rate structures; if CMS data is unavailable, alternative methods are allowed to determine payment levels, subject to CMS approval.
• Agency may contract with alternate care providers if it is more efficient or cost-effective, with minimum reimbursement rates tied to the most recent published rates; more than one alternate care provider may be used.
• If federal funding under Title XIX is not available or the assessment is deemed impermissible, the assessment ceases; any remaining funds are refunded to hospitals proportionally, and the act includes provisions for carryover balances and potential refunds.

AI-generated summary using openai/gpt-5-nano on Feb 22, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Taxation & Revenue