House Bill 232 Alabama 2026 Session

Summary

Primary Sponsor

Paul W. LeeRepresentative

Republican

Session

2026 Regular Session

Title

Hospitals, private hospital assessment and Medicaid funding program sunset clause removed

Summary

HB232 makes the hospital provider privilege tax permanent and creates a long-term funding framework (the Hospital Assessment Account) to support Alabama Medicaid hospital payments.

What This Bill Does

It removes the sunset on the privately operated hospital tax and extends the 6% net patient revenue assessment for state fiscal years 2026 through 2028 to fund hospital payments. It creates the Hospital Assessment Account to hold these funds separately from the General Fund and pay inpatient and outpatient hospital payments (including base, per diem, and access payments) with quarterly disbursements. It also requires intergovernmental transfers from publicly owned hospitals, periodic reviews of federal reimbursement impacts, and refunds of any excess funds if they are not needed or if federal participation changes; if federal participation is not available, the act has no effect.

Who It Affects

• Privately operated hospitals – will pay a 6% net patient revenue assessment to fund Medicaid hospital payments and may receive inpatient/outpatient and access payments from the Hospital Assessment Account.
• Publicly owned/state-owned hospitals and the Alabama Medicaid Agency – publicly/state-owned hospitals must make intergovernmental transfers to obtain federal matching funds, and the Medicaid Agency will administer and pay base, per diem, outpatient, and access payments under the program.

Key Provisions

• Permanently repeals the sunset on the Hospital Provider Privilege Tax and makes the tax permanent.
• Imposes a 6% net patient revenue assessment on privately operated hospitals for state fiscal years 2026, 2027, and 2028 to fund the Hospital Assessment Account.
• Creates the Hospital Assessment Account within the Health Care Trust Fund; funds are separate from the General Fund and not used to replace general Medicaid funding.
• Requires the Medicaid Agency to calculate net patient revenue using CMS cost report data (2023–2025) for 2026–2028, with annual updates and a mechanism to handle missing reports.
• Requires intergovernmental transfers from publicly owned hospitals to fund federal matching funds for hospital payments.
• Establishes base inpatient and outpatient payments (and potential other payments) for 2026–2028, using specified formulas and minimums, and allows updates with approval from the Hospital Services and Reimbursement Panel.
• Sets quarterly hospital access payments for inpatient and outpatient services; payments are capped by upper payment limits and funded by the Hospital Assessment Account.
• Prohibits using hospital access payments to offset other Medicaid payments or to replace general revenues; funds are specifically for hospital payments.
• Provides for refunds of remaining funds if no new assessment begins after October 1, 2028 (or after October 1, 2027 under certain conditions) and allows carryover balances to account for future variations in expenses and federal matches.
• If federal participation under Title XIX is not available, the act has no effect; if partial federal participation is available, funds remain but may be adjusted.
• Effective date is October 1, 2026, and Section 2 repeals the existing sunset provision (40-26B-88).

AI-generated summary using openai/gpt-5-nano on Feb 11, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Taxation & Revenue