SWM FY08 Budget -- Outside Sections


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Commonwealth Covenant STEM Career Incentive Loan Repayment Program

SECTION 9. Said chapter 10 is hereby amended by inserting after section 35DD the following new section:-

Section 35EE. (a) There shall be established and set up on the books of the commonwealth a separate trust fund to be known as the Commonwealth Covenant Fund, the purpose of which is to make loan payments on behalf of graduates of Massachusetts public institutions of higher education who are employed in the areas of science, technology, engineering and mathematics (STEM). The fund shall be administered by the treasurer in consultation with the Commonwealth Covenant Board of Trustees, as established in this section. All monies deposited into the fund shall be expended exclusively for the purpose set forth in this section. No expenditure from the fund shall cause the fund to be in deficiency at the close of a fiscal year. Monies deposited in the trust fund that are unexpended at the end of the fiscal year shall not revert to the General Fund and shall be available for expenditure in the subsequent fiscal year.

(b) There shall be established the Commonwealth Covenant Board of Trustees. The board shall make grants from funds received according to this section. The board shall be administered by the treasurer of the commonwealth, who shall also serve as the chairperson of the board. The board shall consist of 1 member to be appointed by the senate president, 1 member to be appointed by the speaker of the house of representatives, 1 member to be appointed by the minority leader of the senate, 1 member to be appointed by the minority leader of the house of representatives, the president of the university of Massachusetts, and 12 members to be appointed by the treasurer of the commonwealth. Appointments made by the treasurer shall include at least 1 representative from each of the following fields:- bio-technology; healthcare; computers and mathematics; life, physical and social sciences; architecture and engineering; principals of public high schools in the commonwealth; and presidents of public state colleges in the commonwealth. Under the chairperson’s direction, one third of the board members shall be appointed for 1 year terms, one third shall be appointed for 2 year terms and the remaining third shall be appointed for 3 year terms. After the initial terms are served, all terms shall be for 3 years, and board members may be reappointed in perpetuity.

(c) Subject to appropriation, the commonwealth shall deposit no more than $4,000,000 annually into the Commonwealth Covenant Fund. The fund may accept private contributions. Private contributions and commonwealth deposits to the fund may be expended without further appropriation only to make the loan payments and to administer the program on behalf of eligible graduates of Massachusetts public institutions of higher education. Eligible loans shall not include credit card loans or loans taken out by the eligible student’s parent and/or guardian.

(d) The fund shall be administered by the treasurer of the commonwealth using procedures established by the Commonwealth Covenant Board of Trustees. The board shall file these procedures with the senate and house committees on ways and means, the joint committee on higher education and the secretary of administration and finance no later than 30 days after the board adopts the procedures. The board shall file any amendments to the procedures with the senate and house committees on ways and means, the joint committee on higher education and the secretary of administration and finance within 30 days after the board adopts the amendments. The procedures shall include a method for the board of trustees to certify to the senate and house committees on ways and means, the joint committee on higher education and the secretary of administration and finance the actual amount received in private contributions to the fund in each fiscal year. The procedures shall also include safeguards for protecting the anonymity of donors who desire not to be identified.

(e) Grants provided from this fund shall, in addition to any restrictions adopted by the Commonwealth Covenant Board of Trustees, be restricted as follows:

(1) A recipient must have graduated from a public institution of higher education in Massachusetts on or after December 1, 2007 with a degree in a STEM field within 3 years of reaching Junior year standing in the program selected at a 4-year institution. For the purposes of this section, eligible STEM fields shall include: healthcare practitioners and technical occupations; computer and mathematical occupations; life, physical and social sciences occupations; and architecture and engineering occupations. The eligible STEM fields shall also include teaching in any of the aforementioned areas.

(2) A recipient must have graduated from a public institution of higher education in Massachusetts with a cumulative grade point average of 3.0 or greater.

(3) A recipient’s family income during the recipient’s final year of enrollment at a public institution of higher education in Massachusetts as documented on the Free Application for Federal Student Aid form must have been at or below 300 per cent of the federal poverty level applicable in that year.

(4) A recipient must have completed at least 1 year of employment in a STEM field within the Commonwealth.

(5) A recipient must reside in the commonwealth.

(6) A recipient’s annual salary may not exceed $65,000 per year for a single filer and $80,000 for joint filers.

(f) The grants shall be administered in an amount not to exceed $5,000 annually for a recipient. Recipients shall be eligible for grant awards until the total amount of grants awarded to an individual recipient reaches a maximum of $15,000. The grants shall be paid from the fund directly to the lender on behalf of the eligible graduate.

(g) The board of trustees shall, every 3 years, undertake a review of the eligibility requirements in subsection (f) as well as the workforce needs of the Commonwealth and determine which occupations could benefit from an award such as this, and which occupations, if any, no longer require this program. The board may amend the eligibility requirements and expand or contract the program in accordance with the changing workforce needs of the Commonwealth.

MassHealth - Third Party Liability to Satisfy Federal Law

SECTION 20. Said chapter 118E is hereby further amended by striking out section 23, as amended by section 28 of chapter 58 of the acts of 2006, and inserting in place thereof the following section:-

Section 23. (a) As used in this section, health care insurer, health insurer and health insurance shall include, but not be limited to, any health insurance company, health maintenance organization, group or nongroup health plan, self-insured plan, service benefit plan, managed care organization, pharmacy benefit manager, or other public or private third party that is, by statute, contract, agreement, or arrangement legally responsible for payment of a claim for health care benefits.

(b) Notwithstanding any general or special law, rule or regulation to the contrary, the division shall be subrogated to the rights of any recipient of medical assistance under this chapter and may take any and all actions available to that recipient to secure benefits under any policy issued by any health care insurer that is or may be liable to pay for health care benefits obtained by a recipient of medical assistance to the extent of any health care benefits provided by the division on behalf of the recipient or the recipient's dependents. A health care insurer shall reimburse the division for any health care benefits provided by the division on behalf of a recipient of medical assistance, and shall not reduce the amount of the total reimbursement by any division payment, but any part of the total that is a reimbursement for a division payment shall not exceed the amount actually paid by the division.

(c) A health care insurer shall not require written authorization from the recipient before honoring the division's rights under this section. A health insurer shall respond to any inquiry by the division about a claim for payment for any health care benefits and shall not deny any claim for payment for any health care benefits solely on the basis of the date of submission of the claim, the type of format for the claim form, or a failure to present proper documentation at the point of sale that is the basis of the claim, if the claim is submitted by the division within a 3-year period beginning on the date on which the service was furnished, and if any action by the division to enforce its rights with respect to a claim is filed within 6 years after the submission of the claim to the health insurer.

(d) A recipient of medical assistance or any person legally obligated to support and have actual or legal custody of a recipient of medical assistance shall inform the division of any health insurance available to that recipient upon initial application and redetermination for eligibility for assistance and shall make known the nature and extent of any health insurance coverage to any person or institution that provides medical benefits to the recipient or his or her dependent.

(e) A health care insurer shall not take into account that an individual is eligible for or is receiving benefits from the division when enrolling an individual or issuing a policy or agreement covering the individual, or administering or renewing a policy or agreement, or when making any payment for health care benefits to the individual or on behalf of the individual; nor shall any policy or agreement issued, administered, or renewed by a health care insurer contain any provision denying or reducing health care benefits to an individual who is eligible for or is receiving benefits from the division.

(f) A provider of medical assistance under this chapter shall determine whether any recipient for whom it provides medical care or services which are or may be eligible for reimbursement under this chapter is a subscriber or beneficiary of a health insurance plan. The division is the payor of last resort, and accordingly a provider shall request payment for medical care or services it provides from a health insurer which is or may be liable for the medical care or services so provided, before payment is requested from the division.

(g) Payment by the division under the medical assistance programs established by this chapter shall constitute payment in full. After receiving this payment, a provider may not recover from any health insurer an amount greater than the amount paid by the division for any service for which the division is to be the payor of last resort.

(h) Notwithstanding any general or special law or rule or regulation to the contrary, all holders of health insurance information, including, but not limited to, health insurers doing business in the commonwealth, all private and public entities who employ individuals in the commonwealth, and all agencies of the commonwealth, shall provide sufficient information to the division, or in the case of those agencies, shall make other arrangements mutually satisfactory to both agencies, to enable the division: (a) to identify whether any of the following persons are or could be beneficiaries under any policy of insurance in the commonwealth: (1) persons applying for or receiving medical assistance or benefits under this chapter or health services through an agency under the executive office of health and human services, (2) persons for whom hospitals and community health centers claim reimbursement payments from the Health Safety Net Fund, established by section 35 of chapter 118G; and (b) to determine the nature of the coverage that is or was provided, including cost, scope, terms, periods of coverage, and any identifying name, address or number of the policy of insurance. All public and private entities who employ individuals in the commonwealth shall provide, when requested by any employee applying for or receiving benefits provided by the division, written information to the employee describing the availability of health insurance, if any, provided by or through the employer. The failure of an employer to provide an employee with the information shall not be grounds for denial of benefits by the division.

(i) The division may, after notice and opportunity for hearing, garnish the wages, salary, or other employment income of, and shall, with the assistance of the department of revenue under section 3 of chapter 62D, withhold amounts from state tax refunds to, any person who: (1) is required by court or administrative order to provide coverage of the costs of health services to a child who is eligible for medical assistance under this chapter; (2) has received payment from a third party for the costs of those services to the child; but, (3) has not used the payments to reimburse either the other parent or guardian of the child or the provider of the services, to the extent necessary to reimburse the division for expenditures for those costs.

Transfer of the Health Safety Net Office to HCFP II

SECTION 25. Said chapter 118G of the General Laws is hereby further amended by adding the following 6 sections:-

Section 34. As used in section 34 through section 39, inclusive, the following words shall, unless the context clearly requires otherwise, have the following meanings:-

"Acute hospital", the teaching hospital of the University of Massachusetts Medical School and any hospital licensed under section 51 of chapter 111 and which contains a majority of medical-surgical, pediatric, obstetric and maternity beds, as defined by the department of public health.

"Allowable reimbursement", payment to acute hospitals and community health centers for health services provided to uninsured patients of the commonwealth under section 39 and any further regulations promulgated by the office.

“Ambulatory surgical center”, a distinct entity that operates exclusively for the purpose of providing surgical services to patients not requiring hospitalization and meets the requirements of the federal Health Care Financing Administration for participation in the Medicare program.

“Ambulatory surgical center services”, services described for purposes of the Medicare program under 42 U.S.C. 1395k(a)(2)(F)(I). These services include facility services only and do not include surgical procedures.

“Bad debt”, an account receivable based on services furnished to a patient which: (i) is regarded as uncollectible, following reasonable collection efforts consistent with regulations of the office, which regulations shall allow third party payers to negotiate with hospitals to collect the bad debts of its enrollees; (ii) is charged as a credit loss; (iii) is not the obligation of a governmental unit or the federal government or any agency thereof; and (iv) is not a reimbursable health care service.

“Community health center”, a health center operating in conformance with the requirements of Section 330 of United States Public Law 95-626, including all community health centers which file cost reports as requested by the division of health care finance and policy.

“Critical access services”, those health services which are generally provided only by acute hospitals, as further defined in regulations promulgated by the division.

“Director”, the director of the health safety net office.

“DRG”, a patient classification scheme known as diagnosis related grouping, which provides a means of relating the type of patients a hospital treats, such as its case mix, to the cost incurred by the hospital.

“Emergency bad debt”, bad debt resulting from emergency services provided by an acute hospital to an uninsured or underinsured patient or other individual who has an emergency medical condition that is regarded as uncollectible, following reasonable collection efforts consistent with regulations of the office.

“Emergency medical condition”, a medical condition, whether physical or mental, manifesting itself by symptoms of sufficient severity, including severe pain, that the absence of prompt medical attention could reasonably be expected by a prudent layperson who possesses an average knowledge of health and medicine to result in placing the health of the person or another person in serious jeopardy, serious impairment to body function or serious dysfunction of any body organ or part or, with respect to a pregnant woman, as further defined in section 1867(e)(1)(B) of the Social Security Act, 42 U.S.C. 1295dd(e)(1)(B).

“Emergency services”, medically necessary health care services provided to an individual with an emergency medical condition.

“Financial requirements”, a hospital’s requirement for revenue which shall include, but not be limited to, reasonable operating, capital and working capital costs, and the reasonable costs associated with changes in medical practice and technology.

“Fund”, the Health Safety Net Trust Fund established under section 36.

“Fund fiscal year”, the 12-month period starting in October and ending in September.

“Gross patient service revenue”, the total dollar amount of a hospital’s charges for services rendered in a fiscal year.

“Health services”, medically necessary inpatient and outpatient services as mandated under Title XIX of the federal Social Security Act. Health services shall not include: (1) nonmedical services, such as social, educational and vocational services; (2) cosmetic surgery; (3) canceled or missed appointments; (4) telephone conversations and consultations; (5) court testimony; (6) research or the provision of experimental or unproven procedures including, but not limited to, treatment related to sex-reassignment surgery and pre-surgery hormone therapy; and (7) the provision of whole blood, but the administrative and processing costs associated with the provision of blood and its derivatives shall be payable.

“Office”, the health safety net office established under section 35.

“Payments subject to surcharge”, all amounts paid, directly or indirectly, by surcharge payors to acute hospitals for health services and ambulatory surgical centers for ambulatory surgical center services; provided, however, that “payments subject to surcharge” shall not include: (i) payments, settlements and judgments arising out of third party liability claims for bodily injury which are paid under the terms of property or casualty insurance policies; (ii) payments made on behalf of Medicaid recipients, Medicare beneficiaries or persons enrolled in policies issued under chapter 176K or similar policies issued on a group basis; and provided further, that “payments subject to surcharge” may exclude amounts established under regulations promulgated by the division for which the costs and efficiency of billing a surcharge payor or enforcing collection of the surcharge from a surcharge payor would not be cost effective.

“Pediatric hospital”, an acute care hospital which limits services primarily to children and which qualifies as exempt from the Medicare Prospective Payment system regulations.

“Pediatric specialty unit”, a pediatric unit of an acute care hospital in which the ratio of licensed pediatric beds to total licensed hospital beds as of July 1, 1994 exceeded 0.20. In calculating that ratio, licensed pediatric beds shall include the total of all pediatric service beds, and the total of all licensed hospital beds shall include the total of all licensed acute care hospital beds, consistent with Medicare’s acute care hospital reimbursement methodology as put forth in the Provider Reimbursement Manual Part 1, Section 2405.3G.

“Private sector charges”, gross patient service revenue attributable to all patients less gross patient service revenue attributable to Titles XVIII and XIX, other public-aided patients, reimbursable health services and bad debt.

“Reimbursable health services”, health services provided to uninsured and underinsured patients who are determined to be financially unable to pay for their care, in whole or part, under applicable regulations of the office; provided that the health services are emergency, urgent and critical access services provided by acute hospitals or services provided by community health centers; and provided further, that such services shall not be eligible for reimbursement by any other public or private third-party payer.

“Resident”, a person living in the commonwealth, as defined by the office by regulation; provided, however, that such regulation shall not define as a resident a person who moved into the commonwealth for the sole purpose of securing health insurance under this chapter. Confinement of a person in a nursing home, hospital or other medical institution shall not in and of itself, suffice to qualify such person as a resident.

“Surcharge payor”, an individual or entity that pays for or arranges for the purchase of health care services provided by acute hospitals and ambulatory surgical center services provided by ambulatory surgical centers, as defined in this section; provided, however, that the term “surcharge payor” shall not include Title XVIII and Title XIX programs and their beneficiaries or recipients, other governmental programs of public assistance and their beneficiaries or recipients and the workers’ compensation program established under chapter 152.

“Underinsured patient”, a patient whose health insurance plan or self-insurance health plan does not pay, in whole or in part, for health services that are eligible for reimbursement from the health safety net trust fund, provided that such patient meets income eligibility standards set by the office.

“Uninsured patient”, a patient who is a resident of the commonwealth, who is not covered by a health insurance plan or a self-insurance health plan and who is not eligible for a medical assistance program.

Section 35. (a) There shall be established within the division of health care finance and policy a health safety net office which shall be under the supervision and control of a director. The director shall be appointed by the commissioner, in consultation with the secretary of health and human services and the Medicaid director, and shall have such educational qualifications and administrative and other experience as the commissioner and the secretary determine to be necessary for the performance of the duties of director, including, but not limited to, experience in the field of health care financial administration.

(b) The office shall have the following powers and duties:-

(i) to administer the Health Safety Net Trust Fund, established under section 36, and to require payments to the fund consistent with acute hospitals' and surcharge payors' liability to the fund, as determined under sections 37 and 38, and any further regulations promulgated by the office;

(ii) to set, after consultation with the office of Medicaid, reimbursement rates for payments from the fund to acute hospitals and community health centers for reimbursable health services provided to uninsured and underinsured patients and to disburse monies from the fund consistent with such rates; provided that the office shall implement a fee-for-service reimbursement system for acute hospitals;

(iii) to promulgate regulations further defining: (a) eligibility criteria for reimbursable health services; (b) the scope of health services that are eligible for reimbursement by the Health Safety Net Trust Fund; (c) standards for medical hardship; and (d) standards for reasonable efforts to collect payments for the costs of emergency care. The office shall implement procedures for verification of eligibility using the eligibility system of the office of Medicaid and other appropriate sources to determine the eligibility of uninsured and underinsured patients for reimbursable health services and shall establish other procedures to ensure that payments from the fund are made for health services for which there is no other public or private third party payer, including disallowance of payments to acute hospitals and community health centers for health services provided to individuals if reimbursement is available from other public or private sources;

(iv) to develop programs and guidelines to encourage maximum enrollment of uninsured individuals who receive health services reimbursed by the fund into health care plans and programs of health insurance offered by public and private sources and to promote the delivery of care in the most appropriate setting, provided that the programs and guidelines are developed in consultation with the commonwealth health insurance connector, established under chapter 176Q. These programs shall not deny payments from the fund because services should have been provided in a more appropriate setting if the hospital was required to provided the services under 42 U.S.C. 1395 (dd);

(v) to conduct a utilization review program designed to monitor the appropriateness of services for which payments were made by the fund and to promote the delivery of care in the most appropriate setting; and to administer demonstration programs that reduce Health Safety Net Trust Fund liability to acute hospitals, including a demonstration program to enable disease management for patients with chronic diseases, substance abuse and psychiatric disorders through enrollment of patients in community health centers and community mental health centers and through coordination between these centers and acute hospitals, provided, that the office shall report the results of these reviews annually to the joint committee on health care financing and the house and senate committees on ways and means;

(vi) to administer, in consultation with the office of Medicaid, the Essential Community Provider Trust Fund, established under section 2PPP of chapter 29, and to make expenditures from that fund without further appropriation for the purpose of improving and enhancing the ability of acute hospitals and community health centers to serve populations in need more efficiently and effectively, including, but not limited to, the ability to provide community-based care, clinical support, care coordination services, disease management services, primary care services, and pharmacy management services through a grant program. The office shall consider applications from acute hospitals and community health centers in awarding the grants. The criteria for selection shall include, but not be limited to, the following: (a) the financial performance of the provider as determined, in the case of applications from acute hospitals, quarterly by the division of health care finance and policy and by consulting other appropriate measurements of financial performance; (b) the percentage of patients with mental or substance abuse disorders served by a provider; (c) the numbers of patients served by a provider who are chronically ill, elderly, or disabled; (d) the payer mix of the provider, with preference given to acute hospitals where a minimum of 63 per cent of the acute hospital's gross patient service revenue is attributable to Title XVIII and Title XIX of the federal Social Security Act or other governmental payors, including reimbursements from the Health Safety Net Trust Fund; (e) the percentage of total annual operating revenue that funding received in fiscal years 2005 and 2006 from the Distressed Provider Expendable Trust Fund comprised for the provider; and (f) the cultural and linguistic challenges presented by the populations served by the provider.

(vii) to enter into agreements or transactions with any federal, state or municipal agency or other public institution or with a private individual, partnership, firm, corporation, association or other entity, and to make contracts and execute all instruments necessary or convenient for the carrying on of its business;

(viii) to secure payment, without imposing undue hardship upon any individual, for unpaid bills owed to acute hospitals by individuals for health services that are ineligible for reimbursement from the Health Safety Net Trust Fund which have been accounted for as bad debt by the hospital and which are voluntarily referred by a hospital to the department for collection; provided, however that such unpaid charges shall be considered debts owed to the commonwealth and all payments received shall be credited to the fund; and provided, further, that all actions to secure such payments shall be conducted in compliance with a protocol previously submitted by the office to the joint committee on health care financing;

(ix) to require hospitals and community health centers to submit to the office data that it reasonably considers necessary;

(x) to make, amend and repeal rules and regulations to effectuate the efficient use of monies from the Health Safety Net Trust Fund; provided, however, that the regulations shall be promulgated only after notice and hearing and only upon consultation with the board of the commonwealth health insurance connector, the secretary of health and human services, the director of the office of Medicaid and representatives of the Massachusetts Hospital Association, the Massachusetts Council of Community Hospitals, the Alliance of Massachusetts Safety Net Hospitals and the Massachusetts League of Community Health Centers; and

(xi) to provide an annual report at the close of each fund fiscal year, in consultation with the office of Medicaid, to the joint committee on health care financing and the house and senate committees on ways and means, evaluating the processes used to determine eligibility for reimbursable health services, including the Virtual Gateway, so called. The report shall include, but not be limited to, the following: (a) an analysis of the effectiveness of these processes in enforcing eligibility requirements for publicly-funded health programs and in enrolling uninsured residents into programs of health insurance offered by public and private sources; (b) an assessment of the impact of these processes on the level of reimbursable health services by providers; and (c) recommendations for ongoing improvements that will enhance the performance of eligibility determination systems and reduce hospital administrative costs.

Section 36. (a) There shall be established and set up on the books of the commonwealth a fund to be known as the Health Safety Net Trust Fund, in this section and in sections 37 to 39, inclusive, called the fund, which shall be administered by the office. Expenditures from the fund shall not be subject to appropriation unless otherwise required by law. The purpose of the fund shall be to maintain a health care safety net by reimbursing hospitals and community health centers for a portion of the cost of reimbursable health services provided to low-income, uninsured or underinsured residents of the commonwealth. The office shall administer the fund using such methods, policies, procedures, standards and criteria that it deems necessary for the proper and efficient operation of the fund and programs funded by it in a manner designed to distribute the fund resources as equitably as possible.

(b) The fund shall consist of all amounts paid by acute hospitals and surcharge payors under sections 37 and 38; all appropriations for the purpose of payments to acute hospitals or community health centers for health services provided to uninsured and underinsured residents; any transfers from the Commonwealth Care Trust Fund, established under section 2OOO of chapter 29; and all property and securities acquired by and through the use of monies belonging to the fund and all interest thereon. Amounts placed in the fund shall, except for amounts transferred to the Commonwealth Care Trust Fund, be expended by the office for payments to hospitals and community health centers for reimbursable health services provided to uninsured and underinsured residents of the commonwealth, consistent with the requirements of this section and section 39 and the regulations promulgated by the office; provided, however, that $6,000,000 shall be expended annually from the fund for demonstration projects that use case management and other methods to reduce the liability of the fund to acute hospitals. Any annual balance remaining in the fund after these payments have been made shall be transferred to the Commonwealth Care Trust Fund. All interest earned on the amounts in the fund shall be deposited or retained in the fund. The director shall from time to time requisition from the fund amounts that he considers necessary to meet the current obligations of the office for the purposes of the fund and estimated obligations for a reasonable future period.

Section 37. (a) An acute hospital's liability to the fund shall equal the product of (1) the ratio of its private sector charges to all acute hospitals' private sector charges; and (2) $160,000,000. Annually, prior to October 1, the office, in consultation with the office of Medicaid, shall establish each acute hospital's liability to the fund using the best data available, as determined by the division, and shall update each acute hospital's liability to the fund as updated information becomes available. The office shall specify by regulation an appropriate mechanism for interim determination and payment of an acute hospital's liability to the fund. An acute hospital's liability to the fund shall in the case of a transfer of ownership be assumed by the successor in interest to the acute hospital.

(b) The office shall establish by regulation an appropriate mechanism for enforcing an acute hospital's liability to the fund in the event that an acute hospital does not make a scheduled payment to the fund. These enforcement mechanisms may include (1) notification to the office of Medicaid requiring an offset of payments on the Title XIX claims of any such acute hospital or any health care provider under common ownership with the acute care hospital or any successor in interest to the acute hospital, and (2) the withholding by the office of Medicaid of the amount of payment owed to the fund, including any interest and late fees, and the transfer of the withheld funds into the fund. If the office of Medicaid offsets claims payments as ordered by the office, it shall not be considered to be in breach of contract or any other obligation for the payment of non-contracted services, and providers whose payment is offset under an order of the division shall serve all Title XIX recipients under the contract then in effect with the office of Medicaid, or, in the case of a non-contracting or disproportionate share hospital, under its obligation for providing services to Title XIX recipients under this chapter. In no event shall the office direct the office of Medicaid to offset claims unless an acute hospital has maintained an outstanding obligation to the fund for a period longer than 45 days and has received proper notice that the division intends to initiate enforcement actions under regulations promulgated by the office.

Section 38. (a) Acute hospitals and ambulatory surgical centers shall assess a surcharge on all payments subject to surcharge as defined in section 34. The surcharge shall be distinct from any other amount paid by a surcharge payor for the services of an acute hospital or ambulatory surgical center. The surcharge amount shall equal the product of (i) the surcharge percentage and (ii) amounts paid for these services by a surcharge payor. The office shall calculate the surcharge percentage by dividing $160,000,000 by the projected annual aggregate payments subject to the surcharge. The office shall determine the surcharge percentage before the start of each fund fiscal year and may redetermine the surcharge percentage before April 1 of each fund fiscal year if the office projects that the initial surcharge established the previous October will produce less than $150,000,000 or more than $170,000,000. Before each succeeding October 1, the office shall redetermine the surcharge percentage incorporating any adjustments from earlier years. In each determination or redetermination of the surcharge percentage, the office shall use the best data available as determined by the division and may consider the effect on projected surcharge payments of any modified or waived enforcement pursuant to subsection (e). The office shall incorporate all adjustments, including, but not limited to, updates or corrections or final settlement amounts, by prospective adjustment rather than by retrospective payments or assessments.

(b) Each acute hospital and ambulatory surgical center shall bill a surcharge payor an amount equal to the surcharge described in subsection (a) as a separate and identifiable amount distinct from any amount paid by a surcharge payor for acute hospital or ambulatory surgical center services. Each surcharge payor shall pay the surcharge amount to the office for deposit in the Health Safety Net Trust Fund on behalf of said acute hospital or ambulatory surgical center. Upon the written request of a surcharge payor, the office may implement another billing or collection method for the surcharge payor; provided, however, that the office has received all information that it requests which is necessary to implement such billing or collection method; and provided further, that the office shall specify by regulation the criteria for reviewing and approving such requests and the elements of such alternative method or methods.

(c) The office shall specify by regulation appropriate mechanisms that provide for determination and payment of a surcharge payor's liability, including requirements for data to be submitted by surcharge payors, acute hospitals and ambulatory surgical centers.

(d) A surcharge payor's liability to the fund shall in the case of a transfer of ownership be assumed by the successor in interest to the surcharge payor.

(e) The office shall establish by regulation an appropriate mechanism for enforcing a surcharge payor's liability to the fund if a surcharge payor does not make a scheduled payment to the fund; provided, however, that the office may, for the purpose of administrative simplicity, establish threshold liability amounts below which enforcement may be modified or waived. Such enforcement mechanism may include assessment of interest on the unpaid liability at a rate not to exceed an annual percentage rate of 18 per cent and late fees or penalties at a rate not to exceed 5 per cent per month. Such enforcement mechanism may also include notification to the office of Medicaid requiring an offset of payments on the claims of the surcharge payor, any entity under common ownership or any successor in interest to the surcharge payor, from the office of Medicaid in the amount of payment owed to the fund including any interest and penalties, and to transfer the withheld funds into said fund. If the office of Medicaid offsets claims payments as ordered by the office, the office of Medicaid shall be considered not to be in breach of contract or any other obligation for payment of non-contracted services, and a surcharge payor whose payment is offset under an order of the division shall serve all Title XIX recipients under the contract then in effect with the executive office of health and human services. In no event shall the office direct the office of Medicaid to offset claims unless the surcharge payor has maintained an outstanding liability to the fund for a period longer than 45 days and has received proper notice that the office intends to initiate enforcement actions under regulations promulgated by the office.

(f) If a surcharge payor fails to file any data, statistics or schedules or other information required under this chapter or by any regulation promulgated by the office, the office shall provide written notice to the payor. If a surcharge payor fails to provide required information within 2 weeks after the receipt of written notice, or falsifies the same, he shall be subject to a civil penalty of not more than $5,000 for each day on which the violation occurs or continues, which penalty may be assessed in an action brought on behalf of the commonwealth in any court of competent jurisdiction. The attorney general shall bring any appropriate action, including injunctive relief, that may be necessary for the enforcement of this chapter.

Section 39. (a) Reimbursements from the fund to hospitals and community health centers for health services provided to uninsured and underinsured individuals shall be subject to further rules and regulations promulgated by the office and shall be made in the following manner: (i) reimbursements made to acute hospitals shall be based on actual claims for health services provided to uninsured and underinsured patients that are submitted to the office, and shall be made only after determination that the claim is eligible for reimbursement under this chapter and any additional regulations promulgated by the office. Reimbursements for health services provided to residents of other states and foreign countries shall be prohibited, and the office shall make payments to acute hospitals using fee-for-service rates calculated as provided in paragraphs (iv) and (v); (ii) the office shall, in consultation with the office of Medicaid, develop and implement procedures to verify the eligibility of individuals for whom health services are billed to the fund and to ensure that other coverage options are used fully before services are billed to the fund, including procedures adopted under section 36. The office shall review all claims billed to the fund to determine whether the patient is eligible for medical assistance under the provisions of this chapter and whether any third party is financially responsible for the costs of care provided to the patient.