Amends existing law to revise provisions regarding provider payment.

LEGISLATURE OF THE STATE OF IDAHO Sixty-eighth Legislature Second Regular Session - 2026 IN THE SENATE SENATE BILL NO. 1312 BY HEALTH AND WELFARE COMMITTEE AN ACT1 RELATING TO PUBLIC ASSISTANCE; AMENDING SECTION 56-265, IDAHO CODE, TO RE-2 VISE PROVISIONS REGARDING PROVIDER PAYMENT; PROVIDING THAT CERTAIN AD-3 MINISTRATIVE RULES CONTAINED IN IDAPA 16.03.26 SHALL BE NULL, VOID, AND4 OF NO FORCE AND EFFECT; AND DECLARING AN EMERGENCY.5

Be It Enacted by the Legislature of the State of Idaho:6

SECTION 1. That Section 56-265, Idaho Code, be, and the same is hereby7 amended to read as follows:8 56-265. PROVIDER PAYMENT. (1) Where there is an equivalent, the pay-9 ment to medicaid providers:10 (a) May be up to but shall not exceed one hundred percent (100%) of the11 current medicare rate for primary care procedure codes as defined by the12 centers for medicare and medicaid services; and13 (b) Shall be ninety percent (90%) of the current medicare rate for all14 other procedure codes.15 (2) Where there is no medicare equivalent, the payment rate to med-16 icaid providers shall be prescribed by rule. All home and community-based17 services without a medicare equivalent rate shall be cost-surveyed annu-18 ally with fifteen percent (15%) or more of responses being audited. The19 department shall use information from the cost surveys and other sources20 to evaluate rate adequacy. Payment rates shall be developed to include21 allocations to direct care worker wages, employee-related expenses, pro-22 gram-related expenses, and general and administrative costs.23 (a) On an annual basis, providers are required to expend at least the24 amount allocated to direct care worker wages and employee-related ex-25 penses to these categories.26 (b) Failure of the provider to meet the requirement in paragraph (a) of27 this subsection may result in a department-approved corrective action28 plan, closure of intake, or termination of the provider agreement.29 (c) The department shall summarize this audited cost survey work by30 provider type and service in a publicly available report no later than31 December 31 of each calendar year.32 (3) Notwithstanding any other provision of this chapter, if the33 services are provided by a private, freestanding mental health hospital34 facility that is an institution for mental disease as defined in 42 U.S.C.35 1396d(i), the department shall reimburse for inpatient services at a rate36 not to exceed ninety-one percent (91%) of the current medicare rate within37 federally allowed reimbursement under the medicaid program. The reimburse-38 ment provided for in this subsection shall be effective until July 1, 2021.39 (4) The department shall, through the annual budget process, include40 a line-item request for adjustments to provider rates. All changes to41

2 provider payment rates shall be subject to approval of the legislature by1 appropriation.2 (5) Notwithstanding any other provision of this chapter, the depart-3 ment may enter into agreements with providers to pay for services based on4 their value in terms of measurable health care quality and positive impacts5 to participant health.6 (a) Any such agreement shall be designed to be cost-neutral or cost-7 saving compared to other payment methodologies.8 (b) The department is authorized to pursue waiver agreements with the9 federal government as needed to support value-based payment arrange-10 ments, up to and including fully capitated provider-based managed care.11 (c) Beginning with the 2024 performance period and for all future per-12 formance periods thereafter, federally qualified health centers and13 any organization owned and controlled by a federally qualified health14 center shall be exempt from any financial risk in value-based payment15 agreements created pursuant to this section.16 (6) Medicaid reimbursement for critical access, out-of-state, and17 state-owned hospitals shall be as follows:18 (a) In-state, critical access hospitals as designated according to 4219 U.S.C. 1395i-4(c)(2)(B) shall be reimbursed at one hundred one percent20 (101%) of cost;21 (b) Out-of-state hospitals shall be reimbursed at eighty-seven percent22 (87%) of cost;23 (c) State-owned hospitals shall be reimbursed at one hundred percent24 (100%) of cost; and25 (d) Out-of-state hospital institutions for mental disease as defined26 in 42 U.S.C. 1396d(i) shall be reimbursed at a per diem equivalent to27 ninety-five percent (95%) of cost.28 (7) The department shall equitably reduce net reimbursements for all29 hospital services, including in-state institutions for mental disease but30 excluding all hospitals and institutions described in subsection (6) of31 this section, by amounts targeted to reduce general fund needs for hospital32 payments by three million one hundred thousand dollars ($3,100,000) in state33 fiscal year 2020 and eight million seven hundred twenty thousand dollars34 ($8,720,000) in state fiscal year 2021.35 (8) The department shall work with all Idaho hospitals, including in-36 stitutions for mental disease as defined in 42 U.S.C. 1396d(i), to establish37 value-based payment methods for inpatient and outpatient hospital services38 to replace existing cost-based reimbursement methods for in-state hospi-39 tals, other than those hospitals and institutions described in subsection40 (6) of this section, effective July 1, 2021. Budgets for hospital payments41 shall be subject to prospective legislative approval.42 (9) The department shall work with Idaho hospitals to establish a43 quality payment program for inpatient and outpatient adjustment payments44 described in section 56-1406, Idaho Code. Inpatient and outpatient adjust-45 ment payments shall be subject to increase or reduction based on hospital46 service quality measures established by the department in consultation with47 Idaho hospitals.48

SECTION 2. The rules contained in IDAPA 16.03.26, Department of Health49 and Welfare, relating to Medicaid Plan Benefits, Section 051.; and Section50

3 052., shall be null, void, and of no force and effect on and after July 1,1 2026.2

SECTION 3. An emergency existing therefor, which emergency is hereby3 declared to exist, this act shall be in full force and effect on and after its4 passage and approval.5