Bill
SB 3528
Creates a state transformation fund up to $150M annually to modernize hospital payments (APR-DRG/EAPG) and fund equity-focused, community-driven health care improvements.
Scope: This bill amends the Illinois Public Aid Code to advance hospital and health care transformation efforts, with a particular emphasis on Medicaid-related inpatient/outpatient payment reforms, a transitional period for rate adjustments, and a structured, community-focused transformation fund.
Main purpose and intent
- Modernize hospital payment systems and establish a formal hospital and health care transformation program to support system-level changes aligned with community needs and health equity.
- Create and regulate a dedicated transformation funding pool to support transformation projects, prioritizing distressed communities and safety-net providers.
- Encourage partnerships across care delivery, with measurable outcomes and accountability, potentially leveraging federal matching funds.
Key provisions and changes
1) Transformation funding pool and unspent funds
- Establishes a hospital and health care transformation program funded by an annual transformation funding pool of up to $150,000,000 (for 2021-2027) to be used, subject to federal matching funds, for transformation projects.
- If funds remain unexpended in those fiscal years, they may be allocated in FY 2028 up to $150,000,000.
- Transition provisions specify that funding agreements are purchases of care under the Illinois Procurement Code and emphasize maximizing federal matching funds.
2) Phase-in and ongoing reforms for hospital payments
- Inpatient payments: Switch to APR-DRG-based reimbursement using SolventumTM software as the exclusive provider (with limited exceptions if terms cannot be met).
- Development of weighting factors, statewide standardized amounts, trauma/trauma-related and GME adjusters, and add-ons for exceptionally costly stays (outliers) with thresholds updated per Medicare principles.
- Outpatient payments: Switch to EAPG software (SolventumTM) with similar provider exclusivity and adjustments, including add-ons for expensive outpatient devices/drugs and high-volume outpatient adjustments (with a specified $79.2 million annual funding level starting 2018 for high-volume outpatient adjustments).
- Includes various amendments for perinatal centers, burn care, psychiatric inpatient services, and transitional hospital access payments.
- Establishes transition period (through June 30, 2018) with a dedicated transition hospital access pool of at least $290,000,000 annually to support access during transition.
3) Health care transformation program (Phase 2)
- Phase 2 directs expansion of funds into directed payments and pass-through payments under Section 5A-12.7, with a strong emphasis on reducing health disparities and improving access for Medicaid and uninsured populations.
- Creates a formal framework for innovative partnerships designed to improve integrated care, especially in distressed communities.
4) Phase 2: program criteria and community focus
- Requires transformation proposals to be community-needs driven, collaborative across care and community entities, aimed at reducing disparities and improving outcomes.
- Proposals must include measurable disparities metrics, minority/women-owned business participation, and clear access improvements (primary, preventive, or specialty care).
- Prioritizes projects from distressed communities and safety-net hospitals, with detailed funding targeting (e.g., allocations for safety-net collaborations, cross-provider partnerships, workforce development, etc.).
- Establishes a detailed project submission and evaluation process, public posting for comments, and quarterly progress reporting with potential penalties for failing to meet milestones.
5) Governance and oversight
- Creates a Hospital Transformation Review Committee (14 members) to advise on policies, criteria, and payment methodologies. Dissolved April 1, 2019 (as per the text, implying legacy governance structures).
- Allows rulemaking adjustments to respond to federal requirements and procurement rules.
6) Compliance and reporting
- Requires annual updates to reimbursement components and publishes changes on the Department’s website.
- Requires quarterly progress reports on funded projects, with potential funding reductions or terminations for non-performance.
- Ensures alignment with federal funding and procurement rules, including potential for penalties and early closure fees if projects fail.
Who/what is affected
- Hospitals and health care providers receiving transformation funds or participating in the transformation program.
- State Department of Healthcare and Family Services (DHFS or its successor agencies) implementing reimbursement reforms and managing the transformation pool.
- Safety-net and safety-net-related hospitals, critical access hospitals, and community-based organizations partnering in distressed communities.
- Managed care organizations (through adjustments to capitation base rates linked to program changes).
Timeline and procedural notes
- Effective date tied to the act’s passage (amendments reference various dates; key transition period ends June 30, 2018).
- Requires updates and reporting to occur with timelines tied to fiscal and rulemaking cycles, with public posting and stakeholder engagement.
- Bill language indicates ongoing project cycles in 2019-2020 for Phase 1/Phase 2, with a focus on phased funding and measurable milestones.
Overall, SB 3528 seeks to overhaul hospital payment methodology while launching a substantial, equity-focused transformation program funded by a dedicated pool, prioritizing distressed communities, and emphasizing measurable health outcomes and collaboration across the health care system.
Compiled from official sources — confirm details with the bill’s official record.
Sign in to ask a question.
