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HCR 3

HOSPITALS: Provides for a hospital stabilization formula (EN +$659,764,552 SD RV See Note)

2026 Regular Session Introduced by Jack McFarland

Establishes a CMS-approved directed payment system and quarterly hospital assessment to stabilize Louisiana hospital funding while protecting rural hospitals and reducing uninsured

Taken by the Clerk of the House and presented to the Secretary of State in accordance with the Rules of the House.
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Bill Summary · HCR 3

Summary of HCR 3 (2026) — Louisiana Hospital Stabilization Formula

This Louisiana House Concurrent Resolution proposes a framework to stabilize and enhance hospital funding through a directed payment model and an accompanying hospital assessment, contingent on federal CMS approval and state action.

1) Purpose and Intent

  • Establish a hospital stabilization formula under Article VII, Section 10.13 of the Louisiana Constitution.
  • Preserve and enhance inpatient and outpatient hospital services in the state.
  • Protect rural hospitals and pursue a financially sustainable, healthcare-driven funding mechanism that minimizes reliance on general fund dollars.
  • Address uninsured costs and improve efficiency in how current healthcare dollars are used for low-income and uninsured residents.
  • Align with CMS rules by pursuing a hospital-directed payment model approved by CMS.

2) Key Provisions

A. Hospital Stabilization Assessment

  • The Louisiana Department of Health (LDH) would levy an assessment on eligible hospitals once CMS approves a directed payment arrangement for inpatient and outpatient services under 42 C.F.R. 438.6.
  • Assessments would be collected quarterly and covered by a Medicaid assessment report to the Joint Legislative Committee on the Budget (JLCB) prior to each levy.
  • The assessment is calculated as a percentage of each hospital’s net patient revenue (inpatient and outpatient) as reported in the Medicare cost report ending in FY 2023. Specific rates:
    • Long-term acute care, psychiatric, rehabilitation hospitals: 1.38% (inpatient) and 1.38% (outpatient).
    • Hospital Service Districts not classified as rural: 4.99% of inpatient up to $125M and 4.99% of outpatient up to $125M.
    • All other acute care hospitals: 6.49% of inpatient up to $125M and 6.74% of outpatient up to $125M.
    • Hospital Service Districts (not rural) and all other acute care hospitals: 2.36% of inpatient and outpatient revenues exceeding $125M.
  • Exemptions:
    • Non-rural, small urban private acute hospitals with 40 licensed beds or fewer.
    • Freestanding psychiatric Medicaid disproportionate share hospitals.
    • Rural hospitals (per current law).
  • The assessment would only apply in quarters when directed payments are actually paid.

B. Reimbursement Enhancements

  • Upon implementation, LDH would provide for: 1) Directed payment arrangements for inpatient and outpatient services under 42 CFR 438.6.
    • Acute care hospitals: CMS-directed payment methodology to be submitted to CMS by May 31, 2026.
    • Post-acute care hospitals: same submission deadline.
    • If CMS does not approve the initial arrangement by May 31, 2026, LDH may develop a new arrangement with JLCB approval prior to implementation. 2) Health coverage expansion through Medicaid (increasing federal match where applicable). 3) Hospital reimbursements: ensure payments are no less than rates in effect for dates of service on/after January 1, 2026.
  • LDH must publish CMS-directed payment arrangements on the Department’s website within 10 days of CMS approval.
  • Quarterly reporting (within 30 days after each quarter) detailing:
    • Total inpatient and outpatient Medicaid claims paid by hospital (by provider number).
    • Amount of directed payments received by each hospital.
    • Other supplemental payments received by each hospital.

C. Administration and Implementation

  • LDH must submit any necessary state plan amendments within 120 days of adoption.
  • LDH may adopt rules/regulations needed to implement the resolution, though final adoption of rules is not required to implement the resolution.
  • If CMS does not approve an arrangement consistent with the proposal, LDH must develop a new arrangement with JLCB approval before levy.
  • Final adoption of rules is not required to implement the resolution’s provisions.

3) Who and What is Affected

  • Affected: Hospitals subject to the approved directed payment arrangement (primarily acute care hospitals, acute/post-acute facilities, and certain hospital service districts not rural).
  • Exemptions: Non-rural small urban private acute hospitals (≤40 beds), freestanding psychiatric Medicaid DSH hospitals, and rural hospitals.
  • LDH, CMS, and the JLCB: key actors in approval, administration, and monitoring.

4) Procedural and Timeline Aspects

  • CMS approval is a gating condition for imposing the assessment.
  • If CMS approves by May 31, 2026, LDH implements the directed payment arrangement and assessment accordingly.
  • If CMS does not approve by that date, LDH must develop a new arrangement with JLCB approval prior to levy.
  • State plan amendments due within 120 days of adoption.
  • Public reporting: quarterly data to be published no later than 30 days after each quarter.

5) Potential Impacts and Considerations

  • Provides a recurring, non-general-fund source of hospital funding tied to directed payments, potentially stabilizing hospital finances.
  • Aims to protect rural hospitals and reduce uninsured costs shifting onto insured populations.
  • Requires CMS approval and ongoing reporting, creating transparency about directed payments and outcomes.
  • Exemption structure targets smaller rural/private facilities, potentially affecting funding distribution and incentives.

Compiled from official sources — confirm details with the bill’s official record.

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