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HB 2507

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2025 Regular Session Introduced by Chris Runion

Illinois Medicaid nursing facilities must spend at least 90% of adjusted total revenue on resident care and related costs each year, starting 2026, with audits and potential clawba

Passed by indefinitely in Finance and Appropriations (15-Y 0-N)
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Bill Summary · HB 2507

Summary — HB2507 (Illinois) — "Medicaid — Nursing Facility Minimum Resident Care Requirement"

Note: The provided document contains unrelated statutory language from another state's bill. This summary focuses on the substantive Illinois measure in the packet (introduced by Rep. Kelly M. Cassidy), which amends the Illinois Public Aid Code to impose a minimum percent of revenue that Medicaid-participating nursing facilities must spend on resident care.

Purpose / Intent

Require nursing facilities that receive Illinois Medicaid payments to spend a minimum share of their adjusted total revenue on direct resident care and other resident‑related costs, increase financial transparency, limit passthroughs to owners/related parties, and authorize recovery when facilities fail to meet the requirement.

Key provisions

  • New Section 5-5.2a added to the Illinois Public Aid Code.
  • Minimum resident care spending:
    • Beginning January 1, 2026, and each calendar year thereafter, each nursing facility must spend at least 90% of its "adjusted total revenue" on "resident care and other resident‑related costs."
  • Definitions / inclusions:
    • "Resident care and other resident‑related costs" includes direct care (nursing, CNAs/CNAs), support services (food service, laundry, housekeeping, nurse administration, activities, transportation), and ancillary medical services (medical, dental, podiatric, lab services, inhalation therapy, etc.). (The bill text contains some formatting gaps; the intent is to capture direct/resident‑facing care and ancillary clinical services.)
  • Exclusions / deductions:
    • Non‑allowable costs, related‑party adjustments, and owner compensation reported are excluded from the resident‑care calculation.
    • If a related‑party transaction exceeds fair market value, the excess is deducted.
    • 25% of costs associated with contract nursing staff are to be deducted from the resident‑care amount.
    • CNA tenure payments (per an existing statutory cross‑reference) are excluded from resident‑care spending.
  • Adjusted total revenue:
    • Defined as total operating revenue plus interest/investment income, with certain exclusions (e.g., CNA tenure payments).
  • Reporting and audit:
    • Facilities must submit specified financial reports to the Illinois Department of Healthcare and Family Services (HFS) as part of existing reporting obligations. Submissions are subject to audit and must comply with applicable uniform standards.
  • Enforcement and recovery:
    • For calendar year 2027 and thereafter, HFS will use the financial reports to determine compliance.
    • If a facility fails to meet the 90% requirement, the shortfall (calculated per the bill) is treated as a vendor overpayment.
    • HFS must recover the full overpayment amount by reducing future Medicaid payments, requiring direct payment to the Department, or other methods permitted under the Public Aid Code.
  • Rulemaking:
    • HFS is directed to adopt any rules necessary to implement the section.

Who is affected

  • Primary: Nursing facilities that participate in Illinois Medicaid (public aid) programs.
  • State agency: Illinois Department of Healthcare and Family Services (responsible for oversight, audits, determinations, recoveries, and rulemaking).
  • Indirect: Medicaid beneficiaries/residents (potentially benefits from higher direct care spending); facility owners, operators, related entities, and staffing contractors (may receive less allowable cost recovery).

Timeline / Procedural status

  • Introduced (IL House): February 4, 2025 by Rep. Kelly M. Cassidy.
  • Effective dates in the bill:
    • Spend requirement takes effect January 1, 2026.
    • HFS enforcement using reported data begins for calendar year 2027 (i.e., HFS determines compliance starting in 2027).
  • Legislative actions and companion:
    • Companion bill: SB 814.
    • The document includes many sponsorship additions and committee actions; it indicates progression through committees and House actions in 2025 (see bill history for exact procedural status).

Potential impacts and considerations

  • Financial: Facilities may need to shift spending toward direct/resident care or face clawbacks of Medicaid funds. Operators that rely heavily on related‑party payments, owner compensation, or contract nursing costs may see reduced net recoverable amounts.
  • Administrative: Increased financial reporting and audit exposure; HFS rulemaking and enforcement workload.
  • Quality of care: Intended to increase resources devoted to resident care; outcomes depend on how facilities reallocate spending (hiring direct care staff vs. other measures).
  • Legal/compliance: Facilities will need to ensure accurate reporting, fair‑market valuation of related‑party transactions, and documentation supporting allowable costs.

For full implementation details and exact statutory language, consult the bill text (Section 5-5.2a of the Public Aid Code), HFS guidance, and any rules adopted under the bill.

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

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