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HCPF reports Chase board raised hospital supplemental payments to 99.25% of UPL, adding $54 million retroactively
Summary
HCPF told the JBC the Chase board approved increasing hospital supplemental payments from roughly 97% to 99.25% of the Upper Payment Limit, resulting in $54 million in additional net hospital reimbursements for the past two federal fiscal years and an expected $19 million annual increase going forward.
The Health Care Policy and Financing Department told the Joint Budget Committee that the hospital provider fee program (the CHASE or HAF fee program described in departmental materials) has been adjusted to increase hospital supplemental payments to 99.25% of the Upper Payment Limit (UPL), boosting net hospital reimbursements.
CFO Bettina Schneider said that historically CHASE‑funded supplemental payments were calculated to reach about 97% of the UPL. In December, HC PUF collected additional fee revenue and made supplemental payments to bring the last two federal fiscal years to 99.25% of the UPL; the department said that change increased net hospital reimbursement (payments minus fees) by $54 million for the past two federal fiscal years.
Schneider told the committee the change will increase net hospital reimbursements by an estimated $19 million per year going forward. She also discussed the statutory constraints on CHASE administration (a 3% cap on administrative costs), the split of legislative authority over CHASE, and the process by which the CHASE board, rules of the Medical Services Board and CMS approvals shape the fee and payment methodology.
The department also discussed the possibility of pursuing additional reforms—known as state‑directed payments or directed payment programs—to optimize federal draw and support targeted provider increases. HCPF said it will convene CHASE board work groups to study model changes, but it warned that any major redesign will require at least several months to prepare and then CMS review; HCPF told members it expects a minimum of three to six months for CMS to review any submission and tentatively aimed for a July 1, 2025 submission date for a comprehensive proposal.
Committee members asked about administrative costs, how CHASE moneys have been used historically for general‑fund relief in past sessions, and the limits on using enterprise funds. Schneider said the CHASE enterprise can be used to offset general fund medical services premium requests if the General Assembly directs such a change, citing prior precedent where CHASE funds were used for general fund relief.
