Hospitals, private hospital assessment and Medicaid funding program sunset clause removed.

Alabama keeps hospital assessments and Medicaid funding

Beginning October 1, 2026, Alabama removes the sunset from its hospital assessment and related Medicaid hospital funding rules. Private hospitals pay 6.00% of net patient revenue for state fiscal years 2026–2028. The revenue figures come from Medicare cost reports for 2023, 2024, and 2025, respectively. Public and state-owned hospitals continue required transfers that help draw federal Medicaid matching money. The law also repeals the separate Hospital Provider Privilege Tax. Assessment money stays in a dedicated account, separate from the State General Fund, for hospital payments and refunds. For 2026–2028, inpatient base payments use the higher of two daily rates, multiplied by current-year patient days. Those rates are the hospital’s published 2022 rate and 68% of its average Medicaid inpatient payment per day in 2019. Hospitals can request rate reviews, but changes require agency discretion and panel approval. Outpatient base payments use the September 30, 2018 schedule, subject to panel updates. The outpatient payment system’s total budget cannot fall below the federal upper payment limit. All hospital types qualify for quarterly access payments covering the gap between base payments and that limit, until account funds run out. These payments cannot replace other Medicaid hospital payments. The agency can carry over unused funds up to one-third of the current year’s assessment. Unused balances not used for federal matching must lower the next year’s assessment. Remaining funds must be refunded proportionally if no new assessment starts October 1, 2028. Assessment reductions after federal funding changes are limited by the account’s hospital payment needs. Private hospitals are not guaranteed payments equal to their assessments. Funding can stop or require refunds if hospital spending falls below 2017 levels, payment rates fall below required rates, replacement contracts fail payment safeguards, or federal matching becomes unavailable. The framework has no effect without federal Medicaid participation at the approved matching rate. The law does not directly change household taxes or Medicaid eligibility.