House File 919 - Introduced HOUSE FILE 919 BY COMMITTEE ON HEALTH AND HUMAN SERVICES (SUCCESSOR TO HSB 268) A BILL FOR An Act relating to specialty hospital designations for certain 1 nonprofit organizations. 2 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 3 TLSB 2687HV (1) 91 dg/ko

H.F. 919 Section 1. Section 135B.1, Code 2025, is amended by adding 1 the following new subsection: 2 NEW SUBSECTION . 7. “Specialty hospital” means a hospital 3 described by all of the following: 4 a. The hospital is owned and operated by a nonprofit 5 organization. 6 b. The hospital only serves individuals thirty years of age 7 and younger. 8 c. More than sixty percent of the individuals served by the 9 hospital receive medical assistance under chapter 249A. 10 d. The hospital specializes in pediatric rehabilitation and 11 treating children with a behavioral health condition or complex 12 medical needs. 13 e. The hospital has no more than one hundred inpatient beds. 14 f. The hospital provides outpatient services. 15 g. The hospital was a licensed nursing facility under 16 section 135C.1, prior to July 1, 2025. 17 Sec. 2. NEW SECTION . 135B.40 Specialty hospitals. 18 1. A specialty hospital shall establish formal criteria 19 based on objective medical standards for patient admission, 20 discharge, and continuation of care. 21 2. The department shall adopt rules pursuant to chapter 22 17A relating to the application of criteria established under 23 subsection 1 when reviewing patient discharges from a specialty 24 hospital. 25 3. The department of health and human services shall 26 provide notice to a specialty hospital of a significant change 27 in federal Medicaid reimbursement to hospitals which would 28 negatively impact the specialty hospital. To the extent 29 permitted by law, the department of health and human services 30 shall collaborate with the specialty hospital to mitigate the 31 negative effects of a significant change in federal Medicaid 32 reimbursement to hospitals. 33 Sec. 3. DEPARTMENT OF INSPECTIONS, APPEALS, AND LICENSING 34 —— DEPARTMENT OF HEALTH AND HUMAN SERVICES —— SPECIALTY 35 -1- LSB 2687HV (1) 91 dg/ko 1/ 5

H.F. 919 HOSPITALS. 1 1. For purposes of this section, “licensed entity” means an 2 entity granted a provisional general hospital license with a 3 specialty hospital designation under subsection 2, paragraph 4 “a”. 5 2. On or before July 1, 2025, the department of inspections, 6 appeals, and licensing shall, to the extent not prohibited by 7 federal law, do all of the following: 8 a. Grant a provisional general hospital license with a 9 specialty hospital designation to an entity that meets the 10 definition of a specialty hospital under section 135B.1. A 11 provisional license granted under this paragraph shall enable 12 the licensed entity to participate in hospital-based enhanced 13 reimbursement. 14 b. Approve a licensed entity to obtain accreditation from an 15 accrediting organization approved by the federal centers for 16 Medicare and Medicaid services. 17 3. On or before July 1, 2025, the department of health and 18 human services shall set reimbursement rates for inpatient 19 care provided by a licensed entity. Reimbursement rates under 20 this paragraph shall be equal to the licensed entity’s average 21 allowable per diem costs, and adjusted for inflation. 22 4. On or before July 1, 2025, the department of health and 23 human services and the department of inspections, appeals, and 24 licensing shall, to the extent not prohibited by federal law, 25 do the following: 26 a. Grant waivers for facility requirements under each 27 department’s rulemaking authority to the extent necessary to 28 allow a licensed entity to operate as a specialty hospital. A 29 waiver granted under this paragraph shall be valid for no more 30 than twenty-four consecutive months from the date of enactment 31 of this Act, or until the licensed entity complies with all 32 facility requirements, whichever is earlier. 33 b. Collaborate with each other and a licensed entity to 34 obtain necessary federal waivers and approval to allow the 35 -2- LSB 2687HV (1) 91 dg/ko 2/ 5

H.F. 919 licensed entity to operate as a specialty hospital as defined 1 under 42 C.F.R. §411.351. 2 c. Exempt a licensed entity from being required to provide 3 emergency services, other than emergency services the licensed 4 entity provided prior to July 1, 2025. 5 d. Exempt a licensed entity from being required to maintain, 6 or have available, laboratory and pathology services and 7 facilities, other than laboratory and pathology services and 8 facilities the licensed entity maintained prior to July 1, 9 2025. 10 e. Exempt a licensed entity from construction standards 11 applicable only to hospitals and off-site premises, other 12 than the construction standards applicable only to hospitals 13 and off-site premises standards that the licensed entity 14 complied with prior to July 1, 2025. The exemption under this 15 paragraph shall include exemption from the standards set forth 16 in the guidelines for design and construction of hospitals as 17 published by the facility guidelines institute. 18 5. On or before July 1, 2025, the department of health and 19 human services, the department of inspections, appeals, and 20 licensing, and the state health facilities council established 21 in section 10A.712 shall, to the extent not prohibited by 22 federal law, do all of the following: 23 a. Waive any requirement necessary to allow a licensed 24 entity to redesignate nursing facility beds as specialty 25 hospital beds. 26 b. Waive any requirement necessary to allow a licensed 27 entity to expand up to one hundred specialty hospital beds. 28 6. The department of inspections, appeals, and licensing, 29 and the department of health and human services, shall adopt 30 rules pursuant to chapter 17A as necessary to implement this 31 section. 32 EXPLANATION 33 The inclusion of this explanation does not constitute agreement with 34 the explanation’s substance by the members of the general assembly. 35 -3- LSB 2687HV (1) 91 dg/ko 3/ 5

H.F. 919 This bill relates to specialty hospital designations for 1 certain nonprofit organizations. 2 The bill defines “specialty hospital” as a hospital that is 3 owned and operated by a nonprofit organization; only serves 4 individuals 30 years of age and younger; has more than 60 5 percent of patients receiving medical assistance under Code 6 chapter 249A (medical assistance); specializes in pediatric 7 rehabilitation and treating children with a behavioral 8 health condition or complex medical needs; has no more than 9 100 inpatient beds; provides outpatient services; and was a 10 licensed nursing facility prior to July 1, 2025. 11 The bill requires a specialty hospital to establish formal 12 criteria based on objective medical standards for patient 13 admission, discharge, and continuation of care. The department 14 of inspections, appeals, and licensing (DIAL) must adopt rules 15 relating to the application of criteria when reviewing patient 16 discharges from a specialty hospital. 17 The bill requires the department of health and human 18 services (HHS) to provide notice to a specialty hospital 19 of a significant change in federal Medicaid reimbursement 20 to hospitals which would negatively impact the specialty 21 hospital. The bill requires HHS, to the extent permitted by 22 law, to collaborate with specialty hospitals to mitigate the 23 negative effects of a significant change in federal Medicaid 24 reimbursement to hospitals. 25 The bill requires HHS to set reimbursement rates for 26 inpatient care provided by a specialty hospital at a rate equal 27 to the specialty hospital’s average allowable per diem costs as 28 adjusted for inflation. 29 The bill requires DIAL, HHS, and the state health facilities 30 council, to the extent not prohibited by federal law, to waive 31 certain regulatory requirements, exempt a specialty hospital 32 from certain regulatory requirements, and support a specialty 33 hospital in obtaining a waiver from or achieving compliance 34 with certain federal regulatory requirements as necessary to 35 -4- LSB 2687HV (1) 91 dg/ko 4/ 5

H.F. 919 allow the specialty hospital to operate. The bill directs 1 DIAL and HHS to adopt rules to implement such waivers and 2 exemptions, or permit such assistance. 3 -5- LSB 2687HV (1) 91 dg/ko 5/ 5