Hospital Rate Improvement Program: Ensuring Access & Better Quality

HB 75 sponsored by Representative Brandon Reed

  • The Hospital Rate Improvement Program (HRIP) allows the state to draw down federal funds to pay a supplemental Medicaid payment to Kentucky hospitals. Hospitals pay an assessment to fund the state match.
  • No state funds are used in the program.
  • HRIP Payments are made quarterly, by applying a per discharge add-on to each inpatient claim that was paid in the prior quarter.
  • CMS will permit an adjustment to HRIP to also cover outpatient treatment, which will allow rural hospitals to stabilize their finances.
  • Currently, HRIP supplemental payments fill the gap between Medicaid rates and 90% of the average commercial rate. This applies to claims paid by MCOs.
  • HRIP is a value-based program with a portion of the funds tied to quality improvement based on metrics agreed to by the hospitals, CMS, and the Cabinet for Health and Family Services.
  • Hospitals have been achieving the required quality goals.
  • Payment amounts vary from quarter to quarter based on changes in the number of patients treated.
  • CMS must give approval each year for this enhancement to be continued.
  • Legislation is needed to end the hospital assessment if CMS terminates the program.


James C. Musser
KHA Senior Vice President
Policy and Government Relations
(502) 593-2339