A. The “health care delivery and access medicaid-directed payment program” is created in the authority pursuant to the provisions of this section, to be approved by the centers for medicare and medicaid services.

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B. The authority shall:

(1)     determine the amount of funds required for disproportionate share hospital payments but for the impact of the medicaid-directed payment program on the limit established by Section 1923(g) of the federal Social Security Act and direct a like amount of funds otherwise appropriated for the New Mexico medicaid program to fund the medicaid-directed payment program;

(2)     determine the total funding for the medicaid-directed payment program, including the amount pursuant to Paragraph (1) of this subsection, and the associated matching federal funds;

(3)     set aside forty percent of the medicaid-directed payment program funding for quality incentive payments for eligible hospitals, to replace the targeted access fee- for-service supplemental payment program and the hospital value-based directed payment program, including the hospital access payment program and the hospital quality improvement initiative;

(4)     establish quality measurements and performance evaluation criteria based on hospital grouping classifications, after soliciting input from key stakeholders of the New Mexico hospital industry, for eligible hospitals using quality measurements and performance evaluation criteria:

(a) that have been endorsed by a nationally recognized quality organization; (b) that align with the New Mexico medicaid strategic plan; or

(c) that align with the department of health’s state health improvement plan;

(5)     ensure that a quality incentive payment made to an eligible general acute care hospital:

(a) prior to calendar year 2026, is distributed based only on quality measurements and not performance evaluation; and

(b) for calendar year 2026 and subsequent years, is distributed based on quality measurements and performance evaluation;

(6)     ensure that a quality incentive payment made to an eligible special hospital:

(a) prior to calendar year 2027, is distributed based only on quality measurements and not performance evaluation; and

(b) for calendar year 2027 and subsequent years, is distributed based on quality measurements and performance evaluation;

(7)     after soliciting input from key stakeholders of New Mexico’s hospital industry, structure payments to hospitals for the portion of the funding not used for the quality incentive payments as a uniform rate increase, to be paid to eligible hospitals through medicaid managed care organizations separately and in addition to capitation payments made to such organizations; and

(8)     to the extent permitted by federal law, require, no more frequently than annually, that each eligible hospital submit to the authority, upon request, a report demonstrating that the increase in payment for medicaid managed care patients provided through the medicaid-directed payment program has enabled it to invest an amount equal to at least seventy-five percent of its net new funding into the delivery of and access to health care services in New Mexico, including investments in hospital operational costs, workforce recruitment and retention, staff and provider compensation increases, on-call physician coverage, precepting incentives, creation or expansion of services, community benefit activities or capital investments.