(a) As used in this section, "diagnosis-related group methodology" means a system of classification of diagnoses and procedures based on the International Classification of Diseases, Tenth Revision, Clinical Modification, also known as ICD-10-CM, including without limitation:

(1) The all-patient refined diagnosis-related groups system; and

(2) The enhanced ambulatory procedure grouping system.

(b) To the extent possible, the Department of Human Services shall convert the hospital reimbursement systems under the Arkansas Medicaid Program to a diagnosis-related group methodology to allow more accurate classification of patient populations and description of mortality risks and severity of patient illness.

(c)

(1) The department shall promulgate rules to implement this section.

(2) The rules adopted under subdivision (c)(1) of this section shall address:

(A) How supplemental payments to hospitals shall be considered;

(B) Whether funding for the transition from per diem reimbursement to diagnosis-related group methodology shall be provided to hospitals; and

(C) Whether certain types of hospital providers shall be exempt from the diagnosis-related group methodology.

(d)

(1) The department, in coordination with the Arkansas Hospital Association, Inc., shall develop a plan for the conversion of the hospital reimbursement systems under the Arkansas Medicaid Program as described in subsection (b) of this section.

(2) The conversion plan shall:

(A) Include estimates of the impact of the conversion on all state and federal funds used for hospital payment, including without limitation any impact on critical-access hospitals; and

(B) Be submitted to the Legislative Council for review on or before January 1, 2018.