BILL ANALYSIS
AB 896
Page 1
Date of Hearing: April 14, 2009
ASSEMBLY COMMITTEE ON HEALTH
Dave Jones, Chair
AB 896 (Galgiani) - As Introduced: February 26, 2009
SUBJECT : Health care programs: provider reimbursement rates.
SUMMARY : Repeals a requirement due to take effect January 1,
2010 that hospital inpatient payment rates for the California
Children's Services Program (CCS Program), the Genetically
Handicapped Persons Program (GHPP), the Breast and Cervical
Cancer Early Detection Program (BCCEDP), the State-Only Family
Planning Program (State-Only FPP) and the Family Planning,
Access, Care, and Treatment (Family PACT) Waiver Program be
identical to payment rates for the same service performed by the
same provider type under the Medi-Cal program.
EXISTING LAW :
1)Requires provider payment rates for services rendered in CCS
Program, GHPP, BCCEDP, State-Only FPP, and Family PACT to be
identical to the rates of payment for the same service
performed by the same provider type pursuant to the Medi-Cal
program, except that hospital inpatient rates of payment are
required to be 90% of the Medi-Cal hospital interim rates of
payment, as developed by the Department of Health Care
Services (DHCS). The requirement that inpatient rates of
payment be 90% of the Medi-Cal hospital interim rate sunsets
January 1, 2010.
2)Requires provider payment rates for services rendered in CCS
Program, GHPP, BCCEDP, State-Only FPP, and Family PACT be
identical to the rates of payment for the same service
performed by the same provider type pursuant to the Medi-Cal
program. This provision takes effect January 1, 2010.
3)Authorizes services provided under the programs in 1) and 2)
above to be reimbursed at rates greater than the Medi-Cal rate
that would otherwise be applicable if those rates are
increased by the DHCS director in regulations.
FISCAL EFFECT : This bill has not been analyzed by a fiscal
committee.
AB 896
Page 2
COMMENTS :
1)PURPOSE . This bill is sponsored by the California Children's
Hospital Association (CCHA) to make permanent a delay in the
requirement that hospital inpatient rates in the CCS Program
and GHPP be reimbursed at their lower California Medical
Assistance Commission (CMAC) Medi-Cal rate. The author argues
hospitals such as children's' hospitals treat a
disproportionate number of low-income patients, including CCS
patients. CCHA argues a cut in provider reimbursement
directly impacts access to care, and delays in accessing care
costs the health care system more because the children are
sick and treatments are more costly. The author states this
bill would clarify that it was never the Legislature's intent
that these high-cost services to seriously ill children be
reimbursed at an amount less than Medi-Cal allowable costs,
and this bill would do that by removing the January 1, 2010
sunset date in existing law.
2)BACKGROUND . This bill efectively only affects inpatient
reimbursement in the CCS Program and GHPP for non-Medi-Cal
individuals enrolled in those programs because the other
programs (BCCEDP, State-Only FFP, Family PACT) do not
reimburse for inpatient services.
The CCS Program provides diagnostic and treatment services,
medical case management, and medical and occupational therapy
services to eligible children and young adults less than 21
years of age. Eligibility includes diagnosis of specified
medical conditions such as cancer, congenital heart disease,
and sickle cell anemia. Children receive services in one of
three enrollment pathways: a) CCS-Medi-Cal, in which 128,559
children are estimated to be enrolled in 2009-10; b)
CCS-Healthy Families Program (HFP), in which 26,414 children
are estimated to be enrolled in 2009-10; and, c) CCS-only, in
which 19,260 children are estimated to be enrolled in 2009-10.
This bill affects inpatient reimbursement rates for CCS-HFP
and CCS-only children.
GHPP provides medical care to individuals with genetically
handicapping conditions, including cystic fibrosis,
hemophilia, sickle cell disease, Huntington's disease,
Friedreich's Ataxia, and certain hereditary metabolic
disorders. Individuals receive services in one of two
enrollment pathways: a) GHPP-Medi-Cal, in which 334
AB 896
Page 3
individuals are estimated to be enrolled in 2009-10; and, b)
GHPP-only, in which 1,426 individuals are estimated to be
enrolled in 2009-10. This bill affects inpatient
reimbursement rates for GHPP-only individuals.
3)HOSPITAL REIMBURSEMENT . CMAC is a state commission
established to negotiate Medi-Cal contracts with hospitals on
behalf of the state. Hospitals that treat Medi-Cal
fee-for-service beneficiaries receive reimbursement either by
contracting with the state through CMAC, or billing for
services provided. CMAC rates are confidential for four
years. When hospitals do not contract with CMAC (referred to
as non-contract hospitals), they are initially paid an interim
rate. Hospitals are then required to submit a cost report
within five months of the close of their fiscal period, and
DHCS reviews each hospital's cost report and prepares a
tentative settlement, which is a determination of the
allowable reimbursable reported costs for a hospital's fiscal
period. DHCS compares what a hospital was paid in interim
payments, to the hospital's allowable reimbursable reported
costs. The difference may result in either an underpayment
that is paid to the hospital or an overpayment that is
recouped from the hospital. Under current law (until January
1, 2010), hospital inpatient rates of payment for non-Medi-Cal
patients in CCS and GHPP are required to be 90% of the
Medi-Cal hospital interim rate of payment.
During budget discussions last year over reductions in Medi-Cal
noncontract hospital rates, the DHCS practice of reimbursing
hospitals at the interim rate for individuals in non-Medi-Cal
CCS and GHPP is different than what was required under law,
which requires provider payment rates for services rendered in
the CCS Program and GHPP to be identical to the provider's
Medi-Cal rates of payment. Instead, hospitals providing
services to children enrolled in the CCS Program and GHPP who
were not enrolled in Medi-Cal were being reimbursed at their
interim Medi-Cal rate.
At the end of last session, the Legislature passed AB 2474
(Galgiani), Chapter 496, Statutes of 2008, which was also
sponsored by CCHA. AB 2474 requires hospital inpatient rates
of payment to be 90% of the Medi-Cal hospital interim rates of
payment until January 1, 2010, thus delaying until January 1,
2010 the requirement that rates in the CCS Program and GHPP
inpatient hospital rates be reimbursed at their lower Medi-Cal
AB 896
Page 4
CMAC rate. In addition, AB 2474 makes legislative findings to
prevent a recoupment of previous year hospital inpatient
overpayments in the CCS Program and GHPP by stating that it
was never the Legislature's intent in enacting the 2002 health
budget trailer bill that services to non-Medi-Cal children
enrolled in the CCS Program and GHPP be reimbursed at an
amount less than the Medi-Cal interim rate. The intent
language in AB 2474 was intended to protect hospitals that
provide care in the CCS Program and GHPP from being subject to
recoupment for overpayments, and to protect the state from
being obligated to reimburse the federal government for
overpayments in the HFP, which is generally funded 65% by
federal funds.
CCHA indicates that its members' non-contract Medi-Cal rates are
higher than their Medi-Cal contract rates. Because children's
hospitals are CMAC-contracting hospitals, their payment rates
for state-only and CCS-HFP children will be, effective January
1, 2010, their lower CMAC Medi-Cal contract rate, rather than
their higher Medi-Cal interim rate.
4)SUPPORT . CCHA writes as the sponsor of this bill that this
measure would ensure hospitals receive adequate reimbursement
for providing high-cost services to seriously ill children in
CCS. CCHA argues hospitals such as children's hospitals that
treat a disproportionate number of low-income patients cannot
absorb any additional reimbursement reductions without
seriously compromising patient access. CCHA argues that
childrens' hospitals are currently operating with a -1.4
percent operating margin, and this is prior to experiencing
the full impact of the economic downturn, which is resulting
in both increased Medi-Cal enrollment and decreased
non-operating revenues. The impact of reducing hospital
reimbursement for non-Medi-Cal CCS patients to the individual
hospital CMAC rate would be significant for California's
Children's Hospitals - approximately $1 million up to $1.8
million per facility annually.
5)POLICY QUESTIONS .
a) Postponement of Payment Reduction Made Permanent . AB
2474 (Galgiani) delayed until January 1, 2010, the
requirement that inpatient rates in the CCS and GHPP be
reimbursed at their Medi-Cal rate (their lower CMAC rate).
This bill addresses an important issue in that provider
AB 896
Page 5
payment rates in public programs are a key factor in
beneficiaries' ability to access program services.
However, given the state's current fiscal constraints and
potential cuts to existing health programs, should a
temporary delay in a payment reduction be made permanent?
b) CCS and GHPP Reimbursement Different Depending Upon
Underlying Eligibility . In the health budget trailer bill
of 2002 (AB 434 (Committee on Budget), Chapter 1161,
Statutes of 2002), the Legislature required that provider
rates of payment for services rendered in CCS Program,
GHPP, BCCEDP, State-Only FPP, and Family PACT be identical
to the rates of payment for the same service performed by
the same provider type in the Medi-Cal program. As
described above, this requirement was not implemented for
non-Medi-Cal inpatient services in the CCS Program and
GHPP.
CCHA argues the reason a higher rate is necessary for
non-Medi-Cal CCS is that when hospitals negotiate with
CMAC, they are considering the entire Medi-Cal patient
population they serve, which includes both the high-cost
services provided by the hospital along with the less
intensive, more moderate-cost services. However, CCHA
argues the services provided to the non-Medi-Cal CCS
population are all associated with the CCS condition, so
the services are primarily all high-cost. Should inpatient
reimbursement be different depending upon whether the CCS
or GHPP-eligible individual is enrolled in Medi-Cal versus
GHPP-only, CCS-only or CCS-HFP?
REGISTERED SUPPORT / OPPOSITION :
Support
California Children's Hospital Association (sponsor)
American Federation of State, County and Municipal Employees,
AFL-CIO
California Hospital Association
Opposition
None on file.
Analysis Prepared by : Scott Bain / HEALTH / (916) 319-2097
AB 896
Page 6