BILL ANALYSIS
AB 896
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Date of Hearing: April 29, 2009
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Kevin De Leon, Chair
AB 896 (Galgiani) - As Introduced: February 26, 2009
Policy Committee: HealthVote:15-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill repeals the January 1, 2010 sunset of provisions
enacted by AB 2474 (Galgiani), Chapter 496, Statutes of 2008. AB
2474 holds hospitals providing specialized high-cost inpatient
care harmless with respect to recently enacted Medi-Cal rate
reductions. Specifically, AB 2474:
1)Applies to hospital in-patient rates paid for services in two
programs:
a) California Children's Services (CCS) Program (state-only
and Healthy Families CCS)
b) Genetically Handicapped Persons Program (GHPP)
2)Requires hospital in-patient rates paid under these programs
to be 90 % of the interim, cost-based Medi-Cal rate rather the
lower California Medical Assistance Commission (CMAC) rate
that Department of Health Care Services (DHCS) was proceeding
to impose under a new statutory interpretation of a 2002
trailer bill action unrelated to the CCS program.
FISCAL EFFECT
1)On-going Medi-Cal costs in the range of $15 million (50% GF)
to $25 million (50% GF) to hold hospitals addressed by this
bill harmless by deleting the AB 2474 sunset. Actual costs
could be less to the extent that certain patients costing
$100,000 to $500,000 each for in-patient services do not have
significant health needs in a given year.
2)High-cost conditions and services create significant fiscal
risk for in-patient children's hospitals. Due to the serious
AB 896
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nature of CCS-eligible conditions, such as leukemia, parasitic
disease, cancer, and hemophilia, the hospitals providing
services may incur significant losses on expensive treatments
if reduced to the CMAC rate if AB 2474 is repealed.
For example, according to the sponsors of this bill, a four-year
old with recently diagnosed leukemia was hospitalized for
three weeks at a cost of $65,000. Without AB 2474 rate
protections, reimbursement would be $25,000 less than cost.
Another example demonstrating the impact of high-cost service
provision is a 12-year old with a cardiac valve malformation
resulting in six weeks of hospitalization and a $141,000 cost.
This would be reimbursed at $82,000 less than cost without AB
2474.
3)The Medi-Cal emergency injunction does not apply to AB 2474
payments. Following recently enacted Medi-Cal budget
reductions, several lawsuits by providers have been filed. As
a result, an emergency injunction has been put in place to
hold many providers harmless against rate reductions. The
injunction applies to four rate reductions: (a) inpatient
services for non-contract hospitals, (b) outpatient services,
(c) distinct part nursing facilities, and (d) sub-acute
facilities. Because AB 2474 moved the payments addressed in AB
896 out of the code sections under the injunction, AB 2474
hospitals are not protected from reductions like most other
providers.
COMMENTS
1)Rationale . This bill is sponsored by the California Children's
Hospital Association to continue to hold hospitals providing
CCS high-cost inpatient services harmless with respect to rate
cuts enacted in 2008. The CCS program provides a range of
medical services, including in-patient hospital stays to
children from low-income families (less than $40,000 per year)
with major medical conditions such as congenital heart disease
and sickle cell anemia. Children receive services in one of
three enrollment pathways: (a) CCS-Medi-Cal in which 130,000
children are enrolled (b) CCS-Healthy Families in which 26,000
children are enrolled and (c) CCS-only in which 20,000
children are enrolled.
2)Legislative Intent Clarified . CCHA is sponsoring this bill to
clarify that it was not the Legislature's intent in enacting
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the 2002 health budget trailer bill that services provided to
non-Medi-Cal children enrolled in the CCS Program and GHPP be
reimbursed at an amount less than the Medi-Cal cost-based,
interim rate.
In the summer of 2008, DHCS new legal interpretation of the 2002
trailer bill language meant that DHCS may have attempted five
years of CCS fund recoupment for alleged overpayments. DHCS
indicated that because children's hospitals are
CMAC-contracting hospitals, their payment rates for state-only
and Healthy Families CCS children should have been their lower
CMAC Medi-Cal contract rate, rather than the higher Medi-Cal
interim rate. AB 2474 was sponsored to prevent this recoupment
and to clarify the payment level for CCS inpatient services at
90 percent of the cost-based interim rate. This bill makes the
clarification of legislative intent permanent.
Analysis Prepared by : Mary Ader / APPR. / (916) 319-2081