BILL ANALYSIS
AB 896
Page 1
ASSEMBLY THIRD READING
AB 896 (Galgiani)
As Introduced February 26, 2009
Majority vote
HEALTH 15-0 APPROPRIATIONS 17-0
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|Ayes:|Jones, Fletcher, Adams, |Ayes:|De Leon, Nielsen, |
| |Block, De La Torre, | |Ammiano, |
| |De Leon, Emmerson, Hall, | |Charles Calderon, Davis, |
| |Hayashi, Hernandez, | |Duvall, Fuentes, Hall, |
| | Bonnie Lowenthal, Nava, | |Harkey, Miller, |
| |Hill, Salas, Audra | |John A. Perez, Price, |
| |Strickland | |Skinner, Solorio, Audra |
| | | |Strickland, Torlakson, |
| | | |Krekorian |
|-----+--------------------------+-----+--------------------------|
| | | | |
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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.
FISCAL EFFECT : According to the Assembly Appropriations
Committee:
1)Annual Medi-Cal costs in the range of $15 million (50% General
Fund) to $25 million (50% GF) that have been accounted for in
the Budget Act 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 with costs of $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 nature
of CCS-eligible conditions, such as leukemia, parasitic disease,
cancer, and hemophilia, the hospitals providing services may
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incur significant losses on expensive treatments if reduced to
the CMAC rate AB 2474 is repealed.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. 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 : 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. CCHA indicates that its members'
non-contract Medi-Cal rates are higher than their Medi-Cal CMAC
contract rates. Because children's hospitals are CMAC-contracting
hospitals, their payment rates for State-Only CCS and CCS-Healthy
Families Program children will be, effective January 1, 2010,
their lower CMAC Medi-Cal contract rate, rather than their higher
Medi-Cal interim rate. 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. 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. 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.
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.
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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. 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
the Department of Health Care Services (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. 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
required 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 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
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for overpayments in the HFP, which is generally funded 65% by
federal funds.
Analysis Prepared by : Scott Bain / HEALTH / (916) 319-2097
FN: 0001195