BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
896 (Galgiani)
Hearing Date: 8/27/2009 Amended: As Introduced
Consultant: Katie Johnson Policy Vote: Health 9-1
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BILL SUMMARY: AB 896 would eliminate the January 1, 2010,
sunset on the existing provisions that recently made the
reimbursement rate to hospitals that provide inpatient care to
enrollees in the California Children's Services (CCS) program
and the Genetically Handicapped Person's Program (GHPP) 90% of
the interim, cost-based Medi-Cal rate rather than the lower
California Medical Assistance Commission (CMAC) negotiated rate.
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Fiscal Impact (in thousands)
Major Provisions 2009-10 2010-11 2011-12 Fund
Sunset elimination $2,750 - $5,500$5,500 -
10,500 $5,500 - 11,000 General/
$2,750 - $5,500 $5,500 -
10,500$5,500 - 11,000 Federal/ $2,750 - $5,500
$5,500 - 10,500$5,500 - 11,000 County*
*See Staff Comments
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STAFF COMMENTS: SUSPENSE FILE.
Existing law, established by AB 2474 (Galgiani), Chapter 496,
Statutes of 2008, requires that provider rates of payment for
services rendered be identical to the rates of payment for the
same service performed by the same provider for the Medi-Cal
program, except that hospital inpatient rates are required to be
90% of Medi-Cal hospital interim rates of payment, until January
1, 2010, for the following programs:
1) CCS
2) GHPP
3) The Breast and Cervical Cancer Early Detection Program
4) The State-Only Family Planning Program
5) The Family Planning, Access, Care, and Treatment (Family
PACT) Waiver Program.
Existing law provides that services provided under the above
programs could be reimbursed at rates greater than the Medi-Cal
rate by the adoption of those rates in regulation by DHCS.
CCS and GHPP provide both inpatient and outpatient services; the
other three programs provide only outpatient services, so this
bill would only apply to enrollees in CCS and GHPP. Children who
receive CCS services may also be concurrently enrolled in
Medi-Cal or the Healthy Families Program. As of July 2008, of
the 167,045 children enrolled in CCS, 123,988 were also enrolled
in Medi-Cal, 24,474 were also enrolled in Healthy Families, and
18,583 were enrolled in CCS-state-only. GHPP enrollees may
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AB 896 (Galgiani)
also be enrolled in Medi-Cal. As of July 2008, of the 1,688
people enrolled in GHPP, 324 were also enrolled in Medi-Cal and
1,364 were enrolled in GHPP-state-only.
This bill would only apply to CCS-state-only, CCS-Healthy
Families, and GHPP-state-only enrollees. The state receives no
federal matching funds for CCS and GHPP members who are enrolled
only in those programs. Together, the University of California
(UC) medical centers, the public hospitals, and the children's
hospitals serve approximately 65 - 75 percent of CCS and GHPP
patients. More than 100 California hospitals treat about 25 - 35
percent of CCS and GHPP patients.
In July 2008, DHCS was notified that it was misinterpreting the
language as set forth in AB 442 (Committee on Budget), Chapter
1161, Statutes of 2002, with regards to hospital reimbursement
rates for inpatient services to non-Medi-Cal members of CCS and
GHPP programs. According to AB 442, since 2002, DHCS should have
paid hospitals that treat CCS-state-only, CCS-Healthy Families,
and GHPP-state-only patients the lower California Medical
Assistance Commission (CMAC) negotiated Medi-Cal reimbursement
rates for services rendered, unless DHCS had adopted a
regulation that set the payment rate higher. Instead, from 2002
to 2008, DHCS paid hospitals the higher Medi-Cal interim
cost-based rate that it had paid prior to 2002 without the
adoption of a regulation to authorize the higher rate of
payment. Since DHCS paid a higher rate of reimbursement to
hospitals for inpatient services, it requested a higher rate of
reimbursement from the federal government in matching funds for
the CCS members who were also enrolled in Healthy Families. The
matching rate for the Healthy Families Program is 65 percent
federal, 35 percent state funds.
AB 2474 (Galgiani), Chapter 496, Statutes of 2008, clarified,
with the following language, that the Legislature's "intent?as
enacted by Chapter 1161 of the Statutes of 2002, was that the
rates of reimbursement for all inpatient hospital services under
these paragraphs would be at the applicable Medi-Cal interim
rates of reimbursements paid to hospitals not under contract."
It appears to be the intent of this bill and this language to
protect DHCS from any obligation to repay the federal government
for the higher-priced matching funds that it received for the
CCS patients that were also enrolled in Healthy Families from
2002-2008.
AB 2474, existing law, provided that, until January 1, 2010,
DHCS would pay hospitals 90% of the interim Medi-Cal rate for
inpatient services rendered to CCS-state-only, CCS-Healthy
Families, and GHPP-state-only patients. Beginning January 1,
2010, DHCS would reduce the rate of payment to the CMAC
negotiated Medi-Cal rate.
This bill would eliminate the January 1, 2010, sunset, and, as a
result, DHCS would continue to reimburse hospitals for inpatient
services at 90% of the interim Medi-Cal rate instead of the
lower CMAC negotiated rate that DHCS would have paid had the
sunset gone into effect.
Statutorily, this bill would require DHCS to maintain the
increased rate of payment to all hospitals that provide
inpatient services under these programs, which would result in a
total of approximately $17 - 32 million ongoing costs annually,
or $5.5 million - $11
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AB 896 (Galgiani)
million each from federal funds, General Fund, and county funds,
assuming approximately half of the enrollees are enrolled in
Healthy Families and half are state-only. These costs would vary
based on the number and length of a person's hospitalization
each year. Costs are shared as follows: for CCS-Healthy
Families, the matching rate is approximately 65% federal funds,
17.5% General Fund, 17.5% county, and for CCS-state-only and
GHPP-state-only, the matching rate is 50% General Fund and 50%
county.
If the sunset goes into effect on January 1, 2010, there would
be a savings of approximately $17 - 32 million in annual
payments, distributed among the funds as described above, to
hospitals as a result of the reduction in hospital reimbursement
rates for these programs. The savings due to the sunset were not
included in the Governor's proposed 2009-2010 budget.