BILL NUMBER: AB 1653 AMENDED
BILL TEXT
AMENDED IN SENATE JULY 15, 2010
INTRODUCED BY Assembly Member Jones
( Principal coauthor: Senator
Alquist )
JANUARY 14, 2010
An act to amend Sections 14167.1, 14167.6, 14167.10,
14167.31, and 14167.32 of, and to add Article 5.227 (commencing
with Section 14168) to Chapter 7 of Part 3 of Division 9 of ,
the Welfare and Institutions Code, relating to Medi-Cal, making
an appropriation therefor, and declaring the urgency thereof, to
take effect immediately.
LEGISLATIVE COUNSEL'S DIGEST
AB 1653, as amended, Jones. Medi-Cal: hospitals: managed
health care plans: quality assurance fee.
Existing law establishes the Medi-Cal program, administered by the
State Department of Health Care Services, under which basic health
care services are provided to qualified low-income persons. The
Medi-Cal program is, in part, governed and funded by federal Medicaid
provisions.
Existing law, subject to federal approval, requires the department
to make supplemental payments for certain services, as specified, to
private hospitals, nondesignated public hospitals, and designated
public hospitals, as defined, for subject federal fiscal years.
Existing law requires the department to make enhanced payments to
managed health care plans, as defined, and requires the state to make
enhanced payments to mental health plans, as defined, for each
subject federal fiscal year, as specified. Existing law requires the
managed health care plans and mental health plans that received
enhanced payments to make supplemental payments to subject hospitals,
as defined, pursuant to specified formulas.
This bill would, instead, refer to the payments made by the
department to the managed health care plans as increased capitation
payments. The bill would require the department, through its actuary,
to calculate the maximum amount of managed care payments that can be
paid to hospitals under federal law for each subject federal fiscal
year. Upon completion of the calculations by the department's
actuary, the bill would require the department to increase capitation
payments to managed health care plans by the amount calculated by
the actuary. The bill would require each managed health care plan to
expend 100% of any increased capitation payments it receives from the
department on hospital services.
This bill would expand the definition of a nondesignated public
hospital for purposes of the above-described provisions.
Existing law, subject to federal approval, also imposes, as a
condition of participation in state-funded health insurance programs
other than the Medi-Cal program, a quality assurance fee, as
specified, on certain general acute care hospitals through and
including December 31, 2010. Existing law creates the Hospital
Quality Assurance Revenue Fund in the State Treasury and requires
that the money collected from the quality assurance fee be deposited
into the fund. Existing law provides that the moneys in the fund
shall, upon appropriation by the Legislature, be available only for
certain purposes, including providing the above-described
supplemental payments to hospitals and health care coverage for
children.
This bill would modify the methodology used in calculating the
amount of the quality assurance fee imposed on acute care hospitals
pursuant to the above-described provisions.
Existing law, effective January 1, 2011, and subject to the
authority of a subsequent statute enacted to take effect on or after
January 1, 2011, that meets certain conditions, imposes a quality
assurance fee in a manner necessary to obtain federal Medicaid
matching funds that shall be due and payable to the department by
each general acute care hospital at specified rates for the purpose
of making Medi-Cal payments to hospitals
This bill would, effective January 1, 2011, impose on each general
acute care hospital that is not an exempt facility, as defined, a
quality assurance fee, as a condition of participation in
state-funded health insurance programs, other than the Medi-Cal
program. This bill would require the quality assurance fee to be
computed starting on the effective date of the bill and continue
through and including June 30, 2011. The bill would require the
proceeds from the fee to be used for the same purposes as the
above-described quality assurance fee that is imposed on hospitals
through and including December 31, 2010. The bill would provide that
the method of calculation and collection of the quality assurance fee
is to be determined in an unspecified manner.
This bill would require the director to seek federal approvals or
waivers as may be necessary to implement the above-described
provisions and to obtain federal financial participation to the
maximum extent possible with the proceeds from the quality assurance
fee paid pursuant to those provisions.
This bill would require the fee payments and any related federal
reimbursement under the above-described provisions
that become effective January 1, 2011, to be deposited in the
Hospital Quality Assurance Revenue Fund. The bill would continuously
appropriate these moneys in an unspecified manner.
This bill would declare that it is to take effect immediately as
an urgency statute.
Vote: 2/3. Appropriation: yes. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 14167.1 of the
Welfare and Institutions Code is amended to read:
14167.1. (a) "Acute psychiatric days" means the total number of
Short-Doyle administrative days, Short-Doyle acute care days, acute
psychiatric administrative days, and acute psychiatric acute days
identified in the Final Medi-Cal Utilization Statistics for the
2008-09 state fiscal year as calculated by the department on
September 15, 2008.
(b) "Converted hospital" means a private hospital that becomes a
designated public hospital or a nondesignated public hospital after
the implementation date, a nondesignated public hospital that becomes
a private hospital or a designated public hospital after the
implementation date, or a designated public hospital that becomes a
private hospital or a nondesignated public hospital after the
implementation date.
(c) "Current Section 1115 Waiver" means California's Medi-Cal
Hospital/Uninsured Care Section 1115 Waiver Demonstration in effect
on the effective date of the article.
(d) "Designated public hospital" shall have the meaning given in
subdivision (d) of Section 14166.1 as that section may be amended
from time to time.
(e) "General acute care days" means the total number of Medi-Cal
general acute care days paid by the department to a hospital in the
2008 calendar year, as reflected in the state paid claims files on
July 10, 2009.
(f) "High acuity days" means Medi-Cal coronary care unit days,
pediatric intensive care unit days, intensive care unit days,
neonatal intensive care unit days, and burn unit days paid by the
department during the 2008 calendar year, as reflected in the state
paid claims files on July 10, 2009.
(g) "Hospital inpatient services" means all services covered under
Medi-Cal and furnished by hospitals to patients who are admitted as
hospital inpatients and reimbursed on a fee-for-service basis by the
department directly or through its fiscal intermediary. Hospital
inpatient services include outpatient services furnished by a
hospital to a patient who is admitted to that hospital within 24
hours of the provision of the outpatient services that are related to
the condition for which the patient is admitted. Hospital inpatient
services include physician services only where the service is
furnished to a hospital inpatient, the physician is compensated by
the hospital for the service, and the service is billed to Medi-Cal
by the hospital under a provider number assigned to the hospital.
Hospital inpatient services do not include services for which a
managed health care plan is financially responsible.
(h) "Hospital outpatient services" means all services covered
under Medi-Cal furnished by hospitals to patients who are registered
as hospital outpatients and reimbursed by the department on a
fee-for-service basis directly or through its fiscal intermediary.
Hospital outpatient services include physician services only where
the service is furnished to a hospital outpatient, the physician is
compensated by the hospital for the service, and the service is
billed to Medi-Cal by the hospital under a provider number assigned
to the hospital. Hospital outpatient services do not include services
for which a managed health care plan is financially responsible, or
services rendered by a hospital-based federally qualified health
center for which reimbursement is received pursuant to Section
14132.100.
(i) (1) "Implementation date" means the latest effective date of
all federal approvals or waivers necessary for the implementation of
this article and Article 5.22 (commencing with Section 14167.31),
including, but not limited to, any approvals on amendments to
contracts between the department and managed health care plans or
mental health plans necessary for the implementation of this article.
The effective date of a federal approval of a contract amendment
shall be the earliest date to which the computation of payments under
the contract amendment is applicable that may be prior to the date
on which the contract amendment is executed.
(2) If federal approval is sought initially for only the 2008-09
federal fiscal year and separately secured for subsequent federal
fiscal years, the implementation date for the 2008-09 federal fiscal
year shall occur when all necessary federal approvals have been
secured for that federal fiscal year.
(j) "Individual hospital acute psychiatric supplemental payment"
means the total amount of acute psychiatric hospital supplemental
payments to a subject hospital for a quarter for which the
supplemental payments are made. The "individual hospital acute
psychiatric supplemental payment" shall be calculated for subject
hospitals by multiplying the number of acute psychiatric days for the
individual hospital for which a mental health plan was financially
responsible by four hundred eighty-five dollars ($485) and dividing
the result by 4.
(k) "Individual hospital managed care supplemental payment" means
the total amount of managed care hospital supplemental payments to a
subject hospital for a month for which the supplemental payments are
made.
(1) The "individual hospital managed care supplemental payment"
shall be calculated for private hospitals and designated public
hospitals by multiplying the number of Medi-Cal managed care days for
the individual hospital by one thousand three hundred forty-one
dollars and eighty-nine cents ($1,341.89) and dividing the result by
12.
(2) The "individual hospital managed care supplemental payment"
shall be calculated for nondesignated public hospitals by multiplying
the number of Medi-Cal managed care days for the individual hospital
by three hundred seventy-five dollars ($375) and dividing the result
by 12.
(l) (1) "Managed health care plan" means a health care delivery
system that manages the provision of health care and receives prepaid
capitated payments from the state in return for providing services
to Medi-Cal beneficiaries.
(2) (A) Managed health care plans, include, but are not limited
to, county organized health systems, prepaid health plans, and
entities contracting with the department to provide services pursuant
to two-plan models and geographic managed care. Entities providing
these services contract with the department pursuant to any of the
following:
(i) Article 2.7 (commencing with Section 14087.3).
(ii) Article 2.8 (commencing with Section 14087.5).
(iii) Article 2.81 (commencing with Section 14087.96).
(iv) Article 2.91 (commencing with Section 14089).
(v) Article 1 (commencing with Section 14200) of Chapter 8.
(vi) Article 7 (commencing with Section 14490) of Chapter 8.
(B) Managed health care plans do not include any mental health
plan contracting to provide mental health care for Medi-Cal
beneficiaries pursuant to Part 2.5 (commencing with Section 5775) of
Division 5.
(m) "Medi-Cal managed care days" means the total number of general
acute care days, including well baby days, listed for the county
organized health system and prepaid health plans identified in the
Final Medi-Cal Utilization Statistics for the 2008-09 state fiscal
year, as calculated by the department on September 15, 2008, except
that the general acute care days, including well baby days, for the
Santa Barbara Health Care Initiative shall be derived from the Final
Medi-Cal Utilization Statistics for the 2007-08 state fiscal year.
(n) "Medicaid inpatient utilization rate" means Medicaid inpatient
utilization rate as defined in Section 1396r-4 of Title 42 of the
United States Code and as set forth in the final disproportionate
share hospital eligibility list for the 2008-09 state fiscal year
released by the department on October 22, 2008.
(o) "Mental health plan" means a mental health plan that contracts
with the State Department of Mental Health to furnish or arrange for
the provision of mental health services to Medi-Cal beneficiaries
pursuant to Part 2.5 (commencing with Section 5775) of Division 5.
(p) "New hospital" means a hospital that was not in operation
under current or prior ownership as a private hospital, a
nondesignated public hospital, or a designated public hospital for
any portion of the 2008-09 state fiscal year.
(q) "Nondesignated public hospital" means a
either of the following:
(1) A public hospital that is
licensed under subdivision (a) of Section 1250 of the Health and
Safety Code, is not designated as a specialty hospital in the
hospital's annual financial disclosure report for the hospital's
latest fiscal year ending in 2007, and satisfies the definition in
paragraph (25) of subdivision (a) of Section 14105.98, excluding
designated public hospitals.
(2) A tax-exempt nonprofit hospital that is licensed under
subdivision (a) of Section 1250 of the Health and Safety Code, is not
designated as a specialty hospital in the hospital's annual
financial disclosure report for the hospital's latest fiscal year
ending in 2007, is operating a hospital owned by a local health care
district, and is affiliated with the health care district hospital
owner by means of the district's status as the nonprofit corporation'
s sole corporate member.
(r) "Outpatient base amount" means the total amount of payments
for hospital outpatient services made to a hospital in the 2007
calendar year, as reflected in state paid claims files on January 26,
2008.
(s) "Private hospital" means a hospital that meets all of the
following conditions:
(1) Is licensed pursuant to subdivision (a) of Section 1250 of the
Health and Safety Code.
(2) Is in the Charitable Research Hospital peer group, as set
forth in the 1991 Hospital Peer Grouping Report published by the
department, or is not designated as a specialty hospital in the
hospital's Office of Statewide Health Planning and Development Annual
Financial Disclosure Report for the hospitals latest fiscal year
ending in 2007.
(3) Does not satisfy the Medicare criteria to be classified as a
long-term care hospital.
(4) Is a nonpublic hospital, nonpublic converted hospital, or
converted hospital as those terms are defined in paragraphs (26) to
(28), inclusive, respectively, of subdivision (a) of Section
14105.98.
(t) "Subject federal fiscal year" means a federal fiscal year that
ends after the implementation date and begins before December 31,
2010.
(u) "Subject hospital" shall mean a hospital that meets all of the
following conditions:
(1) Is licensed pursuant to subdivision (a) of Section 1250 of the
Health and Safety Code.
(2) Is in the Charitable Research Hospital peer group, as set
forth in the 1991 Hospital Peer Grouping Report published by the
department, or is not designated as a specialty hospital in the
hospital's Office of Statewide Health Planning and Development Annual
Financial Disclosure Report for the hospitals latest fiscal year
ending in 2007.
(3) Does not satisfy the Medicare criteria to be classified as a
long-term care hospital.
(v) "Subject month" means a calendar month beginning on or after
the implementation date and ending before January 1, 2011.
(w) "Upper payment limit" means a federal upper payment limit on
the amount of the Medicaid payment for which federal financial
participation is available for a class of service and a class of
health care providers, as specified in Part 447 of Title 42 of the
Code of Federal Regulations.
SEC. 2. Section 14167.6 of the Welfare
and Institutions Code is amended to read:
14167.6. (a) The department shall enhance
increase capitation payments to Medi-Cal managed health care
plans for the subject federal fiscal years as set forth in this
section.
(b) The enhanced increased capitation
payments shall be made as part of the monthly capitated
payments made by the department to managed health care plans.
(c) The department shall determine the amount of the enhanced
payments to managed health care plans for each subject month
consistent with the following objectives:
(1) Pay to managed health care plans in the aggregate the sum of
the individual hospital managed care supplemental payments for each
month.
(2) Result in payment of the individual hospital managed care
supplemental payment to each subject hospital in accordance with
Section 14167.10.
(3) Result in rates that may be certified as actuarially sound.
(4) Result in rates that are approved by the federal government
for purposes of federal financial participation.
(c) The department, through its actuary, shall calculate the
maximum amount of managed care payments that can be paid to hospitals
under federal law for each subject federal fiscal year. The
department's actuary shall certify those calculations as meeting
federal requirements.
(d) Upon completion of the calculations by the department's
actuary pursuant to subdivision (c), the department shall increase
capitation payments to managed health care plans by the amount
calculated in subdivision (c).
(d)
(e) The department shall make enhanced
increased capitation payments to managed health
care plans exclusively for the purpose of making
supplemental payments to hospitals, in order under
this section shall be made to support the availability of
hospital services and ensure access to hospital services
for Medi-Cal beneficiaries. Managed health care plans shall
pass through enhanced payments to hospitals in a manner determined by
the department. The enhanced
increased capitation payments to managed health care plans
shall be made as follows:
(1) The enhanced increased capitation
payments shall commence during the second month following the
month during which the quality assurance fee set forth in Article
5.22 (commencing with Section 14167.31) is due and payable from
hospitals if the quality assurance fee includes funds for
enhanced increased capitation payments to
managed health care plans. The last enhanced
increased capitation payments made pursuant to this section
shall be made during December 2010.
(2) The enhanced increased capitation
payments made during the first month in which enhanced
increased capitation payments are made pursuant
to this section shall include the sum of the enhanced
increased capitation payments for all prior
months for which payments are due and actuarial certification
was received .
(3) The enhanced payments made during December 2010 shall include
payments for December 2010 to September 2011, inclusive, to the
extent that federal financial participation is available for the
enhanced payments.
(e)
(f) Payments to managed health care plans that would be
paid consistent with actuarial certification and enrollment
in the absence of the payments made pursuant to this section
shall not be reduced as a consequence of payment under this section.
(f)
(g) (1) Each managed health care plan shall expend
, in the form of supplemental payments to hospitals,
100 percent of any rate enhanced
increased capitation payments it receives under this section
, pursuant to Section 14167.10 on hospital
services.
(2) Interest earned by the managed health care plans during timely
implementation of subdivision (b) of Section 14167.10 shall be in
lieu of any administrative fee that the department might otherwise
pay to the plans for implementation of this article.
(3)
(2) The department may issue change orders to amend
contracts with managed health care plans on either a
quarterly or semiannual basis as needed to
adjust monthly capitation payments to coincide with updated
enrollment data so that the amounts paid to hospitals pursuant to
this section equals, or nearly equals, the amounts set forth in
subdivision (a) of Section 14167.10 in order to
implement this section .
(g)
(h) In the event federal financial participation is not
available for all of the enhanced managed care
increased capitation payments determined for a month
pursuant to this section for any reason, the enhanced
increased capitation payments mandated by this
section for that month shall be reduced proportionately to the amount
for which federal financial participation is available.
(h) Enhanced payments to a managed health care plan pursuant to
this section shall not be taken into consideration by the department
or the Department of Managed Health Care in determining the
percentage of total costs attributed to administrative costs for the
purposes of determining compliance with any administrative costs
limit, including, but not limited to, those described in Sections
14087.1 and 14464, Section 1378 of the Health and Safety Code, and
Section 1300.78 of Title 28 of the California Code of Regulations.
(i) Notwithstanding Chapter 3.5 (commencing with Section 11340)
of Part 1 of Division 3 of Title 2 of the Government Code, the
department shall implement this section by means of policy letters or
similar instructions, without taking further regulatory action.
SEC. 3. Section 14167.10 of the Welfare
and Institutions Code is amended to read:
14167.10. (a) (1) At the same time that the department makes an
enhanced payment to a managed health care plan under Section 14167.6,
the department shall notify the plan of each hospital to which the
plan shall make supplemental managed care payments as a consequence
of receiving the enhanced payment and the amount of the supplemental
payment. The department shall determine the amount of the
supplemental payment due to each subject hospital so that the total
supplemental managed care payments to the hospital from all managed
health care plans resulting from payments made to the managed health
care plans for the subject month under Section 14167.6 equals or
approximately equals the hospital's individual hospital managed care
supplemental payment.
(2) In the case of the enhanced payments made to a managed health
care plan during the first month in which the payments are made to
the plan, the amounts of supplemental payments due to each hospital
pursuant to paragraph (1) shall be multiplied by the number of months
for which the enhanced payments were made.
(3) The notice provided by the department in connection with the
enhanced managed care payments to each managed health care plan
during December 2010 shall also direct the managed health care plan
to make monthly supplemental payments to hospitals for months, if
any, from January 2011 to September 2011, inclusive, for which
federal financial participation is available as described in
paragraph (3) of subdivision (d) of Section 14167.6 and the amount of
the supplemental payments as calculated pursuant to this
subdivision.
(b) Each managed health care plan receiving payments under Section
14167.6 shall make supplemental payments to hospitals within 30 days
of receiving the payments under Section 14167.6, except that if the
managed health care plan receives enhanced payments during December
2010, which include payments relating to some or all of the month of
January 2011 to September 2011, inclusive, the managed health care
plan shall make payments relating to the months of January 2011 to
September 2011, inclusive, during each month to which the payment
relates. The payments shall be made to those hospitals and in those
amounts set forth by the department in its notice provided pursuant
to subdivision (a).
(c) The supplemental payments made to hospitals pursuant to this
section shall be in addition to any other amounts payable to
hospitals by a managed health care plan or otherwise and shall not
affect any other payments to hospitals.
14167.10. (a) Each managed health care plan
receiving increased capitation payments under Section 14167.6 shall
expend the capitation rate increases in a manner consistent with
actuarial certification, enrollment, and utilization on hospital
services within 30 days of receiving the increased capitation
payments.
(d)
(b) For each subject federal fiscal year, the sum of
all supplemental payments expenditures
made by a managed health care plan to subject hospitals
for hospital services pursuant to this section
shall equal, or approximately equal, all enhanced
increased capitation payments received by the managed
health care plan , consistent with actuarial certification,
enrollment, and utilization, from the department pursuant to
Section 14167.6.
(e) Managed health care plans shall not take into account payments
made pursuant to this article in negotiating the amount of payments
to hospitals that are not made pursuant to this article.
(f) The obligations of a Medi-Cal managed health care plan to make
payments to a hospital for services furnished by the hospital that
are not covered by a contract between the managed health care plan
and the hospital, including the amounts of payments required apart
from payments under this article, shall not be affected by any
payments made under this article.
(g) In the event federal financial participation for a month is
not available for all of the enhanced managed health care plan
payments pursuant to Section 14167.6 for any reason, the supplemental
payments made to hospitals under this section shall be reduced
proportionately to the amount for which federal financial
participation is available, and the department's notice under
subdivision (a) shall reflect that reduction.
(h) No payments shall be made under this section to a new
hospital.
(i)
(c) Any delegation or attempted delegation by a managed
health care plan of its obligation to make payments
expend the capitation rate increases under this
section shall not relieve the plan from its obligation to
make those payments expend those capitation rate
increases . Managed health care plans shall submit the
documentation the department may require to demonstrate compliance
with this subdivision. The documentation shall demonstrate actual
payments to hospitals expenditure of the
capitation rate increases for hospital services , and not
assignment to subcontractors of the managed health care plan's
obligation of the duty to pay hospitals
expend the capitation rate increases . The department
and each managed health care plan shall make available to each
subject hospital, within 15 days of receipt of the hospital's written
request, documentation demonstrating the amount that the plan paid
to the subject hospital for a subject month and the amount due from
the plan to the subject hospital for the subject month.
(j) If the department determines that a managed health care plan
has failed to pay any enhanced payment amounts it received pursuant
to Section 14167.6 to hospitals as required by this section, the
department shall immediately recover the amounts determined by an
offset to the capitation payments made to the managed health care
plan and by any other legal means available. At least 30 calendar
days prior to seeking any recovery, the department shall notify the
managed health care plan to explain the nature of the department's
determination, to establish the amount of the enhanced payment amount
in excess of supplemental payments to hospitals, and to describe the
recovery process. The department may terminate any or all contracts
between the department and a managed health care plan that fails to
make payments as required by this section.
(k) The department shall pay to a managed health care plan or
plans, as the director determines is or are appropriate, any amounts
recovered under subdivision (i) for the purpose of making payments to
hospitals pursuant to this section and shall direct the managed
health care plan or plans receiving those amounts to make specific
payments to specific hospitals to ensure that hospitals receive the
amounts set forth in this section.
(l) Managed health care plans shall in no event be obligated under
this section to make supplemental payments to hospitals that exceed
the enhanced payments made to the managed care health plans under
Section 14167.6.
(d) Consistent with actuarial certification, enrollment, and
utilization, managed health care plans shall in no event be obligated
under this section to expend the capitation rate increases on
hospital services that exceed the increased capitation payments made
to the managed health care plans under Section 14167.6.
SEC. 4. Section 14167.31 of the Welfare
and Institutions Code is amended to read:
14167.31. (a) (1) "Aggregate quality
assurance fee" means the sum of all of the following:
(1)
(A) The annual fee-for-service days for an individual
hospital multiplied by the fee-for-service per diem quality assurance
fee rate.
(2)
(B) The annual managed care days for an individual
hospital multiplied by the managed care per diem quality assurance
fee rate.
(3)
(C) The annual Medi-Cal days for an individual hospital
multiplied by the Medi-Cal per diem quality assurance fee rate.
(2) "Aggregate quality assurance fee after the application of the
microfee percentage" means the sum of all of the following:
(A) The annual fee-for-service days for an individual
hospital multiplied by the fee-for-service per diem quality assurance
fee rate and multiplied by the microfee percentage.
(B) The annual managed care days for an individual hospital
multiplied by the managed care per diem quality assurance fee rate.
(C) The annual Medi-Cal days for an individual hospital multiplied
by the Medi-Cal per diem quality assurance fee rate and multiplied
by the microfee percentage.
(b) "Annual fee-for-service days" means the number of
fee-for-service days of each hospital subject to the quality
assurance fee in the 2007 calendar year, as reported on the days data
source.
(c) "Annual managed care days" means the number of managed care
days of each hospital subject to the quality assurance fee in the
2007 calendar year, as reported on the days data source.
(d) "Annual Medi-Cal days" means the number of Medi-Cal days of
each hospital subject to the quality assurance fee in the 2007
calendar year, as reported on the days data source.
(e) "Days data source" means the following:
(1) For a hospital that did not submit an Annual Financial
Disclosure Report to the Office of Statewide Health Planning and
Development for a fiscal year ending during 2007, but submitted that
report for a fiscal period ending in 2008 that includes at least 10
months of 2007, the Annual Financial Disclosure Report submitted by
the hospital to the Office of Statewide Health Planning and
Development for the fiscal period in 2008 that includes at least 10
months of 2007.
(2) For a hospital owned by Kaiser Foundation Hospitals that
submitted corrections to reported patient days to the Office of
Statewide Health Planning and Development for its fiscal year ending
in 2007 before July 31, 2009, the corrected data.
(3) For all other hospitals, the hospital's Annual Financial
Disclosure Report in the Office of Statewide Health Planning and
Development files as of October 31, 2008, for its fiscal year ending
during 2007.
(f) "Designated public hospital" shall have the meaning given in
subdivision (d) of Section 14166.1 as that section may be amended
from time to time.
(g) "Exempt facility" means any of the following:
(1) A public hospital as defined in paragraph (25) of subdivision
(a) of Section 14105.98.
(2) With the exception of a hospital that is in the Charitable
Research Hospital peer group, as set forth in the 1991 Hospital Peer
Grouping Report published by the department, a hospital that is a
hospital designated as a specialty hospital in the hospital's Office
of Statewide Health Planning and Development Hospital Annual
Disclosure Report for the hospital's fiscal year ending in the 2007
calendar year.
(3) A hospital that satisfies the Medicare criteria to be a
long-term care hospital.
(4) A small and rural hospital as specified in Section 124840 of
the Health and Safety Code designated as that in the hospital's
Office of Statewide Health Planning and Development Hospital Annual
Disclosure Report for the hospital's fiscal year ending in the 2007
calendar year.
(h) (1) "Federal approval" means the last approval by the federal
government required for the implementation of this article and
Article 5.21 (commencing with Section 14167.1).
(2) If federal approval is sought initially for only the 2008-09
federal fiscal year and separately secured for subsequent federal
fiscal years, the implementation date, as defined in subdivision (i)
of Section 14167.1, for the 2008-09 federal fiscal year shall occur
when all necessary federal approvals have been secured for that
federal fiscal year.
(i) "Fee-for-service per diem quality assurance fee rate" means a
fixed fee on fee-for-service days of two hundred thirty-three dollars
and sixty-six cents ($233.66) per day.
(j) "Fee-for-service days" means inpatient hospital days where the
service type is reported as "acute care," "psychiatric care," and
"chemical dependency care and rehabilitation care," and the payer
category is reported as "Medicare traditional," "county indigent
programs-traditional," "other third parties-traditional," "other
indigent," and "other payers," for purposes of the Annual Financial
Disclosure Report submitted by hospitals to the Office of Statewide
Health Planning and Development.
(k) "Fee percentage" means, for a subject federal fiscal
year, a fraction, expressed as a percentage, the numerator of which
is the amount of payments under Sections 14167.2, 14167.3, and
14167.4, subdivision (b) of Section 14167.5, and Section 14167.6 for
which federal financial participation is available and the
denominator of which is three billion seven hundred eleven million
seven hundred eight thousand seven hundred forty dollars
($3,711,708,740) or "fee percentages" means a
percentage or percentages that consists or consist of the macrofee
percentage or percentages and the microfee percentage or percentages
.
(1) (A) "Microfee percentage" or "microfee percentages" means a
percentage or percentages that is or are calculated by the department
to equal, for a subject federal fiscal year, a fraction, expressed
as a percentage, the numerator of which is the sum of two billion two
hundred fifty-two million two hundred ninety-one thousand three
hundred fifty-three dollars ($2,252,291,353) plus the maximum amount
of managed care payments for the subject federal fiscal year
calculated by the department pursuant to subdivision (c) of Section
14167.6 and the denominator of which is three billion seven hundred
eleven million seven hundred eight thousand seven hundred forty
dollars ($3,711,708,740).
(B) The department shall apply the microfee percentage or
percentages only to the fee-for-service per diem quality assurance
fee rate and the Medi-Cal per diem quality assurance fee rate.
(C) If required in order to comply with federal law, the
department may calculate different microfee percentages for the
fee-for-service per diem quality assurance fee rate and the Medi-Cal
per diem quality assurance fee rate, provided that the difference
between the two microfee percentages shall be the minimum necessary
to comply with federal law.
(2) "Macrofee percentage" or "macrofee percentages" means a
fraction, expressed as a percentage, the numerator of which is the
amount of payments under Sections 14167.2, 14167.3, 14167.4,
subdivision (b) of Section 14167.5, and Section 14167.6 for which
federal financial participation is available and the denominator of
which is the sum of two billion two hundred fifty-two million two
hundred ninety-one thousand three hundred fifty-three dollars
($2,252,291,353) plus the maximum amount of managed care payments for
a subject federal fiscal year calculated by the department pursuant
to subdivision (c) of Section 14167.6.
(l) "General acute care hospital" shall mean
means any hospital licensed pursuant to subdivision (a) of
Section 1250 of the Health and Safety Code.
(m) "Hospital community" means any hospital industry organization
or system that represents children's hospitals, nondesignated public
hospitals, designated public hospitals, private safety-net hospitals,
and other public or private hospitals.
(n) "Managed care days" means inpatient hospital days in the 2007
calendar year as reported on the days data source where the service
type is reported as "acute care," "psychiatric care," and "chemical
dependency care and rehabilitation care," and the payer category is
reported as "Medicare managed care," "county indigent
programs-managed care," and "other third parties-managed care," for
purposes of the Annual Financial Disclosure Report submitted by
hospitals to the Office of Statewide Health Planning and Development.
(o) "Managed care per diem quality assurance fee rate" means a
fixed fee on managed care days of twenty-seven dollars and
twenty-five cents ($27.25) per day.
(p) "Medi-Cal days" means inpatient hospital days in the 2007
calendar year as reported on the days data source where the service
type is reported as "acute care," "psychiatric care," and "chemical
dependency care and rehabilitation care," and the payer category is
reported as "Medi-Cal-traditional" and "Medi-Cal-managed care," for
purposes of the Annual Financial Disclosure Report submitted by
hospitals to the Office of Statewide Health Planning and Development.
(q) "Medi-Cal per diem quality assurance fee rate" means a fixed
fee on Medi-Cal days of two hundred ninety-three dollars ($293) per
day.
(r) "Nondesignated public hospital" means a public hospital that
is licensed under subdivision (a) of Section 1250 of the Health and
Safety Code and is defined in paragraph (25) of subdivision (a) of
Section 14105.98, excluding designated public hospitals.
(s) "Prior fiscal year data" means any data taken from sources
that the department determines are the most accurate and reliable at
the time the determination is made, or may be calculated from the
most recent audited data using appropriate update factors. The data
may be from prior fiscal years, current fiscal years, or projections
of future fiscal years.
(t) "Private hospital" means a hospital licensed under subdivision
(a) of Section 1250 of the Health and Safety Code that is a
nonpublic hospital, nonpublic converted hospital, or converted
hospital as those terms are defined in paragraphs (26) to (28),
inclusive, respectively, of subdivision (a) of Section 14105.98.
(u) "Subject federal fiscal year" means a federal fiscal year
ending after the implementation date, as defined in Section 14167.1,
and beginning before December 31, 2010.
(v) "Upper payment limit" means a federal upper payment limit on
the amount of the Medicaid payment for which federal financial
participation is available for a class of service and a class of
health care providers, as specified in Part 447 of Title 42 of the
Code of Federal Regulations.
SEC. 5. Section 14167.32 of the Welfare
and Institutions Code is amended to read:
14167.32. (a) There shall be imposed on each general acute care
hospital that is not an exempt facility a quality assurance fee, as a
condition of participation in state-funded health insurance
programs, other than the Medi-Cal program.
(b) The quality assurance fee shall be computed starting on the
effective date of this article and continue through and including
December 31, 2010.
(c) The department shall calculate the amount of the aggregate
quality assurance fee for each general acute care hospital that is
not an exempt facility within 30 days after the effective date of
this article. Within 20 days of calculating the aggregate quality
assurance fee, the department shall send notice to each general acute
care hospital that is not an exempt facility of the amount of the
hospital's aggregate quality assurance fee.
(d) For calendar quarters prior to federal approval of the
implementation of this article and the calendar quarter in which the
department receives notice of federal approval of the implementation
of this article, the following provisions shall apply:
(1) For the partial calendar quarter ending September 30, 2009, 20
days after the effective date of this article, each general acute
care hospital that is not an exempt facility shall certify to the
best of its knowledge, on a form provided by the department, that the
hospital is prepared to pay the aggregate quality assurance fee for
that hospital.
(2) For each calendar quarter beginning on or after October 1,
2009, and ending on or before September 30, 2010, within 30 days
following the beginning of each calendar quarter, each general acute
care hospital that is not an exempt facility shall certify to the
best of its knowledge, on a form provided by the department, that the
hospital is prepared to pay the aggregate quality assurance fee for
that hospital divided by four.
(3) For the calendar quarter beginning October 1, 2010, on or
before November 1, 2010, each general acute care hospital that is not
an exempt facility shall certify to the best of its knowledge, on a
form provided by the department, that the hospital is prepared to pay
the aggregate quality assurance fee for that hospital.
(4) Each certification required by this subdivision shall be
cumulative, and in addition, to any prior certification.
(e) Upon receipt of federal approval, the following shall become
operative:
(1) Within 10 days following receipt of the notice of federal
approval from the federal government, the department shall send
notice to each hospital subject to the quality assurance fee, and
publish on its Internet Web site, the following information:
(A) The date that the state received notice of federal approval.
(B) The fee percentage or percentages for each subject
federal fiscal year.
(2) The notice to each hospital subject to the quality assurance
fee shall also state the following:
(A) Within 30 days after the date the department received notice
of federal approval, the hospital shall pay the amount of the quality
assurance fee the hospital has certified or will certify for
calendar quarters, up to, and including, the quarter in which the
department receives notice of approval by the federal government of
the implementation of this article, pursuant to subdivision (d),
except that the term "aggregate quality assurance fee" used in
subdivision (d) shall be replaced with the term "aggregate
quality assurance fee after the application of the microfee
percentage," multiplied by the applicable fee
macrofee percentage or percentages, except that,
in the event that the director has made modifications to the fee
model to secure federal approval pursuant to subdivision (f) or (g)
of Section 14167.35, the above-described amount, adjusted to reflect
the director's modifications.
(B) The total amount of the fee that will be payable by the
hospital within 30 days after the date the department received notice
of federal approval.
(3) Within 30 days after the date the department received notice
of federal approval, each general acute care hospital that is not an
exempt facility shall pay the amounts stated in the department's
notice pursuant to paragraph (2).
(4) Within 30 days following the beginning of each calendar
quarter, commencing with the quarter following the last quarter
governed by subdivision (d) and ending with, and including, the
calendar quarter ending December 31, 2010, each general acute care
hospital that is not an exempt facility shall pay to the department
the amounts that the hospital would certify to pay for the relevant
quarter pursuant to subdivision (d), except that the term
"aggregate quality assurance fee" used in subdivision (d) shall be
replaced with the term "aggregate quality assurance fee after the
application of the microfee percentage," multiplied by the
applicable fee macrofee percentage,
provided that, if modifications were made to the fee model by the
director in order to secure federal approval pursuant to subdivision
(f) or (g) of Section 14167.35, then the hospital shall pay the
amount resulting from the modifications.
(f) The quality assurance fee, as paid pursuant to this
subdivision, shall be paid by each hospital subject to the fee to the
department for deposit in the Hospital Quality Assurance Revenue
Fund. Deposits may be accepted at any time and will be credited
toward the fiscal year for which they were assessed.
(g) Subdivisions (d) and (e) shall become inoperative if the
federal Centers for Medicare and Medicaid Services denies approval
for, or does not approve before January 1, 2012, the implementation
of this article or Article 5.21 (commencing with Section 14167.1),
and either or both article cannot be modified by the department
pursuant to subdivision (e) of Section 14167.35 in order to meet the
requirements of federal law or to obtain federal approval. If
subdivisions (d) and (e) become inoperative pursuant to this
subdivision, each hospital subject to the quality assurance fee shall
be released from any certifications made pursuant to subdivision
(d).
(h) In no case shall the aggregate fees collected in a subject
federal fiscal year pursuant to this section exceed the maximum
percentage of the annual aggregate net patient revenue for hospitals
subject to the fee that is prescribed pursuant to federal law and
regulations as necessary to preclude a finding that an indirect
guarantee has been created.
(i) (1) Interest shall be assessed on quality assurance fees not
paid on the date due at the greater of 10 percent per annum or the
rate at which the department assesses interest on Medi-Cal program
overpayments to hospitals that are not repaid when due. Interest
shall begin to accrue the day after the date the payment was due and
shall be deposited in the Hospital Quality Assurance Revenue Fund.
(2) In the event that any fee payment is more than 60 days
overdue, a penalty equal to the interest charge described in
paragraph (1) shall be assessed and due for each month for which the
payment is not received after 60 days.
(j) When a hospital fails to pay all or part of the quality
assurance fee within 60 days of the date that payment is due, the
department may deduct the unpaid assessment and interest owed from
any Medi-Cal payments or other state payments to the hospital in
accordance with Section 12419.5 of the Government Code until the full
amount is recovered. Any deduction shall be made only after written
notice to the hospital and may be taken over a period of time. All
amounts, except penalties, deducted by the department under this
subdivision shall be deposited in the Hospital Quality Assurance
Revenue Fund. The remedy provided by this section is in addition to
other remedies available under law.
(k) The payment of the quality assurance fee shall not be
considered as an allowable cost for Medi-Cal cost reporting and
reimbursement purposes.
(l) The department shall work in consultation with the hospital
community to implement the quality assurance fee.
(m) This subdivision creates a contractually enforceable promise
on behalf of the state to use the proceeds of the quality assurance
fee, including any federal matching funds, solely and exclusively for
the purposes set forth in this article as they existed on the
effective date of this article, to limit the amount of the proceeds
of the quality assurance fee to be used to pay for the health care
coverage of children to the amounts specified in this article and to
make any payments for the department's costs of administration to the
amounts set forth in this article on the effective date of this
article to maintain and continue prior reimbursement levels as set
forth in Article 5.21 (commencing with Section 14167.1) on the
effective date of that article, and to otherwise comply with all its
obligations set forth in Article 5.21 (commencing with Section
14167.1) and this article.
(n) For the purpose of this article, references to the receipt of
notice by the state of federal approval of the implementation of this
article shall refer to the last date that the state receives notice
of all federal approval or waivers required for implementation of
this article and Article 5.21 (commencing with Section 14167.1),
subject to Section 14167.14.
(o) (1) Effective January 1, 2011, the rates payable to hospitals
and managed health care plans under Medi-Cal shall be the rates then
payable without the supplemental and enhanced payments set forth in
Article 5.21 (commencing with Section 14167.1).
(2) The supplemental payments and other payments under Article
5.21 (commencing with Section 14167.1) shall be regarded as quality
assurance payments, the implementation or suspension of which does
not affect a determination of the adequacy of any rates under federal
law.
SECTION 1. SEC. 6. Article 5.227
(commencing with Section 14168) is added to Chapter 7 of Part 3 of
Division 9 of the Welfare and Institutions Code, to read:
Article 5.227. Quality Assurance Fee Act
14168. (a) (1) "Exempt facility" means any of the following:
(A) A public hospital , which shall include either of the
following:
(i) A hospital as defined in
paragraph (25) of subdivision (a) of Section 14105.98.
(ii) A tax-exempt nonprofit hospital that is licensed under
subdivision (a) of Section 1250 of the Health and Safety Code and
operating a hospital owned by a local health care district, and is
affiliated with the health care district hospital owner by means of
the district's status as the nonprofit corporation's sole corporate
member.
(B) With the exception of a hospital that is in the Charitable
Research Hospital peer group, as set forth in the 1991 Hospital Peer
Grouping Report published by the department, a hospital that is
designated as a specialty hospital in the hospital's Office of
Statewide Health Planning and Development Hospital Annual Disclosure
Report for the hospital's fiscal year ending in the 2007 calendar
year.
(C) A hospital that satisfies the Medicare criteria to be a
long-term care hospital.
(D) A small and rural hospital as specified in Section 124840 of
the Health and Safety Code, designated as that in the hospital's
Office of Statewide Health Planning and Development Hospital Annual
Disclosure Report for the hospital's fiscal year ending in the 2007
calendar year.
(2) "General acute care hospital" shall mean any hospital licensed
pursuant to subdivision (a) of Section 1250 of the Health and Safety
Code.
(b) Effective January 1, 2011, there shall be imposed on each
general acute care hospital that is not an exempt facility a quality
assurance fee, as a condition of participation in a state-funded
health insurance program, other than the Medi-Cal program.
(c) (1) The quality assurance fee shall be computed starting on
the effective date of this article and continue through and including
June 30, 2011.
(2) The method of calculation and collection of the quality
assurance fee shall be determined pursuant to ____.
(3) The quality assurance fee shall be used solely for the
purposes specified in Article 5.21 (commencing with Section 14167.1)
and Article 5.22 (commencing with Section 14167.31).
(d) The director shall do all of the following:
(1) Seek federal approvals or waivers as may be necessary to
implement this article.
(2) Obtain federal financial participation to the maximum extent
possible with the proceeds from the quality assurance fee paid
pursuant to this article.
(e) (1) The fee payments and any related federal reimbursement
shall be deposited in the Hospital Quality Assurance Revenue Fund.
(2) Notwithstanding Section 13340 of the Government Code, any
moneys deposited in the Hospital Quality Assurance Revenue Fund
pursuant to paragraph (1) shall be continuously appropriated, without
regard to fiscal year, as follows:____.
SEC. 2. SEC. 7. This act is an
urgency statute necessary for the immediate preservation of the
public peace, health, or safety within the meaning of Article IV of
the Constitution and shall go into immediate effect. The facts
constituting the necessity are:
In order to make the necessary statutory changes to increase
Medi-Cal payments to hospitals and improve access, at the earliest
possible time, it is necessary that this act take effect immediately.