BILL ANALYSIS                                                                                                                                                                                                    




                   Senate Appropriations Committee Fiscal Summary
                           Senator Christine Kehoe, Chair

                                           1409 (Price)
          
          Hearing Date:  5/27/2010        Amended: 4/13/2010
          Consultant: Katie Johnson       Policy Vote: Health 5-0
          _________________________________________________________________ 
          ____
          BILL SUMMARY:  SB 1409 would require the County of Los Angeles  
          (LA County) and the State of California to continue to pay funds  
          to the private hospitals that currently serve the population  
          formerly served by Los Angeles County Martin Luther King,  
          Jr.-Harbor Hospital through FY 2012-13.
          _________________________________________________________________ 
          ____
                            Fiscal Impact (in thousands)

           Major Provisions         2010-11      2011-12       2012-13     Fund
                                                                  
          County mandate to        $5,000     $5,000   $5,000County/*
          draw down FFP            $8,200     $5,000   $5,000Federal

          SNCP transfers to               $100,000     $100,000   
          $100,000Federal**
          South LA Medical Services
          Preservation Fund

          *38 percent county, 62 percent federal financial participation  
          (FFP) until December 31, 2010; 50 percent county, 50 percent FFP  
          ongoing
          **Safety Net Care Pool
          _________________________________________________________________ 
          ____

          STAFF COMMENTS: SUSPENSE FILE.

          This bill would require the County of Los Angeles (LA County) to  
          continue to send intergovernmental transfers (IGTs) to the state  
          to fund the nonfederal share of increased Medi-Cal payments to  
          those private hospitals that serve the South Los Angeles  
          population that was formerly served by Los Angeles County Martin  
          Luther King, Jr.-Harbor Hospital (MLK-Harbor) for FYs 2010-11,  
          2011-12, and 2012-13, in an amount not to exceed $5 million each  
          project year. These IGTs would draw down federal funds that  
          would then be allocated back to LA County in increased Medi-Cal  










          reimbursement rates to private hospitals. 

          Additionally, the bill would require that an amount not to  
          exceed $100 million annually of the Safety Net Care Pool (SNCP)  
          funds claimed and received by the state that are based on the  
          certified public expenditures (CPEs) of LA County or its  
          designated public hospitals would be transferred to the South  
          Los Angeles Medical Services Preservation Fund for each of the  
          three project years 2010-11, 2011-12, and 2012-13.

          This bill would continue the system of reimbursement to private  
          hospitals that serve this population under the new Section 1115  
          Medi-Cal Hospital Financing Waiver. The existing 1115 Waiver  
          specifies the methodology by which the 22 designated public  
          hospitals, of which MLK-Harbor is one, access federal funds for  
          reimbursement for 
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          SB 1409 (Price)

          CPEs for treatment of Medi-Cal beneficiaries and uninsured  
          Californians. It expires August 31, 2010, and is currently being  
          renegotiated by the Department of Health Care Services (DHCS).

          This bill would assume that the existing funding structure for  
          public hospitals would continue and it would require that a  
          specified amount of future funding be set aside for LA County  
          area hospitals. Without this bill, the funds would be spent  
          elsewhere in California.

          Medi-Cal fee-for-service CPEs are generally matched by federal  
          funds at 50 cents on the dollar. However, as a result of the  
          passage of the American Reinvestment and Recovery Act (ARRA) in  
          February of 2009, California's Federal Medical Assistance  
          Percentage (FMAP) increased from 50 percent to 61.59 percent.  
          Thus, retroactively from October 1, 2008, through December 31,  
          2010, the federal government would pay for approximately 62  
          cents for every CPE dollar spent. After December 31, 2010, the  
          FMAP reduces back to 50 cents on the dollar, unless Congress  
          approves and the President signs an extension.

          MLK-Harbor, one of the designated public hospitals, closed in  
          August 2007. Existing law established the South Los Angeles  
          Medical Services Preservation Fund into which a maximum amount  
          of $100 million of SNCP funds could be deposited for the project  
          years 2007-2008, 2008-2009, and 2009-2010 to pay for services  
          provided by LA County facilities continuing to operate on the  










          MLK-Harbor site, other LA County designated public hospitals,  
          and other providers that contract with LA County. Existing law  
          also requires LA County to make IGTs to DHCS to provide the  
          nonfederal share of increased Medi-Cal payments to those private  
          hospitals that serve the population formerly served by  
          MLK-Harbor.

          On November 19, 2009, LA County and the University of California  
          (UC) announced that they would partner to reopen MLK-Harbor as a  
          nonprofit organization. The hospital would no longer be run by  
          the county, but it would contribute $50 million in start-up  
          funds, $353.8 million in capital project commitment, and $63  
          million annually in operating funds, including $13.3 million to  
          support care for the uninsured. The facility is scheduled to  
          reopen as early as late 2012.