BILL NUMBER: ABX1 19 AMENDED
BILL TEXT
AMENDED IN SENATE JUNE 8, 2011
INTRODUCED BY Assembly Member Blumenfield
MAY 19, 2011
An act relating to the Budget Act of 2011.
An act to amend Sections 1324.20, 1324 .22, 1324.23,
1324.29, 1324.30, 1424, and 1424.5 of the Health and Safety Code, and
to amend Sections 14126.022, 14126.023, 14126.027, 14126.033, and
14126.036 of, and to add Section 14105.193 to, the Welfare and
Institutions Code, relating to long-term care, making an
appropriation therefor, and declaring the urgency thereof, to take
effect immediately.
LEGISLATIVE COUNSEL'S DIGEST
AB 19, as amended, Blumenfield. Budget Act of 2011.
Long-term care.
This bill would express the intent of the Legislature to enact
statutory changes relating to the Budget Act of 2011.
Existing law provides for the Medi-Cal program, which is
administered by the State Department of Health Care Services, under
which qualified low-income individuals receive health care services.
The Medi-Cal program is, in part, governed and funded by federal
Medicaid Program provisions. Existing law requires the department to
impose a uniform quality assurance fee on each skilled nursing
facility, with certain exceptions, in accordance with a prescribed
formula. The formula is based on the determination of the projected
net revenues, as defined, of skilled nursing facilities. Under
existing law, the fee will cease to be assessed after July 31, 2012,
and these provisions will be repealed on January 1, 2013.
This bill would provide that, beginning in the 2011-12 rate year,
a unit that provides freestanding pediatric subacute care services in
a skilled nursing facility will no longer be exempt from the quality
assurance fee. This bill would require that the definition for net
revenues as it applies for the 2009-10 to 2011-12, inclusive, rate
years, shall also apply to each rate year thereafter. This bill would
extend the repeal date of these provisions until January 1, 2014.
This bill would also make conforming changes to reimbursement rates
for freestanding pediatric subacute care units, as prescribed.
Existing law provides for the licensure and regulation of
long-term care facilities by the State Department of Public Health,
and provides for a citation system for the imposition of civil
sanctions against long-term care facilities in violation of
applicable laws and regulations.
This bill would increase the amount that may be imposed on a
skilled nursing facility or an intermediate care facility for a class
"B" citation to $2,000.
Existing law, the Medi-Cal Long-Term Care Reimbursement Act,
requires the department to implement a facility-specific
reimbursement ratesetting system for certain skilled nursing
facilities. Reimbursement rates for freestanding skilled nursing
facilities are funded by a combination of federal funds and moneys
collected pursuant to the skilled nursing uniform quality assurance
fee. Existing law also establishes the Skilled Nursing Facility
Quality and Accountability Special Fund in the State Treasury, which
is a continuously appropriated fund that contains moneys from the
assessment of specified administrative penalties and set asides of
General Fund moneys, for the purposes of making quality and
accountability payments. Existing law provides that this rate
methodology shall cease to be implemented after July 31, 2012, and
that these provisions be repealed on January 1, 2013.
This bill would extend the implementation date of the skilled
nursing facility rate reimbursement provisions through July 31, 2013,
would make various conforming changes in these provisions, and would
extend the repeal date for all of these provisions until January 1,
2014. This bill would also modify, for the 2011-12 and 2012-13 rate
years, the facility reimbursement formula to be used under these
provisions. By extending the period of time during which transfers
are made to the Skilled Nursing Facility Quality and Accountability
Special Fund, this bill would make an appropriation.
The California Constitution authorizes the Governor to declare a
fiscal emergency and to call the Legislature into special session for
that purpose. Governor Schwarzenegger issued a proclamation
declaring a fiscal emergency, and calling a special session for this
purpose, on December 6, 2010. Governor Brown issued a proclamation on
January 20, 2011, declaring and reaffirming that a fiscal emergency
exists and stating that his proclamation supersedes the earlier
proclamation for purposes of that constitutional provision.
This bill would state that it addresses the fiscal emergency
declared and reaffirmed by the Governor by proclamation issued on
January 20, 2011, pursuant to the California Constitution.
This bill would declare that it is to take effect immediately as
an urgency statute.
Vote: majority 2/3 . Appropriation:
no yes . Fiscal committee: no
yes . State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 1324.20 of the
Health and Safety Code is amended to read:
1324.20. For purposes of this article, the following definitions
shall apply:
(a) (1) "Continuing care retirement community" means a provider of
a continuum of services, including independent living services,
assisted living services as defined in paragraph (5) of subdivision
(a) of Section 1771, and skilled nursing care, on a single campus,
that is subject to Section 1791, or a provider of such a continuum of
services on a single campus that has not received a Letter of
Exemption pursuant to subdivision (d) of Section 1771.3.
(2) Notwithstanding paragraph (1), beginning with the 2010-11 rate
year and for every rate year thereafter, the term "continuing care
retirement community" shall have the definition contained in
paragraph (11) of subdivision (c) of Section 1771.
(b) "Department," unless otherwise specified, means the State
Department of Health Care Services.
(c) (1) "Exempt facility" means a skilled nursing facility that is
part of a continuing care retirement community, a skilled nursing
facility operated by the state or another public entity, a unit that
provides pediatric subacute services in a skilled nursing facility, a
skilled nursing facility that is certified by the State Department
of Mental Health for a special treatment program and is an
institution for mental disease as defined in Section 1396d(i) of
Title 42 of the United States Code, or a skilled nursing facility
that is a distinct part of a facility that is licensed as a general
acute care hospital.
(2) Notwithstanding paragraph (1), beginning with the 2010-11 rate
year and for every rate year thereafter, the term "exempt facility"
shall mean a skilled nursing facility that is part of a continuing
care retirement community, as defined in paragraph (2) of subdivision
(a), a skilled nursing facility operated by the state or another
public entity, a unit that provides pediatric subacute services in a
skilled nursing facility, a skilled nursing facility that is
certified by the State Department of Mental Health for a special
treatment program and is an institution for mental disease as defined
in Section 1396d(i) of Title 42 of the United States Code, or a
skilled nursing facility that is a distinct part of a facility that
is licensed as a general acute care hospital.
(3) Notwithstanding paragraph (1), beginning with the 2010-11 rate
year and every rate year thereafter, a multilevel facility, as
described in paragraph (1) of subdivision (a), shall not be exempt
from the quality assurance fee requirements pursuant to this article,
unless it meets the definition of a continuing care retirement
community in paragraph (11) of subdivision (c) of Section 1771.
(4) (A) Notwithstanding paragraph (1), beginning with the 2011-12
rate year, and every rate year thereafter, a unit that provides
freestanding pediatric subacute care services in a skilled nursing
facility, as described in paragraph (1) of subdivision (c), shall not
be exempt from the quality assurance fee requirements pursuant to
this article.
(B) For the purposes of this article, "freestanding pediatric
subacute care unit" has the same meaning as defined in Section
51215.8 of Title 22 of the California Code of Regulations.
(d) (1) "Net revenue" means gross resident revenue for routine
nursing services and ancillary services provided to all residents by
a skilled nursing facility, less Medicare revenue for routine and
ancillary services, including Medicare revenue for services provided
to residents covered under a Medicare managed care plan, less payer
discounts and applicable contractual allowances as permitted under
federal law and regulation.
(2) Notwithstanding paragraph (1), for the 2009-10 to
2011-12, inclusive , 2010-11, and 2011-12 rate
years, and each rate year thereafter, "net revenue" means
gross resident revenue for routine nursing services and ancillary
services provided to all residents by a skilled nursing facility,
including Medicare revenue for routine and ancillary services and
Medicare revenue for services provided to residents covered under a
Medicare managed care plan, less payer discounts and applicable
contractual allowances as permitted under federal law and regulation.
To implement this paragraph, the department shall request federal
approval pursuant to Section 1324.27.
(3) "Net revenue" does not mean charitable contributions and bad
debt.
(e) "Payer discounts and contractual allowances" means the
difference between the facility's resident charges for routine or
ancillary services and the actual amount paid.
(f) "Skilled nursing facility" means a licensed facility as
defined in subdivision (c) of Section 1250.
SEC. 2. Section 1324.22 of the Health
and Safety Code is amended to read:
1324.22. (a) The quality assurance fee, as calculated pursuant to
Section 1324.21, shall be paid by the provider to the department for
deposit in the State Treasury on a monthly basis on or before the
last day of the month following the month for which the fee is
imposed, except as provided in subdivision (e) of Section 1324.21.
(b) On or before the last day of each calendar quarter, each
skilled nursing facility shall file a report with the department, in
a prescribed form, showing the facility's total resident days for the
preceding quarter and payments made. If it is determined that a
lesser amount was paid to the department, the facility shall pay the
amount owed in the preceding quarter to the department with the
report. Any amount determined to have been paid in excess to the
department during the previous quarter shall be credited to the
amount owed in the following quarter.
(c) On or before August 31 of each year, each skilled nursing
facility subject to an assessment pursuant to Section 1324.21 shall
report to the department, in a prescribed form, the facility's total
resident days and total payments made for the preceding state fiscal
year. If it is determined that a lesser amount was paid to the
department during the previous year, the facility shall pay the
amount owed to the department with the report.
(d) (1) A newly licensed skilled nursing facility shall complete
all requirements of subdivision (a) for any portion of the year in
which it commences operations and of subdivision (b) for any portion
of the quarter in which it commences operations.
(2) For purposes of this subdivision, "newly licensed skilled
nursing facility" means a location that has not been previously
licensed as a skilled nursing facility.
(e) (1) When a skilled nursing facility 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 reimbursement payments to the facility until
the full amount is recovered. Any deduction shall be made only after
written notice to the facility and may be taken over a period of time
taking into account the financial condition of the facility.
(2) In addition to the provisions of paragraph (1), any unpaid
quality assurance fee assessed by this article shall constitute a
debt due to the state and may be collected pursuant to Section
12419.5 of the Government Code.
(f) Notwithstanding any other provision of law, the department
shall continue to assess and collect the quality assurance fee,
including any previously unpaid quality assurance fee, from each
skilled nursing facility, irrespective of any changes in ownership or
ownership interest or control or the transfer of any portion of the
assets of the facility to another owner.
(g) During the time period in which a temporary manager is
appointed to a facility pursuant to Section 1325.5 or during which a
receiver is appointed by a court pursuant to Section 1327, the State
Department of Public Health shall not be responsible for any unpaid
quality assurance fee assessed prior to the time period of the
temporary manager or receiver. Nothing in this subdivision shall
affect the responsibility of the facility to make all payments of
unpaid or current quality assurance fees, as required by this section
and Section 1324.21.
(h) If all or any part of the quality assurance fee remains
unpaid, the department may take either or both of the following
actions:
(1) Assess a penalty equal to 50 percent of the unpaid fee amount
for unpaid fees assessed during the 2004-05 to 2009-10, inclusive,
rate years, and up to 50 percent of the unpaid fee amount for unpaid
fees assessed during the 2010-11 rate year and any subsequent rate
year.
(2) (A) Delay license renewal.
(B) Beginning with the 2010-11 rate year, the department may
recommend to the State Department of Public Health that license
renewal be delayed until the full amount of the quality assurance
fee, penalties, and interest is recovered.
(i) In accordance with the provisions of the Medicaid State Plan,
the payment of the quality assurance fee shall be considered as an
allowable cost for Medi-Cal reimbursement purposes.
(j) The assessment process pursuant to this section shall become
operative not later than 60 days from receipt of federal approval of
the quality assurance fee, unless extended by the department. The
department may assess fees and collect payment in accordance with
subdivision (e) of Section 1324.21 in order to provide retroactive
payments for any rate increase authorized under this article.
(k) The amendments made to subdivision (d) and the addition of
subdivision (f) by the act that added this subdivision shall not be
construed as substantive changes, but are merely clarifying existing
law.
(l) (1) Notwithstanding any other provision of law, for the
2011-12 rate year, the department may waive the actions provided
under subdivision (h), or may allow a freestanding pediatric subacute
care facility to delay payments for up to six months, to ensure the
facility has the financial stability required to pay the fee.
(2) For the purposes of this article, "freestanding pediatric
subacute care facility" has the same meaning as defined in Section
51215.8 of Title 22 of the California Code of Regulations.
SEC. 3. Section 1324.23 of the Health
and Safety Code is amended to read:
1324.23. (a) The Director of Health Care Services, or his or her
designee, shall administer this article.
(b) The director may adopt regulations as are necessary to
implement this article. These regulations may be adopted as emergency
regulations in accordance with the rulemaking provisions of the
Administrative Procedure Act (Chapter 3.5 (commencing with Section
11340) of Part 1 of Division 3 of Title 2 of the Government Code).
For purposes of this article, the adoption of regulations shall be
deemed an emergency and necessary for the immediate preservation of
the public peace, health and safety, or general welfare. The
regulations shall include, but need not be limited to, any
regulations necessary for any of the following purposes:
(1) The administration of this article, including the proper
imposition and collection of the quality assurance fee not to exceed
amounts reasonably necessary for purposes of this article.
(2) The development of any forms necessary to obtain required
information from facilities subject to the quality assurance fee.
(3) To provide details, definitions, formulas, and other
requirements.
(c) As an alternative to subdivision (b), and notwithstanding the
rulemaking provisions of Chapter 3.5 (commencing with Section 11340)
of Part 1 of Division 3 of Title 2 of the Government Code, the
director may implement this article, in whole or in part, by means of
a provider bulletin , or other similar
instructions, without taking regulatory action, provided that no such
bulletin or other similar instructions shall remain in effect after
July 31, 2012 2013 . It is the intent
of the Legislature that the regulations adopted pursuant to
subdivision (b) shall be adopted on or before July 31, 2012
2013 .
SEC. 4. Section 1324.29 of the Health
and Safety Code is amended to read:
1324.29. (a) The quality assurance fee shall cease to be assessed
after July 31, 2012 2013 .
(b) Notwithstanding subdivision (a) and Section 1324.30, the
department's authority and obligation to collect all quality
assurance fees and penalties, including interest, shall continue in
effect and shall not cease until the date that all amounts are paid
or recovered in full.
(c) This section shall remain operative until the date that all
fees and penalties, including interest, have been recovered pursuant
to subdivision (b), and as of that date is repealed.
SEC. 5. Section 1324.30 of the Health
and Safety Code is amended to read:
1324.30. This article shall become inoperative after July 31,
2012 2013 , and, as of January 1,
2013 2014 , is repealed, unless a later
enacted statute, that becomes operative on or before January 1,
2013 2014 , deletes or extends the
dates on which it becomes inoperative and is repealed.
SEC. 6. Section 1424 of the Health and
Safety Code is amended to read:
1424. Citations issued pursuant to this chapter shall be
classified according to the nature of the violation and shall
indicate the classification on the face thereof.
(a) In determining the amount of the civil penalty, all relevant
facts shall be considered, including, but not limited to, the
following:
(1) The probability and severity of the risk that the violation
presents to the patient's or resident's mental and physical
condition.
(2) The patient's or resident's medical condition.
(3) The patient's or resident's mental condition and his or her
history of mental disability or disorder.
(4) The good faith efforts exercised by the facility to prevent
the violation from occurring.
(5) The licensee's history of compliance with regulations.
(b) Relevant facts considered by the department in determining the
amount of the civil penalty shall be documented by the department on
an attachment to the citation and available in the public record.
This requirement shall not preclude the department or a facility from
introducing facts not listed on the citation to support or challenge
the amount of the civil penalty in any proceeding set forth in
Section 1428.
(c) Class "AA" violations are violations that meet the criteria
for a class "A" violation and that the state department determines to
have been a direct proximate cause of death of a patient or resident
of a long-term health care facility. Except as provided in Section
1424.5, a class "AA" citation is subject to a civil penalty in the
amount of not less than five thousand dollars ($5,000) and not
exceeding twenty-five thousand dollars ($25,000) for each citation.
In any action to enforce a citation issued under this subdivision,
the state department shall prove all of the following:
(1) The violation was a direct proximate cause of death of a
patient or resident.
(2) The death resulted from an occurrence of a nature that the
regulation was designed to prevent.
(3) The patient or resident suffering the death was among the
class of persons for whose protection the regulation was adopted.
If the state department meets this burden of proof, the licensee
shall have the burden of proving that the licensee did what might
reasonably be expected of a long-term health care facility licensee,
acting under similar circumstances, to comply with the regulation. If
the licensee sustains this burden, then the citation shall be
dismissed.
Except as provided in Section 1424.5, for each class "AA" citation
within a 12-month period that has become final, the state department
shall consider the suspension or revocation of the facility's
license in accordance with Section 1294. For a third or subsequent
class "AA" citation in a facility within that 12-month period that
has been sustained following a citation review conference, the state
department shall commence action to suspend or revoke the facility's
license in accordance with Section 1294.
(d) Class "A" violations are violations which the state department
determines present either (1) imminent danger that death or serious
harm to the patients or residents of the long-term health care
facility would result therefrom, or (2) substantial probability that
death or serious physical harm to patients or residents of the
long-term health care facility would result therefrom. A physical
condition or one or more practices, means, methods, or operations in
use in a long-term health care facility may constitute a class "A"
violation. The condition or practice constituting a class "A"
violation shall be abated or eliminated immediately, unless a fixed
period of time, as determined by the state department, is required
for correction. Except as provided in Section 1424.5, a class "A"
citation is subject to a civil penalty in an amount not less than one
thousand dollars ($1,000) and not exceeding ten thousand dollars
($10,000) for each and every citation.
If the state department establishes that a violation occurred, the
licensee shall have the burden of proving that the licensee did what
might reasonably be expected of a long-term health care facility
licensee, acting under similar circumstances, to comply with the
regulation. If the licensee sustains this burden, then the citation
shall be dismissed.
(e) Class Except as provided in paragraph
(4) of subdivision (a) of Section 1424.5, class "B" violations
are violations that the state department determines have a direct or
immediate relationship to the health, safety, or security of
long-term health care facility patients or residents, other than
class "AA" or "A" violations. Unless otherwise determined by the
state department to be a class "A" violation pursuant to this chapter
and rules and regulations adopted pursuant thereto, any violation of
a patient's rights as set forth in Sections 72527 and 73523 of Title
22 of the California Code of Regulations, that is determined by the
state department to cause or under circumstances likely to cause
significant humiliation, indignity, anxiety, or other emotional
trauma to a patient is a class "B" violation. A class "B" citation is
subject to a civil penalty in an amount not less than one hundred
dollars ($100) and not exceeding one thousand dollars ($1,000) for
each and every citation. A class "B" citation shall specify the time
within which the violation is required to be corrected. If the state
department establishes that a violation occurred, the licensee shall
have the burden of proving that the licensee did what might
reasonably be expected of a long-term health care facility licensee,
acting under similar circumstances, to comply with the regulation. If
the licensee sustains this burden, then the citation shall be
dismissed.
In the event of any citation under this paragraph, if the state
department establishes that a violation occurred, the licensee shall
have the burden of proving that the licensee did what might
reasonably be expected of a long-term health care facility licensee,
acting under similar circumstances, to comply with the regulation. If
the licensee sustains this burden, then the citation shall be
dismissed.
(f) (1) Any willful material falsification or willful material
omission in the health record of a patient of a long-term health care
facility is a violation.
(2) "Willful material falsification," as used in this section,
means any entry in the patient health care record pertaining to the
administration of medication, or treatments ordered for the patient,
or pertaining to services for the prevention or treatment of
decubitus ulcers or contractures, or pertaining to tests and
measurements of vital signs, or notations of input and output of
fluids, that was made with the knowledge that the records falsely
reflect the condition of the resident or the care or services
provided.
(3) "Willful material omission," as used in this section, means
the willful failure to record any untoward event that has affected
the health, safety, or security of the specific patient, and that was
omitted with the knowledge that the records falsely reflect the
condition of the resident or the care or services provided.
(g) Except as provided in subdivision (a) of Section
1425.5 1424.5 , a violation of subdivision (f)
may result in a civil penalty not to exceed ten thousand dollars
($10,000), as specified in paragraphs (1) to (3), inclusive.
(1) The willful material falsification or willful material
omission is subject to a civil penalty of not less than two thousand
five hundred dollars ($2,500) or more than ten thousand dollars
($10,000) in instances where the health care record is relied upon by
a health care professional to the detriment of a patient by
affecting the administration of medications or treatments, the
issuance of orders, or the development of plans of care. In all other
cases, violations of this subdivision are subject to a civil penalty
not exceeding two thousand five hundred dollars ($2,500).
(2) Where the penalty assessed is one thousand dollars ($1,000) or
less, the violation shall be issued and enforced, except as provided
in this subdivision, in the same manner as a class "B" violation,
and shall include the right of appeal as specified in Section 1428.
Where the assessed penalty is in excess of one thousand dollars
($1,000), or for skilled nursing facilities or intermediate care
facilities as specified in paragraphs (1) and (2) of subdivision (a)
of Section 1418, in excess of two thousand dollars ($2,000), the
violation shall be issued and enforced, except as provided in this
subdivision, in the same manner as a class "A" violation, and shall
include the right of appeal as specified in Section 1428.
Nothing in this section shall be construed as a change in previous
law enacted by Chapter 11 of the Statutes of 1985 relative to this
paragraph, but merely as a clarification of existing law.
(3) Nothing in this subdivision shall preclude the state
department from issuing a class "A" or class "B" citation for any
violation that meets the requirements for that citation, regardless
of whether the violation also constitutes a violation of this
subdivision. However, no single act, omission, or occurrence may be
cited both as a class "A" or class "B" violation and as a violation
of this subdivision.
(h) Where the licensee has failed to post the notices as required
by Section 9718 of the Welfare and Institutions Code in the manner
required under Section 1422.6, the state department shall assess the
licensee a civil penalty in the amount of one hundred dollars ($100)
for each day the failure to post the notices continues. Where the
total penalty assessed is less than two thousand dollars ($2,000),
the violation shall be issued and enforced in the same manner as a
class "B" violation, and shall include the right of appeal as
specified in Section 1428. Where the assessed penalty is equal to or
in excess of two thousand dollars ($2,000), the violation shall be
issued and enforced in the same manner as a class "A" violation and
shall include the right of appeal as specified in Section 1428. Any
fines collected pursuant to this subdivision shall be used to fund
the costs incurred by the California Department of Aging in producing
and posting the posters.
(i) The director shall prescribe procedures for the issuance of a
notice of violation with respect to violations having only a minimal
relationship to patient safety or health.
(j) The department shall provide a copy of all citations issued
under this section to the affected residents whose treatment was the
basis for the issuance of the citation, to the affected residents'
designated family member or representative of each of the residents,
and to the complainant if the citation was issued as a result of a
complaint.
(k) Nothing in this section is intended to change existing
statutory or regulatory requirements governing the ability of a
licensee to contest a citation pursuant to Section 1428.
(l) The department shall ensure that district office activities
performed under Sections 1419 to 1424, inclusive, are consistent with
the requirements of these sections and all applicable laws and
regulations. To ensure the integrity of these activities, the
department shall establish a statewide process for the collection of
postsurvey evaluations from affected facilities.
SEC. 7. Section 1424.5 of the Health
and Safety Code is amended to read:
1424.5. (a) In lieu of the fines specified in subdivisions (c),
(d), and (e) (e), and (g) of Section
1424, fines imposed on skilled nursing facilities or intermediate
care facilities, as specified in paragraphs (1) and (2) of
subdivision (a) of Section 1418, shall be as follows:
(1) A class "AA" citation is subject to a civil penalty in an
amount not less than twenty-five thousand dollars ($25,000) and not
exceeding one hundred thousand dollars ($100,000) for each and every
citation. For a second or subsequent class "AA" citation in a skilled
nursing facility or intermediate care facility within a 24-month
period that has been sustained following a citation review
conference, or where the licensee has chosen not to exercise its
right to a citation review conference, the state department shall
commence action to suspend or revoke the facility's license in
accordance with Section 1294.
(2) A class "A" citation is subject to a civil penalty in an
amount not less than two thousand dollars ($2,000) and not exceeding
twenty thousand dollars ($20,000) for each and every citation.
(3) Any "willful material falsification" or "willful material
omission," as those terms are defined in subdivision (f) of Section
1424, in the health record of a resident is subject to a civil
penalty in an amount not less than two thousand dollars ($2,000) and
not exceeding twenty thousand dollars ($20,000) for each and every
citation.
(4) A class "B" citation is subject to a civil penalty in an
amount not less than one hundred dollars ($100) and not exceeding two
thousand dollars ($2,000) for each and every citation. Class "B"
violations are violations that the state department determines have a
direct or immediate relationship to the health, safety, or security
of long-term health care facility patients
or residents, other than class "AA" or
"A" violations. Unless otherwise determined by the state department
to be a class "A" violation pursuant to this chapter and rules and
regulations adopted pursuant thereto, any violation of a patient's
rights as set forth in Sections 72527 and 73523 of Title 22 of the
California Code of Regulations, that is determined by the state
department to cause, or under circumstances to be likely to cause,
significant humiliation, indignity, anxiety, or other emotional
trauma to a patient is a class "B" violation. A class "B" citation
shall specify the time within which the violation is required to be
corrected. If the state department establishes that a violation
occurred, the licensee shall have the burden of proving that the
licensee did what might reasonably be expected of a long-term health
care facility licensee, acting under similar circumstances, to comply
with the regulation. If the licensee sustains this burden, then the
citation shall be dismissed.
(b) A licensee may, in lieu of contesting a class "AA" or class "A"
citation pursuant to Section 1428, transmit to the state department,
the minimum amount specified by law, or 65 percent of the amount
specified in the citation, whichever is greater, for each violation,
within 30 business days after the issuance of the citation.
SEC. 8. Section 14105.193 is added to the
Welfare and Institutions Code , to read:
14105.193. (a) (1) Notwithstanding paragraph (7) of subdivision
(j) of Section 14105.192 and any other law, beginning June 1, 2011,
reimbursement rates for freestanding pediatric subacute care units,
as defined in Section 51215.8 of Title 22 of the California Code of
Regulations, shall be the applicable rate for the 2008-09 rate year,
reduced by 5.75 percent, plus the projected cost of complying with
new state or federal mandates.
(2) The department shall recalculate and publish the rates
specified in paragraph (1) for any of the following reasons:
(A) If the federal Centers for Medicare and Medicaid Services
(CMS) does not approve exemption changes to the facilities subject to
the skilled nursing facility quality assurance fee pursuant to
paragraph (4) of subdivision (c) of Section 1324.20 of the Health and
Safety Code.
(B) If CMS does not approve any proposed modification to the
methodology for calculation of the skilled nursing quality assurance
fee pursuant to Article 7.6 (commencing with Section 1324.20) of
Chapter 2 of Division 2 of the Health and Safety Code.
(C) To ensure that the state does not incur any additional General
Fund expenses for reimbursement to pediatric subacute care units for
dates of service on and after June 1, 2011.
(D) If the difference in the projected skilled nursing quality
assurance fee collections for the 2011-12 rate year, pursuant to
Article 7.6 (commencing with Section 1324.20) of Chapter 2 of
Division 2 of the Health and Safety Code, would result in any
additional General Fund expense to pay for the 2011-12 rate year
reimbursement rate.
(b) The reductions described in this section shall apply only to
payments for services when the General Fund share of the payment is
paid with funds directly appropriated to the department in the annual
Budget Act and shall not apply to payments for services paid with
funds appropriated to other departments or agencies.
(c) Notwithstanding Chapter 3.5 (commencing with Section 11340) of
Part 1 of Division 3 of Title 2 of the Government Code, the
department may implement and administer this section by means of
provider bulletins, or similar instructions, without taking
regulatory action.
(d) The payment reductions and adjustments provided for in section
shall be implemented only if the director determines that the
payments that result from the application of this section will comply
with applicable federal Medicaid requirements and that federal
financial participation will be available.
(1) In determining whether federal financial participation is
available, the director shall determine whether the payments comply
with applicable federal Medicaid requirements, including those set
forth in Section 1396a(a)(30)(A) of Title 42 of the United States
Code.
(2) To the extent that the director determines that the payments
do not comply with the federal Medicaid requirements or that federal
financial participation is not available with respect to any payment
that is reduced pursuant to this section, the director retains the
discretion to not implement the particular payment reduction or
adjustment and may adjust the payment as necessary to comply with
federal Medicaid requirements.
(e) The department shall seek any necessary federal approvals for
the implementation of this section.
(f) This section shall not be implemented until federal approval
is obtained. When federal approval is obtained, the payments
resulting from the application of this section shall be implemented
retroactively to June 1, 2011, or on any other date or dates as may
be applicable.
SEC. 9. Section 14126.022 of the
Welfare and Institutions Code is amended to read:
14126.022. (a) (1) By August 1, 2011, the department shall
develop the Skilled Nursing Facility Quality and Accountability
Supplemental Payment System, subject to approval by the federal
Centers for Medicare and Medicaid Services, and the availability of
federal, state, or other funds.
(2) (A) The system shall be utilized to
provide supplemental payments to skilled nursing facilities that
improve the quality and accountability of care rendered to residents
in skilled nursing facilities, as defined in subdivision (c) of
Section 1250 of the Health and Safety Code, and to penalize those
facilities that do not meet measurable standards.
(B) A freestanding pediatric subacute care facility, as defined in
Section 51215.8 of Title 22 of the California Code of Regulations,
shall be exempt from the Skilled Nursing Facility Quality and
Accountability Supplemental Payment System.
(3) The system shall be phased in, beginning with the 2010-11 rate
year.
(4) The department may utilize the system to do all of the
following:
(A) Assess overall facility quality of care and quality of care
improvement, and assign quality and accountability payments to
skilled nursing facilities pursuant to performance measures described
in subdivision (i).
(B) Assign quality and accountability payments or penalties
relating to quality of care, or direct care staffing levels, wages,
and benefits, or both.
(C) Limit the reimbursement of legal fees incurred by skilled
nursing facilities engaged in the defense of governmental legal
actions filed against the facilities.
(D) Publish each facility's quality assessment and quality and
accountability payments in a manner and form determined by the
director, or his or her designee.
(E) Beginning with the 2011-12 fiscal year, establish a base year
to collect performance measures described in subdivision (i).
(F) Beginning with the 2011-12 fiscal year, in coordination with
the State Department of Public Health, publish the direct care
staffing level data and the performance measures required pursuant to
subdivision (i).
(b) (1) There is hereby created in the State Treasury, the Skilled
Nursing Facility Quality and Accountability Special Fund. The fund
shall contain moneys deposited pursuant to subdivisions (g) and (j)
to (l), inclusive. Notwithstanding Section 16305.7 of the Government
Code, the fund shall contain all interest and dividends earned on
moneys in the fund.
(2) Notwithstanding Section 13340 of the Government Code, the fund
shall be continuously appropriated without regard to fiscal year to
the department for making quality and accountability payments, in
accordance with subdivision (m), to facilities that meet or exceed
predefined measures as established by this section.
(3) Upon appropriation by the Legislature, moneys in the fund may
also be used for any of the following purposes:
(A) To cover the administrative costs incurred by the State
Department of Public Health for positions and contract funding
required to implement this section.
(B) To cover the administrative costs incurred by the State
Department of Health Care Services for positions and contract funding
required to implement this section.
(C) To provide funding assistance for the Long-Term Care Ombudsman
for program Program activities
pursuant to Chapter 11 (commencing with Section 9700) of Division
8.5.
(c) No appropriation associated with this bill is intended to
implement the provisions of Section 1276.65 of the Health and Safety
Code.
(d) (1) There is hereby appropriated for the 2010-11 fiscal year,
one million nine hundred thousand dollars ($1,900,000) from the
Skilled Nursing Facility Quality and Accountability Special Fund to
the California Department of Aging for the Long-Term Care Ombudsman
program Program activities pursuant to
Chapter 11 (commencing with Section 9700) of Division 8.5. It is the
intent of the Legislature for the one million nine hundred thousand
dollars ($1,900,000) from the fund to be in addition to the four
million one hundred sixty-eight thousand dollars ($4,168,000)
proposed in the Governor's May Revision for the 2010-11 Budget. It is
further the intent of the Legislature to increase this level of
appropriation in subsequent years to provide support sufficient to
carry out the mandates and activities pursuant to Chapter 11
(commencing with Section 9700) of Division 8.5.
(2) The department, in partnership with the California Department
of Aging, shall seek approval from the federal Centers for Medicare
and Medicaid Services to obtain federal Medicaid reimbursement for
activities conducted by the Long-Term Care Ombudsman program
Program . The department shall report to the
fiscal committees of the Legislature during budget hearings on
progress being made and any unresolved issues during the 2011-12
budget deliberations.
(e) There is hereby created in the Special Deposit Fund
established pursuant to Section 16370 of the Government Code, the
Skilled Nursing Facility Minimum Staffing Penalty Account. The
account shall contain all moneys deposited pursuant to subdivision
(f).
(f) (1) Beginning with the 2010-11 fiscal year, the State
Department of Public Health shall use the direct care staffing level
data it collects to determine whether a skilled nursing facility has
met the nursing hours per patient per day requirements pursuant to
Section 1276.5 of the Health and Safety Code.
(2) (A) Beginning with the 2010-11 fiscal year, the State
Department of Public Health shall assess a skilled nursing facility,
licensed pursuant to subdivision (c) of Section 1250 of the Health
and Safety Code, an administrative penalty if the State Department of
Public Health determines that the skilled nursing facility fails to
meet the nursing hours per patient per day requirements pursuant to
Section 1276.5 of the Health and Safety Code as follows:
(i) Fifteen thousand dollars ($15,000) if the facility fails to
meet the requirements for 5 percent or more of the audited days up to
49 percent.
(ii) Thirty thousand dollars ($30,000) if the facility fails to
meet the requirements for over 49 percent or more of the audited
days.
(B) (i) If the skilled nursing facility does not dispute the
determination or assessment, the penalties shall be paid in full by
the licensee to the State Department of Public Health within 30 days
of the facility's receipt of the notice of penalty and deposited into
the Skilled Nursing Facility Minimum Staffing Penalty Account.
(ii) The State Department of Public Health may, upon written
notification to the licensee, request that the department offset any
moneys owed to the licensee by the Medi-Cal program or any other
payment program administered by the department to recoup the penalty
provided for in this section.
(C) (i) If a facility disputes the determination or assessment
made pursuant to this paragraph, the facility shall, within 15 days
of the facility's receipt of the determination and assessment,
simultaneously submit a request for appeal to both the department and
the State Department of Public Health. The request shall include a
detailed statement describing the reason for appeal and include all
supporting documents the facility will present at the hearing.
(ii) Within 10 days of the State Department of Public Health's
receipt of the facility's request for appeal, the State Department of
Public Health shall submit, to both the facility and the department,
all supporting documents that will be presented at the hearing.
(D) The department shall hear a timely appeal and issue a decision
as follows:
(i) The hearing shall commence within 60 days from the date of
receipt by the department of the facility's timely request for
appeal.
(ii) The department shall issue a decision within 120 days from
the date of receipt by the department of the facility's timely
request for appeal.
(iii) The decision of the department's hearing officer, when
issued, shall be the final decision of the State Department of Public
Health.
(E) The appeals process set forth in this paragraph shall be
exempt from Chapter 4.5 (commencing with Section 11400) and Chapter 5
(commencing with Section 11500), of Part 1 of Division 3 of Title 2
of the Government Code. The provisions of Section 100171 and 131071
of the Health and Safety Code shall not apply to appeals under this
paragraph.
(F) If a hearing decision issued pursuant to subparagraph (D) is
in favor of the State Department of Public Health, the skilled
nursing facility shall pay the penalties to the State Department of
Public Health within 30 days of the facility's receipt of the
decision. The penalties collected shall be deposited into the Skilled
Nursing Facility Minimum Staffing Penalty Account.
(G) The assessment of a penalty under this subdivision does not
supplant the State Department of Public Health's investigation
process or issuance of deficiencies or citations under Chapter 2.4
(commencing with Section 1417) of Division 2 of the Health and Safety
Code.
(g) The State Department of Public Health shall transfer, on a
monthly basis, all penalty payments collected pursuant to subdivision
(f) into the Skilled Nursing Facility Quality and Accountability
Special Fund.
(h) Nothing in this section shall impact the effectiveness or
utilization of Section 1278.5 or 1432 of the Health and Safety Code
relating to whistleblower protections, or Section 1420 of the Health
and Safety Code relating to complaints.
(i) (1) Beginning in the 2010-11 fiscal year, the department, in
consultation with representatives from the long-term care industry,
organized labor, and consumers, shall establish and publish quality
and accountability measures, benchmarks, and data submission
deadlines by November 30, 2010.
(2) The methodology developed pursuant to this section shall
include, but not be limited to, the following requirements and
performance measures:
(A) Beginning in the 2011-12 rate fiscal
year:
(i) Immunization rates.
(ii) Facility acquired pressure ulcer incidence.
(iii) The use of physical restraints.
(iv) Compliance with the nursing hours per patient per day
requirements pursuant to Section 1276.5 of the Health and Safety
Code.
(v) Resident and family satisfaction.
(vi) Direct care staff retention, if sufficient data is available.
(B) If this act is extended beyond the dates on which it becomes
inoperative and is repealed, in accordance with Section 14126.033,
the department, in consultation with representatives from the
long-term care industry, organized labor, and consumers, beginning in
the 2012-13 2013-14 rate year, shall
incorporate additional measures into the system, including, but not
limited to, quality and accountability measures required by federal
health care reform that are identified by the federal Centers for
Medicare and Medicaid Services.
(C) The department, in consultation with representatives from the
long-term care industry, organized labor, and consumers, may
incorporate additional performance measures, including, but not
limited to, the following:
(i) Compliance with state policy associated with the United States
Supreme Court decision in Olmstead v. L.C. ex rel. Zimring (1999)
527 U.S. 581.
(ii) Direct care staff retention, if not addressed in the
2011-12 2012-13 rate year.
(iii) The use of chemical restraints.
(j) Beginning with the 2010-11 rate year, and pursuant to
subparagraph (B) of paragraph (5) of subdivision (a) of Section
14126.023, the department shall set aside savings achieved from
setting the professional liability insurance cost category, including
any insurance deductible costs paid by the facility, at the 75th
percentile. From this amount, the department shall transfer the
General Fund portion into the Skilled Nursing Facility Quality and
Accountability Special Fund. A skilled nursing facility shall provide
supplemental data on insurance deductible costs to facilitate this
adjustment, in the format and by the deadlines determined by the
department. If this data is not provided, a facility's insurance
deductible costs will remain in the administrative costs category.
(k) Beginning with the 2011-12 2012-13
rate year, the department shall set aside 1 percent of the
weighted average Medi-Cal reimbursement rate, from which the
department shall transfer the General Fund portion into the Skilled
Nursing Facility Quality and Accountability Special Fund.
(l) If this act is extended beyond the dates on which it becomes
inoperative and is repealed, in accordance with Section 14126.033,
beginning with the 2012-13 2013-14 rate
year, in addition to the amount set aside pursuant to subdivision
(k), if there is a rate increase in the weighted average Medi-Cal
reimbursement rate, the department shall set aside at least one-third
of the weighted average Medi-Cal reimbursement rate increase, up to
a maximum of 1 percent, from which the department shall transfer the
General Fund portion of this amount into the Skilled Nursing Facility
Quality and Accountability Special Fund.
(m) (1) Beginning with the 2011-12 2012-13
rate year, the department shall pay a supplemental payment, by
April 30, 2012 2013 , to skilled
nursing facilities based on all of the criteria in subdivision (i),
as published by the department, and according to performance measure
benchmarks determined by the department in consultation with
stakeholders.
(2) Skilled nursing facilities that do not submit required
performance data by the department's specified data submission
deadlines pursuant to subdivision (i) shall not be eligible to
receive supplemental payments.
(3) Notwithstanding paragraph (1), if a facility appeals the
performance measure of compliance with the nursing hours per patient
per day requirements, pursuant to Section 1276.5 of the Health and
Safety Code, to the State Department of Public Health, and it is
unresolved by the department's published due date, the department
shall not use that performance measure when determining the facility'
s supplemental payment.
(4) Notwithstanding paragraph (1), if the department is unable to
pay the supplemental payments by April 30, 2012
2013 , then on May 1, 2012 2013
, the department shall use the funds available in the Skilled
Nursing Facility Quality and Accountability Special Fund as a result
of savings identified in subdivisions (k) and (l), less the
administrative costs required to implement subparagraphs (A) and (B)
of paragraph (3) of subdivision (b), in addition to any Medicaid
funds that are available as of December 31, 2011
2012 , to increase provider rates retroactively to August
1, 2011 2012 .
(n) The department shall seek necessary approvals from the federal
Centers for Medicare and Medicaid Services to implement this
section. The department shall implement this section only in a manner
that is consistent with federal Medicaid law and regulations, and
only to the extent that approval is obtained from the federal Centers
for Medicare and Medicaid Services and federal financial
participation is available.
(o) In implementing this section, the department and the State
Department of Public Health may contract as necessary, with
California's Medicare Quality Improvement Organization, or other
entities deemed qualified by the department or the State Department
of Public Health, not associated with a skilled nursing facility, to
assist with development, collection, analysis, and reporting of the
performance data pursuant to subdivision (i), and with demonstrated
expertise in long-term care quality, data collection or analysis, and
accountability performance measurement models pursuant to
subdivision (i). This subdivision establishes an accelerated process
for issuing any contract pursuant to this section. Any contract
entered into pursuant to this subdivision shall be exempt from the
requirements of the Public Contract Code, through December 31,
2012 2013 .
(p) Notwithstanding Chapter 3.5 (commencing with Section 11340) of
Part 1 of Division 3 of Title 2 of the Government Code, the
following shall apply:
(1) The director shall implement this section, in whole or in
part, by means of provider bulletins, or other similar instructions
without taking regulatory action.
(2) The State Public Health Officer may implement this section by
means of all facility letters, or other similar instructions without
taking regulatory action.
(q) Notwithstanding paragraph (1) of subdivision (m), if a final
judicial determination is made by any state or federal court that is
not appealed, in any action by any party, or a final determination by
the administrator of the federal Centers for Medicare and Medicaid
Services, that any payments pursuant to subdivisions (a) and (m), are
invalid, unlawful, or contrary to any provision of federal law or
regulations, or of state law, these subdivisions shall become
inoperative, and for the 2011-12 rate year, the rate increase
provided under subparagraph (A) of paragraph (4) of subdivision
(a) (c) of Section 14126.033 shall be
reduced by the amounts described in subdivisions (j) and (k)
subdivision (j) . For the 2012-13 rate year
and for each subsequent rate year , any rate
increase shall be reduced by the amounts described in subdivisions
(j) and (l). (k). For the 2013-14 rate year,
and for each subsequent rate year, any rate increase shall be reduced
by the amounts described in subdivisions (j) and (l).
SEC. 10. Section 14126.023 of the
Welfare and Institutions Code is amended to read:
14126.023. (a) The methodology developed pursuant to this article
shall be facility specific and reflect the sum of the projected cost
of each cost category and passthrough costs, as follows:
(1) Labor costs limited as specified in subdivisions (d) and (e).
(2) Indirect care nonlabor costs limited to the 75th percentile.
(3) (A) Administrative costs limited to the 50th percentile.
(B) Notwithstanding subparagraph (A), beginning with the 2010-11
rate year and in each subsequent rate year, the administrative cost
category shall not include any legal and consultant fees in
connection with a fair hearing or other litigation against or
involving any governmental agency or department until all issues
related to the fair hearing or litigation issues are ultimately
decided or resolved.
(C) Notwithstanding subparagraph (A), beginning with the 2010-11
rate year and in each subsequent rate year, the department shall not
allow any cost associated with legal or consultant fees in connection
with a fair hearing or other litigation against any governmental
agency or department where any of the following apply:
(i) A decision has been rendered in favor of the governmental
agency or department.
(ii) The determination of the governmental agency or department
otherwise stands.
(iii) A settlement or similar resolution has been reached
regarding any citation issued under subdivision (c), (d), or (e) of
Section 1424 of the Health and Safety Code or regarding any remedy
imposed under Subpart F of Part 489 of Title 42 of the Code of
Federal Regulations.
(iv) A settlement or similar resolution has been reached under the
provisions of Section 14123 or 14171.
(D) Facilities shall report supplemental data required to disallow
costs described in subparagraph (C) in a format and by the deadline
determined by the department.
(4) Capital costs based on a fair rental value system (FRVS)
limited as specified in subdivision (f).
(5) (A) Direct passthrough of proportional Medi-Cal costs for
property taxes, facility license fees, new state and federal
mandates, caregiver training costs, and liability insurance projected
on the prior year's costs.
(B) (i) Notwithstanding subparagraph (A), for the 2010-11 rate
year and each rate year thereafter, professional liability insurance
costs, including any insurance deductible costs paid by the facility,
shall be limited to the 75th percentile computed on a specific
geographic peer group basis.
(ii) Facilities shall report supplemental data described in this
subparagraph in a format and by the deadline determined by the
department, or the insurance deductible costs shall continue to be
reimbursed in the administrative cost category.
(b) (1) The percentiles in paragraphs (1) through (3) of
subdivision (a) shall be based on annualized costs divided by total
resident days and computed on a specific geographic peer group basis.
Costs within a specific cost category shall not be shifted to any
other cost category.
(2) Notwithstanding paragraph (1), for the 2010-11 and
2011-12 rate years, rate year, and each
rate year
thereafter, the percentiles in paragraphs (1) to (5),
inclusive, of subdivision (a) shall be based on annualized audited
costs divided by total resident days and computed on a specific
geographic peer group basis. Costs within a specific category shall
not be shifted to any other cost category.
(c) (1) Facilities newly certified to participate in the Medi-Cal
program shall receive a reimbursement rate based on the peer group
weighted average Medi-Cal reimbursement rate. Facilities shall
continue to receive the peer group weighted average Medi-Cal
reimbursement rate until either of the following conditions is met:
(A) The department shall calculate the Freestanding Skilled
Nursing Facility-B facility specific rate when a minimum of six
months of Medi-Cal cost data has been audited. The facility specific
rate shall be calculated prospectively and shall be effective on
August 1 of each rate year, pursuant to Section 14126.021.
(B) The department shall calculate the Freestanding Subacute
Skilled Nursing Facility-B facility specific rate when a cost report
with a minimum of 12 months of Medi-Cal cost data has been audited.
The facility specific rate shall be calculated prospectively and
shall be effective on August 1 of each rate year, pursuant to Section
14126.021.
(2) Facilities that have been decertified for less than six months
and upon recertification shall continue to receive the facility per
diem reimbursement rate in effect prior to decertification.
Facilities shall continue to receive the facility per diem
reimbursement rate until either of the following conditions is met:
(A) The department shall calculate the Freestanding Skilled
Nursing Facility-B facility specific rate when a minimum of six
months of Medi-Cal cost data has been audited. The facility specific
rate based on the audited six months of Medi-Cal cost data shall be
calculated prospectively and shall be effective on August 1 of each
rate year, pursuant to Section 14126.021.
(B) The department shall calculate the Freestanding Subacute
Skilled Nursing Facility-B facility specific rate when a cost report
with a minimum of 12 months of Medi-Cal cost data has been audited.
The facility-specific rate shall be calculated prospectively and
shall be effective on August 1 of each rate year, pursuant to Section
14126.021.
(3) Facilities that have been decertified for six months or longer
and upon recertification shall receive a reimbursement rate based on
the peer group weighted average Medi-Cal reimbursement rate.
Facilities shall continue to receive the peer group weighted average
Medi-Cal reimbursement rate until either of the following conditions
is met:
(A) The department shall calculate the Freestanding Skilled
Nursing Facility-B facility specific rate when a minimum of six
months of Medi-Cal cost data has been audited. The facility-specific
rate shall be calculated prospectively and shall be effective on
August 1 of each rate year, pursuant to Section 14126.021.
(B) The department shall calculate the Freestanding Subacute
Skilled Nursing Facility-B facility specific rate when a cost report
with a minimum of 12 months of Medi-Cal cost data has been audited.
The facility-specific rate shall be calculated prospectively and
shall be effective on August 1 of each rate year, pursuant to Section
14126.021.
(4) Facilities that have a change of ownership or change of the
licensed operator shall continue to receive the facility per diem
reimbursement rate in effect with the previous owner. Facilities
shall continue to receive the facility per diem reimbursement rate
until either of the following conditions is met:
(A) The department shall calculate the Freestanding Skilled
Nursing Facility-B facility specific rate when a minimum of six
months of Medi-Cal cost data has been audited. The facility-specific
rate shall be calculated prospectively and shall be effective on
August 1 of each rate year, pursuant to Section 14126.021.
(B) The department shall calculate the Freestanding Subacute
Skilled Nursing Facility B facility-specific rate when a cost report
with a minimum of 12 months of Medi-Cal cost data has been audited.
The facility-specific rate shall be calculated prospectively and
shall be effective on August 1 of each rate year, pursuant to Section
14126.021.
(5) This subdivision represents codification of existing rules
promulgated by the department under the authority of Section
14126.027.
(d) The labor costs category shall be comprised of a direct
resident care labor cost category, an indirect care labor cost
category, and a labor-driven operating allocation cost category, as
follows:
(1) Direct resident care labor cost category which shall include
all labor costs related to routine nursing services including all
nursing, social services, activities, and other direct care
personnel. These costs shall be limited to the 90th percentile.
(2) Indirect care labor cost category which shall include all
labor costs related to staff supporting the delivery of patient care
including, but not limited to, housekeeping, laundry and linen,
dietary, medical records, inservice education, and plant operations
and maintenance. These costs shall be limited to the 90th percentile.
(3) Labor-driven operating allocation shall include an amount
equal to 8 percent of labor costs, minus expenditures for temporary
staffing, which may be used to cover allowable Medi-Cal expenditures.
In no instance shall the operating allocation exceed 5 percent of
the facility's total Medi-Cal reimbursement rate.
(e) Notwithstanding subdivision (d), beginning with the 2010-11
rate year and each rate year thereafter, the labor cost category
shall not include the labor-driven operating allocation and shall be
comprised only of a direct resident care labor cost category and an
indirect care labor cost category.
(f) The capital cost category shall be based on a FRVS that
recognizes the value of the capital related assets necessary to care
for Medi-Cal residents. The capital cost category includes mortgage
principal and interest, leases, leasehold improvements, depreciation
of real property, equipment, and other capital related expenses. The
FRVS methodology shall be based on the formula developed by the
department that assesses facility value based on age and condition
and uses a recognized market interest factor. Capital investment and
improvement expenditures included in the FRVS formula shall be
documented in cost reports or supplemental reports required by the
department. The capital costs based on FRVS shall be limited as
follows:
(1) For the 2005-06 rate year, the capital cost category for all
facilities in the aggregate shall not exceed the department's
estimated value for this cost category for the 2004-05 rate year.
(2) For the 2006-07 rate year and subsequent rate years, the
maximum annual increase for the capital cost category for all
facilities in the aggregate shall not exceed 8 percent of the prior
rate year's FRVS cost component.
(3) If the total capital costs for all facilities in the aggregate
for the 2005-06 rate year exceeds the value of the capital costs for
all facilities in the aggregate for the 2004-05 rate year, or if
that capital cost category for all facilities in the aggregate for
the 2006-07 rate year or any rate year thereafter exceeds 8 percent
of the prior rate year's value, the department shall reduce the
capital cost category for all facilities in equal proportion in order
to comply with paragraphs (1) and (2).
(g) For the 2005-06 and 2006-07 rate years, the facility specific
Medi-Cal reimbursement rate calculated under this article shall not
be less than the Medi-Cal rate that the specific facility would have
received under the rate methodology in effect as of July 31, 2005,
plus Medi-Cal's projected proportional costs for new state or federal
mandates for rate years 2005-06 and 2006-07, respectively.
(h) The department shall update each facility specific rate
calculated under this methodology annually. The update process shall
be prescribed in the Medicaid State Plan, regulations, and the
provider bulletins or similar instructions described in Section
14126.027, and shall be adjusted in accordance with the results of
facility specific audit and review findings in accordance with
subdivisions (i), (j), and (k).
(i) (1) The department shall establish rates pursuant to this
article on the basis of facility cost data reported in the integrated
long-term care disclosure and Medi-Cal cost report required by
Section 128730 of the Health and Safety Code for the most recent
reporting period available, and cost data reported in other facility
financial disclosure reports or supplemental information required by
the department in order to implement this article.
(2) Notwithstanding paragraph (1), or any other provision of law,
beginning with the 2010-11 and 2011-12 rate years,
rate year, and each rate year thereafter, the department
shall establish rates pursuant to this article on the basis of
facility audited cost data pursuant to subdivision (c),
reported in the integrated long-term care disclosure and Medi-Cal
cost report described in Section 128730 of the Health and Safety Code
and audited cost data reported in other facility financial
disclosure reports or audited supplemental information required by
the department in order to implement this article.
(3) Notwithstanding paragraph (1), or any other provision of law,
beginning with the 2010-11 rate year and each rate year thereafter,
the department may determine a facility ineligible to receive
supplemental payments pursuant to Section 14126.022 if a facility
fails to provide supplemental data as requested by the department.
(4) This subdivision represents codification of existing rules
promulgated by the department under the authority of Section
14126.027.
(j) The department shall conduct financial audits of facility and
home office cost data as follows:
(1) The department shall audit facilities a minimum of once every
three years to ensure accuracy of reported costs.
(2) It is the intent of the Legislature that the department
develop and implement limited scope audits of key cost centers or
categories to assure that the rate paid in the years between each
full scope audit required in paragraph (1) accurately reflects actual
costs.
(3) For purposes of updating facility specific rates, the
department shall adjust or reclassify costs reported consistent with
applicable requirements of the Medicaid state plan as required by
Part 413 (commencing with Section 413.1) of Title 42 of the Code of
Federal Regulations.
(4) Overpayments to any facility shall be recovered in a manner
consistent with applicable recovery procedures and requirements of
state and federal laws and regulations.
(k) (1) On an annual basis, the department shall use the results
of audits performed pursuant to subdivisions (i) and (j), the results
of any federal audits, and facility cost reports, including
supplemental reports of actual costs incurred in specific cost
centers or categories as required by the department, to determine any
difference between reported costs used to calculate a facility's
rate and audited facility expenditures in the rate year.
(2) If the department determines that there is a difference
between reported costs and audited facility expenditures pursuant to
paragraph (1), the department shall adjust a facility's reimbursement
prospectively over the intervening years between audits by an amount
that reflects the difference, consistent with the methodology
specified in this article.
(l) For nursing facilities that obtain an audit appeal decision
that results in revision of the facility's allowable costs, the
facility shall be entitled to seek a retroactive adjustment in its
facility specific reimbursement rate.
(m) Except as provided in Section 14126.022, compliance by each
facility with state laws and regulations regarding staffing levels
shall be documented annually either through facility cost reports,
including supplemental reports, or through the annual licensing
inspection process specified in Section 1422 of the Health and Safety
Code.
SEC. 11. Section 14126.027 of the
Welfare and Institutions Code is amended to read:
14126.027. (a) (1) The Director of Health Care Services, or his
or her designee, shall administer this article.
(2) The regulations and other similar instructions adopted
pursuant to this article shall be developed in consultation with
representatives of the long-term care industry, organized labor,
seniors, and consumers.
(b) (1) The director may adopt regulations as are necessary to
implement this article. The adoption, amendment, repeal, or
readoption of a regulation authorized by this section is deemed to be
necessary for the immediate preservation of the public peace, health
and safety, or general welfare, for purposes of Sections 11346.1 and
11349.6 of the Government Code, and the department is hereby
exempted from the requirement that it describe specific facts showing
the need for immediate action.
(2) The regulations adopted pursuant to this section may include,
but need not be limited to, any regulations necessary for any of the
following purposes:
(A) The administration of this article, including the specific
analytical process for the proper determination of long-term care
rates.
(B) The development of any forms necessary to obtain required cost
data and other information from facilities subject to the
ratesetting methodology.
(C) To provide details, definitions, formulas, and other
requirements.
(c) As an alternative to the adoption of regulations pursuant to
subdivision (b), and notwithstanding Chapter 3.5 (commencing with
Section 11340) of Part 1 of Division 3 of Title 2 of the Government
Code, the director may implement this article, in whole or in part,
by means of a provider bulletin or other similar instructions,
without taking regulatory action, provided that no such bulletin or
other similar instructions shall remain in effect after July 31,
2012 2013 . It is the intent of
the Legislature that regulations adopted pursuant to
subdivision (b) shall be in place on or before July 31, 2012
2013 .
SEC. 12. Section 14126.033 of the
Welfare and Institutions Code is amended to read:
14126.033. (a) The Legislature finds and declares all of the
following:
(1) Costs within the Medi-Cal program continue to grow due to the
rising cost of providing health care throughout the state and also
due to increases in enrollment, which are more pronounced during
difficult economic times.
(2) In order to minimize the need for drastically cutting
enrollment standards or benefits during times of economic crisis, it
is crucial to find areas within the program where reimbursement
levels are higher than required under the standard provided in
Section 1902(a)(30)(A) of the federal Social Security Act and can be
reduced in accordance with federal law.
(3) The Medi-Cal program delivers its services and benefits to
Medi-Cal beneficiaries through a wide variety of health care
providers, some of which deliver care via managed care or other
contract models while others do so through fee-for-service
arrangements.
(4) The setting of rates within the Medi-Cal program is complex
and is subject to close supervision by the United States Department
of Health and Human Services.
(5) As the single state agency for Medicaid in California, the
State Department of Health Care Services has unique expertise that
can inform decisions that set or adjust reimbursement methodologies
and levels consistent with the requirements of federal law.
(b) Therefore, it is the intent of the Legislature for the
department to analyze and identify where reimbursement levels can be
reduced consistent with the standard provided in Section 1902(a)(30)
(A) of the federal Social Security Act and also consistent with
federal and state law and policies, including any exemptions
contained in the act that added this section, provided that the
reductions in reimbursement shall not exceed 10 percent on an
aggregate basis for all providers, services, and products.
(c) This article, including Section 14126.031, shall be funded as
follows:
(1) General Fund moneys appropriated for purposes of this article
pursuant to Section 6 of the act adding this section shall be used
for increasing rates, except as provided in Section 14126.031, for
freestanding skilled nursing facilities, and shall be consistent with
the approved methodology required to be submitted to the federal
Centers for Medicare and Medicaid Services pursuant to Article 7.6
(commencing with Section 1324.20) of Chapter 2 of Division 2 of the
Health and Safety Code.
(2) (A) Notwithstanding Section 14126.023, for the 2005-06 rate
year, the maximum annual increase in the weighted average Medi-Cal
rate required for purposes of this article shall not exceed 8 percent
of the weighted average Medi-Cal reimbursement rate for the 2004-05
rate year as adjusted for the change in the cost to the facility to
comply with the nursing facility quality assurance fee for the
2005-06 rate year, as required under subdivision (b) of Section
1324.21 of the Health and Safety Code, plus the total projected
Medi-Cal cost to the facility of complying with new state or federal
mandates.
(B) Beginning with the 2006-07 rate year, the maximum annual
increase in the weighted average Medi-Cal reimbursement rate required
for purposes of this article shall not exceed 5 percent of the
weighted average Medi-Cal reimbursement rate for the prior fiscal
year, as adjusted for the projected cost of complying with new state
or federal mandates.
(C) Beginning with the 2007-08 rate year and continuing through
the 2008-09 rate year, the maximum annual increase in the weighted
average Medi-Cal reimbursement rate required for purposes of this
article shall not exceed 5.5 percent of the weighted average Medi-Cal
reimbursement rate for the prior fiscal year, as adjusted for the
projected cost of complying with new state or federal mandates.
(D) For the 2009-10 rate year, the weighted average Medi-Cal
reimbursement rate required for purposes of this article shall not be
increased with respect to the weighted average Medi-Cal
reimbursement rate for the 2008-09 rate year, as adjusted for the
projected cost of complying with new state or federal mandates.
(3) (A) For the 2010-11 rate year, if the increase in the federal
medical assistance percentage (FMAP) pursuant to the federal American
Recovery and Reinvestment Act of 2009 (ARRA) (Public Law 111-5) is
extended for the entire 2010-11 rate year, the maximum annual
increase in the weighted average Medi-Cal reimbursement rate for the
purposes of this article shall not exceed 3.93 percent, or 3.14
percent, if the increase in the FMAP pursuant to ARRA is not extended
for that period of time, plus the projected cost of complying with
new state or federal mandates. If the increase in the FMAP pursuant
to ARRA is extended at a different rate, or for a different time
period, the rate adjustment for facilities shall be adjusted
accordingly.
(B) The weighted average Medi-Cal reimbursement rate increase
specified in subparagraph (A) shall be adjusted by the department for
the following reasons:
(i) If the federal Centers for Medicare and Medicaid Services does
not approve exemption changes to the facilities subject to the
quality assurance fee.
(ii) If the federal Centers for Medicare and Medicaid Services
does not approve any proposed modification to the methodology for
calculation of the quality assurance fee.
(iii) To ensure that the state does not incur any additional
General Fund expenses to pay for the 2010-11 weighted average
Medi-Cal reimbursement rate increase.
(C) If the maximum annual increase in the weighted average
Medi-Cal rate is reduced pursuant to subparagraph (B), the department
shall recalculate and publish the final maximum annual increase in
the weighted average Medi-Cal reimbursement rate.
(4) (A) Subject to the following provisions, for the 2011-12 rate
year, the maximum annual increase in the weighted average
the increase in the Medi-Cal reimbursement rate
for the purpose of this article , for each skilled nursing
facility as defined in subdivision (c) of Section 1250 of the Health
and Safety Code, shall not exceed 2.4 percent of the rate
on file that was applicable on May 31, 2011 , plus the
projected cost of complying with new state or federal mandates.
The percentage increase shall be applied equally to each rate on file
as of May 31, 2011.
(B) The weighted average Medi-Cal reimbursement rate increase
specified in subparagraph (A) shall be adjusted by the department for
the following reasons:
(i) For the 2011-12 rate year, the department shall set aside 1
percent of the weighted average Medi-Cal reimbursement rate, from
which the department shall transfer the General Fund portion into the
Skilled Nursing Facility Quality and Accountability Special Fund, to
be used for the supplemental rate pool.
(ii)
(i) If the federal Centers for Medicare and Medicaid
Services does not approve exemption changes to the facilities subject
to the quality assurance fee.
(iii)
(ii) If the federal Centers for Medicare and Medicaid
Services does not approve any proposed modification to the
methodology for calculation of the quality assurance fee.
(iv)
(iii) To ensure that the state does not incur any
additional General Fund expenses to pay for the 2011-12 weighted
average Medi-Cal reimbursement rate increase.
(C) The department may recalculate and publish the weighted
average Medi-Cal reimbursement rate increase for the 2011-12 rate
year if the difference in the projected quality assurance fee
collections from the 2011-12 rate year, compared to the projected
quality assurance fee collections for the 2010-11 rate year, would
result in any additional General Fund expense to pay for the 2011-12
rate year weighted average reimbursement rate increase.
(5) To the extent that rates are projected to exceed the adjusted
limits calculated pursuant to subparagraphs (A) to (D), inclusive, of
paragraph (2) and, as applicable, paragraphs (3) and (4), the
department shall adjust each skilled nursing facility's projected
rate for the applicable rate year by an equal percentage.
(6) (A) (i) Notwithstanding any other provision of law, and except
as provided in subparagraphs (B), (C), and (D)
subparagraph (B) , payments resulting from the application
of paragraphs (3) and (4), the provisions of paragraph (5), and all
other applicable adjustments and limits as required by this section,
shall be reduced by 10 percent for dates of service on and after June
1, 2011 , through July 31, 2012.This is a one-time reduction
evenly distributed across all facilities to ensure long-term
stability of nursing homes serving the Medi-Cal population .
(ii) Notwithstanding any other provision of law, the director may
adjust the percentage reductions specified in clause (i), as long as
the resulting reductions, in the aggregate, total no more than 10
percent.
(iii) The adjustments authorized under this subparagraph shall be
implemented only if the director determines that the payments
resulting from the adjustments comply with paragraph (7).
(B) Notwithstanding any other provision of law, the 1 percent set
aside of the weighted average Medi-Cal reimbursement rate as required
by clause (i) of subparagraph (B) of paragraph (4) shall be exempt
from the payment reduction required by this paragraph.
(C) Notwithstanding any other provision of law, payments to
skilled nursing facilities pursuant to subdivision (m) of Section
14126.022 shall be exempt from the payment reduction required by this
paragraph.
(D)
(B) Payments to facilities owned or operated by the
state shall be exempt from the payment reduction required by this
paragraph.
(7) (A) Notwithstanding any other provision of this section, the
payment reductions and adjustments required by paragraph (6) shall be
implemented only if the director determines that the payments that
result from the application of paragraph (6) will comply with
applicable federal Medicaid requirements and that federal financial
participation will be available.
(B) In determining whether federal financial participation is
available, the director shall determine whether the payments comply
with applicable federal Medicaid requirements, including those set
forth in Section 1396a(a)(30)(A) of Title 42 of the United States
Code.
(C) To the extent that the director determines that the payments
do not comply with applicable federal Medicaid requirements or that
federal financial participation is not available with respect to any
payment that is reduced pursuant to this section, the director
retains the discretion to not implement the particular payment
reduction or adjustment and may adjust the payment as necessary to
comply with federal Medicaid requirements.
(8) For managed care health plans that contract with the
department pursuant to this chapter and Chapter 8 (commencing with
Section 14200), except for contracts with the Senior Care Action
Network and AIDS Healthcare Foundation, and to the extent that these
services are provided through any of those contracts, payments shall
be reduced by the actuarial equivalent amount of the reduced provider
reimbursements specified in paragraph (6) pursuant to contract
amendments or change orders effective on July 1, 2011, or thereafter.
(9) (A) For the 2012-13 rate year, all of the following shall
apply:
(i) The department shall determine the amounts of reduced payments
for each skilled nursing facility, as defined in subdivision (c) of
Section 1250 of the Health and Safety Code, resulting from the
10-percent reduction imposed pursuant to clause (i) of subparagraph
(A) of paragraph (6) for the period beginning on June 1, 2011,
through July 31, 2012.
(ii) For claims adjudicated through October 1, 2012, each skilled
nursing facility as defined in subdivision (c) of Section 1250 of the
Health and Safety Code that is reimbursed under the Medi-Cal
fee-for-service program, shall receive the total payments calculated
by the department in clause (i), not later than
December 31, 2012.
(iii) For managed care plans that contract with the department
pursuant to this chapter or Chapter 8 (commencing with Section
14200), except contracts with Senior Care Action Network and AIDS
Healthcare Foundation, and to the extent that skilled nursing
services are provided through any of those contracts, payments shall
be adjusted by the actuarial equivalent amount of the reimbursements
calculated in clause (i) pursuant to contract amendments or change
orders effective on July 1, 2012, or thereafter.
(B) Notwithstanding subparagraph (A), beginning on August 1, 2012,
through July 31, 2013, the department shall calculate rates pursuant
to the reimbursement methodology provided in Section 14126.023,
except that the facility specific Medi-Cal reimbursement rate
calculated under this subparagraph shall not be less than the
Medi-Cal rate that was on file and applicable to the specific skilled
nursing facility on May 31, 2011, plus the projected cost of
complying with new state or federal mandates. If the department was
not able to increase the Medi-Cal reimbursement rates by the maximum
2.4 percent as provided under subparagraph (A) of paragraph (4) for
the 2011-12 rate year, then the department may increase the rates for
the 2012-13 rate year by an amount equal to the difference between
the actual percentage increase in the 2011-12 rates and the maximum
amount that would have been received if the maximum 2.4 percent
increase had been implemented.
(C) The weighted average Medi-Cal reimbursement rate increase
specified in subparagraph (B) shall be adjusted by the department if
the federal Centers for Medicare and Medicaid Services does not
approve any proposed modification to the methodology for calculation
of the skilled nursing quality assurance fee pursuant to Article 7.6
(commencing withe Section 1324.20) of Chapter 2 of Division 2 of the
Health and Safety Code.
(D) The department shall set aside 1 percent of the weighted
average Medi-Cal reimbursement rate, from which the department shall
transfer the General Fund portion into the Skilled Nursing Facility
Quality and Accountability Special Fund, to be used for the
supplemental rate pool.
(E) Notwithstanding any other provision of law, beginning on
January 1, 2013, Article 7.6 (commencing with Section 1324.20) of
Chapter 2 of Division 2 of the Health and Safety Code, which imposes
a skilled nursing facility quality assurance fee, shall not be
enforceable against any skilled nursing facility unless each skilled
nursing facility is paid the rate provided for in subparagraphs (A)
and (B). Any amount collected during the 2012-13 rate year by the
department pursuant to Article 7.6 (commencing with Section 1324.20)
of Chapter 2 of Division 2 of the Health and Safety Code shall be
refunded to each facility not later than February 1, 2013.
(F) The provisions of this paragraph shall also be included as
part of a state plan amendment implementing the 2011-12 and 2012-13
Medi-Cal reimbursement rates authorized under this article.
(9)
(10) The director shall seek any necessary federal
approvals for the implementation of this section. This section shall
not be implemented until federal approval is obtained. When federal
approval is obtained, the payments resulting from the application of
paragraph (6) shall be implemented retroactively to June 1, 2011, or
on any other date or dates as may be applicable.
(d) The rate methodology shall cease to be implemented after July
31, 2012 2013 .
(e) (1) It is the intent of the Legislature that the
implementation of this article result in individual access to
appropriate long-term care services, quality resident care, decent
wages and benefits for nursing home workers, a stable workforce,
provider compliance with all applicable state and federal
requirements, and administrative efficiency.
(2) Not later than December 1, 2006, the Bureau of State Audits
shall conduct an accountability evaluation of the department's
progress toward implementing a facility-specific reimbursement
system, including a review of data to ensure that the new system is
appropriately reimbursing facilities within specified cost categories
and a review of the fiscal impact of the new system on the General
Fund.
(3) Not later than January 1, 2007, to the extent information is
available for the three years immediately preceding the
implementation of this article, the department shall provide baseline
information in a report to the Legislature on all of the following:
(A) The number and percent of freestanding skilled nursing
facilities that complied with minimum staffing requirements.
(B) The staffing levels prior to the implementation of this
article.
(C) The staffing retention rates prior to the implementation of
this article.
(D) The numbers and percentage of freestanding skilled nursing
facilities with findings of immediate jeopardy, substandard quality
of care, or actual harm, as determined by the certification survey of
each freestanding skilled nursing facility conducted prior to the
implementation of this article.
(E) The number of freestanding skilled nursing facilities that
received state citations and the number and class of citations issued
during calendar year 2004.
(F) The average wage and benefits for employees prior to the
implementation of this article.
(4) Not later than January 1, 2009, the department shall provide a
report to the Legislature that does both of the following:
(A) Compares the information required in paragraph (2) to that
same information two years after the implementation of this article.
(B) Reports on the extent to which residents who had expressed a
preference to return to the community, as provided in Section 1418.81
of the Health and Safety Code, were able to return to the community.
(5) The department may contract for the reports required under
this subdivision.
SEC. 13. Section 14126.036 of the
Welfare and Institutions Code is amended to read:
14126.036. This article shall become inoperative on August 1,
2012 2013 , and as of January 1,
2013 2014 , is repealed, unless a later
enacted statute that is enacted before January 1, 2013
2014 , deletes or extends that date.
SEC. 14. This act addresses the fiscal emergency
declared and reaffirmed by the Governor by proclamation on January
20, 2011, pursuant to subdivision (f) of Section 10 of Article IV of
the California Constitution.
SEC. 15. 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 changes necessary for implementation of the
Budget Act of 2011, it is necessary that this act take effect
immediately.
SECTION 1. It is the intent of the Legislature
to enact statutory changes relating to the Budget Act of 2011.
SEC. 2. This act addresses the fiscal emergency
declared and reaffirmed by the Governor by proclamation on January
20, 2011, pursuant to subdivision (f) of Section 10 of Article IV of
the California Constitution.