BILL NUMBER: AB 113 CHAPTERED
BILL TEXT
CHAPTER 20
FILED WITH SECRETARY OF STATE APRIL 13, 2011
APPROVED BY GOVERNOR APRIL 13, 2011
PASSED THE SENATE APRIL 7, 2011
PASSED THE ASSEMBLY APRIL 7, 2011
AMENDED IN SENATE MARCH 31, 2011
INTRODUCED BY Assembly Member Monning
(Principal coauthors: Senators Hernandez and Steinberg)
JANUARY 10, 2011
An act to amend Section 14163 of, and to add Article 5.17
(commencing with Section 14165.55) to, the Welfare and Institutions
Code, relating to health, making an appropriation therefor, and
declaring the urgency thereof, to take effect immediately.
LEGISLATIVE COUNSEL'S DIGEST
AB 113, Monning. Health: hospitals: Medi-Cal.
Existing law establishes the Medi-Cal program, administered by the
State Department of Health Care Services, under which basic health
care services are provided to qualified low-income persons. The
Medi-Cal program is, in part, governed and funded by federal Medicaid
provisions. Existing law establishes the continuously appropriated
Health Care Deposit Fund from which expenditures of state, county,
and federal funds for health care and administration under the
Medi-Cal program are made as specified. Existing law authorizes the
department to accept any elective transfer of funds from a county,
political subdivision, or other governmental entity, and provides the
department with the discretion of whether or not to deposit the
transferred funds into the Medi-Cal Inpatient Payment Adjustment
Fund, which is continuously appropriated and consists of moneys
transferred to the fund to be used as the nonfederal share of payment
adjustments made to hospitals under the Medi-Cal program.
This bill would require the department to establish, implement,
and maintain the Nondesignated Public Hospital Intergovernmental
Transfer Program, as specified, to assist nondesignated public
hospitals in achieving federal financial participation to the fullest
extent permitted by federal law. This bill would provide that a
transferring entity, as defined, may agree to transfer its
intergovernmental transfer allocation, as defined, to the state in
accordance with the program and would require the state to deposit
the transferred funds into the Medi-Cal Inpatient Payment Adjustment
Fund. This bill would require funds transferred into the Medi-Cal
Inpatient Payment Adjustment Fund to be, in part, transferred to the
Health Care Deposit Fund for specified purposes. By increasing the
amount of moneys that may be deposited into the Medi-Cal Inpatient
Payment Adjustment Fund and the Health Care Deposit Fund, and by
revising the purposes for which moneys in those funds shall be used,
this bill would make an appropriation. This bill would authorize the
state to retain 9% of each intergovernmental transfer amount to
reimburse the department, or to transfer to the General Fund, for the
administrative costs of operating the program and for the benefit of
Medi-Cal children's health programs.
This bill would appropriate $1,500,000,000 from the Hospital
Quality Assurance Revenue Fund and $1,500,000,000 from the Federal
Trust Fund to the department to be available for expenditure for
specified purposes until January 1, 2014.
This bill would become operative only if SB 90 of the 2011-12
Regular Session of the Legislature is enacted.
This bill would declare that it is to take effect immediately as
an urgency statute.
Appropriation: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 14163 of the Welfare and Institutions Code is
amended to read:
14163. (a) For purposes of this section, the following
definitions shall apply:
(1) "Public entity" means a county, a city, a city and county, the
State of California, the University of California, a local health
care district, a local health authority, or any other political
subdivision of the state.
(2) "Hospital" means a health facility that is licensed pursuant
to Chapter 2 (commencing with Section 1250) of Division 2 of the
Health and Safety Code to provide acute inpatient hospital services,
and includes all components of the facility.
(3) "Disproportionate share hospital" means a hospital providing
acute inpatient services to Medi-Cal beneficiaries that meets the
criteria for disproportionate share status relating to acute
inpatient services set forth in Section 14105.98.
(4) "Disproportionate share list" means the annual list of
disproportionate share hospitals for acute inpatient services issued
by the department pursuant to Section 14105.98.
(5) "Fund" means the Medi-Cal Inpatient Payment Adjustment Fund.
(6) "Eligible hospital" means, for a particular state fiscal year,
a hospital on the disproportionate share list that is eligible to
receive payment adjustment amounts under Section 14105.98 with
respect to that state fiscal year.
(7) "Transfer year" means the particular state fiscal year during
which, or with respect to which, public entities are required by this
section to make an intergovernmental transfer of funds to the
Controller.
(8) "Transferor entity" means a public entity that, with respect
to a particular transfer year, is required by this section to make an
intergovernmental transfer of funds to the Controller.
(9) "Transfer amount" means an amount of intergovernmental
transfer of funds that this section requires for a particular
transferor entity with respect to a particular transfer year.
(10) "Intergovernmental transfer" means a transfer of funds from a
public entity to the state that is local government financial
participation in Medi-Cal pursuant to the terms of this section.
(11) "Licensee" means an entity that has been issued a license to
operate a hospital by the department.
(12) "Annualized Medi-Cal inpatient paid days" means the total
number of Medi-Cal acute inpatient hospital days, regardless of dates
of service, for which payment was made by or on behalf of the
department to a hospital, under present or previous ownership, during
the most recent calendar year ending prior to the beginning of a
particular transfer year, including all Medi-Cal acute inpatient
covered days of care for hospitals that are paid on a different basis
than per diem payments.
(13) "Medi-Cal acute inpatient hospital day" means any acute
inpatient day of service attributable to patients who, for those
days, were eligible for medical assistance under the California state
plan, including any day of service that is reimbursed on a basis
other than per diem payments.
(14) "OBRA 1993 payment limitation" means the hospital-specific
limitation on the total annual amount of payment adjustments to each
eligible hospital under the payment adjustment program that can be
made with federal financial participation under Section 1396r-4(g) of
Title 42 of the United States Code as implemented pursuant to the
Medi-Cal State Plan.
(b) The Medi-Cal Inpatient Payment Adjustment Fund is hereby
created in the State Treasury. Notwithstanding Section 13340 of the
Government Code, the fund shall be continuously appropriated to, and
under the administrative control of, the department for the purposes
specified in subdivision (d). The fund shall consist of the
following:
(1) Transfer amounts collected by the Controller under this
section, whether submitted by transferor entities pursuant to
applicable provisions of this section or obtained by offset pursuant
to subdivision (j).
(2) Any other intergovernmental transfers deposited in the fund,
as permitted by Section 14164 or Article 5.17 (commencing with
Section 14165.55).
(3) Any interest that accrues with respect to amounts in the fund.
(c) Moneys in the fund, which shall not consist of any state
general funds, shall be used as the source for the nonfederal share
of payments to hospitals pursuant to Section 14105.98. Moneys shall
be allocated from the fund by the department and matched by federal
funds in accordance with customary Medi-Cal accounting procedures,
and used to make payments pursuant to Section 14105.98.
(d) Except as otherwise provided in Section 14105.98 or in any law
appropriating a specified sum of money to the department for
administering this section and Section 14105.98, moneys in the fund
shall be used only for the following:
(1) Payments to hospitals pursuant to Section 14105.98.
(2) Transfers to the Health Care Deposit Fund as follows:
(A) In the amount of two hundred thirty-nine million seven hundred
fifty-seven thousand six hundred ninety dollars ($239,757,690) for
the 1994-95 and 1995-96 fiscal years.
(B) In the amount of two hundred twenty-nine million seven hundred
fifty-seven thousand six hundred ninety dollars ($229,757,690) for
the 1996-97 fiscal year.
(C) In the amount of one hundred fifty-four million seven hundred
fifty-seven thousand six hundred ninety dollars ($154,757,690) for
the 1997-98 fiscal year.
(D) In the amount of one hundred fourteen million seven hundred
fifty-seven thousand six hundred ninety dollars ($114,757,690) for
the 1998-99 fiscal year.
(E) (i) In the amount of eighty-four million seven hundred
fifty-seven thousand six hundred ninety dollars ($84,757,690) for the
1999-2000 fiscal year.
(ii) It is the intent of the Legislature that the economic benefit
of any reduction in the amount transferred, or to be transferred, to
the Health Care Deposit Fund pursuant to this subdivision for the
1999-2000 fiscal year, as compared to the amount so transferred for
the 1998-99 fiscal year, be allocated equally between public and
nonpublic disproportionate share hospitals. To implement the
reduction in clause (i) the department shall, by June 30, 2000,
adjust the calculations in Section 14105.98 in order to allocate the
funds in accordance with this clause.
(F) In the amount of twenty-nine million seven hundred fifty-seven
thousand six hundred ninety dollars ($29,757,690) for the 2000-01
fiscal year and the 2001-02 fiscal year.
(G) In the amount of eighty-five million dollars ($85,000,000) for
the 2002-03 fiscal year and each fiscal year thereafter.
(H) The transfers from the fund shall be made in six equal monthly
installments to the Medi-Cal local assistance appropriation item
(Item 4260-101-0001 of Section 2.00 of the annual Budget Act) in
support of Medi-Cal expenditures. The first installment shall accrue
in October of each transfer year, and all other installments shall
accrue monthly thereafter from November through March.
(3) Transfers to the Health Care Deposit Fund for purposes set
forth in Article 5.17 (commencing with Section 14165.55).
(e) For the 1991-92 state fiscal year, the department shall
determine, no later than 70 days after the enactment of this section,
the transferor entities for the 1991-92 transfer year. To make this
determination, the department shall utilize the disproportionate
share list for the 1991-92 fiscal year issued by the department
pursuant to paragraph (1) of subdivision (f) of Section 14105.98. The
department shall identify each eligible hospital on the list for
which a public entity is the licensee as of July 1, 1991. The public
entity that is the licensee of each identified eligible hospital
shall be a transferor entity for the 1991-92 transfer year.
(f) The department shall determine, no later than 70 days after
the enactment of this section, the transfer amounts for the 1991-92
transfer year.
The transfer amounts shall be determined as follows:
(1) The eligible hospitals for 1991-92 shall be identified. For
each hospital, the applicable total per diem payment adjustment
amount under Section 14105.98 for the 1991-92 transfer year shall be
computed. This amount shall be multiplied by 80 percent of the
eligible hospital's annualized Medi-Cal inpatient paid days as
determined from all Medi-Cal paid claims records available through
April 1, 1991. The products of these calculations for all eligible
hospitals shall be added together to determine an aggregate sum for
the 1991-92 transfer year.
(2) The eligible hospitals for 1991-92 involving transferor
entities as licensees shall be identified. For each hospital, the
applicable total per diem payment adjustment amount under Section
14105.98 for the 1991-92 transfer year shall be computed. This amount
shall be multiplied by 80 percent of the eligible hospital's
annualized Medi-Cal inpatient paid days as determined from all
Medi-Cal paid claims records available through April 1, 1991. The
products of these calculations for all eligible hospitals with
transferor entities as licensees shall be added together to determine
an aggregate sum for the 1991-92 transfer year.
(3) The aggregate sum determined under paragraph (1) shall be
divided by the aggregate sum determined under paragraph (2), yielding
a factor to be utilized in paragraph (4).
(4) The factor determined in paragraph (3) shall be multiplied by
the amount determined for each hospital under paragraph (2). The
product of this calculation for each hospital in paragraph (2) shall
be divided by 1.771, yielding a transfer amount for the particular
transferor entity for the transfer year.
(g) For the 1991-92 transfer year, the department shall notify
each transferor entity in writing of its applicable transfer amount
or amounts.
(h) For the 1992-93 transfer year and subsequent transfer years,
transfer amounts shall be determined in the same procedural manner as
set forth in subdivision (f), except:
(1) The department shall use all of the following:
(A) The disproportionate share list applicable to the particular
transfer year to determine the eligible hospitals.
(B) The payment adjustment amounts calculated under Section
14105.98 for the particular transfer year. These amounts shall take
into account any projected or actual increases or decreases in the
size of the payment adjustment program as are required under Section
14105.98 for the particular year in question, including any decreases
resulting from the application of the OBRA 1993 payment limitation.
The department may issue interim, revised, and supplemental transfer
requests as necessary and appropriate to address changes in payment
adjustment levels that occur under Section 14105.98. All transfer
requests, or adjustments thereto, issued to transferor entities by
the department shall meet the requirements set forth in subdivision
(i).
(C) Data regarding annualized Medi-Cal inpatient paid days for the
most recent calendar year ending prior to the beginning of the
particular transfer year, as determined from all Medi-Cal paid claims
records available through April 1 preceding the particular transfer
year.
(D) The status of public entities as licensees of eligible
hospitals as of July 1 of the particular transfer year.
(E) For the 1993-94 transfer year and subsequent transfer years,
the divisor to be used for purposes of the calculation referred to in
paragraph (4) of subdivision (f) shall be determined by the
department. The divisor shall be calculated to ensure that the
appropriate amount of transfers from transferor entities are received
into the fund to satisfy the requirements of Section 14105.98,
exclusive of the amounts described in paragraph (2) of this
subdivision, and to satisfy the requirements of paragraph (2) of
subdivision (d), for the particular transfer year. For the 1993-94
transfer year, the divisor shall be 1.742.
(F) The following provisions shall apply for certain transfer
amounts relating to nonsupplemental payments under Section 14105.98:
(i) For the 1998-99 transfer year, transfer amounts shall be
determined as though the payment adjustment amounts arising pursuant
to subdivision (ag) of Section 14105.98 were increased by the amounts
paid or payable pursuant to subdivision (af) of Section 14105.98.
(ii) Any transfer amounts paid by a transferor entity pursuant to
subparagraph (C) of paragraph (2) shall serve as credit for the
particular transferor entity against an equal amount of its transfer
obligation for the 1998-99 transfer year.
(iii) For the 1999-2000 transfer year, transfer amounts shall be
determined as though the amount to be transferred to the Health Care
Deposit Fund, as referred to in paragraph (2) of subdivision (d),
were reduced by 28 percent.
(2) (A) Except as provided in subparagraphs (B), (C), and (D), for
the 1993-94 transfer year and subsequent transfer years, transfer
amounts shall be increased for the particular transfer year in the
amounts necessary to fund the nonfederal share of the total
supplemental payment adjustment amounts of all types that arise under
Section 14105.98. These increases shall be paid only by those
transferor entities that are licensees of hospitals that are
projected to receive some or all of the particular supplemental
payments, and the increases shall be paid by the transferor entities
on a pro rata basis in connection with the particular supplemental
payments. For purposes of this paragraph, supplemental payment
adjustment amounts shall be deemed to arise for the particular
transfer year as of the date specified in Section 14105.98. Transfer
amounts to fund the nonfederal share of the payments shall be paid
for the particular transfer year within 20 days after the department
notifies the transferor entity in writing of the additional transfer
amount to be paid.
(B) For the 1995-96 transfer year, the nonfederal share of the
secondary supplemental payment adjustments described in paragraph (9)
of subdivision (y) of Section 14105.98 shall be funded as follows:
(i) Ninety-nine percent of the nonfederal share shall be funded by
a transfer from the University of California.
(ii) One percent of the nonfederal share shall be funded by
transfers from those public entities that are the licensees of the
hospitals included in the "other public hospitals" group referred to
in clauses (ii) and (iii) of subparagraph (B) of paragraph (9) of
subdivision (y) of Section 14105.98. The transfer responsibilities
for this 1 percent shall be allocated to the particular public
entities on a pro rata basis, based on a formula or formulae
customarily used by the department for allocating transfer amounts
under this section. The formula or formulae shall take into account,
through reallocation of transfer amounts as appropriate, the
situation of hospitals whose secondary supplemental payment
adjustments are restricted due to the application of the limitation
set forth in clause (v) of subparagraph (B) of paragraph (9) of
subdivision (y) of Section 14105.98.
(iii) All transfer amounts under this subparagraph shall be paid
by the particular transferor entities within 30 days after the
department notifies the transferor entity in writing of the transfer
amount to be paid.
(C) For the 1997-98 transfer year, transfer amounts to fund the
nonfederal share of the supplemental payment adjustments described in
subdivision (af) of Section 14105.98 shall be funded by a transfer
from the County of Los Angeles.
(D) (i) For the 1998-99 transfer year, transfer amounts to fund
the nonfederal share of the supplemental payment adjustment amounts
arising under subdivision (ah) of Section 14105.98 shall be increased
as set forth in clause (ii).
(ii) The transfer amounts otherwise calculated to fund the
supplemental payment adjustments referred to in clause (i) shall be
increased on a pro rata basis by an amount equal to 28 percent of the
amount to be transferred to the Health Care Deposit Fund for the
1999-2000 fiscal year, as referred to in paragraph (2) of subdivision
(d).
(3) The department shall prepare preliminary analyses and
calculations regarding potential transfer amounts, and potential
transferor entities shall be notified by the department of estimated
transfer amounts as soon as reasonably feasible regarding any
particular transfer year. Written notices of transfer amounts shall
be issued by the department as soon as possible with respect to each
transfer year. All state agencies shall take all necessary steps in
order to supply applicable data to the department to accomplish these
tasks. The Office of Statewide Health Planning and Development shall
provide to the department quarterly access to the edited and
unedited confidential patient discharge data files for all Medi-Cal
eligible patients. The department shall maintain the confidentiality
of that data to the same extent as is required of the Office of
Statewide Health Planning and Development. In addition, the Office of
Statewide Health Planning and Development shall provide to the
department, not later than March 1 of each year, the data specified
by the department, as the data existed on the statewide database file
as of February 1 of each year, from all of the following:
(A) Hospital annual disclosure reports, filed with the Office of
Statewide Health Planning and Development pursuant to former Section
443.31 of, or Section 128735 of, the Health and Safety Code, for
hospital fiscal years that ended during the calendar year ending 13
months prior to the applicable February 1.
(B) Annual reports of hospitals, filed with the Office of
Statewide Health Planning and Development pursuant to former Section
439.2 of, or Section 127285 of, the Health and Safety Code, for the
calendar year ending 13 months prior to the applicable February 1.
(C) Hospital patient discharge data reports, filed with the Office
of Statewide Health Planning and Development pursuant to former
subdivision (g) of Section 443.31 of, or Section 128735 of, the
Health and Safety Code, for the calendar year ending 13 months prior
to the applicable February 1.
(D) Any other materials on file with the Office of Statewide
Health Planning and Development.
(4) Transfer amounts calculated by the department may be increased
or decreased by a percentage amount consistent with the Medi-Cal
state plan.
(5) For the 1993-94 fiscal year, the transfer amount that would
otherwise be required from the University of California shall be
increased by fifteen million dollars ($15,000,000).
(6) Notwithstanding any other law, except for subparagraph (D) of
paragraph (2), the total amount of transfers required from the
transferor entities for any particular transfer year shall not exceed
the sum of the following:
(A) The amount needed to fund the nonfederal share of all payment
adjustment amounts applicable to the particular payment adjustment
year as calculated under Section 14105.98. Included in the
calculations for this purpose shall be any decreases in the program
as a whole, and for individual hospitals, that arise due to the
provisions of Section 1396r-4(f) or (g) of Title 42 of the United
States Code.
(B) The amount needed to fund the transfers to the Health Care
Deposit Fund, as referred to in subdivision (d).
(7) (A) Except as provided in subparagraphs (B) and (C) and in
paragraph (2) of subdivision (j), and except for a prudent reserve
not to exceed two million dollars ($2,000,000) in the Medi-Cal
Inpatient Payment Adjustment Fund, any amounts in the fund, including
interest that accrues with respect to the amounts in the fund, that
are not expended, or estimated to be required for expenditure, under
Section 14105.98 with respect to a particular transfer year shall be
returned on a pro rata basis to the transferor entities for the
particular transfer year within 120 days after the department
determines that the funds are not needed for an expenditure in
connection with the particular transfer year.
(B) The department shall determine the interest amounts that have
accrued in the fund from its inception through June 30, 1995, and, no
later than January 1, 1996, shall distribute these interest amounts
to transferor entities:
(C) With respect to those particular amounts in the fund resulting
solely from the provisions of subparagraph (D) of paragraph (2), the
department shall determine by September 30, 1999, whether these
particular amounts exceed 28 percent of the amount to be transferred
to the Health Care Deposit Fund for the 1999-2000 fiscal year, as
referred to in paragraph (2) of subdivision (d). Any excess amount so
determined shall be returned to the particular transferor entities
on a pro rata basis no later than October 31, 1999.
(D) Regarding any funds returned to a transferor entity under
subparagraph (A) or (C), or interest amounts distributed to a
transferor entity under subparagraph (B), the department shall
provide to the transferor entity a written statement that explains
the basis for the particular return or distribution of funds and
contains the general calculations used by the department in
determining the amount of the particular return or distribution of
funds.
(i) (1) For the 1991-92 transfer year, each transferor entity
shall pay its transfer amount or amounts to the Controller, for
deposit in the fund, in eight equal installments.
(2) (A) Except as provided in subparagraphs (B) and (C), for the
1992-93 transfer year and subsequent transfer years, each transferor
entity shall pay its transfer amount or amounts to the Controller,
for deposit in the fund, in eight equal installments. However, for
the 1997-98 and subsequent transfer years, each transferor entity
shall pay its transfer amount or amounts to the Controller, for
deposit in the fund, in the form of periodic installments according
to a timetable established by the department. The timetable shall be
structured to effectuate, on a reasonable basis, the prompt
distribution of all nonsupplemental payment adjustments under Section
14105.98, and transfers to the Health Care Deposit Fund under
subdivision (d).
(B) For the 1994-95 transfer year, each transferor entity shall
pay its transfer amount or amounts to the Controller, for deposit in
the fund, in five equal installments.
(C) For the 1995-96 transfer year, each transferor entity shall
pay its transfer amount or amounts to the Controller, for deposit in
the fund, in five equal installments.
(D) Except as otherwise specifically provided, subparagraphs (A)
to (C), inclusive, shall not apply to increases in transfer amounts
described in paragraph (2) of subdivision (h) or to additional
transfer amounts described in subdivision (o).
(E) All requests for transfer payments, or adjustments thereto,
issued by the department shall be in writing and shall include (i) an
explanation of the basis for the particular transfer request or
transfer activity, (ii) a summary description of program funding
status for the particular transfer year, and (iii) the general
calculations used by the department in connection with the particular
transfer request or transfer activity.
(3) A transferor entity may use any of the following funds for
purposes of meeting its transfer obligations under this section:
(A) General funds of the transferor entity.
(B) Any other funds permitted by law to be used for these
purposes, except that a transferor entity shall not submit to the
Controller any federal funds unless those federal funds are
authorized by federal law to be used to match other federal funds. In
addition, no private donated funds from any health care provider, or
from any person or organization affiliated with the health care
provider, shall be channeled through a transferor entity or any other
public entity to the fund, unless the donated funds will qualify
under federal rules as a valid component of the nonfederal share of
the Medi-Cal program and will be matched by federal funds. The
transferor entity shall be responsible for determining that funds
transferred meet the requirements of this subparagraph.
(j) (1) If a transferor entity does not submit any transfer amount
within the time period specified in this section, the Controller
shall offset immediately the amount owed against any funds which
otherwise would be payable by the state to the transferor entity. The
Controller, however, shall not impose an offset against any
particular funds payable to the transferor entity where the offset
would violate state or federal law.
(2) Where a withhold or a recoupment occurs pursuant to the
provisions of paragraph (2) of subdivision (r) of Section 14105.98,
the nonfederal portion of the amount in question shall remain in the
fund, or shall be redeposited in the fund by the department, as
applicable. The department shall then proceed as follows:
(A) If the withhold or recoupment was imposed with respect to a
hospital whose licensee was a transferor entity for the particular
state fiscal year to which the withhold or recoupment related, the
nonfederal portion of the amount withheld or recouped shall serve as
a credit for the particular transferor entity against an equal amount
of transfer obligations under this section, to be applied whenever
the transfer obligations next arise. Should no such transfer
obligation arise within 180 days, the department shall return the
funds in question to the particular transferor entity within 30 days
thereafter.
(B) For other situations, the withheld or recouped nonfederal
portion shall be subject to paragraph (7) of subdivision (h).
(k) All transfer amounts received by the Controller or amounts
offset by the Controller shall immediately be deposited in the fund.
( l ) For purposes of this section, the
disproportionate share list utilized by the department for a
particular transfer year shall be identical to the disproportionate
share list utilized by the department for the same state fiscal year
for purposes of Section 14105.98. Nothing on a disproportionate share
list, once issued by the department, shall be modified for any
reason other than mathematical or typographical errors or omissions
on the part of the department or the Office of Statewide Health
Planning and Development in preparation of the list.
(m) Neither the intergovernmental transfers required by this
section, nor any elective transfer made pursuant to Section 14164 or
Article 5.17 (commencing with Section 14165.55), shall create, lead
to, or expand the health care funding or service obligations for
current or future years for any transferor entity, except as required
of the state by this section or as may be required by federal law,
in which case the state shall be held harmless by the transferor
entities on a pro rata basis.
(n) Except as
otherwise permitted by state and federal law, no transfer amount
submitted to the Controller under this section, and no offset by the
Controller pursuant to subdivision (j), shall be claimed or
recognized as an allowable element of cost in Medi-Cal cost reports
submitted to the department.
(o) Whenever additional transfer amounts are required to fund the
nonfederal share of payment adjustment amounts under Section 14105.98
that are distributed after the close of the particular payment
adjustment year to which the payment adjustment amounts apply, the
additional transfer amounts shall be paid by the parties who were the
transferor entities for the particular transfer year that was
concurrent with the particular payment adjustment year. The
additional transfer amounts shall be calculated under the formula
that was in effect during the particular transfer year. For transfer
years prior to the 1993-94 transfer year, the percentage of the
additional transfer amounts available for transfer to the Health Care
Deposit Fund under subdivision (d) shall be the percentage that was
in effect during the particular transfer year. These additional
transfer amounts shall be paid by transferor entities within 20 days
after the department notifies the transferor entity in writing of the
additional transfer amount to be paid.
(p) (1) Ten million dollars ($10,000,000) of the amount
transferred from the Medi-Cal Inpatient Payment Adjustment Fund to
the Health Care Deposit Fund due to amounts transferred attributable
to years prior to the 1993-94 fiscal year is hereby appropriated
without regard to fiscal years to the State Department of Health Care
Services to be used to support the development of managed care
programs under the department's plan to expand Medi-Cal managed care.
(2) These funds shall be used by the department for both of the
following purposes: (A) distributions to counties or other local
entities that contract with the department to receive those funds to
offset a portion of the costs of forming the local initiative entity
and (B) distributions to local initiative entities that contract with
the department to receive those funds to offset a portion of the
costs of developing the local initiative health delivery system in
accordance with the department's plan to expand Medi-Cal managed
care.
(3) Entities contracting with the department for any portion of
the ten million dollars ($10,000,000) shall meet the objectives of
the department's plan to expand Medi-Cal managed care with regard to
traditional and safety net providers.
(4) Entities contracting with the department for any portion of
the ten million dollars ($10,000,000) may be authorized under those
contracts to utilize their funds to provide for reimbursement of the
costs of local organizations and entities incurred in participating
in the development and operation of a local initiative.
(5) To the full extent permitted by state and federal law, these
funds shall be distributed by the department for expenditure at the
local level in a manner that qualifies for federal financial
participation under the Medicaid Program.
(q) (1) Any local initiative entity that has performed
unanticipated additional work for the purposes identified in
subparagraph (B) of paragraph (2) of subdivision (p) resulting in
additional costs attributable to the development of its local
initiative health delivery system, may file a claim for reimbursement
with the department for the additional costs incurred due to delays
in start dates through the 1996-97 fiscal year. The claim shall be
filed by the local initiative entity not later than 90 days after the
effective date of the act adding this subdivision, and shall not
seek extra compensation for any sum that is or could have been
asserted pursuant to the contract disputes and appeals resolution
provisions of the local initiative entity's respective two-plan model
contract. All claims for unanticipated additional incurred costs
shall be submitted with adequate supporting documentation including,
but not limited to, all of the following:
(A) Invoices, receipts, job descriptions, payroll records, work
plans, and other materials that identify the unanticipated additional
claimed and incurred costs.
(B) Documents reflecting mitigation of costs.
(C) To the extent lost profits are included in the claim,
documentation identifying those profits and the manner of
calculation.
(D) Documents reflecting the anticipated start date, the actual
start date, and reasons for the delay between the dates, if any.
(2) In determining any amount to be paid, the department shall do
all of the following:
(A) Conduct a fiscal analysis of the local initiative entity's
claimed costs.
(B) Determine the appropriate amount of payment, after taking into
consideration the supporting documentation and the results of any
audit.
(C) Provide funding for any such payment, as approved by the
Department of Finance through the deficiency process.
(D) Complete the determination required in subparagraph (B) within
six months after receipt of a local initiative entity's completed
claim and supporting documentation. Prior to final determination,
there shall be a review and comment period for that local initiative
entity.
(E) Make reasonable efforts to obtain federal financial
participation. In the event federal financial participation is not
allowed for this payment, the state's payment shall be 50 percent of
the total amount determined to be payable.
(r) Notwithstanding any other law, the Controller may use the
moneys in the Medi-Cal Inpatient Payment Adjustment Fund for loans to
the General Fund as provided in Sections 16310 and 16381 of the
Government Code. However, interest shall be paid on all moneys loaned
to the General Fund from the Medi-Cal Inpatient Payment Adjustment
Fund. Interest payable shall be computed at a rate determined by the
Pooled Money Investment Board to be the current earning rate of the
fund from which loaned. This subdivision does not authorize any
transfer that will interfere with the carrying out of the object for
which the Medi-Cal Inpatient Payment Adjustment Fund was created.
SEC. 2. Article 5.17 (commencing with Section 14165.55) is added
to Chapter 7 of Part 3 of Division 9 of the Welfare and Institutions
Code, to read:
Article 5.17. Nondesignated Public Hospital Medi-Cal Rate
Stabilization Act
14165.55. For the purposes of this article, the following
definitions shall apply:
(a) "Bad debt charges" means deductions from revenue for bad debt.
(b) "Charity care charges" means deductions from revenue for
charity care.
(c) "Contract Hospital" means a nondesignated public hospital,
which has a Medi-Cal fee-for-service contract negotiated by the
California Medical Assistance Commission in effect as of December 31
of the applicable state fiscal year.
(d) "Contract Hospital allocation" means the portion of the
Nondesignated Public Hospital IGT Pool that is allocated to and
transferred to the state by the transferring entity on behalf of the
contract hospitals.
(e) "Converted hospital" means a private hospital that becomes a
designated public hospital or a nondesignated public hospital on or
after July 1 of any state fiscal year, a nondesignated public
hospital that becomes a private hospital or a designated public
hospital on or after July 1 of any state fiscal year, or a designated
public hospital that becomes a private hospital or a nondesignated
public hospital on or after July 1 of any state fiscal year. A
hospital shall be considered a converted hospital only for the fiscal
year during which it became a converted hospital.
(f) "Intergovernmental transfer (IGT)" means the transfer of
public funds by the public entity to the state in accordance with the
requirements of this section.
(g) "Intergovernmental transfer allocation" or "IGT allocation"
means the amount of the Nondesignated Public Hospital IGT Pool
allocated to a nondesignated public hospital for a state fiscal year.
Each transferring entity may agree to transfer its IGT allocation to
the state in order to participate in the Nondesignated Public
Hospital Intergovernmental Transfer Program in accordance with this
section and Section 14164.
(h) "Intergovernmental transfer formula group" or "IGT formula
group" means any of the following groups:
(1) Contract Hospitals that have an IGT Formula Score of between
seven and nine, inclusive.
(2) Contract Hospitals that have an IGT Formula Score of between
four and six, inclusive.
(3) Contract Hospitals that have an IGT Formula Score of between
one and three, inclusive.
(4) Non-Contract Hospitals that have an IGT Formula Score of
between seven and nine, inclusive.
(5) Non-Contract Hospitals that have an IGT Formula Score of
between four and six, inclusive.
(6) Non-Contract Hospitals that have an IGT Formula Score of
between one and three, inclusive.
(i) "New nondesignated hospital" means a hospital that was not in
operation under current or prior ownership as a nondesignated public
hospital for any portion of the calendar year prior to July 1 of any
state fiscal year. A hospital shall be considered a new hospital only
for the fiscal year during which it began operating.
(j) "Non-Contract Hospital" means a nondesignated public hospital,
which does not have a Medi-Cal fee-for-service contract negotiated
by the California Medical Assistance Commission in effect as of
December 31 of the applicable state fiscal year.
(k) "Non-Contract Hospital allocation" means the portion of the
Nondesignated Public Hospital IGT Pool that is allocated to and
transferred to the state by the transferring entity on behalf of the
Non-Contract Hospitals.
(l) "Nondesignated public hospital" means either of the following:
(1) A public hospital that is licensed under subdivision (a) of
Section 1250 of the Health and Safety Code, is not designated as a
specialty hospital in the hospital's latest annual Office of
Statewide Health Planning and Development (OSHPD) financial
disclosure report for the hospital, and satisfies the definition in
paragraph (25) of subdivision (a) of Section 14105.98, excluding
designated public hospitals, as described in subdivision (d) of
Section 14166.1 as that section may be amended from time to time.
(2) A tax-exempt nonprofit hospital that is licensed under
subdivision (a) of Section 1250 of the Health and Safety Code, is not
designated as a specialty hospital in the hospital's latest annual
OSHPD financial disclosure report, is a hospital operated, owned, or
both by a local health care district, and is affiliated with the
health care district hospital owner by means of the district's status
as the nonprofit corporation's sole corporate member.
(m) "Nondesignated Public Hospital Intergovernmental Transfer Pool"
or "Nondesignated Public Hospital IGT Pool" means the pool of funds
that will be utilized as the state's share of the aggregate payments
funded by the transferring entity's intergovernmental transfers for a
state fiscal year. This amount shall be calculated based on the room
under the federal Upper Payment Limit (UPL) in the category of
Non-State Government Owned Hospitals (Inpatient) which the department
has determined is both attributable to the nondesignated public
hospitals and available for the purposes of this article as
determined by the department pursuant to Section 14165.56.
(n) "Public entity" means the transferring entity, which may be a
city, county, special purpose district, or other governmental unit in
the state, regardless of whether the unit of government is also a
health care provider, except as prohibited by federal law.
(o) "Transferring entity" means a public entity that transfers
public funds to the state in accordance with subdivision (f) of
Section 14165.57 and is a public entity as defined in subdivision
(n).
(p) "Upper payment limit" or "UPL" means the federal upper payment
limit category as defined in Sections 447.272 and 447.321 of Title
42 of the Code of Federal Regulations for the amount of the Medicaid
payments for which federal financial participation is available for a
class of service and a class of health care providers.
14165.56. (a) The department shall establish, implement, and
maintain the Nondesignated Public Hospital Intergovernmental Transfer
Program to provide supplemental payments to nondesignated public
hospitals in a manner that maximizes federal financial participation
in the resulting supplemental payments. The department shall develop
and implement the program subject to receiving all federal approvals.
(b) Upon receiving federal approval, the department shall fully
implement this section beginning with the 2010-11 fiscal year. The
department shall perform all acts necessary to secure the maximum
level of federal financial participation for payments resulting from
the Nondesignated Public Hospital IGT Pool. The department shall make
every effort to implement this section for the 2010-11 fiscal year
so that all allocations will be determined, all intergovernmental
transfers will be received by the state, and federal financial
participation will be drawn in order for the department to make
payments due to each nondesignated public hospital prior to July 1,
2011.
(c) By August 1 of each fiscal year, beginning with the 2011-12
fiscal year and every year thereafter, the department shall provide
an estimate of the Non-State Government Owned Hospital (Inpatient)
UPL associated with the inpatient fee-for-service payments to
nondesignated public hospitals in order to establish both the UPL and
the available room in the UPL. The department may make supplemental
inpatient fee-for-service payments to nondesignated public hospitals
using some or all of the shortfall level below the UPL. The amount
identified by the department as available for those payments shall be
multiplied by 100 percent minus the annual federal matching
assistance percentage, as defined in Part 433 of Title 42 of the Code
of Federal Regulations and shall be the amount available in the
Nondesignated Public Hospital Intergovernmental Transfer Pool. The
payments made pursuant to this article may be funded using public
entity intergovernmental transfers and associated federal financial
participation.
(d) Once the department has estimated the UPL and the potential
supplemental payment relating to nondesignated public hospitals, the
department shall use the IGT allocation formula described in Section
14165.57 to determine the estimated IGT allocation for each
nondesignated public hospital from the Nondesignated Public Hospital
IGT Pool using the most recent data publicly available from the
federal Centers for Medicare and Medicaid Services (CMS), and the
federal Health Resources and Services Administration (HRSA).
14165.57. (a) The IGT allocation formula shall use data from each
nondesignated public hospital's latest Hospital Annual Financial
Disclosure Report on file with OSHPD as of March 1 of each prior
fiscal year and shall be as follows:
(1) The Nondesignated Public Hospital IGT Pool shall be allocated
into two allocations: the Contract Hospitals allocation and the
Non-Contract Hospitals allocation. This allocation shall be made to
each group, respectively, based upon the ratio of Medi-Cal
fee-for-service acute patient days listed in the latest OSHPD Annual
Financial Disclosure Report for Contract Hospitals and Non-Contract
Hospitals to the total Medi-Cal fee-for-service acute patient days
provided by all Contract Hospitals and Non-Contract Hospitals.
Medi-Cal fee-for-service acute patient days for converted hospitals
and new hospitals will not be included in this allocation.
(2) The department shall determine if a nondesignated public
hospital provides services in either a federally recognized Health
Professional Shortage Area or to a federally recognized Medically
Underserved Area or Population. The department shall also determine
if the nondesignated public hospital is federally recognized as
either a Critical Access Hospital or a Sole Community Provider. If
any of these conditions apply, the hospital shall score one point.
Otherwise, the hospital shall score zero points.
(3) The department shall calculate for each nondesignated public
hospital the charity care charges as a percentage of the hospital's
total gross revenue. If the charity care charges are greater than or
equal to 3 percent of the total gross revenue, the hospital shall
score three points. If the charity care charges are less than 3
percent, but more than or equal to 1 percent, of the total gross
revenue, the hospital shall score two points. If the charity care
charges are less than 1 percent, but greater than 0 percent, of the
total gross revenue, the hospital shall score one point. If charity
care charges are less than or equal to 0 percent, of the total gross
revenue, the hospital shall score zero points.
(4) The department shall calculate for each nondesignated public
hospital the bad debt charges as a percentage of the hospital's other
payer's gross revenue, as disclosed in the Hospital Annual Financial
Disclosure Report. If the bad debt charges are greater than or equal
to 40 percent of the other gross revenue, the hospital shall score
two points. If the bad debt charges are less than 40 percent, but
greater than 0 percent, of the other gross revenue, the hospital
shall score one point. If the bad debt charges are less than or equal
to 0 percent, of the other gross revenue, the hospital shall score
zero points.
(5) The department shall calculate for each nondesignated public
hospital the Medi-Cal charges as a percentage of the hospital's total
gross revenue. If the Medi-Cal charges are greater than or equal to
25 percent of the total gross revenue, the hospital shall score three
points. If the Medi-Cal charges are less than 25 percent, but more
than or equal to 12 percent, of the total gross revenue, the hospital
shall score two points. If the Medi-Cal charges are less than 12
percent, but greater than 0 percent, of the total gross revenue, the
hospital shall score one point. If the Medi-Cal charges are less than
or equal to 0 percent of total gross revenue, the hospital shall
score zero points.
(6) The sum of each nondesignated public hospital's points
accumulated pursuant to paragraphs (2) to (5), inclusive, shall
constitute the hospital's IGT Formula Score. The IGT Formula Score
for a new hospital or a converted hospital shall be equal to zero.
(7) The Contract Hospital allocation shall be allocated among
Contract Hospitals and the Non-Contract Hospital allocation shall be
allocated among Non-Contract Hospitals to determine preliminary
allocations in accordance with the following:
(A) Each Contract Hospital that has an IGT Formula Score of
between seven and nine, inclusive, shall be allocated three times the
amount of the Contract Hospital allocation that is allocated to each
Contract Hospital that has a score of one to three, inclusive.
(B) Each Contract Hospital that has an IGT Formula Score of
between four and six, inclusive, shall be allocated two times the
amount of the Contract Hospital allocation that is allocated to each
Contract Hospital that has an IGT Formula Score of one to three,
inclusive.
(C) Each Non-Contract Hospital that has an IGT Formula Score of
between seven and nine, inclusive, shall be allocated three times the
amount of the Non-Contract Hospital allocation that is allocated to
each Non-Contract Hospital that has an IGT Formula Score of one to
three, inclusive.
(D) Each Non-Contract Hospital that has an IGT Formula Score of
between four and six, inclusive, shall be allocated two times the
amount of the Non-Contract Hospital allocation that is allocated to
each Non-Contract Hospital that has an IGT Formula Score of one to
three, inclusive.
(E) No amount shall be allocated to a nondesignated public
hospital with an IGT Formula Score of zero points.
(8) The sum of the preliminary allocation determined under
paragraph (7) for all hospitals within each IGT Formula Group shall
be reallocated among the hospitals within each IGT Formula Group
based on the ratio of each hospital's staffed acute beds listed in
the latest OSHPD Annual Financial Disclosure Report, to the total
staffed acute beds of all hospitals in the IGT Formula Group.
(b) By no later than September 1 of the 2011-12 fiscal year or as
soon thereafter as federal approvals are obtained, and by no later
than September 1 of each fiscal year thereafter, the department shall
provide each nondesignated public hospital with an estimated IGT
allocation notice that includes the calculations and data sources
used to calculate the estimated IGT allocation, as described in this
section.
(c) Each nondesignated public hospital shall have 30 days from
receipt of the estimated IGT allocation notice from the department to
review the department's hospital-specific estimated IGT allocation
and to notify the department of any data or calculation errors. If
the hospital does not respond within 30 days, the information will be
deemed accurate. No later than November 30 of each fiscal year, the
department shall incorporate all appropriate corrections or data
updates for all of the nondesignated public hospitals and then
recalculate the IGT allocations using the IGT allocation formula to
obtain a final IGT allocation for each nondesignated public hospital.
(d) Beginning with the 2011-12 fiscal year, on or before December
1 or as soon thereafter as federal approvals are obtained, and by no
later than December 1 of each fiscal year thereafter, the department
shall send each nondesignated public hospital a notice of eligibility
indicating the final IGT allocation for the nondesignated public
hospital. The nondesignated public hospital shall have 20 business
days after receipt of the notice to either accept or decline the
offer. If a nondesignated public hospital accepts the offer, the
nondesignated public hospital may enter into an IGT agreement with
the department. If the department receives no response, the offer
will be considered declined.
(e) Before the later of December 31 of the 2011-12 fiscal year,
the date upon which all federal approvals are obtained, and by no
later than January 15 of each state fiscal year thereafter, the
department shall document all nondesignated public hospital IGT
allocation offers that are either accepted or declined. After the
department has recorded all IGT allocations as being either accepted
or declined, any remaining unsubscribed IGT allocations will be
allocated to all the other participating nondesignated public
hospitals on a pro rata basis based on the final IGT allocations
calculated pursuant to subdivision (b) during January of each fiscal
year. The department shall inform each nondesignated public hospital
participating in the program of the revised final IGT allocation
assigned to that hospital by January 30. At that time, the department
shall give each nondesignated public hospital participant five days
to accept or decline participation in the program.
(f) The state may accept all public funds in the amount of the
final IGT allocation from a transferring entity pursuant to this
section, provided that any funds from a transferring entity must be
permitted by law to be used for these purposes. The transferring
entity shall certify to the department that the funds it proposes to
transfer satisfy the requirements of this subdivision, and are in
compliance with all federal rules and regulations.
(g) The state shall deposit the funds received from the
transferring entities pursuant to this article into the Medi-Cal
Inpatient Payment Adjustment Fund established in accordance with
Section 14163.
(h) Nondesignated public hospital participating in the program
shall inform the public entity funding the IGT to transfer the
appropriate IGT allocation, by February 5 of each fiscal year, to the
state according to the time schedule specified in the written
agreement specified in subdivision (d). By March 31 of each fiscal
year, the department shall make the supplemental payment to the
nondesignated public hospital including the associated federal
financial participation. The deadlines set forth in this subdivision
shall be implemented beginning with the 2011-12 fiscal year or as
soon thereafter as federal approvals are obtained.
(i) The department shall establish written policies and procedures
for transferring entity intergovernmental transfers and payments
made to nondesignated public hospitals pursuant to this section. The
department shall effectively communicate these policies and
procedures to nondesignated public hospitals and the public entities
that will be funding the IGTs in order to facilitate a smooth process
using local public entity moneys for purposes of drawing down
federal financial participation for supplemental payments to
nondesignated public hospitals.
(j) The state shall retain 9 percent of each IGT amount to
reimburse the department, or transfer to the General Fund, for the
administrative costs of operating the Nondesignated Public Hospital
Intergovernmental Transfer Program and for the benefit of Medi-Cal
children's health care programs.
(k) Participation in the intergovernmental transfers under this
article is voluntary on the part of the transferring entities for the
purpose of all applicable federal laws.
(l) (1) The department shall report annually to the Legislature on
the Nondesignated Public Hospital Intergovernmental Transfer
Program. This report shall include, but not be limited to, the amount
of funds available within the UPL, the total amount of IGT
allocation funds transferred by public entities, the total amount of
federal financial participation received by nondesignated public
hospitals, and information on the effectiveness of the IGT allocation
formula to distribute available federal matching funds among
participating nondesignated public hospitals.
(2) The requirement for submitting a report to the Legislature on
the Nondesignated Public Hospital Intergovernmental Transfer Program
imposed under paragraph (1) is inoperative four years after the date
the first report is due.
(3) A report to be submitted pursuant to paragraph (1) shall be
submitted in compliance with Section 9795 of the Government Code.
(m) Notwithstanding Chapter 3.5 (commencing with Section 11340) of
Part 1 of Division 3 of Title 2 of the Government Code, the
department shall implement this article by means of policy letters or
similar instructions, without taking further regulatory action.
SEC. 3. There is hereby appropriated to the State Department of
Health Care Services the following sums for the purposes specified in
subdivisions (b) and (c) of Section 14168.33 of the Welfare and
Institutions Code to be available for expenditure until January 1,
2014:
(a) The sum of one billion five hundred million dollars
($1,500,000,000) from the Hospital Quality Assurance Revenue Fund.
(b) The sum of one billion five hundred million dollars
($1,500,000,000) from the Federal Trust Fund.
SEC. 4. This act shall become operative only if Senate Bill 90 of
the 2011-12 Regular Session of the Legislature is enacted and becomes
effective.
SEC. 5. This act is an urgency statute necessary for the immediate
preservation of the public peace, health, or safety within the
meaning of Article IV of the Constitution and shall go into immediate
effect. The facts constituting the necessity are:
In order to make the necessary statutory changes to increase
Medi-Cal payments to hospitals and improve access at the earliest
possible time, so as to allow this act to be operative as soon as
approval from the federal Centers for Medicare and Medicaid Services
is obtained by the State Department of Health Care Services, it is
necessary that this act take effect immediately.