BILL NUMBER: AB 1489	AMENDED
	BILL TEXT

	AMENDED IN SENATE  AUGUST 31, 2012
	AMENDED IN SENATE  AUGUST 22, 2012

INTRODUCED BY   Committee on Budget (Blumenfield (Chair), Alejo,
Bonilla, Brownley, Buchanan, Butler, Cedillo, Chesbro, Dickinson,
Feuer, Gordon, Huffman, Mitchell, Monning, and Swanson)

                        JANUARY 10, 2012

    An act to amend Sections 5092, 5093, and 5094.6 of, and
to repeal Sections 3628 and 5094.5 of, the Business and Professions
Code, to repeal Section 11535 of, and to repeal Article 3 (commencing
with Section 11675) of Chapter 6 of Part 1 of Division 3 of Title 2
of, the Government Code, to amend Section 110552 of the Health and
Safety Code, to repeal Section 1872.1 of the Insurance Code, to
repeal Section 11062 of the Penal Code, and to amend Section 10605.2
of the Welfare and Institutions Code, relating to state government,
and making an appropriation therefor, to take effect immediately,
bill related to the budget.   An act to amend Sections
1324.23, 1324.27, 1324.29, and 1324.30 of the Health and Safety Code,
and to amend Sections 14126.022,   14126.027, 14126.033,
and 14126.036 of, and to add Section 14126.028 to, the Welfare and
Institutions Code, relating to public health, making an appropriation
therefor, and declaring the urgency thereof, to take effect
immediately. 



	LEGISLATIVE COUNSEL'S DIGEST


   AB 1489, as amended, Committee on Budget.  State boards
and commissions.   Public health: Medi-Cal: nursing
facilities.  
   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 charge will
cease to be assessed after July 31, 2013, and these provisions will
be repealed on January 1, 2014. 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, 2013, and
that these provisions shall be repealed on January 1, 2014. 

   This bill would modify the calculation of rates under the
above-referenced rate methodology, and would extend the assessment of
the charge, implementation of the rate methodology, and
implementation of related provisions until July 31, 2015. 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. This bill would also modify
the amount of moneys to be deposited into the Skilled Nursing
Facility Quality and Accountability Special Fund, by, among other
things, requiring that specified set-asides under the rate
methodology remain in the General Fund instead of transferring to the
Skilled Nursing Facility Quality and Accountability Special Fund and
increasing the amount of certain set-asides to be transferred to the
fund. This bill would instead require that the quality and
accountability payments be made beginning with the 2013-14 rate year.
 
   Existing federal Medicaid law requires nursing facilities, as
defined, to perform an assessment of each resident's functional
capacity that is based on a uniform minimum data set, as specified.
 
   This bill would require nursing facilities, the State Department
of Health Care Services, and the State Department of Public Health to
perform various duties with respect to the federal government's
nursing home quality initiative and this assessment.  
   This bill would declare that it is to take effect immediately as
an urgency statute.  
   (1) Existing law, the Naturopathic Doctors Act, provides for the
licensure and regulation of naturopathic doctors by the Naturopathic
Medicine Committee within the Osteopathic Medical Board of
California. Existing law also requires the committee to establish a
naturopathic childbirth attendance advisory subcommittee to issue
recommendations concerning the practice of naturopathic childbirth
attendance based upon a review of naturopathic medical education and
training, as specified.  
   This bill would repeal the provisions providing for the
establishment of this subcommittee.  
   (2) Existing law provides for the licensure and regulation of
accountants by the California Board of Accountancy. Existing law
requires an applicant for an accountancy license to complete a
minimum of 24 semester units in accounting subjects and a minimum of
24 semester units in business-related subjects. Existing law, on and
after January 1, 2014, requires an applicant for an accountancy
license to complete an additional 10 semester units or 15 quarter
units in ethics study and 20 units in accounting study. Existing law
establishes the Advisory Committee on Accounting Ethics Curriculum
within the jurisdiction of the board to, by January 1, 2012,
recommend guidelines for the ethics study requirement to the board.
 
   This bill would repeal the provisions establishing the Advisory
Committee on Accounting Ethics Curriculum and would make related
conforming and technical changes.  
   (3) Existing law establishes the Committee of Executive Salaries,
and requires the committee to study issues relating to executive
salaries in the private and public sector, and to report to the
Legislature on a biannual basis on its findings and recommended
changes.  
   This bill would repeal the provisions establishing the committee.
 
   (4) Existing law requires the State Department of Public Health to
regulate certain types of candy, as defined, and requires the
department to convene an interagency collaborative to serve as an
oversight committee for the implementation of those provisions and to
work with the department in establishing and revising the required
standards.  
   This bill would repeal those provisions establishing the
interagency collaborative and would make technical and conforming
changes.  
   (5) Existing law creates the Fraud Division within the Department
of Insurance to enforce specific provisions of law regarding crimes
against insured property and insurance fraud reporting. Existing law
creates the advisory committee on automobile insurance fraud and
economic automobile theft prevention within the division to recommend
ways to coordinate the investigation, prosecution, and prevention of
automobile insurance claims fraud, and to provide assistance to the
division towards implementing the goal of reducing the frequency and
severity of fraudulent automobile insurance claims, among other
things.  
   This bill would repeal the provisions establishing the advisory
committee.  
   (6) Existing law requires the Department of Justice to establish
and chair a task force known as the Crime Laboratory Review Task
Force to review and make recommendations as to how best to configure,
fund, and improve the delivery of state and local crime laboratory
services in the future and to report its findings to the Department
of Finance and specified legislative committees by July 1, 2009.
 
   This bill would repeal the provision establishing the task force.
 
   (7) This bill would make various technical and conforming changes.
 
   (8) This bill would appropriate $1,000 from the General Fund to
the Department of Finance for administrative costs related to this
bill.  
   This bill would declare that it is to take effect immediately as a
bill providing for appropriations related to the Budget Bill.

   Vote:  majority   2/3  . Appropriation:
yes. Fiscal committee: yes. State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

   SECTION 1.    Section 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,  2013.
  2015.  It is the intent of the Legislature that
the regulations adopted pursuant to subdivision (b) shall be adopted
on or before July 31,  2013.   2015. 
   SEC. 2.    Section 1324.27 of the   Health
and Safety Code   is amended to read: 
   1324.27.  (a) (1) The department shall request approval from the
federal Centers for Medicare and Medicaid Services for the
implementation of this article. In making this request, the
department shall seek specific approval from the federal Centers for
Medicare and Medicaid Services to exempt facilities identified in
subdivision (c) of Section 1324.20, including the submission of a
request for waiver of broad-based requirement, waiver of uniform fee
requirement, or both, pursuant to paragraphs (1) and (2) of
subdivision (e) of Section 433.68 of Title 42 of the Code of Federal
Regulations.
   (2) The director may alter the methodology specified in this
article, to the extent necessary to meet the requirements of federal
law or regulations or to obtain federal approval. The Director of
Health  Care  Services may also add new categories of exempt
facilities or apply a nonuniform fee to the skilled nursing
facilities subject to the fee in order to meet requirements of
federal law or regulations. The Director of Health  Care 
Services may apply a zero fee to one or more exempt categories of
facilities, if necessary to obtain federal approval.
   (3) If after seeking federal approval, federal approval is not
obtained, this article shall not be implemented.
   (b) The department shall make retrospective adjustments, as
necessary, to the amounts calculated pursuant to Section 1324.21 in
order to assure that the aggregate quality assurance fee for any
particular state fiscal year does not exceed 6 percent of the
aggregate annual net revenue of facilities subject to the fee.
   SEC. 3.    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,  2013.   2015. 
   (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. 4.    Section 1324.30 of the   Health
and Safety Code   is amended to read: 
   1324.30.  This article shall become inoperative after July 31,
 2013,   2015,  and, as of January 1,
 2014,   2016,  is repealed, unless a later
enacted statute, that becomes operative on or before January 1,
 2014,   2016,  deletes or extends the
dates on which it becomes inoperative and is repealed.
   SEC. 5.    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
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 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   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. 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 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 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 2012-13
rate year.
   (iii) The use of chemical restraints.
   (j)  (1)    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. 
   (2) Notwithstanding paragraph (1), for the 2012-13 rate year only,
savings from capping the professional liability insurance cost
category pursuant to paragraph (1) shall remain in the General Fund
and shall not be transferred to the Skilled Nursing Facility Quality
and Accountability Special Fund. 
   (k) Beginning with the  2012-13   2013-14
 rate year,  if there is a rate increase in  the 
weighted average Medi-Cal reimbursement rate, the  department
shall set aside  the first  1 percent of the weighted
average Medi-Cal reimbursement  rate, from which 
 rate increase for  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  2013-14   2014-15
 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)  (A)    Beginning with the 
2012-13   2013-14  rate year, the department shall
pay a supplemental payment, by April 30,  2013, 
 2014,  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. 
   (B) (i) The department may convene a diverse stakeholder group,
including, but not limited to, representatives from consumer groups
and organizations, labor, nursing home providers, advocacy
organizations involved with the aging community, staff from the
Legislature, and other interested parties, to discuss and analyze
alternative mechanisms to implement the quality and accountability
payments provided to nursing homes for reimbursement.  
   (ii) The department shall articulate in a report to the fiscal and
appropriate policy committees of the Legislature the implementation
of an alternative mechanism as described in clause (i) at least 90
days prior to any policy or budgetary changes, and seek subsequent
legislation in order to enact the proposed changes. 
   (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,  2013, 
 2014,  then on May 1,  2013,   2014,
 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,  2012, 
 2013,  to increase provider rates retroactively to August
1,  2012.   2013. 
   (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, 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
 is made  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 (c) of Section 14126.033 shall be reduced by the
amounts described in subdivision (j). For the  2012-13 rate
year, any rate increase shall be reduced by the amounts described in
subdivisions (j) and (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). 
 to (l), inclusive. 
   SEC. 6.    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,
 2013.   2015.  It is the intent of the
Legislature that regulations adopted pursuant to subdivision (b)
shall be in place on or before July 31,  2013.  
2015. 
   SEC. 7.    Section 14126.028 is added to the 
 Welfare and Institutions Code   , to read:  
   14126.028.  (a) The Legislature finds and declares both of the
following:
   (1) Section Q of the Minimum Data Set, Version 3.0, developed as
part of the federal government's nursing home quality initiative,
uses a person-centered approach to ensure that all individuals have
the opportunity to learn about home- and community-based services and
have the opportunity to receive long-term care services in the least
restrictive setting possible.
   (2) More community care services and support options and choices
are now available to meet the care preferences and needs in the least
restrictive setting possible.
   (b) Nursing facilities shall either meet the residents' discharge
planning and referral needs, or make referrals to a designated local
contact agency (LCA) as determined by the State Department of Health
Care Services. The LCA is responsible for contacting referred
                                  residents, and for providing
information and counseling on available home- and community-based
services. The LCA shall also either assist directly with transition
services or make referrals to organizations that assist with
transition services, as appropriate.
   (c) It is the intent of the Legislature to ensure that nursing
home residents who, during the Minimum Data Set, Version 3.0, Section
Q assessment, express interest in the possibility of receiving care
and services in the community are appropriately referred by nursing
facilities to the LCA, as appropriate.
   (d) The State Department of Health Care Services, in collaboration
with the State Department of Public Health, shall, by April 1, 2013,
provide the Legislature an analysis of the appropriate sections of
the Minimum Data Set, Version 3.0, Section Q and nursing facilities
referrals made to the LCA. This analysis shall also document the LCA'
s response to referrals from nursing facilities and the outcomes of
those referrals.
   (e) The State Department of Public Health and the State Department
of Health Care Services shall regularly, and at least quarterly,
meet with representatives from the long-term care industry, organized
labor, consumers, and consumer advocates to provide updates and
receive input on the planning for, implementation of, and progress of
the skilled nursing facility quality improvement program. To
facilitate decisionmaking, the State Department of Public Health and
the State Department of Health Care Services shall promptly convene
this workgroup and provide ongoing guidance to reach tangible
outcomes for implementation by no later than January 2013. 
   SEC. 8.    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 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) 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 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 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) 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   pay  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,   August 1, 
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   prior to and excluding any rate
reduction implemented pursuant to clause (i) of subparagraph (A) of
paragraph (6) for the period beginning on June 1, 20   11,
to July 31, 2012, inclusive, and adjusted for the projected costs of
complying with new state or federal mandates. These rates are deemed
 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.   be sufficient to meet operating expenses.

   (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 with 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) 
    (D)  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) 
    (E)  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. 
   (10) (A) Subject to the following provisions, for the 2013-14 and
2014-15 rate years, the annual increase in the weighted average
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 be 3 percent for each rate
year, respectively, plus the projected cost of complying with new
state or federal mandates.  
   (B) (i) For the 2013-14 rate year, if there is a rate increase in
the weighted average Medi-Cal reimbursement rate, the department
shall set aside 1 percent of the increase in the weighted average
Medi-Cal reimbursement rate, from which the department shall transfer
the nonfederal portion into the Skilled Nursing Facility Quality and
Accountability Special Fund, to be used for the supplemental rate
pool.  
   (ii) For the 2014-15 rate year, 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 nonfederal portion of this amount
into the Skilled Nursing Facility Quality and Accountability Special
Fund.  
   (C) 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.  
    (10) 
    (11)  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,  2013.   2015. 
   (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. 9.    Section 14126.036 of the  
Welfare and Institutions Code   is   amended to
read: 
   14126.036.  This article shall become inoperative on August 1,
 2013,   2015,  and as of January 1,
 2014,   2016,  is repealed, unless a later
enacted statute that is enacted before January 1,  2014,
  2016,  deletes or extends that date.
   SEC. 10.    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 statutory changes necessary for implementation of
the Budget Act of 2012, it is necessary that this act take effect
immediately.  All matter omitted in this version of the bill
appears in the bill as amended in the Senate, August 22, 2012. (JR11)