BILL ANALYSIS Ó
SB 90
Page 1
( Without Reference to File )
SENATE THIRD READING
SB 90 (Steinberg)
As Amended April 7, 2011
2/3 vote. Urgency
SENATE VOTE :Vote not relevant
HEALTH 14-1 APPROPRIATIONS 16-0
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|Ayes:|Monning, Logue, Atkins, |Ayes:|Fuentes, Harkey, |
| |Bonilla, Eng, Garrick, | |Blumenfield, Bradford, |
| |Roger Hernández, Mansoor, | |Charles Calderon, Campos, |
| |Mitchell, Nestande, Pan, | |Davis, Donnelly, Gatto, |
| |Silva, Knight, Williams | |Hill, Lara, Mitchell, |
| | | |Nielsen, Norby, Solorio, |
| | | |Wagner |
|-----+--------------------------+-----+--------------------------|
|Nays:|Ammiano | | |
| | | | |
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SUMMARY : Authorizes the Office of Statewide Health Planning and
Development (OSHPD) to grant hospitals an extension of up to
seven years from hospital seismic safety requirements,
contingent on enactment and implementation of a Medi-Cal
hospital provider fee that includes $320 million in fee revenue
to pay for health care coverage for children for budget year
2011-12, enacts a Medi-Cal six-month hospital provider fee for
the period of January 1, 2011 to July 1, 2011, an
intergovernmental transfer (IGT) program for public hospitals
related to Medi-Cal managed care (MCMC) and makes other changes
necessary to implement savings related to the 2010-11 Budget and
the 2011-12 Budget Act. Provides that enactment is contingent
upon enactment of AB 113 (Monning). Contains an urgency clause
to ensure that the provisions of this bill go into immediate
effect upon enactment.
FISCAL EFFECT : According to the Assembly Appropriations
Committee:
1)A one-time increase of $1.9 billion (43% hospital Quality
Assurance Fee (QAF)/57% Federal Financial Participation (FFP))
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paid to hospitals through June 2011 in the form of increased
Medi-Cal payments for inpatient and outpatient services. This
estimate assumes hospitals subject to the QAF will contribute
$1.0 billion to be matched with FFP at the enhanced rate of
57%, for a total Medi-Cal payment increase of $1.9 billion.
Some of the hospitals will receive payments directly from the
state, while others will receive the payments from the state
through MCMC plans.
2)As compared to the 2010-11 Budget Act, this bill would provide
a net additional $53 million in savings in 2010-11. The
components of the net $53 million are as follows:
a) Additional General Fund (GF) savings of $50 million from
additional QAF revenue to the state for children's health
care coverage. In total, the package provides $210 million
in QAF revenue to the state for children's health care
coverage, but $160 million is already assumed in the
2010-11 Budget.
b) Additional GF savings of $30 million associated with
reductions in payments to certain private hospitals of
approximately $30 million GF and matching FFP in the
current year.
c) Estimated net loss of GF savings of approximately $22
million associated with the repeal of the rate freeze, and
approximately $5 million associated with the repeal of the
rate reductions.
d) The actual impact of this bill on the state budget is a
net $75 million in additional savings instead of a net $53
million, as it is unlikely that the state would have
achieved the $22 million in savings assumed in the budget.
1)As compared to the 2011-12 Budget as passed by the
Legislature, a net loss of savings of $18 million. The
components of the net $18 million are as follows:
a) Additional GF savings of $75 million due to a decrease
in payments of $75 million GF and matching FFP to private
hospitals.
b) Additional GF savings of $41 million associated with
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estimates of slower growth in hospital rates as a result of
provisions in this bill that provide the state greater
leverage in rate negotiations.
c) Estimated net loss of GF savings of approximately $107
million associated with the repeal of the rate freeze, and
approximately $27 million associated with the repeal of the
rate reductions.
d) The actual impact of this bill on the state budget is a
net $89 million in additional savings instead of a loss of
$18 million, as it is unlikely that the state would have
achieved the $107 million in savings assumed in the budget.
Additionally, the bill earmarks $320 million in additional
GF savings in 2011-12 associated with the future enactment
of a QAF program in 2011-12.
1)Estimated one-time administrative costs in the Department of
Health Care Services of approximately $800,000 (57% QAF, 43%
FFP) in the current year.
2)Estimated one-time costs administrative costs at OSHPD of
$56,000 for equipment in 2011-12, and ongoing costs of $1
million annually beginning in 2011-12, to be funded through
increased fees on hospitals submitting applications.
3)Upon the expiration of this program, GF cost pressure is
created to maintain the higher level of payments to hospitals
and the children's health care coverage programs funded by the
QAF.
COMMENTS : This bill and the companion bill AB 113 (Monning)
represent a negotiated agreement between the Governor and the
California Hospital Association (CHA) as part of the 2011-12
Budget. The package will result in a net increase in GF savings
to the state of approximately $50 million for the current year
and potentially up to $355 million in budget year 2011-12. This
bill includes an enactment of a new six-month hospital provider
fee and supplemental payments of up to approximately $1 billon
to private hospitals that serve Medi-Cal patients. A portion of
the new funds will be used for children's health coverage.
This bill also provides that when a 2011-12 hospital provider
fee is enacted, the state will receive $320 million for
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children's health coverage and contingent on receipt of these
additional funds, establishes a process for hospitals to apply
for an up to seven year extension from deadlines that require
hospital buildings to meet certain seismic safety standards.
The companion bill, AB 113 (Monning) enacts an IGT program that
will allow district hospitals to begin drawing up to $30 million
in supplemental Medi-Cal payments. This bill further adds to
the GF by reducing disproportional share hospital type payments
to private hospitals. Finally, this bill resolves a number of
pending lawsuits regarding hospital rate reductions enacted in
prior budgets.
Analysis Prepared by : Marjorie Swartz / HEALTH / (916)
319-2097
FN: 0000185