BILL NUMBER: SB 335 AMENDED
BILL TEXT
AMENDED IN SENATE JUNE 9, 2011
AMENDED IN SENATE APRIL 26, 2011
INTRODUCED BY Senators Hernandez and Steinberg
FEBRUARY 15, 2011
An act to amend Section 14166.115 of , to add and repeal
Article 5.228 (commencing with Section 14169.1) and Article 5.229
(commencing with Section 14169.31) of Chapter 7 of Part 3 of Division
9 of, and to repeal Article 5.225 (commencing with Section 14167.41)
of Chapter 7 of Part 3 of Division 9 of, the Welfare and
Institutions Code, relating to Medi-Cal, making an appropriation
therefor, and declaring the urgency thereof, to take effect
immediately.
LEGISLATIVE COUNSEL'S DIGEST
SB 335, as amended, Hernandez. Medi-Cal: hospitals: quality
assurance fee.
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 individuals. The
Medi-Cal program is, in part, governed and funded by federal Medicaid
Program provisions. Existing law, subject to federal approval,
imposes a quality assurance fee, as specified, on certain general
acute care hospitals through and including June 30, 2011. Existing
law creates the Hospital Quality Assurance Revenue Fund in the State
Treasury and requires that the money collected from the quality
assurance fee be deposited into the fund. Existing law, subject to
federal approval, requires the department to make supplemental
payments for certain services, as specified, to private hospitals
, increased capitation payments to Medi-Cal managed health
care plans, and increased payments to mental health plans. Existing
law provides that the moneys in the Hospital Quality Assurance
Revenue Fund shall, upon appropriation by the Legislature, be
available only for certain purposes, including paying for health care
coverage for children, as specified, and making the supplemental
payments to hospitals, increased capitation payments to Medi-Cal
managed health care plans, and increased payments to mental health
plans. Existing law also establishes the continuously
appropriated Distressed Hospital Fund, which consists of moneys
transferred to the fund or appropriated by the Legislature and used
as the nonfederal share of payments to distressed hospitals, as
defined.
This bill would provide that it is the intent of the Legislature
to consider legislation that would impose a quality assurance fee to
be paid by hospitals, for the period of July 1, 2011, through June
30, 2012, which would be used to increase federal financial
participation in order to make supplemental Medi-Cal payments to
hospitals and pay for health care coverage for children, as
specified. This bill would provide that it is the intent of the
Legislature that the quality assurance fee be implemented only if
specified conditions are met.
This bill would, subject to federal approval, impose a quality
assurance fee, of an unspecified amount, on certain general acute
care hospitals, for the period of July 1, 2011, through June 30,
2012. This bill would require that the money collected from the
quality assurance fee be deposited into the Hospital Quality
Assurance Revenue Fund. The bill would, subject to federal approval,
provide that the moneys in the Hospital Quality Assurance Revenue
Fund shall, upon appropriation by the Legislature, be available only
for certain purposes, including paying for health care coverage for
children, as specified, and making supplemental payments for certain
services to private hospitals, increased capitation payments to
Medi-Cal managed care plans, and increased payments to mental health
plans. This bill would also authorize designated public hospitals to
be paid direct grants in support of health care expenditures funded
by the quality assurance fee. The bill would provide that if quality
assurance fee payments are remitted to the department after the date
determined by the department to be the final date for calculating the
final supplemental payments, the fee payments shall be retained in
the fund for purposes of funding supplemental payments supported by a
hospital quality assurance fee program under subsequent legislation,
but provides that if supplemental payments are not implemented under
subsequent legislation, then those quality assurance fee payments
shall be deposited into the Distressed Hospital Fund. The bill would
also provide that if amounts of the quality assurance fees are
collected in excess of the funds required to make the payments above
and federal rules prohibit the department from refunding the fee
payments to the general acute care hospitals, the excess funds shall
be deposited into the Distressed Hospital Fund. By increasing the
amount of money that may be deposited into the Distressed Hospital
Fund, this bill would make an appropriation.
Existing law requires the department to seek a demonstration
project or federal waiver of Medicaid law to implement specified
objectives, which may include better care coordination for seniors,
persons with disabilities, and children with special health care
needs. Existing law provides that to the extent the provisions under
the Medi-Cal Hospital/Uninsured Care Demonstration Project Act do not
conflict with the provisions of, or the Special Terms and Conditions
of, this demonstration project, the provisions of the Medi-Cal
Hospital/Uninsured Care Demonstration Project Act shall apply. Under
existing law, the department is required to reduce disproportionate
share hospital replacement payments to private hospitals by 10% for
the 2009-10 fiscal year, as specified. Existing law also provides
that, in addition to the 10% reduction, disproportionate share
hospital replacement payments to private hospitals shall be reduced
in the 2010-11 fiscal year by an additional $30 million in General
Fund moneys and by the corresponding federal financial participation,
and in the 2011-12 fiscal year by an additional $75 million in
General Fund moneys and by the corresponding federal financial
participation. Existing law provides that the additional room under
the federal upper payment limit created by these reductions shall be
used for specified purposes.
This bill would, in relation to the 2010-11 and 2011-12 fiscal
year reductions, delete the requirement that the reductions be in
addition to the 10% reduction for the 2009-10 fiscal year.
This bill would declare that it is to take effect immediately as
an urgency statute.
Vote: 2/3. Appropriation: no yes .
Fiscal committee: yes. State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. The Legislature finds and declares both of the
following:
(a) The Legislature continues to recognize the essential role that
hospitals play in serving the state's Medi-Cal beneficiaries. To
that end, it has been, and remains, the intent of the Legislature to
preserve funding for hospitals and to obtain all available federal
funds to make supplemental Medi-Cal payments to hospitals.
(b) It is the intent of the Legislature that funding provided to
hospitals through a hospital quality assurance fee be explored with
the goal of increasing access to care and stabilizing hospital rates
through supplemental Medi-Cal payments to hospitals.
SEC. 2. (a) It is the intent of the Legislature to consider
legislation that would impose a quality assurance fee to be paid by
hospitals, which would be used to increase federal financial
participation in order to do both of the following:
(1) Make supplemental Medi-Cal payments to hospitals for the
period of July 1, 2011, through June 30, 2012.
(2) Pay for health care coverage for children in the amount of
eighty million dollars ($80,000,000) for each quarter in which
supplemental Medi-Cal payments are made to hospitals.
(b) It is the intent of the Legislature to consider legislation
that would require the State Department of Health Care Services to
obtain the necessary federal approvals to implement the quality
assurance fee described in subdivision (a) in order to make
supplemental Medi-Cal payments to hospitals for the period of July 1,
2011, through June 30, 2012.
(c) It is the intent of the Legislature to consider legislation
that would require the quality assurance fee be implemented only if
all of the following conditions are met:
(1) The quality assurance fee is established in consultation with
the hospital community.
(2) The quality assurance fee, including any interest earned after
collection by the department, is deposited in a segregated fund
apart from the General Fund and used exclusively for supplemental
Medi-Cal payments to hospitals and for the direct costs of
administering the program by the State Department of Health Care
Services.
(3) No hospital shall be required to pay the quality assurance fee
to the department unless and until the state receives and maintains
federal approval of the quality assurance fee and related
supplemental payments to hospitals.
(4) The full amount of the quality assurance fee assessed and
collected remains available only for the purposes specified by the
Legislature.
SEC. 3. Section 14166.115 of the Welfare and Institutions Code is
amended to read:
14166.115. (a) Due to the state budget deficit and in order to
implement changes in the level of funding for health care services,
the department shall reduce disproportionate share hospital
replacement payments to private hospitals made pursuant to Section
14166.11 as specified in this section.
(b) (1) Disproportionate share hospital replacement payments to
private hospitals pursuant to Section 14166.11 shall be reduced by 10
percent. The reductions shall be applied to all disproportionate
share hospital replacement payments to private hospitals made for the
2009-10 fiscal year, including, but not limited to, interim
payments, tentative adjusted monthly payments, data corrected
payments, and the final adjusted payment.
(2) Disproportionate share hospital replacement payments to
private hospitals pursuant to Section 14166.11 shall be reduced in
the 2010-11 fiscal year by thirty million dollars ($30,000,000) in
General Fund moneys and by the corresponding federal financial
participation. To the extent permitted by federal law, the additional
room created by this paragraph under the federal upper payment limit
shall be used to increase supplemental payments under Article 5.226
(commencing with Section 14168.1) and Article 5.227 (commencing with
Section 14168.31).
(3) Disproportionate share hospital replacement payments to
private hospitals pursuant to Section 14166.11 shall be reduced in
the 2011-12 fiscal year by seventy-five million dollars ($75,000,000)
in General Fund moneys and by the corresponding federal financial
participation. To the extent permitted by federal law, the additional
room created by this paragraph under the federal upper payment limit
shall be used to increase supplemental payments under subsequent
legislation extending or creating a new supplemental hospital payment
program supported by a fee.
(c) Notwithstanding Chapter 3.5 (commencing with Section 11340) of
Part 1 of Division 3 of Title 2 of the Government Code, the
department may implement and administer this section by means of
provider bulletins, or similar instructions, without taking further
regulatory action.
(d) The reductions described in this section shall apply only to
payments for services when the General Fund share of the payment is
paid with funds appropriated to the department in the annual Budget
Act.
(e) The department shall promptly seek any necessary federal
approvals for the implementation of this section.
SEC. 4. Article 5.225 (commencing with Section
14167.41) of Chapter 7 of Part 3 of Division 9 of the
Welfare and Institutions Code is repealed.
SEC. 5. Article 5.228 (commencing with Section
14169.1) is added to Chapter 7 of Part 3 of Division 9 of the
Welfare and Institutions Code , to read:
Article 5.228. Medi-Cal Hospital Provider Rate Stabilization
Act of 2012
14169.1. For the purposes of this article, the following
definitions shall apply:
(a) "Acute psychiatric days" means the total number of Short-Doyle
administrative days, Short-Doyle acute care days, acute psychiatric
administrative days, and acute psychiatric acute days identified in
the Final Medi-Cal Utilization Statistics for the 2010-11 state
fiscal year as calculated by the department as of May 1, 2011.
(b) "Converted hospital" means a private hospital that becomes a
designated public hospital or a nondesignated public hospital on or
after July 1, 2011.
(c) "Days data source" means the hospital's Annual Financial
Disclosure Report filed with the Office of Statewide Health Planning
and Development as of May 5, 2011, for its fiscal year ending during
2009.
(d) "Designated public hospital" shall have the meaning given in
subdivision (d) of Section 14166.1 as of July 1, 2011.
(e) "General acute care days" means the total number of Medi-Cal
general acute care days reported in the days data source.
(f) "High acuity days" means Medi-Cal coronary care unit days,
pediatric intensive care unit days, intensive care unit days,
neonatal intensive care unit days, and burn unit days reported in the
days as reported in the 2009 paid claims file prepared by the
department on April 26, 2011.
(g) "Hospital inpatient services" means all services covered under
Medi-Cal and furnished by hospitals to patients who are admitted as
hospital inpatients and reimbursed on a fee-for-service basis by the
department directly or through its fiscal intermediary. Hospital
inpatient services include outpatient services furnished by a
hospital to a patient who is admitted to that hospital within 24
hours of the provision of the outpatient services that are related to
the condition for which the patient is admitted. Hospital inpatient
services do not include services for which a managed health care plan
is financially responsible.
(h) "Hospital outpatient services" means all services covered
under Medi-Cal furnished by hospitals to patients who are registered
as hospital outpatients and reimbursed by the department on a
fee-for-service basis directly or through its fiscal intermediary.
Hospital outpatient services do not include services for which a
managed health care plan is financially responsible, or services
rendered by a hospital-based federally qualified health center for
which reimbursement is received pursuant to Section 14132.100.
(i) "Individual hospital acute psychiatric supplemental payment"
means the total amount of acute psychiatric hospital supplemental
payments to a subject hospital for a quarter for which the
supplemental payments are made. The "individual hospital acute
psychiatric supplemental payment" shall be calculated for subject
hospitals by multiplying the number of acute psychiatric days for the
individual hospital for which a mental health plan was financially
responsible by ____ and dividing the result by four.
(j) (1) "Managed health care plan" means a health care delivery
system that manages the provision of health care and receives prepaid
capitated payments from the state in return for providing services
to Medi-Cal beneficiaries.
(2) (A) Managed health care plans include county organized health
systems and entities contracting with the department to provide
services pursuant to two-plan models and geographic managed care.
Entities providing these services contract with the department
pursuant to any of the following:
(i) Article 2.7 (commencing with Section 14087.3).
(ii) Article 2.8 (commencing with Section 14087.5).
(iii) Article 2.81 (commencing with Section 14087.96).
(iv) Article 2.91 (commencing with Section 14089).
(B) Managed health care plans do not include any of the following:
(i) Mental health plans contracting to provide mental health care
for Medi-Cal beneficiaries pursuant to Part 2.5 (commencing with
Section 5775) of Division 5.
(ii) Health plans not covering inpatient services such as primary
care case management plans operating pursuant to Section 14088.85.
(iii) Long-Term Care Demonstration Projects for All-Inclusive Care
for the Elderly operating pursuant to Chapter 8.75 (commencing with
Section 14590).
(k) "Medi-Cal managed care days" means the total number of general
acute care days, including well baby days, listed for the county
organized health system and prepaid health plans identified in the
Final Medi-Cal Utilization Statistics for the 2010-11 fiscal year, as
calculated by the department as of May 1, 2011.
(l) "Medicaid inpatient utilization rate" means Medicaid inpatient
utilization rate as defined in Section 1396r-4 of Title 42 of the
United States Code and as set forth in the final disproportionate
share hospital eligibility list for the 2010-11 fiscal year released
by the department as of May 1, 2011.
(m) "Mental health plan" means a mental health plan that contracts
with the State Department of Mental Health to furnish or arrange for
the provision of mental health services to Medi-Cal beneficiaries
pursuant to Part 2.5 (commencing with Section 5775) of Division 5.
(n) "New hospital" means a hospital operation, business, or
facility functioning under current or prior ownership as a private
hospital that does not have a days data source or a hospital that has
a days data source in whole, or in part, from a previous operator
where there is an outstanding monetary liability owed to the state in
connection with the Medi-Cal program and the new operator did not
assume liability for the outstanding monetary obligation.
(o) "New noncontract hospital" means a private hospital that was a
contract hospital on March 1, 2011, and elects to become a
noncontract hospital at any time between March 1, 2011, and the end
of the program period.
(p) "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 Annual Financial Disclosure
Report for the hospital's latest fiscal year ending in 2009, and
satisfies the definition in paragraph (25) of subdivision (a) of
Section 14105.98, excluding designated public hospitals.
(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 Annual
Financial Disclosure Report for the hospital's latest fiscal year
ending in 2009, is operating a hospital owned 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.
(q) "Outpatient base amount" means the total amount of payments
for hospital outpatient services made to a hospital in the 2009
calendar year, as reflected in the state paid claims files prepared
by the department on May 25, 2011.
(r) "Private hospital" means a hospital that meets all of the
following conditions:
(1) Is licensed pursuant to subdivision (a) of Section 1250 of the
Health and Safety Code.
(2) Is in the Charitable Research Hospital peer group, as set
forth in the 1991 Hospital Peer Grouping Report published by the
department, or is not designated as a specialty hospital in the
hospital's Office of Statewide Health Planning and Development Annual
Financial Disclosure Report for the hospital's latest fiscal year
ending in 2009.
(3) Does not satisfy the Medicare criteria to be classified as a
long-term care hospital.
(4) Is a nonpublic hospital, nonpublic converted hospital, or
converted hospital as those terms are defined in paragraphs (26) to
(28), inclusive, respectively, of subdivision (a) of Section
14105.98.
(s) "Program period" means the period from July 1, 2011, to June
30, 2012, inclusive.
(t) "Subject fiscal quarter" means a state fiscal quarter
beginning on or after July 1, 2011, and ending before July 1, 2012.
(u) "Subject hospital" means a hospital that meets all of the
following conditions:
(1) Is licensed pursuant to subdivision (a) of Section 1250 of the
Health and Safety Code.
(2) Is in the Charitable Research Hospital peer group, as set
forth in the 1991 Hospital Peer Grouping Report published by the
department, or is not designated as a specialty hospital in the
hospital's Office of Statewide Health Planning and Development Annual
Financial Disclosure Report for the hospital's latest fiscal year
ending in 2009.
(3) Does not satisfy the Medicare criteria to be classified as a
long-term care hospital.
(v) "Subject month" means a calendar month beginning on or after
July, 2011, and ending before July 1, 2012.
(w) "Upper payment limit" means a federal upper payment limit on
the amount of the Medicaid payment for which federal financial
participation is available for a class of service and a class of
health care providers, as specified in Part 447 of Title 42 of the
Code of Federal Regulations.
14169.2. (a) Private hospitals shall be paid supplemental amounts
for the provision of hospital outpatient services as set forth in
this section. The supplemental amounts shall be in addition to any
other amounts payable to hospitals with respect to those services and
shall not affect any other payments to hospitals. The supplemental
amounts shall maximize the statewide aggregate upper payment limit
for private hospitals.
(b) Except as set forth in subdivisions (e) and (f), each private
hospital shall be paid an amount for the program period equal to a
percentage of the hospital's outpatient base amount. The percentage
shall be the same for each hospital and shall result in payments to
hospitals that equal the applicable federal upper payment limit, less
any amounts paid pursuant to Section 14168.2 and accounted toward
the federal upper payment limits for the entire 2011-12 fiscal year.
For purposes of this subdivision the applicable federal upper payment
limit shall be the federal upper payment limit for hospital
outpatient services furnished by private hospitals for the entire
2011-12 fiscal year.
(c) In the event federal financial participation is not available
for all of the supplemental amounts payable to private hospitals
under subdivision (b) due to the application of a federal upper
payment limit or for any other reason, both of the following shall
apply:
(1) The total amount payable to private hospitals under
subdivision (b) for the subject fiscal year shall be reduced to the
amount for which federal financial participation is available.
(2) The amount payable under subdivision (b) to each private
hospital for the subject fiscal year shall be equal to the amount
computed under subdivision (b) multiplied by the ratio of the total
amount for which federal financial participation is available to the
total amount computed under subdivision (b).
(d) The supplemental amounts set forth in this section are
inclusive of federal financial participation.
(e) Payments shall not be made under this section to a new
hospital.
(f) No payments shall be made under this section to a converted
hospital.
14169.3. (a) Private hospitals shall be paid supplemental amounts
for the provision of hospital inpatient services as set forth in
this section. The supplemental amounts shall be in addition to any
other amounts payable to hospitals with respect to those services and
shall not affect any other payments to hospitals. The supplemental
amounts shall maximize the statewide aggregate upper payment limit
for private hospitals.
(b) Except as set forth in subdivisions (g) and (h), each private
hospital shall be paid the following amounts as applicable for the
provision of hospital inpatient services for the program period:
(1) ____.
(2) ____ multiplied by the hospital's acute psychiatric days that
were paid directly by the department and were not the financial
responsibility of a mental health plan.
(3) One thousand three hundred fifty dollars ($1,350) multiplied
by the number of the hospital's high acuity days if the hospital's
Medicaid inpatient utilization rate is less than 41.1 percent and
greater than 5 percent and at least 5 percent of the hospital's
general acute care days are high acuity days. This amount shall be in
addition to the amounts specified in paragraphs (1) and (2).
(4) One thousand three hundred fifty dollars ($1,350) multiplied
by the number of the hospital's high acuity days if the hospital
qualifies to receive the amount set forth in paragraph (3) and has
been designated as a Level I, Level II, Adult/Ped Level I, or
Adult/Ped Level II trauma center by the Emergency Medical Services
Authority established pursuant to Section 1797.1 of the Health and
Safety Code. This amount shall be in addition to the amounts
specified in paragraphs (1), (2), and (3).
(c) A private hospital that provides Medi-Cal subacute services
during the program period and has a Medicaid inpatient utilization
rate that is greater than 5 percent and less than 41.1 percent shall
be paid a supplemental amount equal to 20 percent of the Medi-Cal
subacute payments made to the hospital during the 2009 calendar year.
(d) (1) In the event federal financial participation is not
available for all of the supplemental amounts payable to private
hospitals under subdivision (b) due to the application of a federal
upper payment limit or for any other reason, both of the following
shall apply:
(A) The total amount payable to private hospitals under
subdivision (b) shall be reduced to reflect the amount for which
federal financial participation is available.
(B) The amount payable under subdivision (b) to each private
hospital shall be equal to the amount computed under subdivision (b)
multiplied by the ratio of the total amount for which federal
financial participation is available to the total amount computed
under subdivision (b).
(2) In the event federal financial participation is not available
for all of the supplemental amounts payable to private hospitals
under subdivision (c) due to the application of a federal upper
payment limit or for any other reason, both of the following shall
apply:
(A) The total amount payable to private hospitals under
subdivision (c) shall be reduced to reflect the amount for which
federal financial participation is available.
(B) The amount payable under subdivision (c) to each private
hospital shall be equal to the amount computed under subdivision (c)
multiplied by the ratio of the total amount for which federal
financial participation is available to the total amount computed
under subdivision (c).
(e) If the amount otherwise payable to a hospital under this
section exceeds the amount for which federal financial participation
is available for that hospital, the amount due to the hospital shall
be reduced to the amount for which federal financial participation is
available.
(f) The amounts set forth in this section are inclusive of federal
financial participation.
(g) Payments shall not be made under this section to a new
hospital.
(h) Payments shall not be made under this section to a converted
hospital.
(i) (1) The department shall increase payments to mental health
plans for the program period exclusively for the purpose of making
payments to hospitals. The aggregate amount of the increased payments
for a subject fiscal quarter shall be the total of the individual
hospital acute psychiatric supplemental payment amounts for all
hospitals for which federal financial participation is available.
(2) The payments described in paragraph (1) may be made directly
by the department to hospitals when federal law does not require that
the payments be transmitted to hospitals via mental health plans.
14169.5. (a) The department shall increase capitation payments to
Medi-Cal managed health care plans for the program period as set
forth in this section.
(b) The increased capitation payments shall be made as part of the
monthly capitated payments made by the department to managed health
care plans.
(c) The aggregate amount of increased capitation payments to all
Medi-Cal managed health care plans for the program period shall be
the maximum amount for which federal financial participation is
available on an aggregate statewide basis.
(d) The department shall determine the amount of the increased
capitation payments for each managed health care plan. The department
shall consider the composition of Medi-Cal enrollees in the plan,
the anticipated utilization of hospital services by the plan's
Medi-Cal enrollees, and other factors that the department determines
are reasonable and appropriate to ensuring access to high-quality
hospital services by the plan's enrollees.
(e) The amount of increased capitation payments to each Medi-Cal
managed care health plan shall not exceed an amount that results in
capitation payments that are certified by the state's actuary as
meeting federal requirements, taking into account the requirement
that all of the increased capitation payments under this section
shall be paid by the Medi-Cal managed health care plans to hospitals
for hospital services to Medi-Cal enrollees of the plan.
(f) (1) The increased capitation payments to managed health care
plans under this section shall be made to support the availability of
hospital services and ensure access to hospital services for
Medi-Cal beneficiaries. The increased capitation payments to managed
health care plans shall commence no later than December 31, 2011, or
within 60 days of the date on which all necessary federal approvals
have been received, and shall include, but not be limited to, the sum
of the increased payments for all prior months for which payments
are due.
(2) To secure the necessary funding for the payment or payments
made pursuant to paragraph (1), the department may accumulate funds
in the Hospital Quality Assurance Revenue Fund for the purpose of
funding managed care capitation payments under this article
regardless of the date on which capitation payments are scheduled to
be paid in order to secure the necessary total funding for managed
care payments by June 30, 2012.
(g) Payments to managed health care plans that would be paid
consistent with actuarial certification and enrollment in the absence
of the payments made pursuant to this
section shall not be reduced as a consequence of payment
under this section.
(h) (1) Each managed health care plan shall expend 100 percent of
any increased capitation payments it receives under this section on
hospital services.
(2) The department may issue change orders to amend contracts with
managed health care plans as needed to adjust monthly capitation
payments in order to implement this section.
(3) For entities contracting with the department pursuant to
Article 2.91 (commencing with Section 14089), any incremental
increase in capitation rates pursuant to this section shall not be
subject to negotiation and approval by the California Medical
Assistance Commission.
(i) In the event federal financial participation is not available
for all of the increased capitation payments determined for a month
pursuant to this section for any reason, the increased capitation
payments mandated by this section for that month shall be reduced
proportionately to the amount for which federal financial
participation is available.
(j) 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 section by means of policy letters or
similar instructions, without taking further regulatory action.
14169.6. (a) Each managed health care plan receiving increased
capitation payments under Section 14169.5 shall expend the capitation
rate increases in a manner consistent with actuarial certification,
enrollment, and utilization on hospital services. Each managed health
care plan shall expend increased capitation payments on hospital
services within 30 days of receiving the increased capitation
payments to the extent they are made for a subject month that is
prior to the date on which the payments are received by the managed
health care plan.
(b) The sum of all expenditures made by a managed health care plan
for hospital services pursuant to this section shall equal, or
approximately equal, all increased capitation payments received by
the managed health care plan, consistent with actuarial
certification, enrollment, and utilization, from the department
pursuant to Section 14169.5.
(c) Any delegation or attempted delegation by a managed health
care plan of its obligation to expend the capitation rate increases
under this section shall not relieve the plan from its obligation to
expend those capitation rate increases. Managed health care plans
shall submit the documentation the department may require to
demonstrate compliance with this subdivision. The documentation shall
demonstrate actual expenditure of the capitation rate increases for
hospital services, and not assignment to subcontractors of the
managed health care plan's obligation of the duty to expend the
capitation rate increases.
(d) The supplemental hospital payments made by managed health care
plans pursuant to this section shall reflect the overall purpose of
the act.
(e) This article is not intended to create a private right of
action by a hospital against a managed care plan provided that the
managed health care plan expends all increased capitation payments
for hospital services.
14169.7. Designated public hospitals may be paid direct grants in
support of health care expenditures, which shall not constitute
Medi-Cal payments, and which shall be funded by the quality assurance
fee set forth in Article 5.229 (commencing with Section 14169.31).
14169.8. (a) The amount of any payments made under this article
to private hospitals, including the amount of payments made under
Sections 14169.2 and 14169.3 and additional payments to private
hospitals by managed health care plans pursuant to Section 14169.5,
shall not be included in the calculation of the low-income percent or
the OBRA 1993 payment limitation, as defined in paragraph (24) of
subdivision (a) of Section 14105.98, for purposes of determining
payments to private hospitals.
(b) The amount of any payments made to a hospital under this
article shall not be included in the calculation of stabilization
funding under Article 5.2 (commencing with Section 14166) or any
successor legislation, including legislation implementing California'
s Bridge to Reform Section 1115(a) Medicaid Demonstration
(11-W-00193/9).
14169.9. The payments to a hospital under this article shall not
be made for any portion of the program period during which the
hospital is closed. A hospital shall be deemed to be closed on the
first day of any period during which the hospital has no acute
inpatients for at least 30 consecutive days. Payments under this
article to a hospital that is closed during any portion of the
program period shall be reduced by applying a fraction, expressed as
a percentage, the numerator of which shall be the number of days
during the program period that the hospital is closed and the
denominator of which shall be 365.
14169.10. (a) The amount of any supplemental payment under this
article for a new noncontract hospital shall be reduced by the amount
by which that hospital's overall payment for services for Medi-Cal
patients during the program period was increased by reason of its
becoming a noncontract hospital.
(b) The amount of the nonfederal share of any supplemental payment
reduction under subdivision (a) shall be transferred from the
Hospital Quality Assurance Revenue Fund to the General Fund at the
time the reduced supplemental payment under subdivision (a) is made.
(c) 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 section by means of policy letters or
similar instructions, without taking further regulatory action.
14169.11. The department shall make disbursements from the
Hospital Quality Assurance Revenue Fund consistent with the
following:
(a) Fund disbursements shall be made periodically within 15 days
of each date on which quality assurance fees are due from hospitals.
(b) The funds shall be disbursed in accordance with the order of
priority set forth in subdivision (b) of Section 14169.33, subject to
the following:
(1) The amount disbursed for children's health coverage shall not
exceed eighty million dollars ($80,000,000) per quarter.
(2) Funds may be set aside for increased capitation payments to
managed care health plans pursuant to subdivision (f) of Section
14169.5.
(c) The funds shall be disbursed in each payment cycle in
accordance with the order of priority set forth in subdivision (b) of
Section 14169.33 as modified by subdivision (b), and so that the
supplemental payments to hospitals, increased capitation payments to
managed health care plans, increased payments to mental health plans,
and direct payments to hospitals of acute psychiatric supplemental
payments are made to the maximum extent for which funds are
available.
(d) To the maximum extent possible, consistent with the
availability of funds in the quality assurance fund and the timing of
federal approvals, the supplemental payments to hospitals, increased
capitation payments to managed health care plans, and increased
payments to mental health plans under this article shall be made
before July 1, 2012.
(e) The aggregate amount of funds to be disbursed to private
hospitals shall be determined under Sections 14169.2 and 14169.3. The
aggregate amount of funds to be disbursed to managed health care
plans shall be determined under Section 14169.5.
14169.12. (a) Exclusive of payments made under Article 5.21
(commencing with Section 14167.1) and Article 5.226 (commencing with
Section 14168.1), payment rates for hospital outpatient services,
furnished by private hospitals, nondesignated public hospitals, and
designated public hospitals before July 1, 2011, exclusive of amounts
payable under this article, shall not be reduced below the rates in
effect on July 1, 2011.
(b) Rates payable to hospitals for hospital inpatient services
furnished before July 1, 2011, under contracts negotiated pursuant to
the selective provider contracting program under Article 2.6
(commencing with Section 14081), shall not be reduced below the lower
of the contract rates in effect on July 1, 2011. This subdivision
shall not prohibit changes to the supplemental payments paid to
individual hospitals under Sections 14166.12, 14166.17, and 14166.23,
provided that the aggregate amount of the payments for the 2011-12
fiscal year are not less than the minimum amount permitted under
Section 14167.13.
(c) Subject to Section 14105.281, exclusive of payments made under
Article 5.21 (commencing with Section 14167.1) and Article 5.226
(commencing with Section 14168.1), payments to private hospitals for
hospital inpatient services furnished before July 1, 2012, that are
not reimbursed under a contract negotiated pursuant to the selective
provider contracting program under Article 2.6 (commencing with
Section 14081), exclusive of amounts payable under this article,
shall not be less than the amount of payments that would have been
made under the payment methodology in effect on the effective date of
this article.
(d) Solely for purposes of this article, a rate reduction or a
change in a rate methodology that is enjoined by a court shall be
included in the determination of a rate or a rate methodology until
all appeals or judicial reviews have been exhausted and the rate
reduction or change in rate methodology has been permanently
enjoined, denied by the federal government, or otherwise permanently
prevented from being implemented.
14169.13. (a) The director shall do all of the following:
(1) Promptly submit any state plan amendment or waiver request
that may be necessary to implement this article.
(2) Promptly seek federal approvals or waivers as may be necessary
to implement this article and to obtain federal financial
participation to the maximum extent possible for the payments under
this article.
(3) Amend the contracts between the managed health care plans and
the department as necessary to incorporate the provisions of Sections
14169.5 and 14169.6 and promptly seek all necessary federal
approvals of those amendments. The department shall pursue amendments
to the contracts as soon as possible after the effective date of
this article and Article 5.229 (commencing with Section 14169.31),
and shall not wait for federal approval of this article or Article
5.229 (commencing with Section 14169.31) prior to pursuing amendments
to the contracts. The amendments to the contracts shall, among other
provisions, set forth an agreement to increase capitation payments
to managed health care plans under Section 14169.5 and increase
payments to hospitals under Section 14169.6 in a manner that relates
back to July 1, 2011, or as soon thereafter as possible, conditioned
on obtaining all federal approvals necessary for federal financial
participation for the increased capitation payments to the managed
health care plans.
(b) In implementing this article, the department may utilize the
services of the Medi-Cal fiscal intermediary through a change order
to the fiscal intermediary contract to administer this program,
consistent with the requirements of Sections 14104.6, 14104.7,
14104.8, and 14104.9. Contracts entered into for purposes of
implementing this article or Article 5.229 (commencing with Section
14169.31) shall not be subject to Part 2 (commencing with Section
10100) of Division 2 of the Public Contract Code.
(c) This article shall become inoperative if either of the
following occurs:
(1) In the event, and on the effective date, of a final judicial
determination made by any court of appellate jurisdiction or a final
determination by the federal Department of Health and Human Services
or the federal Centers for Medicare and Medicaid Services that any
element of this article or any provision of Section 14166.115 cannot
be implemented.
(2) In the event both of the following conditions exist:
(A) The federal Centers for Medicare and Medicaid Services denies
approval for, or does not approve before January 1, 2013, the
implementation of Article 5.229 (commencing with Section 14169.31) or
this article.
(B) Either or both articles cannot be modified by the department
pursuant to subdivision (e) of Section 14169.33 in order to meet the
requirements of federal law or to obtain federal approval.
(d) If this article becomes inoperative pursuant to paragraph (1)
of subdivision (c) and the determination applies to any period or
periods of time prior to the effective date of the determination, the
department shall have authority to recoup all payments made pursuant
to this article during that period or those periods of time.
(e) In the event any hospital, or any party on behalf of a
hospital, shall initiate a case or proceeding in any state or federal
court in which the hospital seeks any relief of any sort whatsoever,
including, but not limited to, monetary relief, injunctive relief,
declaratory relief, or a writ, based in whole or in part on a
contention that any or all of this article is unlawful and may not be
lawfully implemented, both of the following shall apply:
(1) Payments shall not be made to the hospital pursuant to this
article until the case or proceeding is finally resolved, including
the final disposition of all appeals.
(2) Any amount computed to be payable to the hospital pursuant to
this section for a project year shall be withheld by the department
and shall be paid to the hospital only after the case or proceeding
is finally resolved, including the final disposition of all appeals.
(f) Subject to Section 14169.34, no payment shall be made under
this article until all necessary federal approvals for the payment
and for the fee provisions in Article 5.229 (commencing with Section
14169.31) have been obtained and the fee has been imposed and
collected. Notwithstanding any other provision of law, payments under
this article shall be made only to the extent that the fee
established in Article 5.229 (commencing with Section 14169.31) is
collected and available to cover the nonfederal share of the
payments.
(g) A hospital's receipt of payments under this article for
services rendered prior to the effective date of this article is
conditioned on the hospital's continued participation in Medi-Cal for
at least 30 days after the effective date of this article.
(h) All payments made by the department to hospitals, managed
health care plans, and mental health plans under this article shall
be made only from the following:
(1) The quality assurance fee set forth in Article 5.229
(commencing with Section 14169.31) and due and payable on or before
June 30, 2012, along with any interest or other investment income
thereon.
(2) Federal reimbursement and any other related federal funds.
14169.14. Notwithstanding any other provision of this article or
Article 5.229 (commencing with Section 14169.31), the director may
proportionately reduce the amount of any supplemental payments or
increased capitation payments under this article to the extent that
the payment would result in the reduction of other amounts payable to
a hospital or managed health care plan or mental health plan due to
the application of federal law.
14169.15. The director may, pursuant to Section 14169.40, decide
not to implement or to discontinue implementation of this article and
Article 5.229 (commencing with Section 14169.31), and to
retroactively invalidate the requirements for supplemental payments
or other payments under this article.
14169.16. This article shall remain in effect only until January
1, 2013, the date the last payment of quality assurance fee payments
pursuant to Article 5.229 (commencing with Section 14169.31), or the
date of the last payment from the department pursuant to this
article, whichever is later, and as of that date is repealed, unless
a later enacted statute, that is enacted before January 1, 2013,
deletes or extends that date.
14169.17. Notwithstanding any other provision of law, if federal
approval or a letter that indicates likely federal approval in
accordance with Section 14169.34 has not been received on or before
June 1, 2012, then this article shall become inoperative, and as of
June 1, 2012, is repealed, unless a later enacted statute, that is
enacted before June 1, 2012, deletes or extends that date.
14169.175. 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.
14169.18. (a) If the director determines that this article has
become inoperative pursuant to Section 14169.13, 14169.17, or
14169.40, the director shall execute a declaration stating that this
determination has been made. The director shall retain the
declaration and provide a copy, within five working days of the
execution of the declaration, to the fiscal and appropriate policy
committees of the Legislature.
(b) In addition to the requirements specified in subdivision (a),
the director shall post the declaration on the department's Internet
Web site and the director shall send the declaration to the Secretary
of State, the Secretary of the Senate, the Chief Clerk of the
Assembly, and the Legislative Counsel.
SEC. 6. Article 5.229 (commencing with Section
14169.31) is added to Chapter 7 of Part 3 of Division 9 of the
Welfare and Institutions Code , to read:
Article 5.229. Hospital Quality Assurance Fee Act of 2012
14169.31. For the purposes of this article, the following
definitions shall apply:
(a) (1) "Aggregate quality assurance fee" means, with respect to a
hospital that is not a prepaid health plan hospital, the sum of all
of the following:
(A) The annual fee-for-service days for an individual hospital
multiplied by the fee-for-service per diem quality assurance fee
rate.
(B) The annual managed care days for an individual hospital
multiplied by the managed care per diem quality assurance fee rate.
(C) The annual Medi-Cal days for an individual hospital multiplied
by the Medi-Cal per diem quality assurance fee rate.
(2) "Aggregate quality assurance fee" means, with respect to a
hospital that is a prepaid health plan hospital, the sum of all of
the following:
(A) The annual fee-for-service days for an individual hospital
multiplied by the fee-for-service per diem quality assurance fee
rate.
(B) The annual managed care days for an individual hospital
multiplied by the prepaid health plan hospital managed care per diem
quality assurance fee rate.
(C) The annual Medi-Cal managed care days for an individual
hospital multiplied by the prepaid health plan hospital Medi-Cal
managed care per diem quality assurance fee rate, divided by two.
(D) The annual Medi-Cal fee-for-service days for an individual
hospital multiplied by the Medi-Cal per diem quality assurance fee
rate.
(3) "Aggregate quality assurance fee after the application of the
fee percentage" means the aggregate quality assurance fee multiplied
by the fee percentage for the program period.
(b) "Annual fee-for-service days" means the number of
fee-for-service days of each hospital subject to the quality
assurance fee, as reported on the days data source.
(c) "Annual managed care days" means the number of managed care
days of each hospital subject to the quality assurance fee, as
reported on the days data source.
(d) "Annual Medi-Cal days" means the number of Medi-Cal days of
each hospital subject to the quality assurance fee, as reported on
the days data source.
(e) "Converted hospital" shall mean a hospital described in
subdivision (b) of Section 14169.1.
(f) "Days data source" means the hospital's Annual Financial
Disclosure Report filed with the Office of Statewide Health Planning
and Development as of May 5, 2011, for its fiscal year ending during
2009.
(g) "Designated public hospital" shall have the meaning given in
subdivision (d) of Section 14166.1 as of January 1, 2011.
(h) "Exempt facility" means any of the following:
(1) A public hospital, which shall include either of the
following:
(A) A hospital, as defined in paragraph (25) of subdivision (a) of
Section 14105.98.
(B) A tax-exempt nonprofit hospital that is licensed under
subdivision (a) of Section 1250 of the Health and Safety Code and
operating a hospital owned 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.
(2) With the exception of a hospital that is in the Charitable
Research Hospital peer group, as set forth in the 1991 Hospital Peer
Grouping Report published by the department, a hospital that is a
hospital designated as a specialty hospital in the hospital's Office
of Statewide Health Planning and Development Hospital Annual
Financial Disclosure Report for the hospital's fiscal year ending in
the 2009 calendar year.
(3) A hospital that satisfies the Medicare criteria to be a
long-term care hospital.
(4) A small and rural hospital as specified in Section 124840 of
the Health and Safety Code designated as that in the hospital's
Office of Statewide Health Planning and Development Hospital Annual
Financial Disclosure Report for the hospital's fiscal year ending in
the 2009 calendar year.
(i) "Federal approval" means the last approval by the federal
government required for the implementation of this article and
Article 5.228 (commencing with Section 14169.1).
(j) (1) "Fee-for-service per diem quality assurance fee rate"
means a fixed daily fee on fee-for-service days.
(2) The fee-for-service per diem quality assurance fee rate ____.
(3) Upon federal approval or conditional federal approval
described in Section 14169.34, the director shall determine the
fee-for-service per diem quality assurance fee rate based on the
funds required to make the payments specified in Article 5.228
(commencing with Section 14169.1), in consultation with the hospital
community.
(k) "Fee-for-service days" means inpatient hospital days where the
service type is reported as "acute care," "psychiatric care," and
"chemical dependency care and rehabilitation care," and the payer
category is reported as "Medicare traditional," "county indigent
programs-traditional," "other third parties-traditional," "other
indigent," and "other payers," for purposes of the Annual Financial
Disclosure Report submitted by hospitals to the Office of Statewide
Health Planning and Development.
(l) "Fee percentage" means a fraction, expressed as a percentage,
the numerator of which is the amount of payments for the program
period under Sections 14169.2, 14169.3, and 14169.5, for which
federal financial participation is available and the denominator of
which is the maximum statewide aggregate allowable under the private
hospital upper payment limit and the maximum amount under subdivision
(c) of Section 14169.5.
(m) "General acute care hospital" means any hospital licensed
pursuant to subdivision (a) of Section 1250 of
the Health and Safety Code.
(n) "Hospital community" means any hospital industry organization
or system that represents hospitals.
(o) "Managed care days" means inpatient hospital days where the
service type is reported as "acute care," "psychiatric care," and
"chemical dependency care and rehabilitation care," and the payer
category is reported as "Medicare managed care," "county indigent
programs-managed care," and "other third parties-managed care," for
purposes of the Annual Financial Disclosure Report submitted by
hospitals to the Office of Statewide Health Planning and Development.
(p) "Managed care per diem quality assurance fee rate" means a
fixed fee on managed care days of ____.
(q) "Medi-Cal days" means inpatient hospital days where the
service type is reported as "acute care," "psychiatric care," and
"chemical dependency care and rehabilitation care," and the payer
category is reported as "Medi-Cal traditional" and "Medi-Cal managed
care," for purposes of the Annual Financial Disclosure Report
submitted by hospitals to the Office of Statewide Health Planning and
Development.
(r) "Medi-Cal fee-for-service days" means inpatient hospital days
where the service type is reported as "acute care," "psychiatric
care," and "chemical dependency care and rehabilitation care," and
the payer category is reported as "Medi-Cal traditional" for purposes
of the Annual Financial Disclosure Report submitted by hospitals to
the Office of Statewide Health Planning and Development.
(s) "Medi-Cal managed care days" means inpatient hospital days as
reported on the days data source where the service type is reported
as "acute care," "psychiatric care," and "chemical dependency care
and rehabilitation care," and the payer category is reported as
"Medi-Cal managed care" for purposes of the Annual Financial
Disclosure Report submitted by hospitals to the Office of Statewide
Health Planning and Development.
(t) "Medi-Cal per diem quality assurance fee rate" means a fixed
fee on Medi-Cal days of ____.
(u) "New hospital" means a hospital operation, business, or
facility functioning under current or prior ownership as a private
hospital that does not have a days data source or a hospital that has
a days data source in whole, or in part, from a previous operator
where there is an outstanding monetary liability owed to the state in
connection with the Medi-Cal program and the new operator did not
assume liability for the outstanding monetary obligation.
(v) "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 Annual Financial Disclosure
Report for the hospital's latest fiscal year ending in 2009, and
satisfies the definition in paragraph (25) of subdivision (a) of
Section 14105.98, excluding designated public hospitals.
(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 Annual
Financial Disclosure Report for the hospital's latest fiscal year
ending in 2009, is operating a hospital owned 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.
(w) "Prepaid health plan hospital" means a hospital owned by a
nonprofit public benefit corporation that shares a common board of
directors with a nonprofit health care service plan.
(x) "Prepaid health plan hospital managed care per diem quality
assurance fee rate" means a fixed fee on non-Medi-Cal managed care
days for prepaid health plan hospitals of ____.
(y) "Prepaid health plan hospital Medi-Cal managed care per diem
quality assurance fee rate" means a fixed fee on Medi-Cal managed
care days for prepaid health plan hospitals of ____.
(z) "Prior fiscal year data" means any data taken from sources
that the department determines are the most accurate and reliable at
the time the determination is made, or may be calculated from the
most recent audited data using appropriate update factors. The data
may be from prior fiscal years, current fiscal years, or projections
of future fiscal years.
(aa) "Private hospital" means a hospital that meets all of the
following conditions:
(1) Is licensed pursuant to subdivision (a) of Section 1250 of the
Health and Safety Code.
(2) Is in the Charitable Research Hospital peer group, as set
forth in the 1991 Hospital Peer Grouping Report published by the
department, or is not designated as a specialty hospital in the
hospital's Office of Statewide Health Planning and Development Annual
Financial Disclosure Report for the hospital's latest fiscal year
ending in 2009.
(3) Does not satisfy the Medicare criteria to be classified as a
long-term care hospital.
(4) Is a nonpublic hospital, nonpublic converted hospital, or
converted hospital as those terms are defined in paragraphs (26) to
(28), inclusive, respectively, of subdivision (a) of Section
14105.98.
(ab) "Program period" means the period from July 1, 2011, to June
30, 2012, inclusive.
(ac) "Subject fiscal quarter" means a state fiscal quarter during
the program period.
(ad) "Upper payment limit" means a federal upper payment limit on
the amount of the Medicaid payment for which federal financial
participation is available for a class of service and a class of
health care providers, as specified in Part 447 of Title 42 of the
Code of Federal Regulations.
14169.32. (a) There shall be imposed on each general acute care
hospital that is not an exempt facility a quality assurance fee,
provided that a quality assurance fee under this article shall not be
imposed on a converted hospital.
(b) The quality assurance fee shall be computed starting on July
1, 2011, and continue through and including June 30, 2012.
(c) Subject to Section 14169.34, upon receipt of federal approval,
the following shall become operative:
(1) Within 10 business days following receipt of the notice of
federal approval from the federal government, the department shall
send notice to each hospital subject to the quality assurance fee,
and publish on its Internet Web site, the following information:
(A) The date that the state received notice of federal approval.
(B) The fee percentage for the program period.
(2) The notice to each hospital subject to the quality assurance
fee shall also state the following:
(A) The aggregate quality assurance fee after the application of
the fee percentage for the program period.
(B) The aggregate quality assurance fee.
(C) The amount of each payment due from the hospital with respect
to the aggregate quality assurance fee.
(D) The date on which each payment is due.
(3) The hospitals shall pay the aggregate quality assurance fee in
four equal installments, at least one month apart.
(4) Notwithstanding paragraph (3), the amount of each hospital's
aggregate quality assurance fee after the application of the fee
percentage that has not been paid by the hospital before June 15,
2012, pursuant to paragraph (3), shall be paid by the hospital no
later than June 15, 2012.
(d) The quality assurance fee, as paid pursuant to this section,
shall be paid by each hospital subject to the fee to the department
for deposit in the Hospital Quality Assurance Revenue Fund. Deposits
may be accepted at any time and will be credited toward the program
period.
(e) This section shall become inoperative if the federal Centers
for Medicare and Medicaid Services denies approval for, or does not
approve before January 1, 2013, the implementation of this article or
Article 5.228 (commencing with Section 14169.1), and either or both
articles cannot be modified by the department pursuant to subdivision
(d) of Section 14169.33 in order to meet the requirements of federal
law or to obtain federal approval.
(f) In no case shall the aggregate fees collected in a federal
fiscal year pursuant to this section, Section 14167.32, and Section
14168.32 exceed the maximum percentage of the annual aggregate net
patient revenue for hospitals subject to the fee that is prescribed
pursuant to federal law and regulations as necessary to preclude a
finding that an indirect guarantee has been created.
(g) (1) Interest shall be assessed on quality assurance fees not
paid on the date due at the greater of 10 percent per annum or the
rate at which the department assesses interest on Medi-Cal program
overpayments to hospitals that are not repaid when due. Interest
shall begin to accrue the day after the date the payment was due and
shall be deposited in the Hospital Quality Assurance Revenue Fund.
(2) In the event that any fee payment is more than 60 days
overdue, a penalty equal to the interest charge described in
paragraph (1) shall be assessed and due for each month for which the
payment is not received after 60 days.
(h) When a hospital fails to pay all or part of the quality
assurance fee on or before the date that payment is due, the
department may, the following day, immediately begin to deduct the
unpaid assessment and interest owed from any Medi-Cal payments or
other state payments to the hospital in accordance with Section
12419.5 of the Government Code, until the full amount is recovered.
All amounts, except penalties, deducted by the department under this
subdivision shall be deposited in the Hospital Quality Assurance
Revenue Fund. The remedy provided to the department by this section
is in addition to other remedies available under law.
(i) The payment of the quality assurance fee shall not be
considered as an allowable cost for Medi-Cal cost reporting and
reimbursement purposes.
(j) The department shall work in consultation with the hospital
community to implement this article and Article 5.228 (commencing
with Section 14169.1).
(k) This subdivision creates a contractually enforceable promise
on behalf of the state to use the proceeds of the quality assurance
fee, including any federal matching funds, solely and exclusively for
the purposes set forth in this article as they existed on the
effective date of this article, to limit the amount of the proceeds
of the quality assurance fee to be used to pay for the health care
coverage of children to the amounts specified in this article, to
limit any payments for the department's costs of administration to
the amounts set forth in this article on the effective date of this
article, to maintain and continue prior reimbursement levels as set
forth in Section 14169.12 on the effective date of that article, and
to otherwise comply with all its obligations set forth in Article
5.228 (commencing with Section 14169.1) and this article provided
that amendments that arise from, or have as a basis, a decision,
advice, or determination by the federal Centers for Medicare and
Medicaid Services relating to federal approval of the quality
assurance fee or the payments set forth in this article or Article
5.228 (commencing with Section 14169.1) shall control for the
purposes of this subdivision.
(l) For the purpose of this article, references to the receipt of
notice by the state of federal approval of the implementation of this
article shall refer to the last date that the state receives notice
of all federal approval or waivers required for implementation of
this article and Article 5.228 (commencing with Section 14169.1).
(m) (1) Effective July 1, 2012, the rates payable to hospitals and
managed health care plans under Medi-Cal shall be the rates then
payable without the supplemental and increased capitation payments
set forth in Article 5.228 (commencing with Section 14169.1).
(2) The supplemental payments and other payments under Article
5.228 (commencing with Section 14169.1) shall be regarded as quality
assurance payments, the implementation or suspension of which does
not affect a determination of the adequacy of any rates under federal
law.
(n) (1) Subject to paragraph (2), the director may waive any or
all interest and penalties assessed under this article in the event
that the director determines, in his or her sole discretion, that the
hospital has demonstrated that imposition of the full quality
assurance fee on the timelines applicable under this article has a
high likelihood of creating a financial hardship for the hospital or
a significant danger of reducing the provision of needed health care
services.
(2) Waiver of some or all of the interest or penalties under this
subdivision shall be conditioned on the hospital's agreement to make
fee payments, or to have the payments withheld from payments
otherwise due from the Medi-Cal program to the hospital, on a
schedule developed by the department that takes into account the
financial situation of the hospital and the potential impact on
services.
(3) A decision by the director under this subdivision shall not be
subject to judicial review.
(4) If fee payments are remitted to the department after the date
determined by the department to be the final date for calculating the
final supplemental payments under this article and Article 5.228
(commencing with Section 14169.1), the fee payments shall be retained
in the fund for purposes of funding supplemental payments supported
by a hospital quality assurance fee program implemented under
subsequent legislation, provided, however, that if supplemental
payments are not implemented under subsequent legislation, then those
fee payments shall be deposited in the Distressed Hospital Fund.
(5) If during the implementation of this article, fee payments
that were due under Article 5.21 (commencing with Section 14167.1)
and Article 5.22 (commencing with Section 14167.31), or Article 5.226
(commencing with Section 14168.1) and Article 5.227 (commencing with
Section 14168.31), are remitted to the department under a payment
plan or for any other reason, and the final date for calculating the
final supplemental payments under those articles has passed, then
those fee payments shall be deposited in the fund to support the uses
established by this article.
14169.33. (a) (1) All fees required to be paid to the state
pursuant to this article shall be paid in the form of remittances
payable to the department.
(2) The department shall directly transmit the fee payments to the
Treasurer to be deposited in the Hospital Quality Assurance Revenue
Fund, created pursuant to Section 14167.35. Notwithstanding Section
16305.7 of the Government Code, any interest and dividends earned on
deposits in the fund from the proceeds of the fee assessed pursuant
to this article shall be retained in the fund for purposes specified
in subdivision (b).
(b) Notwithstanding subdivision (c) of Section 14167.35 and
subdivision (b) of Section 14168.33, all funds from the proceeds of
the fee assessed pursuant to this article in the Hospital Quality
Assurance Revenue Fund, together with any interest and dividends
earned on money in the fund, shall, upon appropriation by the
Legislature, continue to be used exclusively to enhance federal
financial participation for hospital services under the Medi-Cal
program, to provide additional reimbursement to, and to support
quality improvement efforts of, hospitals, and to minimize
uncompensated care provided by hospitals to uninsured patients, in
the following order of priority:
(1) To pay for the department's staffing and administrative costs
directly attributable to implementing Article 5.228 (commencing with
Section 14169.1) and this article, not to exceed five hundred
thousand dollars ($500,000).
(2) To pay for the health care coverage for children in the amount
of eighty million dollars ($80,000,000) for each subject fiscal
quarter for which payments are made under Article 5.228 (commencing
with Section 14169.1).
(3) To make increased capitation payments to managed health care
plans pursuant to Article 5.228 (commencing with Section 14169.1).
(4) To reimburse the General Fund for the increase in the overall
compensation to a private hospital that is attributable to its change
in status from contract hospital to noncontract hospital, pursuant
to subdivision (a) of Section 14169.10.
(5) To make increased payments or grants to hospitals pursuant to
Article 5.228 (commencing with Section 14169.1).
(6) To make increased payments to mental health plans pursuant to
Article 5.228 (commencing with Section 14169.1).
(c) Any amounts of the quality assurance fee collected in excess
of the funds required to implement subdivision (b), including any
funds recovered under subdivision (d) of Section 14169.13 or
subdivision (e) of Section 14169.38, shall be refunded to general
acute care hospitals, pro rata with the amount of quality assurance
fee paid by the hospital, subject to the limitations of federal law.
If federal rules prohibit the refund described in this subdivision,
the excess funds shall be deposited in the Distressed Hospital Fund
to be used for the purposes described in Section 14166.23, and shall
be supplemental to and not supplant existing funds.
(d) Any methodology or other provision specified in Article 5.228
(commencing with Section 14169.1) or this article may be modified by
the department, in consultation with the hospital community, to the
extent necessary to meet the requirements of federal law or
regulations to obtain federal approval or to enhance the probability
that federal approval can be obtained, provided the modifications do
not violate the spirit and intent of Article 5.228 (commencing with
Section 14169.1) or this article and are not inconsistent with the
conditions of implementation set forth in Section 14169.40.
(e) The department, in consultation with the hospital community,
shall make adjustments, as necessary, to the amounts calculated
pursuant to Section 14169.32 in order to ensure compliance with the
federal requirements set forth in Section 433.68 of Title 42 of the
Code of Federal Regulations or elsewhere in federal law.
(f) 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 providers identified in this article as exempt from the
fees specified, including the submission, as may be necessary, of a
request for waiver of the broad-based requirement, waiver of the
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.
(g) Notwithstanding Chapter 3.5 (commencing with Section 11340) of
Part 1 of Division 3 of Title 2 of the Government Code, the
department may implement this article or Article 5.228 (commencing
with Section 14169.1) by means of provider bulletins, all plan
letters, or other similar instruction, without taking regulatory
action. The department shall also provide notification to the Joint
Legislative Budget Committee and to the appropriate policy and fiscal
committees of the Legislature within five working days when the
above-described action is taken in order to inform the Legislature
that the action is being implemented.
14169.34. (a) Notwithstanding any other provision of this article
or Article 5.228 (commencing with Section 14169.1) requiring federal
approvals, the department may impose and collect the quality
assurance fee and may make payments under this article and Article
5.228 (commencing with Section 14169.1), including increased
capitation payments, based upon receiving a letter from the federal
Centers for Medicare and Medicaid Services or the United States
Department of Health and Human Services that indicates likely federal
approval, but only if and to the extent that the letter is
sufficient as set forth in subdivision (b).
(b) In order for the letter to be sufficient under this section,
the director shall find that the letter meets both of the following
requirements:
(1) The letter is in writing and signed by an official of the
federal Centers for Medicare and Medicaid Services or an official of
the United States Department of Health and Human Services.
(2) The director, after consultation with the hospital community,
has determined, in the exercise of his or her sole discretion, that
the letter provides a sufficient level of assurance to justify
advanced implementation of the fee and payment provisions.
(c) Nothing in this section shall be construed as modifying the
requirement under Section 14169.13 that payments shall be made only
to the extent a sufficient amount of funds collected as the quality
assurance fee are available to cover the nonfederal share of those
payments.
(d) Upon notice from the federal government that final federal
approval for the fee model under this article or for any payment
method under Article 5.228 (commencing with Section 14169.1) has been
denied, any fees collected pursuant to this section shall be
refunded and any payments made pursuant to this article or Article
5.228 (commencing with Section 14169.1) shall be recouped, including,
but not limited to, supplemental payments, increased capitation
payments, payments to hospitals by health care plans resulting from
the increased capitation payments, increased payments to mental
health plans, and payments for the health care coverage of children.
To the extent fees were paid by a hospital that also received
payments under this section, the payments may first be recouped from
fees that would otherwise be refunded to the hospital prior to the
use of any other recoupment method allowed under law.
(e) Any payment made pursuant to this section shall be a
conditional payment until all final federal approvals necessary to
fully implement this article and Article 5.228 (commencing with
Section 14169.1) have been received.
(f) The director shall have broad authority under this section to
collect the quality assurance fee for an interim period after receipt
of the letter described in subdivision (a) pending receipt of all
necessary federal approvals. This authority shall include discretion
to determine both of the following:
(1) Whether the quality assurance fee should be collected on a
full or pro rata basis during the interim period.
(2) The dates on which payments of the quality assurance fee are
due.
(g) The department may draw against the Hospital Quality Assurance
Revenue Fund for all administrative costs associated with
implementation under this article or Article 5.228 (commencing with
Section 14169.1).
(h) This section shall be implemented only to the extent federal
financial participation is not jeopardized by implementation prior to
the receipt of all necessary final federal approvals.
14169.35. (a) Notwithstanding any other provision of law, the
director shall have discretion to modify any timeline or timelines in
this article or Article 5.228 (commencing with Section 14169.1) if
the letter that indicates likely federal approval,
as described in Section 14169.34, is not
secured by June 15, 2012, and the director determines that it is
impossible from an operational perspective to implement a timeline or
timelines without the modification.
(b) The department shall notify the fiscal and policy committees
of the Legislature prior to implementing a modified timeline or
timelines under subdivision (a).
(c) The department shall consult with representatives of the
hospital community in developing a modified timeline or timelines
pursuant to this section.
(d) The discretion to modify timelines under this section shall
include, but not be limited to, discretion to accelerate payments to
plans or hospitals.
14169.36. (a) Upon receipt of a letter that indicates likely
federal approval that the director determines is sufficient for
implementation under Section 14169.34, or upon the receipt of all
final federal approvals necessary for the implementation of this
article and Article 5.228 (commencing with Section 14169.1), the
following shall occur:
(1) To the maximum extent possible, and consistent with the
availability of funds in the Hospital Quality Assurance Revenue Fund,
the department shall make all of the payments under Sections
14169.2, 14169.3, and 14169.5, including, but not limited to,
supplemental payments and increased capitation payments, prior to
July 1, 2012.
(2) The department shall make supplemental payments to hospitals
under Article 5.228 (commencing with Section 14169.1) consistent with
the timeframe described in Section 14169.11 or a modified timeline
developed pursuant to Section 14169.35.
(b) Notwithstanding any other provision of this article or Article
5.228 (commencing with Section 14169.1), if the director determines,
on or after June 15, 2012, that there are insufficient funds
available in the Hospital Quality Assurance Revenue Fund to make all
scheduled payments under Article 5.228 (commencing with Section
14169.1) before July 1, 2012, he or she shall consult with
representatives of the hospital community to develop an acceptable
plan for making additional payments to hospitals and managed health
care plans to maximize the use of delinquent fee payments or other
deposits or interest projected to become available in the fund after
June 15, 2012, but before September 15, 2012.
(c) Nothing in this section shall require the department to
continue to make payments under Article 5.228 (commencing with
Section 14169.1) if, after the consultation required under
subdivision (b), the director determines in the exercise of his or
her sole discretion that a workable plan for the continued payments
cannot be developed.
(d) Subdivisions (b) and (c) shall be implemented only if and to
the extent federal financial participation is available for continued
supplemental payments and to providers and continued increased
capitation payments to managed health care plans.
(e) If any payment or payments made pursuant to this section are
found to be inconsistent with federal law, the department shall
recoup the payments by means of withholding or any other available
remedy.
(f) Nothing in this section shall be read as affecting the
department's ongoing authority to continue, after June 30, 2012, to
collect quality assurance fees imposed on or before June 30, 2012.
14169.37. Notwithstanding any other provision of law, if actual
federal approval or a letter that indicates likely federal approval
in accordance with Section 14169.34 has not been received on or
before June 1, 2012, then this article shall become inoperative, and
as of June 1, 2012, is repealed, unless a later enacted statute, that
is enacted before June 1, 2012, deletes or extends that date.
14169.38. (a) This article shall be implemented only as long as
all of the following conditions are met:
(1) Subject to Section 14169.33, the quality assurance fee is
established in a manner that is fundamentally consistent with this
article.
(2) The quality assurance fee, including any interest on the fee
after collection by the department, is deposited in a segregated fund
apart from the General Fund.
(3) The proceeds of the quality assurance fee, including any
interest and related federal reimbursement, may only be used for the
purposes set forth in this article.
(b) No hospital shall be required to pay the quality assurance fee
to the department unless and until the state receives and maintains
federal approval of the quality assurance fee as set forth in this
article and Article 5.228 (commencing with Section 14169.1) from the
federal Centers for Medicare and Medicaid Services.
(c) Hospitals shall be required to pay the quality assurance fee
to the department as set forth in this article only as long as all of
the following conditions are met:
(1) The federal Centers for Medicare and Medicaid Services allows
the use of the quality assurance fee as set forth in this article.
(2) Article 5.228 (commencing with Section 14169.1) is enacted and
remains in effect and hospitals are reimbursed the increased rates
for services during the program period, as defined in Section
14169.1.
(3) The full amount of the quality assurance fee assessed and
collected pursuant to this article remains available only for the
purposes specified in this article.
(d) This article shall become inoperative if either of the
following occurs:
(1) In the event, and on the effective date, of a final judicial
determination made by any court of appellate jurisdiction or a final
determination by the United States Department of Health and Human
Services or the federal Centers for Medicare and Medicaid Services
that any element of this article or any provision of Section
14166.115 cannot be implemented.
(2) In the event both of the following conditions exist:
(A) The federal Centers for Medicare and Medicaid Services denies
approval for, or does not approve before January 1, 2013, the
implementation of Article 5.228 (commencing with Section 14169.1) or
this article.
(B) Either or both articles cannot be modified by the department
pursuant to subdivision (d) of Section 14169.33 in order to meet the
requirements of federal law or to obtain federal approval.
(e) If this article becomes inoperative pursuant to paragraph (1)
of subdivision (d) and the determination applies to any period or
periods of time prior to the effective date of the determination, the
department may recoup all payments made pursuant to Article 5.228
(commencing with Section 14169.1) during that period or those periods
of time.
(f) (1) In the event that all necessary final federal approvals
are not received as described and anticipated under this article or
Article 5.228 (commencing with Section 14169.1), the director shall
have the discretion and authority to develop procedures for
recoupment from managed health care plans, and from hospitals under
contract with managed health care plans, of any amounts received
pursuant to this article or Article 5.228 (commencing with Section
14169.1).
(2) Any procedure instituted pursuant to this subdivision shall be
developed in consultation with representatives from managed health
care plans and representatives of the hospital community.
(3) Any procedure instituted pursuant to this subdivision shall be
in addition to all other remedies made available under the law,
pursuant to contracts between the department and the managed health
care plans, or pursuant to contracts between the managed health care
plans and the hospitals.
14169.39. Notwithstanding any other provision of this article or
Article 5.228 (commencing with Section 14169.1), supplemental
payments or other payments under Article 5.228 (commencing with
Section 14169.1) shall only be required and payable in any quarter
for which a fee payment obligation exists.
14169.40. (a) This article and Article 5.228 (commencing with
Section 14169.1) shall become inoperative and the requirements for
supplemental payments or other payments under Article 5.228
(commencing with Section 14169.1) shall be retroactively invalidated,
on the first day of the first month of the calendar quarter
following notification to the Joint Legislative Budget Committee by
the Department of Finance, that any of the following have occurred:
(1) A final judicial determination by the California Supreme Court
or any California Court of Appeal that the revenues collected
pursuant to this article that are deposited in the Hospital Quality
Assurance Revenue Fund are either of the following:
(A) "General Fund proceeds of taxes appropriated pursuant to
Article XIII B of the California Constitution," as used in
subdivision (b) of Section 8 of Article XVI of the California
Constitution.
(B) "Allocated local proceeds of taxes," as used in subdivision
(b) of Section 8 of Article XVI of the California Constitution.
(2) The department has sought but has not received federal
financial participation for the supplemental payments and other costs
required by this article for which federal financial participation
has been sought.
(3) A lawsuit related to this article, Article 5.228 (commencing
with Section 14169.1), or Section 14166.115 is filed against the
state and a preliminary injunction or other order has been issued
that results in a financial disadvantage to the state.
(4) The director, in consultation with the Department of Finance,
determines that the implementation of this article or Article 5.228
(commencing with Section 14169.1) has resulted in a financial
disadvantage to the state.
(b) For purposes of this section, "financial disadvantage to the
state" means either of the following:
(1) A loss of federal financial participation.
(2) A cost to the General Fund, that is equal to or greater than
one-quarter of 1 percent of the General Fund expenditures authorized
in the most recent annual Budget Act.
(c) (1) The director shall have the authority to recoup any
payments made under Article 5.228 (commencing with Section 14169.1)
if any of the following apply:
(A) Recoupment of payments made under Article 5.228 (commencing
with Section 14169.1) is ordered by a court.
(B) Federal financial participation is not available for payments
made under Article 5.228 (commencing with Section 14169.1) for which
federal financial participation has been sought.
(C) Recoupment of payments made under Article 5.228 (commencing
with Section 14169.1) is necessary to prevent a General Fund cost
that is estimated to be equal to or greater than one-quarter of 1
percent of the General Fund expenditures authorized in the most
recent annual Budget Act and that results from implementation of a
court order or the unavailability of federal financial participation.
(2) In the event payments are recouped for a particular quarter,
fees paid by a hospital for that quarter pursuant to this article
shall be refunded to the extent that the hospital meets both of the
following conditions:
(A) The hospital has actually paid the fee for the subject quarter
and for all prior quarters.
(B) The hospital has returned the payment received pursuant to
Article 5.228 (commencing with Section 14169.1) for that quarter, or
has had that payment recouped through a withholding of funds owed by
Medi-Cal or other state payments, or recouped through other means.
(d) In the event the department determines that recoupment of
supplemental payments is necessary to implement any provision of this
section, the department may recoup payments made pursuant to Article
5.228 (commencing with Section 14169.1) from fees paid by the
hospital pursuant to this article.
(e) Concurrent with invoking any provision of this section, the
director shall notify the fiscal and appropriate policy committees of
the Legislature of the intended action and the specific reason or
reasons for the proposed action.
14169.40.5. 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.
14169.41. This article shall remain in effect only until January
1, 2013, the date of the last payment of quality assurance fee
payments pursuant to this article, or the date of the last payment
from the department pursuant to Article 5.228 (commencing with
Section 14169.1), whichever is later, and as of that date is
repealed, unless a later enacted statute, that is enacted before that
date, deletes or extends that date.
14169.42. (a) If the director determines that this article has
become inoperative pursuant to Section 14169.37, 14169.38, or
14169.40, the director shall execute a declaration stating that this
determination has been made. The director shall retain the
declaration and provide a copy, within five working days of the
execution of the declaration, to the fiscal and appropriate policy
committees of the Legislature.
(b) In addition to the requirements specified in subdivision (a),
the director shall post the declaration on the department's Internet
Web site and the director shall send the declaration to the Secretary
of State, the Secretary of the Senate, the Chief Clerk of the
Assembly, and the Legislative Counsel.
SEC. 4. SEC. 7. 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.