Amended in Senate August 4, 2014

Amended in Senate June 16, 2014

Amended in Assembly January 6, 2014

Amended in Assembly May 1, 2013

Amended in Assembly April 8, 2013

California Legislature—2013–14 Regular Session

Assembly Bill No. 468

Introduced by Assembly Member Chávez

(Principal coauthors: Assembly Members Chesbro and Dahle)

February 19, 2013

An act to begin delete add Sections 14166.152, 14166.153, and 14166.155 to, end delete begin insert amend Section 14301.4 of, and to add Sections 14166.153 and 14301.56 to, end insert the Welfare and Institutions Code, relating to begin delete Medi-Cal, and declaring the urgency thereof, to take effect immediately. end delete begin insert Medi-Cal. end insert

LEGISLATIVE COUNSEL’S DIGEST

AB 468, as amended, Chávez. Medi-Cal: begin delete delivery system reform incentive pool payments. end delete begin insert nondesignated public hospitals. end insert

Existing law provides for the Medi-Cal program, which is administered by the State Department of Health Care Services, under which qualified low-income individuals receive health care services. The Medi-Cal program is, in part, governed and funded by federal Medicaid Program provisions. Existing law requires the department to seek a successor 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 beginning with services provided on or after July 1, 2013, to the extent that additional federal funding is made available pursuant to the Special Terms and Conditions of the demonstration project or waiver, nondesignated public hospitals shall be eligible to receive safety net care pool payments for uncompensated care costs.

This bill begin delete would, beginning with the 2014-15 fiscal year, subject to federal approval and if specified conditions are met, require that nondesignated public hospitals receive delivery system reform incentive pool funding, as specified. The bill would also end delete begin insert would end insert require nondesignated public hospitals to report and certify specified information for begin delete each successor demonstration year. end delete begin insert the 2012-13 fiscal year and each fiscal year thereafter. end insert

begin delete

This bill would declare that it is to take effect immediately as an urgency statute.

end delete begin insert

Existing law authorizes a transferring entity, as defined, to make an intergovernmental transfer (IGT) to the state, and authorizes the department to accept all IGTs from a transferring entity for the purpose of providing support for the nonfederal share of risk-based payments to managed care health plans to enable those plans to compensate providers designated by the transferring entity for Medi-Cal health care services and support of the Medi-Cal program. Existing law, with some exceptions, authorizes the state to assess a fee of 20% on each IGT to reimburse the department for the administrative costs of operating the IGT program and for the support of the Medi-Cal program.

end insert begin insert

This bill would provide that the 20% assessment shall not apply to nondesignated public hospitals. The bill would also require the department to pay rate range increases, as defined, to Medi-Cal managed care plans that contract with the department to provide Medi-Cal services in specified counties for the purpose of providing additional payments to nondesignated public hospitals for purposes of equaling the amount of reimbursement the nondesignated public hospital would have received through certified public expenditures under the fee-for-service payment methodology.

end insert

Vote:  begin delete ²⁄₃ end delete begin insert majority end insert . Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

begin delete

SECTION 1.  

Section 14166.152 is added to the Welfare and
Institutions Code, to read:

14166.152.  

(a) For dates of service on and after July 1, 2014,
nondesignated public hospitals shall be eligible to receive delivery
system reform incentive pool payments to the extent additional
federal funding is made available for this purpose under the
delivery system reform incentive pool in the successor
demonstration project and if the nondesignated public hospitals
comply with the delivery system reform incentive pool funding
requirements set forth in Section 14166.155.

(b) The amount of funds that may be received shall not exceed
the additional federal funding made available for delivery system
reform incentive pool payments to nondesignated public hospitals,
and shall not reduce the amounts that would otherwise be made
available to designated public hospitals in the absence of this
section, including the amounts that designated public hospitals
would be eligible to receive under their delivery system reform
incentive pool plans approved as of January 1, 2012.

(c) Notwithstanding subparagraph (B), if the designated public
hospitals are unable to claim the full amount of federal funding
made available to the designated public hospitals pursuant to
Section 14166.77 and the Special Terms and Conditions, including
through reallocations made pursuant to paragraph (3) of subdivision
(a) of Section 14166.77 as authorized by the Special Terms and
Conditions, and the unused amount of federal funding made
available to the designated public hospitals cannot be used in a
later demonstration year, the department may authorize the unused
funding to be made available to the nondesignated public hospitals.

end delete

begin delete SEC. 2. end delete
begin insert SECTION 1. end insert   

Section 14166.153 is added to the Welfare and
Institutions Code, to read:

14166.153.  

(a)  begin delete Beginning in the 2012-13 fiscal year, within
five months after the end of a successor demonstration year, each end delete
begin insert For the 2012-13 fiscal year and each fiscal year thereafter, each end insert
of the nondesignated public hospitals shall submit to the department
all of the following reports:

(1) The hospital’s Medicare cost report for the project year or
successor demonstration year.

(2) Other cost reporting and statistical data necessary for the
determination of amounts due the hospital under the demonstration
project or successor demonstration project, as requested by the
department.

(b) For each project year or successor demonstration year, the
reports shall identify all of the following:

(1) To the extent applicable, the costs incurred in providing
inpatient hospital services to Medi-Cal beneficiaries on a
fee-for-service basis and physician and nonphysician practitioner
services costs.

(2) The costs incurred in providing hospital services to uninsured
individuals.

(c) Each nondesignated public hospital, or governmental entity
with which it is affiliated, that operates nonhospital clinics or
provides physician, nonphysician practitioner, or other health care
services that are not identified as hospital services under the Special
Terms and Conditions for the demonstration project and successor
demonstration project, shall report and certify all of the
uncompensated Medi-Cal and uninsured costs of the services
furnished. The amount of these uncompensated costs to be claimed
by the department shall be determined by the department in
consultation with the governmental entity so as to optimize the
level of claimable federal Medicaid reimbursement.

(d) Reports submitted under this section shall include all
allowable costs.

(e) The appropriate public official shall certify to all of the
following:

(1) The accuracy of the reports required under this section.

(2) That the expenditures to meet the reported costs comply
with Section 433.51 of Title 42 of the Code of Federal Regulations.

(3) That the sources of funds used to make the expenditures
certified under this section do not include impermissible provider
taxes or donations as defined under Section 1396b(w) of Title 42
of the United States Code or other federal funds. For this purpose,
federal funds do not include delivery system reform incentive pool
payments or patient care revenue received as payment for services
rendered under programs such as nondesignated state health
programs, the Low Income Health Program, Medicare, or
Medicaid.

(f) The certification of public expenditures made pursuant to
this section shall be based on a schedule established by the
department in accordance with federal requirements.

(1) The director may require the nondesignated public hospitals
to submit quarterly estimates of anticipated expenditures, if these
estimates are necessary to obtain interim payments of federal
Medicaid funds.

(2) All reported expenditures shall be subject to reconciliation
to allowable costs, as determined in accordance with applicable
implementing documents for the demonstration project and
successor demonstration project.

(g) The director shall seek Medicaid federal financial
participation for all certified public expenditures reported by the
nondesignated public hospitals and recognized under the successor
demonstration project.

(h) The timeframes for data submission and reporting periods
may be adjusted as necessary in accordance with federal
requirements.

begin delete

SEC. 3.  

Section 14166.155 is added to the Welfare and
Institutions Code, to read:

14166.155.  

(a) (1) Beginning in the 2014-15 fiscal year, if
federal approval is obtained for an amendment to the successor
demonstration project, nondesignated public hospitals shall receive
payments pursuant to this section. The amount of delivery system
reform incentive pool funding, consisting of both the federal and
nonfederal share of payments, that is made available to each
nondesignated public hospital system in the aggregate for the term
of the successor demonstration project shall be based initially on
the delivery system reform proposals that are submitted by the
nondesignated public hospitals to the department for review and
submission to the federal Centers for Medicare and Medicaid
Services for final approval. The initial percentages of delivery
system reform incentive pool funding among the nondesignated
public hospitals for each successor demonstration year shall be
determined based on the annual components as contained in the
approved proposals.

(2) The actual receipt of funds shall be conditioned on the
nondesignated public hospital’s progress toward, and achievement
of, the specified milestones and other metrics established in its
approved delivery system reform incentive pool proposal. A
nondesignated public hospital may carry forward available
incentive pool funding associated with milestones and metrics
from one year to a subsequent period as authorized by the Special
Terms and Conditions and the final delivery system reform
incentive pool protocol.

(3) The department may reallocate the incentive pool funding
available under this section pursuant to conditions specified, and
as authorized by, the Special Terms and Conditions and the final
delivery system reform incentive pool protocol.

(b) Each nondesignated public hospital shall be individually
responsible for progress toward, and achievement of, milestones
and other metrics in its proposal, as well as other applicable
requirements specified in the Special Terms and Conditions and
the final delivery system reform incentive pool protocol, in order
to receive its specified allocation of incentive pool funding under
this section.

(1) The nondesignated public hospital shall submit semiannual
reports and requests for payment to the department by March 31
and the September 30 following the end of the second and fourth
quarters of the successor demonstration year, or comply with any
other process as approved by the federal Centers for Medicare and
Medicaid Services.

(2) Within 14 days after the semiannual report due date, the
nondesignated public hospital system or its affiliated governmental
entity shall make an intergovernmental transfer of funds equal to
the nonfederal share that is necessary to claim the federal funding
for the pool payment related to the achievement or progress metric
that is certified. The intergovernmental transfers shall be deposited
into the Public Hospital Investment, Improvement, and Incentive
Fund, established pursuant to Section 14182.4.

(3) The department shall claim the federal funding and pay both
the nonfederal and federal shares of the incentive payment to the
nondesignated public hospital system or other affiliated
governmental provider, as applicable. If the intergovernmental
transfer is made within the appropriate 14-day timeframe, the
incentive payment shall be disbursed within seven days with the
expedited payment process as approved by the federal Centers for
Medicare and Medicaid Services, otherwise the payment shall be
disbursed within 20 days of when the transfer is made.

(4) The nondesignated public hospital system or other affiliated
governmental provider is responsible for any fee or cost required
to implement the expedited payment process in accordance with
Section 8422.1 of the State Administrative Manual.

(c) The department shall submit for federal approval an
amendment to the successor demonstration project to implement
this section.

(d) In the event of a conflict between any provision of this
section and the Special Terms and Conditions for the successor
demonstration project and the final delivery system reform
incentive pool protocol, the Special Terms and Conditions and the
final delivery system reform incentive pool protocol shall control.

SEC. 4.  

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 improve access to health care services for patients in
underserved areas at the earliest possible time, it is necessary that
this act take effect immediately.

end delete

begin insert

begin insert SEC. 2. end insert   

end insert

begin insert Section 14301.4 of the end insert begin insert Welfare and Institutions Code end insert
begin insert is amended to read: end insert

14301.4.  

(a) It is the intent of the Legislature, to the extent
federal financial participation is not jeopardized and consistent
with federal law, that the intergovernmental transfers described in
this section provide support for the nonfederal share of risk-based
payments to managed care health plans to enable those plans to
compensate providers designated by the transferring entity for
Medi-Cal health care services and for support of the Medi-Cal
program.

(b) For the purposes of this section, the following definitions
apply:

(1) “Intergovernmental transfer” or “IGT” means the transfer
of public funds by the transferring entity to the state in accordance
with the requirements of this section.

(2) “Managed care health plan” means a Medi-Cal managed
care plan contracting with the department under this chapter or
Article 2.7 (commencing with Section 14087.3), Article 2.8
(commencing with Section 14087.5), Article 2.81 (commencing
with Section 14087.96), or Article 2.91 (commencing with Section
14089) of Chapter 7.

(3) “Public provider” means any provider that is able to certify
public expenditures under state and federal Medicaid law.

(4) “Rate range increases” means increases to risk-based
payments to managed care health plans to increase the payments
from the lower bound of the range determined to be actuarially
sound to the upper bound of that range, as determined by the
department’s actuaries to take into account the variations in
underwriting, risk, return on investment, and contingencies.

(5) “Transferring entity” means a public entity, which may be
a city, county, special purpose district, or other governmental unit
in the state, regardless of whether the unit of government is also
a health care provider, except as prohibited by federal law.

(c) To the extent permitted by federal law, a transferring entity
may elect to make an intergovernmental transfer to the state, and
the department may accept all intergovernmental transfers from a
transferring entity, for the purposes of providing support for the
nonfederal share of risk-based payments to managed care health
plans to enable those plans to compensate providers designated
by the transferring entity for Medi-Cal health care services and
for the support of the Medi-Cal program. The transferring entity
shall certify to the department that the funds it proposes to transfer
satisfy the requirements of this section and are in compliance with
all federal rules and regulations.

(d) (1) Pursuant to paragraphs (2), (3), and (4), the state shall,
upon acceptance of the IGT described in subdivision (c), assess a
fee of 20 percent on each IGT subject to this section to reimburse
the department for the administrative costs of operating the IGT
program pursuant to this section and for the support of the
Medi-Cal program.

(2) The IGTs subject to the fee shall be limited to those made
by a transferring entity to provide the nonfederal share of rate
range increases.

(3) The 20-percent assessment shall not apply to IGTs
designated for increases to risk-based payments to managed care
health plans intended to increase reimbursement for designated
public providers begin insert and nondesignated public hospitals end insert for purposes
of equaling the amount of reimbursement the public provider would
have received through certified public expenditures under the
fee-for-service payment methodology.

(4) The 20-percent assessment shall not apply to IGTs authorized
pursuant to Sections 14168.7 and 14182.15.

(e) Participation in the intergovernmental transfers pursuant to
this section is voluntary on the part of the transferring entities for
the purposes of all applicable federal laws.

(f) The director shall seek any necessary federal approvals for
the implementation of this section.

(g) To the extent that the director determines that the payments
made pursuant to this section do not comply with the federal
Medicaid requirements, the director retains the discretion to return
the IGTs or not accept the IGTs.

(h) This section shall be implemented only to the extent that
federal financial participation is not jeopardized.

(i) 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.

(j) This section shall be implemented on July 1, 2011, or the
date on which all necessary federal approvals have been received,
whichever is later.

begin insert

begin insert SEC. 3. end insert   

end insert

begin insert Section 14301.56 is added to the end insert begin insert Welfare and
Institutions Code end insert begin insert , to read: end insert

begin insert

begin insert 14301.56. end insert   

(a) (1) To the extent federal financial participation
is not jeopardized and consistent with federal law, the department
shall pay rate range increases, as defined in paragraph (4) of
subdivision (b) of Section 14301.4, to Medi-Cal managed care
plans that have a contract with the department under Section
14087.98, for the purposes specified in paragraph (2). If a
nonfederal share is necessary to fund the rate range increases, an
affiliated governmental entity may voluntarily provide
intergovernmental transfers as the nonfederal share. The
department shall not be required to pay rate range increases
pursuant to this section if intergovernmental transfers are not
received as the nonfederal share.

(2) The Medi-Cal managed care plans shall pay the rate range
increases provided under this section as additional payments to
nondesignated public hospitals for providing and making available
services to Medi-Cal enrollees of the plan for purposes of equaling
the amount of reimbursement the nondesignated public hospital
would have received through certified public expenditures under
the fee-for-service payment methodology.

(b) The increased payments to Medi-Cal managed care plans
that would be paid consistent with actuarial certification and
enrollment in the absence of this section, including, but not limited
to, payments described in Section 14182.15, shall not be reduced
as a consequence of payment under this section.

end insert