Amended in Senate June 20, 2013

Amended in Assembly May 7, 2013

Amended in Assembly April 23, 2013

Amended in Assembly March 19, 2013

California Legislature—2013–14 Regular Session

Assembly Bill No. 498

Introduced by Assembly Member Chávez

February 20, 2013

An act to begin delete add Section 14166.156 to end delete begin insert amend Section 14166.151 of end insert the Welfare and Institutions Code, relating to Medi-Cal.

LEGISLATIVE COUNSEL’S DIGEST

AB 498, as amended, Chávez. Medi-Cal.

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, subject to federal approval, modifies the inpatient fee-for-service reimbursement methodology for nondesignated public hospitals, as defined, under a specified demonstration project for services on or after July 1, 2012. begin insert Existing law provides that beginning with the 2012-13 fiscal year, and if specified conditions are met, nondesignated public hospitals, or governmental entities with which the hospitals are affiliated, shall be eligible to receive safety net care pool payments for uncompensated care from the Health Care Support Fund. Existing law provides that these provisions shall become operative on the date that all necessary federal approvals have been obtained to implement these and other related provisions. end insert

begin delete

This bill would prohibit a payment made to a nondesignated public hospital pursuant to these provisions from being subject to a peer grouping inpatient reimbursement limitation established by the department, unless otherwise required by federal law.

end delete begin insert

This bill would instead authorize the department to seek necessary federal approvals or waivers to separately implement the safety net care pool payments for uncompensated care provisions for the 2013-14 and 2014-15 fiscal years. The bill would require the state, if the state receives federal safety net care pool funds for uncompensated care under these provision, to retain 1⁄2 of the funds for Medi-Cal related expenditures.

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

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

begin insert

begin insert SECTION 1. end insert   

end insert

begin insert Section 14166.151 of the end insert begin insert Welfare and Institutions
Code end insert begin insert is amended to read: end insert

14166.151.  

(a) It is the intent of the Legislature to reform the
inpatient fee-for-service reimbursement methodology for
nondesignated public hospitals based on their public structure in
order to provide new opportunities for nondesignated public
hospitals to receive reimbursement under the successor
demonstration project for care provided to the uninsured and to
receive new incentive payments for achievement related to delivery
system reform.

(b) Subject to subdivision (c), beginning with services provided
on or after July 1, 2012, fee-for-service payments to nondesignated
public hospitals for inpatient services shall be governed by this
subdivision. Each nondesignated public hospital shall receive as
payment for inpatient hospital services provided to Medi-Cal
beneficiaries during any successor demonstration year, the federal
financial participation claimed by the department based on the
hospital’s allowable costs incurred in providing those services,
subject to all of the following:

(1) Nondesignated public hospitals shall comply with the
requirements of Section 14166.152. The payments authorized in
this section shall be subject to audit and a final reconciliation where
an overpayment to the nondesignated public hospital shall result
in a collection of the overpayment and an underpayment to the
nondesignated public hospital shall result in a corrective payment.

(2) (A) Nondesignated public hospitals shall be eligible to
receive safety net care pool payments for uncompensated care
costs to the extent that additional federal funding is made available
pursuant to the Special Terms and Conditions for the safety net
care pool uncompensated care limit of the successor demonstration
project and if they comply with the requirements set forth in
Section 14166.154.

(B) The amount of funds that may be claimed pursuant to
subparagraph (A) shall not exceed the additional federal funding
made available under the safety net care pool for nondesignated
public hospital uncompensated care costs, and shall not reduce the
amounts of federal funding for safety net care pool uncompensated
care costs that would otherwise be made available to designated
public hospitals in the absence of this paragraph, including the
amounts available under the Special Terms and Conditions in effect
as of April 1, 2012, and amounts available pursuant to Section
15916.

(C) (i) Notwithstanding subparagraph (B), if the designated
public hospitals do not have sufficient certified public expenditures
to claim the full amount of federal funding made available to the
designated public hospitals as referenced in subparagraph (B),
including consideration of the potential for the designated public
hospitals to have sufficient certified public expenditures in a
subsequent year, the department may authorize the funding to be
claimed by the nondesignated public hospitals.

(ii) The department may determine whether designated public
hospitals do not have sufficient certified public expenditures to
claim the full amount of federal funding pursuant to clause (i) no
sooner than after the submission of the cost reporting information
required pursuant to Section 14166.8 for the applicable successor
demonstration year.

(iii) If the department makes the determination identified in
clause (ii) based on as-filed cost reporting information submitted
prior to a final audit, the department shall make the determination
in consultation with the designated public hospitals and shall apply
an audit cushion of at least 5 percent to the as-filed cost
information. If the department makes the determination identified
in clause (ii) based on audited cost reporting information, no audit
cushion shall be applied.

(3) (A) 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
paragraph, 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 such
unused funding to be made available to the nondesignated public
hospitals.

(c) (1) (A) The reimbursement methodology developed
pursuant to subdivision (b) shall be effective beginning July 1,
2012. If all necessary federal approvals have not been received by
July 1, 2012, then the effective date shall be retroactive to July 1,
2012. Between July 1, 2012, and when all necessary federal
approvals have been received, any payments made pursuant to any
methodology replaced by subdivision (b) shall be deemed as
interim payments subject to offsetting and recoupment against
payments made under subdivision (b) pursuant to Section 51047
of Title 22 of the California Code of Regulations.

(B) Subject to paragraph (2), beginning January 1, 2014, the
reimbursement methodology developed pursuant to subdivision
(b), which shall be in effect July 1, 2012, through and including
December 31, 2013, shall continue for those nondesignated public
hospitals that certify voluntary participation as described in clause
(i), if the director executes a declaration on or before December
31, 2013, certifying all of the following:

(i) The governmental entities that own or operate a
nondesignated public hospital, or hospitals, have provided
certifications of voluntary participation in the reimbursement
methodology pursuant to subdivision (b).

(ii) Any necessary federal approvals have been obtained.

(iii) Continuation of the reimbursement methodology for those
nondesignated public hospitals certifying voluntary participation
would be cost beneficial to the state.

(2) On December 31, 2013, if one or more of the nondesignated
public hospitals subject to the reimbursement methodology
described in subdivision (b) have not provided written certification
of voluntariness described in clause (i) of subparagraph (B) of
paragraph (1), or if the director determines, for any reason, that
the reimbursement methodology described in subdivision (b)
cannot be implemented on or after January 1, 2014, then the
director shall execute a declaration certifying that the
reimbursement methodology described in subdivision (b) cannot
continue to be implemented for all or one or more of the
nondesignated public hospitals, in which case subdivision (e) shall
be implemented on January 1, 2014.

(d) Upon implementation of subparagraph (A) of paragraph (1)
of subdivision (c), implementation of the laws and regulations
listed in paragraphs (1) to (4), inclusive, shall be suspended with
respect to fee-for-service payments to all nondesignated public
hospitals for inpatient services through and including December
31, 2013. Implementation of the laws and regulations listed in
paragraphs (1) to (4), inclusive, shall also be suspended with
respect to fee-for-service payments to nondesignated public
hospitals that certify voluntary participation if a declaration is
executed pursuant to subparagraph (B) of paragraph (1) of
subdivision (c), beginning on January 1, 2014, and until the
expiration of the successor demonstration project.

(1) The Nondesignated Public Hospital Medi-Cal Rate
Stabilization Act in Article 5.17 (commencing with Section
14165.55).

(2) The inpatient fee-for-service per diem rate authorized in
Article 2.6 (commencing with Section 14081).

(3) The reimbursement methodology for fee-for-service inpatient
services in Sections 14105 and 14105.15, and Article 7.5
(commencing with Section 51536) of Title 22 of the California
Code of Regulations.

(4) Section 14166.17.

(e) Subject to the conditions in paragraph (2) of subdivision (c),
on January 1, 2014, the percentage of each intergovernmental
transfer amount retained pursuant to subdivision (j) of Section
14165.57 shall be increased to 20 percent to reimburse the
department, or transferred to the General Fund, for the
administrative costs of operating the Nondesignated Public Hospital
Intergovernmental Transfer Program and for the benefit of the
Medi-Cal program.

(f)  begin insert (1) end insert begin insert   end insert This section and Sections 14166.152, 14166.153,
14166.154, and 14166.155 shall become operative on the date all
necessary federal approvals have been obtained to implement all
of these sections.

begin insert

(2) Notwithstanding paragraph (1) of this subdivision and
Section 14166.154, if the necessary federal approvals are not
obtained to implement all of the sections set forth in paragraph
(1), the department may seek any necessary federal approvals or
waivers to separately implement the safety net care pool payments
for uncompensated care, as described in paragraph (2) of
subdivision (b) of this section and Section 14166.154, for the
2013-14 and 2014-15 fiscal years. If federal safety net care pool
funds for uncompensated care are received by the state for this
purpose, the state shall retain one-half of the funds for Medi-Cal
related expenditures.

end insert

begin delete

SECTION 1.  

Section 14166.156 is added to the Welfare and
Institutions Code, to read:

14166.156.  

If a payment to a nondesignated public hospital is
made pursuant to Section 14166.151, the reimbursement shall not
be subject to a peer grouping inpatient reimbursement limitation
established by the department, unless otherwise required by federal
law.

end delete