Amended in Senate September 5, 2013

Amended in Senate August 20, 2013

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 BillNo. 498


Introduced by Assembly Member Chávez

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(Coauthors: Assembly Members Alejo, Bigelow, Chesbro, and Conway)

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(Coauthor: Senator Nielsen)

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February 20, 2013


An act to amendbegin delete Sectionend deletebegin insert Sections 14105.27 andend insert 14166.151 of, and to repeal Sections 14166.152, 14166.153, 14166.154, and 14166.155 of, the Welfare and Institutions Code, relating to Medi-Cal.

LEGISLATIVE COUNSEL’S DIGEST

AB 498, as amended, Chávez. Medi-Cal.

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(1) 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. Existing law provides that a health facility is eligible to receive supplemental reimbursement under the Medi-Cal program if the facility has specified characteristics, including that the facility is owned or operated by the state, a county, a city, a city and county, or health care district. Existing law prohibits claimed expenditures for specified nursing facility services, when combined with the amount received from all other sources of reimbursement from the Medi-Cal program, from exceeding 100% of projected costs, as determined pursuant to the Medi-Cal State Plan, for skilled nursing services at each facility.

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This bill would, instead, prohibit those claimed expenditures from exceeding 100% of allowable costs. The bill would require that supplemental reimbursement be subject to a reconciliation process established in the state plan to ensure that supplemental reimbursement is not made in excess of allowable costs, and to ensure that it is made up to allowable costs.

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(1) 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

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begin insert(2)end insertbegin insertend insertbegin insertTheend insert 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. 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. Existing law requires designated public hospitals to report and certify specified information for each successor demonstration year beginning with the 2012−13 fiscal year.

This bill would revise and recast those provisions. 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 provisions, to retainbegin insert end insert12 of the funds for Medi-Cal related expenditures.

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(2)

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begin insert(3)end insert Under existing law, nondesignated public hospitals may receive fee-for-service payments for inpatient services, as specified. Under existing law, beginning with the 2012-13 fiscal year, subject to federal approval and if specified conditions are met, nondesignated public hospitals may receive delivery system reform incentive pool funding, as specified.

This bill would eliminate those provisions.

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

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

P3    1begin insert

begin insertSECTION 1.end insert  

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begin insertSection 14105.27 of the end insertbegin insertWelfare and Institutions
2Code
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begin insert is amended to read:end insert

3

14105.27.  

(a) Each eligible facility, as described in subdivision
4(b) may, in addition to the rate of payment that the facility would
5otherwise receive for skilled nursing services, receive supplemental
6Medi-Cal reimbursement to the extent provided in this section.

7(b) A facility shall be eligible for supplemental reimbursement
8only if the facility has all of the following characteristics
9continuously during the department’s rate year:

10(1) Provides services to Medi-Cal beneficiaries.

11(2) Is either of the following:

12(A) For the department’s rate year beginning August 1, 2001,
13and for subsequent rate years, a distinct part of an acute care
14hospital providing skilled nursing services. For purposes of this
15section, “acute care hospital” means a facility described by
16subdivision (a) or (b), or both, of Section 1250 of the Health and
17Safety Code.

18(B) For the department’s rate year beginning August 1, 2006,
19and for subsequent rate years, a state home, as defined in Section
20101 (19) of Title 38 of the United States Code.

21(3) Is owned or operated by the state, or by a county, city, city
22and county, or health care district organized pursuant to Chapter
231 (commencing with Section 32000) of Division 23 of the Health
24and Safety Code.

25(c) An eligible facility’s supplemental reimbursement pursuant
26to this section shall be calculated and paid as follows:

27(1) The supplemental reimbursement to an eligible facility, as
28described in paragraph (4), shall be equal to the amount of federal
29financial participation received as a result of the claims submitted
30pursuant to paragraph (2) of subdivision (g).

P4    1(2) In no instance shall the amount certified pursuant to
2paragraph (1) of subdivision (e), when combined with the amount
3received from all other sources of reimbursement from the
4Medi-Cal program, exceed 100 percent ofbegin delete projectedend deletebegin insert allowableend insert
5 costs, as determined pursuant to the Medi-Cal State Plan, for
6distinct part skilled nursing services at each facility.

7(3) Costs associated with the provision of subacute services
8pursuant to Section 14132.25 shall not be certified for supplemental
9reimbursement pursuant to this section.

10(4) The supplemental Medi-Cal reimbursement provided by this
11section shall be distributed under a payment methodology based
12on skilled nursing services provided to Medi-Cal patients at the
13eligible facility, either on a per diem basis, a per discharge basis,
14or any other federally permissible basis. The department shall seek
15approval from the federal Centers for Medicare and Medicaid
16Services for the payment methodology to be utilized, and shall not
17make any payment pursuant to this section prior to obtaining that
18approval.

19(d) (1) It is the Legislature’s intent in enacting this section to
20provide the supplemental reimbursement described in this section
21without any expenditure from the General Fund. An eligible
22 facility, as a condition of receiving supplemental reimbursement
23pursuant to this section, shall enter into, and maintain, an agreement
24with the department for the purposes of implementing this section
25and reimbursing the department for the costs of administering this
26section.

27(2) The state share of the supplemental reimbursement submitted
28to the federal Centers for Medicare and Medicaid Services for
29purposes of claiming federal financial participation shall be paid
30only with funds from the governmental entities described in
31paragraph (3) of subdivision (b) and certified to the state as
32provided in subdivision (e).

33(e) The particular governmental entity, described in paragraph
34(3) of subdivision (b), on behalf of any eligible facility shall do
35all of the following:

36(1) Certify, in conformity with the requirements of Section
37433.51 of Title 42 of the Code of Federal Regulations, that the
38claimed expenditures for distinct part nursing facility services are
39eligible for federal financial participation.

P5    1(2) Provide evidence supporting the certification as specified
2by the department.

3(3) Submit data as specified by the department to determine the
4appropriate amounts to claim as expenditures qualifying for federal
5financial participation.

6(4) Keep, maintain, and have readily retrievable, any records
7specified by the department to fully disclose reimbursement
8amounts to which the eligible facility is entitled, and any other
9records required by the federal Centers for Medicare and Medicaid
10Services.

11(f) The department may require that any governmental entity,
12described in paragraph (3) of subdivision (b), seeking supplemental
13reimbursement under this section enter into an interagency
14agreement with the department for the purpose of implementing
15this section.

16(g) (1) The department shall promptly seek any necessary
17federal approvals, including a federal medicaid waiver, for the
18implementation of this section. If necessary to obtain federal
19approval, the department may limit the program to those costs that
20are allowable expenditures under Title XIX of the federal Social
21Security Act (Subchapter 19 (commencing with Section 1396) of
22Chapter 7 of Title 42 of the United States Code). If federal approval
23is not obtained for implementation of this section, this section shall
24become inoperative.

25(2) The department shall submit claims for federal financial
26participation for the expenditures for the services described in
27subdivision (e) that are allowable expenditures under federal law.

28(3) The department shall, on an annual basis, submit any
29necessary materials to the federal government to provide assurances
30that claims for federal financial participation will include only
31those expenditures that are allowable under federal law.

32(h) In the event there is a final judicial determination by any
33court of appellate jurisdiction or a final determination by the
34administrator of the federal Centers for Medicare and Medicaid
35Services that the supplemental reimbursement provided in this
36section must be made to any facility not described in this section,
37this section shall become immediately inoperative.

38(i) All funds expended pursuant to this section are subject to
39review and audit by the department.

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P6    1(j) Supplemental reimbursement made pursuant to this section
2shall be subject to a reconciliation process established in the
3Medi-Cal State Plan to ensure that it is not made in excess of
4allowable costs, and to ensure that it is made up to allowable costs.

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5

begin deleteSECTION 1.end delete
6begin insertSEC. 2.end insert  

Section 14166.151 of the Welfare and Institutions
7Code
is amended to read:

8

14166.151.  

(a) It is the intent of the Legislature to allow for
9a voluntary process for nondesignated public hospitals to claim
10reimbursement from the safety net care pool in the successor
11demonstration project based on their public structure, to the extent
12that there is funding available for nondesignated public hospitals
13in that pool, as allowed by the federal government, which shall be
14allocated equally between the state and the nondesignated public
15hospital, so that for every dollar of certified public expenditure
16used by the nondesignated public hospital, the nondesignated public
17hospital shall voluntarily allow the state to use a corresponding
18certified public expenditure amount for claiming purposes.

19(b) (1) Beginning with services provided on or after July 1,
202013, nondesignated public hospitals shall be eligible to receive
21safety net care pool payments for uncompensated care costs to the
22extent that additional federal funding is made available pursuant
23to the Special Terms and Conditions for the safety net care pool
24uncompensated care limit of the successor demonstration project
25and if they comply with the requirements set forth in this section.

26(2) The amount of funds that may be claimed pursuant to
27paragraph (1) shall not exceed the additional federal funding made
28available under the safety net care pool for nondesignated public
29hospital uncompensated care costs, and shall not reduce the
30amounts of federal funding for safety net care pool uncompensated
31 care costs that would otherwise be made available to designated
32public hospitals in the absence of this paragraph, including the
33amounts available under the Special Terms and Conditions in effect
34as ofbegin delete April 1, 2013,end deletebegin insert July 1, 2013,end insert and amounts available pursuant
35to Section 15916.

36(3) (A) Notwithstanding paragraph (2), if the designated public
37hospitals do not have sufficient certified public expenditures to
38claim the full amount of federal funding made available to the
39designated public hospitals as referenced in paragraph (2),
40including consideration of the potential for the designated public
P7    1hospitals to have sufficient certified public expenditures in a
2subsequent year, the department may authorize the funding to be
3claimed by the nondesignated public hospitals.

4(B) The department may determine whether designated public
5hospitals do not have sufficient certified public expenditures to
6claim the full amount of federal funding pursuant to subparagraph
7(B) no sooner than after the submission of the cost reporting
8information required pursuant to Section 14166.8 for the applicable
9successor demonstration year.

10(C) If the department makes the determination identified in
11subparagraph (B) based on as-filed cost reporting information
12submitted prior to a final audit, the department shall make the
13determination in consultation with the designated public hospitals
14and shall apply an audit cushion of at least 5 percent to the as-filed
15cost information. If the department makes the determination
16identified in subparagraph (B) based on audited cost reporting
17information, no audit cushion shall be applied.

18(c) Beginning in the 2013-14 fiscal year, within five months
19after the end of a successor demonstration year, nondesignated
20public hospitals shall submit to the department all of the following
21reports:

22(1) The hospital’s Medicare or Medicaid cost report for the
23successor demonstration year.

24(2) Other cost reporting and statistical data necessary for the
25determination of amounts due to the hospital under the successor
26demonstration project, as requested by the department.

27(d) For each successor demonstration year, the reports shall
28identify all of the costs incurred in providing hospital services to
29uninsured individuals.

30(e) A nondesignated public hospital, or the governmental entity
31with which it is affiliated, that operates nonhospital clinics or
32provides physician, nonphysician practitioner, or other health care
33services that are not identified as hospital services under the Special
34Terms and Conditions for the successor demonstration project,
35shall report and certify all of the uncompensated uninsured costs
36of the services furnished.

37(f) Reports submitted under this section shall include all
38allowable costs.

39(g) The appropriate public official shall certify to all of the
40following:

P8    1(1) The accuracy of the reports required under this section.

2(2) That the expenditures to meet the reported costs comply
3with Section 433.51 of Title 42 of the Code of Federal Regulations.

4(3) That the sources of funds used to make the expenditures
5certified under this section do not include impermissible provider
6taxes or donations, as defined under Section 1396b(w) of Title 42
7of the United States Code, or other federal funds. For this purpose,
8federal funds do not include delivery system reform incentive pool
9payments or patient care revenue received as payment for services
10rendered under programs such as nondesignated state health
11programs, the Low Income Health Program, Medicare, or
12Medicaid.

13(h) The certification of public expenditures made pursuant to
14this section shall be based on a schedule established by the
15department in accordance with federal requirements.

16(1) The director may require nondesignated public hospitals to
17submit quarterly estimates of anticipated expenditures, if these
18estimates are necessary to obtain interim payments of federal
19Medicaid funds.

20(2) All reported expenditures shall be subject to reconciliation
21to allowable costs, as determined in accordance with applicable
22implementing documents for the successor demonstration project.

23(i) The timeframes for data submission and reporting periods
24may be adjusted as necessary in accordance with federal
25requirements.

26(j) (1) Beginning in the 2013-14 fiscal year, safety net care
27pool payments for uncompensated care shall be allocated to
28nondesignated public hospitals as follows:

29(A) The department shall determine the maximum amount of
30safety net care pool payments for uncompensated care that is
31available to nondesignated public hospitals for the successor
32demonstration year pursuant to this section. This determination
33shall be made solely with respect to allowable uncompensated care
34costs incurred by nondesignated public hospitals and reported
35pursuant to subdivisions (c) to (i), inclusive.

36(B) The department shall establish, in consultation with the
37nondesignated public hospitals, an allocation methodology to
38determine the amount of safety net care pool payments to be made
39to the nondesignated public hospitals. The allocation methodology
40shall be implemented when the director issues a declaration stating
P9    1that the methodology complies with all applicable federal
2requirements for federal financial participation.

3(2) A safety net care pool payment amount may be paid to a
4nondesignated public hospital, or governmental entity with which
5it is affiliated, pursuant to this section independent of the amount
6of uncompensated uninsured costs that is certified as public
7expenditures pursuant to subdivisions (c) to (i), inclusive, provided
8that, in accordance with the Special Terms and Conditions for the
9successor demonstration project, the recipient hospital shall not
10return any portion of the funds received to any unit of government,
11excluding amounts recovered by the state or federal government.

12(3) Nondesignated public hospitals, or governmental entities
13with which they are affiliated, shall receive the amount established
14pursuant to this subdivision, less the 50 percent retained by the
15state pursuant to subdivision (l), in quarterly interim payments
16during the successor demonstration year. The determination of the
17interim payments shall be made on an interim basis prior to the
18start of each successor demonstration year. The department shall
19use the cost and statistical data that is in subdivisions (c) to (i),
20inclusive.

21(k) (1) No later than April 1 following the end of the relevant
22reporting period for the successor demonstration year, the
23department shall undertake an interim reconciliation of the payment
24amount established pursuant to subdivision (j) for nondesignated
25public hospitals using Medicare and other cost, payment, and
26statistical data submitted by the hospitals for the successor
27demonstration year, and shall adjust payments to the hospitals
28accordingly.

29(2) All payments to nondesignated public hospitals are subject
30to a final reconciliation that is subject to final audits of all
31applicable Medicare and other cost, payment, discharge, and
32statistical data for the successor demonstration year.

33(l) The process for supplemental payments made in subdivisions
34(j) and (k) is a voluntary process the implementation of which is
35limited by this subdivision. The department may submit for federal
36approval a proposed amendment to the successor demonstration
37project to implement this section.

38(1) If a nondesignated public hospital voluntarily agrees to
39participate in a process that, up to the amount of safety net care
40pool funds available, allows the certified public expenditures for
P10   1uncompensated care under this section to be allocated equally
2between the state and the nondesignated public hospital, so that
3for every dollar of certified public expenditure used by the
4nondesignated public hospital, the nondesignated public hospital
5shall voluntarily allow the state to use a corresponding certified
6public expenditure amount for claiming purposes. Participation in
7the safety net care pool under this section is voluntary on the part
8of the nondesignated public hospital for the purposes of all
9applicable federal laws. If a nondesignated public hospital does
10not voluntarily agree to participate in this process, it shall not be
11eligible to receive safety net care pool funds.

12(2) If the budget neutrality requirements established under
13Section XI of the Special Terms and Conditions of the successor
14demonstration project are exceeded, payments made under this
15section shall be reducedbegin insert or refundedend insert to achieve budget neutrality
16begin insert before any other payments under the successor demonstration
17project are madeend insert
. The state’s share of the federal financial
18participation shall be reduced after the provider’s share has been
19exhausted.

20(3) Notwithstanding any other provision of law, upon the receipt
21of a notice of disallowance or deferral from the federal government
22related to any certified public expenditures for uncompensated
23care incurred by the nondesignated public hospital that are used
24for federal claiming under the safety net care pool pursuant to the
25successor demonstration project after this section is implemented,
26and subject to the processes set forth in this section, the department
27and the nondesignated public hospitals shall each be responsible
28for one-half of the repayment of the federal portion of any federal
29disallowance or deferral for the applicable successor demonstration
30year, up to the amount claimed and allocated pursuant to this
31section for that particular year beginning with the 2013-14 fiscal
32year.

33(4) This section shall be implemented only to the extent other
34federal financial participation is not jeopardized.

35(m) Eligible providers, as a condition of receiving supplemental
36reimbursement pursuant to this section, shall enter into, and
37maintain, an agreement with the department for the purposes of
38implementing this section and reimbursing the department for the
39costs of administering this section, including, but not limited to,
P11   1the state personnel costs. No General Fund moneys shall be
2expended for the implementation and administration of this section.

3

begin deleteSEC. 2.end delete
4begin insertSEC. 3.end insert  

Section 14166.152 of the Welfare and Institutions
5Code
is repealed.

6

begin deleteSEC. 3.end delete
7begin insertSEC. 4.end insert  

Section 14166.153 of the Welfare and Institutions
8Code
is repealed.

9

begin deleteSEC. 4.end delete
10begin insertSEC. 5.end insert  

Section 14166.154 of the Welfare and Institutions
11Code
is repealed.

12

begin deleteSEC. 5.end delete
13begin insertSEC. 6.end insert  

Section 14166.155 of the Welfare and Institutions
14Code
is repealed.



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