BILL ANALYSIS Ó
SENATE COMMITTEE ON HEALTH
Senator Ed Hernandez, O.D., Chair
BILL NO: AB 498
AUTHOR: Chavez
AMENDED: June 20, 2013
HEARING DATE: July 3, 2013
CONSULTANT: Bain
SUBJECT : Medi-Cal.
SUMMARY : Allows the Department of Health Care Services to seek
any necessary federal approvals or waivers to make payments to
Non-Designated Public Hospitals (known more commonly as district
hospitals) from the federally funded Safety Net Care Pool under
the state's Medicaid waiver for uncompensated care for the
2013-14 and 2014-15 fiscal years if federal approval is not
obtained to implement the payment methodology established in the
2013 health budget trailer bill. Requires the state to retain
one-half of the funds for Medi-Cal related expenditure if funds
for uncompensated care are received by the state for this
purpose.
Existing law:
1.Establishes the Medi-Cal program, administered by the
Department of Health Care Services (DHCS), under which
qualified low-income individuals receive health care services.
Requires inpatient hospital services to be a covered benefit
under the Medi-Cal program.
2.Changes, under the 2012 health budget trailer bill, Medi-Cal
inpatient fee-for-service (FFS) reimbursement methodology for
Non Designated Public Hospitals (NDPHs) under the state's
federal Medicaid hospital financing waiver, for services on or
after July 1, 2012. These changes switch hospitals to a
cost-based Medi-Cal reimbursement based on certified public
expenditures (CPE), allow NDPHs to receive funds from the
Safety Net Care Pool (SNCP) and the Delivery System Reform
Incentive Pool (DSRIP), and discontinue funding from the state
General Fund (GF) and from intergovernmental transfers (IGT)
made to draw down federal matching funds. Makes implementation
of the reimbursement changes contingent on federal approval of
all provisions of the funding changes.
3.Suspends existing law for Medi-Cal inpatient FFS reimbursement
to NDPHs upon implementation of the changes in 2) above.
Continued---
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This bill:
1.Allows DHCS to seek any necessary federal approvals or waivers
to make payments to NDPHs from the SNCP for uncompensated care
for the 2013-14 and 2014-15 fiscal years if federal approval
is not obtained to implement the new payment methodology
described in 2) in existing law above.
2.Requires the state to retain one-half of the funds for
Medi-Cal related expenditure if federal SNCP funds for
uncompensated care are received by the state for this purpose.
FISCAL EFFECT : The current version of this bill has not been
analyzed by a fiscal committee.
PRIOR VOTES :
Assembly Health: 18- 0
Assembly Appropriations:17- 0
Assembly Floor: 74- 0
COMMENTS :
1.Author's statement. In the 2011-12 budget, the state proposed
to move NDPHs to a CPE reimbursement process, saving the state
about $100 million. The conversion was tied to the approval of
two other programs to access other federal funds, the SNCP and
the DSRIP, through the state's Section 1115 federal Medicaid
Waiver. Unfortunately, the DSRIP program is unlikely to be
approved. This will prevent the entire proposal from moving
forward because it relies on federal approval for all three
pieces. AB 498 will untie the three programs and allow the
state to seek additional federal funds for NDPHs through the
SNCP.
2.Background. NDPHs are hospitals owned by hospital districts or
municipal entities. There are 46 NDPHs in California.
NDPHs are currently reimbursed by Medi-Cal based on a negotiated
per diem rate if they contract with the state, or they receive
cost-based reimbursement if they do not (referred to as
"non-contract hospitals"). The fund sources for these Medi-Cal
payments are the state GF and federal funds. In addition to
the current per diem or non-contract payments, NDPHs receive
$1.9 million in supplemental payments (from the NDPH
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Supplemental Fund, which is funded by GF and federal funds),
and supplemental payments authorized by AB 113 (Monning),
Chapter 20, Statutes of 2011, through the NDPH
Intergovernmental Transfer Program (which is funded by local
governments transferring funds to the state via an
intergovernmental transfer (IGTs), which is then matched with
federal Medicaid funds).
AB 1467, (Budget Committee), Chapter 23, Statutes of 2012. The
2012 trailer bill proposed to change reimbursement to NDPHs,
effective July 1, 2012. These changes were subject to federal
approval. The new methodology under AB 1467 would have
eliminated supplemental payments and IGTs to NDPHs, and would
have shifted NDPHs to a cost-based reimbursement based on
certified public expenditures (CPEs). This would enable these
hospitals to be paid up to the maximum amount allowable under
federal Medicaid law (known as the "upper payment limit" or
UPL). Under this funding shift, hospital districts would put
up the state match (instead of the GF) to draw down federal
Medicaid matching funds. This proposal was intended to result
in savings to the GF and allow NDPHs to draw down additional
federal funds (described below). The proposed change in
methodology would result in NDPHs being reimbursed for their
inpatient Medi-Cal FFS days in the same manner as designated
public hospitals (DPHs,) which are the 19 county and
University of California hospitals, in that they will use
their CPEs to draw down federal funds.
In addition, AB 1467 would have made NDPHs eligible to receive
payments from the SNCP and the DSRIP, fund sources under the
waiver for which they are not currently eligible. The funds
from the SNCP would be used to offset NDPH's uncompensated
care costs. These changes were estimated to result in savings
of approximately $95 million GF.
The reimbursement changes proposed by AB 1467 were contingent
upon DHCS receiving federal approval via an amendment to the
Section 1115 Medicaid Demonstration Waiver. However, DHCS
indicated these changes were not likely to be approved by the
federal government, and it withdrew the proposal in the 2013
May Revise. Because AB 1467 required all components of the
NDPH reimbursement changes to be federally approved, if one
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component of the proposed changes is not implemented, the
other provisions are not implemented either.
This bill would enable one provision of the existing proposal
(allowing NDPH to receive funds from the SNCP) to go forward
without shifting NDPHs to CPEs and without allowing these
hospitals to access the DSRIP. Under this bill, NDPHs estimate
they will receive $50 million in 2013-14 from the SNCP and $55
million in 2014-15.
3.Federal Medicaid waiver. In November 2010, California
received federal approval for a new five year Section 1115
Medi-Cal Demonstration/Pilot Project Waiver, entitled "A
Bridge to Reform." This waiver is a renewal of the 2005
Hospital Financing /Uninsured Waiver and includes a
continuation of the hospital financing provisions from the
2005 waiver but with modifications to the allocation of SNCP
funds. Under the waiver, DPHs make CPEs and use IGTs to draw
down federal funds.
4.Prior legislation.
a. AB 1467 (Budget Committee), Chapter 23, Statutes
of 2012 proposed to change the reimbursement methodology
and fund source for reimbursement to NDPHs, as described
above.
b. AB 113 (Monning), Chapter 20, Statutes of 2011,
established the NDPH IGT Program, administered by the
DHCS, under which public entities voluntarily transfer
funds to the state for the purpose of drawing down
federal funds to make supplemental Medi-Cal payments to
these NDPHs.
c. AB 102 (Budget Committee), Chapter 29, Statutes of
2011, requires DHCS to implement a new inpatient payment
methodology based on diagnosis-related groups (DRGs).
d. SB 853 (Budget and Fiscal Review Committee),
Chapter 717, Statutes of 2010, requires DHCS, subject to
federal approval, to develop and implement a Medi-Cal
payment methodology based on DRGs for private inpatient
hospital services.
e. SB 208 (Steinberg), Chapter 714, Statutes of 2010,
implemented provisions of the 2010 Section 1115 Medicaid
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waiver including establishing the DSRIP Fund consisting
of IGTs from counties or other specified governmental
entities, to be matched with federal funds and to be
used for investment, improvement, and incentive payments
for DPHs.
1.Support. This bill is sponsored by the District Hospital
Leadership Forum (DHLF) and supported by individual NDPHs.
Proponents argue this bill will assist in drawing down
additional federal funds for NDPH, would assist these
hospitals financially, would assist low-income uninsured
patients served by these hospitals, and would not divert funds
from DPH.
SUPPORT AND OPPOSITION :
Support: District Hospital Leadership Forum (sponsor)
Antelope Valley Hospital
Association of California Healthcare Districts
City of Alameda Health Care District
Corcoran District Hospital
Eastern Plumas Health Care
El Camino Hospital
Hazel Hawkins Memorial Hospital
Hi-Desert Medical Center
John C. Fremont Healthcare District
Kaweah Delta Health Care District
Lompoc Valley Medical Center
Marin General Hospital
Oak Valley Hospital District
Palm Drive Hospital
Palomar Health
Pioneers Memorial Healthcare District
Salinas Valley Memorial Healthcare System
San Bernardino Mountains Community Hospital District
San Gorgonio Memorial Hospital
Sierra View District Hospital
Sonoma Valley Hospital
Surprise Valley Health Care District
Tri-City Medical Center
Tulare Regional Medical Center
Washington Hospital Healthcare System
Oppose: None received.
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