BILL ANALYSIS Ó
Senate Appropriations Committee Fiscal Summary
Senator Kevin de León, Chair
AB 498 (Chavez) - Medi-Cal.
Amended: August 20, 2013 Policy Vote: Health 9-0
Urgency: No Mandate: No
Hearing Date: August 30, 2013
Consultant: Brendan McCarthy
SUSPENSE FILE.
Bill Summary: AB 498 would allow the Department of Health Care
Services to seek federal approval to make payments to
Non-Designated Public Hospitals from the federally-funded Safety
Net Care Pool in 2013-14 and 2014-15. The bill requires the
state to retain one-half of any federal funds received for this
purpose.
Fiscal Impact:
One-time cost of about $300,000 to seek federal approvals
by the Department of Health Care Services (50% General Fund,
50% federal funds).
Payments to Non-Designated Public Hospitals of about $25
million in 2013-14 and $27.5 million in 2014-15 (federal
funds).
State expenditures for the Medi-Cal program of about $25
million in 2013-14 and $27.5 million in 2014-15 (federal
funds). These federal funds will allow the state to reduce
General Fund expenditures by a similar amount.
Background: The state's Medi-Cal program provides health care
coverage for low income children, their families, and certain
disabled residents of the state. Of the roughly 8.2 million
people enrolled in Medi-Cal, about 30% are served through the
fee-for-service program. In fee-for-service Medi-Cal, the
Department of Health Care Services pays providers, such as
hospitals, for the costs of providing treatment to program
participants.
Non-Designated Public Hospitals are hospitals that are owned by
hospital districts or municipal entities. There are 46
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Non-Designated Public Hospitals in the state. Under current
practice, Non-Designated Public Hospitals are paid for services
provided to Medi-Cal beneficiaries either based on a contracted
rate or by cost-based reimbursements.
AB 1467 (Committee on Budget, Statutes of 2012), the health
budget trailer bill, proposed to change the method for paying
Non-Designated Public Hospitals for providing services to
Medi-Cal enrollees. Under that bill, subject to federal
approval, the Non-Designated Public Hospitals would use their
certified public expenditures (their own funds expended to
provide care) to draw down federal matching funds. This would
have eliminated the state's obligation to provide funds to match
federal funds. In addition, the Non-Designated Public Hospitals
would have been allowed to draw down federal funding from the
federally-financed Safety Net Care Pool and the Delivery System
Reform Incentive Pool, both of which are authorized under the
state's federal Medicaid hospital financing waiver. Based on
feedback from the federal government, the Department of Health
Care Services has withdrawn the state's application to implement
this new funding mechanism for Non-Designated Public Hospitals.
Proposed Law: AB 498 would allow the Department of Health Care
Services to seek federal approval to make payments to
Non-Designated Public Hospitals from the federally-funded Safety
Net Care Pool in 2013-14 and 2014-15, if federal approval is not
granted for the new funding mechanism for Non-Designated Public
Hospitals authorized in AB 1467.
The bill requires the state to retain one-half of any federal
funds received for this purpose for Medi-Cal related
expenditures.
Related Legislation: SB 239 (Hernandez) would impose a quality
assurance fee on certain hospitals from January 1, 2014 to
December 30, 2015. The bill would require the Department of
Health Care Services to use the resulting revenues (and federal
matching funds) to make supplemental payments to private
hospitals and Medi-Cal managed care plans. That bill is in the
Assembly Health Committee.
Staff Comments: According to the Department of Health Care
Services, allowing Non-Designated Public Hospitals to access
Safety Net Care Pool funds would not reduce the level of federal
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funding available for other hospitals in the state. California
hospitals currently are not currently drawing down the maximum
allowed amount of federal funding under California's current
hospital financing waiver.