BILL ANALYSIS Ó
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THIRD READING
Bill No: AB 498
Author: Chávez (R)
Amended: 8/20/13 in Senate
Vote: 21
SENATE HEALTH COMMITTEE : 9-0, 7/3/13
AYES: Hernandez, Anderson, Beall, De León, DeSaulnier, Monning,
Nielsen, Pavley, Wolk
SENATE APPROPRIATIONS COMMITTEE : 7-0, 8/30/13
AYES: De León, Walters, Gaines, Hill, Lara, Padilla, Steinberg
ASSEMBLY FLOOR : 74-0, 5/23/13 - See last page for vote
SUBJECT : Medi-Cal
SOURCE : District Hospital Leadership Forum
DIGEST : This bill allows the Department of Health Care
Services (DHCS) to seek federal approval to make payments to
Non-Designated Public Hospitals (NDPH) from the
federally-funded Safety Net Care Pool (SNCP) in 2013-14 and
2014-15. This bill requires the state to retain one-half of any
federal funds received for this purpose.
ANALYSIS :
Existing law:
1. Establishes the Medi-Cal program, administered by DHCS, under
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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
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 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.
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.
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
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current per diem or non-contract payments, NDPHs receive $1.9
million in supplemental payments (from the NDPH 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 a IGTs, which is then matched with federal Medicaid
funds).
AB 1467, (Assembly 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 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 component
of the proposed changes is not implemented, the other provisions
are not implemented either.
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This bill enables 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.
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.
Prior Legislation
AB 1467 (Assembly Budget Committee, Chapter 23, Statutes of
2012) proposed to change the reimbursement methodology and fund
source for reimbursement to NDPHs, as described above.
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.
AB 102 (Assembly Budget Committee, Chapter 29, Statutes of 2011)
requires DHCS to implement a new inpatient payment methodology
based on diagnosis-related groups (DRGs).
SB 853 (Senate 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.
SB 208 (Steinberg, Chapter 714, Statutes of 2010) implemented
provisions of the 2010 Section 1115 Medicaid 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.
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FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
One-time cost of about $300,000 to seek federal approvals by
DHCS (50% General Fund, 50% federal funds).
Payments to NDPHs 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.
SUPPORT : (Verified 9/3/13)
District Hospital Leadership Forum (source)
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
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Washington Hospital Healthcare System
ARGUMENTS IN 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.
ASSEMBLY FLOOR : 74-0, 05/23/13
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Bigelow, Bloom,
Blumenfield, Bocanegra, Bonilla, Bonta, Bradford, Brown,
Buchanan, Ian Calderon, Campos, Chau, Chávez, Chesbro, Conway,
Cooley, Dahle, Daly, Dickinson, Donnelly, Eggman, Fong, Fox,
Frazier, Beth Gaines, Garcia, Gatto, Gomez, Gordon, Gorell,
Gray, Hagman, Hall, Harkey, Roger Hernández, Jones-Sawyer,
Levine, Linder, Logue, Lowenthal, Maienschein, Mansoor,
Medina, Melendez, Mitchell, Morrell, Mullin, Muratsuchi,
Nazarian, Nestande, Olsen, Pan, Patterson, Perea, V. Manuel
Pérez, Quirk, Quirk-Silva, Rendon, Salas, Skinner, Stone,
Ting, Wagner, Weber, Wieckowski, Wilk, Williams, Yamada, John
A. Pérez
NO VOTE RECORDED: Grove, Holden, Jones, Waldron, Vacancy,
Vacancy
JL:d 9/3/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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