BILL ANALYSIS Ó
Senate Appropriations Committee Fiscal Summary
Senator Kevin de León, Chair
AB 498 (Chavez) - Medi-Cal.
Amended: September 5, 2013 Policy Vote: Health 7-0
Urgency: No Mandate: No
Hearing Date: September 11, 2013
Consultant: Brendan McCarthy
This bill meets the criteria for referral to the Suspense File.
This bill was referred to this committee pursuant to Senate Rule
29.10(b). Under that rule, this committee can only return the
bill to the Senate Floor or vote to hold it in committee. The
bill cannot be sent to the 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. The bill would also make changes to the process for
making supplemental payments to certain nursing facilities.
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.
Increased supplemental payments to certain nursing
facilities of about $3.2 million per year (federal funds).
The Department of Health Care Services indicates that
changing the criteria for making supplemental payments from
"projected costs" to "allowable costs" (under federal law)
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will result in increased payments to certain nursing
facilities that are currently not recovering all their
allowable costs.
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
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.
Under current law, publicly-owned district part nursing
facilities are eligible to receive supplemental payments for
services provided to Medi-Cal beneficiaries, in addition to the
standard Medi-Cal payments made to nursing facilities. The
eligible nursing facilities are allowed to use their own
projected, uncompensated costs to draw down additional federal
funding. Under current law, eligible nursing facilities use
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their own projected costs to draw down federal funding and there
is no after-the-fact reconciliation process.
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.
The bill would also make changes to the process for making
supplemental payments to certain nursing facilities.
Specifically, the bill would change existing law to require that
supplemental payments made to publicly-owned distinct part
nursing facilities do not exceed 100% of allowable costs (as
opposed to projected costs). The bill also authorizes the
Department to use a reconciliation process to ensure that
supplemental payments do not exceed allowable costs.
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
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.