BILL ANALYSIS Ó
AB 498
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CONCURRENCE IN SENATE AMENDMENTS
AB 498 (Chávez)
As Amended September 5, 2013
Majority vote
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|ASSEMBLY: |74-0 |(May 23, 2013) |SENATE: |33-0 |(September 12, |
| | | | | |2013) |
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Original Committee Reference: HEALTH
SUMMARY : Requires the Department of Health Care Services (DHCS)
to allocate payments for uncompensated care to Non-Designated
Public Hospitals (known more commonly as district hospitals or
NDPHs) from the federally funded Safety Net Care Pool (SNCP)
under the state's Medicaid waiver, subject to specified
conditions. Requires NDPHs, or governmental entities with which
they are affiliated, to receive funding from the SNCP, minus 50%
retained by the state. Requires supplemental reimbursement
under an existing Medi-Cal program that provides supplemental
federal reimbursement to public distinct part nursing facilities
(DP-NFs) to be subject to a reconciliation process.
The Senate amendments delete the Assembly-approved version of
this bill.
EXISTING LAW :
1)Establishes the Medi-Cal program, administered by 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 AB 1467 (Budget Committee), Chapter 23,
Statutes of 2012, 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. Provides that designated public hospitals DPH are
reimbursed based on their costs, and use their own funds
(instead of state General Fund (GF)) as the state match to
draw down federal Medicaid matching funds, pursuant to a
Section 1115 waiver.
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3)Provides, upon approval of a waiver amendment, and state plan
amendment, that NDPH (district hospitals) are to be reimbursed
in the same fashion as DPHs based on certified public
expenditures (CPE), allows NDPHs to receive funds from the
SNCP and the Delivery System Reform Incentive Pool (DSRIP),
and discontinue funding from the state GF. Makes
implementation of the reimbursement changes contingent on
federal approval of all provisions of the funding changes.
(These changes were not implemented.)
4)Suspends existing law for Medi-Cal inpatient FFS reimbursement
to NDPHs upon implementation of the changes in 2) and 3)
above.
5)Permits publicly-owned DP-NFs, in addition to the rate of
payment that the facility would otherwise receive for skilled
nursing services, to receive supplemental Medi-Cal
reimbursement by certifying its projected costs and providing
the state match to draw down additional federal Medicaid
funds.
AS PASSED BY THE ASSEMBLY , this bill exempted cost-based FFS
payments to a NDPH for inpatient services on or after July 1,
2012, and supplemental payments from the SNCP and DSRIP,
established in the 2012 Section 1115 Medi-Cal Waiver, Bridge to
Reform, from being subject to a peer grouping inpatient
reimbursement limitation by DHCS, unless otherwise required by
federal law.
FISCAL EFFECT : According to the Senate Appropriations
Committee:
1)One-time cost of about $300,000 to seek federal approvals by
DHCS (50% GF, 50% federal funds).
2)Payments to NDPHs of about $25 million in 2013-14 and $27.5
million in 2014-15 (federal funds).
3)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 GF
expenditures by a similar amount.
4)Increased supplemental payments to certain nursing facilities
of about $3.2 million per year (federal funds). DHCS
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indicates that changing the criteria for making supplemental
payments from "projected costs" to "allowable costs" (under
federal law) will result in increased payments to certain
nursing facilities that are currently not recovering all their
allowable costs.
COMMENTS : According to the author, this bill has two
provisions. The first enables NDPHs to receive funding from the
SNCP. AB 1467 (Budget Committee) proposed to change
reimbursement to NDPHs, effective July 1, 2012. These changes
were subject to federal approval, which was not received. The
unapproved methodology proposed by AB 1467 would have allowed
supplemental payments and Intergovernmental Transfers to NDPHs,
and would have shifted NDPHs to a cost-based reimbursement based
on CPEs, and 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. AB 1467 required all components of the NDPH
reimbursement changes to be federally approved, if one component
of the proposed changes was 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, and would repeal the other
provisions that have not taken effect because they did not
receive federal approval.
The second provision is clean-up language for AB 430 (Cardenas),
Chapter 171, Statutes of 2001, which allowed public DP-NFs to
claim supplemental federal reimbursement. This second provision
clarifies that DHCS has audit authority over this program, and
may apply a reconciliation process to seek collections of
overpayments and to make corrective payments for underpayments.
This bill would also allow eligible DP-NFs to receive
supplemental federal reimbursement up to allowable costs,
instead of projected costs under existing law. When actual
costs exceed projected costs, eligible DP-NFs are not able to
receive additional supplemental federal reimbursement for their
costs in excess of projected costs, despite federal Medicaid law
allowing supplemental Medicaid reimbursement up to allowable
costs.
Background : A DP-NF is part of a hospital and is certified to
provide skilled nursing services. The facility must be
physically distinguishable from the hospital and fiscally
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separate for cost reporting purposes. AB 430 allows DP-NFs
owned or operated by the state, a county, a city, a city and
county, or health care district to receive supplemental federal
Medicaid reimbursement up to projected costs by certifying their
costs (known as CPEs). There are 31 DP-NFs eligible under the
provision of law enacted by AB 430.
An audit performed by the federal Office of Inspector General
(OIG) found the state did not provide adequate instructions to
DP-NFs to properly calculate the CPEs used to support additional
reimbursement amounts, and did not have adequate monitoring
procedures to ensure that the facilities properly calculated
their reported Medicaid days and expenditures, which resulted in
an overpayment of $3.6 million to three facilities audited by
OIG.
DHCS requested the changes made by this bill related to the
reconciliation process for DP-NFs in response to the OIG audit,
and to draw down additional federal funds for these facilities.
This bill would require a reconciliation process for this
program, and would allow DHCS to increase federal reimbursement
to eligible DP-NFs. DHCS indicates that facilities can
currently only be reimbursed to the lesser of DHCS' projected
costs or the facility's actual cost, and this methodology does
not align with CPE methodology. Under AB 430, the supplemental
reimbursement is capped at the facilities' projected cost, and
facilities have to use the lesser of the two (the projected cost
or actual cost), when calculating supplemental amounts. Based
on 2009-10 projected rates and audit reports, 42% of the
eligible DP-NF's had costs above their projected rates. DHCS
estimates this provision would generate $3.2 million in
additional federal funds for the federal fiscal year 2013-14.
This bill is sponsored by the District Hospital Leadership Forum
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 designated public hospitals.
Analysis Prepared by : Marjorie Swartz / HEALTH / (916)
319-2097
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