BILL ANALYSIS Ó
AB 498
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( Without Reference to File )
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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|COMMITTEE VOTE: |18-0 |(September 12, |RECOMMENDATION: |concur |
|(Health) | |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
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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.
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.
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4)Increased supplemental payments to certain nursing facilities of
about $3.2 million per year (federal funds). DHCS 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 separate for cost
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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
FN: 0002851
AB 498
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