Amended in Senate April 17, 2013

Senate BillNo. 239


Introduced by Senators Hernandez and Steinberg

February 12, 2013


An actbegin insert to amend Section 14167.35 of, and to add Article 5.230 (commencing with Section 14169.51) and Article 5.231 (commencing with Section 14169.71) to Chapter 7 of Part 3 of Division 9 of, the Welfare and Institutions Code,end insert relating to Medi-Calbegin insert, and declaring the urgency thereof, to take effect immediatelyend insert.

LEGISLATIVE COUNSEL’S DIGEST

SB 239, as amended, Hernandez. Medi-Cal: hospital quality assurance fee.

Existing law provides for the Medi-Cal program, which is administered by the State Department of Health Care Services, under which qualified low-income individuals receive health care services. The Medi-Cal program is, in part, governed and funded by federal Medicaid Program provisions. Existing law, subject to federal approval, imposes a quality assurance fee, as specified, on certain general acute care hospitals from July 1, 2011, through December 31, 2013. Existing law, subject to federal approval, requires the fee to be deposited into the Hospital Quality Assurance Revenue Fund, and requires that the moneys in the fund be used, upon appropriation by the Legislature, only for certain purposes, including, among other things, paying for health care coverage for children and making supplemental payments for certain services to private hospitals, increased capitation payments to Medi-Cal managed care plans, and increased payments to mental health plans.

This bill would state the intent of the Legislature to impose a quality assurance fee to be paid by hospitals, which would be used to increase federal financial participation in order to make supplemental Medi-Cal payments to hospitals for the period of January 1, 2014, through December 31, 2015, and to help pay for health care coverage for low-income children. This bill would require the department to make every effort to obtain the necessary federal approvals to implement the quality assurance fee as described.

begin insert

This bill would, subject to federal approval, impose a hospital quality assurance fee, as specified, on certain general acute care hospitals from January 1, 2014, through December 30, 2015, to be deposited into the Hospital Quality Assurance Revenue Fund. This bill would, subject to federal approval, impose a hospital quality assurance fee, as specified, on certain general acute care hospitals from January 1, 2014, through December 30, 2015, to be deposited into the Hospital Quality Assurance Revenue Fund. The bill would, subject to federal approval, require supplemental payments to be made to private hospitals for certain services and increased capitation payments to be made to Medi-Cal managed care plans, as specified. The bill would also make conforming changes.

end insert
begin insert

This bill would declare that it is to take effect immediately as an urgency statute.

end insert

Vote: begin deletemajority end deletebegin insert23end insert. Appropriation: no. Fiscal committee: begin deleteno end deletebegin insertyesend insert. State-mandated local program: no.

The people of the State of California do enact as follows:

P2    1

SECTION 1.  

The Legislature finds and declares both of the
2following:

3(a) The Legislature continues to recognize the essential role that
4hospitals play in serving the state’s Medi-Cal beneficiaries. To
5that end, it has been, and remains, the intent of the Legislature to
6improve funding for hospitals and obtain all available federal funds
7to make supplemental Medi-Cal payments to hospitals.

8(b) It is the intent of the Legislature that funding provided to
9hospitals through a hospital quality assurance fee be explored with
10the goal of increasing access to care and improving hospital
11reimbursement through supplemental Medi-Cal payments to
12hospitals.

P3    1

SEC. 2.  

(a) It is the intent of the Legislature to impose a quality
2assurance fee to be paid by hospitals, which would be used to
3increase federal financial participation in order to make
4supplemental Medi-Cal payments to hospitals for the period of
5January 1, 2014, through December 31, 2015, and to help pay for
6health care coverage for low-income children.

7(b) The State Department of Health Care Services shall make
8every effort to obtain the necessary federal approvals to implement
9the quality assurance fee described in subdivision (a) in order to
10make supplemental Medi-Cal payments to hospitals for the period
11of January 1, 2014, through December 31, 2015.

12(c) It is the intent of the Legislature that the quality assurance
13fee be implemented only if all of the following conditions are met:

14(1) The quality assurance fee is established in consultation with
15the hospital community.

16(2) The quality assurance fee, including any interest earned after
17collection by the department, is deposited into segregated funds
18apart from the General Fund and used exclusively for supplemental
19Medi-Cal payments to hospitals, health care coverage for
20low-income children, and for the direct costs of administering the
21program by the department.

22(3) No hospital shall be required to pay the quality assurance
23fee to the department unless and until the state receives and
24maintains federal approval of the quality assurance fee and related
25supplemental payments to hospitals.

26(4) The full amount of the quality assurance fee assessed and
27collected remains available only for the purposes specified by the
28Legislature in this act.

29begin insert

begin insertSEC. 3.end insert  

end insert

begin insertSection 14167.35 of the end insertbegin insertWelfare and Institutions Codeend insert
30begin insert is amended to read:end insert

31

14167.35.  

(a) The Hospital Quality Assurance Revenue Fund
32is hereby created in the State Treasury.

33(b) (1) All fees required to be paid to the state pursuant to this
34article shall be paid in the form of remittances payable to the
35department.

36(2) The department shall directly transmit the fee payments to
37the Treasurer to be deposited in the Hospital Quality Assurance
38Revenue Fund. Notwithstanding Section 16305.7 of the
39Government Code, any interest and dividends earned on deposits
P4    1in the fund shall be retained in the fund for purposes specified in
2subdivision (c).

3(c) All funds in the Hospital Quality Assurance Revenue Fund,
4together with any interest and dividends earned on money in the
5fund, shall, upon appropriation by the Legislature, be used
6exclusively to enhance federal financial participation for hospital
7services under the Medi-Cal program, to provide additional
8reimbursement to, and to support quality improvement efforts of,
9hospitals, and to minimize uncompensated care provided by
10hospitals to uninsured patients, in the following order of priority:

11(1) To pay for the department’s staffing and administrative costs
12directly attributable to implementing Article 5.21 (commencing
13with Section 14167.1) and this article, including any administrative
14fees that the director determines shall be paid to mental health
15plans pursuant to subdivision (d) of Section 14167.11 and
16repayment of the loan made to the department from the Private
17Hospital Supplemental Fund pursuant to the act that added this
18section.

19(2) To pay for the health care coverage for children in the
20amount of eighty million dollars ($80,000,000) for each subject
21fiscal quarter for which payments are made under Article 5.21
22(commencing with Section 14167.1).

23(3) To make increased capitation payments to managed health
24care plans pursuant to Article 5.21 (commencing with Section
2514167.1).

26(4) To pay funds from the Hospital Quality Assurance Revenue
27Fund pursuant to Section 14167.5 that would have been used for
28grant payments and that are retained by the state, and to make
29increased payments to hospitals, including grants, pursuant to
30Article 5.21 (commencing with Section 14167.1), both of which
31shall be of equal priority.

32(5) To make increased payments to mental health plans pursuant
33to Article 5.21 (commencing with Section 14167.1).

34(d) Any amounts of the quality assurance fee collected in excess
35of the funds required to implement subdivision (c), including any
36funds recovered under subdivision (d) of Section 14167.14 or
37subdivision (e) of Section 14167.36, shall be refunded to general
38acute care hospitals, pro rata with the amount of quality assurance
39fee paid by the hospital, subject to the limitations of federal law.
40If federal rules prohibit the refund described in this subdivision,
P5    1the excess funds shall be deposited in the Distressed Hospital Fund
2to be used for the purposes described in Section 14166.23, and
3shall be supplemental to and not supplant existing funds.

4(e) Any methodology or other provision specified in Article
55.21 (commencing with Section 14167.1) and this article may be
6modified by the department, in consultation with the hospital
7community, to the extent necessary to meet the requirements of
8federal law or regulations to obtain federal approval or to enhance
9the probability that federal approval can be obtained, provided the
10modifications do not violate the spirit and intent of Article 5.21
11(commencing with Section 14167.1) or this article and are not
12inconsistent with the conditions of implementation set forth in
13Section 14167.36.

14(f) The department, in consultation with the hospital community,
15shall make adjustments, as necessary, to the amounts calculated
16pursuant to Section 14167.32 in order to ensure compliance with
17the federal requirements set forth in Section 433.68 of Title 42 of
18the Code of Federal Regulations or elsewhere in federal law.

19(g) The department shall request approval from the federal
20Centers for Medicare and Medicaid Services for the implementation
21of this article. In making this request, the department shall seek
22specific approval from the federal Centers for Medicare and
23Medicaid Services to exempt providers identified in this article as
24exempt from the fees specified, including the submission, as may
25be necessary, of a request for waiver of the broad based
26requirement, waiver of the uniform fee requirement, or both,
27pursuant to paragraphs (e)(1) and (e)(2) of Section 433.68 of Title
2842 of the Code of Federal Regulations.

29(h) (1) For purposes of this section, a modification pursuant to
30this section shall be implemented only if the modification, change,
31or adjustment does not do either of the following:

32(A) Reduces or increases the supplemental payments or grants
33made under Article 5.21 (commencing with Section 14167.1) in
34the aggregate for the 2008-09, 2009-10, and 2010-11 federal
35fiscal years to a hospital by more than 2 percent of the amount that
36would be determined under this article without any change or
37adjustment.

38(B) Reduces or increases the amount of the fee payable by a
39hospital in total under this article for the 2008-09, 2009-10, and
402010-11 federal fiscal years by more than 2 percent of the amount
P6    1that would be determined under this article without any change or
2adjustment.

3(2) The department shall provide the Joint Legislative Budget
4Committee and the fiscal and appropriate policy committees of
5the Legislature a status update of the implementation of Article
65.21 (commencing with Section 14167.1) and this article on
7January 1, 2010, and quarterly thereafter. Information on any
8adjustments or modifications to the provisions of this article or
9Article 5.21 (commencing with Section 14167.1) that may be
10required for federal approval shall be provided coincident with the
11consultation required under subdivisions (f) and (g).

12(i) Notwithstanding Chapter 3.5 (commencing with Section
1311340) of Part 1 of Division 3 of Title 2 of the Government Code,
14the department may implement this article or Article 5.21
15(commencing with Section 14167.1) by means of provider
16bulletins, all plan letters, or other similar instruction, without taking
17regulatory action. The department shall also provide notification
18to the Joint Legislative Budget Committee and to the appropriate
19policy and fiscal committees of the Legislature within five working
20days when the above-described action is taken in order to inform
21the Legislature that the action is being implemented.

22(j) Notwithstanding any law, the Controller may use the funds
23in the Hospital Quality Assurance Revenue Fund for cashflow
24loans to the General Fund as provided in Sections 16310 and 16381
25of the Government Code.

26(k) Notwithstanding Sections 14167.17 and 14167.40,
27subdivisions (b) to (h), inclusive, shall become inoperative on
28January 1, 2013, subdivisions (a), (i), and (j) shall remain operative
29until January 1,begin delete 2015,end deletebegin insert 2017,end insert and as of January 1,begin delete 2015,end deletebegin insert 2017,end insert this
30section is repealed.

31begin insert

begin insertSEC. 4.end insert  

end insert

begin insertArticle 5.230 (commencing with Section 14169.51) is
32added to Chapter 7 of Part 3 of Division 9 of the end insert
begin insertWelfare and
33Institutions Code
end insert
begin insert, to read:end insert

begin insert

34 

35Article begin insert5.230.end insert  Medi-Cal Hospital Reimbursement Improvement
36Act of 2014
37

 

38

begin insert14169.51.end insert  

For the purposes of this article, the following
39definitions shall apply:

P7    1(a) “General acute care days” means the total number of
2Medi-Cal general acute care days paid by the department to a
3hospital for services in the __ calendar year, as reflected in the
4state paid claims file on ___.

5(b) “Hospital inpatient services” means all services covered
6under Medi-Cal and furnished by hospitals to patients who are
7admitted as hospital inpatients and reimbursed on a fee-for-service
8basis by the department directly or through its fiscal intermediary.
9Hospital inpatient services include outpatient services furnished
10by a hospital to a patient who is admitted to that hospital within
1124 hours of the provision of the outpatient services that are related
12to the condition for which the patient is admitted. Hospital inpatient
13services do not include services for which a managed health care
14plan is financially responsible.

15(c) “Hospital outpatient services” means all services covered
16under Medi-Cal furnished by hospitals to patients who are
17registered as hospital outpatients and reimbursed by the
18department on a fee-for-service basis directly or through its fiscal
19intermediary. Hospital outpatient services do not include services
20for which a managed health care plan is financially responsible,
21or services rendered by a hospital-based federally qualified health
22center for which reimbursement is received pursuant to Section
2314132.100.

24(d) (1) “Managed health care plan” means a health care
25delivery system that manages the provision of health care and
26receives prepaid capitated payments from the state in return for
27providing services to Medi-Cal beneficiaries.

28(2) (A) Managed health care plans include county organized
29health systems and entities contracting with the department to
30provide services pursuant to two-plan models and geographic
31managed care. Entities providing these services contract with the
32department pursuant to any of the following:

33(i) Article 2.7 (commencing with Section 14087.3).

34(ii) Article 2.8 (commencing with Section 14087.5).

35(iii) Article 2.81 (commencing with Section 14087.96).

36(iv) Article 2.91 (commencing with Section 14089).

37(B) Managed health care plans do not include any of the
38following:

P8    1(i) Mental health plans contracting to provide mental health
2care for Medi-Cal beneficiaries pursuant to Chapter 8.9
3(commencing with Section 14700).

4(ii) Health plans not covering inpatient services such as primary
5care case management plans operating pursuant to Section
614088.85.

7(iii) Program for All-Inclusive Care for the Elderly
8organizations operating pursuant to Chapter 8.75 (commencing
9with Section 14591).

10(e) “New hospital” means a hospital operation, business, or
11facility functioning under current or prior ownership as a private
12hospital that does not have a days data source or a hospital that
13has a days data source in whole, or in part, from a previous
14operator where there is an outstanding monetary liability owed
15to the state in connection with the Medi-Cal program and the new
16operator did not assume liability for the outstanding monetary
17obligation.

18(f) “Private hospital” means a hospital that meets all of the
19following conditions:

20(1) Is licensed pursuant to subdivision (a) of Section 1250 of
21the Health and Safety Code.

22(2) Is in the Charitable Research Hospital peer group, as set
23forth in the 1991 Hospital Peer Grouping Report published by the
24department, or is not designated as a specialty hospital in the
25hospital’s Office of Statewide Health Planning and Development
26Annual Financial Disclosure Report for the hospital’s latest fiscal
27year ending in __.

28(3) Does not satisfy the Medicare criteria to be classified as a
29long-term care hospital.

30(4) Is a nonpublic hospital, nonpublic converted hospital, or
31converted hospital as those terms are defined in paragraphs (26)
32to (28), inclusive, respectively, of subdivision (a) of Section
3314105.98.

34(g) “Program period” means the period from January 1, 2014,
35to December 31, 2015, inclusive.

36(h) “Upper payment limit” means a federal upper payment limit
37on the amount of the Medicaid payment for which federal financial
38participation is available for a class of service and a class of health
39care providers, as specified in Part 447 of Title 42 of the Code of
P9    1Federal Regulations. The applicable upper payment limit shall be
2separately calculated for inpatient and outpatient hospital services.

3

begin insert14169.52.end insert  

Private hospitals shall be paid supplemental amounts
4for the provision of hospital outpatient services as set forth in this
5section. The supplemental amounts shall be in addition to any
6other amounts payable to hospitals with respect to those services
7and shall not affect any other payments to hospitals. The
8supplemental amounts shall result in payments equal to the
9statewide aggregate upper payment limit for private hospitals for
10each subject fiscal year.

11

begin insert14169.53.end insert  

Private hospitals shall be paid supplemental amounts
12for the provision of hospital inpatient services for the program
13period as set forth in this section. The supplemental amounts shall
14be in addition to any other amounts payable to hospitals with
15respect to those services and shall not affect any other payments
16to hospitals. The supplemental amounts shall result in payments
17equal to the statewide aggregate upper payment limit for private
18hospitals for each subject fiscal year.

19

begin insert14169.54.end insert  

(a) The department shall increase capitation
20payments to Medi-Cal managed health care plans for each subject
21fiscal year as set forth in this section.

22(b) The increased capitation payments shall be made as part of
23the monthly capitated payments made by the department to
24managed health care plans.

25(c) The aggregate amount of increased capitation payments to
26all Medi-Cal managed health care plans for each subject fiscal
27year shall be the maximum amount for which federal financial
28participation is available on an aggregate statewide basis for the
29applicable subject fiscal year.

30(d) The department shall determine the amount of the increased
31capitation payments for each managed health care plan. The
32department shall consider the composition of Medi-Cal enrollees
33in the plan, the anticipated utilization of hospital services by the
34plan’s Medi-Cal enrollees, and other factors that the department
35determines are reasonable and appropriate to ensure access to
36high-quality hospital services by the plan’s enrollees.

37(e) The amount of increased capitation payments to each
38Medi-Cal managed health care plan shall not exceed an amount
39that results in capitation payments that are certified by the state’s
40actuary as meeting federal requirements, taking into account the
P10   1requirement that all of the increased capitation payments under
2this section shall be paid by the Medi-Cal managed health care
3plans to hospitals for hospital services to Medi-Cal enrollees of
4the plan.

5(f) (1) The increased capitation payments to managed health
6care plans under this section shall be made to support the
7availability of hospital services and ensure access to hospital
8services for Medi-Cal beneficiaries. The increased capitation
9payments to managed health care plans shall commence within
1090 days of the date on which all necessary federal approvals have
11been received, and shall include, but not be limited to, the sum of
12the increased payments for all prior months for which payments
13are due.

14(2) To secure the necessary funding for the payment or payments
15made pursuant to paragraph (1), the department may accumulate
16funds in the Hospital Quality Assurance Revenue Fund, established
17pursuant to Section 14167.35, for the purpose of funding managed
18health care capitation payments under this article regardless of
19the date on which capitation payments are scheduled to be paid
20in order to secure the necessary total funding for managed health
21care payments by December 31, 2015.

22(g) Payments to managed health care plans that would be paid
23consistent with actuarial certification and enrollment in the
24absence of the payments made pursuant to this section, including,
25but not limited to, payments described in Section 14182.15, shall
26not be reduced as a consequence of payments under this section.

27(h) (1) Each managed health care plan shall expend 100 percent
28of any increased capitation payments it receives under this section
29on hospital services.

30(2) The department may issue change orders to amend contracts
31with managed health care plans as needed to adjust monthly
32capitation payments in order to implement this section.

33(3) For entities contracting with the department pursuant to
34Article 2.91 (commencing with Section 14089), any incremental
35increase in capitation rates pursuant to this section shall not be
36subject to negotiation and approval by the California Medical
37Assistance Commission.

38(i) In the event federal financial participation is not available
39for all of the increased capitation payments determined for a month
40pursuant to this section for any reason, the increased capitation
P11   1payments mandated by this section for that month shall be reduced
2proportionately to the amount for which federal financial
3participation is available.

4

begin insert14169.55.end insert  

(a)  Each managed health care plan receiving
5increased capitation payments under Section 14169.54 shall expend
6the capitation rate increases in a manner consistent with actuarial
7certification, enrollment, and utilization on hospital services. Each
8managed health care plan shall expend increased capitation
9payments on hospital services within 30 days of receiving the
10increased capitation payments to the extent they are made for a
11subject month that is prior to the date on which the payments are
12received by the managed health care plan.

13(b) The sum of all expenditures made by a managed health care
14plan for hospital services pursuant to this section shall equal, or
15approximately equal, all increased capitation payments received
16by the managed health care plan, consistent with actuarial
17certification, enrollment, and utilization, from the department
18pursuant to Section 14169.54.

19(c) Any delegation or attempted delegation by a managed health
20care plan of its obligation to expend the capitation rate increases
21under this section shall not relieve the plan from its obligation to
22expend those capitation rate increases. Managed health care plans
23shall submit the documentation that the department may require
24to demonstrate compliance with this subdivision. The
25documentation shall demonstrate actual expenditure of the
26capitation rate increases for hospital services, and not assignment
27to subcontractors of the managed health care plan’s obligation of
28the duty to expend the capitation rate increases.

29(d) The supplemental hospital payments made by managed
30health care plans pursuant to this section shall reflect the overall
31 purpose of this article and Article 5.231 (commencing with Section
3214169.71).

33(e) This article is not intended to create a private right of action
34by a hospital against a managed care plan provided that the
35managed health care plan expends all increased capitation
36payments for hospital services.

37

begin insert14169.56.end insert  

(a) Exclusive of payments made under Article ____
38(commencing with Section ____) and Article ____ (commencing
39with Section ____), payment rates for hospital outpatient services,
40furnished by private hospitals, nondesignated public hospitals,
P12   1and designated public hospitals before December 31, 2015,
2exclusive of amounts payable under this article, shall not be
3reduced below the rates in effect on January 1, 2014.

4(b) Rates payable to hospitals for hospital inpatient services
5furnished before December 31, 2015, under contracts negotiated
6pursuant to the selective provider contracting program under
7Article 2.6 (commencing with Section 14081), shall not be reduced
8below the contract rates in effect on January 1, 2014. This
9subdivision shall not prohibit changes to the supplemental
10payments paid to individual hospitals under Sections 14166.12,
1114166.17, and 14166.23, provided that the aggregate amount of
12the payments for each subject fiscal year is not less than the
13minimum amount permitted under former Section 14167.13.

14(c) Notwithstanding Section 14105.281, exclusive of payments
15made under former Article 5.21 (commencing with Section
1614167.1) and Article 5.226 (commencing with Section 14168.1),
17payments to private hospitals for hospital inpatient services
18furnished before January 1, 2014, that are not reimbursed under
19a contract negotiated pursuant to the selective provider contracting
20program under Article 2.6 (commencing with Section 14081),
21exclusive of amounts payable under this article, shall not be less
22than the amount of payments that would have been made under
23the payment methodology in effect on the effective date of this
24article.

25(d) Upon the implementation of the new Medi-Cal inpatient
26hospital reimbursement methodology based on diagnosis-related
27groups pursuant to Section 14105.28, the requirements in
28subdivisions (b) and (c) shall be met if the rates paid under the
29new Medi-Cal inpatient hospital reimbursement methodology
30based on diagnosis-related groups result in an average payment
31per discharge to all hospitals subject to the new reimbursement
32methodology, calculated on an aggregate basis per subject fiscal
33year, exclusive of amounts payable under this article, amounts
34payable under Sections 14166.11 and 14166.23, and if amounts
35payable under Sections 14166.12 and 14166.17 are not included
36in the payments under the diagnosis-related group methodology
37and continue to be paid separately to hospitals, exclusive of those
38amounts, that is not less than the average payment per discharge
39to the hospitals, exclusive of amounts payable under this article,
40amounts payable under Sections 14166.11 and 14166.23, and if
P13   1amounts payable under Sections 14166.12 and 14166.17 are not
2included in the payments under the diagnosis-related group
3methodology and continue to be paid separately to hospitals,
4exclusive of those amounts, calculated on an aggregate basis for
5the fiscal year ending June 30, 2012, adjusted, in consultation with
6the hospital community, to reflect the movement of populations
7into managed care under Article 5.4 (commencing with Section
814180).

9(e) Solely for purposes of this article, a rate reduction or a
10change in a rate methodology that is enjoined by a court shall be
11included in the determination of a rate or a rate methodology until
12all appeals or judicial reviews have been exhausted and the rate
13reduction or change in rate methodology has been permanently
14enjoined, denied by the federal government, or otherwise
15permanently prevented from being implemented.

16(f) Disproportionate share replacement payments to private
17hospitals shall be not less than the amount determined pursuant
18to Section 14166.11. For purposes of this subdivision, references
19to Section 14166.11 are to the version of Section 14166.11 in effect
20on the effective date of the act that added this subdivision.

end insert
21begin insert

begin insertSEC. 5.end insert  

end insert

begin insertArticle 5.231 (commencing with Section 14169.71) is
22added to Chapter 3 of Part 7 of Division 9 of the end insert
begin insertWelfare and
23Institutions Code
end insert
begin insert, to read:end insert

begin insert

24 

25Article begin insert5.231.end insert  Private Hospital Quality Assurance Fee Act of
262014
27

 

28

begin insert14169.71.end insert  

(a) There shall be imposed on each general acute
29care hospital that is not an exempt facility a quality assurance fee,
30provided that a quality assurance fee under this article shall not
31be imposed on a converted hospital.

32(b) The quality assurance fee shall be computed starting on
33January 1, 2014, and continue through and including December
3431, 2015.

35(c) The quality assurance fee, as paid pursuant to this section,
36shall be paid by each hospital subject to the fee to the department
37for deposit in the Hospital Quality Assurance Revenue Fund.
38Deposits may be accepted at any time and will be credited toward
39the program period.

P14   1(d) This section shall become inoperative if the federal Centers
2for Medicare and Medicaid Services denies approval for, or does
3not approve before July 1, 2015, the implementation of the quality
4assurance fee pursuant to this article or the supplemental payments
5to private hospitals described in Sections 14169.52 and 14169.53.

6(e) In no case shall the aggregate fees collected in a federal
7fiscal year pursuant to this section, former Section 14167.32,
8Section 14168.32, and Section 14169.32 exceed the maximum
9percentage of the annual aggregate net patient revenue for
10hospitals subject to the fee that is prescribed pursuant to federal
11law and regulations as necessary to preclude a finding that an
12indirect guarantee has been created.

13(f) The department shall work in consultation with the hospital
14community to implement this article and Article 5.230 (commencing
15with Section 14169.51).

16(g) This subdivision creates a contractually enforceable promise
17on behalf of the state to use the proceeds of the quality assurance
18fee, including any federal matching funds, solely and exclusively
19for the purposes set forth in this article as they existed on the
20effective date of this article, to limit the amount of the proceeds of
21the quality assurance fee to be used to pay for the health care
22coverage of children to the amounts specified in this article, to
23limit any payments for the department’s costs of administration
24to the amounts set forth in this article on the effective date of this
25article, to maintain and continue prior reimbursement levels as
26set forth in Section ____ on the effective date of that article, and
27to otherwise comply with all its obligations set forth in Article
285.230 (commencing with Section 14169.51) and this article
29provided that amendments that arise from, or have as a basis for,
30a decision, advice, or determination by the federal Centers for
31Medicare and Medicaid Services relating to federal approval of
32the quality assurance fee or the payments set forth in this article
33or Article 5.230 (commencing with Section 14169.51) shall control
34for the purposes of this subdivision.

35(h) (1) Effective January 1, 2014, the rates payable to hospitals
36and managed health care plans under Medi-Cal shall be the rates
37then payable without the supplemental and increased capitation
38payments set forth in Article 5.230 (commencing with Section
3914169.51).

P15   1(2) The supplemental payments and other payments under
2Article 5.230 (commencing with Section 14169.51) shall be
3regarded as quality assurance payments, the implementation or
4suspension of which does not affect a determination of the
5adequacy of any rates under federal law.

6

begin insert14169.72.end insert  

(a) (1) All fees required to be paid to the state
7pursuant to this article shall be paid in the form of remittances
8payable to the department.

9(2) The department shall directly transmit the fee payments to
10the Treasurer to be deposited in the Hospital Quality Assurance
11Revenue Fund, created pursuant to Section 14167.35.
12Notwithstanding Section 16305.7 of the Government Code, any
13interest and dividends earned on deposits in the fund from the
14proceeds of the fee assessed pursuant to this article shall be
15retained in the fund for purposes specified in subdivision (b).

16(b) Notwithstanding subdivision (c) of Section 14167.35,
17subdivision (b) of Section 14168.33, and subdivision (b) of Section
1814169.33, all funds from the proceeds of the fee assessed pursuant
19to this article in the Hospital Quality Assurance Revenue Fund,
20together with any interest and dividends earned on money in the
21fund, shall, upon appropriation by the Legislature, continue to be
22used exclusively to enhance federal financial participation for
23hospital services under the Medi-Cal program, to provide
24additional reimbursement to, and to support quality improvement
25efforts of, hospitals, and to minimize uncompensated care provided
26by hospitals to uninsured patients.

27

begin insert14169.73.end insert  

(a) This article shall be implemented only as long
28as all of the following conditions are met:

29(1) Subject to Section ____, the quality assurance fee is
30established in a manner that is fundamentally consistent with this
31article.

32(2) The quality assurance fee, including any interest on the fee
33after collection by the department, is deposited in a segregated
34fund apart from the General Fund.

35(3) The proceeds of the quality assurance fee, including any
36interest and related federal reimbursement, may only be used for
37the purposes set forth in this article.

38(b) No hospital shall be required to pay the quality assurance
39fee to the department unless and until the state receives and
40maintains federal approval.

P16   1(c) Hospitals shall be required to pay the quality assurance fee
2to the department as set forth in this article only as long as all of
3the following conditions are met:

4(1) The federal Centers for Medicare and Medicaid Services
5allows the use of the quality assurance fee as set forth in this article
6in accordance with federal approval.

7(2) Article 5.230 (commencing with Section 14169.51) is enacted
8and remains in effect and hospitals are reimbursed the increased
9rates for services during the program period, as defined in Section
1014169.51.

11(3) The full amount of the quality assurance fee assessed and
12collected pursuant to this article remains available only for the
13purposes specified in this article.

end insert
14begin insert

begin insertSEC. 6.end insert  

end insert
begin insert

This act is an urgency statute necessary for the
15immediate preservation of the public peace, health, or safety within
16the meaning of Article IV of the Constitution and shall go into
17immediate effect. The facts constituting the necessity are:

end insert
begin insert

18In order to make the necessary changes to increase medi-cal
19payments to hospitals and improve access at the earliest time, so
20as to allow this act to be operative as soon as approval from the
21federal centers for Medicare and Medicaid Services is obtained
22by the State Department of Health Care Services, it is necessary
23 that this act takes effect immediately.

end insert


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