BILL NUMBER: SB 239 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY AUGUST 14, 2013
AMENDED IN SENATE APRIL 17, 2013
INTRODUCED BY Senators Hernandez and Steinberg
FEBRUARY 12, 2013
An act to amend Section Sections 14164,
14165, and 14167.35 of, to add Section 14167.37 to,
and to add and repeal Article 5.230 (commencing with
Section 14169.51) and Article 5.231 (commencing with Section
14169.71) to of Chapter 7 of Part 3 of
Division 9 of, the Welfare and Institutions Code, relating to
Medi-Cal, making an appropriation therefor, and declaring
the urgency thereof, to take effect immediately.
LEGISLATIVE COUNSEL'S DIGEST
SB 239, as amended, Hernandez. Medi-Cal: hospital
hospitals: 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. Existing law also
establishes the continuously appropriated Distressed Hospital Fund,
which consists of moneys transferred to the fund or appropriated by
the Legislature and used as the nonfederal share of payments to
distressed hospitals.
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.
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
31 , 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. This bill would, subject
to federal approval, provide that moneys in the Hospital Quality
Assurance Revenue Fund shall, upon appropriation by the Legislature,
be available only for certain purposes, including paying for health
care coverage for children, as specified, 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. The bill would also authorize the
payment of direct grants to designated and nondesignated
public hospitals in support of health care expenditures funded by the
quality assurance fee. The bill would require the department to make
available all public documentation it uses to administer and audit
these provisions and would require the department to, upon request,
assist hospitals in reconciling payments due and received from
Medi-Cal managed care plans. The bill would require the department to
post specified documents on its Internet Web site relating to these
provisions.
The bill would provide that if quality assurance fee payments are
remitted to the department after the date determined by the
department to be the final date for calculating the final
supplemental payments, the fee payments shall be retained in the fund
for purposes of funding supplemental payments supported by a
hospital quality assurance fee program under subsequent legislation,
but if supplemental payments are not implemented under subsequent
legislation, then those quality assurance fee payments shall be
deposited into the Distressed Hospital Fund. The bill would also
provide that if amounts of the quality assurance fees are collected
in excess of the funds required to make the payments above and
federal rules prohibit the department from refunding the fee payments
to the general acute care hospitals, the excess funds shall be
deposited into the Distressed Hospital Fund. By increasing the amount
of moneys that may be deposited into the Distressed Hospital Fund,
this bill would make an appropriation. The bill would make other
conforming changes.
Existing law provides that any county, other political subdivision
of the state, or governmental entity in the state may elect to
transfer funds in the form of cash or loans to the department in
support of the Medi-Cal program. Existing law provides the department
discretion to accept or not accept any elective transfer from a
county, political subdivision, or other governmental entity for
purposes of obtaining federal financial participation.
This bill would authorize the Director of Health Care Services to
maximize federal financial participation to provide access to
services provided by hospitals that are not reimbursed by certified
public expenditure, as specified, by authorizing the use of
intergovernmental transfers to fund the nonfederal share of
supplemental payments as permitted under federal law.
Existing law requires that the California Medical Assistance
Commission be dissolved after June 30, 2012, and requires that, upon
dissolution of the commission, all powers, duties, and
responsibilities of the commission be transferred to the Director of
Health Care Services. Existing law provides that upon a determination
by the director that a payment system based on diagnosis-related
groups, as described, has been developed and implemented, the powers,
duties, and responsibilities conferred on the commission and
transferred to the director shall no longer be exercised, except as
specified.
This bill would add to those exceptions by authorizing the
director to continue to administer and distribute payments for the
Construction and Renovation Reimbursement Program, which provides
supplemental reimbursement to hospitals that contract under the
selective provider contracting program or with a county organized
health system, as specified. The bill would provide that maintaining
or negotiating a selective provider contract shall cease to be a
requirement for a hospital's participation in the Construction and
Renovation Reimbursement Program.
This bill would declare that it is to take effect immediately as
an urgency statute.
Vote: 2/3. Appropriation: no yes .
Fiscal committee: yes. State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. The Legislature finds and declares both of the
following:
(a) The Legislature continues to recognize the essential role that
hospitals play in serving the state's Medi-Cal beneficiaries. To
that end, it has been, and remains, the intent of the Legislature to
improve funding for hospitals and obtain all available federal funds
to make supplemental Medi-Cal payments to hospitals.
(b) It is the intent of the Legislature that funding provided to
hospitals through a hospital quality assurance fee be explored with
the goal of increasing access to care and improving hospital
reimbursement through supplemental Medi-Cal payments to hospitals.
SEC. 2. (a) It is 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.
(b) The State Department of Health Care Services shall make every
effort to obtain the necessary federal approvals to implement the
quality assurance fee described in subdivision (a) in order to make
supplemental Medi-Cal payments to hospitals for the period of January
1, 2014, through December 31, 2015.
(c) It is the intent of the Legislature that the quality assurance
fee be implemented only if all of the following conditions are met:
(1) The quality assurance fee is established in consultation with
the hospital community.
(2) The quality assurance fee, including any interest earned after
collection by the department, is deposited into segregated funds
apart from the General Fund and used exclusively for supplemental
Medi-Cal payments to hospitals, direct grants to public
hospitals, health care coverage for low-income children, and
for the direct costs of administering the program by the department.
(3) No hospital shall be required to pay the quality assurance fee
to the department unless and until the state receives and maintains
federal approval of the quality assurance fee and related
supplemental payments to hospitals.
(4) The full amount of the quality assurance fee assessed and
collected remains available only for the purposes specified by the
Legislature in this act.
SEC. 3. Section 14164 of the Welfare
and Institutions Code is amended to read:
14164. (a) In addition to the required
intergovernmental transfers set forth in Section 14163, any county,
other political subdivision of the state, or governmental entity in
the state may elect to transfer funds, subject to subdivision (m) of
Section 14163, to the department in support of the Medi-Cal program.
Those transfers may consist of cash or loans to the state. The
department shall have the discretion to accept or not accept any
elective transfer from a county, political subdivision, or other
governmental entity, as well as the discretion of whether to deposit
the transfer in the Medi-Cal Inpatient Payment Adjustment Fund
established pursuant to Section 14163. If the department accepts a
transfer pursuant to this section, the department shall obtain
federal matching funds to the full extent permitted by federal law.
(b) (1) The director may maximize available federal financial
participation to provide access to services provided by hospitals
that are not reimbursed by certified public expenditure pursuant to
Article 5.2 (commencing with Section 14166) by authorizing the use of
intergovernmental transfers to fund the nonfederal share of
supplemental payments as permitted under Section 433.51 of Title 42
of the Code of Federal Regulations or any other applicable federal
Medicaid laws. The transferring entity shall certify to the
department that the funds are in compliance with all federal rules
and regulations. Any payments funded by intergovernmental transfers
shall remain with the hospital and shall not be transferred back to
any county, other political subdivision of the state, or governmental
entity in the state, except for federal disallowance or withhold
recovery efforts by the department. Participation in
intergovernmental transfers under this subdivision is voluntary on
the part of the transferring entity for purposes of all applicable
federal laws.
(2) This subdivision shall be implemented only to the extent
federal financial participation is not jeopardized.
SEC. 4. Section 14165 of the Welfare
and Institutions Code is amended to read:
14165. (a) There is hereby created in the Governor's office the
California Medical Assistance Commission, for the purpose of
contracting with health care delivery systems for the provision of
health care services to recipients under the California Medical
Assistance program.
(b) Notwithstanding any other provision of law,
the commission created pursuant to subdivision (a) shall continue
through June 30, 2012, after which, it shall be dissolved and the
term of any commissioner serving at that time shall end.
(1) Upon dissolution of the commission, all powers, duties, and
responsibilities of the commission shall be transferred to the
Director of Health Care Services. These powers, duties, and
responsibilities shall include, but are not limited to, those
exercised in the operation of the selective provider contracting
program pursuant to Article 2.6 (commencing with Section 14081).
(2) (A) On July 1, 2012, notwithstanding any other law, employees
of the California Medical Assistance Commission as of June 30, 2012,
excluding commissioners, shall transfer to the State Department of
Health Care Services.
(B) Employees who transfer pursuant to subparagraph (A) shall be
subject to the same conditions of employment under the department as
they were under the California Medical Assistance Commission,
including retention of their exempt status, until the
diagnosis-related groups payment system described in Section 14105.28
replaces the contract-based payment system described in this
article.
(C) (i) Notwithstanding any other law or rule, persons employed by
the department who transferred to the department pursuant to
subparagraph (A) shall be eligible to apply for civil service
examinations. Persons receiving passing scores shall have their names
placed on lists resulting from these examinations, or otherwise gain
eligibility for appointment. In evaluating minimum qualifications,
related California Medical Assistance Commission experience shall be
considered state civil service experience in a class deemed
comparable by the State Personnel Board, based on the duties and
responsibilities assigned.
(ii) On the date the diagnosis-related groups payment system
described in Section 14105.28 replaces the contract-based system
described in this article, employees who transferred to the
department pursuant to subparagraph (A) shall transfer to civil
service classifications within the department for which they are
eligible.
(3) Upon a determination by the Director of Health Care Services
that a payment system based on diagnosis-related groups as described
in Section 14105.28 that is sufficient to replace the contract-based
payment system described in this article has been developed and
implemented, the powers, duties, and responsibilities conferred on
the commission and transferred to the Director of Health Care
Services shall no longer be exercised, excluding both
all of the following:
(A) Stabilization payments made or committed from Sections
14166.14 and 14166.19 for services rendered prior to the director's
determination pursuant to this paragraph.
(B) The ability to negotiate and make payments from the Private
Hospital Supplemental Fund, established pursuant to Section 14166.12,
and the Nondesignated Public Hospital Supplemental Fund, established
pursuant to Section 14166.17.
(C) The ability to continue to administer and distribute payments
for the Construction Renovation Reimbursement Program, in accordance
with Sections 14085 to 14085.57, inclusive. Notwithstanding any other
law, maintaining or negotiating a selective provider contract
pursuant to Article 2.6 (commencing with Section 14081) shall cease
to be a requirement for a hospital's participation in the
Construction Renovation Reimbursement Program.
(4) Protections afforded to the negotiations and contracts of the
commission by the California Public Records Act (Chapter 3.5
(commencing with Section 6250) of Division 7 of Title 1 of the
Government Code) shall be applicable to the negotiations and
contracts conducted or entered into pursuant to this section by the
State Department of Health Care Services.
(c) Notwithstanding the rulemaking provisions of Chapter 3.5
(commencing with Section 11340) of Part 1 of Division 3 of Title 2 of
the Government Code, or any other provision of law, the State
Department of Health Care Services may implement and administer this
section by means of provider bulletins or other similar instructions,
without taking regulatory action. The authority to implement this
section as set forth in this subdivision shall include the authority
to give notice by provider bulletin or other similar instruction of a
determination made pursuant to paragraph (3) of subdivision (b) and
to modify or supersede existing regulations in Title 22 of the
California Code of Regulations that conflict with implementation of
this section.
SEC. 3. SEC. 5. Section 14167.35 of
the Welfare and Institutions Code is amended to read:
14167.35. (a) The Hospital Quality Assurance Revenue Fund is
hereby created in the State Treasury.
(b) (1) All fees required to be paid to the state pursuant to this
article shall be paid in the form of remittances payable to the
department.
(2) The department shall directly transmit the fee payments to the
Treasurer to be deposited in the Hospital Quality Assurance Revenue
Fund. Notwithstanding Section 16305.7 of the Government Code, any
interest and dividends earned on deposits in the fund shall be
retained in the fund for purposes specified in subdivision (c).
(c) All funds in the Hospital Quality Assurance Revenue Fund,
together with any interest and dividends earned on money in the fund,
shall, upon appropriation by the Legislature, be used exclusively to
enhance federal financial participation for hospital services under
the Medi-Cal program, to provide additional reimbursement to, and to
support quality improvement efforts of, hospitals, and to minimize
uncompensated care provided by hospitals to uninsured patients, in
the following order of priority:
(1) To pay for the department's staffing and administrative costs
directly attributable to implementing Article 5.21 (commencing with
Section 14167.1) and this article, including any administrative fees
that the director determines shall be paid to mental health plans
pursuant to subdivision (d) of Section 14167.11 and repayment of the
loan made to the department from the Private Hospital Supplemental
Fund pursuant to the act that added this section.
(2) To pay for the health care coverage for children in the amount
of eighty million dollars ($80,000,000) for each subject fiscal
quarter for which payments are made under Article 5.21 (commencing
with Section 14167.1).
(3) To make increased capitation payments to managed health care
plans pursuant to Article 5.21 (commencing with Section 14167.1).
(4) To pay funds from the Hospital Quality Assurance Revenue Fund
pursuant to Section 14167.5 that would have been used for grant
payments and that are retained by the state, and to make increased
payments to hospitals, including grants, pursuant to Article 5.21
(commencing with Section 14167.1), both of which shall be of equal
priority.
(5) To make increased payments to mental health plans pursuant to
Article 5.21 (commencing with Section 14167.1).
(d) Any amounts of the quality assurance fee collected in excess
of the funds required to implement subdivision (c), including any
funds recovered under subdivision (d) of Section 14167.14 or
subdivision (e) of Section 14167.36, shall be refunded to general
acute care hospitals, pro rata with the amount of quality assurance
fee paid by the hospital, subject to the limitations of federal law.
If federal rules prohibit the refund described in this subdivision,
the excess funds shall be deposited in the Distressed Hospital Fund
to be used for the purposes described in Section 14166.23, and shall
be supplemental to and not supplant existing funds.
(e) Any methodology or other provision specified in Article 5.21
(commencing with Section 14167.1) and this article may be modified by
the department, in consultation with the hospital community, to the
extent necessary to meet the requirements of federal law or
regulations to obtain federal approval or to enhance the probability
that federal approval can be obtained, provided the modifications do
not violate the spirit and intent of Article 5.21 (commencing with
Section 14167.1) or this article and are not inconsistent with the
conditions of implementation set forth in Section 14167.36.
(f) The department, in consultation with the hospital community,
shall make adjustments, as necessary, to the amounts calculated
pursuant to Section 14167.32 in order to ensure compliance with the
federal requirements set forth in Section 433.68 of Title 42 of the
Code of Federal Regulations or elsewhere in federal law.
(g) The department shall request approval from the federal Centers
for Medicare and Medicaid Services for the implementation of this
article. In making this request, the department shall seek specific
approval from the federal Centers for Medicare and Medicaid Services
to exempt providers identified in this article as exempt from the
fees specified, including the submission, as may be necessary, of a
request for waiver of the broad based requirement, waiver of the
uniform fee requirement, or both, pursuant to paragraphs (e)(1) and
(e)(2) of Section 433.68 of Title 42 of the Code of Federal
Regulations.
(h) (1) For purposes of this section, a modification pursuant to
this section shall be implemented only if the modification, change,
or adjustment does not do either of the following:
(A) Reduces or increases the supplemental payments or grants made
under Article 5.21 (commencing with Section 14167.1) in the aggregate
for the 2008-09, 2009-10, and 2010-11 federal fiscal years to a
hospital by more than 2 percent of the amount that would be
determined under this article without any change or adjustment.
(B) Reduces or increases the amount of the fee payable by a
hospital in total under this article for the 2008-09, 2009-10, and
2010-11 federal fiscal years by more than 2 percent of the amount
that would be determined under this article without any change or
adjustment.
(2) The department shall provide the Joint Legislative Budget
Committee and the fiscal and appropriate policy committees of the
Legislature a status update of the implementation of Article 5.21
(commencing with Section 14167.1) and this article on January 1,
2010, and quarterly thereafter. Information on any adjustments or
modifications to the provisions of this article or Article 5.21
(commencing with Section 14167.1) that may be required for federal
approval shall be provided coincident with the consultation required
under subdivisions (f) and (g).
(i) Notwithstanding Chapter 3.5 (commencing with Section 11340) of
Part 1 of Division 3 of Title 2 of the Government Code, the
department may implement this article or Article 5.21 (commencing
with Section 14167.1) by means of provider bulletins, all plan
letters, or other similar instruction, without taking regulatory
action. The department shall also provide notification to the Joint
Legislative Budget Committee and to the appropriate policy and fiscal
committees of the Legislature within five working days when the
above-described action is taken in order to inform the Legislature
that the action is being implemented.
(j) Notwithstanding any law, the Controller may use the funds in
the Hospital Quality Assurance Revenue Fund for cashflow loans to the
General Fund as provided in Sections 16310 and 16381 of the
Government Code.
(k) Notwithstanding Sections 14167.17 and 14167.40, subdivisions
(b) to (h), inclusive, shall become inoperative on January 1, 2013,
subdivisions (a), (i), and (j) shall remain operative until January
1, 2017, and as of January 1, 2017, this section is repealed.
SEC. 6. Section 14167.37 is added to the
Welfare and Institutions Code , to read:
14167.37. (a) The department shall make available all public
documentation it uses to administer and audit the program authorized
under Article 5.230 (commencing with Section 14169.51) and Article
5.231 (commencing with Section 14169.71) pursuant to the Public
Records Act (Chapter 3.5 (commencing with Section 6250) of Division 7
of Title 1 of the Government Code). In addition, upon request, the
department shall assist hospitals in reconciling payments due and
received from Medi-Cal managed care plans under Article 5.230
(commencing with Section 14169.51).
(b) Notwithstanding subdivision (a), the department shall post all
of the following on the department's Internet Web site:
(1) Within 10 business days after receipt of approval of the
hospital quality assurance fee program under Article 5.230
(commencing with Section 14169.51) and Article 5.231 (commencing with
Section 14169.71) from the federal Centers for Medicare and Medicaid
Services (CMS), the hospital quality assurance fee final model and
upper payment limit calculations.
(2) Quarterly updates on payments, fee schedules, and model
updates when applicable.
(3) Within 10 business days after receipt, information on managed
care rate approvals.
(c) For purposes of this section, the following definitions shall
apply:
(1) "Fee schedules" mean the dates on which the hospital quality
assurance fee will be due from the hospitals and the dates on which
the department will submit fee-for-service payments to the hospitals.
"Fee schedules" also include the dates on which the department is
expected to submit payments to managed care plans.
(2) "Hospital quality assurance fee final model" means the
spreadsheet calculating the supplemental amounts based on the upper
payment limit calculation from claims and hospital data sources of
days and hospital services once CMS approves the program under
Article 5.230 (commencing with Section 14169.51) and Article 5.231
(commencing with Section 14169.71).
(3) "Upper payment limit calculation" means the determination of
the federal upper payment limit on the amount of the Medicaid payment
for which federal financial participation is available for a class
of service and a class of health care providers, as specified in Part
447 of Title 42 of the Code of Federal Regulations and that has been
approved by CMS.
SEC. 4. SEC. 7. Article 5.230
(commencing with Section 14169.51) is added to Chapter 7 of Part 3 of
Division 9 of the Welfare and Institutions Code, to read:
Article 5.230. Medi-Cal Hospital Reimbursement Improvement Act
of 2014 2013
14169.51. For the purposes of this article, the following
definitions shall apply:
(a) "General acute care days" means the total number of Medi-Cal
general acute care days paid by the department to a hospital for
services in the __ calendar year, as reflected in the state paid
claims file on ___.
(b) "Hospital inpatient services" means all services covered under
Medi-Cal and furnished by hospitals to patients who are admitted as
hospital inpatients and reimbursed on a fee-for-service basis by the
department directly or through its fiscal intermediary. Hospital
inpatient services include outpatient services furnished by a
hospital to a patient who is admitted to that hospital within 24
hours of the provision of the outpatient services that are related to
the condition for which the patient is admitted. Hospital inpatient
services do not include services for which a managed health care plan
is financially responsible.
(c) "Hospital outpatient services" means all services covered
under Medi-Cal furnished by hospitals to patients who are registered
as hospital outpatients and reimbursed by the department on a
fee-for-service basis directly or through its fiscal intermediary.
Hospital outpatient services do not include services for which a
managed health care plan is financially responsible, or services
rendered by a hospital-based federally qualified health center for
which reimbursement is received pursuant to Section 14132.100.
(d) (1) "Managed health care plan" means a health care delivery
system that manages the provision of health care and receives prepaid
capitated payments from the state in return for providing services
to Medi-Cal beneficiaries.
(2) (A) Managed health care plans include county organized health
systems and entities contracting with the department to provide
services pursuant to two-plan models and geographic managed care.
Entities providing these services contract with the department
pursuant to any of the following:
(i) Article 2.7 (commencing with Section 14087.3).
(ii) Article 2.8 (commencing with Section 14087.5).
(iii) Article 2.81 (commencing with Section 14087.96).
(iv) Article 2.91 (commencing with Section 14089).
(B) Managed health care plans do not include any of the following:
(i) Mental health plans contracting to provide mental health care
for Medi-Cal beneficiaries pursuant to Chapter 8.9 (commencing with
Section 14700).
(ii) Health plans not covering inpatient services such as primary
care case management plans operating pursuant to Section 14088.85.
(iii) Program for All-Inclusive Care for the Elderly organizations
operating pursuant to Chapter 8.75 (commencing with Section 14591).
(e) "New hospital" means a hospital operation, business, or
facility functioning under current or prior ownership as a private
hospital that does not have a days data source or a hospital that has
a days data source in whole, or in part, from a previous operator
where there is an outstanding monetary liability owed to the state in
connection with the Medi-Cal program and the new operator did not
assume liability for the outstanding monetary obligation.
(f) "Private hospital" means a hospital that meets all of the
following conditions:
(1) Is licensed pursuant to subdivision (a) of Section 1250 of the
Health and Safety Code.
(2) Is in the Charitable Research Hospital peer group, as set
forth in the 1991 Hospital Peer Grouping Report published by the
department, or is not designated as a specialty hospital in the
hospital's Office of Statewide Health Planning and Development Annual
Financial Disclosure Report for the hospital's latest fiscal year
ending in __.
(3) Does not satisfy the Medicare criteria to be classified as a
long-term care hospital.
(4) Is a nonpublic hospital, nonpublic converted hospital, or
converted hospital as those terms are defined in paragraphs (26) to
(28), inclusive, respectively, of subdivision (a) of Section
14105.98.
(g) "Program period" means the period from January 1, 2014, to
December 31, 2015, inclusive.
(h) "Upper payment limit" means a federal upper payment limit on
the amount of the Medicaid payment for which federal financial
participation is available for a class of service and a class of
health care providers, as specified in Part 447 of Title 42 of the
Code of Federal Regulations. The applicable upper payment limit shall
be separately calculated for inpatient and outpatient hospital
services.
14169.51. (a) "Acute psychiatric days" means the total number of
Medi-Cal specialty mental health service administrative days,
Medi-Cal specialty mental health service acute care days, acute
psychiatric administrative days, and acute psychiatric acute days
identified in the Final Medi-Cal Utilization Statistics for the
2012-13 state fiscal year as calculated by the department as of
December 17, 2012.
(b) "Converted hospital" means a private hospital that becomes a
designated public hospital or a nondesignated public hospital on or
after January 1, 2014.
(c) "Days data source" means the hospital's Annual Financial
Disclosure Report filed with the Office of Statewide Health Planning
and Development as of June 6, 2013, for its fiscal year ending during
2010, except for Downey Regional Medical Center which shall be the
Annual Financial Disclosure Report for the fiscal year ending during
2011 retrieved from the Office of Statewide Health Planning and
Development as of July 23, 2013.
(d) "Designated public hospital" shall have the meaning given in
subdivision (d) of Section 14166.1 as of January 1, 2014.
(e) "General acute care days" means the total number of Medi-Cal
general acute care days paid by the department to a hospital for
services in the 2010 calendar year, as reflected in the state paid
claims file on April 26, 2013.
(f) "High acuity days" means Medi-Cal coronary care unit days,
pediatric intensive care unit days, intensive care unit days,
neonatal intensive care unit days, and burn unit days paid by the
department during the
2010 calendar year, as reflected in the state paid claims file
prepared by the department on April 26, 2013.
(g) "Hospital inpatient services" means all services covered under
Medi-Cal and furnished by hospitals to patients who are admitted as
hospital inpatients and reimbursed on a fee-for-service basis by the
department directly or through its fiscal intermediary. Hospital
inpatient services include outpatient services furnished by a
hospital to a patient who is admitted to that hospital within 24
hours of the provision of the outpatient services that are related to
the condition for which the patient is admitted. Hospital inpatient
services do not include services for which a managed health care plan
is financially responsible.
(h) "Hospital outpatient services" means all services covered
under Medi-Cal furnished by hospitals to patients who are registered
as hospital outpatients and reimbursed by the department on a
fee-for-service basis directly or through its fiscal intermediary.
Hospital outpatient services do not include services for which a
managed health care plan is financially responsible, or services
rendered by a hospital-based federally qualified health center for
which reimbursement is received pursuant to Section 14132.100.
(i) "Individual hospital acute psychiatric supplemental payment"
means the total amount of acute psychiatric hospital supplemental
payments to a subject hospital for a quarter for which the
supplemental payments are made. The "individual hospital acute
psychiatric supplemental payment" shall be calculated for subject
hospitals by multiplying the number of acute psychiatric days for the
individual hospital for which a mental health plan was financially
responsible by the amount calculated in accordance with paragraph (2)
of subdivision (b) of Section 14169.53 and dividing the result by
four.
(j) (1) "Managed health care plan" means a health care delivery
system that manages the provision of health care and receives prepaid
capitated payments from the state in return for providing services
to Medi-Cal beneficiaries.
(2) (A) Managed health care plans include county organized health
systems and entities contracting with the department to provide
services pursuant to two-plan models and geographic managed care.
Entities providing these services contract with the department
pursuant to any of the following:
(i) Article 2.7 (commencing with Section 14087.3).
(ii) Article 2.8 (commencing with Section 14087.5).
(iii) Article 2.81 (commencing with Section 14087.96).
(iv) Article 2.91 (commencing with Section 14089).
(B) Managed health care plans do not include any of the following:
(i) Mental health plans contracting to provide mental health care
for Medi-Cal beneficiaries pursuant to Chapter 8.9 (commencing with
Section 14700).
(ii) Health plans not covering inpatient services such as primary
care case management plans operating pursuant to Section 14088.85.
(iii) Program for All-Inclusive Care for the Elderly organizations
operating pursuant to Chapter 8.75 (commencing with Section 14591).
(k) "Medi-Cal managed care days" means the total number of general
acute care days, including well baby days, listed for the county
organized health system and prepaid health plans identified in the
Final Medi-Cal Utilization Statistics for the 2012-13 fiscal year, as
calculated by the department as of December 17, 2012.
(l) "Medicaid inpatient utilization rate" means Medicaid inpatient
utilization rate as defined in Section 1396r-4 of Title 42 of the
United States Code and as set forth in the Final Medi-Cal Utilization
Statistics for the 2012-13 fiscal year, as calculated by the
department as of December 17, 2012.
(m) "Mental health plan" means a mental health plan that contracts
with the state to furnish or arrange for the provision of mental
health services to Medi-Cal beneficiaries pursuant to Chapter 8.9
(commencing with Section 14700).
(n) "New hospital" means a hospital operation, business, or
facility functioning under current or prior ownership as a private
hospital that does not have a days data source or a hospital that has
a days data source in whole, or in part, from a previous operator
when there is an outstanding monetary liability owed to the state in
connection with the Medi-Cal program and the new operator did not
assume liability for the outstanding monetary obligation.
(o) "Nondesignated public hospital" means either of the following:
(1) A public hospital that is licensed under subdivision (a) of
Section 1250 of the Health and Safety Code, is not designated as a
specialty hospital in the hospital's most recent publicly available
Annual Financial Disclosure Report, and satisfies the definition in
paragraph (25) of subdivision (a) of Section 14105.98, excluding
designated public hospitals.
(2) A tax-exempt nonprofit hospital that is licensed under
subdivision (a) of Section 1250 of the Health and Safety Code, is not
designated as a specialty hospital in the hospital's most recent
publicly available Annual Financial Disclosure Report, is operating a
hospital owned by a local health care district, and is affiliated
with the health care district hospital owner by means of the district'
s status as the nonprofit corporation's sole corporate member.
(p) "Outpatient base amount" means the total amount of payments
for hospital outpatient services made to a hospital in the 2010
calendar year, as reflected in the state paid claims file prepared by
the department on April 26, 2013.
(q) "Private hospital" means a hospital that meets all of the
following conditions:
(1) Is licensed pursuant to subdivision (a) of Section 1250 of the
Health and Safety Code.
(2) Is in the Charitable Research Hospital peer group, as set
forth in the 1991 Hospital Peer Grouping Report published by the
department, or is not designated as a specialty hospital in the
hospital's most recent publicly available Office of Statewide Health
Planning and Development Annual Financial Disclosure Report.
(3) Does not satisfy the Medicare criteria to be classified as a
long-term care hospital.
(4) Is a nonpublic hospital, nonpublic converted hospital, or
converted hospital as those terms are defined in paragraphs (26) to
(28), inclusive, respectively, of subdivision (a) of Section
14105.98.
(r) "Program period" means the period from January 1, 2014, to
December 31, 2015, inclusive.
(s) "Subject fiscal quarter" means a state fiscal quarter
beginning on or after January 1, 2014, and ending before January 1,
2016.
(t) "Subject fiscal year" means a state fiscal year that ends
after January 1, 2014, and begins before January 1, 2016.
(u) "Subject hospital" means a hospital that meets all of the
following conditions:
(1) Is licensed pursuant to subdivision (a) of Section 1250 of the
Health and Safety Code.
(2) Is in the Charitable Research Hospital peer group, as set
forth in the 1991 Hospital Peer Grouping Report published by the
department, or is not designated as a specialty hospital in the
hospital's most recent publicly available Office of Statewide Health
Planning and Development Annual Financial Disclosure Report.
(3) Does not satisfy the Medicare criteria to be classified as a
long-term care hospital.
(v) "Subject month" means a calendar month beginning on or after
January 1, 2014, and ending before January 1, 2016.
(w) "Transplant days" means the number of Medi-Cal days for
MS-DRGs 1, 2, 5 to 10, inclusive, 14, 15 and 652, according to the
2010 Patient Discharge file from the Office of Statewide Health
Planning and Development accessed on June 28, 2011.
(x) "Upper payment limit" means a federal upper payment limit on
the amount of the Medicaid payment for which federal financial
participation is available for a class of service and a class of
health care providers, as specified in Part 447 of Title 42 of the
Code of Federal Regulations. The applicable upper payment limit shall
be separately calculated for inpatient and outpatient hospital
services.
14169.52. (a) Private hospitals shall be
paid supplemental amounts for the provision of hospital outpatient
services as set forth in this section. The supplemental amounts shall
be in addition to any other amounts payable to hospitals with
respect to those services and shall not affect any other payments to
hospitals. The supplemental amounts shall result in payments equal to
the statewide aggregate upper payment limit for private hospitals
for each subject fiscal year.
(b) Except as set forth in subdivisions (e) and (f), each private
hospital shall be paid an amount for each subject fiscal year equal
to a percentage of the hospital's outpatient base amount. The
percentage shall be the same for each hospital for a subject fiscal
year. The percentage shall result in payments to hospitals that equal
the applicable federal upper payment limit as it may be modified
pursuant to Section 14169.68 for a subject fiscal year. For purposes
of this subdivision the applicable federal upper payment limit shall
be the federal upper payment limit for hospital outpatient services
furnished by private hospitals for each subject fiscal year.
(c) In the event federal financial participation for a subject
fiscal year is not available for all of the supplemental amounts
payable to private hospitals under subdivision (b) due to the
application of a federal upper payment limit or for any other reason,
both of the following shall apply:
(1) The total amount payable to private hospitals under
subdivision (b) for the subject fiscal year shall be reduced to the
amount for which federal financial participation is available.
(2) The amount payable under subdivision (b) to each private
hospital for the subject fiscal year shall be equal to the amount
computed under subdivision (b) multiplied by the ratio of the total
amount for which federal financial participation is available to the
total amount computed under subdivision (b).
(d) The supplemental amounts set forth in this section are
inclusive of federal financial participation.
(e) Payments shall not be made under this section to a new
hospital.
(f) No payments shall be made under this section to a converted
hospital.
14169.53. Private ( a)
Except as provided in Section 14169.68, private
hospitals shall be paid supplemental amounts for the provision of
hospital inpatient services for the program period as set forth in
this section. The supplemental amounts shall be in addition to any
other amounts payable to hospitals with respect to those services and
shall not affect any other payments to hospitals. The supplemental
amounts shall result in payments equal to the statewide aggregate
upper payment limit for private hospitals for each subject fiscal
year as it may be modified pursuant to Section 14169.68 .
(b) Except as set forth in subdivisions (g) and (h), each private
hospital shall be paid the following amounts as applicable for the
provision of hospital inpatient services for each subject fiscal
year:
(1) Eight hundred ninety-six dollars and forty eight cents
($896.48) multiplied by the hospital's general acute care days for
supplemental payments for the 2014 calendar year, and one thousand
eighty-one dollars and eighty-four cents ($1,081.84) multiplied by
the hospital's general acute care days for supplemental payments for
the 2015 calendar year.
(2) For the hospital's acute psychiatric days that were paid
directly by the department and were not the financial responsibility
of a mental health plan, nine hundred sixty-five dollars ($965)
multiplied by the hospital's acute psychiatric days for supplemental
payments for the 2014 calendar year, and nine hundred seventy-five
dollars ($975) multiplied by the hospital's acute psychiatric days
for supplemental payments for the 2015 calendar year.
(3) (A) For the 2014 and 2015 calendar years, two thousand five
hundred dollars ($2,500) multiplied by the number of the hospital's
high acuity days if the hospital's Medicaid inpatient utilization
rate is less than 43 percent and greater than 5 percent and at least
5 percent of the hospital's general acute care days are high acuity
days.
(B) The amount under this paragraph shall be in addition to the
amounts specified in paragraphs (1) and (2).
(4) (A) For the 2014 and 2015 calendar years, two thousand five
hundred dollars ($2,500) multiplied by the number of the hospital's
high acuity days if the hospital qualifies to receive the amount set
forth in paragraph (3) and has been designated as a Level I, Level
II, Adult/Ped Level I, or Adult/Ped Level II trauma center by the
Emergency Medical Services Authority established pursuant to Section
1797.1 of the Health and Safety Code.
(B) The amount under this paragraph shall be in addition to the
amounts specified in paragraphs (1), (2), and (3).
(5) (A) For the 2014 and 2015 calendar years, two thousand five
hundred dollars ($2,500) multiplied by the number of the hospital's
transplant days if the hospital's Medicaid inpatient utilization rate
is less than 43 percent and greater than 5 percent.
(B) The amount under this paragraph shall be in addition to the
amounts specified in paragraphs (1), (2), (3), and (4).
(c) A private hospital that provided Medi-Cal subacute services
during the 2010 calendar year and has a Medicaid inpatient
utilization rate that is greater than 5 percent and less than 43
percent shall be paid a supplemental amount equal to 50 percent for
the 2014 calendar year and 60 percent for the 2015 calendar year of
the Medi-Cal subacute payments paid by the department to the hospital
during the 2010 calendar year, as reflected in the state paid claims
file prepared by the department on April 26, 2013.
(d) (1) If federal financial participation for a subject fiscal
year is not available for all of the supplemental amounts payable to
private hospitals under subdivision (b) due to the application of a
federal upper payment limit or for any other reason, both of the
following shall apply:
(A) The total amount payable to private hospitals under
subdivision (b) for the subject fiscal year shall be reduced to
reflect the amount for which federal financial participation is
available.
(B) The amount payable under subdivision (b) to each private
hospital for the subject fiscal year shall be equal to the amount
computed under subdivision (b) multiplied by the ratio of the total
amount for which federal financial participation is available to the
total amount computed under subdivision (b).
(2) If federal financial participation for a subject fiscal year
is not available for all of the supplemental amounts payable to
private hospitals under subdivision (c) due to the application of a
federal upper payment limit or for any other reason, both of the
following shall apply:
(A) The total amount payable to private hospitals under
subdivision (c) for the subject fiscal year shall be reduced to
reflect the amount for which federal financial participation is
available.
(B) The amount payable under subdivision (c) to each private
hospital for the subject fiscal year shall be equal to the amount
computed under subdivision (c) multiplied by the ratio of the total
amount for which federal financial participation is available to the
total amount computed under subdivision (c).
(e) If the amount otherwise payable to a hospital under this
section for a subject fiscal year exceeds the amount for which
federal financial participation is available for that hospital, the
amount due to the hospital for that subject fiscal year shall be
reduced to the amount for which federal financial participation is
available.
(f) The amounts set forth in this section are inclusive of federal
financial participation.
(g) Payments shall not be made under this section to a new
hospital.
(h) Payments shall not be made under this section to a converted
hospital.
(i) (1) The department shall increase payments to mental health
plans for the program period exclusively for the purpose of making
payments to private hospitals. The aggregate amount of the increased
payments for a subject fiscal quarter shall be the total of the
individual hospital acute psychiatric supplemental payment amounts
for all hospitals for which federal financial participation is
available.
(2) The payments described in paragraph (1) may be made directly
by the department to hospitals when federal law does not require that
the payments be transmitted to hospitals via mental health plans.
14169.54. (a) The department shall increase capitation payments
to Medi-Cal managed health care plans for each subject fiscal year as
set forth in this section.
(b) The increased capitation payments shall be made as part of the
monthly capitated payments made by the department to managed health
care plans.
(c) The aggregate amount of increased capitation payments to all
Medi-Cal managed health care plans for each subject fiscal year shall
be the maximum amount for which federal financial participation is
available on an aggregate statewide basis for the applicable subject
fiscal year.
(d) The department shall determine the amount of the increased
capitation payments for each managed health care plan. The department
shall consider the composition of Medi-Cal enrollees in the plan,
the anticipated utilization of hospital services by the plan's
Medi-Cal enrollees, and other factors that the department determines
are reasonable and appropriate to ensure access to high-quality
hospital services by the plan's enrollees.
(e) The amount of increased capitation payments to each Medi-Cal
managed health care plan shall not exceed an amount that results in
capitation payments that are certified by the state's actuary as
meeting federal requirements, taking into account the requirement
that all of the increased capitation payments under this section
shall be paid by the Medi-Cal managed health care plans to hospitals
for hospital services to Medi-Cal enrollees of the plan.
(f) (1) The increased capitation payments to managed health care
plans under this section shall be made to support the availability of
hospital services and ensure access to hospital services for
Medi-Cal beneficiaries. The increased capitation payments to managed
health care plans shall commence within 90 days of the date on which
all necessary federal approvals have been received, and shall
include, but not be limited to, the sum of the increased payments for
all prior months for which payments are due.
(2) To secure the necessary funding for the payment or payments
made pursuant to paragraph (1), the department may accumulate funds
in the Hospital Quality Assurance Revenue Fund, established pursuant
to Section 14167.35, for the purpose of funding managed health care
capitation payments under this article regardless of the date on
which capitation payments are scheduled to be paid in order to secure
the necessary total funding for managed health care payments by
December 31, 2015.
(g) Payments to managed health care plans that would be paid
consistent with actuarial certification and enrollment in the absence
of the payments made pursuant to this section, including, but not
limited to, payments described in Section 14182.15, shall not be
reduced as a consequence of payments under this section.
(h) (1) Each managed health care plan shall expend 100 percent of
any increased capitation payments it receives under this section on
hospital services.
(2) The department may issue change orders to amend contracts with
managed health care plans as needed to adjust monthly capitation
payments in order to implement this section.
(3) For entities contracting with the department pursuant to
Article 2.91 (commencing with Section 14089), any incremental
increase in capitation rates pursuant to this section shall not be
subject to negotiation and approval by the California Medical
Assistance Commission.
(i) In the event (1)
If federal financial participation is not available for all of
the increased capitation payments determined for a month pursuant to
this section for any reason, the increased capitation payments
mandated by this section for that month shall be reduced
proportionately to the amount for which federal financial
participation is available.
(2) The determination under this subdivision for any month in the
program period shall be made after accounting for all federal
financial participation necessary for full implementation of Section
14182.15 for that month.
14169.55. (a) Each managed health care plan receiving increased
capitation payments under Section 14169.54 shall expend the
capitation rate increases in a manner consistent with actuarial
certification, enrollment, and utilization on hospital services. Each
managed health care plan shall expend increased capitation payments
on hospital services within 30 days of receiving the increased
capitation payments to the extent they are made for a subject month
that is prior to the date on which the payments are received by the
managed health care plan.
(b) The sum of all expenditures made by a managed health care plan
for hospital services pursuant to this section shall equal, or
approximately equal, all increased capitation payments received by
the managed health care plan, consistent with actuarial
certification, enrollment, and utilization, from the department
pursuant to Section 14169.54.
(c) Any delegation or attempted delegation by a managed health
care plan of its obligation to expend the capitation rate increases
under this section shall not relieve the plan from its obligation to
expend those capitation rate increases. Managed health care plans
shall submit the documentation that the department may require to
demonstrate compliance with this subdivision. The documentation shall
demonstrate actual expenditure of the capitation rate increases for
hospital services, and not assignment to subcontractors of the
managed health care plan's obligation of the duty to expend the
capitation rate increases.
(d) The supplemental hospital payments made by managed health care
plans pursuant to this section shall reflect the overall purpose of
this article and Article 5.231 (commencing with Section 14169.71).
(e) This article is not intended to create a private right of
action by a hospital against a managed care plan provided that the
managed health care plan expends all increased capitation payments
for hospital services.
14169.56. (a) Designated public hospitals may be paid direct
grants in support of health care expenditures, which shall not
constitute Medi-Cal payments, and which shall be funded by the
quality assurance fee set forth in Article 5.231 (commencing with
Section 14169.71).
(b) Nondesignated public hospitals may be paid direct grants in
support of health care expenditures, which shall not constitute
Medi-Cal payments, and which shall be funded by the quality assurance
fee set forth in Article 5.231 (commencing with Section 14169.71).
14169.57. (a) The amount of any payments made under this article
to private hospitals, including the amount of payments made under
Sections 14169.52 and 14169.53 and additional payments to private
hospitals by managed health care plans pursuant to Section 14169.54,
shall not be included in the calculation of the low-income percent or
the OBRA 1993 payment limitation, as defined in paragraph (24) of
subdivision (a) of Section 14105.98, for purposes of determining
payments to private hospitals.
(b) The amount of any payments made to a hospital under this
article shall not be included in the calculation of stabilization
funding under Article 5.2 (commencing with Section 14166) or any
successor legislation, including legislation implementing California'
s Bridge to Reform Section 1115(a) Medicaid Demonstration
(11-W-00193/9).
14169.58. The payments to a hospital under this article shall not
be made for any portion of a subject fiscal
year during which the hospital is closed. A
hospital shall be deemed to be closed on the first day of any period
during which the hospital has no acute inpatients for at least 30
consecutive days. Payments under this article to a hospital that is
closed during any portion of a subject fiscal year shall be reduced
by applying a fraction, expressed as a percentage, the numerator of
which shall be the number of days during the applicable subject
fiscal year that the hospital is closed and the denominator of which
shall be 365.
14169.59. The department shall make disbursements from the
Hospital Quality Assurance Revenue Fund consistent with all of the
following:
(a) Fund disbursements shall be made periodically within 15 days
of each date on which quality assurance fees are due from hospitals.
(b) The funds shall be disbursed in accordance with the order of
priority set forth in subdivision (b) of Section 14169.73, except
that funds may be set aside for increased capitation payments to
managed care health plans pursuant to subdivision (f) of Section
14169.54.
(c) The funds shall be disbursed in each payment cycle in
accordance with the order of priority set forth in subdivision (b) of
Section 14169.73 as modified by subdivision (b) so that the
supplemental payments, direct grants to hospitals, and increased
capitation payments to managed health care plans are made to the
maximum extent for which funds are available.
(d) To the maximum extent possible, consistent with the
availability of funds in the Hospital Quality Assurance Revenue Fund
and the timing of federal approvals, the supplemental payments,
direct grants to hospitals, and increased capitation payments to
managed health care plans under this article shall be made before
December 31, 2015.
(e) The aggregate amount of funds to be disbursed to private
hospitals shall be determined under Sections 14169.52 and 14169.53.
The aggregate amount of funds to be disbursed to managed health care
plans shall be determined under Section 14169.54. The aggregate
amount of direct grants to designated and nondesignated public
hospitals shall be determined under Section 14169.56.
14169.56. 14169.60. (a) Exclusive
of payments made under Article ____ (commencing with Section
____) and Article ____ (commencing with Section ____)
former Article 5.21 (commencing with Section 14167.1), former
Article 5.226 (commencing with Section 14168.1), and Article 5.228
(commencing with Section 14169.1) , payment rates for hospital
outpatient services, furnished by private hospitals, nondesignated
public hospitals, and designated public hospitals before December 31,
2015, exclusive of amounts payable under this article, shall not be
reduced below the rates in effect on January 1, 2014.
(b) Rates payable to hospitals for hospital inpatient services
furnished before December 31, 2015, under contracts negotiated
pursuant to the selective provider contracting program under Article
2.6 (commencing with Section 14081), shall not be reduced below the
contract rates in effect on January 1, 2014. This subdivision shall
not prohibit changes to the supplemental payments paid to individual
hospitals under Sections 14166.12, 14166.17, and 14166.23, provided
that the aggregate amount of the payments for each subject fiscal
year is not less than the minimum amount permitted under former
Section 14167.13.
(c) Notwithstanding Section 14105.281, exclusive of payments made
under former Article 5.21 (commencing with Section 14167.1)
and , former Article 5.226 (commencing with
Section 14168.1), and Article 5.228 (commencing with Section
14169.1), payments to private hospitals for hospital inpatient
services furnished before January 1, 2014, that are not reimbursed
under a contract negotiated pursuant to the selective provider
contracting program under Article 2.6 (commencing with Section
14081), exclusive of amounts payable under this article, shall not be
less than the amount of payments that would have been made under the
payment methodology in effect on the effective date of this article.
(d) Upon the implementation of the new Medi-Cal inpatient hospital
reimbursement methodology based on diagnosis-related groups pursuant
to Section 14105.28, the requirements in subdivisions (b) and (c)
shall be met if the rates paid under the new Medi-Cal inpatient
hospital reimbursement methodology based on diagnosis-related groups
result in an average payment per discharge to all hospitals subject
to the new reimbursement methodology, calculated on an aggregate
basis per subject fiscal year, exclusive of amounts payable under
this article, amounts payable under Sections 14166.11 and 14166.23,
and if amounts payable under Sections 14166.12 and 14166.17 are not
included in the payments under the diagnosis-related group
methodology and continue to be paid separately to hospitals,
exclusive of those amounts, that is not less than the average payment
per discharge to the hospitals, exclusive of amounts payable under
this article, amounts payable under Sections 14166.11 and 14166.23,
and if amounts payable under Sections 14166.12 and 14166.17 are not
included in the payments under the diagnosis-related group
methodology and continue to be paid separately to hospitals,
exclusive of those amounts, calculated on an aggregate basis for the
fiscal year ending June 30, 2012, adjusted, in consultation with the
hospital community, to reflect the movement of populations into
managed care under Article 5.4 (commencing with Section 14180).
(e) Solely for purposes of this article, a rate reduction or a
change in a rate methodology that is enjoined by a court shall be
included in the determination of a rate or a rate methodology until
all appeals or judicial reviews have been exhausted and the rate
reduction or change in rate methodology has been permanently
enjoined, denied by the federal government, or otherwise permanently
prevented from being implemented.
(f) Disproportionate share replacement payments to private
hospitals shall be not less than the amount determined pursuant to
Section 14166.11. For purposes of this subdivision, references to
Section 14166.11 are to the version of Section 14166.11 in effect on
the effective date of the act that added this subdivision.
14169.61. (a) The director shall do all of the following:
(1) Promptly submit any state plan amendment or waiver request
that may be necessary to implement this article.
(2) Promptly seek federal approvals or waivers as may be necessary
to implement this article and to obtain federal financial
participation to the maximum extent possible for the payments under
this article.
(3) Amend the contracts between the managed health care plans and
the department as necessary to incorporate the provisions of Sections
14169.54 and 14169.55 and promptly seek all necessary federal
approvals of those amendments. The department shall pursue amendments
to the contracts as soon as possible after the effective date of
this article and Article 5.231 (commencing with Section 14169.71),
and shall not wait for federal approval of this article or Article
5.231 (commencing with Section 14169.71) prior to pursuing amendments
to the contracts. The amendments to the contracts shall, among other
provisions, set forth an agreement to increase capitation payments
to managed health care plans under Section 14169.54 and increase
payments to hospitals under Section 14169.55 in a manner that relates
back to January 1, 2014, or as soon thereafter as possible,
conditioned on obtaining all federal approvals necessary for federal
financial participation for the increased capitation payments to the
managed health care plans.
(b) In implementing this article, the department may utilize the
services of the Medi-Cal fiscal intermediary through a change order
to the fiscal intermediary contract to administer this program,
consistent with the requirements of Sections 14104.6, 14104.7,
14104.8, and 14104.9. Contracts entered into for purposes of
implementing this article or Article 5.231 (commencing with Section
14169.71) shall not be subject to Part 2 (commencing with Section
10100) of Division 2 of the Public Contract Code.
(c) This article shall become inoperative if either of the
following occurs:
(1) In the event, and on the effective date, of a final judicial
determination made by any court of appellate jurisdiction or a final
determination by the federal Department of Health and Human Services
or the federal Centers for Medicare and Medicaid Services that
Section 14169.52 or Section 14169.53 cannot be implemented.
(2) In the event both of the following conditions exist:
(A) The federal Centers for Medicare and Medicaid Services denies
approval for, or does not approve before January 1, 2016, the
implementation of Section 14169.52, Section 14169.53, or the quality
assurance fee established pursuant to Article 5.231 (commencing with
Section 14169.71).
(B) Section 14169.52, Section 14169.53, or Article 5.231
(commencing with Section 14169.71) cannot be modified by the
department pursuant to subdivision (e) of Section 14169.73 in order
to meet the requirements of federal law or to obtain federal
approval.
(d) If this article becomes inoperative pursuant to paragraph (1)
of subdivision (c) and the determination applies to any period or
periods of time prior to the effective date of the determination, the
department shall have authority to recoup all payments made pursuant
to this article during that period or those periods of time.
(e) If any hospital, or any party on behalf of a hospital, shall
initiate a case or proceeding in any state or federal court in which
the hospital seeks any relief of any sort whatsoever, including, but
not limited to, monetary relief, injunctive relief, declaratory
relief, or a writ, based in whole or in part on a contention that any
or all of this article or Article 5.231 (commencing with Section
14169.71) is unlawful and may not be lawfully implemented, both of
the following shall apply:
(1) Payments shall not be made to the hospital pursuant to this
article until the case or proceeding is finally resolved, including
the final disposition of all appeals.
(2) Any amount computed to be payable to the hospital pursuant to
this section for a project year shall be withheld by the department
and shall be paid to the hospital only after the case or proceeding
is finally resolved, including the final disposition of all appeals.
(f) Subject to Section 14169.74, no payment shall be made under
this article until all necessary federal approvals for the payment
and for the fee provisions in Article 5.231 (commencing with Section
14169.71) have been obtained and the fee has been imposed and
collected. Notwithstanding any other law, payments under this article
shall be made only to the extent that the fee established in Article
5.231 (commencing with Section 14169.71) is collected and available
to cover the nonfederal share of the payments.
(g) A hospital's receipt of payments under this article for
services rendered prior to the effective date of this article is
conditioned on the hospital's continued participation in Medi-Cal for
at least 30 days after the effective date of this article.
(h) All payments made by the department to hospitals and managed
health care plans under this article shall be made only from the
following:
(1) The quality assurance fee set forth in Article 5.231
(commencing with Section 14169.71) and due and payable on or before
December 31, 2015, along with any interest or other investment income
thereon.
(2) Federal reimbursement and any other related federal funds.
14169.62. Notwithstanding any other provision of this article or
Article 5.231 (commencing with Section 14169.71), the director may
proportionately reduce the amount of any supplemental payments or
increased capitation payments under this article to the extent that
the payment would result in the reduction of other amounts payable to
a hospital or managed health care plan due to the application of
federal law.
14169.63. The director may, pursuant to Section 14169.80, decide
not to implement or to discontinue implementation of this article and
Article 5.231 (commencing with Section 14169.71), and to
retroactively invalidate the requirements for supplemental payments
or other payments under this article.
14169.64. (a) This article shall remain operative only until the
later of the following:
(1) January 1, 2017.
(2) The date of the last payment of the quality assurance fee
payments pursuant to Article 5.231 (commencing Section 14169.71).
(3) The date of the last payment from the department pursuant to
this article.
(b) If this article becomes inoperative under paragraph (1) of
subdivision (a), this article shall be repealed on January 1, 2017,
unless a later enacted statute enacted before that date, deletes or
extends that date.
(c) If this article becomes inoperative under paragraph (2) or (3)
of subdivision (a), this article shall be repealed on January 1 of
the year following the date this article becomes inoperative, unless
a later enacted statute enacted before that date, deletes or extends
that date.
14169.65. Notwithstanding any other law, if federal approval or a
letter that indicates likely federal approval in accordance with
Section 14169.74 has not been received on or before December 1, 2015,
then this article shall become inoperative, and as of December 1,
2015, is repealed, unless a later enacted statute, that is enacted
before December 1, 2015, deletes or extends that date.
14169.66. Notwithstanding Chapter 3.5 (commencing with Section
11340) of Part 1 of Division 3 of Title 2 of the Government Code, the
department shall implement this article by means of policy letters
or similar instructions, without taking further regulatory action.
14169.67. If the director determines that this article has become
inoperative pursuant to Section 14169.61, 14169.64, 14169.65, or
14169.80, the director shall execute a declaration stating that this
determination has been made and stating the basis for this
determination. The director shall retain the declaration and provide
a copy, within five working days of the execution of the declaration,
to the fiscal and appropriate policy committees of the Legislature.
In addition, the director shall post the declaration on the
department's Internet Web site and the director shall send the
declaration to the Secretary of State, the Secretary of the Senate,
the Chief Clerk of the Assembly, and the Legislative Counsel.
14169.68. (a) It is the intent of the Legislature to consider
legislation requiring the director to seek approval to increase
payments to hospitals in accordance with subdivision (b) of Section
14169.52, subdivision (a) of Section 14169.53, and subdivision (c) of
Section 14169.54, and to adopt a corresponding increase in the fee
imposed pursuant to Article 5.231 (commencing with Section 14169.71),
consistent with federal law and regulations, if the director
determines that the maximum available upper payment limits in
subdivision (b) of Section 14169.52 or subdivision (a) of Section
14169.53, or the amount of federal financial participation for
increased capitation payments to managed care health plans in
subdivision (c) of Section 14169.54, have increased during the
program period.
(b) The legislation described in subdivision (a) shall do both of
the following:
(1) Require the director to work in consultation with the hospital
community in seeking any necessary approvals from the federal
Centers for Medicare and Medicaid Services to increase payments to
hospitals and to impose corresponding fee increases.
(2) Require that, in the event that the director determines that
the maximum available upper payment limits in subdivision (b) of
Section 14169.52 or subdivision (a) of Section 14169.53, or the
amount of federal financial participation for increased capitation
payments to managed care health plans in subdivision (c) of Section
14169.54, have increased during the program period, the increases
shall first be made available for the purposes of this section prior
to being used for other purposes.
(c) Notwithstanding any other provision of this article or Article
5.231 (commencing with Section 14169.71), failure to secure, or
denial of, any necessary federal approvals required by the
legislation described in subdivision (a) shall not affect
implementation of this article or Article 5.231 (commencing with
Section 14169.71).
SEC. 5. SEC. 8. Article 5.231
(commencing with Section 14169.71) is added to Chapter 3 of
Part 7 of Division 9 Part 3
of Division 9 of the Welfare and Institutions Code, to
read:
Article 5.231. Private Hospital Quality Assurance Fee Act of
2014 2013
14169.71. For the purposes of this article, the following
definitions shall apply:
(a) (1) "Aggregate quality assurance fee" means, with respect to a
hospital that is not a prepaid health plan hospital, the sum of all
of the following:
(A) The annual fee-for-service days for an individual hospital
multiplied by the fee-for-service per diem quality assurance fee
rate.
(B) The annual managed care days for an individual hospital
multiplied by the managed care per diem quality assurance fee rate.
(C) The annual Medi-Cal days for an individual hospital multiplied
by the Medi-Cal per diem quality assurance fee rate.
(2) "Aggregate quality assurance fee" means, with respect to a
hospital that is a prepaid health plan hospital, the sum of all of
the following:
(A) The annual fee-for-service days for an individual hospital
multiplied by the fee-for-service per diem quality assurance fee
rate.
(B) The annual managed care days for an individual hospital
multiplied by the prepaid health plan hospital managed care per diem
quality assurance fee rate.
(C) The annual Medi-Cal managed care days for an individual
hospital multiplied by the prepaid health plan hospital Medi-Cal
managed care per diem quality assurance fee rate.
(D) The annual Medi-Cal fee-for-service days for an individual
hospital multiplied by the Medi-Cal per diem quality assurance fee
rate.
(3) "Aggregate quality assurance fee after the application of the
fee percentage" means the aggregate quality assurance fee multiplied
by the fee percentage for each subject fiscal year.
(b) "Annual fee-for-service days" means the number of
fee-for-service days of each hospital subject to the quality
assurance fee, as reported on the days data source.
(c) "Annual managed care days" means the number of managed care
days of each hospital subject to the quality assurance fee, as
reported on the days data source.
(d) "Annual Medi-Cal days" means the number of Medi-Cal days of
each hospital subject to the quality assurance fee, as reported on
the days data source.
(e) "Converted hospital" shall mean a hospital described in
subdivision (b) of Section 14169.51.
(f) "Days data source" means the hospital's Annual Financial
Disclosure Report filed with the Office of Statewide Health Planning
and Development as of June 6, 2013, for its fiscal year ending during
2010.
(g) "Designated public hospital" shall have the meaning given in
subdivision (d) of Section 14166.1 as of January 1, 2014.
(h) "Exempt facility" means any of the following:
(1) A public hospital, which shall include either of the
following:
(A) A hospital, as defined in paragraph (25) of subdivision (a) of
Section 14105.98.
(B) A tax-exempt nonprofit hospital that is licensed under
subdivision (a) of Section 1250 of the Health and Safety Code and
operating a hospital owned by a local health care district, and is
affiliated with the health care district hospital owner by means of
the district's status as the nonprofit corporation's sole corporate
member.
(2) With the exception of a hospital that is in the Charitable
Research Hospital peer group, as set forth in the 1991 Hospital Peer
Grouping Report published by the department, a hospital that is a
hospital designated as a specialty hospital in the hospital's most
recent publicly available Office of Statewide Health Planning and
Development Hospital Annual Financial Disclosure Report.
(3) A hospital that satisfies the Medicare criteria to be a
long-term care hospital.
(4) A small and rural hospital as specified in Section 124840 of
the Health and Safety Code designated as that in the hospital's
Office of Statewide Health Planning and Development Hospital Annual
Financial Disclosure Report for the hospital's fiscal year ending in
the 2010 calendar year.
(i) "Federal approval" means the approval by the federal
government of both the quality assurance fee established pursuant to
this article and the supplemental payments to private hospitals
described in Sections 14169.52 and 14169.53.
(j) (1) "Fee-for-service per diem quality assurance fee rate"
means a fixed daily fee on fee-for-service days.
(2) The fee-for-service per diem quality assurance fee rate shall
be four hundred one dollars and forty-one cents ($401.41) per day for
the 2014 calendar year and four hundred fifty-two dollars and
seventy three cents ($452.73) per day for the 2015 calendar year.
(3) Upon federal approval or conditional federal approval
described in Section 14169.74, the director shall determine the
fee-for-service per diem quality assurance fee rate based on the
funds required to make the payments specified in Article 5.230
(commencing with Section 14169.51), in consultation with the hospital
community.
(k) "Fee-for-service days" means inpatient hospital days when the
service type is reported as "acute care," "psychiatric care," and
"rehabilitation care," and the payer category is reported as
"Medicare traditional," "county indigent programs-traditional,"
"other third parties-traditional," "other indigent," and "other
payers," for purposes of the Annual Financial Disclosure Report
submitted by hospitals to the Office of Statewide Health Planning and
Development.
(l) "Fee percentage" means a fraction, expressed as a percentage,
the numerator of which is the amount of payments for each subject
fiscal year under Sections 14169.52, 14169.53, and 14169.54, for
which federal financial participation is available and the
denominator of which is____.
(m) "General acute care hospital" means any hospital licensed
pursuant to subdivision (a) of Section 1250 of the Health and Safety
Code.
(n) "Hospital community" means any hospital industry organization
or system that represents hospitals.
(o) "Managed care days" means inpatient hospital days when the
service type is reported as "acute care," "psychiatric care," and
"rehabilitation care," and the payer category is reported as
"Medicare managed care," "county indigent programs-managed care," and
"other third parties-managed care," for purposes of the Annual
Financial Disclosure Report submitted by hospitals to the Office of
Statewide Health Planning and Development.
(p) "Managed care per diem quality assurance fee rate" means a
fixed fee on managed care days of one hundred forty dollars ($140)
per day for the 2014 calendar year and one hundred sixty-five dollars
($165) per day for the 2015 calendar year.
(q) "Medi-Cal days" means inpatient hospital days when the service
type is reported as "acute care," "psychiatric care," and
"rehabilitation care," and the payer category is reported as
"Medi-Cal traditional" and "Medi-Cal managed care," for purposes of
the Annual Financial Disclosure Report submitted by hospitals to the
Office of Statewide Health Planning and Development.
(r) "Medi-Cal
fee-for-service days" means inpatient hospital days when the service
type is reported as "acute care," "psychiatric care," and
"rehabilitation care," and the payer category is reported as
"Medi-Cal traditional" for purposes of the Annual Financial
Disclosure Report submitted by hospitals to the Office of Statewide
Health Planning and Development.
(s) "Medi-Cal managed care days" means inpatient hospital days as
reported on the days data source when the service type is reported as
"acute care," "psychiatric care," and "rehabilitation care," and the
payer category is reported as "Medi-Cal managed care" for purposes
of the Annual Financial Disclosure Report submitted by hospitals to
the Office of Statewide Health Planning and Development.
(t) "Medi-Cal per diem quality assurance fee rate" means a fixed
fee on Medi-Cal days of four hundred seventy-four dollars and
sixty-four cents ($474.64) per day for the 2014 calendar year and
five hundred forty-two dollars and thirty-six cents ($542.36) for the
2015 calendar year.
(u) "New hospital" means a hospital operation, business, or
facility functioning under current or prior ownership as a private
hospital that does not have a days data source or a hospital that has
a days data source in whole, or in part, from a previous operator
when there is an outstanding monetary liability owed to the state in
connection with the Medi-Cal program and the new operator did not
assume liability for the outstanding monetary obligation.
(v) "Nondesignated public hospital" means either of the following:
(1) A public hospital that is licensed under subdivision (a) of
Section 1250 of the Health and Safety Code, is not designated as a
specialty hospital in the hospital's Annual Financial Disclosure
Report for the hospital's latest fiscal year, and satisfies the
definition in paragraph (25) of subdivision (a) of Section 14105.98,
excluding designated public hospitals.
(2) A tax-exempt nonprofit hospital that is licensed under
subdivision (a) of Section 1250 of the Health and Safety Code, is not
designated as a specialty hospital in the hospital's Annual
Financial Disclosure Report for the hospital's latest fiscal year, is
operating a hospital owned by a local health care district, and is
affiliated with the health care district hospital owner by means of
the district's status as the nonprofit corporation's sole corporate
member.
(w) "Prepaid health plan hospital" means a hospital owned by a
nonprofit public benefit corporation that shares a common board of
directors with a nonprofit health care service plan.
(x) "Prepaid health plan hospital managed care per diem quality
assurance fee rate" means a fixed fee on non-Medi-Cal managed care
days for prepaid health plan hospitals of seventy-eight dollars and
forty cents ($78.40) per day for the 2014 calendar year and
ninety-two dollars and forty cents ($92.40) for the 2015 calendar
year.
(y) "Prepaid health plan hospital Medi-Cal managed care per diem
quality assurance fee rate" means a fixed fee on Medi-Cal managed
care days for prepaid health plan hospitals of two hundred sixty-five
dollars and eighty cents ($265.80) per day for the 2014 calendar
year and three hundred three dollars and seventy-two cents ($303.72)
per day for the 2015 calendar year.
(z) "Prior fiscal year data" means any data taken from sources
that the department determines are the most accurate and reliable at
the time the determination is made, or may be calculated from the
most recent audited data using appropriate update factors. The data
may be from prior fiscal years, current fiscal years, or projections
of future fiscal years.
(aa) "Private hospital" means a hospital that meets all of the
following conditions:
(1) Is licensed pursuant to subdivision (a) of Section 1250 of the
Health and Safety Code.
(2) Is in the Charitable Research Hospital peer group, as set
forth in the 1991 Hospital Peer Grouping Report published by the
department, or is not designated as a specialty hospital in the
hospital's most recent publicly available Office of Statewide Health
Planning and Development Annual Financial Disclosure Report.
(3) Does not satisfy the Medicare criteria to be classified as a
long-term care hospital.
(4) Is a nonpublic hospital, nonpublic converted hospital, or
converted hospital as those terms are defined in paragraphs (26) to
(28), inclusive, respectively, of subdivision (a) of Section
14105.98.
(ab) "Program period" means the period from January 1, 2014, to
December 31, 2015, inclusive.
(ac) "Subject fiscal quarter" means a state fiscal quarter during
the program period.
(ad) "Subject fiscal year" means a state fiscal year that ends
after July 1, 2013, and begins before January 1, 2016.
(ae) "Upper payment limit" means a federal upper payment limit on
the amount of the Medicaid payment for which federal financial
participation is available for a class of service and a class of
health care providers, as specified in Part 447 of Title 42 of the
Code of Federal Regulations. The applicable upper payment limit shall
be separately calculated for inpatient and outpatient hospital
services.
14169.71. 14169.72. (a) There shall
be imposed on each general acute care hospital that is not an exempt
facility a quality assurance fee, provided that a quality assurance
fee under this article shall not be imposed on a converted hospital.
(b) The quality assurance fee shall be computed starting on
January 1, 2014, and continue through and including December 31,
2015.
(c) Subject to Section 14169.74, upon receipt of federal approval,
the following shall become operative:
(1) Within 10 business days following receipt of the notice of
federal approval from the federal government, the department shall
send notice to each hospital subject to the quality assurance fee,
and publish on its Internet Web site, the following information:
(A) The date that the state received notice of federal approval.
(B) The fee percentage for each subject fiscal year.
(2) The notice to each hospital subject to the quality assurance
fee shall also state the following:
(A) The aggregate quality assurance fee after the application of
the fee percentage for each subject fiscal year.
(B) The aggregate quality assurance fee.
(C) The amount of each payment due from the hospital with respect
to the aggregate quality assurance fee.
(D) The date on which each payment is due.
(3) The hospitals shall pay the aggregate quality assurance fee
after application of the fee percentage for all subject fiscal years
in eight installments. The department shall establish the date that
each installment is due, provided that the first installment shall be
due no earlier than 20 days following the department sending the
notice pursuant to paragraph (1), and the installments shall be paid
at least one month apart, but if possible, the installments shall be
paid on a quarterly basis.
(4) Notwithstanding any other provision of this section, the
amount of each hospital's aggregate quality assurance fee after the
application of the fee percentage for each subject fiscal year that
has not been paid by the hospital before December 15, 2015, pursuant
to paragraphs (3) and (8), shall be paid by the hospital no later
than December 15, 2015.
(5) (A) Notwithstanding subdivision (l) of Section 14169.71, for
the purpose of determining the installments under paragraph (3), the
department shall use an interim fee percentage as follows:
(i) One hundred percent for the 2014 calendar year until the
federal government has approved or disapproved additional capitation
payments described in Section 14169.54 for that subject fiscal year.
(ii) One hundred percent for the 2015 calendar year until the
federal government has approved or disapproved additional capitation
payments described in Section 14169.54 for that subject fiscal year.
(B) The director may use a lower interim fee percentage for each
subject fiscal year under this paragraph as the director, in his or
her discretion, determines is reasonable in order to generate
sufficient but not excessive installment payments to make the
payments described in subdivision (b) of Section 14169.73.
(6) The director shall determine the final fee percentage for each
subject fiscal year within 15 days of the approval or disapproval,
in whole or in part, by the federal government of all changes to the
capitation rates of managed health care plans requested by the
department to implement Section 14169.54 for that subject fiscal
year, but in no event later than December 1, 2015. At the time the
director determines the final fee percentage for a subject fiscal
year, the director shall also determine the amount of future
installment payments of the quality assurance fee for each hospital
subject to the fee, if any are due. The amount of each future
installment payment shall be established by the director with the
objective that the total of the installment payments of the quality
assurance fee due from a hospital shall equal the director's estimate
for each subject fiscal year for the hospital of the aggregate
quality assurance fee after the application of the fee percentage.
(7) The director, within 15 days of determining the final fee
percentage for a subject fiscal year pursuant to paragraph (6), shall
send notice to each hospital subject to the quality assurance fee of
the following information:
(A) The final fee percentage for each subject fiscal year for
which the final fee percentage has been determined.
(B) The fee percentage determined under paragraph (5) for each
subject fiscal year for which the final fee percentage has not been
determined.
(C) The aggregate quality assurance fee after application of the
fee percentage for each subject fiscal year.
(D) The director's estimate of total quality assurance fee
payments due from the hospital under this article whether or not
paid. This amount shall be the sum of the aggregate quality assurance
fee after application of the fee percentage for each subject fiscal
year using the fee percentages contained in the notice.
(E) The total quality assurance fee payments that the hospital has
made under this article.
(F) The amount, if any, by which the total quality assurance fee
payments due from the hospital under this article as described in
subparagraph (D) exceed the total quality assurance fee payments that
the hospital has made under this article.
(G) The amount of each remaining installment of the quality
assurance fee, if any, due from the hospital and the date each
installment is due. This amount shall be the amount described in
subparagraph (E) divided by the number of installment payments
remaining.
(8) Each hospital that is sent a notice under paragraph (7) shall
pay the additional installments of the quality assurance fee that are
due, if any, in the amounts and at the times set forth in the notice
unless superseded by a subsequent notice from the department.
(9) The department shall refund to a hospital paying the quality
assurance fee the amount, if any, by which the total quality
assurance fee payments that the hospital has made under this article
for all subject fiscal years exceed the total quality assurance fee
payments due from the hospital under this article within 30 days of
the date on which the notice is sent to the hospital under paragraph
(7).
(c)
( d) The quality assurance fee, as paid
pursuant to this section, shall be paid by each hospital subject to
the fee to the department for deposit in the Hospital Quality
Assurance Revenue Fund established pursuant to Section 14167.35
. Deposits may be accepted at any time and will be credited
toward the program period.
(d)
( e) This section shall become inoperative
if the federal Centers for Medicare and Medicaid Services denies
approval for, or does not approve before July 1, 2015,
2016, the implementation of the quality
assurance fee pursuant to this article or the supplemental payments
to private hospitals described in Sections 14169.52 and 14169.53.
(e)
( f) In no case shall the aggregate fees
collected in a federal fiscal year pursuant to this section, former
Section 14167.32, Section 14168.32, and Section
and Sections 14168.32 and 14169.32 exceed the
maximum percentage of the annual aggregate net patient revenue for
hospitals subject to the fee that is prescribed pursuant to federal
law and regulations as necessary to preclude a finding that an
indirect guarantee has been created.
(g) (1) Interest shall be assessed on quality assurance fees not
paid on the date due at the greater of 10 percent per annum or the
rate at which the department assesses interest on Medi-Cal program
overpayments to hospitals that are not repaid when due. Interest
shall begin to accrue the day after the date the payment was due and
shall be deposited in the Hospital Quality Assurance Revenue Fund.
(2) If any fee payment is more than 60 days overdue, a penalty
equal to the interest charge described in paragraph (1) shall be
assessed and due for each month for which the payment is not received
after 60 days.
(h) When a hospital fails to pay all or part of the quality
assurance fee on or before the date that payment is due, the
department may immediately begin to deduct the unpaid assessment and
interest from any Medi-Cal payments owed to the hospital, or, in
accordance with Section 12419.5 of the Government Code, from any
other state payments owed to the hospital until the full amount is
recovered. All amounts, except penalties, deducted by the department
under this subdivision shall be deposited in the Hospital Quality
Assurance Revenue Fund. The remedy provided to the department by this
section is in addition to other remedies available under law.
(i) The payment of the quality assurance fee shall not be
considered as an allowable cost for Medi-Cal cost reporting and
reimbursement purposes.
(f)
( j) The department shall work in
consultation with the hospital community to implement this article
and Article 5.230 (commencing with Section 14169.51).
(g)
( k) This subdivision creates a
contractually enforceable promise on behalf of the state to use the
proceeds of the quality assurance fee, including any federal matching
funds, solely and exclusively for the purposes set forth in this
article as they existed on the effective date of this article, to
limit the amount of the proceeds of the quality assurance fee to be
used to pay for the health care coverage of children to the amounts
specified in this article, to limit any payments for the department's
costs of administration to the amounts set forth in this article on
the effective date of this article, to maintain and continue prior
reimbursement levels as set forth in Section ____
14169.60 on the effective date of that article
section , and to otherwise comply with all its
obligations set forth in Article 5.230 (commencing with Section
14169.51) and this article provided that amendments that arise from,
or have as a basis for, a decision, advice, or determination by the
federal Centers for Medicare and Medicaid Services relating to
federal approval of the quality assurance fee or the payments set
forth in this article or Article 5.230 (commencing with Section
14169.51) shall control for the purposes of this subdivision.
(h)
( l) (1) Effective January 1, 2014
2016 , the rates payable to hospitals and
managed health care plans under Medi-Cal shall be the rates then
payable without the supplemental and increased capitation payments
set forth in Article 5.230 (commencing with Section 14169.51).
(2) The supplemental payments and other payments under Article
5.230 (commencing with Section 14169.51) shall be regarded as quality
assurance payments, the implementation or suspension of which does
not affect a determination of the adequacy of any rates under federal
law.
(m) (1) Subject to paragraph (2), the director may waive any or
all interest and penalties assessed under this article in the event
that the director determines, in his or her sole discretion, that the
hospital has demonstrated that imposition of the full quality
assurance fee on the timelines applicable under this article has a
high likelihood of creating a financial hardship for the hospital or
a significant danger of reducing the provision of needed health care
services.
(2) Waiver of some or all of the interest or penalties under this
subdivision shall be conditioned on the hospital's agreement to make
fee payments, or to have the payments withheld from payments
otherwise due from the Medi-Cal program to the hospital, on a
schedule developed by the department that takes into account the
financial situation of the hospital and the potential impact on
services.
(3) A decision by the director under this subdivision shall not be
subject to judicial review.
(4) If fee payments are remitted to the department after the date
determined by the department to be the final date for calculating the
final supplemental payments under this article and Article 5.230
(commencing with Section 14169.51), the fee payments shall be
retained in the fund for purposes of funding supplemental payments
supported by a hospital quality assurance fee program implemented
under subsequent legislation. However, if supplemental payments are
not implemented under subsequent legislation, then those fee payments
shall be deposited in the Distressed Hospital Fund.
(5) If during the implementation of this article, fee payments
that were due under former Article 5.21 (commencing with Section
14167.1) and former Article 5.22 (commencing with Section 14167.31),
or former Article 5.226 (commencing with Section 14168.1) and Article
5.227 (commencing with Section 14168.31), or Article 5.228
(commencing with Section 14169.1) and Article 5.229 (commencing with
Section 14169.31) are remitted to the department under a payment plan
or for any other reason, and the final date for calculating the
final supplemental payments under those articles has passed, then
those fee payments shall be deposited in the fund to support the uses
established by this article.
14169.72. 14169.73. (a) (1) All
fees required to be paid to the state pursuant to this article shall
be paid in the form of remittances payable to the department.
(2) The department shall directly transmit the fee payments to the
Treasurer to be deposited in the Hospital Quality Assurance Revenue
Fund, created pursuant to Section 14167.35. Notwithstanding Section
16305.7 of the Government Code, any interest and dividends earned on
deposits in the fund from the proceeds of the fee assessed pursuant
to this article shall be retained in the fund for purposes specified
in subdivision (b).
(b) Notwithstanding subdivision (c) of Section 14167.35,
subdivision (b) of Section 14168.33, and subdivision (b) of Section
14169.33, all funds from the proceeds of the fee assessed pursuant to
this article in the Hospital Quality Assurance Revenue Fund,
together with any interest and dividends earned on money in the fund,
shall, upon appropriation by the Legislature, continue to be used
exclusively to enhance federal financial participation for hospital
services under the Medi-Cal program, to provide additional
reimbursement to, and to support quality improvement efforts of,
hospitals, and to minimize uncompensated care provided by hospitals
to uninsured patients. patients, as well as
to pay for the state's administrative costs and to provide funding
for children's health coverage, in the following order of priority:
(1) To pay for the department's staffing and administrative costs
directly attributable to implementing Article 5.230 (commencing with
Section 14169.51) and this article, not to exceed two million dollars
($2,000,000) for the program period.
(2) To pay for the health care coverage for children in the amount
of one hundred fifty-five million dollars ($155,000,000) for each
subject fiscal quarter during the 2014 and 2015 calendar years.
(3) To make increased capitation payments to managed health care
plans pursuant to Article 5.230 (commencing with Section 14169.51).
(4) To make increased payments or direct grants to hospitals
pursuant to Article 5.230 (commencing with Section 14169.51).
(c) Any amounts of the quality assurance fee collected in excess
of the funds required to implement subdivision (b), including any
funds recovered under subdivision (d) of Section 14169.61 or
subdivision (e) of Section 14169.78, shall be refunded to general
acute care hospitals, pro rata with the amount of quality assurance
fee paid by the hospital, subject to the limitations of federal law.
If federal rules prohibit the refund described in this subdivision,
the excess funds shall be deposited in the Distressed Hospital Fund
to be used for the purposes described in Section 14166.23, and shall
be supplemental to and not supplant existing funds.
(d) Any methodology or other provision specified in Article 5.230
(commencing with Section 14169.51) or this article may be modified by
the department, in consultation with the hospital community, to the
extent necessary to meet the requirements of federal law or
regulations to obtain federal approval or to enhance the probability
that federal approval can be obtained, provided the modifications do
not violate the spirit and intent of Article 5.230 (commencing with
Section 14169.51) or this article and are not inconsistent with the
conditions of implementation set forth in Section 14169.80.
(e) The department, in consultation with the hospital community,
shall make adjustments, as necessary, to the amounts calculated
pursuant to Section 14169.72 in order to ensure compliance with the
federal requirements set forth in Section 433.68 of Title 42 of the
Code of Federal Regulations or elsewhere in federal law.
(f) The department shall request approval from the federal Centers
for Medicare and Medicaid Services for the implementation of this
article. In making this request, the department shall seek specific
approval from the federal Centers for Medicare and Medicaid Services
to exempt providers identified in this article as exempt from the
fees specified, including the submission, as may be necessary, of a
request for waiver of the broad-based requirement, waiver of the
uniform fee requirement, or both, pursuant to paragraphs (1) and (2)
of subdivision (e) of Section 433.68 of Title 42 of the Code of
Federal Regulations.
(g) Notwithstanding Chapter 3.5 (commencing with Section 11340) of
Part 1 of Division 3 of Title 2 of the Government Code, the
department may implement this article or Article 5.230 (commencing
with Section 14169.51) by means of provider bulletins, all plan
letters, or other similar instruction, without taking regulatory
action. The department shall also provide notification to the Joint
Legislative Budget Committee and to the appropriate policy and fiscal
committees of the Legislature within five working days when the
above-described action is taken in order to inform the Legislature
that the action is being implemented.
14169.74. (a) Notwithstanding any other provision of this article
or Article 5.230 (commencing with Section 14169.51) requiring
federal approvals, the department may impose and collect the quality
assurance fee and may make payments under this article and Article
5.230 (commencing with Section 14169.51), including increased
capitation payments, based upon receiving a letter from the federal
Centers for Medicare and Medicaid Services or the United States
Department of Health and Human
Services that indicates likely federal approval, but only if
and to the extent that the letter is sufficient as set forth in
subdivision (b).
(b) In order for the letter to be sufficient under this section,
the director shall find that the letter meets both of the following
requirements:
(1) The letter is in writing and signed by an official of the
federal Centers for Medicare and Medicaid Services or an official of
the United States Department of Health and Human Services.
(2) The director, after consultation with the hospital community,
has determined, in the exercise of his or her sole discretion, that
the letter provides a sufficient level of assurance to justify
advanced implementation of the fee and payment provisions.
(c) Nothing in this section shall be construed as modifying the
requirement under Section 14169.61 that payments shall be made only
to the extent a sufficient amount of funds collected as the quality
assurance fee are available to cover the nonfederal share of those
payments.
(d) Upon notice from the federal government that final federal
approval for the fee model under this article or for the supplemental
payments to private hospitals under Section 14169.52 or 14169.53 has
been denied, any fees collected pursuant to this section shall be
refunded and any payments made pursuant to this article or Article
5.230 (commencing with Section 14169.51) shall be recouped,
including, but not limited to, supplemental payments and grants,
increased capitation payments, payments to hospitals by health care
plans resulting from the increased capitation payments, and payments
for the health care coverage of children. To the extent fees were
paid by a hospital that also received payments under this section,
the payments may first be recouped from fees that would otherwise be
refunded to the hospital prior to the use of any other recoupment
method allowed under law.
(e) Any payment made pursuant to this section shall be a
conditional payment until final federal approval has been received.
(f) The director shall have broad authority under this section to
collect the quality assurance fee for an interim period after receipt
of the letter described in subdivision (a) pending receipt of all
necessary federal approvals. This authority shall include discretion
to determine both of the following:
(1) Whether the quality assurance fee should be collected on a
full or pro rata basis during the interim period.
(2) The dates on which payments of the quality assurance fee are
due.
(g) The department may draw against the Hospital Quality Assurance
Revenue Fund for all administrative costs associated with
implementation under this article or Article 5.230 (commencing with
Section 14169.51).
(h) This section shall be implemented only to the extent federal
financial participation is not jeopardized by implementation prior to
the receipt of all necessary final federal approvals.
14169.75. (a) Notwithstanding any other law, the director shall
have discretion to modify any timeline or timelines in this article
or Article 5.230 (commencing with Section 14169.51) if the letter
that indicates likely federal approval, as described in Section
14169.74, is not secured by December 15, 2015, and the director
determines that it is impossible from an operational perspective to
implement a timeline or timelines without the modification.
(b) The department shall notify the fiscal and policy committees
of the Legislature prior to implementing a modified timeline or
timelines under subdivision (a).
(c) The department shall consult with representatives of the
hospital community in developing a modified timeline or timelines
pursuant to this section.
(d) The discretion to modify timelines under this section shall
include, but not be limited to, discretion to accelerate payments to
plans or hospitals.
14169.76. (a) Upon receipt of a letter that indicates likely
federal approval that the director determines is sufficient for
implementation under Section 14169.74, or upon the receipt of federal
approval, the following shall occur:
(1) To the maximum extent possible, and consistent with the
availability of funds in the Hospital Quality Assurance Revenue Fund,
the department shall make all of the payments under Sections
14169.52, 14169.53, and 14169.54, including, but not limited to,
supplemental payments and increased capitation payments, prior to
January 1, 2016, except that the increased capitation payments under
Section 14169.54 shall not be made until federal approval is obtained
for these payments.
(2) The department shall make supplemental payments to hospitals
under Article 5.230 (commencing with Section 14169.51) consistent
with the timeframe described in Section 14169.59 or a modified
timeline developed pursuant to Section 14169.75.
(b) Notwithstanding any other provision of this article or Article
5.230 (commencing with Section 14169.51), if the director
determines, on or after December 15, 2015, that there are
insufficient funds available in the Hospital Quality Assurance
Revenue Fund to make all scheduled payments under Article 5.230
(commencing with Section 14169.51) before January 1, 2016, he or she
shall consult with representatives of the hospital community to
develop an acceptable plan for making additional payments to
hospitals and managed health care plans to maximize the use of
delinquent fee payments or other deposits or interest projected to
become available in the fund after December 15, 2015, but before June
15, 2016.
(c) Nothing in this section shall require the department to
continue to make payments under Article 5.230 (commencing with
Section 14169.51) if, after the consultation required under
subdivision (b), the director determines in the exercise of his or
her sole discretion that a workable plan for the continued payments
cannot be developed.
(d) Subdivisions (b) and (c) shall be implemented only if and to
the extent federal financial participation is available for continued
supplemental payments and to providers and continued increased
capitation payments to managed health care plans.
(e) If any payment or payments made pursuant to this section are
found to be inconsistent with federal law, the department shall
recoup the payments by means of withholding or any other available
remedy.
(f) Nothing in this section shall be read as affecting the
department's ongoing authority to continue, after December 31, 2015,
to collect quality assurance fees imposed on or before December 31,
2015.
14169.77. Notwithstanding any other law, if actual federal
approval or a letter that indicates likely federal approval in
accordance with Section 14169.74 has not been received on or before
December 1, 2015, then this article shall become inoperative, and as
of December 1, 2015, is repealed, unless a later enacted statute,
that is enacted before December 1, 2015, deletes or extends that
date.
14169.73. 14169.78. (a) This
article shall be implemented only as long as all of the following
conditions are met:
(1) Subject to Section ____, the quality assurance fee is
established in a manner that is fundamentally consistent with this
article.
(2) The quality assurance fee, including any interest on the fee
after collection by the department, is deposited in a segregated fund
apart from the General Fund.
(3) The proceeds of the quality assurance fee, including any
interest and related federal reimbursement, may only be used for the
purposes set forth in this article.
(b) No hospital shall be required to pay the quality assurance fee
to the department unless and until the state receives and maintains
federal approval.
(c) Hospitals shall be required to pay the quality assurance fee
to the department as set forth in this article only as long as all of
the following conditions are met:
(1) The federal Centers for Medicare and Medicaid Services allows
the use of the quality assurance fee as set forth in this article in
accordance with federal approval.
(2) Article 5.230 (commencing with Section 14169.51) is enacted
and remains in effect and hospitals are reimbursed the increased
rates for services during the program period, as defined in Section
14169.51.
(3) The full amount of the quality assurance fee assessed and
collected pursuant to this article remains available only for the
purposes specified in this article.
(1) Subject to Section 14169.73, the quality assurance fee is
established in a manner that is fundamentally consistent with this
article.
(2) The quality assurance fee, including any interest on the fee
after collection by the department, is deposited in a segregated fund
apart from the General Fund.
(3) The proceeds of the quality assurance fee, including any
interest and related federal reimbursement, may only be used for the
purposes set forth in this article.
(b) No hospital shall be required to pay the quality assurance fee
to the department unless and until the state receives and maintains
federal approval.
(c) Hospitals shall be required to pay the quality assurance fee
to the department as set forth in this article only as long as all of
the following conditions are met:
(1) The federal Centers for Medicare and Medicaid Services allows
the use of the quality assurance fee as set forth in this article in
accordance with federal approval.
(2) Article 5.230 (commencing with Section 14169.51) is enacted
and remains in effect and hospitals are reimbursed the increased
rates for services during the program period, as defined in Section
14169.51.
(3) The full amount of the quality assurance fee assessed and
collected pursuant to this article remains available only for the
purposes specified in this article.
(d) This article shall become inoperative if either of the
following occurs:
(1) In the event, and on the effective date, of a final judicial
determination made by any court of appellate jurisdiction or a final
determination by the United States Department of Health and Human
Services or the federal Centers for Medicare and Medicaid Services
that the quality assurance fee established pursuant to this article
cannot be implemented.
(2) In the event both of the following conditions exist:
(A) The federal Centers for Medicare and Medicaid Services denies
approval for, or does not approve before January 1, 2016, the
implementation of Sections 14169.52 and 14169.53 or this article.
(B) Section 14169.52, Section 14169.53, or this article cannot be
modified by the department pursuant to subdivision (d) of Section
14169.73 in order to meet the requirements of federal law or to
obtain federal approval.
(e) If this article becomes inoperative pursuant to paragraph (1)
of subdivision (d) and the determination applies to any period or
periods of time prior to the effective date of the determination, the
department may recoup all payments made pursuant to Article 5.230
(commencing with Section 14169.51) during that period or those
periods of time.
(f) (1) If all necessary final federal approvals are not received
as described and anticipated under this article or Article 5.230
(commencing with Section 14169.51), the director shall have the
discretion and authority to develop procedures for recoupment from
managed health care plans, and from hospitals under contract with
managed health care plans, of any amounts received pursuant to this
article or Article 5.230 (commencing with Section 14169.51).
(2) Any procedure instituted pursuant to this subdivision shall be
developed in consultation with representatives from managed health
care plans and representatives of the hospital community.
(3) Any procedure instituted pursuant to this subdivision shall be
in addition to all other remedies made available under the law,
pursuant to contracts between the department and the managed health
care plans, or pursuant to contracts between the managed health care
plans and the hospitals.
14169.79. Notwithstanding any other provision of this article or
Article 5.230 (commencing with Section 14169.51), supplemental
payments or other payments under Article 5.230 (commencing with
Section 14169.51) shall only be required and payable in any quarter
for which a fee payment obligation exists.
14169.80. (a) This article and Article 5.230 (commencing with
Section 14169.51) shall become inoperative and the requirements for
supplemental payments or other payments under Article 5.230
(commencing with Section 14169.51) shall be retroactively
invalidated, on the first day of the first month of the calendar
quarter following notification to the Joint Legislative Budget
Committee by the Department of Finance, that any of the following
have occurred:
(1) A final judicial determination by the California Supreme Court
or any California Court of Appeal that the revenues collected
pursuant to this article that are deposited in the Hospital Quality
Assurance Revenue Fund are either of the following:
(A) General Fund proceeds of taxes appropriated pursuant to
Article XIII B of the California Constitution, as used in subdivision
(b) of Section 8 of Article XVI of the California Constitution.
(B) Allocated local proceeds of taxes, as used in subdivision (b)
of Section 8 of Article XVI of the California Constitution.
(2) The department has sought but has not received federal
financial participation for the supplemental payments and other costs
required by this article for which federal financial participation
has been sought.
(3) A lawsuit related to this article or Article 5.230 (commencing
with Section 14169.51) is filed against the state and a preliminary
injunction or other order has been issued that results in a financial
disadvantage to the state.
(4) The director, in consultation with the Department of Finance,
determines that the implementation of this article or Article 5.230
(commencing with Section 14169.51) has resulted in a financial
disadvantage to the state.
(b) For purposes of this section, "financial disadvantage to the
state" means either of the following:
(1) A loss of federal financial participation.
(2) A cost to the General Fund, that is equal to or greater than
one-quarter of 1 percent of the General Fund expenditures authorized
in the most recent annual Budget Act.
(c) (1) The director shall have the authority to recoup any
payments made under Article 5.230 (commencing with Section 14169.51)
if any of the following apply:
(A) Recoupment of payments made under Article 5.230 (commencing
with Section 14169.51) is ordered by a court.
(B) Federal financial participation is not available for payments
made under Article 5.230 (commencing with Section 14169.51) for which
federal financial participation has been sought.
(C) Recoupment of payments made under Article 5.230 (commencing
with Section 14169.51) is necessary to prevent a General Fund cost
that is estimated to be equal to or greater than one-quarter of 1
percent of the General Fund expenditures authorized in the most
recent annual Budget Act and that results from implementation of a
court order or the unavailability of federal financial participation.
(2) In the event payments are recouped for a particular quarter,
fees paid by a hospital for that quarter pursuant to this article
shall be refunded to the extent that the hospital meets both of the
following conditions:
(A) The hospital has actually paid the fee for the subject quarter
and for all prior quarters.
(B) The hospital has returned the payment received pursuant to
Article 5.230 (commencing with Section 14169.51) for that quarter, or
has had that payment recouped through a withholding of funds owed by
Medi-Cal or other state payments, or recouped through other means.
(d) In the event the department determines that recoupment of
supplemental payments is necessary to implement any provision of this
section, the department may recoup payments made pursuant to Article
5.230 (commencing with Section 14169.51) from fees paid by the
hospital pursuant to this article.
(e) Concurrent with invoking any provision of this section, the
director shall notify the fiscal and appropriate policy committees of
the Legislature of the intended action and the specific reason or
reasons for the proposed action.
14169.81. Notwithstanding Chapter 3.5 (commencing with Section
11340) of Part 1 of Division 3 of Title 2 of the Government Code, the
department shall implement this article by means of policy letters
or similar instructions, without taking further regulatory action.
14169.82. (a) This article shall remain operative only until the
later of the following:
(1) January 1, 2017.
(2) The date of the last payment of the quality assurance fee
payments pursuant to this article.
(3) The date of the last payment from the department pursuant to
Article 5.230 (commencing with Section 14169.51).
(b) If this article becomes inoperative under paragraph (1) of
subdivision (a), this article shall be repealed on January 1, 2017,
unless a later enacted statute enacted before that date, deletes or
extends that date.
(c) If this article becomes inoperative under paragraph (2) or (3)
of subdivision (a), this article shall be repealed on January 1 of
the year following the date this article becomes inoperative, unless
a later enacted statute enacted before that date, deletes or extends
that date.
14169.83. If the director determines that this article has become
inoperative pursuant to Section 14169.77, 14169.78, 14169.80, or
14169.82, or that Section 14169.72 has become inoperative pursuant to
subdivision (e) of that section, the director shall execute a
declaration stating that this determination has been made and stating
the basis for this determination. The director shall retain the
declaration and provide a copy, within five working days of the
execution of the declaration, to the fiscal and appropriate policy
committees of the Legislature. In addition, the director shall post
the declaration on the department's Internet Web site and the
director shall send the declaration to the Secretary of State, the
Secretary of the Senate, the Chief Clerk of the Assembly, and the
Legislative Counsel.
SEC. 6. SEC. 9. This act is an
urgency statute necessary for the immediate preservation of the
public peace, health, or safety within the meaning of Article IV of
the Constitution and shall go into immediate effect. The facts
constituting the necessity are:
In order to make the necessary changes to increase
medi-cal Medi-Cal payments to hospitals and
improve access at the earliest time, so as to allow this act to be
operative as soon as approval from the federal centers
Centers for Medicare and Medicaid Services is
obtained by the State Department of Health Care Services, it is
necessary that this act takes effect immediately.