Amended in Assembly August 27, 2013

Amended in Assembly August 14, 2013

Amended in Senate April 17, 2013

Senate BillNo. 239


Introduced by Senators Hernandez and Steinberg

February 12, 2013


An act to amend 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) 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: hospitals: quality assurance fee.

begin delete

Existing

end delete

begin insert(1)end insertbegin insertend insertbegin insertExistingend insert 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.begin delete 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.end delete

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 31, 2015, to be deposited into the Hospital Quality Assurance Revenue Fund. This bill would, subject to federal approval, provide that moneys in the Hospital Quality Assurance Revenue Fund shallbegin delete, upon appropriation by the Legislature,end delete bebegin insert continuously appropriated andend insert available only for certain purposes, including paying for health care coverage for children, as specified, and making supplemental payments for certain services to privatebegin delete hospitals,end deletebegin insert hospitals andend insert increased capitation payments to Medi-Cal managed care plansbegin delete, and increased payments to mental health plansend delete. 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 provisionsbegin delete and would require the department to, upon request, assist hospitals in reconciling payments due and received from Medi-Cal managed care plansend delete. 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 bebegin delete deposited into the Distressed Hospital Fundend deletebegin insert returned to the private hospitals pro rata, as specifiedend insert. 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 bebegin delete 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 appropriationend deletebegin insert returned to the private hospitals pro rata, as specifiedend insert. The bill would make other conforming changes.

begin delete

Existing

end delete

begin insert(2)end insertbegin insertend insertbegin insertExistingend insert 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.

begin delete

Existing

end delete

begin insert(3)end insertbegin insertend insertbegin insertExistingend insert 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 contractbegin insert or a contract with a county organized health systemend insert shall cease to be a requirement for a hospital’s participation in the Construction and Renovation Reimbursement Program.

begin delete

This

end delete

begin insert(4)end insertbegin insertend insertbegin insertThisend insert bill would declare that it is to take effect immediately as an urgency statute.

Vote: 23. Appropriation: yes. Fiscal committee: yes. State-mandated local program: no.

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

P4    1

SECTION 1.  

The Legislature finds and declares both of the
2following:

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

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

13

SEC. 2.  

(a) It is the intent of the Legislature to impose a quality
14assurance fee to be paid by hospitals, which would be used to
15increase federal financial participation in order to make
16supplemental Medi-Cal payments to hospitals for the period of
17January 1, 2014, through December 31, 2015, and to help pay for
18health care coverage for low-income children.

19(b) The State Department of Health Care Services shall make
20every effort to obtain the necessary federal approvals to implement
21the quality assurance fee described in subdivision (a) in order to
22make supplemental Medi-Cal payments to hospitals for the period
23of January 1, 2014, through December 31, 2015.

24(c) It is the intent of the Legislature that the quality assurance
25fee be implemented only if all of the following conditions are met:

26(1) The quality assurance fee is established in consultation with
27the hospital community.

28(2) The quality assurance fee, including any interest earned after
29collection by the department, is deposited into segregated funds
30apart from the General Fund and used exclusively for supplemental
31Medi-Cal payments to hospitals, direct grants to public hospitals,
32health care coverage for low-income children, and for the direct
33costs of administering the program by the department.

34(3) No hospital shall be required to pay the quality assurance
35fee to the department unless and until the state receives and
P5    1maintains federal approval of the quality assurance fee and related
2supplemental payments to hospitals.

3(4) The full amount of the quality assurance fee assessed and
4collected remains available only for the purposes specified by the
5Legislature in this act.

6

SEC. 3.  

Section 14164 of the Welfare and Institutions Code is
7amended to read:

8

14164.  

(a) In addition to the required intergovernmental
9transfers set forth in Section 14163, any county, other political
10subdivision of the state, or governmental entity in the state may
11elect to transfer funds, subject to subdivision (m) of Section 14163,
12to the department in support of the Medi-Cal program. Those
13transfers may consist of cash or loans to the state. The department
14shall have the discretion to accept or not accept any elective transfer
15from a county, political subdivision, or other governmental entity,
16as well as the discretion of whether to deposit the transfer in the
17Medi-Cal Inpatient Payment Adjustment Fund established pursuant
18to Section 14163. If the department accepts a transfer pursuant to
19this section, the department shall obtain federal matching funds to
20the full extent permitted by federal law.

21(b) (1) The director may maximize available federal financial
22participation to provide access to services provided by hospitals
23that are not reimbursed by certified public expenditure pursuant
24to Article 5.2 (commencing with Section 14166) by authorizing
25the use of intergovernmental transfers to fund the nonfederal share
26of supplemental payments as permitted under Section 433.51 of
27Title 42 of the Code of Federal Regulations or any other applicable
28federal Medicaid laws. The transferring entity shall certify to the
29department that the funds are in compliance with all federal rules
30and regulations. Any payments funded by intergovernmental
31transfers shall remain with the hospital and shall not be transferred
32back to any county, other political subdivision of the state, or
33governmental entity in the state, except for federal disallowance
34or withhold recovery efforts by the department. Participation in
35intergovernmental transfers under this subdivision is voluntary on
36the part of the transferring entity for purposes of all applicable
37federal laws.

38(2) This subdivision shall be implemented only to the extent
39federal financial participation is not jeopardized.

P6    1

SEC. 4.  

Section 14165 of the Welfare and Institutions Code is
2amended to read:

3

14165.  

(a) There is hereby created in the Governor’s office
4the California Medical Assistance Commission, for the purpose
5of contracting with health care delivery systems for the provision
6of health care services to recipients under the California Medical
7Assistance Program.

8(b) Notwithstanding any other law, the commission created
9pursuant to subdivision (a) shall continue through June 30, 2012,
10after which, it shall be dissolved and the term of any commissioner
11serving at that time shall end.

12(1) Upon dissolution of the commission, all powers, duties, and
13responsibilities of the commission shall be transferred to the
14Director of Health Care Services. These powers, duties, and
15responsibilities shall include, but are not limited to, those exercised
16in the operation of the selective provider contracting program
17pursuant to Article 2.6 (commencing with Section 14081).

18(2) (A) On July 1, 2012, notwithstanding any other law,
19employees of the California Medical Assistance Commission as
20of June 30, 2012, excluding commissioners, shall transfer to the
21State Department of Health Care Services.

22(B) Employees who transfer pursuant to subparagraph (A) shall
23be subject to the same conditions of employment under the
24department as they were under the California Medical Assistance
25Commission, including retention of their exempt status, until the
26diagnosis-related groups payment system described in Section
2714105.28 replaces the contract-based payment system described
28in this article.

29(C) (i) Notwithstanding any other law or rule, persons employed
30by the department who transferred to the department pursuant to
31subparagraph (A) shall be eligible to apply for civil service
32examinations. Persons receiving passing scores shall have their
33names placed on lists resulting from these examinations, or
34otherwise gain eligibility for appointment. In evaluating minimum
35qualifications, related California Medical Assistance Commission
36experience shall be considered state civil service experience in a
37class deemed comparable by the State Personnel Board, based on
38the duties and responsibilities assigned.

39(ii) On the date the diagnosis-related groups payment system
40described in Section 14105.28 replaces the contract-based system
P7    1described in this article, employees who transferred to the
2department pursuant to subparagraph (A) shall transfer to civil
3service classifications within the department for which they are
4eligible.

5(3) Upon a determination by the Director of Health Care
6Services that a payment system based on diagnosis-related groups
7as described in Section 14105.28 that is sufficient to replace the
8contract-based payment system described in this article has been
9developed and implemented, the powers, duties, and responsibilities
10conferred on the commission and transferred to the Director of
11Health Care Services shall no longer be exercised, excluding all
12of the following:

13(A) Stabilization payments made or committed from Sections
1414166.14 and 14166.19 for services rendered prior to the director’s
15determination pursuant to this paragraph.

16(B) The ability to negotiate and make payments from the Private
17Hospital Supplemental Fund, established pursuant to Section
1814166.12, and the Nondesignated Public Hospital Supplemental
19Fund, established pursuant to Section 14166.17.

20(C) The ability to continue to administer and distribute payments
21for the Construction Renovation Reimbursement Program, in
22accordance with Sections 14085 to 14085.57, inclusive.
23Notwithstanding any other law, maintaining or negotiating a
24selective provider contract pursuant to Article 2.6 (commencing
25with Section 14081)begin insert or a contract with a county organized health
26systemend insert
shall cease to be a requirement for a hospital’s participation
27in the Construction Renovation Reimbursement Program.

28(4) Protections afforded to the negotiations and contracts of the
29commission by the California Public Records Act (Chapter 3.5
30(commencing with Section 6250) of Division 7 of Title 1 of the
31Government Code) shall be applicable to the negotiations and
32contracts conducted or entered into pursuant to this section by the
33State Department of Health Care Services.

34(c) Notwithstanding the rulemaking provisions of Chapter 3.5
35(commencing with Section 11340) of Part 1 of Division 3 of Title
362 of the Government Code, or any other provision of law, the State
37Department of Health Care Services may implement and administer
38this section by means of provider bulletins or other similar
39instructions, without taking regulatory action. The authority to
40implement this section as set forth in this subdivision shall include
P8    1the authority to give notice by provider bulletin or other similar
2instruction of a determination made pursuant to paragraph (3) of
3subdivision (b) and to modify or supersede existing regulations in
4Title 22 of the California Code of Regulations that conflict with
5implementation of this section.

6

SEC. 5.  

Section 14167.35 of the Welfare and Institutions Code
7 is amended to read:

8

14167.35.  

(a) The Hospital Quality Assurance Revenue Fund
9is hereby created in the State Treasury.

10(b) (1) All fees required to be paid to the state pursuant to this
11article shall be paid in the form of remittances payable to the
12department.

13(2) The department shall directly transmit the fee payments to
14the Treasurer to be deposited in the Hospital Quality Assurance
15Revenue Fund. Notwithstanding Section 16305.7 of the
16Government Code, any interest and dividends earned on deposits
17in the fund shall be retained in the fund for purposes specified in
18subdivision (c).

19(c) All funds in the Hospital Quality Assurance Revenue Fund,
20 together with any interest and dividends earned on money in the
21fund, shall, upon appropriation by the Legislature, be used
22exclusively to enhance federal financial participation for hospital
23services under the Medi-Cal program, to provide additional
24reimbursement to, and to support quality improvement efforts of,
25hospitals, and to minimize uncompensated care provided by
26hospitals to uninsured patients, in the following order of priority:

27(1) To pay for the department’s staffing and administrative costs
28directly attributable to implementing Article 5.21 (commencing
29with Section 14167.1) and this article, including any administrative
30fees that the director determines shall be paid to mental health
31plans pursuant to subdivision (d) of Section 14167.11 and
32repayment of the loan made to the department from the Private
33Hospital Supplemental Fund pursuant to the act that added this
34section.

35(2) To pay for the health care coverage for children in the
36amount of eighty million dollars ($80,000,000) for each subject
37fiscal quarter for which payments are made under Article 5.21
38(commencing with Section 14167.1).

P9    1(3) To make increased capitation payments to managed health
2care plans pursuant to Article 5.21 (commencing with Section
314167.1).

4(4) To pay funds from the Hospital Quality Assurance Revenue
5Fund pursuant to Section 14167.5 that would have been used for
6grant payments and that are retained by the state, and to make
7increased payments to hospitals, including grants, pursuant to
8Article 5.21 (commencing with Section 14167.1), both of which
9shall be of equal priority.

10(5) To make increased payments to mental health plans pursuant
11to Article 5.21 (commencing with Section 14167.1).

12(d) Any amounts of the quality assurance fee collected in excess
13of the funds required to implement subdivision (c), including any
14funds recovered under subdivision (d) of Section 14167.14 or
15subdivision (e) of Section 14167.36, shall be refunded to general
16acute care hospitals, pro rata with the amount of quality assurance
17fee paid by the hospital, subject to the limitations of federal law.
18If federal rules prohibit the refund described in this subdivision,
19the excess funds shall be deposited in the Distressed Hospital Fund
20to be used for the purposes described in Section 14166.23, and
21shall be supplemental to and not supplant existing funds.

22(e) Any methodology or other provision specified in Article
235.21 (commencing with Section 14167.1) and this article may be
24modified by the department, in consultation with the hospital
25community, to the extent necessary to meet the requirements of
26federal law or regulations to obtain federal approval or to enhance
27the probability that federal approval can be obtained, provided the
28modifications do not violate the spirit and intent of Article 5.21
29(commencing with Section 14167.1) or this article and are not
30inconsistent with the conditions of implementation set forth in
31Section 14167.36.

32(f) The department, in consultation with the hospital community,
33shall make adjustments, as necessary, to the amounts calculated
34pursuant to Section 14167.32 in order to ensure compliance with
35the federal requirements set forth in Section 433.68 of Title 42 of
36the Code of Federal Regulations or elsewhere in federal law.

37(g) The department shall request approval from the federal
38Centers for Medicare and Medicaid Services for the implementation
39of this article. In making this request, the department shall seek
40specific approval from the federal Centers for Medicare and
P10   1Medicaid Services to exempt providers identified in this article as
2exempt from the fees specified, including the submission, as may
3be necessary, of a request for waiver of the broad based
4requirement, waiver of the uniform fee requirement, or both,
5pursuant to paragraphs (e)(1) and (e)(2) of Section 433.68 of Title
642 of the Code of Federal Regulations.

7(h) (1) For purposes of this section, a modification pursuant to
8this section shall be implemented only if the modification, change,
9or adjustment does not do either of the following:

10(A) Reduces or increases the supplemental payments or grants
11made under Article 5.21 (commencing with Section 14167.1) in
12the aggregate for the 2008-09, 2009-10, and 2010-11 federal
13fiscal years to a hospital by more than 2 percent of the amount that
14would be determined under this article without any change or
15adjustment.

16(B) Reduces or increases the amount of the fee payable by a
17hospital in total under this article for the 2008-09, 2009-10, and
182010-11 federal fiscal years by more than 2 percent of the amount
19that would be determined under this article without any change or
20adjustment.

21(2) The department shall provide the Joint Legislative Budget
22Committee and the fiscal and appropriate policy committees of
23the Legislature a status update of the implementation of Article
245.21 (commencing with Section 14167.1) and this article on
25January 1, 2010, and quarterly thereafter. Information on any
26adjustments or modifications to the provisions of this article or
27Article 5.21 (commencing with Section 14167.1) that may be
28required for federal approval shall be provided coincident with the
29consultation required under subdivisions (f) and (g).

30(i) Notwithstanding Chapter 3.5 (commencing with Section
3111340) of Part 1 of Division 3 of Title 2 of the Government Code,
32the department may implement this article or Article 5.21
33(commencing with Section 14167.1) by means of provider
34bulletins, all plan letters, or other similar instruction, without taking
35regulatory action. The department shall also provide notification
36to the Joint Legislative Budget Committee and to the appropriate
37policy and fiscal committees of the Legislature within five working
38days when the above-described action is taken in order to inform
39the Legislature that the action is being implemented.

P11   1(j) Notwithstanding any law, the Controller may use the funds
2in the Hospital Quality Assurance Revenue Fund for cashflow
3loans to the General Fund as provided in Sections 16310 and 16381
4of the Government Code.

5(k) Notwithstanding Sections 14167.17 and 14167.40,
6subdivisions (b) to (h), inclusive, shall become inoperative on
7January 1, 2013, subdivisions (a), (i), and (j) shall remain operative
8until January 1, 2017, and as of January 1, 2017, this section is
9repealed.

10

SEC. 6.  

Section 14167.37 is added to the Welfare and
11Institutions Code
, to read:

12

14167.37.  

(a) begin insert(1)end insertbegin insertend insertThe department shall make available all
13public documentation it uses to administer and audit the program
14authorized under Article 5.230 (commencing with Section
1514169.51) and Article 5.231 (commencing with Section 14169.71)
16pursuant to the Public Records Act (Chapter 3.5 (commencing
17with Section 6250) of Division 7 of Title 1 of the Government
18Code).begin delete In addition, upon request, the department shall assist
19hospitals in reconciling payments due and received from Medi-Cal
20managed care plans under Article 5.230 (commencing with Section
2114169.51).end delete

begin insert

22(2) In addition, upon request from a hospital, the department
23shall require Medi-Cal managed care plans to furnish hospitals
24with the amounts the plan intends to pay to the hospital pursuant
25to Article 5.230 (commencing with Section 14169.51). Nothing in
26this paragraph shall require the department to reconcile payments
27made to individual hospitals from Medi-Cal managed care plans.

end insert

28(b) Notwithstanding subdivision (a), the department shall post
29all of the following on the department’s Internet Web site:

30(1) Within 10 business days after receipt of approval of the
31hospital quality assurance fee program under Article 5.230
32(commencing with Section 14169.51) and Article 5.231
33(commencing with Section 14169.71) from the federal Centers for
34Medicare and Medicaid Services (CMS), the hospital quality
35 assurance fee final model and upper payment limit calculations.

36(2) Quarterly updates on payments, fee schedules, and model
37updates when applicable.

38(3) Within 10 business days after receipt, information on
39managed care rate approvals.

P12   1(c) For purposes of this section, the following definitions shall
2apply:

3(1) “Fee schedules” mean the dates on which the hospital quality
4assurance fee will be due from the hospitals and the dates on which
5the department will submit fee-for-service payments to the
6hospitals. “Fee schedules” also include the dates on which the
7department is expected to submit payments to managed care plans.

8(2) “Hospital quality assurance fee final model” means the
9 spreadsheet calculating the supplemental amounts based on the
10upper payment limit calculation from claims and hospital data
11sources of days and hospital services once CMS approves the
12program under Article 5.230 (commencing with Section 14169.51)
13and Article 5.231 (commencing with Section 14169.71).

14(3) “Upper payment limit calculation” means the determination
15of the federal upper payment limit on the amount of the Medicaid
16payment for which federal financial participation is available for
17a class of service and a class of health care providers, as specified
18in Part 447 of Title 42 of the Code of Federal Regulations and that
19has been approved by CMS.

20

SEC. 7.  

Article 5.230 (commencing with Section 14169.51)
21is added to Chapter 7 of Part 3 of Division 9 of the Welfare and
22Institutions Code
, to read:

23 

24Article 5.230.  Medi-Cal Hospital Reimbursement Improvement
25Act of 2013
26

 

27

14169.51.  

begin delete(a)end deletebegin deleteend deletebegin delete“Acute end deletebegin insertFor purposes of this article, the following
28definitions shall apply:end insert

29begin insert(a)end insertbegin insertend insertbegin insert“Acuteend insert psychiatric days” means the total number of
30Medi-Cal specialty mental health service administrative days,
31Medi-Cal specialty mental health service acute care days, acute
32psychiatric administrative days, and acute psychiatric acute days
33identified in the Final Medi-Cal Utilization Statistics for the
342012-13 state fiscal year as calculated by the department as of
35December 17, 2012.

36(b) “Converted hospital” means a private hospital that becomes
37a designated public hospital or a nondesignated public hospital on
38or after January 1, 2014.

39(c) “Days data source” means the hospital’s Annual Financial
40Disclosure Report filed with the Office of Statewide Health
P13   1Planning and Development as of June 6, 2013, for its fiscal year
2ending duringbegin delete 2010, except for Downey Regional Medical Center
3which shall be the Annual Financial Disclosure Report for the
4fiscal year ending during 2011 retrieved from the Office of
5Statewide Health Planning and Development as of July 23, 2013.end delete

6begin insert 2010.end insert

begin insert

7(d) “Department” means the State Department of Health Care
8Services.

end insert
begin delete

9(d)

end delete

10begin insert(e)end insert “Designated public hospital” shall have the meaning given
11in subdivision (d) of Section 14166.1begin delete as of January 1, 2014end delete.

begin insert

12(f) “Director” means the Director of Health Care Services.

end insert
begin delete

13(e)

end delete

14begin insert(g)end insert “General acute care days” means the total number of
15Medi-Cal general acute care daysbegin insert, including well baby days, less
16any acute psychiatric inpatient days,end insert
paid by the department to a
17hospital for services in the 2010 calendar year, as reflected in the
18state paid claims file on April 26, 2013.

begin delete

19(f)

end delete

20begin insert(h)end insert “High acuity days” means Medi-Cal coronary care unit days,
21pediatric intensive care unit days, intensive care unit days, neonatal
22intensive care unit days, and burn unit days paid by the department
23during the 2010 calendar year, as reflected in the state paid claims
24file prepared by the department on April 26, 2013.

begin insert

25(i) “Hospital community” means any general acute care hospital
26and any hospital industry organization that represents general
27acute care hospitals.

end insert
begin delete

28(g)

end delete

29begin insert(j)end insert “Hospital inpatient services” means all services covered
30under Medi-Cal and furnished by hospitals to patients who are
31admitted as hospital inpatients and reimbursed on a fee-for-service
32basis by the department directly or through its fiscal intermediary.
33Hospital inpatient services include outpatient services furnished
34by a hospital to a patient who is admitted to that hospital within
3524 hours of the provision of the outpatient services that are related
36to the condition for which the patient is admitted. Hospital inpatient
37services do not include services for which a managed health care
38plan is financially responsible.

begin delete

39(h)

end delete

P14   1begin insert(k)end insert “Hospital outpatient services” means all services covered
2under Medi-Cal furnished by hospitals to patients who are
3registered as hospital outpatients and reimbursed by the department
4on a fee-for-service basis directly or through its fiscal intermediary.
5Hospital outpatient services do not include services for which a
6managed health care plan is financially responsible, or services
7rendered by a hospital-based federally qualified health center for
8which reimbursement is received pursuant to Section 14132.100.

begin delete

9(i) “Individual hospital acute psychiatric supplemental payment”
10means the total amount of acute psychiatric hospital supplemental
11payments to a subject hospital for a quarter for which the
12supplemental payments are made. The “individual hospital acute
13psychiatric supplemental payment” shall be calculated for subject
14hospitals by multiplying the number of acute psychiatric days for
15the individual hospital for which a mental health plan was
16financially responsible by the amount calculated in accordance
17with paragraph (2) of subdivision (b) of Section 14169.53 and
18dividing the result by four.

19(j)

end delete

20begin insert(l)end insert (1) “Managed health care plan” means a health care delivery
21system that manages the provision of health care and receives
22prepaid capitated payments from the state in return for providing
23services to Medi-Cal beneficiaries.

24(2) (A) Managed health care plans include county organized
25health systems and entities contracting with the department to
26provide services pursuant to two-plan models and geographic
27managed care. Entities providing these services contract with the
28department pursuant to any of the following:

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

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

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

begin insert

32(iv) Article 2.82 (commencing with Section 14087.98).

end insert
begin delete

33(iv)

end delete

34begin insert(v)end insert Article 2.91 (commencing with Section 14089).

35(B) Managed health care plans do not include any of the
36following:

37(i) Mental health plans contracting to provide mental health care
38for Medi-Cal beneficiaries pursuant to Chapter 8.9 (commencing
39with Section 14700).

P15   1(ii) Health plans not covering inpatient services such as primary
2care case management plans operating pursuant to Section
314088.85.

4(iii) Program for All-Inclusive Care for the Elderly organizations
5operating pursuant to Chapter 8.75 (commencing with Section
614591).

begin delete

7(k)

end delete

8begin insert(m)end insert “Medi-Cal managed care days” means the total number of
9general acute care days, including well baby days, listed for the
10county organized health system and prepaid health plans identified
11in the Final Medi-Cal Utilization Statistics for the 2012-13 fiscal
12year, as calculated by the department as of December 17, 2012.

begin delete

13(l)

end delete

14begin insert(n)end insert “Medicaid inpatient utilization rate” means Medicaid
15inpatient utilization rate as defined in Section 1396r-4 of Title 42
16of the United States Code and as set forth in the Final Medi-Cal
17Utilization Statistics for the 2012-13 fiscal year, as calculated by
18the department as of December 17, 2012.

begin delete

19(m) “Mental health plan” means a mental health plan that
20contracts with the state to furnish or arrange for the provision of
21mental health services to Medi-Cal beneficiaries pursuant to
22Chapter 8.9 (commencing with Section 14700).

23(n)

end delete

24begin insert(o)end insert “New hospital” means a hospital operation, business, or
25facility functioning under current or prior ownership as a private
26hospital that does not have a days data source or a hospital that
27has a days data source in whole, or in part, from a previous operator
28begin delete whenend deletebegin insert whereend insert there is an outstanding monetarybegin delete liabilityend deletebegin insert obligationend insert
29 owed to the state in connection with the Medi-Cal program and
30thebegin delete new operator did not assume liabilityend deletebegin insert hospital is not, or does
31not agree to become, financially responsible to the departmentend insert
for
32the outstanding monetary obligationbegin insert in accordance with subdivision
33(d) of Section 14169.58end insert
.

begin delete

34(o)

end delete

35begin insert(p)end insert “Nondesignated public hospital” means either of the
36following:

37(1) A public hospital that is licensed under subdivision (a) of
38Section 1250 of the Health and Safety Code, is not designated as
39a specialty hospital in the hospital’s mostbegin delete recent publicly availableend delete
40begin insert recently filed end insert Annual Financial Disclosure Reportbegin insert as of January
P16   11, 2014end insert
, and satisfies the definition in paragraph (25) of subdivision
2(a) of Section 14105.98, excluding designated public hospitals.

3(2) A tax-exempt nonprofit hospital that is licensed under
4subdivision (a) of Section 1250 of the Health and Safety Code, is
5not designated as a specialty hospital in the hospital’s mostbegin delete recent
6publicly availableend delete
begin insert recently filedend insert Annual Financial Disclosure
7Reportbegin insert as of January 1, 2014end insert, is operating a hospital owned by a
8local health care district, and is affiliated with the health care
9district hospital owner by means of the district’s status as the
10nonprofit corporation’s sole corporate member.

begin delete

11(p)

end delete

12begin insert(q)end insert “Outpatient base amount” means the total amount of
13payments for hospital outpatient services made to a hospital in the
142010 calendar year, as reflected in the state paid claims file
15prepared by the department on April 26, 2013.

begin delete

16(q)

end delete

17begin insert(r)end insert “Private hospital” means a hospital that meets all of the
18following conditions:

19(1) Is licensed pursuant to subdivision (a) of Section 1250 of
20the Health and Safety Code.

21(2) Is in the Charitable Research Hospital peer group, as set
22forth in the 1991 Hospital Peer Grouping Report published by the
23department, or is not designated as a specialty hospital in the
24hospital’s mostbegin delete recent publicly availableend deletebegin insert recently filedend insert Office of
25Statewide Health Planning and Development Annual Financial
26Disclosure Reportbegin insert as of January 1, 2014end insert.

27(3) Does not satisfy the Medicare criteria to be classified as a
28long-term care hospital.

29(4) Is a nonpublic hospital, nonpublic converted hospital, or
30converted hospital as those terms are defined in paragraphs (26)
31to (28), inclusive, respectively, of subdivision (a) of Section
3214105.98.

begin insert

33(5) Is not a nondesignated public hospital or a designated public
34hospital.

end insert
begin delete

35(r)

end delete

36begin insert(s)end insert “Program period” means the period from January 1, 2014,
37to December 31, 2015, inclusive.

begin delete

38(s)

end delete

39begin insert(t)end insert “Subject fiscal quarter” means a state fiscal quarter beginning
40on or after January 1, 2014, and ending before January 1, 2016.

begin delete

P17   1(t)

end delete

2begin insert(u)end insert “Subject fiscal year” means a state fiscal year that ends after
3January 1, 2014, and begins before January 1, 2016.

begin delete

4(u) “Subject hospital” means a hospital that meets all of the
5following conditions:

6(1) Is licensed pursuant to subdivision (a) of Section 1250 of
7the Health and Safety Code.

8(2) Is in the Charitable Research Hospital peer group, as set
9forth in the 1991 Hospital Peer Grouping Report published by the
10department, or is not designated as a specialty hospital in the
11hospital’s most recent publicly available Office of Statewide Health
12Planning and Development Annual Financial Disclosure Report.

13(3) Does not satisfy the Medicare criteria to be classified as a
14long-term care hospital.

end delete

15(v) “Subject month” means a calendar month beginning on or
16after January 1, 2014, and ending before January 1, 2016.

17(w) “Transplant days” means the number of Medi-Cal daysbegin insert, as
18defined in subdivision (q) of Section 14169.71,end insert
for MS-DRGs 1,
192, 5 to 10, inclusive, 14, 15 and 652, according to the 2010 Patient
20Discharge file from the Office of Statewide Health Planning and
21Development accessed on June 28, 2011.

22(x) “Upper payment limit” means a federal upper payment limit
23on the amount of the Medicaid payment for which federal financial
24participation is available for a class of service and a class of health
25care providers, as specified in Part 447 of Title 42 of the Code of
26Federal Regulations. The applicable upper payment limit shall be
27separately calculated for inpatient and outpatient hospital services.

28

14169.52.  

(a) Private hospitals shall be paid supplemental
29amounts for the provision of hospital outpatient servicesbegin insert for each
30subject fiscal quarterend insert
as set forth in this section. The supplemental
31amounts shall be in addition to any other amounts payable to
32hospitals with respect to those services and shall not affect any
33other payments to hospitals. The supplemental amounts shall result
34in payments equal to the statewide aggregate upper payment limit
35for private hospitals for each subject fiscal yearbegin insert, except that with
36respect to a subject fiscal year that begins before the start of the
37program period or that ends after the end of the program period,
38the outpatient supplemental amounts shall result in payments to
39hospitals that equal a percentage of the applicable upper payment
P18   1limit where the percentage equals the percentage of the subject
2fiscal year that occurs during the program periodend insert
.

3(b) Except as set forth in subdivisions (e) and (f), each private
4hospital shall be paid an amount for each subject fiscal year equal
5to a percentage of the hospital’s outpatient base amountbegin insert, which
6payments shall be made on a quarterly basisend insert
. The percentage shall
7be the same for each hospital for a subject fiscal yearbegin insert, or portion
8thereof in the program periodend insert
. The percentage shall result in
9payments to hospitals that equal the applicable federal upper
10payment limit as it may be modified pursuant to Section 14169.68
11for a subject fiscal yearbegin insert, or any portion thereof in the program
12periodend insert
. For purposes of this subdivision the applicable federal
13upper payment limit shall be the federal upper payment limit for
14hospital outpatient services furnished by private hospitals for each
15subject fiscal yearbegin insert, or portion thereofend insert.

16(c) In the event federal financial participation for a subject fiscal
17year is not available for all of the supplemental amounts payable
18to private hospitals under subdivision (b) due to the application of
19a federal upper payment limit or for any other reason, both of the
20following shall apply:

21(1) The total amount payable to private hospitals under
22subdivision (b) for the subject fiscal year shall be reduced to the
23amount for which federal financial participation is available.

24(2) The amount payable under subdivision (b) to each private
25hospital for the subject fiscal year shall be equal to the amount
26computed under subdivision (b) multiplied by the ratio of the total
27amount for which federal financial participation is available to the
28total amount computed under subdivision (b).

29(d) The supplemental amounts set forth in this section are
30inclusive of federal financial participation.

31(e) Payments shall not be made under this section to a new
32hospitalbegin insert for the periods when the hospital is a new hospitalend insert.

begin delete

33(f) No payments shall be made under this section to a converted
34hospital.

end delete
begin insert

35(f) Payments shall be made to a converted hospital that converts
36during a subject fiscal quarter by multiplying the hospital’s
37outpatient supplemental payment as calculated in subdivision (b)
38by the number of days that the hospital was a private hospital in
39the subject fiscal quarter, divided by the number of days in the
P19   1subject fiscal quarter. Payments shall not be made to a converted
2hospital in any subsequent subject fiscal quarter.

end insert
3

14169.53.  

(a) Except as provided in Section 14169.68, private
4hospitals shall be paid supplemental amounts for the provision of
5hospital inpatient services forbegin delete the program periodend deletebegin insert each subject
6fiscal quarterend insert
as set forth in this section. The supplemental amounts
7shall be in addition to any other amounts payable to hospitals with
8respect to those services and shall not affect any other payments
9to hospitals. The supplemental amounts shall result in payments
10equal to the statewide aggregate upper payment limit for private
11hospitals for each subject fiscal year as it may be modified pursuant
12to Section 14169.68begin insert, except that with respect to a subject fiscal
13year that begins before the start of the program period or that
14ends after the end of the program period, the inpatient
15supplemental amounts shall result in payments to hospitals that
16equal a percentage of the applicable upper payment limit where
17the percentage equals the percentage of the subject fiscal year that
18occurs during the program periodend insert
.

19(b) Except as set forth in subdivisionsbegin delete (g) and (h)end deletebegin insert (f) and (g)end insert,
20each private hospital shall be paid thebegin insert sum of all of theend insert following
21amounts as applicable for the provision of hospital inpatient
22services for each subject fiscalbegin delete yearend deletebegin insert quarterend insert:

23(1) begin deleteEight hundred ninety-six dollars and forty eight cents
24($896.48) end delete
begin insertOne thousand two dollars ($1,002)end insert multiplied by the
25hospital’s general acute care days for supplemental payments for
26the 2014 calendar yearbegin insert, divided by fourend insert, and one thousand
27begin delete eighty-one dollars and eighty-four cents ($1,081.84)end deletebegin insert two hundred
28five dollars ($1,205) end insert
multiplied by the hospital’s general acute
29care days for supplemental payments for the 2015 calendar yearbegin insert,
30divided by fourend insert
.

31(2) begin deleteFor the hospital’s acute psychiatric days that were paid
32directly by the department and were not the financial responsibility
33of a mental health plan, nine hundred sixty-five dollars ($965) end delete

34begin insertNine hundred seventy dollars ($970) end insert multiplied by the hospital’s
35acute psychiatric days for supplemental payments for the 2014
36calendar yearbegin insert, divided by fourend insert, and nine hundred seventy-five
37dollars ($975) multiplied by the hospital’s acute psychiatric days
38for supplemental payments for the 2015 calendar yearbegin insert, divided by
39fourend insert
.

P20   1(3) begin delete(A)end deletebegin deleteend deletebegin deleteFor the 2014 and 2015 calendar years, two end deletebegin insertTwo end insert
2thousand five hundred dollars ($2,500) multiplied by the number
3of the hospital’s high acuity daysbegin insert for the respective calendar year
4for 2014 or 2015, divided by four,end insert
if the hospital’s Medicaid
5inpatient utilization rate is less than 43 percent and greater than 5
6percent and at least 5 percent of the hospital’s general acute care
7days are high acuity days.

begin delete

8(B) The amount under this paragraph shall be in addition to the
9amounts specified in paragraphs (1) and (2).

end delete

10(4) begin delete(A)end deletebegin deleteend deletebegin deleteFor the 2014 and 2015 calendar years, two end deletebegin insertTwo end insert
11thousand five hundred dollars ($2,500) multiplied by the number
12of the hospital’s high acuity daysbegin insert for the respective calendar year
13for 2014 and 2015, divided by four,end insert
if the hospital qualifies to
14receive the amount set forth in paragraph (3) and has been
15designated as a Level I, Level II, Adult/Ped Level I, or Adult/Ped
16Level II trauma center by the Emergency Medical Services
17Authority established pursuant to Section 1797.1 of the Health and
18Safety Code.

begin delete

19(B) The amount under this paragraph shall be in addition to the
20amounts specified in paragraphs (1), (2), and (3).

end delete

21(5)  begin delete(A) For the 2014 and 2015 calendar years, two end delete begin insertTwo end insert
22thousand five hundred dollars ($2,500) multiplied by the number
23of the hospital’s transplant daysbegin insert for the respective calendar year
24for 2014 and 2015, divided by four,end insert
if the hospital’s Medicaid
25inpatient utilization rate is less than 43 percent and greater than 5
26percent.

begin delete

27(B) The amount under this paragraph shall be in addition to the
28amounts specified in paragraphs (1), (2), (3), and (4).

end delete
begin delete

29(c)

end delete

30begin insert(6)end insert Abegin delete private hospitalend deletebegin insert payment for hospital inpatient services
31for private hospitalsend insert
that provided Medi-Cal subacute services
32during the 2010 calendar year andbegin delete hasend deletebegin insert haveend insert a Medicaid inpatient
33utilization rate that is greater than 5 percent and less than 43 percent
34begin delete shall be paid a supplemental amount equal to 50end deletebegin insert equal to 55end insert percent
35for the 2014 calendar yearbegin insert of the Medi-Cal subacute payments
36paid by the department to the hospital during the 2010 calendar
37year, as reflected in the state paid claims file prepared by the
38department on April 26, 2013, divided by four,end insert
and 60 percent for
39the 2015 calendar year of the Medi-Cal subacute payments paid
40by the department to the hospital during the 2010 calendar year,
P21   1as reflected in the state paid claims file prepared by the department
2on April 26, 2013begin insert, divided by fourend insert.

begin delete

3(d) (1)

end delete

4begin insert(c)end insert If federal financial participation for a subject fiscal year is
5not available for all of the supplemental amounts payable to private
6hospitals under subdivision (b) due to the application of a federal
7upper payment limit or for any other reason, both of the following
8shall apply:

begin delete

9(A)

end delete

10begin insert(1)end insert The total amount payable to private hospitals under
11subdivision (b) for the subject fiscal year shall be reduced to reflect
12the amount for which federal financial participation is available.

begin delete

13(B)

end delete

14begin insert(2)end insert The amount payable under subdivision (b) to each private
15hospital for the subject fiscal year shall be equal to the amount
16computed under subdivision (b) multiplied by the ratio of the total
17amount for which federal financial participation is available to the
18total amount computed under subdivision (b).

begin delete

19(2) If federal financial participation for a subject fiscal year is
20not available for all of the supplemental amounts payable to private
21hospitals under subdivision (c) due to the application of a federal
22upper payment limit or for any other reason, both of the following
23shall apply:

end delete
begin delete

24(A) The total amount payable to private hospitals under
25subdivision (c) for the subject fiscal year shall be reduced to reflect
26the amount for which federal financial participation is available.

end delete
begin delete

27(B) The amount payable under subdivision (c) to each private
28hospital for the subject fiscal year shall be equal to the amount
29computed under subdivision (c) multiplied by the ratio of the total
30amount for which federal financial participation is available to the
31total amount computed under subdivision (c).

end delete
begin delete

32(e)

end delete

33begin insert(d)end insert If the amount otherwise payable to a hospital under this
34section for a subject fiscal year exceeds the amount for which
35federal financial participation is available for that hospital, the
36amount due to the hospital for that subject fiscal year shall be
37reduced to the amount for which federal financial participation is
38available.

begin delete

39(f)

end delete

P22   1begin insert(e)end insert The amounts set forth in this section are inclusive of federal
2financial participation.

begin delete

3(g)

end delete

4begin insert(f)end insert Payments shall not be made under this section to a new
5hospitalbegin insert for the periods when the hospital is a new hospitalend insert.

begin insert

6(g) Payments shall be made to a converted hospital that converts
7during a subject fiscal quarter by multiplying the hospital’s
8inpatient supplemental payment as calculated in subdivision (b)
9by the number of days that the hospital was a private hospital in
10the subject fiscal quarter, divided by the number of days in the
11subject fiscal quarter. Payments shall not be made to a converted
12hospital in any subsequent subject fiscal quarter.

end insert
begin delete

13(h) Payments shall not be made under this section to a converted
14hospital.

15(i) (1) The department shall increase payments to mental health
16plans for the program period exclusively for the purpose of making
17payments to private hospitals. The aggregate amount of the
18increased payments for a subject fiscal quarter shall be the total
19of the individual hospital acute psychiatric supplemental payment
20amounts for all hospitals for which federal financial participation
21is available.

22(2) The payments described in paragraph (1) may be made
23directly by the department to hospitals when federal law does not
24require that the payments be transmitted to hospitals via mental
25health plans.

end delete
26

14169.54.  

(a) The department shall increase capitation
27payments to Medi-Cal managed health care plans for each subject
28begin delete fiscal yearend deletebegin insert monthend insert as set forth in this section.

29(b) The increased capitation payments shall be made as part of
30the monthly capitated payments made by the department to
31managed health care plans.

32(c) The aggregate amount of increased capitation payments to
33all Medi-Cal managed health care plans for each subject fiscal
34yearbegin insert, or portion thereof in the program period,end insert shall be the
35maximum amount for which federal financial participation is
36available on an aggregate statewide basis for the applicable subject
37fiscal yearbegin insert, or portion thereof in the program periodend insert.

38(d) The department shall determine the amount of the increased
39capitation payments for each managed health care plan. The
40department shall consider the composition of Medi-Cal enrollees
P23   1in the plan, the anticipated utilization of hospital services by the
2plan’s Medi-Cal enrollees, and other factors that the department
3determines are reasonable and appropriate to ensure access to
4high-quality hospital services by the plan’s enrollees.

5(e) The amount of increased capitation payments to each
6Medi-Cal managed health care plan shall not exceed an amount
7that results in capitation payments that are certified by the state’s
8actuary as meeting federal requirements, taking into account the
9requirement that all of the increased capitation payments under
10this section shall be paid by the Medi-Cal managed health care
11plans to hospitals for hospital services to Medi-Cal enrollees of
12the plan.

13(f) (1) The increased capitation payments to managed health
14care plans under this section shall be made to support the
15availability of hospital services and ensure access to hospital
16services for Medi-Cal beneficiaries. The increased capitation
17payments to managed health care plans shall commence within 90
18days of the date on which all necessary federal approvals have
19been received, and shall include, but not be limited to, the sum of
20the increased payments for all prior months for which payments
21are due.

22(2) To secure the necessary funding for the payment or payments
23made pursuant to paragraph (1), the department may accumulate
24funds in the Hospital Quality Assurance Revenue Fund, established
25pursuant to Section 14167.35, for the purpose of funding managed
26health care capitation payments under this article regardless of the
27date on which capitation payments are scheduled to be paid in
28order to secure the necessary total funding for managed health care
29payments by December 31, 2015.

30(g) Payments to managed health care plans that would be paid
31consistent with actuarial certification and enrollment in the absence
32of the payments made pursuant to this section, including, but not
33limited to, payments described in Section 14182.15, shall not be
34reduced as a consequence of payments under this section.

35(h) (1) Each managed health care plan shall expend 100 percent
36of any increased capitation payments it receives under this section
37on hospital services.

38(2) The department may issue change orders to amend contracts
39with managed health care plans as needed to adjust monthly
40capitation payments in order to implement this section.

P24   1(3) For entities contracting with the department pursuant to
2Article 2.91 (commencing with Section 14089), any incremental
3increase in capitation rates pursuant to this section shall not be
4subject to negotiation and approval by thebegin delete California Medical
5Assistance Commissionend delete
begin insert departmentend insert.

6(i) (1) If federal financial participation is not available for all
7of the increased capitation payments determined for a month
8pursuant to this section for any reason, the increased capitation
9payments mandated by this section for that month shall be reduced
10proportionately to the amount for which federal financial
11participation is available.

12(2) The determination under this subdivision for anybegin insert subjectend insert
13 monthbegin delete in the program periodend delete shall be made after accounting for
14all federal financial participation necessary for full implementation
15of Section 14182.15 for that month.

16

14169.55.  

(a) Each managed health care plan receiving
17increased capitation payments under Section 14169.54 shall expend
18the capitation rate increases in a manner consistent with actuarial
19certification, enrollment, and utilization on hospital services. Each
20managed health care plan shall expend increased capitation
21payments on hospital services within 30 days of receiving the
22increased capitation payments to the extent they are made for a
23subject month that is prior to the date on which the payments are
24received by the managed health care plan.

25(b) The sum of all expenditures made by a managed health care
26plan for hospital services pursuant to this section shall equal, or
27approximately equal, all increased capitation payments received
28by the managed health care plan, consistent with actuarial
29certification, enrollment, and utilization, from the department
30pursuant to Section 14169.54.

31(c) Any delegation or attempted delegation by a managed health
32care plan of its obligation to expend the capitation rate increases
33under this section shall not relieve the plan from its obligation to
34expend those capitation rate increases. Managed health care plans
35shall submit the documentation that the department may require
36to demonstrate compliance with this subdivision. The
37documentation shall demonstrate actual expenditure of the
38capitation rate increases for hospital services, and not assignment
39to subcontractors of the managed health care plan’s obligation of
40the duty to expend the capitation rate increases.

P25   1(d) The supplemental hospital payments made by managed
2health care plans pursuant to this section shall reflect the overall
3purpose of this article and Article 5.231 (commencing with Section
414169.71).

5(e) This article is not intended to create a private right of action
6by a hospital against a managed care plan provided that the
7managed health care plan expends all increased capitation payments
8for hospital services.

9

14169.56.  

(a) Designated public hospitalsbegin delete mayend deletebegin insert shallend insert be paid
10direct grants in support of health care expenditures, which shall
11not constitute Medi-Cal payments, and which shall be funded by
12the quality assurance fee set forth in Article 5.231 (commencing
13with Section 14169.71).

begin insert

14(1) The aggregate amount of the grants to designated public
15hospitals shall be forty-five million dollars ($45,000,000) in the
16aggregate for the subject fiscal quarters in subject fiscal year
172013-14, ninety-three million dollars ($93,000,000) for subject
18fiscal year 2014-15, and forty-eight million dollars ($48,000,000)
19in the aggregate for the subject fiscal quarters in the subject fiscal
20year 2015-16. For each subject fiscal year, the director shall
21allocate the aggregate grant amounts in accordance with
22paragraph (2).

end insert
begin insert

23(2) (A) Of the direct grant amounts set forth in paragraph (1),
24the director shall allocate twenty-four million five hundred
25thousand dollars ($24,500,000) in the aggregate for the subject
26fiscal quarters in subject fiscal year 2013-14, fifty million five
27hundred thousand dollars ($50,500,000) for subject fiscal year
282014-15, and twenty-six million dollars ($26,000,000) in the
29aggregate for the subject fiscal quarters in subject fiscal year
302015-16, among the designated public hospitals pursuant to a
31methodology developed in consultation with the designated public
32hospitals.

end insert
begin insert

33(i) Of the direct grant amounts set forth in this subparagraph,
34the director shall distribute six million one hundred twenty-five
35thousand dollars ($6,125,000) for each subject fiscal quarter in
36subject fiscal year 2013-14, six million three hundred twelve
37thousand five hundred dollars ($6,312,500) for each subject fiscal
38quarter in subject fiscal year 2014-15, and six million five hundred
39thousand dollars ($6,500,000) for each subject fiscal quarter in
P26   1subject fiscal year 2015-16 in accordance with the timeframes
2specified in subdivision (a) of Section 14169.59.

end insert
begin insert

3(ii) Of the direct grant amounts set forth in this subparagraph,
4the director shall distribute six million one hundred twenty-five
5thousand dollars ($6,125,000) for each subject fiscal quarter in
6subject fiscal year 2013-14, six million three hundred twelve
7thousand five hundred dollars ($6,312,500) for each subject fiscal
8 quarter in subject fiscal year 2014-15, and six million five hundred
9thousand dollars ($6,500,000) for each subject fiscal quarter in
10subject fiscal year 2015-16 only upon 100 percent of the rate
11range increases under subparagraph (B) being distributed to
12managed health care plans pursuant to subparagraph (B) for the
13respective subject fiscal quarter. If the rate range increases under
14subparagraph (B) are distributed to managed health care plans,
15the direct grant amounts described in this clause shall be
16distributed to designated public hospitals no later than 30 days
17after the rate range increases have been distributed to managed
18health care plans pursuant to subparagraph (B).

end insert
begin insert

19(B) Of the direct grant amounts set forth in paragraph (1),
20twenty million five hundred thousand dollars ($20,500,000) in the
21aggregate for the subject fiscal quarters in subject fiscal year
222013-14, forty-two million five hundred thousand dollars
23($42,500,000) for subject fiscal year 2014-15, and twenty-two
24million dollars ($22,000,000) in the aggregate for the subject fiscal
25quarters in subject fiscal year 2015-16 shall be withheld from
26payment to the designated public hospitals by the director, and
27shall be used as the nonfederal share for rate range increases, as
28defined in paragraph (4) of subdivision (b) of Section 14301.4, to
29risk-based payments to managed care health plans that contract
30with the department to serve counties where a designated public
31hospital is located. The rate range increases shall apply to
32managed care rates for beneficiaries other than newly eligible
33beneficiaries, as defined in subdivision (s) of Section 17612.2, and
34shall enable plans to compensate hospitals for Medi-Cal health
35services and to support the Medi-Cal program. Each managed
36health care plan shall expend 100 percent of the rate range
37increases on hospital services within 30 days of receiving the
38increased payments. Rate range increases funded under this
39subparagraph shall be allocated among plans pursuant to a
P27   1methodology developed in consultation with the hospital
2community.

end insert
begin insert

3(3) Notwithstanding any other law, any amounts withheld from
4payment to the designated public hospitals by the director as the
5nonfederal share for rate range increases, including those
6described in subparagraph (B) of paragraph (2), shall not be
7considered hospital fee direct grants as defined under subdivision
8(k) of Section 17612.2 and shall not be included in the
9determination under paragraph (1) of subdivision (a) of Section
1017612.3.

end insert

11(b) Nondesignated public hospitalsbegin delete mayend deletebegin insert shallend insert be paid direct
12grants in support of health care expenditures, which shall not
13constitute Medi-Cal payments, and which shall be funded by the
14quality assurance fee set forth in Article 5.231 (commencing with
15Section 14169.71).

begin insert

16(1) The aggregate amount of the grants to nondesignated public
17hospitals shall be twelve million five hundred thousand dollars
18($12,500,000) in the aggregate for the subject fiscal quarters in
19subject fiscal year 2013-14, twenty-five million dollars
20($25,000,000) for subject fiscal year 2014-15, and twelve million
21five hundred thousand dollars ($12,500,000) in the aggregate for
22the subject fiscal quarters in subject fiscal year 2015-16. For each
23subject fiscal year, the director shall allocate the aggregate grant
24amounts in accordance with paragraph (2).

end insert
begin insert

25(2) (A) Of the direct grant amounts set forth in paragraph (1),
26the director shall allocate two million five hundred thousand
27dollars ($2,500,000) in the aggregate for the subject fiscal quarters
28in subject fiscal year 2013-14, five million dollars ($5,000,000)
29for subject fiscal year 2014-15, and two million five hundred
30thousand dollars ($2,500,000) in the aggregate for the subject
31fiscal quarters in subject fiscal year 2015-16 among the
32nondesignated public hospitals pursuant to a methodology
33developed in consultation with the nondesignated public hospitals.

end insert
begin insert

34(B) Of the direct grant amounts set forth in paragraph (1), ten
35million dollars ($10,000,000) in the aggregate for the subject fiscal
36quarters in subject fiscal year 2013-14, twenty million dollars
37($20,000,000) for subject fiscal year 2014-15, and ten million
38dollars ($10,000,000) in the aggregate for the subject fiscal
39quarters in subject fiscal year 2015-16 shall be withheld from
40payment to the nondesignated public hospitals by the director, and
P28   1shall be used as the nonfederal share for rate range increases, as
2defined in paragraph (4) of subdivision (b) of Section 14301.4, to
3risk-based payments to managed care health plans that contract
4with the department. The rate range increases shall enable plans
5to compensate hospitals for Medi-Cal health services and to
6support the Medi-Cal program. Each managed health care plan
7shall expend 100 percent of the rate range increases on hospital
8services within 30 days of receiving the increased payments. Rate
9range increases funded under this subparagraph shall be allocated
10among plans pursuant to a methodology developed in consultation
11with the hospital community.

end insert
begin insert

12(c) If the amounts set forth in this section for rate range
13increases are not actually used for rate range increases as
14described in this section, the direct grant amounts set forth in this
15section that are withheld pursuant to clause (ii) of subparagraph
16(A) of paragraph (1) of subdivision (a) or as the nonfederal share
17for rate range increases for rate range increases pursuant to
18subparagraph (B) of paragraph (2) of subdivision (a) or
19subparagraph (B) of paragraph (2) of subdivision (b) shall be
20returned to the Hospital Quality Assurance Revenue Fund subject
21to subdivision (c) of Section 14169.73.

end insert
22

14169.57.  

(a) The amount of any payments made under this
23article to private hospitals, including the amount of payments made
24under Sections 14169.52 and 14169.53 and additional payments
25to private hospitals by managed health care plans pursuant to
26Section 14169.54, shall not be included in the calculation of the
27low-income percent or the OBRA 1993 payment limitation, as
28defined in paragraph (24) of subdivision (a) of Section 14105.98,
29for purposes of determining payments to private hospitals.

30(b) The amount of any payments made to a hospital under this
31article shall not be included in the calculation of stabilization
32funding under Article 5.2 (commencing with Section 14166) or
33any successor legislation, including legislation implementing
34California’s Bridge to Reform Section 1115(a) Medicaid
35Demonstration (11-W-00193/9).

begin delete
36

14169.58.  

The payments to a hospital under this article shall
37not be made for any portion of a subject fiscal year during which
38the hospital is closed. A hospital shall be deemed to be closed on
39the first day of any period during which the hospital has no acute
40inpatients for at least 30 consecutive days. Payments under this
P29   1article to a hospital that is closed during any portion of a subject
2fiscal year shall be reduced by applying a fraction, expressed as a
3percentage, the numerator of which shall be the number of days
4during the applicable subject fiscal year that the hospital is closed
5and the denominator of which shall be 365.

end delete
begin insert
6

begin insert14169.58.end insert  

(a) (1) Except as provided in this section, all data
7and other information relating to a hospital that are used for the
8purposes of this article, including, without limitation, the days
9data source, shall continue to be used to determine the payments
10to that hospital pursuant to this article, regardless of whether the
11hospital has undergone one or more changes of ownership.

12(2) All supplemental payments to a hospital under this article
13shall be made to the licensee of a hospital on the date the
14supplemental payment is made.

15(b) The data of separate facilities prior to a consolidation shall
16be aggregated for the purposes of this article if: (1) a private
17 hospital consolidates with another private hospital, (2) the facilities
18operate under a consolidated hospital license, (3) data for a period
19prior to the consolidation is used for purposes of this article, and
20(4) neither hospital has had a change of ownership on or after the
21effective date of this article unless paragraph (2) of subdivision
22(d) has been satisfied by the new owner. Data of a facility that was
23a separately licensed hospital prior to the consolidation shall not
24be included in the data, including the days data source, for the
25purpose of determining payments to the facility under this article
26for any time period during which the facility is closed. A facility
27shall be deemed to be closed for purposes of this subdivision on
28the first day of any period during which the facility has no general
29acute, psychiatric, or rehabilitation inpatients for at least 30
30consecutive days. A facility that has been deemed to be closed
31under this subdivision shall no longer be deemed to be closed on
32the first subsequent day on which it has general acute, psychiatric,
33or rehabilitation inpatients.

34(c) The payments to a hospital under this article shall not be
35made for any period during which the hospital is closed. A hospital
36shall be deemed to be closed on the first day of any period during
37which the hospital has no general acute, psychiatric, or
38rehabilitation inpatients for at least 30 consecutive days. A hospital
39that has been deemed to be closed under this subdivision shall no
40longer be deemed to be closed on the first subsequent day on which
P30   1it has general acute, psychiatric, or rehabilitation inpatients.
2Payments under this article to a hospital that is closed during any
3portion of a subject fiscal quarter shall be reduced by applying a
4fraction, expressed as a percentage, the numerator of which shall
5be the number of days during the applicable subject fiscal quarter
6that the hospital is closed during the subject fiscal year and the
7 denominator of which shall be the number of days in the subject
8fiscal quarter.

9(d) The following provisions shall apply only for purposes of
10this article and Article 5.231 (commencing with Section 14169.71),
11and shall have no application outside of this article and Article
125.231 (commencing with Section 14169.71) nor shall they affect
13the assumption of any outstanding monetary obligation to the
14Medi-Cal program:

15(1) The director shall develop and describe in provider bulletins
16and on the department’s Internet Web site a process by which the
17new operator of a hospital that has a days data source in whole
18or in part from a previous operator may enter into an agreement
19with the department to confirm that it is financially responsible
20or to become financially responsible to the department for the
21outstanding monetary obligation to the Medi-Cal program of the
22previous operator in order to avoid being classified as a new
23hospital for purposes of this article. This process shall be available
24for changes of ownership that occur before, on, or after January
251, 2014.

26(2) The outstanding monetary obligation referred to in
27subdivision (o) of Section 14169.51 and subdivision (u) of Section
2814169.71 shall include liabilities for all of the following:

29(A) Payment of the quality assurance fee established pursuant
30to Article 5.231 (commencing with Section 14169.71).

31(B) Known overpayments that have been asserted by the
32department or its fiscal intermediary by sending a written
33communication that is received by the hospital prior to the date
34that the new operator becomes the licensee of the hospital.

35(C) Overpayments that are asserted after that date and arise
36from customary reconciliations of payments, such as cost report
37settlements, and, with the exception of overpayments described in
38subparagraph (B), shall exclude liabilities arising from the
39fraudulent or intentionally criminal act of a prior operator if the
P31   1new operator did not knowingly participate in or continue that
2fraudulent or criminal act after becoming the licensee.

3(3) The department shall have the discretion to determine
4whether the new owner properly and fully agreed to be financially
5responsible for the outstanding monetary obligation in connection
6with the Medi-Cal program and seek additional assurances as the
7department deems necessary. However, a new owner that executes
8an agreement with the department as described in paragraph (1)
9shall be conclusively deemed to have agreed to be financially
10responsible for the outstanding monetary obligation in connection
11with the Medi-Cal program. The department may establish the
12terms for satisfying the outstanding monetary obligation in
13connection with the Medi-Cal program, including, but not limited
14to, recoupment from amounts payable to the hospital under this
15section.

end insert
16

14169.59.  

The department shall make disbursements from the
17Hospital Quality Assurance Revenue Fund consistent with all of
18the following:

19(a) Fund disbursements shall be made periodically within 15
20days of each date on which quality assurance fees are due from
21hospitals.

22(b) The funds shall be disbursed in accordance with the order
23of priority set forth in subdivision (b) of Section 14169.73, except
24that funds may be set aside for increased capitation payments to
25managed care health plans pursuant to subdivision (f) of Section
2614169.54.

27(c) The funds shall be disbursed in each payment cycle in
28accordance with the order of priority set forth in subdivision (b)
29of Section 14169.73 as modified by subdivision (b) so that the
30supplemental payments, direct grants to hospitals, and increased
31capitation payments to managed health care plans are made to the
32maximum extent for which funds are available.

33(d) To the maximum extent possible, consistent with the
34availability of funds in the Hospital Quality Assurance Revenue
35Fund and the timing of federal approvals, the supplemental
36payments, direct grants to hospitals, and increased capitation
37payments to managed health care plans under this article shall be
38made before December 31, 2015.

39(e) The aggregate amount of funds to be disbursed to private
40hospitals shall be determined under Sections 14169.52 and
P32   114169.53. The aggregate amount of funds to be disbursed to
2managed health care plans shall be determined under Section
314169.54. The aggregate amount of direct grants to designated
4 and nondesignated public hospitals shall be determined under
5Section 14169.56.

6

14169.60.  

(a) Exclusive of payments made under former
7Article 5.21 (commencing with Section 14167.1), former Article
85.226 (commencing with Section 14168.1), and Article 5.228
9(commencing with Section 14169.1), payment rates for hospital
10outpatient services, furnished by private hospitals, nondesignated
11public hospitals, and designated public hospitals before December
1231, 2015, exclusive of amounts payable under this article, shall
13not be reduced below the rates in effect on January 1, 2014.

14(b) Rates payable to hospitals for hospital inpatient services
15furnished before December 31, 2015, under contracts negotiated
16pursuant to the selective provider contracting program under Article
172.6 (commencing with Section 14081), shall not be reduced below
18the contract rates in effect on January 1, 2014. This subdivision
19shall not prohibit changes to the supplemental payments paid to
20individual hospitals under Sections 14166.12, 14166.17, and
2114166.23, provided that the aggregate amount of the payments for
22each subject fiscal year is not less than the minimum amount
23permitted under former Section 14167.13.

24(c) Notwithstanding Section 14105.281, exclusive of payments
25made under former Article 5.21 (commencing with Section
2614167.1), former Article 5.226 (commencing with Section
2714168.1), and Article 5.228 (commencing with Section 14169.1),
28payments to private hospitals for hospital inpatient services
29furnished before January 1, 2014, that are not reimbursed under a
30contract negotiated pursuant to the selective provider contracting
31program under Article 2.6 (commencing with Section 14081),
32exclusive of amounts payable under this article, shall not be less
33than the amount of payments that would have been made under
34the payment methodology in effect on the effective date of this
35article.

36(d) begin deleteUpon the implementation of the new Medi-Cal inpatient
37hospital reimbursement methodology based on diagnosis-related
38groups pursuant to Section 14105.28, the requirements in
39subdivisions (b) and (c) shall be met end delete
begin insertThe requirements in
40subdivisions (b) and (c) shall be met with respect to the inpatient
P33   1hospital reimbursement methodology based on diagnosis-related
2groups pursuant to Section 14105.28 end insert
if the rates paid under the
3begin delete newend delete Medi-Cal inpatient hospital reimbursement methodology
4based on diagnosis-related groups result in an average payment
5per discharge to all hospitals subject to the new reimbursement
6methodology, calculated on an aggregate basis per subject fiscal
7year, exclusive of amounts payable under this article, amounts
8payable under Sections 14166.11 and 14166.23, and if amounts
9payable under Sections 14166.12 and 14166.17 are not included
10in the payments under the diagnosis-related group methodology
11and continue to be paid separately to hospitals, exclusive of those
12amounts, that is not less than the average payment per discharge
13to the hospitals, exclusive of amounts payable under this article,
14amounts payable under Sections 14166.11 and 14166.23, and if
15amounts payable under Sections 14166.12 and 14166.17 are not
16included in the payments under the diagnosis-related group
17methodology and continue to be paid separately to hospitals,
18exclusive of those amounts, calculated on an aggregate basis for
19thebegin delete fiscal year ending June 30, 2012end deletebegin insert six months ending December
2031, 2013end insert
, adjusted, in consultation with the hospital community,
21to reflect the movement of populations into managed care under
22Article 5.4 (commencing with Section 14180).

23(e) Solely for purposes of this article, a rate reduction or a
24change in a rate methodology that is enjoined by a court shall be
25included in the determination of a rate or a rate methodology until
26all appeals or judicial reviews have been exhausted and the rate
27reduction or change in rate methodology has been permanently
28enjoined, denied by the federal government, or otherwise
29permanently prevented from being implemented.

30(f) Disproportionate share replacement payments to private
31hospitals shall be not less than the amount determined pursuant to
32Section 14166.11. For purposes of this subdivision, references to
33Section 14166.11 are to the version of Section 14166.11 in effect
34on the effective date of the act that added this subdivision.

35

14169.61.  

(a) The director shall do all of the following:

36(1) Promptly submit any state plan amendment or waiver request
37that may be necessary to implement this article.

38(2) Promptly seek federal approvals or waivers as may be
39necessary to implement this article and to obtain federal financial
P34   1participation to the maximum extent possible for the payments
2under this article.

3(3) Amend the contracts between the managed health care plans
4and the department as necessary to incorporate the provisions of
5Sections 14169.54 and 14169.55 and promptly seek all necessary
6federal approvals of those amendments. The department shall
7 pursue amendments to the contracts as soon as possible after the
8effective date of this article and Article 5.231 (commencing with
9Section 14169.71), and shall not wait for federal approval of this
10article or Article 5.231 (commencing with Section 14169.71) prior
11to pursuing amendments to the contracts. The amendments to the
12contracts shall, among other provisions, set forth an agreement to
13increase capitation payments to managed health care plans under
14Section 14169.54 and increase payments to hospitals under Section
1514169.55 in a manner that relates back to January 1, 2014, or as
16soon thereafter as possible, conditioned on obtaining all federal
17approvals necessary for federal financial participation for the
18increased capitation payments to the managed health care plans.

19(b) In implementing this article, the department may utilize the
20services of the Medi-Cal fiscal intermediary through a change
21order to the fiscal intermediary contract to administer this program,
22consistent with the requirements of Sections 14104.6, 14104.7,
2314104.8, and 14104.9. Contracts entered into for purposes of
24implementing this article or Article 5.231 (commencing with
25Section 14169.71) shall not be subject to Part 2 (commencing with
26Section 10100) of Division 2 of the Public Contract Code.

27(c) This article shall become inoperative if either of the
28following occurs:

29(1) In the event, and on the effective date, of a final judicial
30determination made by any court of appellate jurisdiction or a final
31determination by the federal Department of Health and Human
32Services or the federal Centers for Medicare and Medicaid Services
33that Section 14169.52 or Section 14169.53 cannot be implemented.
34begin insert This paragraph shall not apply to a final judicial determination
35made by any court of appellate jurisdiction in a case brought by
36hospitals located outside the State of California.end insert

37(2) In the event both of the following conditions exist:

38(A) The federal Centers for Medicare and Medicaid Services
39denies approval for, or does not approve before January 1, 2016,
40the implementation of Section 14169.52, Section 14169.53, or the
P35   1quality assurance fee established pursuant to Article 5.231
2(commencing with Section 14169.71).

3(B) Section 14169.52, Section 14169.53, or Article 5.231
4(commencing with Section 14169.71) cannot be modified by the
5department pursuant to subdivision (e) of Section 14169.73 in
6order to meet the requirements of federal law or to obtain federal
7approval.

8(d) If this article becomes inoperative pursuant to paragraph (1)
9of subdivision (c) and the determination applies to any period or
10periods of time prior to the effective date of the determination, the
11department shall have authority to recoup all payments made
12pursuant to this article during that period or those periods of time.

13(e) begin deleteIf end deletebegin insertIn the event end insertany hospital, or any party on behalf of a
14hospital,begin delete shall initiateend deletebegin insert initiatesend insert a case or proceeding in any state or
15federal court in which the hospital seeks any relief of any sort
16whatsoever, including, but not limited to, monetary relief,
17injunctive relief, declaratory relief, or a writ, based in whole or in
18part on a contention that any or all of this article or Article 5.231
19(commencing with Section 14169.71) is unlawful and may not be
20lawfully implemented, both of the following shall apply:

21(1) Payments shall not be made to the hospital pursuant to this
22article until the case or proceeding is finally resolved, including
23the final disposition of all appeals.

24(2) Any amount computed to be payable to the hospital pursuant
25to thisbegin delete section for a project yearend deletebegin insert articleend insert shall be withheld by the
26department and shall be paid to the hospital only after the case or
27proceeding is finally resolved, including the final disposition of
28all appeals.

29(f) Subject to Section 14169.74, no payment shall be made under
30this article until all necessary federal approvals for the payment
31and for the fee provisions in Article 5.231 (commencing with
32Section 14169.71) have been obtained and the fee has been
33imposed and collected. Notwithstanding any other law, payments
34under this article shall be made only to the extent that the fee
35established in Article 5.231 (commencing with Section 14169.71)
36is collected and available to cover the nonfederal share of the
37payments.

38(g) A hospital’s receipt of payments under this article for
39services rendered prior to the effective date of this article is
P36   1conditioned on the hospital’s continued participation in Medi-Cal
2for at least 30 days after the effective date of this article.

3(h) All payments made by the department to hospitals and
4managed health care plans under this article shall be made only
5from the following:

6(1) The quality assurance fee set forth in Article 5.231
7(commencing with Section 14169.71) and due and payable on or
8before December 31, 2015, along with any interest or other
9investment income thereon.

10(2) Federal reimbursement and any other related federal funds.

begin insert

11(i) In order to ensure access to care for hospital services, the
12director shall seek federal approval for supplemental payments
13for hospital services provided to all Medi-Cal populations,
14including the optional and expansion populations.

end insert
15

14169.62.  

Notwithstanding any other provision of this article
16or Article 5.231 (commencing with Section 14169.71), the director
17may proportionately reduce the amount of any supplemental
18payments or increased capitation payments under this article to
19the extent that the payment would result in the reduction of other
20amounts payable to a hospital or managed health care plan due to
21the application of federal law.

22

14169.63.  

The director may, pursuant to Section 14169.80,
23decide not to implement or to discontinue implementation of this
24article and Article 5.231 (commencing with Section 14169.71),
25and to retroactively invalidate the requirements for supplemental
26payments or other payments under this article.

27

14169.64.  

(a) This article shall remain operative only until the
28later of the following:

29(1) January 1, 2017.

30(2) The date of the last payment of the quality assurance fee
31payments pursuant to Article 5.231 (commencing Section
3214169.71).

33(3) The date of the last payment from the department pursuant
34to this article.

35(b) If this article becomes inoperative under paragraph (1) of
36subdivision (a), this article shall be repealed on January 1, 2017,
37unless a later enacted statute enacted before that date, deletes or
38extends that date.

39(c) If this article becomes inoperative under paragraph (2) or
40(3) of subdivision (a), this article shall be repealed on January 1
P37   1of the year following the date this article becomes inoperative,
2unless a later enacted statute enacted before that date, deletes or
3extends that date.

4

14169.65.  

Notwithstanding any other law, if federal approval
5or a letter that indicates likely federal approval in accordance with
6Section 14169.74 has not been received on or before December
71, 2015, then this article shall become inoperative, and as of
8December 1, 2015, is repealed, unless a later enacted statute, that
9is enacted before December 1, 2015, deletes or extends that date.

10

14169.66.  

Notwithstanding Chapter 3.5 (commencing with
11Section 11340) of Part 1 of Division 3 of Title 2 of the Government
12Code, the department shall implement this article by means of
13policy letters or similar instructions, without taking further
14regulatory action.

15

14169.67.  

If the director determines that this article has become
16inoperative pursuant to Section 14169.61, 14169.64, 14169.65, or
1714169.80, the director shall execute a declaration stating that this
18determination has been made and stating the basis for this
19determination. The director shall retain the declaration and provide
20a copy, within five working days of the execution of the
21declaration, to the fiscal and appropriate policy committees of the
22Legislature. In addition, the director shall post the declaration on
23the department’s Internet Web site and the director shall send the
24declaration to the Secretary of State, the Secretary of the Senate,
25the Chief Clerk of the Assembly, and the Legislative Counsel.

26

14169.68.  

(a) It is the intent of the Legislature to consider
27legislation requiring the director to seek approval to increase
28payments to hospitals in accordance withbegin delete subdivision (b) ofend delete Section
2914169.52,begin delete subdivision (a) ofend delete Section 14169.53, andbegin delete subdivision
30(c) ofend delete
Section 14169.54, and to adopt a corresponding increase in
31the fee imposed pursuant to Article 5.231 (commencing with
32Section 14169.71), consistent with federal law and regulations, if
33the director determines that the maximum available upper payment
34limitsbegin delete in subdivision (b)end deletebegin insert described in subdivision (a)end insert of Section
3514169.52 or subdivision (a) of Section 14169.53, or the amount
36of federal financial participation for increased capitation payments
37to managed care health plans in subdivision (c) of Section
3814169.54, have increased during the program period.

39(b) The legislation described in subdivision (a) shall do both of
40the following:

P38   1(1) Require the director to work in consultation with the hospital
2community in seeking any necessary approvals from the federal
3Centers for Medicare and Medicaid Services to increase payments
4to hospitals and to impose corresponding fee increases.

5(2) Require that, in the event that the director determines that
6the maximum available upper payment limits in subdivisionbegin delete (b)end delete
7begin insert (a)end insert of Section 14169.52 or subdivision (a) of Section 14169.53,
8or the amount of federal financial participation for increased
9capitation payments to managed care health plans in subdivision
10(c) of Section 14169.54, have increased during the program period,
11the increases shall first be made available for the purposes of this
12section prior to being used for other purposes.

13(c) Notwithstanding any other provision of this article or Article
145.231 (commencing with Section 14169.71), failure to secure, or
15denial of, any necessary federal approvals required by the
16legislation described in subdivision (a) shall not affect
17implementation of this article or Article 5.231 (commencing with
18Section 14169.71).

begin insert
19

begin insert14169.69.end insert  

To the extent permitted by federal law and other
20federal requirements, the director shall develop and describe in
21provider bulletins and on the department’s Internet Web site a
22process by which a private general acute care hospital located
23outside the state that serves Medi-Cal beneficiaries may opt in to
24pay the quality assurance fee pursuant to Article 5.231
25(commencing with Section 14169.71) and receive supplemental
26payments pursuant to this article, in the same manner that the
27hospital could participate if it were located in the state.
28Notwithstanding Section 14169.51 and Section 14169.71, the
29department shall rely on reliable data to make reasonable estimates
30or projections made with respect to the hospital as to the data,
31including, but not limited to, the days data source, used to calculate
32the fees due under Article 5.231 (commencing with Section
3314169.71) and the supplemental payments under this article.
34Hospitals located outside the state that would meet the definition
35of a small and rural hospital if they were located in the state shall
36be deemed a small and rural hospital for the purposes of Article
375.231 (commencing with Section 14169.71) and this article.

end insert
begin insert
38

begin insert14169.70.end insert  

(a) Notwithstanding any provision of this article or
39Article 5.231 (commencing with Section 14169.71), the director
40may correct any identified material and egregious errors in the
P39   1data, including, but not limited to, the days data source, used in
2this article or Article 5.231 (commencing with Section 14169.71).
3An error is material and egregious if the error is clear to the
4director, based on information the director finds to be reliable,
5and results in an increase or decrease to a hospital’s supplemental
6payment under Sections 14169.52 and 14169.53, or an increase
7or decrease to a hospital’s quality assurance fee payments under
8Article 5.231 (commencing with Section 14169.71), of at least one
9million dollars ($1,000,000) for any subject fiscal year. The
10director’s determination whether to exercise his or her discretion
11under this section and any determination made by the director
12under this section shall not be subject to judicial review, except
13that a hospital may bring a writ of mandate under Section 1085
14of the Code of Civil Procedure to rectify an abuse of discretion by
15the department in correcting that hospital’s data when that
16correction results in lower supplemental payments under Sections
1714169.52 and 14169.53 in the aggregate or higher quality
18assurance fees for that hospital pursuant to Article 5.231
19(commencing with Section 14169.71).

20(b) Notwithstanding any other law, with respect to a hospital
21described in subdivision (f) of Section 14165.50, both of the
22following shall apply:

23(1) The hospital shall not be considered a new hospital, as
24defined in subdivision (o) of Section 14169.51 for purposes of this
25article and subdivision (u) of Section 14169.71 for purposes of
26 Article 5.231 (commencing with Section 14169.71).

27(2) To the extent permitted by federal law and other federal
28requirements, the department shall use the best available and
29reasonable estimates or projections made with respect to the
30hospital for an annual period as the data, including, but not limited
31to, the days data source, used in this article or Article 5.231
32(commencing with Section 14169.71).

end insert
33

SEC. 8.  

Article 5.231 (commencing with Section 14169.71)
34is added to Chapter 7 of Part 3 of Division 9 of the Welfare and
35Institutions Code
, to read:

 

P40   1Article 5.231.  Private Hospital Quality Assurance Fee Act of
22013
3

 

4

14169.71.  

Forbegin delete theend delete purposes of this article, the following
5definitions shall apply:

begin delete

6(a) (1) “Aggregate quality assurance fee” means, with respect
7to a hospital that is not a prepaid health plan hospital, the sum of
8all of the following:

9(A) The annual fee-for-service days for an individual hospital
10multiplied by the fee-for-service per diem quality assurance fee
11rate.

12(B) The annual managed care days for an individual hospital
13multiplied by the managed care per diem quality assurance fee
14rate.

15(C) The annual Medi-Cal days for an individual hospital
16 multiplied by the Medi-Cal per diem quality assurance fee rate.

17(2) “Aggregate quality assurance fee” means, with respect to a
18hospital that is a prepaid health plan hospital, the sum of all of the
19following:

20(A) The annual fee-for-service days for an individual hospital
21multiplied by the fee-for-service per diem quality assurance fee
22rate.

23(B) The annual managed care days for an individual hospital
24multiplied by the prepaid health plan hospital managed care per
25diem quality assurance fee rate.

26(C) The annual Medi-Cal managed care days for an individual
27hospital multiplied by the prepaid health plan hospital Medi-Cal
28managed care per diem quality assurance fee rate.

29(D) The annual Medi-Cal fee-for-service days for an individual
30hospital multiplied by the Medi-Cal per diem quality assurance
31fee rate.

32(3) “Aggregate quality assurance fee after the application of the
33fee percentage” means the aggregate quality assurance fee
34multiplied by the fee percentage for each subject fiscal year.

35(b)

end delete

36begin insert(a)end insert “Annual fee-for-service days” means the number of
37fee-for-service days of each hospital subject to the quality assurance
38fee, as reported on the days data source.

begin delete

39(c)

end delete

P41   1begin insert(b)end insert “Annual managed care days” means the number of managed
2care days of each hospital subject to the quality assurance fee, as
3reported on the days data source.

begin delete

4(d)

end delete

5begin insert(c)end insert “Annual Medi-Cal days” means the number of Medi-Cal
6days of each hospital subject to the quality assurance fee, as
7reported on the days data source.

begin delete

8(e)

end delete

9begin insert(d)end insert “Converted hospital”begin delete shall meanend deletebegin insert meansend insert a hospital described
10in subdivision (b) of Section 14169.51.

begin delete

11(f)

end delete

12begin insert(e)end insert “Days data source” means the hospital’s Annual Financial
13Disclosure Report filed with the Office of Statewide Health
14Planning and Development as of June 6, 2013, for its fiscal year
15ending during 2010.

begin insert

16(f) “Department” means the State Department of Health Care
17Services.

end insert

18(g) “Designated public hospital” shall have the meaning given
19in subdivision (d) of Section 14166.1 as of January 1, 2014.

begin insert

20(h) “Director” means the Director of Health Care Services.

end insert
begin delete

21(h)

end delete

22begin insert(i)end insert “Exempt facility” means any of the following:

23(1) A public hospital, which shall include either of the following:

24(A) A hospital, as defined in paragraph (25) of subdivision (a)
25of Section 14105.98.

26(B) A tax-exempt nonprofit hospital that is licensed under
27subdivision (a) of Section 1250 of the Health and Safety Code and
28operating a hospital owned by a local health care district, and is
29affiliated with the health care district hospital owner by means of
30the district’s status as the nonprofit corporation’s sole corporate
31member.

32(2) With the exception of a hospital that is in the Charitable
33Research Hospital peer group, as set forth in the 1991 Hospital
34Peer Grouping Report published by the department, a hospital that
35is a hospital designated as a specialty hospital in the hospital’s
36mostbegin delete recent publicly available end deletebegin insert recently filed end insertOffice of Statewide
37Health Planning and Development Hospital Annual Financial
38Disclosure Reportbegin insert as of January 1, 2014end insert.

39(3) A hospital that satisfies the Medicare criteria to be a
40long-term care hospital.

P42   1(4) A small and rural hospital as specified in Section 124840
2of the Health and Safety Code designated as that in the hospital’s
3begin insert most recently filed end insertOffice of Statewide Health Planning and
4Development Hospital Annual Financial Disclosure Reportbegin delete for the
5hospital’s fiscal year ending in the 2010 calendar yearend delete
begin insert as of
6January 1, 2014end insert
.

begin delete

7(i)

end delete

8begin insert(j)end insert “Federal approval” means the approval by the federal
9government of both the quality assurance fee established pursuant
10to this article and thebegin delete supplementalend delete payments to private hospitals
11described inbegin delete Sections 14169.52 and 14169.53end deletebegin insert Article 5.230
12(commencing with Section 14169.51)end insert
.

begin delete

13(j)

end delete

14begin insert(k)end insert (1) “Fee-for-service per diem quality assurance fee rate”
15means a fixed daily fee on fee-for-service days.

16(2) The fee-for-service per diem quality assurance fee rate shall
17bebegin delete four hundred one dollars and forty-one cents ($401.41)end deletebegin insert three
18hundred ninety-nine dollars and thirty-six cents ($399.36)end insert
per day
19for the 2014 calendar year and four hundredbegin delete fifty-two dollars and
20seventy three cents ($452.73)end delete
begin insert fifty-four dollars and seventy-nine
21cents ($454.79)end insert
per day for the 2015 calendar year.

22(3) Upon federal approval or conditional federal approval
23described in Section 14169.74, the director shall determine the
24fee-for-service per diem quality assurance fee rate based on the
25funds required to make the payments specified in Article 5.230
26(commencing with Section 14169.51), in consultation with the
27hospital community.

begin delete

28(k)

end delete

29begin insert(l)end insert “Fee-for-service days” means inpatient hospital daysbegin delete whenend delete
30begin insert where end insert the service type is reported as “acute care,” “psychiatric
31care,” and “rehabilitation care,” and the payer category is reported
32as “Medicare traditional,” “county indigent programs-traditional,”
33“other third parties-traditional,” “other indigent,” and “other
34payers,” for purposes of the Annual Financial Disclosure Report
35submitted by hospitals to the Office of Statewide Health Planning
36and Development.

begin delete

37(l) “Fee percentage” means a fraction, expressed as a percentage,
38the numerator of which is the amount of payments for each subject
39fiscal year under Sections 14169.52, 14169.53, and 14169.54, for
P43   1which federal financial participation is available and the
2denominator of which is____.

end delete

3(m) “General acute care hospital” means any hospital licensed
4pursuant to subdivision (a) of Section 1250 of the Health and Safety
5Code.

6(n) “Hospital community” means anybegin delete hospital industry
7organization or system that representsend delete
begin insert general acute care hospital
8and any hospital industry organization that represents general
9acute careend insert
hospitals.

10(o) “Managed care days” means inpatient hospital daysbegin delete whenend delete
11begin insert where end insert the service type is reported as “acute care,” “psychiatric
12care,” and “rehabilitation care,” and the payer category is reported
13as “Medicare managed care,” “county indigent programs-managed
14care,” and “other third parties-managed care,” for purposes of the
15Annual Financial Disclosure Report submitted by hospitals to the
16Office of Statewide Health Planning and Development.

17(p) “Managed care per diem quality assurance fee rate” means
18a fixed fee on managed care days of one hundredbegin delete forty dollars
19($140)end delete
begin insert forty-five dollars ($145)end insert per day for the 2014 calendar year
20and one hundredbegin delete sixty-five dollars ($165)end deletebegin insert seventy dollars ($170)end insert
21 per day for the 2015 calendar year.

22(q) “Medi-Cal days” means inpatient hospital daysbegin delete whenend deletebegin insert whereend insert
23 the service type is reported as “acute care,” “psychiatric care,” and
24“rehabilitation care,” and the payer category is reported as
25“Medi-Cal traditional” and “Medi-Cal managed care,” for purposes
26of the Annual Financial Disclosure Report submitted by hospitals
27to the Office of Statewide Health Planning and Development.

28(r) “Medi-Cal fee-for-service days” means inpatient hospital
29daysbegin delete whenend deletebegin insert whereend insert the service type is reported as “acute care,”
30“psychiatric care,” and “rehabilitation care,” and the payer category
31is reported as “Medi-Cal traditional” for purposes of the Annual
32Financial Disclosure Report submitted by hospitals to the Office
33of Statewide Health Planning and Development.

34(s) “Medi-Cal managed care days” means inpatient hospital
35days as reported on the days data source when the service type is
36reported as “acute care,” “psychiatric care,” and “rehabilitation
37care,” and the payer category is reported as “Medi-Cal managed
38care” for purposes of the Annual Financial Disclosure Report
39submitted by hospitals to the Office of Statewide Health Planning
40and Development.

P44   1(t) “Medi-Cal per diem quality assurance fee rate” means a fixed
2fee on Medi-Cal days of four hundredbegin delete seventy-four dollars and
3sixty-four cents ($474.64)end delete
begin insert seventy-six dollars and twenty-three
4cents ($476.23)end insert
per day for the 2014 calendar year and five hundred
5begin delete forty-two dollars and thirty-six cents ($542.36)end deletebegin insert forty-seven dollars
6and sixty-eight cents ($547.68) end insert
for the 2015 calendar year.

7(u) “New hospital” means a hospital operation, business, or
8facility functioning under current or prior ownership as a private
9hospital that does not have a days data source or a hospital that
10has a days data source in whole, or in part, from a previous operator
11begin delete whenend deletebegin insert whereend insert there is an outstanding monetarybegin delete liabilityend deletebegin insert obligationend insert
12 owed to the state in connection with the Medi-Cal program and
13thebegin delete new operator did not assume liabilityend deletebegin insert hospital is not, or does
14not agree to become, financially responsible to the departmentend insert
for
15the outstanding monetary obligationbegin insert in accordance with subdivision
16(d) of Section 14169.58end insert
.

17(v) “Nondesignated public hospital” means either of the
18following:

19(1) A public hospital that is licensed under subdivision (a) of
20Section 1250 of the Health and Safety Code, is not designated as
21a specialty hospital in the hospital’sbegin insert most recently filedend insert Annual
22Financial Disclosure Reportbegin delete for the hospital’s latest fiscal yearend deletebegin insert as
23of January 1, 2014end insert
, and satisfies the definition in paragraph (25)
24of subdivision (a) of Section 14105.98, excluding designated public
25hospitals.

26(2) A tax-exempt nonprofit hospital that is licensed under
27subdivision (a) of Section 1250 of the Health and Safety Code, is
28not designated as a specialty hospital in the hospital’sbegin insert most recently
29filedend insert
Annual Financial Disclosure Reportbegin delete for the hospital’s latest
30fiscal yearend delete
begin insert as of January 1, 2014end insert, is operating a hospital owned
31by a local health care district, and is affiliated with the health care
32district hospital owner by means of the district’s status as the
33nonprofit corporation’s sole corporate member.

34(w) “Prepaid health plan hospital” means a hospital owned by
35a nonprofit public benefit corporation that shares a common board
36of directors with a nonprofit health care service planbegin insert, which
37exclusively contracts with no more than two medical groups in the
38state to provide or arrange for professional medical services for
39the enrollees of the planend insert
.

P45   1(x) “Prepaid health plan hospital managed care per diem quality
2assurance fee rate” means a fixed fee on non-Medi-Cal managed
3care days for prepaid health plan hospitals ofbegin delete seventy-eight dollars
4and forty cents ($78.40)end delete
begin insert eighty-one dollars and twenty cents
5($81.20)end insert
per day for the 2014 calendar year and begin deleteninety-two dollars
6and forty cents ($92.40)end delete
begin insert ninety-five dollars and twenty cents
7($95.20) per dayend insert
for the 2015 calendar year.

8(y) “Prepaid health plan hospital Medi-Cal managed care per
9diem quality assurance fee rate” means a fixed fee on Medi-Cal
10managed care days for prepaid health plan hospitals of two hundred
11begin delete sixty-five dollars and eighty cents ($265.80)end deletebegin insert sixty-six dollars and
12sixty-nine cents ($266.69)end insert
per day for the 2014 calendar year and
13three hundredbegin delete three dollars and seventy-two cents ($303.72)end deletebegin insert six
14dollars and seventy cents ($306.70)end insert
per day for the 2015 calendar
15year.

begin delete

16(z) “Prior fiscal year data” means any data taken from sources
17that the department determines are the most accurate and reliable
18at the time the determination is made, or may be calculated from
19the most recent audited data using appropriate update factors. The
20data may be from prior fiscal years, current fiscal years, or
21projections of future fiscal years.

end delete
begin delete

22(aa)

end delete

23begin insert(z)end insert “Private hospital” means a hospital that meets all of the
24following conditions:

25(1) Is licensed pursuant to subdivision (a) of Section 1250 of
26the Health and Safety Code.

27(2) Is in the Charitable Research Hospital peer group, as set
28forth in the 1991 Hospital Peer Grouping Report published by the
29department, or is not designated as a specialty hospital in the
30hospital’s mostbegin delete recent publicly availableend deletebegin insert recently filedend insert Office of
31Statewide Health Planning and Development Annual Financial
32Disclosure Reportbegin insert as of January 1, 2014end insert.

33(3) Does not satisfy the Medicare criteria to be classified as a
34long-term care hospital.

35(4) Is a nonpublic hospital, nonpublic converted hospital, or
36converted hospital as those terms are defined in paragraphs (26)
37to (28), inclusive, respectively, of subdivision (a) of Section
3814105.98.

begin insert

39(5) Is not a nondesignated public hospital or a designated
40hospital.

end insert
begin delete

P46   1(ab)

end delete

2begin insert(aa)end insert “Program period” means the period from January 1, 2014,
3to December 31, 2015, inclusive.

begin insert

4(ab) “Quality assurance fee” means the quality assurance fee
5assessed pursuant to Section 14169.72 and collected on the basis
6of the quarterly quality assurance fee.

end insert
begin insert

7(ac) (1) “Quarterly quality assurance fee” means, with respect
8to a hospital that is not a prepaid health plan hospital, the sum of
9all of the following:

end insert
begin insert

10(A) The annual fee-for-service days for an individual hospital
11multiplied by the fee-for-service per diem quality assurance fee
12rate, divided by four.

end insert
begin insert

13(B) The annual managed care days for an individual hospital
14multiplied by the managed care per diem quality assurance fee
15rate, divided by four.

end insert
begin insert

16(C) The annual Medi-Cal days for an individual hospital
17multiplied by the Medi-Cal per diem quality assurance fee rate,
18divided by four.

end insert
begin insert

19(2) “Quarterly quality assurance fee” means, with respect to a
20hospital that is a prepaid health plan hospital, the sum of all of
21the following:

end insert
begin insert

22(A) The annual fee-for-service days for an individual hospital
23multiplied by the fee-for-service per diem quality assurance fee
24rate, divided by four.

end insert
begin insert

25(B) The annual managed care days for an individual hospital
26multiplied by the prepaid health plan hospital managed care per
27diem quality assurance fee rate, divided by four.

end insert
begin insert

28(C) The annual Medi-Cal managed care days for an individual
29hospital multiplied by the prepaid health plan hospital Medi-Cal
30managed care per diem quality assurance fee rate, divided by four.

end insert
begin insert

31(D) The annual Medi-Cal fee-for-service days for an individual
32hospital multiplied by the Medi-Cal per diem quality assurance
33fee rate, divided by four.

end insert
begin delete

34(ac)

end delete

35begin insert(ad)end insert “Subject fiscal quarter” means a state fiscal quarter during
36the program period.

begin delete

37(ad)

end delete

38begin insert(ae)end insert “Subject fiscal year” means a state fiscal year that ends
39after July 1, 2013, and begins before January 1, 2016.

begin delete

40(ae)

end delete

P47   1begin insert(af)end insert “Upper payment limit” means a federal upper payment limit
2on the amount of the Medicaid payment for which federal financial
3participation is available for a class of service and a class of health
4care providers, as specified in Part 447 of Title 42 of the Code of
5Federal Regulations. The applicable upper payment limit shall be
6separately calculated for inpatient and outpatient hospital services.

7

14169.72.  

(a) There shall be imposed on each general acute
8care hospital that is not an exempt facility a quality assurance fee,
9provided that a quality assurance fee under this article shall not be
10imposed on a converted hospitalbegin insert for the periods when the hospital
11is a public hospital or a new hospitalend insert
.

12(b) Thebegin insert department shall compute the quarterlyend insert quality
13assurance feebegin delete shall be computedend deletebegin insert for each subject fiscal quarterend insert
14 starting on January 1, 2014, andbegin delete continueend delete through and including
15December 31, 2015.

16(c) Subject to Section 14169.74, upon receipt of federal
17approval, the following shall become operative:

18(1) Within 10 business days following receipt of the notice of
19federal approval from the federal government, the department shall
20send notice to each hospital subject to the quality assurance feebegin delete,
21and publish on its Internet Web site,end delete
the following information:

22(A) The date that the state received notice of federal approval.

23(B) Thebegin delete fee percentageend deletebegin insert quarterly quality assurance feeend insert for each
24subject fiscal year.

begin delete

25(2) The notice to each hospital subject to the quality assurance
26fee shall also state the following:

end delete
begin delete

27(A) The aggregate quality assurance fee after the application of
28the fee percentage for each subject fiscal year.

end delete
begin delete

29(B) The aggregate quality assurance fee.

end delete
begin delete

30(C) The amount of each payment due from the hospital with
31respect to the aggregate quality assurance fee.

end delete
begin delete

32(D) The date on which each payment is due.

end delete
begin delete

33(3) The hospitals shall pay the aggregate quality assurance fee
34after application of the fee percentage for all subject fiscal years
35in eight installments. The department shall establish the date that
36each installment is due, provided that the first installment shall be
37due no earlier than 20 days following the department sending the
38notice pursuant to paragraph (1), and the installments shall be paid
39at least one month apart, but if possible, the installments shall be
40paid on a quarterly basis.

end delete
begin insert

P48   1(C) The date on which each payment is due.

end insert
begin insert

2(2) The hospitals shall pay the quarterly quality assurance fees,
3based on a schedule developed by the department. The department
4shall establish the date that each payment is due, provided that
5the first payment shall be due no earlier than 20 days following
6the date the department sends the notice pursuant to paragraph
7(1), and the payments shall be paid at least one month apart, but
8if possible, the payments shall be paid on a quarterly basis.

end insert
begin delete

9(4)

end delete

10begin insert(3)end insert Notwithstanding any other provision of this section, the
11amount of each hospital’sbegin delete aggregateend deletebegin insert quarterlyend insert quality assurance
12begin delete fee after the application of the fee percentage for each subject fiscal
13yearend delete
begin insert fees for the program period end insert thatbegin delete hasend deletebegin insert haveend insert not been paid by
14the hospital before December 15, 2015,begin delete pursuant to paragraphs (3)
15and (8),end delete
shall be paid by the hospital no later than December 15,
162015.

begin delete

17(5) (A) Notwithstanding subdivision (l) of Section 14169.71,
18for the purpose of determining the installments under paragraph
19(3), the department shall use an interim fee percentage as follows:

20(i) One hundred percent for the 2014 calendar year until the
21federal government has approved or disapproved additional
22capitation payments described in Section 14169.54 for that subject
23fiscal year.

24(ii) One hundred percent for the 2015 calendar year until the
25federal government has approved or disapproved additional
26capitation payments described in Section 14169.54 for that subject
27fiscal year.

28(B) The director may use a lower interim fee percentage for
29each subject fiscal year under this paragraph as the director, in his
30or her discretion, determines is reasonable in order to generate
31sufficient but not excessive installment payments to make the
32payments described in subdivision (b) of Section 14169.73.

33(6) The director shall determine the final fee percentage for each
34subject fiscal year within 15 days of the approval or disapproval,
35in whole or in part, by the federal government of all changes to
36the capitation rates of managed health care plans requested by the
37department to implement Section 14169.54 for that subject fiscal
38year, but in no event later than December 1, 2015. At the time the
39director determines the final fee percentage for a subject fiscal
40year, the director shall also determine the amount of future
P49   1installment payments of the quality assurance fee for each hospital
2subject to the fee, if any are due. The amount of each future
3installment payment shall be established by the director with the
4objective that the total of the installment payments of the quality
5assurance fee due from a hospital shall equal the director’s estimate
6for each subject fiscal year for the hospital of the aggregate quality
7assurance fee after the application of the fee percentage.

8(7) The director, within 15 days of determining the final fee
9percentage for a subject fiscal year pursuant to paragraph (6), shall
10send notice to each hospital subject to the quality assurance fee of
11the following information:

12(A) The final fee percentage for each subject fiscal year for
13which the final fee percentage has been determined.

14(B) The fee percentage determined under paragraph (5) for each
15subject fiscal year for which the final fee percentage has not been
16determined.

17(C) The aggregate quality assurance fee after application of the
18fee percentage for each subject fiscal year.

19(D) The director’s estimate of total quality assurance fee
20payments due from the hospital under this article whether or not
21paid. This amount shall be the sum of the aggregate quality
22assurance fee after application of the fee percentage for each
23subject fiscal year using the fee percentages contained in the notice.

24(E) The total quality assurance fee payments that the hospital
25has made under this article.

26(F) The amount, if any, by which the total quality assurance fee
27payments due from the hospital under this article as described in
28subparagraph (D) exceed the total quality assurance fee payments
29that the hospital has made under this article.

30(G) The amount of each remaining installment of the quality
31assurance fee, if any, due from the hospital and the date each
32installment is due. This amount shall be the amount described in
33subparagraph (E) divided by the number of installment payments
34remaining.

35(8)

end delete

36begin insert(4)end insert Each hospitalbegin delete that is sent a notice under paragraph (7)end delete
37begin insert described in subdivision (a)end insert shall pay thebegin delete additional installments
38of the quality assurance feeend delete
begin insert quarterly quality assurance feesend insert that
39are due, if any, in the amounts and at the times set forth in the
P50   1notice unless superseded by a subsequent notice from the
2department.

begin delete

3(9) The department shall refund to a hospital paying the quality
4assurance fee the amount, if any, by which the total quality
5assurance fee payments that the hospital has made under this article
6for all subject fiscal years exceed the total quality assurance fee
7payments due from the hospital under this article within 30 days
8of the date on which the notice is sent to the hospital under
9paragraph (7).

end delete

10(d) The quality assurance fee, as paid pursuant to this section,
11shall be paid by each hospital subject to the fee to the department
12for deposit in the Hospital Quality Assurance Revenue Fund
13established pursuant to Section 14167.35. Deposits may be
14accepted at any time and will be credited toward the program
15period.

16(e) This section shall become inoperative if the federal Centers
17for Medicare and Medicaid Services denies approval for, or does
18not approve before July 1, 2016, the implementation of the quality
19assurance fee pursuant to this article or the supplemental payments
20to private hospitals described in Sections 14169.52 and 14169.53.

21(f) In no case shall the aggregate fees collected in a federal fiscal
22year pursuant to this section, former Section 14167.32, and Sections
2314168.32 and 14169.32 exceed the maximum percentage of the
24annual aggregate net patient revenue for hospitals subject to the
25fee that is prescribed pursuant to federal law and regulations as
26necessary to preclude a finding that an indirect guarantee has been
27created.

28(g) (1) Interest shall be assessed on quality assurance fees not
29paid on the date due at the greater of 10 percent per annum or the
30rate at which the department assesses interest on Medi-Cal program
31overpayments to hospitals that are not repaid when due. Interest
32shall begin to accrue the day after the date the payment was due
33and shall be deposited in the Hospital Quality Assurance Revenue
34Fund.

35(2) If any fee payment is more than 60 days overdue, a penalty
36equal to the interest charge described in paragraph (1) shall be
37assessed and due for each month for which the payment is not
38received after 60 days.

39(h) When a hospital fails to pay all or part of the quality
40assurance fee on or before the date that payment is due, the
P51   1department may immediately begin to deduct the unpaid assessment
2and interest from any Medi-Cal payments owed to the hospital,
3or, in accordance with Section 12419.5 of the Government Code,
4from any other state payments owed to the hospital until the full
5amount is recovered. All amounts, except penalties, deducted by
6the department under this subdivision shall be deposited in the
7Hospital Quality Assurance Revenue Fund. The remedy provided
8to the department by this section is in addition to other remedies
9available under law.

10(i) The payment of the quality assurance fee shall not be
11considered as an allowable cost for Medi-Cal cost reporting and
12reimbursement purposes.

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

16(k) This subdivision creates a contractually enforceable promise
17on behalf of the state to use the proceeds of the quality assurance
18fee, including any federal matching funds, solely and exclusively
19for the purposes set forth in this article as they existed on the
20effective date of this article, to limit the amount of the proceeds
21of the quality assurance fee to be used to pay for the health care
22coverage of children to the amounts specified in this article, to
23limit any payments for the department’s costs of administration
24to the amounts set forth in this article on the effective date of this
25article, to maintain and continue prior reimbursement levels as set
26forth in Section 14169.60 on the effective date of that section, and
27to otherwise comply with all its obligations set forth in Article
285.230 (commencing with Section 14169.51) and this article
29provided that amendments that arise from, or have as a basis for,
30a decision, advice, or determination by the federal Centers for
31Medicare and Medicaid Services relating to federal approval of
32the quality assurance fee or the payments set forth in this article
33or Article 5.230 (commencing with Section 14169.51) shall control
34for the purposes of this subdivision.

35(l) (1) Effective January 1, 2016, the rates payable to hospitals
36and managed health care plans under Medi-Cal shall be the rates
37then payable without the supplemental and increased capitation
38payments set forth in Article 5.230 (commencing with Section
3914169.51).

P52   1(2) The supplemental payments and other payments under
2Article 5.230 (commencing with Section 14169.51) shall be
3regarded as quality assurance payments, the implementation or
4suspension of which does not affect a determination of the
5adequacy of any rates under federal law.

6(m) (1) Subject to paragraph (2), the director may waive any
7or all interest and penalties assessed under this article in the event
8that the director determines, in his or her sole discretion, that the
9hospital has demonstrated that imposition of the full quality
10assurance fee on the timelines applicable under this article has a
11high likelihood of creating a financial hardship for the hospital or
12a significant danger of reducing the provision of needed health
13care services.

14(2) Waiver of some or all of the interest or penalties under this
15subdivision shall be conditioned on the hospital’s agreement to
16make fee payments, or to have the payments withheld from
17payments otherwise due from the Medi-Cal program to the hospital,
18on a schedule developed by the department that takes into account
19the financial situation of the hospital and the potential impact on
20services.

21(3) A decision by the director under this subdivision shall not
22be subject to judicial review.

23(4) If fee payments are remitted to the department after the date
24determined by the department to be the final date for calculating
25the final supplemental payments under this article and Article
265.230 (commencing with Section 14169.51), the fee payments
27shall be retained in the fund for purposes of funding supplemental
28payments supported by a hospital quality assurance fee program
29implemented under subsequent legislation. However, if
30supplemental payments are not implemented under subsequent
31legislation, then those fee payments shall bebegin delete deposited in the
32Distressed Hospital Fundend delete
begin insert returned to the private hospitals pro rata
33based on each hospital’s total fee payments under this article to
34the extent consistent with federal lawend insert
.

35(5) If during the implementation of this article, fee payments
36that were due under former Article 5.21 (commencing with Section
3714167.1) and former Article 5.22 (commencing with Section
3814167.31), or former Article 5.226 (commencing with Section
3914168.1) and Article 5.227 (commencing with Section 14168.31),
40or Article 5.228 (commencing with Section 14169.1) and Article
P53   15.229 (commencing with Section 14169.31) are remitted to the
2department under a payment plan or for any other reason, and the
3final date for calculating the final supplemental payments under
4those articles has passed, then those fee payments shall be
5deposited in the fund to support the uses established by this article.

6

14169.73.  

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

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

16(b) begin insert(1)end insertbegin insertend insertNotwithstanding subdivision (c) of Section 14167.35,
17subdivision (b) of Section 14168.33, and subdivision (b) of Section
1814169.33, all funds from the proceeds of the fee assessed pursuant
19to this article in the Hospital Quality Assurance Revenue Fund,
20together with any interest and dividends earned on money in the
21fund, shallbegin delete, upon appropriation by the Legislature,end delete continue to be
22used exclusively to enhance federal financial participation for
23hospital services under the Medi-Cal program, to provide additional
24reimbursement to, and to support quality improvement efforts of,
25hospitals, and to minimize uncompensated care provided by
26hospitals to uninsured patients, as well as to pay for the state’s
27administrative costs and to provide funding for children’s health
28coverage, in the following order of priority:

begin delete

29(1)

end delete

30begin insert(A)end insert To pay for the department’s staffing and administrative costs
31directly attributable to implementing Article 5.230 (commencing
32with Section 14169.51) and this article, not to exceed two million
33dollars ($2,000,000) for the program period.

begin delete

34(2)

end delete

35begin insert(B)end insert To pay for the health care coverage for children in the
36amount of one hundred fifty-five million dollars ($155,000,000)
37for each subject fiscal quarter during the 2014 and 2015 calendar
38years.

begin delete

39(3)

end delete

P54   1begin insert(C)end insert To make increased capitation payments to managed health
2care plans pursuant to Article 5.230 (commencing with Section
314169.51).

begin delete

4(4)

end delete

5begin insert(D)end insert To make increased paymentsbegin delete orend deletebegin insert andend insert direct grants to hospitals
6pursuant to Article 5.230 (commencing with Section 14169.51).

begin insert

7(2) Notwithstanding subdivision (c) of Section 14167.35,
8subdivision (b) of Section 14168.33, and subdivision (b) of Section
914169.33, and notwithstanding Section 13340 of the Government
10Code, the moneys in the Hospital Quality Assurance Revenue Fund
11shall be continuously appropriated without regard to fiscal year
12for the purposes of this article, Article 5.230 (commencing with
13Section 14169.51), Article 5.229 (commencing with Section
1414169.31), Article 5.228 (commencing with Section 14169.1),
15Article 5.227 (commencing with Section 14168.31), former Article
165.226 (commencing with Section 14168.1), former Article 5.22
17(commencing with Section 14167.31) and former Article 5.21
18(commencing with Section 14167.1).

end insert

19(c) Any amounts of the quality assurance fee collected in excess
20of the funds required to implement subdivision (b), including any
21funds recovered under subdivision (d) of Section 14169.61 or
22subdivision (e) of Section 14169.78, shall be refunded to general
23acute care hospitals, pro rata with the amount of quality assurance
24fee paid by the hospital, subject to the limitations of federal law.
25If federal rules prohibit the refund described in this subdivision,
26the excess funds shall be begin delete deposited in the Distressed Hospital Fund
27to be used for the purposes described in Section 14166.23, and
28shall be supplemental to and not supplant existing funds.end delete
begin insert returned
29to the private hospitals pro rata based on each hospital’s total fee
30payments under this article to the extent consistent with federal
31law.end insert

32(d) Any methodology or other provision specified in Article
335.230 (commencing with Section 14169.51) or this article may be
34modified by the department, in consultation with the hospital
35community, to the extent necessary to meet the requirements of
36federal law or regulations to obtain federal approval or to enhance
37the probability that federal approval can be obtained, provided the
38modifications do not violate the spirit and intent of Article 5.230
39(commencing with Section 14169.51) or this article and are not
P55   1inconsistent with the conditions of implementation set forth in
2 Section 14169.80.

3(e) The department, in consultation with the hospital community,
4shall make adjustments, as necessary, to the amounts calculated
5pursuant to Section 14169.72 in order to ensure compliance with
6the federal requirements set forth in Section 433.68 of Title 42 of
7the Code of Federal Regulations or elsewhere in federal law.

8(f) The department shall request approval from the federal
9Centers for Medicare and Medicaid Services for the implementation
10of this article. In making this request, the department shall seek
11specific approval from the federal Centers for Medicare and
12Medicaid Services to exempt providers identified in this article as
13exempt from the fees specified, including the submission, as may
14be necessary, of a request for waiver of the broad-based
15requirement, waiver of the uniform fee requirement, or both,
16pursuant to paragraphs (1) and (2) of subdivision (e) of Section
17433.68 of Title 42 of the Code of Federal Regulations.

18(g) Notwithstanding Chapter 3.5 (commencing with Section
1911340) of Part 1 of Division 3 of Title 2 of the Government Code,
20the department may implement this article or Article 5.230
21(commencing with Section 14169.51) by means of provider
22bulletins, all plan letters, or other similar instruction, without taking
23regulatory action. The department shall also provide notification
24to the Joint Legislative Budget Committee and to the appropriate
25policy and fiscal committees of the Legislature within five working
26days when the above-described action is taken in order to inform
27the Legislature that the action is being implemented.

28

14169.74.  

(a) Notwithstanding any other provision of this
29article or Article 5.230 (commencing with Section 14169.51)
30requiring federal approvals, the department may impose and collect
31the quality assurance fee and may make payments under this article
32and Article 5.230 (commencing with Section 14169.51), including
33increased capitation payments, based upon receiving a letter from
34the federal Centers for Medicare and Medicaid Services or the
35United States Department of Health and Human Services that
36indicates likely federal approval, but only if and to the extent that
37the letter is sufficient as set forth in subdivision (b).

38(b) In order for the letter to be sufficient under this section, the
39director shall find that the letter meets both of the following
40requirements:

P56   1(1) The letter is in writing and signed by an official of the federal
2Centers for Medicare and Medicaid Services or an official of the
3United States Department of Health and Human Services.

4(2) The director, after consultation with the hospital community,
5has determined, in the exercise of his or her sole discretion, that
6the letter provides a sufficient level of assurance to justify advanced
7implementation of the fee and payment provisions.

8(c) Nothing in this section shall be construed as modifying the
9requirement under Section 14169.61 that payments shall be made
10only to the extent a sufficient amount of funds collected as the
11quality assurance fee are available to cover the nonfederal share
12of those payments.

13(d) Upon notice from the federal government that final federal
14approval for the fee model under this article or for the supplemental
15payments to private hospitals under Section 14169.52 or 14169.53
16has been denied, any fees collected pursuant to this section shall
17be refunded and any payments made pursuant to this article or
18Article 5.230 (commencing with Section 14169.51) shall be
19recouped, including, but not limited to, supplemental payments
20and grants, increased capitation payments, payments to hospitals
21by health care plans resulting from the increased capitation
22payments, and payments for the health care coverage of children.
23To the extent fees were paid by a hospital that also received
24payments under this section, the payments may first be recouped
25from fees that would otherwise be refunded to the hospital prior
26to the use of any other recoupment method allowed under law.

27(e) Any payment made pursuant to this section shall be a
28conditional payment until final federal approval has been received.

29(f) The director shall have broad authority under this section to
30collect the quality assurance fee for an interim period after receipt
31of the letter described in subdivision (a) pending receipt of all
32necessary federal approvals. This authority shall include discretion
33to determine both of the following:

34(1) Whether the quality assurance fee should be collected on a
35full or pro rata basis during the interim period.

36(2) The dates on which payments of the quality assurance fee
37are due.

38(g) The department may draw against the Hospital Quality
39Assurance Revenue Fund for all administrative costs associated
P57   1with implementation under this article or Article 5.230
2(commencing with Section 14169.51).

3(h) This section shall be implemented only to the extent federal
4financial participation is not jeopardized by implementation prior
5to the receipt of all necessary final federal approvals.

6

14169.75.  

(a) Notwithstanding any other law, the director shall
7have discretion to modify any timeline or timelines in this article
8or Article 5.230 (commencing with Section 14169.51) if the letter
9that indicates likely federal approval, as described in Section
1014169.74, is not secured by December 15, 2015, and the director
11determines that it is impossible from an operational perspective
12to implement a timeline or timelines without the modification.

13(b) The department shall notify the fiscal and policy committees
14of the Legislature prior to implementing a modified timeline or
15timelines under subdivision (a).

16(c) The department shall consult with representatives of the
17hospital community in developing a modified timeline or timelines
18pursuant to this section.

19(d) The discretion to modify timelines under this section shall
20include, but not be limited to, discretion to accelerate payments to
21plans or hospitals.

22

14169.76.  

(a) Upon receipt of a letter that indicates likely
23federal approval that the director determines is sufficient for
24implementation under Section 14169.74, or upon the receipt of
25federal approval, the following shall occur:

26(1) To the maximum extent possible, and consistent with the
27availability of funds in the Hospital Quality Assurance Revenue
28Fund, the department shall make all of the payments under Sections
2914169.52, 14169.53, and 14169.54, including, but not limited to,
30supplemental payments and increased capitation payments, prior
31to January 1, 2016, except that the increased capitation payments
32under Section 14169.54 shall not be made until federal approval
33is obtained for these payments.

34(2) The department shall make supplemental payments to
35hospitals under Article 5.230 (commencing with Section 14169.51)
36consistent with the timeframe described in Section 14169.59 or a
37modified timeline developed pursuant to Section 14169.75.

38(b) Notwithstanding any other provision of this article or Article
395.230 (commencing with Section 14169.51), if the director
40determines, on or after December 15, 2015, that there are
P58   1insufficient funds available in the Hospital Quality Assurance
2Revenue Fund to make all scheduled payments under Article 5.230
3(commencing with Section 14169.51) before January 1, 2016, he
4or she shall consult with representatives of the hospital community
5to develop an acceptable plan for making additional payments to
6hospitals and managed health care plans to maximize the use of
7delinquent fee payments or other deposits or interest projected to
8become available in the fund after December 15, 2015, but before
9June 15, 2016.

10(c) Nothing in this section shall require the department to
11continue to make payments under Article 5.230 (commencing with
12Section 14169.51) if, after the consultation required under
13subdivision (b), the director determines in the exercise of his or
14her sole discretion that a workable plan for the continued payments
15cannot be developed.

16(d) Subdivisions (b) and (c) shall be implemented only if and
17to the extent federal financial participation is available for
18continued supplemental payments and to providers and continued
19increased capitation payments to managed health care plans.

20(e) If any payment or payments made pursuant to this section
21are found to be inconsistent with federal law, the department shall
22recoup the payments by means of withholding or any other
23available remedy.

24(f) Nothing in this section shall be read as affecting the
25department’s ongoing authority to continue, after December 31,
262015, to collect quality assurance fees imposed on or before
27December 31, 2015.

28

14169.77.  

Notwithstanding any other law, if actual federal
29approval or a letter that indicates likely federal approval in
30accordance with Section 14169.74 has not been received on or
31before December 1, 2015, then this article shall become
32inoperative, and as of December 1, 2015, is repealed, unless a later
33enacted statute, that is enacted before December 1, 2015, deletes
34or extends that date.

35

14169.78.  

(a) This article shall be implemented only as long
36as all of the following conditions are met:

37(1) Subject to Section 14169.73, the quality assurance fee is
38established in a manner that is fundamentally consistent with this
39article.

P59   1(2) The quality assurance fee, including any interest on the fee
2after collection by the department, is deposited in a segregated
3fund apart from the General Fund.

4(3) The proceeds of the quality assurance fee, including any
5interest and related federal reimbursement, may only be used for
6the purposes set forth in this article.

7(b) No hospital shall be required to pay the quality assurance
8fee to the department unless and until the state receives and
9maintains federal approval.

10(c) Hospitals shall be required to pay the quality assurance fee
11to the department as set forth in this article only as long as all of
12the following conditions are met:

13(1) The federal Centers for Medicare and Medicaid Services
14allows the use of the quality assurance fee as set forth in this article
15in accordance with federal approval.

16(2) Article 5.230 (commencing with Section 14169.51) is
17enacted and remains in effect and hospitals are reimbursed the
18increased rates for services during the program period, as defined
19in Section 14169.51.

20(3) The full amount of the quality assurance fee assessed and
21collected pursuant to this article remains available only for the
22purposes specified in this article.

23(d) This article shall become inoperative if either of the
24following occurs:

25(1) In the event, and on the effective date, of a final judicial
26determination made by any court of appellate jurisdiction or a final
27determination by the United States Department of Health and
28Human Services or the federal Centers for Medicare and Medicaid
29Services that the quality assurance fee established pursuant to this
30article cannot be implemented.begin insert This paragraph shall not apply to
31a final judicial determination made by any court of appellate
32jurisdiction in a case brought by hospitals located outside the
33state.end insert

34(2) In the event both of the following conditions exist:

35(A) The federal Centers for Medicare and Medicaid Services
36denies approval for, or does not approve before January 1, 2016,
37the implementation of Sections 14169.52 and 14169.53 or this
38article.

39(B) Section 14169.52, Section 14169.53, or this article cannot
40be modified by the department pursuant to subdivision (d) of
P60   1Section 14169.73 in order to meet the requirements of federal law
2or to obtain federal approval.

3(e) If this article becomes inoperative pursuant to paragraph (1)
4of subdivision (d) and the determination applies to any period or
5periods of time prior to the effective date of the determination, the
6department may recoup all payments made pursuant to Article
75.230 (commencing with Section 14169.51) during that period or
8those periods of time.

9(f) (1) If all necessary final federal approvals are not received
10as described and anticipated under this article or Article 5.230
11(commencing with Section 14169.51), the director shall have the
12discretion and authority to develop procedures for recoupment
13from managed health care plans, and from hospitals under contract
14with managed health care plans, of any amounts received pursuant
15to this article or Article 5.230 (commencing with Section
1614169.51).

17(2) Any procedure instituted pursuant to this subdivision shall
18be developed in consultation with representatives from managed
19health care plans and representatives of the hospital community.

20(3) Any procedure instituted pursuant to this subdivision shall
21be in addition to all other remedies made available under the law,
22pursuant to contracts between the department and the managed
23health care plans, or pursuant to contracts between the managed
24health care plans and the hospitals.

25

14169.79.  

Notwithstanding any other provision of this article
26or Article 5.230 (commencing with Section 14169.51),
27supplemental payments or other payments under Article 5.230
28(commencing with Section 14169.51) shall only be required and
29payable in any quarter for which a fee payment obligation exists.

30

14169.80.  

(a) This article and Article 5.230 (commencing with
31Section 14169.51) shall become inoperative and the requirements
32for supplemental payments or other payments under Article 5.230
33(commencing with Section 14169.51) shall be retroactively
34invalidated, on the first day of the first month of the calendar
35quarter following notification to the Joint Legislative Budget
36Committee by the Department of Finance, that any of the following
37have occurred:

38(1) A final judicial determination by the California Supreme
39Court or any California Court of Appeal that the revenues collected
P61   1pursuant to this article that are deposited in the Hospital Quality
2Assurance Revenue Fund are either of the following:

3(A) General Fund proceeds of taxes appropriated pursuant to
4Article XIII B of the California Constitution, as used in subdivision
5(b) of Section 8 of Article XVI of the California Constitution.

6(B) Allocated local proceeds of taxes, as used in subdivision
7(b) of Section 8 of Article XVI of the California Constitution.

8(2) The department has sought but has not received federal
9financial participation for the supplemental payments and other
10costs required by this article for which federal financial
11participation has been sought.

12(3) A lawsuit related to this article or Article 5.230 (commencing
13with Section 14169.51) is filed against the state and a preliminary
14injunction or other order has been issued that results in a financial
15disadvantage to the state.

16(4) The director, in consultation with the Department of Finance,
17determines that the implementation of this article or Article 5.230
18(commencing with Section 14169.51) has resulted in a financial
19disadvantage to the state.

20(b) For purposes of this section, “financial disadvantage to the
21state” means either of the following:

22(1) A loss of federal financial participation.

23(2) A cost to the General Fund, that is equal to or greater than
24one-quarter of 1 percent of the General Fund expenditures
25authorized in the most recent annual Budget Act.

26(c) (1) The director shall have the authority to recoup any
27payments made under Article 5.230 (commencing with Section
2814169.51) if any of the following apply:

29(A) Recoupment of payments made under Article 5.230
30(commencing with Section 14169.51) is ordered by a court.

31(B) Federal financial participation is not available for payments
32made under Article 5.230 (commencing with Section 14169.51)
33for which federal financial participation has been sought.

34(C) Recoupment of payments made under Article 5.230
35(commencing with Section 14169.51) is necessary to prevent a
36General Fund cost that is estimated to be equal to or greater than
37one-quarter of 1 percent of the General Fund expenditures
38authorized in the most recent annual Budget Act and that results
39from implementation of a court order or the unavailability of
40federal financial participation.

P62   1(2) In the event payments are recouped for a particular quarter,
2fees paid by a hospital for that quarter pursuant to this article shall
3be refunded to the extent that the hospital meets both of the
4following conditions:

5(A) The hospital has actually paid the fee for the subject quarter
6and for all prior quarters.

7(B) The hospital has returned the payment received pursuant to
8Article 5.230 (commencing with Section 14169.51) for that quarter,
9or has had that payment recouped through a withholding of funds
10owed by Medi-Cal or other state payments, or recouped through
11other means.

12(d) In the event the department determines that recoupment of
13supplemental payments is necessary to implement any provision
14of this section, the department may recoup payments made pursuant
15to Article 5.230 (commencing with Section 14169.51) from fees
16paid by the hospital pursuant to this article.

17(e) Concurrent with invoking any provision of this section, the
18director shall notify the fiscal and appropriate policy committees
19of the Legislature of the intended action and the specific reason
20or reasons for the proposed action.

21

14169.81.  

Notwithstanding Chapter 3.5 (commencing with
22Section 11340) of Part 1 of Division 3 of Title 2 of the Government
23Code, the department shall implement this article by means of
24policy letters or similar instructions, without taking further
25regulatory action.

26

14169.82.  

(a) This article shall remain operative only until the
27later of the following:

28(1) January 1, 2017.

29(2) The date of the last payment of the quality assurance fee
30payments pursuant to this article.

31(3) The date of the last payment from the department pursuant
32to Article 5.230 (commencing with Section 14169.51).

33(b) If this article becomes inoperative under paragraph (1) of
34subdivision (a), this article shall be repealed on January 1, 2017,
35unless a later enacted statute enacted before that date, deletes or
36extends that date.

37(c) If this article becomes inoperative under paragraph (2) or
38(3) of subdivision (a), this article shall be repealed on January 1
39of the year following the date this article becomes inoperative,
P63   1unless a later enacted statute enacted before that date, deletes or
2extends that date.

3

14169.83.  

If the director determines that this article has become
4inoperative pursuant to Section 14169.77, 14169.78, 14169.80, or
514169.82, or that Section 14169.72 has become inoperative
6pursuant to subdivision (e) of that section, the director shall execute
7a declaration stating that this determination has been made and
8stating the basis for this determination. The director shall retain
9the declaration and provide a copy, within five working days of
10the execution of the declaration, to the fiscal and appropriate policy
11committees of the Legislature. In addition, the director shall post
12the declaration on the department’s Internet Web site and the
13director shall send the declaration to the Secretary of State, the
14Secretary of the Senate, the Chief Clerk of the Assembly, and the
15Legislative Counsel.

begin insert
16

begin insert14169.84.end insert  

(a) (1) Except as provided in this section, all data
17and other information relating to a hospital that are used for the
18purposes of this article, including, without limitation, the days
19data source, shall continue to be used to determine the quality
20assurance fees due from that hospital pursuant to this article,
21regardless of whether the hospital has undergone one or more
22changes of ownership.

23(2) All quality assurance fee payments under this article shall
24be paid by the licensee of a hospital on the date the quarterly
25quality assurance fee payment is due.

26(b) The data of separate facilities prior to a consolidation shall
27be aggregated for the purposes of this article if: (1) a private
28hospital consolidates with another private hospital, (2) the facilities
29operate under a consolidated hospital license, (3) data for a period
30prior to the consolidation is used for purposes of this article, and
31(4) neither hospital has had a change of ownership on or after the
32effective date of this article unless paragraph (2) of subdivision
33(d) has been satisfied by the new owner. Data of a facility that was
34a separately licensed hospital prior to the consolidation shall not
35be included in the data, including the days data source, for the
36purpose of determining the quality assurance fees due from the
37facility under the article for any time period during which such
38facility is closed. A facility shall be deemed to be closed for
39purposes of this subdivision on the first day of any period during
40which the facility has no general acute, psychiatric, or
P64   1rehabilitation inpatients for at least 30 consecutive days. A facility
2that has been deemed to be closed under this subdivision shall no
3longer be deemed to be closed on the first subsequent day on which
4it has general acute, psychiatric, or rehabilitation inpatients.

5(c) The quality assurance fees under this article shall not be
6due, for any period during which the hospital is closed. A hospital
7shall be deemed to be closed on the first day of any period during
8which the hospital has no general acute, psychiatric, or
9rehabilitation inpatients for at least 30 consecutive days. A hospital
10that has been deemed to be closed under this subdivision shall no
11longer be deemed to be closed on the first subsequent day on which
12it has general acute, psychiatric, or rehabilitation inpatients.
13Payments of the quality assurance fee under this article due from
14a hospital that is closed during any portion of a subject fiscal
15quarter shall be reduced by applying a fraction, expressed as a
16percentage, the numerator of which shall be the number of days
17during the applicable subject fiscal quarter that the hospital is
18closed during the subject fiscal year and the denominator of which
19shall be the number of days in the subject fiscal quarter.

20(d) The procedure established by the director pursuant to
21subdivision (d) of Section 14169.58 shall apply to this article.

end insert
22

SEC. 9.  

This act is an urgency statute necessary for the
23immediate preservation of the public peace, health, or safety within
24the meaning of Article IV of the Constitution and shall go into
25immediate effect. The facts constituting the necessity are:

26In order to make the necessary changes to increase Medi-Cal
27payments to hospitals and improve access at the earliest time, so
28as to allow this act to be operative as soon as approval from the
29federal Centers for Medicare and Medicaid Services is obtained
30by the State Department of Health Care Services, it is necessary
31that this act takes effect immediately.



O

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