Amended in Assembly September 11, 2013

Amended in Assembly September 6, 2013

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 addbegin delete Sectionend deletebegin insert Sections 14165.58 andend insert 14167.37 to,begin insert to add Article 5.231 (commencing with Section 14169.81) to,end insert and to add and repeal Article 5.230 (commencing with Sectionbegin delete 14169.51) and Article 5.231 (commencing with Section 14169.71) ofend deletebegin insert 14169.50) of,end insert 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 assurancebegin delete fee.end deletebegin insert fees: distinct part skilled nursing facilities.end insert

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

This bill would, subject to federal approval, impose a hospital quality assurance fee, as specified, on certain general acute care hospitalsbegin delete from January 1, 2014, through December 31, 2015,end delete 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 shall be continuously appropriatedbegin insert during the first program period of January 1, 2014, to December 31, 2016, inclusive,end insert and available only for certain purposes, including paying for health care coverage for children, as specified, and making supplemental payments for certain services to private hospitals and increased capitation payments to Medi-Cal managed care plans. The bill would also require the payment of direct grants to designated and nondesignated public hospitals in support of health care expenditures funded by the quality assurance feebegin insert for the first program period. The bill would, for subsequent program periods, authorize the payment of direct grants for designated and nondesignated public hospitals and require that the moneys in the Hospital Quality Assurance Revenue Fund be used for the above-described purposes upon appropriation by the Legislature in the annual Budget Actend insert. The bill would require the department to make available all public documentation it uses to administer and audit these provisions. The bill would require the department to post specified documents on its Internet Web site relating to these provisions.

begin delete

The bill would provide that if quality assurance fee payments are remitted to the department after the date determined by the department to be the final date for calculating the final supplemental payments, the fee payments shall be retained in the fund for purposes of funding supplemental payments supported by a hospital quality assurance fee program under subsequent legislation, but if supplemental payments are not implemented under subsequent legislation, then those quality assurance fee payments shall be returned to the private hospitals pro rata, as specified. The bill would also provide that if amounts of the quality assurance fees are collected in excess of the funds required to make the payments above and federal rules prohibit the department from refunding the fee payments to the general acute care hospitals, the excess funds shall be returned to the private hospitals pro rata, as specified. The bill would make other conforming changes.

end delete

(2) Existing law provides that any county, other political subdivision of the state, or governmental entity in the state may elect to transfer funds in the form of cash or loans to the department in support of the Medi-Cal program. Existing law provides the department discretion to accept or not accept any elective transfer from a county, political subdivision, or other governmental entity for purposes of obtaining federal financial participation.

This bill would authorize the Director of Health Care Services to maximize federal financial participation to provide access to services provided by hospitals that are not reimbursed by certified public expenditure, as specified, by authorizing the use of intergovernmental transfers to fund the nonfederal share of supplemental payments as permitted under federal law.

(3) Existing law requires that the California Medical Assistance Commission be dissolved after June 30, 2012, and requires that, upon dissolution of the commission, all powers, duties, and responsibilities of the commission be transferred to the Director of Health Care Services. Existing law provides that upon a determination by the director that a payment system based on diagnosis-related groups, as described, has been developed and implemented, the powers, duties, and responsibilities conferred on the commission and transferred to the director shall no longer be exercised, except as specified.

This bill would add to those exceptions by authorizing the director to continue to administer and distribute payments for the Construction and Renovation Reimbursement Program, which provides supplemental reimbursement to hospitals that contract under the selective provider contracting program or with a county organized health system, as specified. The bill would provide that maintaining or negotiating a selective provider contract or a contract with a county organized health system shall cease to be a requirement for a hospital’s participation in the Construction and Renovation Reimbursement Program.

begin insert

(4) Existing law requires, except as otherwise provided, Medi-Cal provider payments to be reduced by 1% or 5%, and provider payments for specified non-Medi-Cal programs to be reduced by 1%, for dates of service on and after March 1, 2009, and until June 1, 2011. Existing law requires, except as otherwise provided, Medi-Cal provider payments and payments for specified non-Medi-Cal programs to be reduced by 10% for dates of service on and after June 1, 2011.

end insert
begin insert

This bill would require that reimbursement for services provided by skilled nursing facilities that are distinct parts of a general acute care hospitals be determined, for dates of service on or after October 1, 2013, without application of the reductions and limitations set forth in those provisions. The bill would also require the department to develop, in consultation with the hospital community, proposed modifications to the quality assurance fee provisions to collect additional fees for increasing managed care plan rate range increases for the purpose of increasing payments to private hospitals and nondesignated public hospitals in counties that do not have designated public hospitals. The bill would also require the department to develop a process by which a private general acute care hospital located outside the state that serves Medi-Cal beneficiaries may opt in to pay the quality assurance fee and receive supplemental payments, as specified.

end insert
begin delete

(4)

end delete

begin insert(end insertbegin insert5)end insert This 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    1begin insert

begin insertSECTION 1.end insert  

end insert

begin insertSection 14164 of the end insertbegin insertWelfare and Institutions
2Code
end insert
begin insert is amended to read:end insert

3

14164.  

begin insert(a)end insertbegin insertend insert In addition to the required intergovernmental
4transfers set forth in Section 14163, any county, other political
5subdivision of the state, or governmental entity in the state may
6elect to transfer funds, subject to subdivision (m) of Section 14163,
7to the department in support of the Medi-Cal program. Those
8transfers may consist of cash or loans to the state. The department
9shall have the discretion to accept or not accept any elective transfer
10from a county, political subdivision, or other governmental entity,
11as well as the discretion of whether to deposit the transfer in the
12Medi-Cal Inpatient Payment Adjustment Fund established pursuant
13to Section 14163. If the department accepts a transfer pursuant to
14this section, the department shall obtain federal matching funds to
15the full extent permitted by federal law.

begin insert

P5    1(b) (1) The director may maximize available federal financial
2participation to provide access to services provided by hospitals
3that are not reimbursed by certified public expenditure pursuant
4to Article 5.2 (commencing with Section 14166) by authorizing
5the use of intergovernmental transfers to fund the nonfederal share
6of supplemental payments as permitted under Section 433.51 of
7Title 42 of the Code of Federal Regulations or any other applicable
8federal Medicaid laws. The transferring entity shall certify to the
9department that the funds are in compliance with all federal rules
10and regulations. Any payments funded by intergovernmental
11transfers shall remain with the hospital and shall not be transferred
12back to any county, other political subdivision of the state, or
13governmental entity in the state, except for federal disallowance
14or withhold recovery efforts by the department. Participation in
15intergovernmental transfers under this subdivision is voluntary
16on the part of the transferring entity for purposes of all applicable
17federal laws.

end insert
begin insert

18(2) This subdivision shall be implemented only to the extent
19federal financial participation is not jeopardized.

end insert
20begin insert

begin insertSEC. 2.end insert  

end insert

begin insertSection 14165 of the end insertbegin insertWelfare and Institutions Codeend insertbegin insert is
21amended to read:end insert

22

14165.  

(a) There is hereby created in the Governor’s office
23the California Medical Assistance Commission, for the purpose
24of contracting with health care delivery systems for the provision
25of health care services to recipients under the California Medical
26Assistance program.

27(b) Notwithstanding any other provision of law, the commission
28created pursuant to subdivision (a) shall continue through June 30,
292012, after which, it shall be dissolved and the term of any
30commissioner serving at that time shall end.

31(1) Upon dissolution of the commission, all powers, duties, and
32responsibilities of the commission shall be transferred to the
33Director of Health Care Services. These powers, duties, and
34 responsibilities shall include, but are not limited to, those exercised
35in the operation of the selective provider contracting program
36pursuant to Article 2.6 (commencing with Section 14081).

37(2) (A) On July 1, 2012, notwithstanding any other law,
38employees of the California Medical Assistance Commission as
39of June 30, 2012, excluding commissioners, shall transfer to the
40State Department of Health Care Services.

P6    1(B) Employees who transfer pursuant to subparagraph (A) shall
2be subject to the same conditions of employment under the
3department as they were under the California Medical Assistance
4Commission, including retention of their exempt status, until the
5diagnosis-related groups payment system described in Section
614105.28 replaces the contract-based payment system described
7in this article.

8(C) (i) Notwithstanding any other law or rule, persons employed
9by the department who transferred to the department pursuant to
10subparagraph (A) shall be eligible to apply for civil service
11examinations. Persons receiving passing scores shall have their
12names placed on lists resulting from these examinations, or
13otherwise gain eligibility for appointment. In evaluating minimum
14qualifications, related California Medical Assistance Commission
15experience shall be considered state civil service experience in a
16class deemed comparable by the State Personnel Board, based on
17the duties and responsibilities assigned.

18(ii) On the date the diagnosis-related groups payment system
19described in Section 14105.28 replaces the contract-based system
20described in this article, employees who transferred to the
21department pursuant to subparagraph (A) shall transfer to civil
22service classifications within the department for which they are
23eligible.

24(3) Upon a determination by the Director of Health Care
25Services that a payment system based on diagnosis-related groups
26as described in Section 14105.28 that is sufficient to replace the
27contract-based payment system described in this article has been
28developed and implemented, the powers, duties, and responsibilities
29conferred on the commission and transferred to the Director of
30Health Care Services shall no longer be exercised, excludingbegin delete bothend delete
31begin insert allend insert of the following:

32(A) Stabilization payments made or committed from Sections
3314166.14 and 14166.19 for services rendered prior to the director’s
34determination pursuant to this paragraph.

35(B) The ability to negotiate and make payments from the Private
36Hospital Supplemental Fund, established pursuant to Section
3714166.12, and the Nondesignated Public Hospital Supplemental
38Fund, established pursuant to Section 14166.17.

begin insert

39(C) The ability to continue to administer and distribute payments
40for the Construction and Renovation Reimbursement Program, in
P7    1accordance with Sections 14085 to 14085.57, inclusive.
2Notwithstanding any other law, maintaining or negotiating a
3selective provider contract pursuant to Article 2.6 (commencing
4with Section 14081) or a contract with a county organized health
5system shall cease to be a requirement for a hospital’s participation
6in the Construction and Renovation Reimbursement Program.

end insert

7(4) Protections afforded to the negotiations and contracts of the
8commission by the California Public Records Act (Chapter 3.5
9(commencing with Section 6250) of Division 7 of Title 1 of the
10Government Code) shall be applicable to the negotiations and
11contracts conducted or entered into pursuant to this section by the
12State Department of Health Care Services.

13(c) Notwithstanding the rulemaking provisions of Chapter 3.5
14(commencing with Section 11340) of Part 1 of Division 3 of Title
152 of the Government Code, or any other provision of law, the State
16Department of Health Care Services may implement and administer
17this section by means of provider bulletins or other similar
18instructions, without taking regulatory action. The authority to
19implement this section as set forth in this subdivision shall include
20the authority to give notice by provider bulletin or other similar
21instruction of a determination made pursuant to paragraph (3) of
22subdivision (b) and to modify or supersede existing regulations in
23Title 22 of the California Code of Regulations that conflict with
24implementation of this section.

25begin insert

begin insertSEC. 3.end insert  

end insert

begin insertSection 14165.58 is added to the end insertbegin insertWelfare and
26Institutions Code
end insert
begin insert, to read:end insert

begin insert
27

begin insert14165.58.end insert  

(a) The department shall design and implement, in
28consultation with nondesignated public hospitals, an
29intergovernmental transfer program relating to Medi-Cal managed
30care services provided by nondesignated public hospitals in order
31to increase capitation payments for the purpose of increasing their
32reimbursement.

33(b) The increased capitation payments under this section shall
34be actuarially equivalent to the increased fee-for-service payments
35made pursuant to Section 14165.57 to the extent permissible under
36federal law.

37(c) This section shall be implemented on the later of January
381, 2014, or the date on which all necessary federal approvals have
39been received, and only to the extent intergovernmental transfers
40from nondesignated public hospitals are provided for this purpose.

P8    1(d) Participation in the intergovernmental transfers under this
2section is voluntary on the part of the transferring entities for the
3purposes of all applicable federal laws.

4(e) This section shall be implemented only to the extent federal
5financial participation is available for the reimbursement specified
6in subdivision (b).

7(f) This section shall be implemented only to the extent federal
8financial participation is not jeopardized.

9(g) To the extent that the director determines that the payments
10do not comply with the federal Medicaid requirements, the director
11retains the discretion not to implement an intergovernmental
12transfer and may adjust the payment as necessary to comply with
13federal Medicaid requirements.

14(h) To the extent federal approval is secured, the increased
15capitation payments under this section may cover dates of service
16on or after January 1, 2014.

17(i) Notwithstanding Chapter 3.5 (commencing with Section
1811340) of Part 1 of Division 3 of Title 2 of the Government Code,
19the department shall implement this section by means of policy
20letters or similar instructions, without taking further regulatory
21action. Notwithstanding Section 10231.5 of the Government code,
22the department shall provide the Joint Legislative Budget
23Committee and the fiscal and appropriate policy committees of
24the Legislature a status update of the implementation of this section
25on January 1, 2014, and annually thereafter.

end insert
26begin insert

begin insertSEC. 4.end insert  

end insert

begin insertSection 14167.35 of the end insertbegin insertWelfare and Institutions Codeend insert
27begin insert is amended to read:end insert

28

14167.35.  

(a) The Hospital Quality Assurance Revenue Fund
29is hereby created in the State Treasury.

30(b) (1) All fees required to be paid to the state pursuant to this
31article shall be paid in the form of remittances payable to the
32department.

33(2) The department shall directly transmit the fee payments to
34the Treasurer to be deposited in the Hospital Quality Assurance
35Revenue Fund. Notwithstanding Section 16305.7 of the
36Government Code, any interest and dividends earned on deposits
37in the fund shall be retained in the fund for purposes specified in
38subdivision (c).

39(c) All funds in the Hospital Quality Assurance Revenue Fund,
40together with any interest and dividends earned on money in the
P9    1fund, shall, upon appropriation by the Legislature, be used
2exclusively to enhance federal financial participation for hospital
3services under the Medi-Cal program, to provide additional
4reimbursement to, and to support quality improvement efforts of,
5hospitals, and to minimize uncompensated care provided by
6hospitals to uninsured patients, in the following order of priority:

7(1) To pay for the department’s staffing and administrative costs
8directly attributable to implementing Article 5.21 (commencing
9with Section 14167.1) and this article, including any administrative
10fees that the director determines shall be paid to mental health
11plans pursuant to subdivision (d) of Section 14167.11 and
12repayment of the loan made to the department from the Private
13Hospital Supplemental Fund pursuant to the act that added this
14section.

15(2) To pay for the health care coverage for children in the
16amount of eighty million dollars ($80,000,000) for each subject
17fiscal quarter for which payments are made under Article 5.21
18(commencing with Section 14167.1).

19(3) To make increased capitation payments to managed health
20care plans pursuant to Article 5.21 (commencing with Section
2114167.1).

22(4) To pay funds from the Hospital Quality Assurance Revenue
23Fund pursuant to Section 14167.5 that would have been used for
24grant payments and that are retained by the state, and to make
25increased payments to hospitals, including grants, pursuant to
26Article 5.21 (commencing with Section 14167.1), both of which
27shall be of equal priority.

28(5) To make increased payments to mental health plans pursuant
29to Article 5.21 (commencing with Section 14167.1).

30(d) Any amounts of the quality assurance fee collected in excess
31of the funds required to implement subdivision (c), including any
32funds recovered under subdivision (d) of Section 14167.14 or
33subdivision (e) of Section 14167.36, shall be refunded to general
34acute care hospitals, pro rata with the amount of quality assurance
35fee paid by the hospital, subject to the limitations of federal law.
36If federal rules prohibit the refund described in this subdivision,
37the excess funds shall be deposited in the Distressed Hospital Fund
38to be used for the purposes described in Section 14166.23, and
39shall be supplemental to and not supplant existing funds.

P10   1(e) Any methodology or other provision specified in Article
25.21 (commencing with Section 14167.1) and this article may be
3modified by the department, in consultation with the hospital
4community, to the extent necessary to meet the requirements of
5federal law or regulations to obtain federal approval or to enhance
6the probability that federal approval can be obtained, provided the
7modifications do not violate the spirit and intent of Article 5.21
8(commencing with Section 14167.1) or this article and are not
9inconsistent with the conditions of implementation set forth in
10Section 14167.36.

11(f) The department, in consultation with the hospital community,
12shall make adjustments, as necessary, to the amounts calculated
13pursuant to Section 14167.32 in order to ensure compliance with
14the federal requirements set forth in Section 433.68 of Title 42 of
15the Code of Federal Regulations or elsewhere in federal law.

16(g) The department shall request approval from the federal
17Centers for Medicare and Medicaid Services for the implementation
18of this article. In making this request, the department shall seek
19specific approval from the federal Centers for Medicare and
20Medicaid Services to exempt providers identified in this article as
21exempt from the fees specified, including the submission, as may
22be necessary, of a request for waiver of the broad based
23requirement, waiver of the uniform fee requirement, or both,
24pursuant to paragraphs (e)(1) and (e)(2) of Section 433.68 of Title
2542 of the Code of Federal Regulations.

26(h) (1) For purposes of this section, a modification pursuant to
27this section shall be implemented only if the modification, change,
28or adjustment does not do either of the following:

29(A) Reduces or increases the supplemental payments or grants
30made under Article 5.21 (commencing with Section 14167.1) in
31the aggregate for the 2008-09, 2009-10, and 2010-11 federal
32fiscal years to a hospital by more than 2 percent of the amount that
33would be determined under this article without any change or
34adjustment.

35(B) Reduces or increases the amount of the fee payable by a
36hospital in total under this article for the 2008-09, 2009-10, and
372010-11 federal fiscal years by more than 2 percent of the amount
38that would be determined under this article without any change or
39adjustment.

P11   1(2) The department shall provide the Joint Legislative Budget
2Committee and the fiscal and appropriate policy committees of
3the Legislature a status update of the implementation of Article
45.21 (commencing with Section 14167.1) and this article on
5January 1, 2010, and quarterly thereafter. Information on any
6adjustments or modifications to the provisions of this article or
7Article 5.21 (commencing with Section 14167.1) that may be
8required for federal approval shall be provided coincident with the
9consultation required under subdivisions (f) and (g).

10(i) Notwithstanding Chapter 3.5 (commencing with Section
1111340) of Part 1 of Division 3 of Title 2 of the Government Code,
12the department may implement this article or Article 5.21
13(commencing with Section 14167.1) by means of provider
14bulletins, all plan letters, or other similar instruction, without taking
15regulatory action. The department shall also provide notification
16to the Joint Legislative Budget Committee and to the appropriate
17policy and fiscal committees of the Legislature within five working
18days when the above-described action is taken in order to inform
19the Legislature that the action is being implemented.

20(j) Notwithstanding any law, the Controller may use the funds
21in the Hospital Quality Assurance Revenue Fund for cashflow
22loans to the General Fund as provided in Sections 16310 and 16381
23of the Government Code.

24(k) Notwithstanding Sections 14167.17 and 14167.40,
25subdivisions (b) to (h), inclusive, shall become inoperative on
26January 1, 2013, subdivisions (a), (i), and (j) shall remain operative
27until January 1,begin delete 2015,end deletebegin insert 2018,end insert and as of January 1,begin delete 2015,end deletebegin insert 2018,end insert this
28section is repealed.

29begin insert

begin insertSEC. 5.end insert  

end insert

begin insertSection 14167.37 is added to the end insertbegin insertWelfare and
30Institutions Code
end insert
begin insert, to read:end insert

begin insert
31

begin insert14167.37.end insert  

(a) (1) The department shall make available all
32public documentation it uses to administer and audit the program
33authorized under Article 5.230 (commencing with Section
3414169.50) pursuant to the California Public Records Act (Chapter
353.5 (commencing with Section 6250) of Division 7 of Title 1 of the
36Government Code).

37(2) In addition, upon request from a hospital, the department
38shall require Medi-Cal managed care plans to furnish hospitals
39with the amounts the plan intends to pay to the hospital pursuant
40to Article 5.230 (commencing with Section 14169.50). Nothing in
P12   1this paragraph shall require the department to reconcile payments
2made to individual hospitals from Medi-Cal managed care plans.

3(b) Notwithstanding subdivision (a), the department shall post
4all of the following on the department’s Internet Web site:

5(1) Within 10 business days after receipt of approval of the
6hospital quality assurance fee program under Article 5.230
7(commencing with Section 14169.50) from the federal Centers for
8Medicare and Medicaid Services (CMS), the hospital quality
9assurance fee final model and upper payment limit calculations.

10(2) Quarterly updates on payments, fee schedules, and model
11updates when applicable.

12(3) Within 10 business days after receipt, information on
13managed care rate approvals.

14(c) For purposes of this section, the following definitions shall
15apply:

16(1) “Fee schedules” mean the dates on which the hospital
17quality assurance fee will be due from the hospitals and the dates
18on which the department will submit fee-for-service payments to
19the hospitals. “Fee schedules” also include the dates on which
20the department is expected to submit payments to managed care
21plans.

22(2) “Hospital quality assurance fee final model” means the
23spreadsheet calculating the supplemental amounts based on the
24upper payment limit calculation from claims and hospital data
25sources of days and hospital services once CMS approves the
26program under Article 5.230 (commencing with Section 14169.50).

27(3) “Upper payment limit calculation” means the determination
28of the federal upper payment limit on the amount of the Medicaid
29payment for which federal financial participation is available for
30a class of service and a class of health care providers, as specified
31in Part 447 of Title 42 of the Code of Federal Regulations, and
32that has been approved by CMS.

end insert
33begin insert

begin insertSEC. 6.end insert  

end insert

begin insertArticle 5.230 (commencing with Section 14169.50) is
34added to Chapter 7 of Part 3 of Division 9 of the end insert
begin insertWelfare and
35Institutions Code
end insert
begin insert, to read:end insert

begin insert

 

P13   1Article begin insert5.230.end insert  Medi-Cal Hospital Reimbursement Improvement
2Act of 2013
3

 

4

begin insert14169.50.end insert  

The Legislature finds and declares all of the
5following:

6(a) The Legislature continues to recognize the essential role
7that hospitals play in serving the state’s Medi-Cal beneficiaries.
8To that end, it has been, and remains, the intent of the Legislature
9to improve funding for hospitals and obtain all available federal
10funds to make supplemental Medi-Cal payments to hospitals.

11(b) It is the intent of the Legislature that funding provided to
12hospitals through a hospital quality assurance fee be continued
13with the goal of increasing access to care and improving hospital
14reimbursement through supplemental Medi-Cal payments to
15hospitals.

16(c) It is the intent of the Legislature to recognize the fundamental
17structure of the components used to develop a successful hospital
18quality assurance fee program.

19(d) It is the intent of the Legislature to impose a quality
20assurance fee to be paid by hospitals, which would be used to
21increase federal financial participation in order to make
22supplemental Medi-Cal payments to hospitals, and to help pay for
23health care coverage for low-income children.

24(e) The State Department of Health Care Services shall make
25every effort to obtain the necessary federal approvals to implement
26the quality assurance fee described in subdivision (d) in order to
27make supplemental Medi-Cal payments to hospitals.

28(f) It is the intent of the Legislature that the quality assurance
29fee be implemented only if all of the following conditions are met:

30(1) The quality assurance fee is established in consultation with
31the hospital community.

32(2) The quality assurance fee, including any interest earned
33after collection by the department, is deposited into segregated
34funds apart from the General Fund and used exclusively for
35supplemental Medi-Cal payments to hospitals, direct grants to
36public hospitals, health care coverage for low-income children,
37and for the department’s direct costs of administering the program.

38(3) No hospital shall be required to pay the quality assurance
39fee to the department unless and until the state receives and
P14   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 article.

6

begin insert14169.51.end insert  

For purposes of this article, the following definitions
7shall apply:

8(a) “Acute psychiatric days” means the total number of
9Medi-Cal specialty mental health service administrative days,
10Medi-Cal specialty mental health service acute care days, acute
11psychiatric administrative days, and acute psychiatric acute days
12identified in the Final Medi-Cal Utilization Statistics for the state
13fiscal year preceding the rebase calculation year as calculated by
14the department as of the retrieval date.

15(b) “Acute psychiatric per diem supplemental rate” means a
16fixed per diem supplemental payment for acute psychiatric days.

17(c) “Annual fee-for-service days” means the number of
18fee-for-service days of each hospital subject to the quality
19assurance fee, as reported on the days data source.

20(d) “Annual managed care days” means the number of managed
21care days of each hospital subject to the quality assurance fee, as
22reported on the days data source.

23(e) “Annual Medi-Cal days” means the number of Medi-Cal
24days of each hospital subject to the quality assurance fee, as
25reported on the days data source.

26(f) “Base calendar year” means a calendar year that ends before
27a subject fiscal year begins, but no more than six years before a
28subject fiscal year begins. Beginning with the third program period,
29the department shall establish the base calendar year during the
30rebase calculation year as the calendar year for which the most
31recent data is available that the department determines is reliable.

32(g) “Converted hospital” means a private hospital that becomes
33a designated public hospital or a nondesignated public hospital
34on or after the first day of a program period.

35(h) “Days data source” means either: (1) if a hospital’s Annual
36Financial Disclosure Report for its fiscal year ending in the base
37calendar year includes data for a full fiscal year of operation, the
38hospital’s Annual Financial Disclosure Report retrieved from the
39Office of Statewide Health Planning and Development as retrieved
40by the department on the retrieval date pursuant to Section
P15   114169.59, for its fiscal year ending in the base calendar year; or
2(2) if a hospital’s Annual Financial Disclosure Report for its fiscal
3year ending in the base calendar year includes data for more than
4one day, but less than a full year of operation, the department’s
5best and reasonable estimates of the hospital’s Annual Financial
6Disclosure Report if the hospital had operated for a full year.

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

9(j) “Designated public hospital” shall have the meaning given
10in subdivision (d) of Section 14166.1.

11(k) “Director” means the Director of Health Care Services.

12(l) “Exempt facility” means any of the following:

13(1) A public hospital, which shall include either of the following:

14(A) A hospital, as defined in paragraph (25) of subdivision (a)
15of Section 14105.98.

16(B) A tax-exempt nonprofit hospital that is licensed under
17subdivision (a) of Section 1250 of the Health and Safety Code and
18operating a hospital owned by a local health care district, and is
19affiliated with the health care district hospital owner by means of
20the district’s status as the nonprofit corporation’s sole corporate
21member.

22(2) With the exception of a hospital that is in the Charitable
23Research Hospital peer group, as set forth in the 1991 Hospital
24Peer Grouping Report published by the department, a hospital
25that is designated as a specialty hospital in the hospital’s most
26recently filed Office of Statewide Health Planning and Development
27Hospital Annual Financial Disclosure Report, as of the first day
28of a program period.

29(3) A hospital that satisfies the Medicare criteria to be a
30long-term care hospital.

31(4) A small and rural hospital as specified in Section 124840
32of the Health and Safety Code designated as that in the hospital’s
33most recently filed Office of Statewide Health Planning and
34Development Hospital Annual Financial Disclosure Report, as of
35the first day of a program period.

36(m) “Federal approval” means the approval by the federal
37government of both the quality assurance fee established pursuant
38to this article and the supplemental payments to private hospitals
39described pursuant to this article.

P16   1(n) “Fee-for-service per diem quality assurance fee rate” means
2a fixed fee on fee-for-service days.

3(o) “Fee-for-service days” means inpatient hospital days as
4reported on the days data source where the service type is reported
5as “acute care,” “psychiatric care,” or “rehabilitation care,”
6and the payer category is reported as “Medicare traditional,”
7“county indigent programs-traditional,” “other third
8parties-traditional,” “other indigent,” or “other payers,” for
9purposes of the Annual Financial Disclosure Report submitted by
10hospitals to the Office of Statewide Health Planning and
11Development.

12(p) “General acute care days” means the total number of
13Medi-Cal general acute care days, including well baby days, less
14any acute psychiatric inpatient days, paid by the department to a
15hospital for services in the base calendar year, as reflected in the
16state paid claims file on the retrieval date.

17(q) “General acute care hospital” means any hospital licensed
18pursuant to subdivision (a) of Section 1250 of the Health and Safety
19Code.

20(r) “General acute care per diem supplemental rate” means a
21fixed per diem supplemental payment for general acute care days.

22(s) “High acuity days” means Medi-Cal coronary care unit
23days, pediatric intensive care unit days, intensive care unit days,
24neonatal intensive care unit days, and burn unit days paid by the
25department to a hospital for services in the base calendar year,
26as reflected in the state paid claims file prepared by the department
27on the retrieval date.

28(t) “High acuity per diem supplemental rate” means a fixed per
29diem supplemental payment for high acuity days for specified
30hospitals in Section 14169.55.

31(u) “High acuity trauma per diem supplemental rate” means a
32fixed per diem supplemental payment for high acuity days for
33specified hospitals in Section 14169.55 that have been designated
34as specified types of trauma hospitals.

35(v) “Hospital community” includes, but is not limited to, the
36statewide hospital industry organization and systems representing
37general acute care hospitals.

38(w) “Hospital inpatient services” means all services covered
39under Medi-Cal and furnished by hospitals to patients who are
40admitted as hospital inpatients and reimbursed on a fee-for-service
P17   1basis by the department directly or through its fiscal intermediary.
2Hospital inpatient services include outpatient services furnished
3by a hospital to a patient who is admitted to that hospital within
424 hours of the provision of the outpatient services that are related
5to the condition for which the patient is admitted. Hospital inpatient
6services do not include services for which a managed health care
7plan is financially responsible.

8(x) “Hospital outpatient services” means all services covered
9under Medi-Cal furnished by hospitals to patients who are
10registered as hospital outpatients and reimbursed by the
11department on a fee-for-service basis directly or through its fiscal
12intermediary. Hospital outpatient services do not include services
13for which a managed health care plan is financially responsible,
14or services rendered by a hospital-based federally qualified health
15center for which reimbursement is received pursuant to Section
1614132.100.

17(y) “Managed care days” means inpatient hospital days as
18reported on the days data source where the service type is reported
19as “acute care,” “psychiatric care,” or “rehabilitation care,”
20and the payer category is reported as “Medicare managed care,”
21“county indigent programs-managed care,” or “other third
22parties-managed care,” for purposes of the Annual Financial
23Disclosure Report submitted by hospitals to the Office of Statewide
24Health Planning and Development.

25(z) “Managed care per diem quality assurance fee rate” means
26a fixed fee on managed care days.

27(aa) (1) “Managed health care plan” means a health care
28delivery system that manages the provision of health care and
29receives prepaid capitated payments from the state in return for
30providing services to Medi-Cal beneficiaries.

31(2) (A) Managed health care plans include county organized
32health systems and entities contracting with the department to
33provide or arrange services for Medi-Cal beneficiaries pursuant
34to the two-plan model, geographic managed care, or regional
35managed care for the rural expansion. Entities providing these
36services contract with the department pursuant to any of the
37following:

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

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

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

P18   1(iv) Article 2.82 (commencing with Section 14087.98).

2(v) Article 2.91 (commencing with Section 14089).

3(B) Managed health care plans do not include any of the
4following:

5(i) Mental health plans contracting to provide mental health
6care for Medi-Cal beneficiaries pursuant to Chapter 8.9
7(commencing with Section 14700).

8(ii) Health plans not covering inpatient services such as primary
9care case management plans operating pursuant to Section
1014088.85.

11(iii) Program for All-Inclusive Care for the Elderly
12organizations operating pursuant to Chapter 8.75 (commencing
13with Section 14591).

14(ab) “Medi-Cal days” means inpatient hospital days as reported
15on the days data source where the service type is reported as
16“acute care,” “psychiatric care,” or “rehabilitation care,” and
17the payer category is reported as “Medi-Cal traditional” or
18“Medi-Cal managed care,” for purposes of the Annual Financial
19Disclosure Report submitted by hospitals to the Office of Statewide
20Health Planning and Development.

21(ac) “Medi-Cal fee-for-service days” means inpatient hospital
22days as reported on the days data source where the service type
23is reported as “acute care,” “psychiatric care,” or “rehabilitation
24care,” and the payer category is reported as “Medi-Cal
25traditional” for purposes of the Annual Financial Disclosure
26Report submitted by hospitals to the Office of Statewide Health
27Planning and Development.

28(ad) “Medi-Cal managed care days” means the total number
29of general acute care days, including well baby days, listed for
30the county organized health system and prepaid health plans
31identified in the Final Medi-Cal Utilization Statistics for the state
32fiscal year preceding the rebase calculation year, as calculated
33by the department as of the retrieval date.

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

P19   1(af) “Medi-Cal per diem quality assurance fee rate” means a
2fixed fee on Medi-Cal days.

3(ag) “Medicaid inpatient utilization rate” means Medicaid
4inpatient utilization rate as defined in Section 1396r-4 of Title 42
5of the United States Code and as set forth in the Final Medi-Cal
6Utilization Statistics for the state fiscal year preceding the rebase
7calculation year, as calculated by the department as of the retrieval
8date.

9(ah) “New hospital” means a hospital operation, business, or
10facility functioning under current or prior ownership as a private
11hospital that does not have a days data source or a hospital that
12has a days data source in whole, or in part, from a previous
13operator where there is an outstanding monetary obligation owed
14to the state in connection with the Medi-Cal program and the
15hospital is not, or does not agree to become, financially responsible
16to the department for the outstanding monetary obligation in
17accordance with subdivision (d) of Section 14169.61.

18(ai) “Nondesignated public hospital” means either of the
19following:

20(1) A public hospital that is licensed under subdivision (a) of
21Section 1250 of the Health and Safety Code, is not designated as
22a specialty hospital in the hospital’s most recently filed Annual
23Financial Disclosure Report, as of the first day of a program
24period, and satisfies the definition in paragraph (25) of subdivision
25(a) of Section 14105.98, excluding designated public hospitals.

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’s most
29recently filed Annual Financial Disclosure Report, as of the first
30day of a program period, is operating a hospital owned by a local
31health care district, and is affiliated with the health care district
32hospital owner by means of the district’s status as the nonprofit
33corporation’s sole corporate member.

34(aj) “Outpatient base amount” means the total amount of
35payments for hospital outpatient services made to a hospital in
36the base calendar year, as reflected in the state paid claims files
37prepared by the department as of the retrieval date.

38(ak) “Outpatient supplemental rate” means a fixed proportional
39supplemental payment for Medi-Cal outpatient services.

P20   1(al) “Prepaid health plan hospital” means a hospital owned by
2a nonprofit public benefit corporation that shares a common board
3of directors with a nonprofit health care service plan, which
4exclusively contracts with no more than two medical groups in the
5state to provide or arrange for professional medical services for
6the enrollees of the plan, as of the effective date of this article.

7(am) “Prepaid health plan hospital managed care per diem
8quality assurance fee rate” means a fixed fee on non-Medi-Cal
9managed care fee days for prepaid health plan hospitals.

10(an) “Prepaid health plan hospital Medi-Cal managed care per
11diem quality assurance fee rate” means a fixed fee on Medi-Cal
12managed care fee days for prepaid health plan hospitals.

13(ao) “Private hospital” means a hospital that meets all of the
14following conditions:

15(1) Is licensed pursuant to subdivision (a) of Section 1250 of
16the Health and Safety Code.

17(2) Is in the Charitable Research Hospital peer group, as set
18forth in the 1991 Hospital Peer Grouping Report published by the
19department, or is not designated as a specialty hospital in the
20hospital’s most recently filed Office of Statewide Health Planning
21and Development Annual Financial Disclosure Report, as of the
22first day of a program period.

23(3) Does not satisfy the Medicare criteria to be classified as a
24long-term care hospital.

25(4) Is a nonpublic hospital, nonpublic converted hospital, or
26converted hospital as those terms are defined in paragraphs (26)
27to (28), inclusive, respectively, of subdivision (a) of Section
2814105.98.

29(5) Is not a nondesignated public hospital or a designated public
30hospital.

31(ap) “Program period” means a period not to exceed three
32years during which a fee model and a supplemental payment model
33developed under this article shall be effective. The first program
34period shall be the period beginning January 1, 2014, and ending
35December 31, 2016, inclusive. The second program period shall
36be the period beginning on January 1, 2017, and ending June 30,
372019. Each subsequent program period shall begin on the day
38immediately following the last day of the immediately preceding
39program period and shall end on the last day of a state fiscal year,
40as determined by the department.

P21   1(aq) “Quality assurance fee” means the quality assurance fee
2assessed pursuant to Section 14169.52 and collected on the basis
3of the quarterly quality assurance fee.

4(ar) (1) “Quarterly quality assurance fee” means, with respect
5to a hospital that is not a prepaid health plan hospital, the sum of
6all of the following:

7(A) The annual fee-for-service days for an individual hospital
8multiplied by the fee-for-service per diem quality assurance fee
9rate, divided by four.

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

13(C) The annual Medi-Cal days for an individual hospital
14multiplied by the Medi-Cal per diem quality assurance fee rate,
15divided by four.

16(2) “Quarterly quality assurance fee” means, with respect to a
17hospital that is a prepaid health plan hospital, the sum of all of
18the following:

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

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

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

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, divided by four.

32(as) “Rebase calculation year” means a state fiscal year during
33which the department shall rebase the data, including, but not
34limited to, the days data source, used for the following: acute
35psychiatric days, annual fee-for-service days, annual managed
36care days, annual Medi-Cal days, fee-for-service days, general
37acute care days, high acuity days, managed care days, Medi-Cal
38days, Medi-Cal fee-for-service days, Medi-Cal managed care days,
39Medi-Cal managed care fee days, outpatient base amount, and
40transplant days, pursuant to Section 14169.59. Beginning with the
P22   1third program period, the rebase calculation year for a program
2period shall be the last subject fiscal year of the immediately
3preceding program period.

4(at) “Rebase year” means the first state fiscal year of a program
5period and shall immediately follow a rebase calculation year.

6(au) “Retrieval date” means a day for each data element during
7the last quarter of the rebase calculation year upon which the
8department retrieves the data, including, but not limited to, the
9 days data source, used for the following: acute psychiatric days,
10annual fee-for-service days, annual managed care days, annual
11Medi-Cal days, fee-for-service days, general acute care days, high
12acuity days, managed care days, Medi-Cal days, Medi-Cal
13fee-for-service days, Medi-Cal managed care days, Medi-Cal
14managed care fee days, outpatient base amount, and transplant
15days, pursuant to Section 14169.59. The retrieval date for each
16data element may be a different date within the quarter as
17determined to be necessary and appropriate by the department.

18(av) “Subacute supplemental rate” means a fixed proportional
19supplemental payment for acute inpatient services based on a
20hospital’s prior provision of Medi-Cal subacute services.

21(aw) “Subject fiscal quarter” means a state fiscal quarter
22beginning on or after the first day of a program period and ending
23on or before the last day of a program period.

24(ax) “Subject fiscal year” means a state fiscal year beginning
25on or after the first day of a program period and ending on or
26before the last day of a program period.

27(ay) “Subject month” means a calendar month beginning on
28or after the first day of a program period and ending on or before
29the last day of a program period.

30(az) “Transplant days” means the number of Medi-Cal days
31for Medicare Severity-Diagnosis Related Groups (MS-DRGs) 1,
322, 5 to 10, inclusive, 14, 15, or 652, according to the Patient
33Discharge file from the Office of Statewide Health Planning and
34Development for the base calendar year accessed on the retrieval
35date.

36(ba) “Transplant per diem supplemental rate” means a fixed
37per diem supplemental payment for transplant days.

38(bb) “Upper payment limit” means a federal upper payment
39limit on the amount of the Medicaid payment for which federal
40financial participation is available for a class of service and a
P23   1 class of health care providers, as specified in Part 447 of Title 42
2of the Code of Federal Regulations. The applicable upper payment
3limit shall be separately calculated for inpatient and outpatient
4hospital services.

5

begin insert14169.52.end insert  

(a) There shall be imposed on each general acute
6care hospital that is not an exempt facility a quality assurance fee,
7except that a quality assurance fee under this article shall not be
8imposed on a converted hospital for the periods when the hospital
9is a public hospital or a new hospital with respect to a program
10period.

11(b) The department shall compute the quarterly quality
12assurance fee for each subject fiscal year during a program period
13pursuant to Section 14169.59.

14(c) Subject to Section 14169.63, on the later of the date of the
15department’s receipt of federal approval or the first day of each
16program period, the following shall commence:

17(1) Within 10 business days following receipt of the notice of
18federal approval, the department shall send notice to each hospital
19subject to the quality assurance fee, which shall contain the
20following information:

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

22(B) The quarterly quality assurance fee for each subject fiscal
23year.

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

25(2) The hospitals shall pay the quarterly quality assurance fee,
26based on a schedule developed by the department. The department
27shall establish the date that each payment is due, provided that
28the first payment shall be due no earlier than 20 days following
29the department sending the notice pursuant to paragraph (1), and
30the payments shall be paid at least one month apart, but if possible,
31the payments shall be paid on a quarterly basis.

32(3) Notwithstanding any other provision of this section, the
33amount of each hospital’s quarterly quality assurance fee for a
34program period that has not been paid by the hospital before 15
35days prior to the end of a program period shall be paid by the
36hospital no later than 15 days prior to the end of a program period.

37(4) Each hospital described in subdivision (a) shall pay the
38quarterly quality assurance fees that are due, if any, in the amounts
39and at the times set forth in the notice unless superseded by a
40subsequent notice from the department.

P24   1(d) The quality assurance fee, as assessed pursuant to this
2section, shall be paid by each hospital subject to the fee to the
3 department for deposit in the Hospital Quality Assurance Revenue
4Fund. Deposits may be accepted at any time and shall be credited
5toward the program period for which the fees were assessed. This
6article shall not affect the ability of a hospital to pay fees assessed
7for a program period after the end of that program period.

8(e) This section shall become inoperative if the federal Centers
9for Medicare and Medicaid Services denies approval for, or does
10not approve before December 1, 2016, the implementation of the
11quality assurance fee pursuant to this article or the supplemental
12payments to private hospitals pursuant to this article for the first
13program period.

14(f) In no case shall the aggregate fees collected in a federal
15fiscal year pursuant to this section, former Section 14167.32,
16Section 14168.32, and Section 14169.32 exceed the maximum
17percentage of the annual aggregate net patient revenue for
18hospitals subject to the fee that is prescribed pursuant to federal
19law and regulations as necessary to preclude a finding that an
20indirect guarantee has been created.

21(g) (1) Interest shall be assessed on quality assurance fees not
22paid on the date due at the greater of 10 percent per annum or the
23rate at which the department assesses interest on Medi-Cal
24program overpayments to hospitals that are not repaid when due.
25Interest shall begin to accrue the day after the date the payment
26was due and shall be deposited in the Hospital Quality Assurance
27Revenue Fund.

28(2) In the event that any fee payment is more than 60 days
29overdue, a penalty equal to the interest charge described in
30paragraph (1) shall be assessed and due for each month for which
31the payment is not received after 60 days.

32(h) When a hospital fails to pay all or part of the quality
33assurance fee on or before the date that payment is due, the
34department may immediately begin to deduct the unpaid assessment
35and interest from any Medi-Cal payments owed to the hospital,
36or, in accordance with Section 12419.5 of the Government Code,
37from any other state payments owed to the hospital until the full
38amount is recovered. All amounts, except penalties, deducted by
39the department under this subdivision shall be deposited in the
40Hospital Quality Assurance Revenue Fund. The remedy provided
P25   1to the department by this section is in addition to other remedies
2available under law.

3(i) The payment of the quality assurance fee shall not be
4considered as an allowable cost for Medi-Cal cost reporting and
5reimbursement purposes.

6(j) The department shall work in consultation with the hospital
7community to implement this article.

8(k) This subdivision creates a contractually enforceable promise
9on behalf of the state to use the proceeds of the quality assurance
10fee, including any federal matching funds, solely and exclusively
11for the purposes set forth in this article, to limit the amount of the
12proceeds of the quality assurance fee to be used to pay for the
13health care coverage of children as provided in Section 14169.53,
14to limit any payments for the department’s costs of administration
15to the amounts set forth in this article, to maintain and continue
16prior reimbursement levels as set forth in Section 14169.68 on the
17effective date of that section, and to otherwise comply with all its
18obligations set forth in this article, provided that amendments that
19arise from, or have as a basis for, a decision, advice, or
20determination by the federal Centers for Medicare and Medicaid
21Services relating to federal approval of the quality assurance fee
22or the payments set forth in this article shall control for the
23purposes of this subdivision.

24(l) (1) Subject to paragraph (2), the director may waive any or
25all interest and penalties assessed under this article in the event
26that the director determines, in his or her sole discretion, that the
27hospital has demonstrated that imposition of the full quality
28assurance fee on the timelines applicable under this article has a
29high likelihood of creating a financial hardship for the hospital
30or a significant danger of reducing the provision of needed health
31care services.

32(2) Waiver of some or all of the interest or penalties under this
33subdivision shall be conditioned on the hospital’s agreement to
34make fee payments, or to have the payments withheld from
35payments otherwise due from the Medi-Cal program to the hospital,
36on a schedule developed by the department that takes into account
37the financial situation of the hospital and the potential impact on
38services.

39(3) A decision by the director under this subdivision shall not
40be subject to judicial review.

P26   1(4) If fee payments are remitted to the department after the date
2determined by the department to be the final date for calculating
3the final supplemental payments for a program period under this
4article, the fee payments shall be refunded to general acute care
5hospitals, pro rata with the amount of quality assurance fee paid
6by the hospital in the program period, subject to the limitations
7of federal law. If federal rules prohibit the refund described in this
8paragraph, the excess funds shall be used as quality assurance
9fees for the next program period for general acute care hospitals,
10pro rata with the quality assurance fees paid by the hospital for
11the program period.

12(5) If during the implementation of this article, fee payments
13that were due under former Article 5.21 (commencing with Section
1414167.1) and former Article 5.22 (commencing with Section
1514167.31), or former Article 5.226 (commencing with Section
1614168.1) and Article 5.227 (commencing with Section 14168.31),
17or Article 5.228 (commencing with Section 14169.1) and Article
185.229 (commencing with Section 14169.31) are remitted to the
19department under a payment plan or for any other reason, and the
20final date for calculating the final supplemental payments under
21those articles has passed, then those fee payments shall be
22deposited in the fund to support the uses established by this article.

23

begin insert14169.53.end insert  

(a) (1) All fees required to be paid to the state
24pursuant to this article shall be paid in the form of remittances
25payable to the department.

26(2) The department shall directly transmit the fee payments to
27the Treasurer to be deposited in the Hospital Quality Assurance
28Revenue Fund, created pursuant to Section 14167.35.
29Notwithstanding Section 16305.7 of the Government Code, any
30interest and dividends earned on deposits in the fund from the
31proceeds of the fee assessed pursuant to this article shall be
32retained in the fund for purposes specified in subdivision (b).

33(b) (1) Notwithstanding subdivision (c) of Section 14167.35,
34 subdivision (b) of Section 14168.33, and subdivision (b) of Section
3514169.33, all funds from the proceeds of the fee assessed pursuant
36to this article in the Hospital Quality Assurance Revenue Fund,
37together with any interest and dividends earned on money in the
38fund, shall continue to be used exclusively to enhance federal
39financial participation for hospital services under the Medi-Cal
40program, to provide additional reimbursement to, and to support
P27   1quality improvement efforts of, hospitals, and to minimize
2uncompensated care provided by hospitals to uninsured patients,
3as well as to pay for the state’s administrative costs and to provide
4funding for children’s health coverage, in the following order of
5priority:

6(A) To pay for the department’s staffing and administrative
7costs directly attributable to implementing this article, not to
8exceed two hundred fifty thousand dollars ($250,000) for each
9subject fiscal quarter, exclusive of any federal matching funds.

10(B) To pay for the health care coverage, as described in
11subdivision (g), except that for the two subject fiscal quarters in
12the 2013-14 fiscal year, the amount for children’s health care
13coverage shall be one hundred fifty-five million dollars
14($155,000,000) for each subject fiscal quarter, exclusive of any
15federal matching funds.

16(C) To make increased capitation payments to managed health
17care plans pursuant to this article and Section 14169.82, including
18the nonfederal share of capitation payments to managed health
19care plans pursuant to this article and Section 14169.82 for
20services provided to individuals who meet the eligibility
21requirements in Section 1902(a)(10)(A)(i)(VIII) of Title XIX of the
22federal Social Security Act (42 U.S.C. Sec.
231396a(a)(10)(A)(i)(VIII)), and who meet the conditions described
24in Section 1905(y) of the federal Social Security Act (42 U.S.C.
25Sec. 1396d(y)).

26(D) To make increased payments and direct grants to hospitals
27pursuant to this article and Section 14169.83, including the
28nonfederal share of payments to hospitals under this article and
29Section 14169.83 for services provided to individuals who meet
30the eligibility requirements in Section 1902(a)(10)(A)(i)(VIII) of
31Title XIX of the federal Social Security Act (42 U.S.C. Sec.
321396a(a)(10)(A)(i)(VIII)), and who meet the conditions described
33in Section 1905(y) of the federal Social Security Act (42 U.S.C.
34Sec. 1396d(y)).

35(2) Notwithstanding subdivision (c) of Section 14167.35,
36subdivision (b) of Section 14168.33, and subdivision (b) of Section
3714169.33, and notwithstanding Section 13340 of the Government
38Code, the moneys in the Hospital Quality Assurance Revenue Fund
39shall be continuously appropriated during the first program period
40only, without regard to fiscal year, for the purposes of this article,
P28   1Article 5.229 (commencing with Section 14169.31), Article 5.228
2(commencing with Section 14169.1), Article 5.227 (commencing
3with Section 14168.31), former Article 5.226 (commencing with
4Section 14168.1), former Article 5.22 (commencing with Section
514167.31), and former Article 5.21 (commencing with Section
614167.1).

7(3) For subsequent program periods, the moneys in the Hospital
8Quality Assurance Revenue Fund shall be used, upon appropriation
9by the Legislature in the annual Budget Act, for the purposes of
10this article and Sections 14169.82 and 14169.83.

11(c) Any amounts of the quality assurance fee collected in excess
12of the funds required to implement subdivision (b), including any
13funds recovered under subdivision (d) of Section 14169.61, shall
14be refunded to general acute care hospitals, pro rata with the
15amount of quality assurance fee paid by the hospital, subject to
16the limitations of federal law. If federal rules prohibit the refund
17described in this subdivision, the excess funds shall be used as
18quality assurance fees for the next program period for general
19acute care hospitals, pro rata with the amount of quality assurance
20fees paid by the hospital for the program period.

21(d) Any methodology or other provision specified in this article
22may be modified by the department, in consultation with the
23hospital community, to the extent necessary to meet the
24requirements of federal law or regulations to obtain federal
25approval or to enhance the probability that federal approval can
26be obtained, provided the modifications do not violate the spirit,
27purposes, and intent of this article and are not inconsistent with
28the conditions of implementation set forth in Section 14169.72.
29The department shall notify the Joint Legislative Budget Committee
30and the fiscal and appropriate policy committees of the Legislature
3130 days prior to implementation of a modification pursuant to this
32subdivision.

33(e) The department, in consultation with the hospital community,
34shall make adjustments, as necessary, to the amounts calculated
35pursuant to Section 14169.52 in order to ensure compliance with
36the federal requirements set forth in Section 433.68 of Title 42 of
37the Code of Federal Regulations or elsewhere in federal law.

38(f) The department shall request approval from the federal
39Centers for Medicare and Medicaid Services for the
40implementation of this article. In making this request, the
P29   1department shall seek specific approval from the federal Centers
2for Medicare and Medicaid Services to exempt providers identified
3in this article as exempt from the fees specified, including the
4submission, as may be necessary, of a request for waiver of the
5 broad-based requirement, waiver of the uniform fee requirement,
6or both, pursuant to paragraphs (1) and (2) of subdivision (e) of
7Section 433.68 of Title 42 of the Code of Federal Regulations.

8(g) (1) For purposes of this subdivision, the following
9definitions shall apply:

10(A) “Actual net benefit” means the net benefit determined by
11the department for a net benefit period after the conclusion of the
12net benefit period using payments and grants actually made, and
13fees actually collected, for the net benefit period.

14(B) “Aggregate fees” means the aggregate fees collected from
15hospitals under this article.

16(C) “Aggregate payments” means the aggregate payments and
17grants made directly or indirectly to hospitals under this article,
18 including payments and grants described in Sections 14169.54,
1914169.55, 14169.57, and 14169.58, and subdivision (b) of Section
2014169.82.

21(D) “Fund” means the Hospital Quality Assurance Revenue
22Fund established pursuant to Section 14167.35.

23(E) “Net benefit” means the aggregate payments for a net
24benefit period minus the aggregate fees for the net benefit period.

25(F) “Net benefit period” means a subject fiscal year or portion
26thereof that is in a program period and begins on or after July 1,
272014.

28(G) “Preliminary net benefit” means the net benefit determined
29by the department for a net benefit period prior to the beginning
30of that net benefit period using estimated or projected data.

31(2) The amount of funding provided for children’s health care
32coverage under subdivision (b) for a net benefit period shall be
33equal to 24 percent of the net benefit for that net benefit period.

34(3) The department shall determine the preliminary net benefit
35for all net benefit periods in the first program period before July
361, 2014. The department shall determine the preliminary net benefit
37for all net benefit periods in a subsequent program period before
38the beginning of the program period.

39(4) The department shall determine the actual net benefit and
40make the reconciliation described in paragraph (5) for each net
P30   1benefit period within six months after the date determined by the
2department pursuant to subdivision (h).

3(5) For each net benefit period, the department shall reconcile
4the amount of moneys in the fund used for children’s health
5coverage based on the preliminary net benefit with the amount of
6the fund that may be used for children’s health coverage under
7this subdivision based on the actual net benefit. For each net
8benefit period, any amounts that were in the fund and used for
9children’s health coverage in excess of the 24 percent of the actual
10net benefit shall be returned to the fund, and the amount, if any,
11by which 24 percent of the actual net benefit exceeds 24 percent
12of the preliminary net benefit shall be available from the fund to
13the department for children’s health coverage. The department
14shall notify the Joint Legislative Budget Committee and the fiscal
15and appropriate policy committees of the Legislature of the results
16of the reconciliation for each net benefit period pursuant to this
17paragraph within five working days of performing the
18reconciliation.

19(6) The department shall make all calculations and
20 reconciliations required by this subdivision in consultation with
21the hospital community using data that the department determines
22is the best data reasonably available.

23(h) After consultation with the hospital community, the
24department shall determine a date upon which substantially all
25fees have been paid and substantially all supplemental payments,
26grants, and rate range increases have been made for a program
27period, which date shall be no later than two years after the end
28of a program period. After the date determined by the department
29pursuant to this subdivision, no further supplemental payments
30shall be made under the program period, and any fees collected
31with respect to the program period shall be used for a subsequent
32program period consistent with this section. Nothing in this
33subdivision shall affect the department’s authority to collect quality
34assurance fees for a program period after the end of the program
35period or after the date determined by the department pursuant to
36this subdivision. The department shall notify the Joint Legislative
37Budget Committee and fiscal and appropriate policy committees
38of that date within five working days of the determination.

39(i) Use of the fee proceeds to enhance federal financial
40participation pursuant to subdivision (b) shall include use of the
P31   1proceeds to supply the nonfederal share, if any, of payments to
2hospitals under this article for services provided to individuals
3who meet the eligibility requirements in Section
41902(a)(10)(A)(i)(VIII) of Title XIX of the federal Social Security
5Act (42 U.S.C. Sec. 1396a(a)(10)(A)(i)(VIII)), and who meet the
6conditions described in Section 1905(y) of the federal Social
7Security Act (42 U.S.C. Sec. 1396d(y)) such that expenditures for
8services provided to the individual are eligible for the enhanced
9federal medical assistance percentage described in that section.

10

begin insert14169.54.end insert  

(a) Private hospitals shall be paid supplemental
11amounts for each subject fiscal quarter in a program period for
12the provision of hospital outpatient services as set forth in this
13section. The supplemental amounts shall be in addition to any
14other amounts payable to hospitals with respect to those services
15and shall not affect any other payments to hospitals. The
16supplemental amounts shall result in payments equal to the
17statewide aggregate upper payment limit for private hospitals for
18each subject fiscal year.

19(b) Except as set forth in subdivisions (d) and (e), each private
20hospital shall be paid an amount for each subject fiscal year equal
21to the outpatient supplemental rate multiplied by the hospital’s
22outpatient base amount, which payments shall be made on a
23quarterly basis. The outpatient supplemental rate shall result in
24payments to hospitals that equal the applicable federal upper
25payment limit for the subject fiscal year, except that with respect
26to a subject fiscal year that begins before the start of a program
27period or that ends after the end of the program period for which
28the payments are made, the outpatient supplemental rate shall
29result in payments to hospitals that equal a percentage of the
30applicable upper payment limit where the percentage equals the
31percentage of the subject fiscal year that occurs during the
32program period. For purposes of this subdivision, the applicable
33federal upper payment limit shall be the federal upper payment
34limit for hospital outpatient services furnished by private hospitals
35for each subject fiscal year.

36(c) In the event federal financial participation for a subject
37fiscal year is not available for all of the supplemental amounts
38payable to private hospitals under subdivision (b) due to the
39application of an upper payment limit or for any other reason,
40both of the following shall apply:

P32   1(1) The total amount payable to private hospitals under
2subdivision (b) for the subject fiscal year shall be reduced to the
3amount for which federal financial participation is available.

4(2) The amount payable under subdivision (b) to each private
5hospital for the subject fiscal year shall be equal to the amount
6computed under subdivision (b) multiplied by the ratio of the total
7amount for which federal financial participation is available to
8the total amount computed under subdivision (b).

9(d) Payments shall not be made under this section for the periods
10when a hospital is a new hospital during a program period.

11(e) Payments shall be made to a converted hospital that converts
12during a subject fiscal quarter by multiplying the hospital’s
13outpatient supplemental payment as calculated in subdivision (b)
14by the number of days that the hospital was a private hospital in
15the subject fiscal quarter, divided by the number of days in the
16subject fiscal quarter. Payments shall not be made to a converted
17hospital in any subsequent subject fiscal quarter.

18

begin insert14169.55.end insert  

(a) Private hospitals shall be paid supplemental
19amounts for the provision of hospital inpatient services for each
20subject fiscal quarter in a program period as set forth in this
21section. The supplemental amounts shall be in addition to any
22other amounts payable to hospitals with respect to those services
23and shall not affect any other payments to hospitals. The inpatient
24supplemental amounts shall result in payments to hospitals that
25equal the applicable federal upper payment limit for the subject
26fiscal year, except that with respect to a subject fiscal year that
27begins before the start of a program period or that ends after the
28end of the program period for which the payments are made, the
29inpatient supplemental amounts shall result in payments to
30hospitals that equal a percentage of the applicable upper payment
31limit where the percentage equals the percentage of the subject
32fiscal year that occurs during the program period.

33(b) Except as set forth in subdivisions (e) and (f), each private
34hospital shall be paid the sum of the following amounts as
35applicable for the provision of hospital inpatient services for each
36subject fiscal quarter:

37(1) A general acute care per diem supplemental rate multiplied
38by the hospital’s general acute care days.

39(2) An acute psychiatric per diem supplemental rate multiplied
40by the hospital’s acute psychiatric days.

P33   1(3) A high acuity per diem supplemental rate multiplied by the
2number of the hospital’s high acuity days if the hospital’s Medicaid
3inpatient utilization rate is less than the percent required to be
4 eligible to receive disproportionate share replacement funds for
5the state fiscal year ending in the base calendar year and greater
6than 5 percent and at least 5 percent of the hospital’s general
7acute care days are high acuity days.

8(4) A high acuity trauma per diem supplemental rate multiplied
9by the number of the hospital’s high acuity days if the hospital
10qualifies to receive the amount set forth in paragraph (3) and has
11been designated as a Level I, Level II, Adult/Ped Level I, or
12Adult/Ped Level II trauma center by the Emergency Medical
13Services Authority established pursuant to Section 1797.1 of the
14Health and Safety Code.

15(5) A transplant per diem supplemental rate multiplied by the
16number of the hospital’s transplant days if the hospital’s Medicaid
17inpatient utilization rate is less than the percent required to be
18eligible to receive disproportionate share replacement funds for
19the state fiscal year ending in the base calendar year and greater
20than 5 percent.

21(6) A payment for hospital inpatient services equal to the
22subacute supplemental rate multiplied by the Medi-Cal subacute
23payments as reflected in the state paid claims file prepared by the
24department as of the retrieval date for the base calendar year if
25the private hospital provided Medi-Cal subacute services during
26the base calendar year.

27(c) In the event federal financial participation for a subject
28fiscal year is not available for all of the supplemental amounts
29payable to private hospitals under subdivision (b) due to the
30application of an upper payment limit or for any other reason,
31both of the following shall apply:

32(1) The total amount payable to private hospitals under
33subdivision (b) for the subject fiscal year shall be reduced to reflect
34the amount for which federal financial participation is available.

35(2) The amount payable under subdivision (b) to each private
36hospital for the subject fiscal year shall be equal to the amount
37computed under subdivision (b) multiplied by the ratio of the total
38amount for which federal financial participation is available to
39the total amount computed under subdivision (b).

P34   1(d) If the amount otherwise payable to a hospital under this
2section for a subject fiscal year exceeds the amount for which
3federal financial participation is available for that hospital, the
4amount due to the hospital for that subject fiscal year shall be
5reduced to the amount for which federal financial participation is
6available.

7(e) Payments shall not be made under this section for the periods
8when a hospital is a new hospital during a program period.

9(f) Payments shall be made to a converted hospital that converts
10during a subject fiscal quarter by multiplying the hospital’s
11outpatient supplemental payment as calculated in subdivision (b)
12by the number of days that the hospital was a private hospital in
13the subject fiscal quarter, divided by the number of days in the
14subject fiscal quarter. Payments shall not be made to a converted
15hospital in any subsequent subject fiscal quarter.

16

begin insert14169.56.end insert  

(a) The department shall increase capitation
17payments to Medi-Cal managed health care plans for each subject
18fiscal year as set forth in this section.

19(b) (1) Subject to the limitation in paragraph (2), the increased
20capitation payments shall be made as part of the monthly capitated
21payments made by the department to managed health care plans.
22The aggregate amount of increased capitation payments to all
23Medi-Cal managed health care plans for each subject fiscal year,
24or portion thereof, shall be the maximum amount for which federal
25financial participation is available on an aggregate statewide
26basis for the applicable subject fiscal year within a program
27period, or portion thereof.

28(2) (A) The limitation in subparagraph (B) shall be applied
29with respect to a subject fiscal year or portion thereof for which
30the federal matching assistance percentage is less than 90
31percentage for expenditures for services furnished to individuals
32who meet the eligibility requirements in Section
331902(a)(10)(A)(i)(VIII) of Title XIX of the federal Social Security
34Act (42 U.S.C. Sec. 1396a(a)(10)(A)(i)(VIII)), and who meet the
35conditions described in Section 1905(y) of the federal Social
36Security Act (42 U.S.C. Sec. 1396d(y)).

37(B) During a subject fiscal year or portion thereof described in
38subparagraph (A), the aggregate amount of the increased
39capitation payments under this section shall not exceed the
40aggregate amount of the increased capitation payments that would
P35   1be made if the nonfederal share of the increased capitation
2payments were the amount that the nonfederal share would have
3been if the federal matching assistance percentage were 90 percent
4for expenditures for services furnished to individuals who meet
5the eligibility requirements in Section 1902(a)(10)(A)(i)(VIII) of
6Title XIX of the federal Social Security Act (42 U.S.C. Sec.
71396a(a)(10)(A)(i)(VIII)), and who meet the conditions described
8in Section 1905(y) of the federal Social Security Act (42 U.S.C.
9Sec. 1396d(y)).

10(c) The department shall determine the amount of the increased
11capitation payments for each managed health care plan for each
12subject fiscal year or portion thereof during a program period.
13The department shall consider the composition of Medi-Cal
14enrollees in the plan, the anticipated utilization of hospital services
15by the plan’s Medi-Cal enrollees, and other factors that the
16department determines are reasonable and appropriate to ensure
17access to high-quality hospital services by the plan’s enrollees.

18(d) The amount of increased capitation payments to each
19Medi-Cal managed health care plan shall not exceed an amount
20that results in capitation payments that are certified by the state’s
21actuary as meeting federal requirements, taking into account the
22requirement that all of the increased capitation payments under
23this section shall be paid by the Medi-Cal managed health care
24plans to hospitals for hospital services to Medi-Cal enrollees of
25the plan.

26(e) (1) The increased capitation payments to managed health
27care plans under this section shall be made to support the
28availability of hospital services and ensure access to hospital
29services for Medi-Cal beneficiaries. The increased capitation
30payments to managed health care plans shall commence within
3190 days after the date on which all necessary federal approvals
32have been received, and shall include, but not be limited to, the
33sum of the increased payments for all prior months for which
34payments are due.

35(2) To secure the necessary funding for the payment or payments
36made pursuant to paragraph (1), the department may accumulate
37funds in the Hospital Quality Assurance Revenue Fund, established
38pursuant to Section 14167.35, for the purpose of funding managed
39health care capitation payments under this article regardless of
40the date on which capitation payments are scheduled to be paid
P36   1in order to secure the necessary total funding for managed health
2care payments by the end of a program period.

3(f) Payments to managed health care plans that would be paid
4consistent with actuarial certification and enrollment in the
5absence of the payments made pursuant to this section, including,
6but not limited to, payments described in Section 14182.15, shall
7not be reduced as a consequence of payments under this section.

8(g) (1) Each managed health care plan shall expend 100 percent
9of any increased capitation payments it receives under this section
10on hospital services as provided in Section 14169.57.

11(2) The department may issue change orders to amend contracts
12with managed health care plans as needed to adjust monthly
13capitation payments in order to implement this section.

14(3) For entities contracting with the department pursuant to
15Article 2.91 (commencing with Section 14089), any incremental
16increase in capitation rates pursuant to this section shall not be
17subject to negotiation and approval by the department.

18(h) (1) In the event federal financial participation is not
19available for all of the increased capitation payments determined
20for a month pursuant to this section for any reason, the increased
21capitation payments mandated by this section for that month shall
22be reduced proportionately to the amount for which federal
23financial participation is available.

24(2) The determination under this subdivision for any month in
25a program period shall be made after accounting for all federal
26financial participation necessary for full implementation of Section
2714182.15 for that month.

28

begin insert14169.57.end insert  

(a) Each managed health care plan receiving
29increased capitation payments under Section 14169.56 shall expend
30the capitation rate increases in a manner consistent with actuarial
31certification, enrollment, and utilization on hospital services. Each
32managed health care plan shall expend increased capitation
33payments on hospital services within 30 days of receiving the
34increased capitation payments to the extent they are made for a
35subject month that is prior to the date on which the payments are
36received by the managed health care plan.

37(b) The sum of all expenditures made by a managed health care
38plan for hospital services pursuant to this section shall equal, or
39approximately equal, all increased capitation payments received
40by the managed health care plan, consistent with actuarial
P37   1certification, enrollment, and utilization, from the department
2pursuant to Section 14169.56.

3(c) Any delegation or attempted delegation by a managed health
4care plan of its obligation to expend the capitation rate increases
5under this section shall not relieve the plan from its obligation to
6expend those capitation rate increases. Managed health care plans
7shall submit the documentation that the department may require
8to demonstrate compliance with this subdivision. The
9documentation shall demonstrate actual expenditure of the
10capitation rate increases for hospital services, and not assignment
11to subcontractors of the managed health care plan’s obligation of
12the duty to expend the capitation rate increases.

13(d) The supplemental hospital payments made by managed
14health care plans pursuant to this section shall reflect the overall
15 purpose of this article.

16(e) This article is not intended to create a private right of action
17by a hospital against a managed care plan provided that the
18managed health care plan expends all increased capitation
19payments for hospital services.

20

begin insert14169.58.end insert  

(a) (1) For the first program period, designated
21public hospitals shall be paid direct grants in support of health
22care expenditures, which shall not constitute Medi-Cal payments,
23and which shall be funded by the quality assurance fee set forth
24in this article. For the first program period, the aggregate amount
25of the grants to designated public hospitals funded by the quality
26assurance fee set forth in this article shall be forty-five million
27dollars ($45,000,000) in the aggregate for the two subject fiscal
28quarters in the 2013-14 subject fiscal year, ninety-three million
29dollars ($93,000,000) for the 2014-15 subject fiscal year, one
30hundred ten million five hundred thousand dollars ($110,500,000)
31for the 2015-16 subject fiscal year, and sixty-two million five
32hundred thousand dollars ($62,500,000) in the aggregate for the
33two subject fiscal quarters in the 2016-17 subject fiscal year.

34(2) (A) Of the direct grant amounts set forth in paragraph (1),
35the director shall allocate twenty-four million five hundred
36thousand dollars ($24,500,000) in the aggregate for the two subject
37fiscal quarters in the 2013-14 subject fiscal year, fifty million five
38hundred thousand dollars ($50,500,000) for the 2014-15 subject
39fiscal year, sixty million five hundred thousand dollars
40($60,500,000) for the 2015-16 subject fiscal year, and thirty-four
P38   1million five hundred thousand dollars ($34,500,000) in the
2aggregate for the two subject fiscal quarters in the 2016-17 subject
3fiscal year among the designated public hospitals pursuant to a
4methodology developed in consultation with the designated public
5hospitals.

6(B) Of the direct grant amounts set forth in subparagraph (A),
7the director shall distribute six million one hundred twenty-five
8thousand dollars ($6,125,000) for each subject fiscal quarter in
9the 2013-14 subject fiscal year, six million three hundred twelve
10thousand five hundred dollars ($6,312,500) for each subject fiscal
11quarter in the 2014-15 subject fiscal year, seven million five
12hundred sixty-two thousand five hundred dollars ($7,562,500) for
13each subject fiscal quarter in the 2015-16 subject fiscal year, and
14eight million six hundred twenty-five thousand dollars ($8,625,000)
15for each subject fiscal quarter in the 2016-17 subject fiscal year
16in accordance with the timeframes specified in subdivision (a) of
17Section 14169.66.

18(C) Of the direct grant amounts set forth in subparagraph (A),
19the director shall distribute six million one hundred twenty-five
20thousand dollars ($6,125,000) for each subject fiscal quarter in
21the 2013-14 subject fiscal year, six million three hundred twelve
22thousand five hundred dollars ($6,312,500) for each subject fiscal
23quarter in the 2014-15 subject fiscal year, seven million five
24hundred sixty-two thousand five hundred dollars ($7,562,500) for
25each subject fiscal quarter in the 2015-16 subject fiscal year, and
26eight million six hundred twenty-five thousand dollars ($8,625,000)
27for each subject fiscal quarter in the 2016-17 subject fiscal year
28only upon 100 percent of the rate range increases being distributed
29to managed health care plans pursuant to subparagraph (D) for
30the respective subject fiscal quarter. If the rate range increases
31pursuant to subparagraph (D) are distributed to managed health
32care plans, the direct grant amounts described in this
33subparagraph shall be distributed to designated public hospitals
34no later than 30 days after the rate range increases have been
35distributed to managed health care plans pursuant to subparagraph
36(D).

37(D) Of the direct grant amounts set forth in paragraph (1),
38twenty million five hundred thousand dollars ($20,500,000) in the
39aggregate for the two subject fiscal quarters in the 2013-14 subject
40fiscal year, forty two million five hundred thousand dollars
P39   1($42,500,000) for the 2014-15 subject fiscal year, fifty million
2dollars ($50,000,000) for the 2015-16 subject fiscal year, and
3twenty-eight million dollars ($28,000,000) in the aggregate for
4the two subject fiscal quarters in the 2016-17 subject fiscal year
5shall be withheld from payment to the designated public hospitals
6by the director, and shall be used as the nonfederal share for rate
7range increases, as defined in paragraph (4) of subdivision (b) of
8Section 14301.4, to risk-based payments to managed care health
9plans that contract with the department to serve counties where a
10designated public hospital is located. The rate range increases
11shall apply to managed care rates for beneficiaries other than
12newly eligible beneficiaries, as defined in subdivision (s) of Section
1317612.2, and shall enable plans to compensate hospitals for
14Medi-Cal health services and to support the Medi-Cal program.
15Each managed health care plan shall expend 100 percent of the
16rate range increases on hospital services within 30 days of
17receiving the increased payments. Rate range increases funded
18under this subparagraph shall be allocated among plans pursuant
19to a methodology developed in consultation with the hospital
20community.

21(3) Notwithstanding any other provision of law, any amounts
22withheld from payment to the designated public hospitals by the
23director as the nonfederal share for rate range increases, including
24those described in subparagraph (D) of paragraph (2), shall not
25be considered hospital fee direct grants as defined under
26subdivision (k) of Section 17612.2 and shall not be included in the
27determination under paragraph (1) of subdivision (a) of Section
2817612.3.

29(b) (1) For the first program period, nondesignated public
30hospitals shall be paid direct grants in support of health care
31expenditures, which shall not constitute Medi-Cal payments, and
32which shall be funded by the quality assurance fee set forth in this
33article. For the first program period, the aggregate amount of the
34grants funded by the quality assurance fee set forth in this article
35to nondesignated public hospitals shall be twelve million five
36hundred thousand dollars ($12,500,000) in the aggregate for two
37subject fiscal quarters in the 2013-14 subject fiscal year,
38twenty-five million dollars ($25,000,000) for the 2014-15 subject
39fiscal year, thirty million dollars ($30,000,000) for the 2015-16
40subject fiscal year, and seventeen million five hundred thousand
P40   1dollars ($17,500,000) in the aggregate for the two subject fiscal
2quarters in the 2016-17 subject fiscal year.

3(2) (A) Of the direct grant amounts set forth in paragraph (1),
4the director shall allocate two million five hundred thousand
5dollars ($2,500,000) in the aggregate for the two subject fiscal
6quarters in the 2013-14 subject fiscal year, five million dollars
7($5,000,000) for the 2014-15 subject fiscal year, six million dollars
8($6,000,000) for the 2015-16 subject fiscal year, and three million
9five hundred thousand dollars ($3,500,000) in the aggregate for
10the two subject fiscal quarters in the 2016-17 subject fiscal year
11among the nondesignated public hospitals pursuant to a
12methodology developed in consultation with the nondesignated
13public hospitals.

14(B) Of the direct grant amounts set forth in paragraph (1), ten
15million dollars ($10,000,000) in the aggregate for the two subject
16fiscal quarters in the 2013-14 subject fiscal year, twenty million
17dollars ($20,000,000) for the 2014-15 subject fiscal year, twenty
18four million dollars ($24,000,000) for the 2015-16 subject fiscal
19year, and fourteen million dollars ($14,000,000) in the aggregate
20for the two subject fiscal quarters in the 2016-17 subject fiscal
21year shall be withheld from payment to the nondesignated public
22hospitals by the director, and shall be used as the nonfederal share
23for rate range increases, as defined in paragraph (4) of subdivision
24(b) of Section 14301.4, to risk-based payments to managed care
25health plans that contract with the department. The rate range
26increases shall enable plans to compensate hospitals for Medi-Cal
27health services and to support the Medi-Cal program. Each
28managed health care plan shall expend 100 percent of the rate
29range increases on hospital services within 30 days of receiving
30the increased payments. Rate range increases funded under this
31subparagraph shall be allocated among plans pursuant to a
32methodology developed in consultation with the hospital
33community.

34(c) If the amounts set forth in this section for rate range
35increases are not actually used for rate range increases as
36described in this section, the direct grant amounts set forth in this
37section that are withheld pursuant to subparagraph (D) of
38paragraph (2) of subdivision (a) and subparagraph (B) of
39paragraph (2) of subdivision (b) shall be returned the Hospital
P41   1Quality Assurance Revenue Fund subject to paragraph (4) of
2subdivision (l) of Section 14169.52.

3(d) For subsequent program periods, designated public hospitals
4and nondesignated public hospitals may be paid direct grants
5pursuant to subdivision (e) of Section 14169.59 upon appropriation
6in the annual Budget Act.

7

begin insert14169.59.end insert  

(a) The department shall determine during each
8rebase calculation year the number of subject fiscal years in the
9next program period.

10(b) During each rebase calculation year, the department shall
11retrieve the data, including, but not limited to, the days data source,
12used to determine the following for the subsequent program period:
13acute psychiatric days, annual fee-for-service days, annual
14managed care days, annual Medi-Cal days, fee-for-service days,
15general acute care days, high acuity days, managed care days,
16Medi-Cal days, Medi-Cal fee-for-service days, Medi-Cal managed
17care days, Medi-Cal managed care fee days, outpatient base
18amount, and transplant days. The department shall pull data from
19the most recent base calendar year for which the department
20determines reliable data is available for all hospitals.

21(c) During each rebase calculation year, the department shall
22determine all of the following rates for the subsequent program
23period, which rates shall be specified in provisional language in
24the annual Budget Act:

25(1) The acute psychiatric per diem supplemental rate for each
26subject fiscal year during the program period.

27(2) The fee-for-service per diem quality assurance fee rate for
28each subject fiscal year during the program period.

29(3) The general acute care per diem supplemental rate for each
30subject fiscal year during the program period.

31(4) The high acuity per diem supplemental rate for each subject
32fiscal year during the program period.

33(5) The high acuity trauma per diem supplemental rate for each
34subject fiscal year during the program period.

35(6) The managed care per diem quality assurance fee rate for
36each subject fiscal year during the program period.

37(7) The Medi-Cal per diem quality assurance fee rate for each
38subject fiscal year during the program period.

39(8) The outpatient supplemental rate for each subject fiscal year
40during the program period.

P42   1(9) The prepaid health plan hospital managed care per diem
2quality assurance fee rate for each subject fiscal year during the
3program period.

4(10) The prepaid health plan hospital Medi-Cal managed care
5per diem quality assurance fee rate for each subject fiscal year
6during the program period.

7(11) The subacute supplemental rate for each subject fiscal year
8during the program period.

9(12) The transplant per diem supplemental rate for each subject
10fiscal year during the program period.

11(d) The department shall determine the rates set forth in
12paragraph (1) to (12), inclusive, of subdivision (c) based on the
13data retrieved pursuant to subdivision (b). Each rate determined
14by the department shall be the same for all hospitals to which the
15rate applies. These rates shall be specified in provisional language
16in the annual Budget Act. The department shall determine the rates
17in accordance with all of the following:

18(1) The rates shall meet the requirements of federal law and be
19established in a manner to obtain federal approval.

20(2) The department shall consult with the hospital community
21in determining the rates.

22(3) The supplemental payments and other Medi-Cal payments
23for hospital outpatient services furnished by private hospitals for
24each fiscal year shall equal as close as possible the applicable
25federal upper payment limit.

26(4) The supplemental payments and other Medi-Cal payments
27for hospital inpatient services furnished by private hospitals for
28each fiscal year shall equal as close as possible the applicable
29federal upper payment limit.

30(5) The increased capitation payments to managed health care
31plans shall result in the maximum payments to the plans permitted
32by federal law.

33(6) The quality assurance fee proceeds shall be adequate to
34make the expenditures described in this article, but shall not be
35more than necessary to make the expenditures.

36(7) The relative values of per diem supplemental payment rates
37to one another for the various categories of patient days shall be
38generally consistent with the relative values during the first
39program period under this article.

P43   1(8) The relative values of per diem fee rates to one another for
2the various categories of patient days shall be generally consistent
3with the relative values during the first program period under this
4article.

5(9) The rates shall result in supplemental payments and quality
6assurance fees that are consistent with the purposes of this article.

7(e) During each rebase calculation year, the director shall
8determine the amounts and allocation methodology, if any, of
9direct grants to designated public hospitals and nondesignated
10public hospitals for each subject fiscal year in a program period,
11in consultation with the hospital community. The amounts and
12allocation methodology may include a withhold of direct grants
13to be used as the nonfederal share for rate range increases. These
14amounts shall be specified in provisional language in the annual
15Budget Act.

16(f) Notwithstanding any other provision in this article, the
17following shall apply to the first program period under this article:

18(1) The first program period under this article shall be the
19period from January 1, 2014, to December 31, 2016, inclusive.

20(2) The acute psychiatric days shall be those identified in the
21Final Medi-Cal Utilization Statistics for the 2012-13 state fiscal
22year as calculated by the department as of December 17, 2012.

23(3) The acute psychiatric per diem supplemental rate shall be
24nine hundred sixty-five dollars ($965) for the two remaining subject
25fiscal quarters in the 2013-14 subject fiscal year, nine hundred
26seventy dollars ($970) for the subject fiscal quarters in the 2014-15
27subject fiscal year, nine hundred seventy-five dollars ($975) for
28the subject fiscal quarters in the 2015-16 subject fiscal year and
29nine hundred seventy-five dollars ($975) for the first two subject
30fiscal quarters in the 2016-17 subject fiscal year.

31(4) The days data source shall be the hospital’s Annual
32Financial Disclosure Report filed with the Office of Statewide
33Health Planning and Development as of June 6, 2013, for its fiscal
34year ending during the 2010 calendar year.

35(5) The fee-for-service per diem quality assurance fee rate shall
36be three hundred seventy-four dollars and ninety-one cents
37($374.91) for the two remaining subject fiscal quarters in the
382013-14 subject fiscal year, four hundred twenty-five dollars and
39twenty-two cents ($425.22) for the subject fiscal quarters in the
402014-15 subject fiscal year, four hundred eighty dollars and eleven
P44   1cents ($480.11) for the subject fiscal quarters in the 2015-16
2subject fiscal year, and five hundred forty-two dollars and ten
3cents ($542.10) for the first two subject fiscal quarters in the
42016-17 subject fiscal year.

5(6) The general acute care days shall be those identified in the
62010 calendar year, as reflected in the state paid claims file on
7April 26, 2013.

8(7) The general acute care per diem supplemental rate shall be
9eight hundred twenty-four dollars and forty cents ($824.40) for
10the two remaining subject fiscal quarters in the 2013-14 subject
11fiscal year, one thousand one hundred ten dollars and sixty-seven
12cents ($1,110.67) for the subject fiscal quarters in the 2014-15
13subject fiscal year, one thousand three hundred thirty-five dollars
14and forty-two cents ($1,335.42) for the subject fiscal quarters in
15the 2015-16 subject fiscal year, and one thousand four hundred
16forty-one dollars and twenty cents ($1,441.20) for the first two
17subject fiscal quarters in the 2016-17 subject fiscal year.

18(8) The high acuity days shall be those paid during the 2010
19calendar year, as reflected in the state paid claims file prepared
20by the department on April 26, 2013.

21(9) The high acuity per diem supplemental rate shall be two
22thousand five hundred dollars ($2,500) for the two remaining
23subject fiscal quarters in the 2013-14 subject fiscal year, two
24thousand five hundred dollars ($2,500) for the subject fiscal
25quarters in the 2014-15 subject fiscal year, two thousand five
26hundred dollars ($2,500) for the subject fiscal quarters in the
272015-16 subject fiscal year, and two thousand five hundred dollars
28($2,500) for the first two subject fiscal quarters in the 2016-17
29subject fiscal year.

30(10) The high acuity trauma per diem supplemental rate shall
31be two thousand five hundred dollars ($2,500) for the two
32remaining subject fiscal quarters in the 2013-14 subject fiscal
33year, two thousand five hundred dollars ($2,500) for the subject
34fiscal quarters in the 2014-15 subject fiscal year, two thousand
35five hundred dollars ($2,500) for the subject fiscal quarters in the
362015-16 subject fiscal year, and two thousand five hundred dollars
37($2,500) for the first two subject fiscal quarters in the 2016-17
38 subject fiscal year.

39(11) The managed care per diem quality assurance fee rate
40shall be one hundred forty-five dollars ($145) for the two remaining
P45   1subject fiscal quarters in the 2013-14 subject fiscal year, one
2hundred forty-five dollars ($145) for the subject fiscal quarters in
3the 2014-15 subject fiscal year, one hundred seventy dollars ($170)
4for the subject fiscal quarters in the 2015-16 subject fiscal year,
5and one hundred seventy dollars ($170) for the first two subject
6fiscal quarters in the 2016-17 subject fiscal year.

7(12) The Medi-Cal managed care days shall be those identified
8in the Final Medi-Cal Utilization Statistics for the 2012-13 fiscal
9year, as calculated by the department as of December 17, 2012.

10(13) The Medi-Cal per diem quality assurance fee rate shall be
11four hundred fifty-seven dollars and ten cents ($457.10) for the
12two remaining subject fiscal quarters in the 2013-14 subject fiscal
13year, four hundred ninety-seven dollars and eight cents ($497.08)
14for the subject fiscal quarters in the 2014-15 subject fiscal year,
15five hundred sixty-eight dollars and fifteen cents ($568.15) for the
16subject fiscal quarters in the 2015-16 subject fiscal year, and six
17hundred eighteen dollars and fourteen cents ($618.14) for the first
18two subject fiscal quarters in the 2016-17 subject fiscal year.

19(14) The outpatient base amount shall be those payments for
20outpatient services made to a hospital in the 2010 calendar year,
21as reflected in the state paid claims files prepared by the
22department on April 26, 2013.

23(15) The outpatient supplemental rate shall be 119 percent of
24the outpatient base amount for the two remaining subject fiscal
25quarters in the 2013-14 subject fiscal year, 268 percent of the
26outpatient base amount for the subject fiscal quarters in the
272014-15 subject fiscal year, 292 percent of the outpatient base
28amount for the subject fiscal quarters in the 2015-16 subject fiscal
29year, and 151 percent of the outpatient base amount for the first
30two subject fiscal quarters in the 2016-17 subject fiscal year.

31(16) The prepaid health plan hospital managed care per diem
32quality assurance fee rate shall be eighty-one dollars and twenty
33cents ($81.20) for the two remaining subject fiscal quarters in the
342013-14 subject fiscal year, eighty-one dollars and twenty cents
35($81.20) for the subject fiscal quarters in the 2014-15 subject
36fiscal year, ninety-five dollars and twenty cents ($95.20) for the
37subject fiscal quarters in the 2015-16 subject fiscal year, and
38ninety-five dollars and twenty cents ($95.20) for the first two
39subject fiscal quarters in the 2016-17 subject fiscal year.

P46   1(17) The prepaid health plan hospital Medi-Cal managed care
2per diem quality assurance fee rate shall be two hundred fifty-five
3dollars and ninety-seven cents ($255.97) for the two remaining
4subject fiscal quarters in the 2013-14 subject fiscal year, two
5hundred seventy-eight dollars and thirty-seven cents ($278.37) for
6the subject fiscal quarters in the 2014-15 subject fiscal year, three
7hundred eighteen dollars and sixteen cents ($318.16) for the subject
8fiscal quarters in the 2015-16 subject fiscal year, and three
9hundred forty-six dollars and sixteen cents ($346.16) for the first
10two subject fiscal quarters in the 2016-17 subject fiscal year.

11(18) The subacute supplemental rate shall be 50 percent for the
12two remaining subject fiscal quarters in the 2013-14 subject fiscal
13year, 55 percent for the subject fiscal quarters in the 2014-15
14subject fiscal year, 60 percent for the subject fiscal quarters in the
152015-16 subject fiscal year, and 60 percent for the first two subject
16fiscal quarters in the 2016-17 subject fiscal year of the Medi-Cal
17subacute payments paid by the department to the hospital during
18the 2010 calendar year, as reflected in the state paid claims file
19prepared by the department on April 26, 2013.

20(19) The transplant days shall be those identified in the 2010
21Patient Discharge file from the Office of Statewide Health Planning
22and Development accessed on June 28, 2011.

23(20) The transplant per diem supplemental rate shall be two
24thousand five hundred dollars ($2,500) for the two remaining
25subject fiscal quarters in the 2013-14 subject fiscal year, two
26thousand five hundred dollars ($2,500) for the subject fiscal
27quarters in the 2014-15 subject fiscal year, two thousand five
28hundred dollars ($2,500) for the subject fiscal quarters in the
29 2015-16 subject fiscal year, and two thousand five hundred dollars
30($2,500) for the first two subject fiscal quarters in the 2016-17
31subject fiscal year.

32(21) Upon federal approval or conditional federal approval
33described in Section 14169.63, the director shall have the
34discretion to revise the fee-for-service per diem quality assurance
35fee rate, the managed care per diem quality assurance fee rate,
36the Medi-Cal per diem quality assurance fee rate, the prepaid
37health plan hospital managed care per diem quality assurance fee
38rate, or the prepaid health plan hospital Medi-Cal managed care
39per diem quality assurance fee rate, based on the funds required
P47   1to make the payments specified in this article, in consultation with
2the hospital community.

3(22) With respect to a hospital described in subdivision (f) of
4Section 14165.50, both of the following shall apply:

5(A) The hospital shall not be considered a new hospital as
6defined in subdivision (ah) of Section 14169.51 for the purposes
7of this article.

8(B) To the extent permitted by federal law and other federal
9requirements, the department shall use the best available and
10reasonable current estimates or projections made with respect to
11the hospital for an annual period as the data, including, but not
12limited to, the days data source and data described as being
13derived from a state paid claims file, used for all purposes,
14including, but not limited to, the calculation of supplemental
15payments and the quality assurance fee. The estimates and
16projections shall be deemed to reflect paid claims and shall be
17used for each data element regardless of the time period otherwise
18applicable to the data element. The data elements include, but are
19not limited to, acute psychiatric days, annual fee-for-service days,
20annual managed care days, annual Medi-Cal days, fee-for-service
21days, general acute care days, high acuity days, managed care
22days, Medi-Cal days, Medi-Cal fee-for-service days, Medi-Cal
23managed care days, Medi-Cal managed care fee days, outpatient
24base amount, and transplant days.

25(g) Notwithstanding any other provision in this article, the
26following shall apply to the second program period under this
27article:

28(1) The second program period under this article shall begin
29on January 1, 2017, and shall end on June 30, 2019.

30(2) The retrieval date shall occur between October 1, 2016, and
31December 31, 2016.

32(3) The base calendar year shall be the 2013 calendar year, or
33a more recent calendar year for which the department determines
34 reliable data is available.

35(4) The rebase calculation year shall be the 2015-16 state fiscal
36year.

37(5) With respect to a hospital described in subdivision (f) of
38Section 14165.50, both of the following shall apply:

P48   1(A) The hospital shall not be considered a new hospital as
2defined in subdivision (ah) of Section 14169.51 for the purposes
3of this article.

4(B) To the extent permitted by federal law or other federal
5requirements, the department shall use the best available and
6reasonable current estimates or projections made with respect to
7the hospital for an annual period as to the data, including, but not
8limited to, the days data source and data described as being
9derived from a state paid claims file, used for all purposes,
10including, but not limited to, the calculation of supplemental
11payments and the quality assurance fee. The estimates and
12projections shall be deemed to reflect paid claims and shall be
13used for each data element regardless of the time period otherwise
14applicable to the data element. The data elements include, but are
15not limited to, acute psychiatric days, annual fee-for-service days,
16annual managed care days, annual Medi-Cal days, fee-for-service
17days, general acute care days, high acuity days, managed care
18days, Medi-Cal days, Medi-Cal fee-for-service days, Medi-Cal
19managed care days, Medi-Cal managed care fee days, outpatient
20base amount, and transplant days.

21(i) Commencing January 2016, the department shall provide a
22clear narrative description along with fiscal detail in the Medi-Cal
23estimate package, submitted to the Legislature in January and
24May of each year, of all of the calculations made by the department
25pursuant to this section for the second program period and every
26program period thereafter.

27

begin insert14169.60.end insert  

(a) The amount of any payments made under this
28article to private hospitals, including the amount of payments made
29under Sections 14169.54 and 14169.55 and additional payments
30to private hospitals by managed health care plans pursuant to
31Section 14169.57, shall not be included in the calculation of the
32low-income percent or the OBRA 1993 payment limitation, as
33defined in paragraph (24) of subdivision (a) of Section 14105.98,
34for purposes of determining payments to private hospitals.

35(b) The supplemental payments and other payments under this
36article shall be regarded as quality assurance payments, the
37implementation or suspension of which does not affect a
38determination of the adequacy of any rates under federal law.

39

begin insert14169.61.end insert  

(a) (1) Except as provided in this section, all data
40and other information relating to a hospital that are used for the
P49   1purposes of this article, including, without limitation, the days
2data source, shall continue to be used to determine the payments
3to that hospital, regardless of whether the hospital has undergone
4one or more changes of ownership.

5(2) All supplemental payments to a hospital under this article
6shall be made to the licensee of a hospital on the date the
7supplemental payment is made. All quality assurance fee payments
8under this article shall be paid by the licensee of a hospital on the
9date the quarterly quality assurance fee payment is due.

10(b) The data of separate facilities prior to a consolidation shall
11be aggregated for the purposes of this article if: (1) a private
12hospital consolidates with another private hospital, (2) the facilities
13operate under a consolidated hospital license, (3) data for a period
14prior to the consolidation is used for purposes of this article, and
15(4) neither hospital has had a change of ownership on or after the
16effective date of this article unless paragraph (2) of subdivision
17(d) has been satisfied by the new owner. Data of a facility that was
18a separately licensed hospital prior to the consolidation shall not
19be included in the data, including the days data source, for the
20purpose of determining payments to the facility or the quality
21assurance fees due from the facility under the article for any time
22period during which the facility is closed. A facility shall be deemed
23to be closed for purposes of this subdivision on the first day of any
24period during which the facility has no general acute, psychiatric,
25or rehabilitation inpatients for at least 30 consecutive days. A
26facility that has been deemed to be closed under this subdivision
27shall no longer be deemed to be closed on the first subsequent day
28on which it has general acute, psychiatric, or rehabilitation
29inpatients.

30(c) The payments to a hospital under this article shall not be
31made, and the quality assurance fees shall not be due, for any
32period during which the hospital is closed. A hospital shall be
33deemed to be closed on the first day of any period during which
34the hospital has no general acute, psychiatric or rehabilitation
35inpatients for at least 30 consecutive days. A hospital that has
36been deemed to be closed under this subdivision shall no longer
37be deemed to be closed on the first subsequent day on which it has
38general acute, psychiatric or rehabilitation inpatients. Payments
39under this article to a hospital and installment payments of the
40aggregate quality assurance fee due from a hospital that is closed
P50   1during any portion of a subject fiscal quarter shall be reduced by
2applying a fraction, expressed as a percentage, the numerator of
3which shall be the number of days during the applicable subject
4fiscal quarter that the hospital is closed during the subject fiscal
5year and the denominator of which shall be the number of days in
6the subject fiscal quarter.

7(d) The following provisions shall apply only for purposes of
8this article, and shall have no application outside of this article
9nor shall they affect the assumption of any outstanding monetary
10obligation to the Medi-Cal program:

11(1) The director shall develop and describe in provider bulletins
12and on the department’s Internet Web site a process by which the
13new operator of a hospital that has a days data source in whole
14or in part from a previous operator may enter into an agreement
15with the department to confirm that it is financially responsible
16or to become financially responsible to the department for the
17outstanding monetary obligation to the Medi-Cal program of the
18previous operator in order to avoid being classified as a new
19hospital for purposes of this article. This process shall be available
20for changes of ownership that occur before, on, or after January
211, 2014, but only in regard to payments under this article and
22otherwise shall have no retroactive effect.

23(2) The outstanding monetary obligation referred to in
24subdivision (ah) of Section 14169.51 shall include responsibility
25for all of the following:

26(A) Payment of the quality assurance fee established pursuant
27to this article.

28(B) Known overpayments that have been asserted by the
29department or its fiscal intermediary by sending a written
30communication that is received by the hospital prior to the date
31that the new operator becomes the licensee of the hospital.

32(C) Overpayments that are asserted after such date and arise
33from customary reconciliations of payments, such as cost report
34settlements, and, with the exception of overpayments described in
35subparagraph (B), shall exclude liabilities arising from the
36fraudulent or intentionally criminal act of a prior operator if the
37new operator did not knowingly participate in or continue the
38fraudulent or criminal act after becoming the licensee.

39(3) The department shall have the discretion to determine
40whether the new owner properly and fully agreed to be financially
P51   1responsible for the outstanding monetary obligation in connection
2with the Medi-Cal program and seek additional assurances as the
3department deems necessary, except that a new owner that executes
4an agreement with the department to be financially responsible
5for the monetary obligations as described in paragraph (1) shall
6be conclusively deemed to have agreed to be financially responsible
7for the outstanding monetary obligation in connection with the
8Medi-Cal program. The department shall have the discretion to
9establish the terms for satisfying the outstanding monetary
10obligation in connection with the Medi-Cal program, including,
11but not limited to, recoupment from amounts payable to the hospital
12under this section.

13

begin insert14169.62.end insert  

Notwithstanding any provision in this article, the
14director may correct any identified material and egregious errors
15in the data, including, but not limited to, the days data source,
16used for the following: acute psychiatric days, annual
17fee-for-service days, annual managed care days, annual Medi-Cal
18days, fee-for-service days, general acute care days, high acuity
19days, managed care days, Medi-Cal days, Medi-Cal fee-for-service
20days, Medi-Cal managed care days, Medi-Cal managed care fee
21days, outpatient base amount, and transplant days. An error is
22material and egregious if the error is clear to the director based
23on information the director finds to be reliable and results in an
24increase or decrease to a hospital’s supplemental payment amounts
25under this article, or in a hospital’s quality assurance fee payments,
26of at least one million dollars ($1,000,000) for any subject fiscal
27year. The director’s determination whether to exercise his or her
28discretion under this section and any determination made by the
29director under this section shall not be subject to judicial review,
30except that a hospital may bring a writ of mandate under Section
311085 of the Code of Civil Procedure to rectify an abuse of
32discretion by the department in correcting that hospital’s data
33when that correction results in greater fees for that hospital
34pursuant to Sections 14169.52 and 14169.53 or lower supplemental
35payments for that hospital pursuant to Section 14169.54 and
3614169.55.

37

begin insert14169.63.end insert  

(a) Notwithstanding any other provision of this
38article requiring federal approvals, the department may impose
39and collect the quality assurance fee and may make payments
40under this article, including increased capitation payments, based
P52   1upon receiving a letter from the federal Centers for Medicare and
2Medicaid Services or the United States Department of Health and
3Human Services that indicates likely federal approval, but only if
4and to the extent that the letter is sufficient as set forth in
5subdivision (b).

6(b) In order for the letter to be sufficient under this section, the
7director shall find that the letter meets both of the following
8requirements:

9(1) The letter is in writing and signed by an official of the federal
10Centers for Medicare and Medicaid Services or an official of the
11United States Department of Health and Human Services.

12(2) The director, after consultation with the hospital community,
13has determined, in the exercise of his or her sole discretion, that
14the letter provides a sufficient level of assurance to justify advanced
15implementation of the fee and payment provisions.

16(c) Nothing in this section shall be construed as modifying the
17requirement under Section 14169.69 that payments shall be made
18only to the extent a sufficient amount of funds collected as the
19quality assurance fee are available to cover the nonfederal share
20of those payments.

21(d) Upon notice from the federal government that final federal
22approval for the fee model under this article or for the
23 supplemental payments to private hospitals under Section 14169.54
24or 14169.55 has been denied, any fees collected pursuant to this
25section shall be refunded and any payments made pursuant to this
26article shall be recouped, including, but not limited to,
27supplemental payments and grants, increased capitation payments,
28payments to hospitals by health care plans resulting from the
29increased capitation payments, and payments for the health care
30coverage of children. To the extent fees were paid by a hospital
31that also received payments under this section, the payments may
32first be recouped from fees that would otherwise be refunded to
33the hospital prior to the use of any other recoupment method
34allowed under law.

35(e) Any payment made pursuant to this section shall be a
36conditional payment until final federal approval has been received.

37(f) The director shall have broad authority under this section
38to collect the quality assurance fee for an interim period after
39receipt of the letter described in subdivision (a) pending receipt
P53   1of all necessary federal approvals. This authority shall include
2discretion to determine both of the following:

3(1) Whether the quality assurance fee should be collected on a
4full or pro rata basis during the interim period.

5(2) The dates on which payments of the quality assurance fee
6are due.

7(g) The department may draw against the Hospital Quality
8Assurance Revenue Fund for all administrative costs associated
9with implementation under this article, consistent with subdivision
10(b) of Section 14169.53.

11(h) This section shall be implemented only to the extent federal
12financial participation is not jeopardized by implementation prior
13to the receipt of all necessary final federal approvals.

14

begin insert14169.64.end insert  

(a) Notwithstanding any other provision in this
15article, the director may modify any timeline or timelines related
16to the assessment of the quality assurance fee or Medi-Cal
17payments under this article, including capitation payments, if the
18director, upon consultation with the hospital community,
19determines that it is impossible from an operational perspective
20to implement a timeline or timelines without the modification.

21(b) The department shall notify the Joint Budget Legislative
22Committee and the fiscal and appropriate policy committees of
23the Legislature five working days prior to implementing a modified
24timeline or timelines under subdivision (a).

25(c) The department shall consult with representatives of the
26hospital community in developing a modified timeline or timelines
27pursuant to this section.

28(d) The discretion to modify timelines under this section shall
29include, but not be limited to, discretion to accelerate payments
30to plans or hospitals.

31

begin insert14169.65.end insert  

(a) Upon receipt of a letter that indicates likely
32federal approval that the director determines is sufficient for
33implementation under Section 14169.63, or upon the receipt of
34federal approval, the following shall occur:

35(1) To the maximum extent possible, and consistent with the
36availability of funds in the Hospital Quality Assurance Revenue
37Fund, the department shall make all of the payments under Sections
3814169.54, 14169.55, and 14169.56, including, but not limited to,
39supplemental payments and increased capitation payments, prior
40to the end of a program period, except that the increased capitation
P54   1payments under Section 14169.56 shall not be made until federal
2approval is obtained for these payments.

3(2) The department shall make supplemental payments to
4hospitals under this article consistent with the timeframe described
5in Section 14169.66 or a modified timeline developed pursuant to
6Section 14169.64.

7(b) If any payment or payments made pursuant to this section
8are found to be inconsistent with federal law, the department shall
9recoup the payments by means of withholding or any other
10available remedy.

11(c) This section shall not affect the department’s ongoing
12authority to continue, after the end of a program period, to collect
13quality assurance fees imposed on or before the end of the program
14period.

15

begin insert14169.66.end insert  

The department shall make disbursements from the
16Hospital Quality Assurance Revenue Fund consistent with the
17following:

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

21(b) The funds shall be disbursed in accordance with the order
22of priority set forth in subdivision (b) of Section 14169.53, except
23that funds may be set aside for increased capitation payments to
24managed care health plans pursuant to subdivision (e) of Section
2514169.56.

26(c) The funds shall be disbursed in each payment cycle in
27accordance with the order of priority set forth in subdivision (b)
28of Section 14169.53 as modified by subdivision (b), and so that
29the supplemental payments and direct grants to hospitals and the
30increased capitation payments to managed health care plans are
31made to the maximum extent for which funds are available.

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

38(e) The aggregate amount of funds to be disbursed to private
39hospitals shall be determined under Sections 14169.54 and
4014169.55. The aggregate amount of funds to be disbursed to
P55   1managed health care plans shall be determined under Section
214169.56. The aggregate amount of direct grants to designated
3and nondesignated public hospitals shall be determined under
4Section 14169.58.

5

begin insert14169.67.end insert  

Notwithstanding any other provision of this article,
6supplemental payments or other payments under this article shall
7only be required and payable in any quarter for which a fee
8payment obligation exists.

9

begin insert14169.68.end insert  

(a) In order to ensure that the proceeds of the
10quality assurance fee, the matching amount provided by the federal
11government, and any interest earned on those proceeds are used
12to supplement existing funding for hospital services provided to
13Medi-Cal patients and not supplant such funding, the aggregate
14fee-for-service payments under the Medi-Cal program to hospitals
15for hospital services furnished on and after January 1, 2014, for
16each fiscal year or portion thereof that is in a program period
17shall not be less than the aggregate amounts that would have been
18paid for those services under the rates and payment methodologies
19in effect on December 31, 2013. This provision shall be applied
20separately for each category of hospital services.

21(b) For purposes of this section, all of the following definitions
22shall apply:

23(1) “Aggregate amounts” means payments that would have
24been made on a fee-for-service basis to a hospital under Medi-Cal
25where the nonfederal share of the payments would have been
26appropriated from state general funds with the exception of
27disproportionate share replacement payments made under Section
2814166.11. Aggregate amounts do not include payments made
29pursuant to Article 5.228 (commencing with Section 14169.1).

30(2) “Aggregate fee-for-service payments” means all payments
31made on a fee-for-service basis to a hospital under Medi-Cal where
32the nonfederal share of the payments were appropriated from state
33general funds with the exception of disproportionate share
34replacement payments made under Section 14166.11. Aggregate
35fee-for-service payments do not include payments made under this
36 article.

37(3) “Hospital services” means all services covered under
38Medi-Cal furnished by a hospital, including, but not limited to,
39hospital inpatient services, hospital outpatient services, skilled
P56   1nursing facility services furnished by a hospital, and subacute
2services furnished by a hospital.

3(c) Disproportionate share replacement payments to private
4hospitals shall be not less than the amount determined pursuant
5to Section 14166.11. For purposes of this subdivision, references
6to Section 14166.11 are to the version of Section 14166.11 in effect
7on the effective date of this article.

8(d) This section shall be implemented only to the extent it does
9not violate federal law and only to the extent available federal
10financial participation is not jeopardized.

11(e) This section shall not require a rate or level of funding to
12be maintained where federal financial participation for the rate
13or level of funding has been reduced or eliminated by federal law.

14

begin insert14169.69.end insert  

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

15(1) Promptly submit any state plan amendment or waiver request
16that may be necessary to implement this article.

17(2) Promptly seek federal approvals or waivers as may be
18necessary to implement this article and to obtain federal financial
19participation to the maximum extent possible for the payments
20under this article.

21(3) Amend the contracts between the managed health care plans
22and the department as necessary to incorporate the provisions of
23Sections 14169.56 and 14169.57 and promptly seek all necessary
24federal approvals of those amendments. The department shall
25 pursue amendments to the contracts as soon as possible after the
26effective date of this article, and shall not wait for federal approval
27of this article prior to pursuing amendments to the contracts. The
28amendments to the contracts shall, among other provisions, set
29forth an agreement to increase capitation payments to managed
30health care plans under Section 14169.56 and increase payments
31to hospitals under Section 14169.57 in a manner that relates back
32to the beginning of a program period, or as soon thereafter as
33possible, conditioned on obtaining all federal approvals necessary
34for federal financial participation for the increased capitation
35payments to the managed health care plans.

36(b) In implementing this article, the department may utilize the
37services of the Medi-Cal fiscal intermediary through a change
38order to the fiscal intermediary contract to administer this
39program, consistent with the requirements of Sections 14104.6,
4014104.7, 14104.8, and 14104.9. Contracts entered into for purposes
P57   1of implementing this article shall not be subject to Part 2
2(commencing with Section 10100) of Division 2 of the Public
3Contract Code.

4(c) In the event any hospital, or any party on behalf of a hospital,
5initiates a case or proceeding in any state or federal court in which
6the hospital seeks any relief of any sort whatsoever, including, but
7not limited to, monetary relief, injunctive relief, declaratory relief,
8or a writ, based in whole or in part on a contention that any or all
9of this article is unlawful and may not be lawfully implemented,
10both of the following shall apply:

11(1) Payments shall not be made to the hospital pursuant to this
12article until the case or proceeding is finally resolved, including
13the final disposition of all appeals.

14(2) Any amount computed to be payable to the hospital pursuant
15to this article for a subject fiscal year shall be withheld by the
16department and shall be paid to the hospital only after the case or
17proceeding is finally resolved, including the final disposition of
18all appeals.

19(d) Subject to Section 14169.63, no payment shall be made
20under this article until all necessary federal approvals for the
21payment and for the fee provisions in this article have been
22obtained and the fee has been imposed and collected.
23Notwithstanding any other law, payments under this article shall
24be made only to the extent that the fee established in this article
25is collected and available to cover the nonfederal share of the
26payments.

27(e) All payments made by the department to hospitals and
28managed health care plans under this article shall be made only
29from the following:

30(1) The quality assurance fee set forth in this article, along with
31any interest or other investment income thereon.

32(2) Federal reimbursement and any other related federal funds.

33(f) In order to ensure access to care to hospital services, the
34director shall seek federal approval for supplemental payments
35for hospital services provided to all Medi-Cal populations,
36including the optional and expansion populations.

37

begin insert14169.70.end insert  

Notwithstanding Chapter 3.5 (commencing with
38Section 11340) of Part 1 of Division 3 of Title 2 of the Government
39Code, the department may implement this article by means of
40provider bulletins, all plan letters, or other similar instruction,
P58   1without taking regulatory action. The department shall also provide
2notification to the Joint Legislative Budget Committee and to the
3fiscal and appropriate policy committees of the Legislature within
4five working days when the above-described action is taken in
5order to inform the Legislature that the action is being
6implemented.

7

begin insert14169.71.end insert  

Notwithstanding any other provision of this article,
8the director may proportionately reduce the amount of any
9supplemental payments or increased capitation payments under
10this article to the extent that the payment would result in the
11reduction of other amounts payable to a hospital or managed
12health care plan due to the application of federal law.

13

begin insert14169.72.end insert  

This article shall become inoperative if any of the
14following occurs:

15(a) The effective date of a final judicial determination made by
16any court of appellate jurisdiction or a final determination by the
17United States Department of Health and Human Services or the
18federal Centers for Medicare and Medicaid Services that the
19quality assurance fee established pursuant to this article, or Section
2014169.54 or 14169.55, cannot be implemented. This subdivision
21shall not apply to any final judicial determination made by any
22court of appellate jurisdiction in a case brought by hospitals
23located outside the state.

24(b) The federal Centers for Medicare and Medicaid Services
25denies approval for, or does not approve on or before the last day
26of a program period, the implementation of Sections 14169.52,
2714169.53, 14169.54, and 14169.55, and the department fails to
28modify Section 14169.52, 14169.53, 14169.54, or 14169.55
29pursuant to subdivision (d) of Section 14169.53 in order to meet
30the requirements of federal law or to obtain federal approval.

31(c) A final judicial determination by the California Supreme
32Court or any California Court of Appeal that the revenues collected
33pursuant to this article that are deposited in the Hospital Quality
34Assurance Revenue Fund are either of the following:

35(1) “General Fund proceeds of taxes appropriated pursuant to
36Article XIII B of the California Constitution,” as used in
37subdivision (b) of Section 8 of Article XVI of the California
38Constitution.

39(2) “Allocated local proceeds of taxes,” as used in subdivision
40(b) of Section 8 of Article XVI of the California Constitution.

P59   1(d) The department has sought but has not received federal
2financial participation for the supplemental payments and other
3costs required by this article for which federal financial
4participation has been sought.

5(e) A lawsuit related to this article is filed against the state and
6a preliminary injunction or other order has been issued that results
7in a financial disadvantage to the state. For purposes of this
8subdivision, “financial disadvantage to the state” means either of
9the following:

10(1) A loss of federal financial participation.

11(2) A cost to the General Fund that is equal to or greater than
12one-quarter of 1 percent of the General Fund expenditures
13authorized in the most recent annual Budget Act.

14(f) The proceeds of the fee and any interest and dividends earned
15on deposits are not deposited into the Hospital Quality Assurance
16Revenue Fund or are not used as provided in section 14169.53.

17(g) The proceeds of the fee, the matching amount provided by
18the federal government, and interest and dividends earned on
19deposits in the Hospital Quality Assurance Revenue Fund are not
20used as provided in section 14169.68.

21

begin insert14169.73.end insert  

In the event this article becomes inoperative pursuant
22to Section 14169.72, all of the following shall apply:

23(a) No hospital shall be required to pay the fee except for any
24fee owed prior to the article becoming inoperative.

25(b) The director shall execute a declaration stating that he or
26she has determined that the article is inoperative and shall state
27the basis for this determination. The director shall retain the
28declaration and provide a copy, within five working days of the
29execution of the declaration, to the fiscal and appropriate policy
30committees of the Legislature. In addition, the director shall post
31the declaration on the department’s Internet Web site and the
32director shall send the declaration to the Secretary of State, the
33Secretary of the Senate, the Chief Clerk of the Assembly, and the
34Legislative Counsel.

35(c) Upon execution of the declaration described in subdivision
36(b), the director shall implement a plan, in consultation with the
37hospital community and the Legislature, to wind down the program
38consistent with the purposes of the article, including the
39recoupment of payments made under this article if ordered by a
40court.

P60   1

begin insert14169.74.end insert  

Beginning with the proposed budget for the 2014-15
2fiscal year, and each fiscal year thereafter, the Department of
3Finance shall report in the Governor’s proposed budget and the
4May Revision the difference in General Fund benefit for the
5upcoming fiscal year resulting from this article and what was
6anticipated at the time the Budget Act of 2013 was enacted. It is
7the intent of the Legislature that additional General Fund benefit
8be appropriated to supplement, and not supplant, funding for
9health and human service programs, which may include the cost
10of medical interpreters.

11

begin insert14169.75.end insert  

Notwithstanding Section 14169.72, this article shall
12become inoperative on January 1, 2017. No hospital shall be
13required to pay the fee after that date unless the fee was owed
14during the period in which the article was operative, and no
15payments authorized under Section 14169.53 shall be made unless
16the payments were owed during the period in which the article
17was operative.

18

begin insert14169.76.end insert  

This article is repealed on January 1 of the year
19following the date on which the article becomes inoperative.

end insert
20begin insert

begin insertSEC. 7.end insert  

end insert

begin insertArticle 5.231 (commencing with Section 14169.81) is
21added to Chapter 7 of Part 3 of Division 9 of the end insert
begin insertWelfare and
22Institutions Code
end insert
begin insert, to read:end insert

begin insert

23 

24Article begin insert5.231.end insert  Medi-Cal Hospital Reimbursement Improvement
25and Restoration Act of 2013
26

 

27

begin insert14169.81.end insert  

(a) Notwithstanding Sections 14105.191 and
2814105.192, reimbursement for services provided by skilled nursing
29facilities that are distinct parts of general acute care hospitals
30shall be determined, for dates of service on or after October 1,
312013, without application of the reductions and limitations set
32forth in Sections 14105.191 and 14105.192.

33(b) The director shall promptly seek all necessary federal
34approvals to implement this section.

35(c) Notwithstanding Chapter 3.5 (commencing with Section
3611340) of Part 1 of Division 3 of Title 2 of the Government Code,
37the department may implement this section by means of provider
38bulletins or notices, policy letters, or other similar instructions,
39without taking regulatory action.

P61   1

begin insert14169.82.end insert  

(a) In consultation with the hospital community, as
2defined in Section 14169.51, the department shall develop proposed
3modifications to the quality assurance fee program under Article
45.230 (commencing with Section 14169.50) to collect additional
5fees solely designated for use under this section. In addition, the
6department shall consult with the hospital community to enable
7intergovernmental transfers from nondesignated public hospitals
8solely designated for use under this section. The department shall
9notify the Joint Legislative Budget Committee and fiscal and
10appropriate policy committees 30 working days prior to
11implementing a modification pursuant to this section.

12(b) To the extent federal financial participation is not
13jeopardized and consistent with federal law, and subject to the
14conditions set forth in subdivision (c), the department shall pay
15Medi-Cal managed care plans rate range increases, as defined by
16paragraph (4) of subdivision (b) of Section 14301.4, for the purpose
17of increasing payments to private hospitals and nondesignated
18public hospitals in counties that do not have designated public
19hospitals. Nondesignated public hospitals shall be given priority
20relative to accessing rate range funds in counties where a
21nondesignated public hospital is the only public hospital.

22(c) Payments to Medi-Cal managed care plans pursuant to
23subdivision (b) are conditioned on both of the following:

24(A) The Medi-Cal managed care plan shall pay all of the rate
25range increases provided under this section as additional payments
26to private hospitals and nondesignated public hospitals for
27providing and making available services to Medi-Cal enrollees of
28the plan.

29(B) The amount of the increases to Medi-Cal managed care
30plans shall be limited to the total amount of payments possible,
31including federal financial participation, based on the amount of
32fees actually collected and intergovernmental transfers actually
33provided pursuant to subdivision (a) as the nonfederal share for
34these payments.

35

begin insert14169.83.end insert  

To the extent permitted by federal law and other
36federal requirements, the director shall develop and describe in
37provider bulletins and on the department’s Internet Web site a
38process by which a private general acute care hospital located
39outside the state that serves Medi-Cal beneficiaries may opt in to
40pay the quality assurance fee on all applicable categories of patient
P62   1days and receive supplemental payments for the Medi-Cal program
2patient days pursuant to Article 5.230 (commencing with Section
314169.50), in the same manner that the hospital could participate
4if it were located in the state. Notwithstanding Section 14169.51,
5the department shall rely on reliable data to make reasonable
6estimates or projections made with respect to the hospital as to
7the data, including, but not limited to, the days data source, used
8 for the following: acute psychiatric days, annual fee-for-service
9days, annual managed care days, annual Medi-Cal days,
10fee-for-service days, general acute care days, high acuity days,
11managed care days, Medi-Cal days, Medi-Cal fee-for-service days,
12Medi-Cal managed care days, Medi-Cal managed care fee days,
13outpatient base amount, and transplant days, used to calculate the
14fees due and the supplemental payments. The director may modify
15the procedure set forth in this section to the minimum extent
16necessary to comply with applicable law, in consultation with the
17hospital community as defined in Section 14169.51.

end insert
18begin insert

begin insertSEC. 8.end insert  

end insert
begin insert

This act is an urgency statute necessary for the
19immediate preservation of the public peace, health, or safety within
20the meaning of Article IV of the Constitution and shall go into
21immediate effect. The facts constituting the necessity are:

end insert
begin insert

22In order to make the necessary changes to increase Medi-Cal
23payments to hospitals and improve access at the earliest time, so
24as to allow this act to be operative as soon as approval from the
25federal Centers for Medicare and Medicaid Services is obtained
26by the State Department of Health Care Services, it is necessary
27that this act takes effect immediately.

end insert
begin delete
28

SECTION 1.  

The Legislature finds and declares both of the
29following:

30(a) The Legislature continues to recognize the essential role that
31hospitals play in serving the state’s Medi-Cal beneficiaries. To
32that end, it has been, and remains, the intent of the Legislature to
33improve funding for hospitals and obtain all available federal funds
34to make supplemental Medi-Cal payments to hospitals.

35(b) It is the intent of the Legislature that funding provided to
36hospitals through a hospital quality assurance fee be explored with
37the goal of increasing access to care and improving hospital
38reimbursement through supplemental Medi-Cal payments to
39hospitals.

P63   1

SEC. 2.  

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

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

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

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

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

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

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

29

SEC. 3.  

Section 14164 of the Welfare and Institutions Code is
30amended to read:

31

14164.  

(a) In addition to the required intergovernmental
32transfers set forth in Section 14163, any county, other political
33subdivision of the state, or governmental entity in the state may
34elect to transfer funds, subject to subdivision (m) of Section 14163,
35to the department in support of the Medi-Cal program. Those
36transfers may consist of cash or loans to the state. The department
37shall have the discretion to accept or not accept any elective transfer
38from a county, political subdivision, or other governmental entity,
39as well as the discretion of whether to deposit the transfer in the
40Medi-Cal Inpatient Payment Adjustment Fund established pursuant
P64   1to Section 14163. If the department accepts a transfer pursuant to
2this section, the department shall obtain federal matching funds to
3the full extent permitted by federal law.

4(b) (1) The director may maximize available federal financial
5participation to provide access to services provided by hospitals
6that are not reimbursed by certified public expenditure pursuant
7to Article 5.2 (commencing with Section 14166) by authorizing
8the use of intergovernmental transfers to fund the nonfederal share
9of supplemental payments as permitted under Section 433.51 of
10Title 42 of the Code of Federal Regulations or any other applicable
11federal Medicaid laws. The transferring entity shall certify to the
12department that the funds are in compliance with all federal rules
13and regulations. Any payments funded by intergovernmental
14transfers shall remain with the hospital and shall not be transferred
15back to any county, other political subdivision of the state, or
16governmental entity in the state, except for federal disallowance
17or withhold recovery efforts by the department. Participation in
18intergovernmental transfers under this subdivision is voluntary on
19the part of the transferring entity for purposes of all applicable
20federal laws.

21(2) This subdivision shall be implemented only to the extent
22federal financial participation is not jeopardized.

23

SEC. 4.  

Section 14165 of the Welfare and Institutions Code is
24amended to read:

25

14165.  

(a) There is hereby created in the Governor’s office
26the California Medical Assistance Commission, for the purpose
27of contracting with health care delivery systems for the provision
28of health care services to recipients under the California Medical
29Assistance Program.

30(b) Notwithstanding any other law, the commission created
31pursuant to subdivision (a) shall continue through June 30, 2012,
32after which, it shall be dissolved and the term of any commissioner
33serving at that time shall end.

34(1) Upon dissolution of the commission, all powers, duties, and
35responsibilities of the commission shall be transferred to the
36Director of Health Care Services. These powers, duties, and
37responsibilities shall include, but are not limited to, those exercised
38in the operation of the selective provider contracting program
39pursuant to Article 2.6 (commencing with Section 14081).

P65   1(2) (A) On July 1, 2012, notwithstanding any other law,
2employees of the California Medical Assistance Commission as
3of June 30, 2012, excluding commissioners, shall transfer to the
4State Department of Health Care Services.

5(B) Employees who transfer pursuant to subparagraph (A) shall
6be subject to the same conditions of employment under the
7department as they were under the California Medical Assistance
8Commission, including retention of their exempt status, until the
9diagnosis-related groups payment system described in Section
1014105.28 replaces the contract-based payment system described
11in this article.

12(C) (i) Notwithstanding any other law or rule, persons employed
13by the department who transferred to the department pursuant to
14subparagraph (A) shall be eligible to apply for civil service
15examinations. Persons receiving passing scores shall have their
16names placed on lists resulting from these examinations, or
17otherwise gain eligibility for appointment. In evaluating minimum
18qualifications, related California Medical Assistance Commission
19experience shall be considered state civil service experience in a
20class deemed comparable by the State Personnel Board, based on
21the duties and responsibilities assigned.

22(ii) On the date the diagnosis-related groups payment system
23described in Section 14105.28 replaces the contract-based system
24described in this article, employees who transferred to the
25department pursuant to subparagraph (A) shall transfer to civil
26service classifications within the department for which they are
27eligible.

28(3) Upon a determination by the Director of Health Care
29Services that a payment system based on diagnosis-related groups
30as described in Section 14105.28 that is sufficient to replace the
31contract-based payment system described in this article has been
32developed and implemented, the powers, duties, and responsibilities
33conferred on the commission and transferred to the Director of
34Health Care Services shall no longer be exercised, excluding all
35of the following:

36(A) Stabilization payments made or committed from Sections
3714166.14 and 14166.19 for services rendered prior to the director’s
38determination pursuant to this paragraph.

39(B) The ability to negotiate and make payments from the Private
40Hospital Supplemental Fund, established pursuant to Section
P66   114166.12, and the Nondesignated Public Hospital Supplemental
2Fund, established pursuant to Section 14166.17.

3(C) The ability to continue to administer and distribute payments
4for the Construction Renovation Reimbursement Program, in
5accordance with Sections 14085 to 14085.57, inclusive.
6Notwithstanding any other law, maintaining or negotiating a
7selective provider contract pursuant to Article 2.6 (commencing
8with Section 14081) or a contract with a county organized health
9system shall cease to be a requirement for a hospital’s participation
10in the Construction Renovation Reimbursement Program.

11(4) Protections afforded to the negotiations and contracts of the
12commission by the California Public Records Act (Chapter 3.5
13(commencing with Section 6250) of Division 7 of Title 1 of the
14Government Code) shall be applicable to the negotiations and
15contracts conducted or entered into pursuant to this section by the
16State Department of Health Care Services.

17(c) Notwithstanding the rulemaking provisions of Chapter 3.5
18(commencing with Section 11340) of Part 1 of Division 3 of Title
192 of the Government Code, or any other provision of law, the State
20Department of Health Care Services may implement and administer
21this section by means of provider bulletins or other similar
22instructions, without taking regulatory action. The authority to
23implement this section as set forth in this subdivision shall include
24the authority to give notice by provider bulletin or other similar
25instruction of a determination made pursuant to paragraph (3) of
26subdivision (b) and to modify or supersede existing regulations in
27Title 22 of the California Code of Regulations that conflict with
28implementation of this section.

29

SEC. 5.  

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

31

14167.35.  

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

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

36(2) The department shall directly transmit the fee payments to
37the Treasurer to be deposited in the Hospital Quality Assurance
38Revenue Fund. Notwithstanding Section 16305.7 of the
39Government Code, any interest and dividends earned on deposits
P67   1in the fund shall be retained in the fund for purposes specified in
2subdivision (c).

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

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

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

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

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

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

34(d) Any amounts of the quality assurance fee collected in excess
35of the funds required to implement subdivision (c), including any
36funds recovered under subdivision (d) of Section 14167.14 or
37subdivision (e) of Section 14167.36, shall be refunded to general
38acute care hospitals, pro rata with the amount of quality assurance
39fee paid by the hospital, subject to the limitations of federal law.
40If federal rules prohibit the refund described in this subdivision,
P68   1the excess funds shall be deposited in the Distressed Hospital Fund
2to be used for the purposes described in Section 14166.23, and
3shall be supplemental to and not supplant existing funds.

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

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

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

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

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

38(B) Reduces or increases the amount of the fee payable by a
39hospital in total under this article for the 2008-09, 2009-10, and
402010-11 federal fiscal years by more than 2 percent of the amount
P69   1that would be determined under this article without any change or
2adjustment.

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

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

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

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

31

SEC. 6.  

Section 14167.37 is added to the Welfare and
32Institutions Code
, to read:

33

14167.37.  

(a) (1) The department shall make available all
34public documentation it uses to administer and audit the program
35authorized under Article 5.230 (commencing with Section
3614169.51) and Article 5.231 (commencing with Section 14169.71)
37pursuant to the Public Records Act (Chapter 3.5 (commencing
38with Section 6250) of Division 7 of Title 1 of the Government
39Code).

P70   1(2) In addition, upon request from a hospital, the department
2shall require Medi-Cal managed care plans to furnish hospitals
3with the amounts the plan intends to pay to the hospital pursuant
4to Article 5.230 (commencing with Section 14169.51). Nothing
5in this paragraph shall require the department to reconcile payments
6made to individual hospitals from Medi-Cal managed care plans.

7(b) Notwithstanding subdivision (a), the department shall post
8all of the following on the department’s Internet Web site:

9(1) Within 10 business days after receipt of approval of the
10hospital quality assurance fee program under Article 5.230
11(commencing with Section 14169.51) and Article 5.231
12(commencing with Section 14169.71) from the federal Centers for
13Medicare and Medicaid Services (CMS), the hospital quality
14 assurance fee final model and upper payment limit calculations.

15(2) Quarterly updates on payments, fee schedules, and model
16updates when applicable.

17(3) Within 10 business days after receipt, information on
18managed care rate approvals.

19(c) For purposes of this section, the following definitions shall
20apply:

21(1) “Fee schedules” mean the dates on which the hospital quality
22assurance fee will be due from the hospitals and the dates on which
23the department will submit fee-for-service payments to the
24hospitals. “Fee schedules” also include the dates on which the
25department is expected to submit payments to managed care plans.

26(2) “Hospital quality assurance fee final model” means the
27 spreadsheet calculating the supplemental amounts based on the
28upper payment limit calculation from claims and hospital data
29sources of days and hospital services once CMS approves the
30program under Article 5.230 (commencing with Section 14169.51)
31and Article 5.231 (commencing with Section 14169.71).

32(3) “Upper payment limit calculation” means the determination
33of the federal upper payment limit on the amount of the Medicaid
34payment for which federal financial participation is available for
35a class of service and a class of health care providers, as specified
36in Part 447 of Title 42 of the Code of Federal Regulations and that
37has been approved by CMS.

38

SEC. 7.  

Article 5.230 (commencing with Section 14169.51)
39is added to Chapter 7 of Part 3 of Division 9 of the Welfare and
40Institutions Code
, to read:

 

P71   1Article 5.230.  Medi-Cal Hospital Reimbursement Improvement
2Act of 2013
3

 

4

14169.51.  

For purposes of this article, the following definitions
5shall apply:

6(a) “Acute psychiatric days” means the total number of Medi-Cal
7specialty mental health service administrative days, Medi-Cal
8specialty mental health service acute care days, acute psychiatric
9administrative days, and acute psychiatric acute days identified in
10the Final Medi-Cal Utilization Statistics for the 2012-13 state
11fiscal year as calculated by the department as of December 17,
122012.

13(b) “Converted hospital” means a private hospital that becomes
14a designated public hospital or a nondesignated public hospital on
15or after January 1, 2014.

16(c) “Days data source” means the hospital’s Annual Financial
17Disclosure Report filed with the Office of Statewide Health
18Planning and Development as of June 6, 2013, for its fiscal year
19ending during 2010.

20(d) “Department” means the State Department of Health Care
21Services.

22(e) “Designated public hospital” shall have the meaning given
23in subdivision (d) of Section 14166.1.

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

25(g) “General acute care days” means the total number of
26Medi-Cal general acute care days, including well baby days, less
27any acute psychiatric inpatient days, paid by the department to a
28hospital for services in the 2010 calendar year, as reflected in the
29state paid claims file on April 26, 2013.

30(h) “High acuity days” means Medi-Cal coronary care unit days,
31pediatric intensive care unit days, intensive care unit days, neonatal
32intensive care unit days, and burn unit days paid by the department
33during the 2010 calendar year, as reflected in the state paid claims
34file prepared by the department on April 26, 2013.

35(i) “Hospital community” means any general acute care hospital
36and any hospital industry organization that represents general acute
37care hospitals.

38(j) “Hospital inpatient services” means all services covered
39under Medi-Cal and furnished by hospitals to patients who are
40admitted as hospital inpatients and reimbursed on a fee-for-service
P72   1basis by the department directly or through its fiscal intermediary.
2Hospital inpatient services include outpatient services furnished
3by a hospital to a patient who is admitted to that hospital within
424 hours of the provision of the outpatient services that are related
5to the condition for which the patient is admitted. Hospital inpatient
6services do not include services for which a managed health care
7plan is financially responsible.

8(k) “Hospital outpatient services” means all services covered
9under Medi-Cal furnished by hospitals to patients who are
10registered as hospital outpatients and reimbursed by the department
11on a fee-for-service basis directly or through its fiscal intermediary.
12Hospital outpatient services do not include services for which a
13managed health care plan is financially responsible, or services
14rendered by a hospital-based federally qualified health center for
15which reimbursement is received pursuant to Section 14132.100.

16(l) (1) “Managed health care plan” means a health care delivery
17system that manages the provision of health care and receives
18prepaid capitated payments from the state in return for providing
19services to Medi-Cal beneficiaries.

20(2) (A) Managed health care plans include county organized
21health systems and entities contracting with the department to
22provide services pursuant to two-plan models and geographic
23managed care. Entities providing these services contract with the
24department pursuant to any of the following:

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

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

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

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

29(v) Article 2.91 (commencing with Section 14089).

30(B) Managed health care plans do not include any of the
31following:

32(i) Mental health plans contracting to provide mental health care
33for Medi-Cal beneficiaries pursuant to Chapter 8.9 (commencing
34with Section 14700).

35(ii) Health plans not covering inpatient services such as primary
36care case management plans operating pursuant to Section
3714088.85.

38(iii) Program for All-Inclusive Care for the Elderly organizations
39operating pursuant to Chapter 8.75 (commencing with Section
4014591).

P73   1(m) “Medi-Cal managed care days” means the total number of
2general acute care days, including well baby days, listed for the
3county organized health system and prepaid health plans identified
4in the Final Medi-Cal Utilization Statistics for the 2012-13 fiscal
5year, as calculated by the department as of December 17, 2012.

6(n) “Medicaid inpatient utilization rate” means Medicaid
7inpatient utilization rate as defined in Section 1396r-4 of Title 42
8of the United States Code and as set forth in the Final Medi-Cal
9Utilization Statistics for the 2012-13 fiscal year, as calculated by
10the department as of December 17, 2012.

11(o) “New hospital” means a hospital operation, business, or
12facility functioning under current or prior ownership as a private
13hospital that does not have a days data source or a hospital that
14has a days data source in whole, or in part, from a previous operator
15where there is an outstanding monetary obligation owed to the
16state in connection with the Medi-Cal program and the hospital is
17not, or does not agree to become, financially responsible to the
18department for the outstanding monetary obligation in accordance
19with subdivision (d) of Section 14169.58.

20(p) “Nondesignated public hospital” means either of the
21following:

22(1) A public hospital that is licensed under subdivision (a) of
23Section 1250 of the Health and Safety Code, is not designated as
24a specialty hospital in the hospital’s most recently filed Annual
25Financial Disclosure Report as of January 1, 2014, and satisfies
26the definition in paragraph (25) of subdivision (a) of Section
2714105.98, excluding designated public hospitals.

28(2) A tax-exempt nonprofit hospital that is licensed under
29subdivision (a) of Section 1250 of the Health and Safety Code, is
30not designated as a specialty hospital in the hospital’s most recently
31filed Annual Financial Disclosure Report as of January 1, 2014,
32is operating a hospital owned by a local health care district, and
33is affiliated with the health care district hospital owner by means
34of the district’s status as the nonprofit corporation’s sole corporate
35member.

36(q) “Outpatient base amount” means the total amount of
37payments for hospital outpatient services made to a hospital in the
382010 calendar year, as reflected in the state paid claims file
39prepared by the department on April 26, 2013.

P74   1(r) “Private hospital” means a hospital that meets all of the
2following conditions:

3(1) Is licensed pursuant to subdivision (a) of Section 1250 of
4the Health and Safety Code.

5(2) Is in the Charitable Research Hospital peer group, as set
6forth in the 1991 Hospital Peer Grouping Report published by the
7department, or is not designated as a specialty hospital in the
8hospital’s most recently filed Office of Statewide Health Planning
9and Development Annual Financial Disclosure Report as of January
101, 2014.

11(3) Does not satisfy the Medicare criteria to be classified as a
12long-term care hospital.

13(4) Is a nonpublic hospital, nonpublic converted hospital, or
14converted hospital as those terms are defined in paragraphs (26)
15to (28), inclusive, respectively, of subdivision (a) of Section
1614105.98.

17(5) Is not a nondesignated public hospital or a designated public
18hospital.

19(s) “Program period” means the period from January 1, 2014,
20to December 31, 2015, inclusive.

21(t) “Subject fiscal quarter” means a state fiscal quarter beginning
22on or after January 1, 2014, and ending before January 1, 2016.

23(u) “Subject fiscal year” means a state fiscal year that ends after
24January 1, 2014, and begins before January 1, 2016.

25(v) “Subject month” means a calendar month beginning on or
26after January 1, 2014, and ending before January 1, 2016.

27(w) “Transplant days” means the number of Medi-Cal days, as
28defined in subdivision (q) of Section 14169.71, for MS-DRGs 1,
292, 5 to 10, inclusive, 14, 15, and 652, according to the 2010 Patient
30Discharge file from the Office of Statewide Health Planning and
31Development accessed on June 28, 2011.

32(x) “Upper payment limit” means a federal upper payment limit
33on the amount of the Medicaid payment for which federal financial
34participation is available for a class of service and a class of health
35care providers, as specified in Part 447 of Title 42 of the Code of
36Federal Regulations. The applicable upper payment limit shall be
37separately calculated for inpatient and outpatient hospital services.

38

14169.52.  

(a) Private hospitals shall be paid supplemental
39amounts for the provision of hospital outpatient services for each
40subject fiscal quarter as set forth in this section. The supplemental
P75   1amounts shall be in addition to any other amounts payable to
2hospitals with respect to those services and shall not affect any
3other payments to hospitals. The supplemental amounts shall result
4in payments equal to the statewide aggregate upper payment limit
5for private hospitals for each subject fiscal year, except that with
6respect to a subject fiscal year that begins before the start of the
7program period or that ends after the end of the program period,
8the outpatient supplemental amounts shall result in payments to
9hospitals that equal a percentage of the applicable upper payment
10limit where the percentage equals the percentage of the subject
11fiscal year that occurs during the program period.

12(b) Except as set forth in subdivisions (e) and (f), each private
13hospital shall be paid an amount for each subject fiscal year equal
14to a percentage of the hospital’s outpatient base amount, which
15payments shall be made on a quarterly basis. The percentage shall
16be the same for each hospital for a subject fiscal year, or portion
17thereof in the program period. The percentage shall result in
18payments to hospitals that equal the applicable federal upper
19payment limit as it may be modified pursuant to Section 14169.68
20for a subject fiscal year, or any portion thereof in the program
21period. For purposes of this subdivision the applicable federal
22upper payment limit shall be the federal upper payment limit for
23hospital outpatient services furnished by private hospitals for each
24subject fiscal year, or portion thereof.

25(c) In the event federal financial participation for a subject fiscal
26year is not available for all of the supplemental amounts payable
27to private hospitals under subdivision (b) due to the application of
28a federal upper payment limit or for any other reason, both of the
29following shall apply:

30(1) The total amount payable to private hospitals under
31subdivision (b) for the subject fiscal year shall be reduced to the
32amount for which federal financial participation is available.

33(2) The amount payable under subdivision (b) to each private
34hospital for the subject fiscal year shall be equal to the amount
35computed under subdivision (b) multiplied by the ratio of the total
36amount for which federal financial participation is available to the
37total amount computed under subdivision (b).

38(d) The supplemental amounts set forth in this section are
39inclusive of federal financial participation.

P76   1(e) Payments shall not be made under this section to a new
2hospital for the periods when the hospital is a new hospital.

3(f) Payments shall be made to a converted hospital that converts
4during a subject fiscal quarter by multiplying the hospital’s
5outpatient supplemental payment as calculated in subdivision (b)
6by the number of days that the hospital was a private hospital in
7the subject fiscal quarter, divided by the number of days in the
8subject fiscal quarter. Payments shall not be made to a converted
9hospital in any subsequent subject fiscal quarter.

10

14169.53.  

(a) Except as provided in Section 14169.68, private
11hospitals shall be paid supplemental amounts for the provision of
12hospital inpatient services for each subject fiscal quarter as set
13forth in this section. The supplemental amounts shall be in addition
14to any other amounts payable to hospitals with respect to those
15services and shall not affect any other payments to hospitals. The
16supplemental amounts shall result in payments equal to the
17statewide aggregate upper payment limit for private hospitals for
18each subject fiscal year as it may be modified pursuant to Section
1914169.68, except that with respect to a subject fiscal year that
20begins before the start of the program period or that ends after the
21end of the program period, the inpatient supplemental amounts
22shall result in payments to hospitals that equal a percentage of the
23applicable upper payment limit where the percentage equals the
24percentage of the subject fiscal year that occurs during the program
25period.

26(b) Except as set forth in subdivisions (f) and (g), each private
27hospital shall be paid the sum of all of the following amounts as
28applicable for the provision of hospital inpatient services for each
29subject fiscal quarter:

30(1) One thousand two dollars ($1,002) multiplied by the
31hospital’s general acute care days for supplemental payments for
32the 2014 calendar year, divided by four, and one thousand two
33hundred five dollars ($1,205) multiplied by the hospital’s general
34acute care days for supplemental payments for the 2015 calendar
35year, divided by four.

36(2) Nine hundred seventy dollars ($970) multiplied by the
37hospital’s acute psychiatric days for supplemental payments for
38the 2014 calendar year, divided by four, and nine hundred
39seventy-five dollars ($975) multiplied by the hospital’s acute
P77   1psychiatric days for supplemental payments for the 2015 calendar
2year, divided by four.

3(3) Two thousand five hundred dollars ($2,500) multiplied by
4the number of the hospital’s high acuity days for the respective
5calendar year for 2014 or 2015, divided by four, if the hospital’s
6Medicaid inpatient utilization rate is less than 43 percent and
7 greater than 5 percent and at least 5 percent of the hospital’s general
8acute care days are high acuity days.

9(4) Two thousand five hundred dollars ($2,500) multiplied by
10the number of the hospital’s high acuity days for the respective
11calendar year for 2014 and 2015, divided by four, if the hospital
12qualifies to receive the amount set forth in paragraph (3) and has
13been designated as a Level I, Level II, Adult/Ped Level I, or
14Adult/Ped Level II trauma center by the Emergency Medical
15Services Authority established pursuant to Section 1797.1 of the
16Health and Safety Code.

17(5) Two thousand five hundred dollars ($2,500) multiplied by
18the number of the hospital’s transplant days for the respective
19calendar year for 2014 and 2015, divided by four, if the hospital’s
20 Medicaid inpatient utilization rate is less than 43 percent and
21greater than 5 percent.

22(6) A payment for hospital inpatient services for private hospitals
23that provided Medi-Cal subacute services during the 2010 calendar
24year and have a Medicaid inpatient utilization rate that is greater
25than 5 percent and less than 43 percent equal to 55 percent for the
262014 calendar year of the Medi-Cal subacute payments paid by
27the department to the hospital during the 2010 calendar year, as
28reflected in the state paid claims file prepared by the department
29on April 26, 2013, divided by four, and 60 percent for the 2015
30calendar year of the Medi-Cal subacute payments paid by the
31department to the hospital during the 2010 calendar year, as
32reflected in the state paid claims file prepared by the department
33on April 26, 2013, divided by four.

34(c) If federal financial participation for a subject fiscal year is
35not available for all of the supplemental amounts payable to private
36hospitals under subdivision (b) due to the application of a federal
37upper payment limit or for any other reason, both of the following
38shall apply:

P78   1(1) The total amount payable to private hospitals under
2subdivision (b) for the subject fiscal year shall be reduced to reflect
3the amount for which federal financial participation is available.

4(2) The amount payable under subdivision (b) to each private
5hospital for the subject fiscal year shall be equal to the amount
6computed under subdivision (b) multiplied by the ratio of the total
7amount for which federal financial participation is available to the
8total amount computed under subdivision (b).

9(d) If the amount otherwise payable to a hospital under this
10section for a subject fiscal year exceeds the amount for which
11federal financial participation is available for that hospital, the
12amount due to the hospital for that subject fiscal year shall be
13reduced to the amount for which federal financial participation is
14available.

15(e) The amounts set forth in this section are inclusive of federal
16financial participation.

17(f) Payments shall not be made under this section to a new
18hospital for the periods when the hospital is a new hospital.

19(g) Payments shall be made to a converted hospital that converts
20during a subject fiscal quarter by multiplying the hospital’s
21inpatient supplemental payment as calculated in subdivision (b)
22by the number of days that the hospital was a private hospital in
23the subject fiscal quarter, divided by the number of days in the
24subject fiscal quarter. Payments shall not be made to a converted
25hospital in any subsequent subject fiscal quarter.

26

14169.54.  

(a) The department shall increase capitation
27payments to Medi-Cal managed health care plans for each subject
28month 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
34year, or portion thereof in the program period, shall be the
35maximum amount for which federal financial participation is
36available on an aggregate statewide basis for the applicable subject
37fiscal year, or portion thereof in the program period.

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
P79   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
24 funds 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.

P80   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 the department.

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

11(2) The determination under this subdivision for any subject
12month shall be made after accounting for all federal financial
13participation necessary for full implementation of Section 14182.15
14for that month.

15

14169.55.  

(a) Each managed health care plan receiving
16increased capitation payments under Section 14169.54 shall expend
17the capitation rate increases in a manner consistent with actuarial
18certification, enrollment, and utilization on hospital services. Each
19managed health care plan shall expend increased capitation
20payments on hospital services within 30 days of receiving the
21increased capitation payments to the extent they are made for a
22subject month that is prior to the date on which the payments are
23received by the managed health care plan.

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

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

P81   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 hospitals shall be paid direct
10grants in support of health care expenditures, which shall not
11constitute Medi-Cal payments, and which shall be funded by the
12quality assurance fee set forth in Article 5.231 (commencing with
13Section 14169.71).

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 paragraph
22(2).

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.

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
P82   1subject fiscal year 2015-16 in accordance with the timeframes
2specified in subdivision (a) of Section 14169.59.

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 range
11increases under subparagraph (B) being distributed to managed
12health care plans pursuant to subparagraph (B) for the respective
13subject fiscal quarter. If the rate range increases under subparagraph
14(B) are distributed to managed health care plans, the direct grant
15amounts described in this clause shall be distributed to designated
16public hospitals no later than 30 days after the rate range increases
17have been distributed to managed health care plans pursuant to
18subparagraph (B).

19(B) Of the direct grant amounts set forth in paragraph (1), twenty
20million 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 managed
32care rates for beneficiaries other than newly eligible beneficiaries,
33as defined in subdivision (s) of Section 17612.2, and shall enable
34plans to compensate hospitals for Medi-Cal health services and to
35support the Medi-Cal program. Each managed health care plan
36shall expend 100 percent of the rate range increases on hospital
37services within 30 days of receiving the increased payments. Rate
38range increases funded under this subparagraph shall be allocated
39among plans pursuant to a methodology developed in consultation
40with the hospital community.

P83   1(3) Notwithstanding any other law, any amounts withheld from
2payment to the designated public hospitals by the director as the
3nonfederal share for rate range increases, including those described
4in subparagraph (B) of paragraph (2), shall not be considered
5hospital fee direct grants as defined under subdivision (k) of
6Section 17612.2 and shall not be included in the determination
7under paragraph (1) of subdivision (a) of Section 17612.3.

8(b) Nondesignated public hospitals shall be paid direct grants
9in support of health care expenditures, which shall not constitute
10Medi-Cal payments, and which shall be funded by the quality
11assurance fee set forth in Article 5.231 (commencing with Section
1214169.71).

13(1) The aggregate amount of the grants to nondesignated public
14hospitals shall be twelve million five hundred thousand dollars
15($12,500,000) in the aggregate for the subject fiscal quarters in
16subject fiscal year 2013-14, twenty-five million dollars
17($25,000,000) for subject fiscal year 2014-15, and twelve million
18five hundred thousand dollars ($12,500,000) in the aggregate for
19the subject fiscal quarters in subject fiscal year 2015-16. For each
20subject fiscal year, the director shall allocate the aggregate grant
21amounts in accordance with paragraph (2).

22(2) (A) Of the direct grant amounts set forth in paragraph (1),
23the director shall allocate two million five hundred thousand dollars
24($2,500,000) in the aggregate for the subject fiscal quarters in
25subject fiscal year 2013-14, five million dollars ($5,000,000) for
26subject fiscal year 2014-15, and two million five hundred thousand
27dollars ($2,500,000) in the aggregate for the subject fiscal quarters
28in subject fiscal year 2015-16 among the nondesignated public
29hospitals pursuant to a methodology developed in consultation
30with the nondesignated public hospitals.

31(B) Of the direct grant amounts set forth in paragraph (1), ten
32million dollars ($10,000,000) in the aggregate for the subject fiscal
33quarters in subject fiscal year 2013-14, twenty million dollars
34($20,000,000) for subject fiscal year 2014-15, and ten million
35dollars ($10,000,000) in the aggregate for the subject fiscal quarters
36in subject fiscal year 2015-16 shall be withheld from payment to
37the nondesignated public hospitals by the director, and shall be
38used as the nonfederal share for rate range increases, as defined
39in paragraph (4) of subdivision (b) of Section 14301.4, to risk-based
40payments to managed care health plans that contract with the
P84   1department. The rate range increases shall enable plans to
2compensate hospitals for Medi-Cal health services and to support
3the Medi-Cal program. Each managed health care plan shall expend
4100 percent of the rate range increases on hospital services within
530 days of receiving the increased payments. Rate range increases
6funded under this subparagraph shall be allocated among plans
7pursuant to a methodology developed in consultation with the
8hospital community.

9(c) If the amounts set forth in this section for rate range increases
10are not actually used for rate range increases as described in this
11section, the direct grant amounts set forth in this section that are
12withheld pursuant to clause (ii) of subparagraph (A) of paragraph
13(1) of subdivision (a) or as the nonfederal share for rate range
14increases for rate range increases pursuant to subparagraph (B) of
15paragraph (2) of subdivision (a) or subparagraph (B) of paragraph
16(2) of subdivision (b) shall be returned to the Hospital Quality
17Assurance Revenue Fund subject to subdivision (c) of Section
1814169.73.

19

14169.57.  

(a) The amount of any payments made under this
20article to private hospitals, including the amount of payments made
21under Sections 14169.52 and 14169.53 and additional payments
22to private hospitals by managed health care plans pursuant to
23Section 14169.54, shall not be included in the calculation of the
24low-income percent or the OBRA 1993 payment limitation, as
25defined in paragraph (24) of subdivision (a) of Section 14105.98,
26for purposes of determining payments to private hospitals.

27(b) The amount of any payments made to a hospital under this
28article shall not be included in the calculation of stabilization
29funding under Article 5.2 (commencing with Section 14166) or
30 any successor legislation, including legislation implementing
31California’s Bridge to Reform Section 1115(a) Medicaid
32Demonstration (11-W-00193/9).

33

14169.58.  

(a) (1) Except as provided in this section, all data
34and other information relating to a hospital that are used for the
35purposes of this article, including, without limitation, the days data
36source, shall continue to be used to determine the payments to that
37hospital pursuant to this article, regardless of whether the hospital
38has undergone one or more changes of ownership.

P85   1(2) All supplemental payments to a hospital under this article
2shall be made to the licensee of a hospital on the date the
3supplemental payment is made.

4(b) The data of separate facilities prior to a consolidation shall
5be aggregated for the purposes of this article if: (1) a private
6 hospital consolidates with another private hospital, (2) the facilities
7operate under a consolidated hospital license, (3) data for a period
8prior to the consolidation is used for purposes of this article, and
9(4) neither hospital has had a change of ownership on or after the
10effective date of this article unless paragraph (2) of subdivision
11(d) has been satisfied by the new owner. Data of a facility that was
12a separately licensed hospital prior to the consolidation shall not
13be included in the data, including the days data source, for the
14purpose of determining payments to the facility under this article
15for any time period during which the facility is closed. A facility
16shall be deemed to be closed for purposes of this subdivision on
17the first day of any period during which the facility has no general
18acute, psychiatric, or rehabilitation inpatients for at least 30
19consecutive days. A facility that has been deemed to be closed
20under this subdivision shall no longer be deemed to be closed on
21the first subsequent day on which it has general acute, psychiatric,
22or rehabilitation inpatients.

23(c) The payments to a hospital under this article shall not be
24made for any period during which the hospital is closed. A hospital
25shall be deemed to be closed on the first day of any period during
26which the hospital has no general acute, psychiatric, or
27rehabilitation inpatients for at least 30 consecutive days. A hospital
28that has been deemed to be closed under this subdivision shall no
29longer be deemed to be closed on the first subsequent day on which
30it has general acute, psychiatric, or rehabilitation inpatients.
31Payments under this article to a hospital that is closed during any
32portion of a subject fiscal quarter shall be reduced by applying a
33fraction, expressed as a percentage, the numerator of which shall
34be the number of days during the applicable subject fiscal quarter
35that the hospital is closed during the subject fiscal year and the
36 denominator of which shall be the number of days in the subject
37fiscal quarter.

38(d) The following provisions shall apply only for purposes of
39this article and Article 5.231 (commencing with Section 14169.71),
40and shall have no application outside of this article and Article
P86   15.231 (commencing with Section 14169.71) nor shall they affect
2the assumption of any outstanding monetary obligation to the
3Medi-Cal program:

4(1) The director shall develop and describe in provider bulletins
5and on the department’s Internet Web site a process by which the
6new operator of a hospital that has a days data source in whole or
7in part from a previous operator may enter into an agreement with
8the department to confirm that it is financially responsible or to
9become financially responsible to the department for the
10outstanding monetary obligation to the Medi-Cal program of the
11previous operator in order to avoid being classified as a new
12hospital for purposes of this article. This process shall be available
13for changes of ownership that occur before, on, or after January
141, 2014.

15(2) The outstanding monetary obligation referred to in
16subdivision (o) of Section 14169.51 and subdivision (u) of Section
1714169.71 shall include liabilities for all of the following:

18(A) Payment of the quality assurance fee established pursuant
19to Article 5.231 (commencing with Section 14169.71).

20(B) Known overpayments that have been asserted by the
21department or its fiscal intermediary by sending a written
22communication that is received by the hospital prior to the date
23that the new operator becomes the licensee of the hospital.

24(C) Overpayments that are asserted after that date and arise from
25customary reconciliations of payments, such as cost report
26settlements, and, with the exception of overpayments described in
27subparagraph (B), shall exclude liabilities arising from the
28fraudulent or intentionally criminal act of a prior operator if the
29new operator did not knowingly participate in or continue that
30fraudulent or criminal act after becoming the licensee.

31(3) The department shall have the discretion to determine
32whether the new owner properly and fully agreed to be financially
33responsible for the outstanding monetary obligation in connection
34with the Medi-Cal program and seek additional assurances as the
35department deems necessary. However, a new owner that executes
36an agreement with the department as described in paragraph (1)
37shall be conclusively deemed to have agreed to be financially
38responsible for the outstanding monetary obligation in connection
39with the Medi-Cal program. The department may establish the
40terms for satisfying the outstanding monetary obligation in
P87   1connection with the Medi-Cal program, including, but not limited
2to, recoupment from amounts payable to the hospital under this
3section.

4

14169.59.  

The department shall make disbursements from the
5Hospital Quality Assurance Revenue Fund consistent with all of
6the following:

7(a) Fund disbursements shall be made periodically within 15
8days of each date on which quality assurance fees are due from
9hospitals.

10(b) The funds shall be disbursed in accordance with the order
11of priority set forth in subdivision (b) of Section 14169.73, except
12that funds may be set aside for increased capitation payments to
13managed care health plans pursuant to subdivision (f) of Section
1414169.54.

15(c) The funds shall be disbursed in each payment cycle in
16accordance with the order of priority set forth in subdivision (b)
17of Section 14169.73 as modified by subdivision (b) so that the
18supplemental payments, direct grants to hospitals, and increased
19capitation payments to managed health care plans are made to the
20maximum extent for which funds are available.

21(d) To the maximum extent possible, consistent with the
22availability of funds in the Hospital Quality Assurance Revenue
23Fund and the timing of federal approvals, the supplemental
24payments, direct grants to hospitals, and increased capitation
25payments to managed health care plans under this article shall be
26made before December 31, 2015.

27(e) The aggregate amount of funds to be disbursed to private
28hospitals shall be determined under Sections 14169.52 and
2914169.53. The aggregate amount of funds to be disbursed to
30managed health care plans shall be determined under Section
3114169.54. The aggregate amount of direct grants to designated
32 and nondesignated public hospitals shall be determined under
33Section 14169.56.

34

14169.60.  

(a) Exclusive of payments made under former
35Article 5.21 (commencing with Section 14167.1), former Article
365.226 (commencing with Section 14168.1), and Article 5.228
37(commencing with Section 14169.1), payment rates for hospital
38outpatient services, furnished by private hospitals, nondesignated
39public hospitals, and designated public hospitals before December
P88   131, 2015, exclusive of amounts payable under this article, shall
2not be reduced below the rates in effect on January 1, 2014.

3(b) Rates payable to hospitals for hospital inpatient services
4furnished before December 31, 2015, under contracts negotiated
5pursuant to the selective provider contracting program under Article
62.6 (commencing with Section 14081), shall not be reduced below
7the contract rates in effect on January 1, 2014. This subdivision
8shall not prohibit changes to the supplemental payments paid to
9individual hospitals under Sections 14166.12, 14166.17, and
1014166.23, provided that the aggregate amount of the payments for
11each subject fiscal year is not less than the minimum amount
12permitted under former Section 14167.13.

13(c) Notwithstanding Section 14105.281, exclusive of payments
14made under former Article 5.21 (commencing with Section
1514167.1), former Article 5.226 (commencing with Section
1614168.1), and Article 5.228 (commencing with Section 14169.1),
17payments to private hospitals for hospital inpatient services
18furnished before January 1, 2014, that are not reimbursed under a
19contract negotiated pursuant to the selective provider contracting
20program under Article 2.6 (commencing with Section 14081),
21exclusive of amounts payable under this article, shall not be less
22than the amount of payments that would have been made under
23the payment methodology in effect on the effective date of this
24article.

25(d) The requirements in subdivisions (b) and (c) shall be met
26with respect to the inpatient hospital reimbursement methodology
27based on diagnosis-related groups pursuant to Section 14105.28
28if the rates paid under the Medi-Cal inpatient hospital
29reimbursement methodology based on diagnosis-related groups
30result in an average payment per discharge to all hospitals subject
31to the new reimbursement methodology, calculated on an aggregate
32basis per subject fiscal year, exclusive of amounts payable under
33this article, amounts payable under Sections 14166.11 and
3414166.23, and if amounts payable under Sections 14166.12 and
3514166.17 are not included in the payments under the
36diagnosis-related group methodology and continue to be paid
37separately to hospitals, exclusive of those amounts, that is not less
38than the average payment per discharge to the hospitals, exclusive
39of amounts payable under this article, amounts payable under
40Sections 14166.11 and 14166.23, and if amounts payable under
P89   1Sections 14166.12 and 14166.17 are not included in the payments
2under the diagnosis-related group methodology and continue to
3be paid separately to hospitals, exclusive of those amounts,
4calculated on an aggregate basis for the six months ending
5December 31, 2013, adjusted, in consultation with the hospital
6community, to reflect the movement of populations into managed
7care under Article 5.4 (commencing with Section 14180).

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

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

20

14169.61.  

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

21(1) Promptly submit any state plan amendment or waiver request
22that may be necessary to implement this article.

23(2) Promptly seek federal approvals or waivers as may be
24necessary to implement this article and to obtain federal financial
25participation to the maximum extent possible for the payments
26under this article.

27(3) Amend the contracts between the managed health care plans
28and the department as necessary to incorporate the provisions of
29Sections 14169.54 and 14169.55 and promptly seek all necessary
30federal approvals of those amendments. The department shall
31 pursue amendments to the contracts as soon as possible after the
32effective date of this article and Article 5.231 (commencing with
33Section 14169.71), and shall not wait for federal approval of this
34article or Article 5.231 (commencing with Section 14169.71) prior
35to pursuing amendments to the contracts. The amendments to the
36contracts shall, among other provisions, set forth an agreement to
37increase capitation payments to managed health care plans under
38Section 14169.54 and increase payments to hospitals under Section
3914169.55 in a manner that relates back to January 1, 2014, or as
40soon thereafter as possible, conditioned on obtaining all federal
P90   1approvals necessary for federal financial participation for the
2increased capitation payments to the managed health care plans.

3(b) In implementing this article, the department may utilize the
4services of the Medi-Cal fiscal intermediary through a change
5order to the fiscal intermediary contract to administer this program,
6consistent with the requirements of Sections 14104.6, 14104.7,
714104.8, and 14104.9. Contracts entered into for purposes of
8implementing this article or Article 5.231 (commencing with
9Section 14169.71) shall not be subject to Part 2 (commencing with
10Section 10100) of Division 2 of the Public Contract Code.

11(c) This article shall become inoperative if either of the
12following occurs:

13(1) In the event, and on the effective date, of a final judicial
14determination made by any court of appellate jurisdiction or a final
15determination by the federal Department of Health and Human
16Services or the federal Centers for Medicare and Medicaid Services
17that Section 14169.52 or 14169.53 cannot be implemented. This
18paragraph shall not apply to a final judicial determination made
19by any court of appellate jurisdiction in a case brought by hospitals
20located outside the State of California.

21(2) In the event both of the following conditions exist:

22(A) The federal Centers for Medicare and Medicaid Services
23denies approval for, or does not approve before January 1, 2016,
24the implementation of Section 14169.52, Section 14169.53, or the
25quality assurance fee established pursuant to Article 5.231
26(commencing with Section 14169.71).

27(B) Section 14169.52, Section 14169.53, or Article 5.231
28(commencing with Section 14169.71) cannot be modified by the
29department pursuant to subdivision (e) of Section 14169.73 in
30order to meet the requirements of federal law or to obtain federal
31approval.

32(d) If this article becomes inoperative pursuant to paragraph (1)
33of subdivision (c) and the determination applies to any period or
34periods of time prior to the effective date of the determination, the
35department shall have authority to recoup all payments made
36pursuant to this article during that period or those periods of time.

37(e) In the event any hospital, or any party on behalf of a hospital,
38initiates a case or proceeding in any state or federal court in which
39the hospital seeks any relief of any sort whatsoever, including, but
40not limited to, monetary relief, injunctive relief, declaratory relief,
P91   1or a writ, based in whole or in part on a contention that any or all
2of this article or Article 5.231 (commencing with Section 14169.71)
3is unlawful and may not be lawfully implemented, both of the
4following shall apply:

5(1) Payments shall not be made to the hospital pursuant to this
6article until the case or proceeding is finally resolved, including
7the final disposition of all appeals.

8(2) Any amount computed to be payable to the hospital pursuant
9to this article shall be withheld by the department and shall be paid
10to the hospital only after the case or proceeding is finally resolved,
11including the final disposition of all appeals.

12(f) Subject to Section 14169.74, no payment shall be made under
13this article until all necessary federal approvals for the payment
14and for the fee provisions in Article 5.231 (commencing with
15Section 14169.71) have been obtained and the fee has been
16imposed and collected. Notwithstanding any other law, payments
17under this article shall be made only to the extent that the fee
18established in Article 5.231 (commencing with Section 14169.71)
19is collected and available to cover the nonfederal share of the
20payments.

21(g) A hospital’s receipt of payments under this article for
22services rendered prior to the effective date of this article is
23conditioned on the hospital’s continued participation in Medi-Cal
24for at least 30 days after the effective date of this article.

25(h) All payments made by the department to hospitals and
26managed health care plans under this article shall be made only
27from the following:

28(1) The quality assurance fee set forth in Article 5.231
29(commencing with Section 14169.71) and due and payable on or
30before December 31, 2015, along with any interest or other
31investment income thereon.

32(2) Federal reimbursement and any other related federal funds.

33(i) In order to ensure access to care for hospital services, the
34director shall seek federal approval for supplemental payments for
35hospital services provided to all Medi-Cal populations, including
36the optional and expansion populations.

37

14169.62.  

Notwithstanding any other provision of this article
38or Article 5.231 (commencing with Section 14169.71), the director
39may proportionately reduce the amount of any supplemental
40payments or increased capitation payments under this article to
P92   1the extent that the payment would result in the reduction of other
2amounts payable to a hospital or managed health care plan due to
3the application of federal law.

4

14169.63.  

The director may, pursuant to Section 14169.80,
5decide not to implement or to discontinue implementation of this
6article and Article 5.231 (commencing with Section 14169.71),
7and to retroactively invalidate the requirements for supplemental
8payments or other payments under this article.

9

14169.64.  

(a) This article shall remain operative only until the
10later of the following:

11(1) January 1, 2017.

12(2) The date of the last payment of the quality assurance fee
13payments pursuant to Article 5.231 (commencing Section
1414169.71).

15(3) The date of the last payment from the department pursuant
16to this article.

17(b) If this article becomes inoperative under paragraph (1) of
18subdivision (a), this article shall be repealed on January 1, 2017,
19unless a later enacted statute enacted before that date, deletes or
20extends that date.

21(c) If this article becomes inoperative under paragraph (2) or
22(3) of subdivision (a), this article shall be repealed on January 1
23of the year following the date this article becomes inoperative,
24unless a later enacted statute enacted before that date, deletes or
25extends that date.

26

14169.65.  

Notwithstanding any other law, if federal approval
27or a letter that indicates likely federal approval in accordance with
28Section 14169.74 has not been received on or before December
291, 2015, then this article shall become inoperative, and as of
30December 1, 2015, is repealed, unless a later enacted statute, that
31is enacted before December 1, 2015, deletes or extends that date.

32

14169.66.  

Notwithstanding Chapter 3.5 (commencing with
33Section 11340) of Part 1 of Division 3 of Title 2 of the Government
34Code, the department shall implement this article by means of
35policy letters or similar instructions, without taking further
36regulatory action.

37

14169.67.  

If the director determines that this article has become
38inoperative pursuant to Section 14169.61, 14169.64, 14169.65, or
3914169.80, the director shall execute a declaration stating that this
40determination has been made and stating the basis for this
P93   1determination. The director shall retain the declaration and provide
2a copy, within five working days of the execution of the
3declaration, to the fiscal and appropriate policy committees of the
4Legislature. In addition, the director shall post the declaration on
5the department’s Internet Web site and the director shall send the
6declaration to the Secretary of State, the Secretary of the Senate,
7the Chief Clerk of the Assembly, and the Legislative Counsel.

8

14169.68.  

(a) It is the intent of the Legislature to consider
9legislation requiring the director to seek approval to increase
10payments to hospitals in accordance with Section 14169.52, Section
1114169.53, and Section 14169.54, and to adopt a corresponding
12increase in the fee imposed pursuant to Article 5.231 (commencing
13with Section 14169.71), consistent with federal law and regulations,
14if the director determines that the maximum available upper
15payment limits described in subdivision (a) of Section 14169.52
16or subdivision (a) of Section 14169.53, or the amount of federal
17financial participation for increased capitation payments to
18managed care health plans in subdivision (c) of Section 14169.54,
19have increased during the program period.

20(b) The legislation described in subdivision (a) shall do both of
21the following:

22(1) Require the director to work in consultation with the hospital
23community in seeking any necessary approvals from the federal
24Centers for Medicare and Medicaid Services to increase payments
25to hospitals and to impose corresponding fee increases.

26(2) Require that, in the event that the director determines that
27the maximum available upper payment limits in subdivision (a)
28of Section 14169.52 or subdivision (a) of Section 14169.53, or the
29amount of federal financial participation for increased capitation
30payments to managed care health plans in subdivision (c) of Section
3114169.54, have increased during the program period, the increases
32shall first be made available for the purposes of this section prior
33to being used for other purposes.

34(c) Notwithstanding any other provision of this article or Article
355.231 (commencing with Section 14169.71), failure to secure, or
36denial of, any necessary federal approvals required by the
37legislation described in subdivision (a) shall not affect
38implementation of this article or Article 5.231 (commencing with
39Section 14169.71).

P94   1

14169.69.  

To the extent permitted by federal law and other
2federal requirements, the director shall develop and describe in
3provider bulletins and on the department’s Internet Web site a
4process by which a private general acute care hospital located
5outside the state that serves Medi-Cal beneficiaries may opt in to
6pay the quality assurance fee pursuant to Article 5.231
7(commencing with Section 14169.71) and receive supplemental
8payments pursuant to this article, in the same manner that the
9hospital could participate if it were located in the state.
10Notwithstanding Section 14169.51 and Section 14169.71, the
11department shall rely on reliable data to make reasonable estimates
12or projections made with respect to the hospital as to the data,
13including, but not limited to, the days data source, used to calculate
14the fees due under Article 5.231 (commencing with Section
1514169.71) and the supplemental payments under this article.
16Hospitals located outside the state that would meet the definition
17of a small and rural hospital if they were located in the state shall
18be deemed a small and rural hospital for the purposes of Article
195.231 (commencing with Section 14169.71) and this article.

20

14169.70.  

(a) Notwithstanding any provision of this article or
21Article 5.231 (commencing with Section 14169.71), the director
22may correct any identified material and egregious errors in the
23data, including, but not limited to, the days data source, used in
24this article or Article 5.231 (commencing with Section 14169.71).
25An error is material and egregious if the error is clear to the
26director, based on information the director finds to be reliable, and
27results in an increase or decrease to a hospital’s supplemental
28payment under Sections 14169.52 and 14169.53, or an increase
29or decrease to a hospital’s quality assurance fee payments under
30Article 5.231 (commencing with Section 14169.71), of at least one
31million dollars ($1,000,000) for any subject fiscal year. The
32director’s determination whether to exercise his or her discretion
33under this section and any determination made by the director
34under this section shall not be subject to judicial review, except
35that a hospital may bring a writ of mandate under Section 1085 of
36the Code of Civil Procedure to rectify an abuse of discretion by
37the department in correcting that hospital’s data when that
38correction results in lower supplemental payments under Sections
3914169.52 and 14169.53 in the aggregate or higher quality assurance
P95   1fees for that hospital pursuant to Article 5.231 (commencing with
2Section 14169.71).

3(b) Notwithstanding any other law, with respect to a hospital
4described in subdivision (f) of Section 14165.50, both of the
5following shall apply:

6(1) The hospital shall not be considered a new hospital, as
7defined in subdivision (o) of Section 14169.51 for purposes of this
8article and subdivision (u) of Section 14169.71 for purposes of
9 Article 5.231 (commencing with Section 14169.71).

10(2) To the extent permitted by federal law and other federal
11requirements, the department shall use the best available and
12reasonable estimates or projections made with respect to the
13hospital for an annual period as the data, including, but not limited
14to, the days data source, used in this article or Article 5.231
15(commencing with Section 14169.71).

16

SEC. 8.  

Article 5.231 (commencing with Section 14169.71)
17is added to Chapter 7 of Part 3 of Division 9 of the Welfare and
18Institutions Code
, to read:

19 

20Article 5.231.  Private Hospital Quality Assurance Fee Act of
212013
22

 

23

14169.71.  

For purposes of this article, the following definitions
24shall apply:

25(a) “Annual fee-for-service days” means the number of
26fee-for-service days of each hospital subject to the quality assurance
27fee, as reported on the days data source.

28(b) “Annual managed care days” means the number of managed
29care days of each hospital subject to the quality assurance fee, as
30reported on the days data source.

31(c) “Annual Medi-Cal days” means the number of Medi-Cal
32days of each hospital subject to the quality assurance fee, as
33reported on the days data source.

34(d) “Converted hospital” means a hospital described in
35subdivision (b) of Section 14169.51.

36(e) “Days data source” means the hospital’s Annual Financial
37Disclosure Report filed with the Office of Statewide Health
38Planning and Development as of June 6, 2013, for its fiscal year
39ending during 2010.

P96   1(f) “Department” means the State Department of Health Care
2Services.

3(g) “Designated public hospital” shall have the meaning given
4in subdivision (d) of Section 14166.1 as of January 1, 2014.

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

6(i) “Exempt facility” means any of the following:

7(1) A public hospital, which shall include either of the following:

8(A) A hospital, as defined in paragraph (25) of subdivision (a)
9of Section 14105.98.

10(B) A tax-exempt nonprofit hospital that is licensed under
11subdivision (a) of Section 1250 of the Health and Safety Code and
12operating a hospital owned by a local health care district, and is
13affiliated with the health care district hospital owner by means of
14the district’s status as the nonprofit corporation’s sole corporate
15member.

16(2) With the exception of a hospital that is in the Charitable
17Research Hospital peer group, as set forth in the 1991 Hospital
18Peer Grouping Report published by the department, a hospital that
19is a hospital designated as a specialty hospital in the hospital’s
20most recently filed Office of Statewide Health Planning and
21Development Hospital Annual Financial Disclosure Report as of
22January 1, 2014.

23(3) A hospital that satisfies the Medicare criteria to be a
24long-term care hospital.

25(4) A small and rural hospital as specified in Section 124840
26of the Health and Safety Code designated as that in the hospital’s
27most recently filed Office of Statewide Health Planning and
28Development Hospital Annual Financial Disclosure Report as of
29January 1, 2014.

30(j) “Federal approval” means the approval by the federal
31government of both the quality assurance fee established pursuant
32to this article and the payments to private hospitals described in
33Article 5.230 (commencing with Section 14169.51).

34(k) (1) “Fee-for-service per diem quality assurance fee rate”
35means a fixed daily fee on fee-for-service days.

36(2) The fee-for-service per diem quality assurance fee rate shall
37 be three hundred ninety-nine dollars and thirty-six cents ($399.36)
38per day for the 2014 calendar year and four hundred fifty-four
39dollars and seventy-nine cents ($454.79) per day for the 2015
40calendar year.

P97   1(3) Upon federal approval or conditional federal approval
2described in Section 14169.74, the director shall determine the
3fee-for-service per diem quality assurance fee rate based on the
4funds required to make the payments specified in Article 5.230
5(commencing with Section 14169.51), in consultation with the
6hospital community.

7(l) “Fee-for-service days” means inpatient hospital days where
8the service type is reported as “acute care,” “psychiatric care,” and
9“rehabilitation care,” and the payer category is reported as
10“Medicare traditional,” “county indigent programs-traditional,”
11“other third parties-traditional,” “other indigent,” and “other
12payers,” for purposes of the Annual Financial Disclosure Report
13submitted by hospitals to the Office of Statewide Health Planning
14and Development.

15(m) “General acute care hospital” means any hospital licensed
16pursuant to subdivision (a) of Section 1250 of the Health and Safety
17Code.

18(n) “Hospital community” means any general acute care hospital
19and any hospital industry organization that represents general acute
20care hospitals.

21(o) “Managed care days” means inpatient hospital days where
22the service type is reported as “acute care,” “psychiatric care,” and
23“rehabilitation care,” and the payer category is reported as
24“Medicare managed care,” “county indigent programs-managed
25care,” and “other third parties-managed care,” for purposes of the
26Annual Financial Disclosure Report submitted by hospitals to the
27Office of Statewide Health Planning and Development.

28(p) “Managed care per diem quality assurance fee rate” means
29a fixed fee on managed care days of one hundred forty-five dollars
30($145) per day for the 2014 calendar year and one hundred seventy
31dollars ($170) per day for the 2015 calendar year.

32(q) “Medi-Cal days” means inpatient hospital days where the
33service type is reported as “acute care,” “psychiatric care,” and
34“rehabilitation care,” and the payer category is reported as
35“Medi-Cal traditional” and “Medi-Cal managed care,” for purposes
36of the Annual Financial Disclosure Report submitted by hospitals
37to the Office of Statewide Health Planning and Development.

38(r) “Medi-Cal fee-for-service days” means inpatient hospital
39days where the service type is reported as “acute care,” “psychiatric
40care,” and “rehabilitation care,” and the payer category is reported
P98   1as “Medi-Cal traditional” for purposes of the Annual Financial
2Disclosure Report submitted by hospitals to the Office of Statewide
3Health Planning and Development.

4(s) “Medi-Cal managed care days” means inpatient hospital
5days as reported on the days data source when the service type is
6reported as “acute care,” “psychiatric care,” and “rehabilitation
7care,” and the payer category is reported as “Medi-Cal managed
8care” for purposes of the Annual Financial Disclosure Report
9submitted by hospitals to the Office of Statewide Health Planning
10and Development.

11(t) “Medi-Cal per diem quality assurance fee rate” means a fixed
12fee on Medi-Cal days of four hundred seventy-six dollars and
13twenty-three cents ($476.23) per day for the 2014 calendar year
14and five hundred forty-seven dollars and sixty-eight cents ($547.68)
15for the 2015 calendar year.

16(u) “New hospital” means a hospital operation, business, or
17facility functioning under current or prior ownership as a private
18hospital that does not have a days data source or a hospital that
19has a days data source in whole, or in part, from a previous operator
20 where there is an outstanding monetary obligation owed to the
21state in connection with the Medi-Cal program and the hospital is
22not, or does not agree to become, financially responsible to the
23department for the outstanding monetary obligation in accordance
24with subdivision (d) of Section 14169.58.

25(v) “Nondesignated public hospital” means either of the
26following:

27(1) A public hospital that is licensed under subdivision (a) of
28Section 1250 of the Health and Safety Code, is not designated as
29a specialty hospital in the hospital’s most recently filed Annual
30Financial Disclosure Report as of January 1, 2014, and satisfies
31the definition in paragraph (25) of subdivision (a) of Section
3214105.98, excluding designated public hospitals.

33(2) A tax-exempt nonprofit hospital that is licensed under
34subdivision (a) of Section 1250 of the Health and Safety Code, is
35not designated as a specialty hospital in the hospital’s most recently
36filed Annual Financial Disclosure Report as of January 1, 2014,
37is operating a hospital owned by a local health care district, and
38is affiliated with the health care district hospital owner by means
39of the district’s status as the nonprofit corporation’s sole corporate
40member.

P99   1(w) “Prepaid health plan hospital” means a hospital owned by
2a nonprofit public benefit corporation that shares a common board
3of directors with a nonprofit health care service plan, which
4exclusively contracts with no more than two medical groups in the
5 state to provide or arrange for professional medical services for
6the enrollees of the plan.

7(x) “Prepaid health plan hospital managed care per diem quality
8assurance fee rate” means a fixed fee on non-Medi-Cal managed
9care days for prepaid health plan hospitals of eighty-one dollars
10and twenty cents ($81.20) per day for the 2014 calendar year and
11ninety-five dollars and twenty cents ($95.20) per day for the 2015
12calendar year.

13(y) “Prepaid health plan hospital Medi-Cal managed care per
14diem quality assurance fee rate” means a fixed fee on Medi-Cal
15managed care days for prepaid health plan hospitals of two hundred
16sixty-six dollars and sixty-nine cents ($266.69) per day for the
172014 calendar year and three hundred six dollars and seventy cents
18($306.70) per day for the 2015 calendar year.

19(z) “Private hospital” means a hospital that meets all of the
20following conditions:

21(1) Is licensed pursuant to subdivision (a) of Section 1250 of
22the Health and Safety Code.

23(2) Is in the Charitable Research Hospital peer group, as set
24forth in the 1991 Hospital Peer Grouping Report published by the
25department, or is not designated as a specialty hospital in the
26hospital’s most recently filed Office of Statewide Health Planning
27and Development Annual Financial Disclosure Report as of January
281, 2014.

29(3) Does not satisfy the Medicare criteria to be classified as a
30long-term care hospital.

31(4) Is a nonpublic hospital, nonpublic converted hospital, or
32converted hospital as those terms are defined in paragraphs (26)
33to (28), inclusive, respectively, of subdivision (a) of Section
3414105.98.

35(5) Is not a nondesignated public hospital or a designated
36hospital.

37(aa) “Program period” means the period from January 1, 2014,
38to December 31, 2015, inclusive.

P100  1(ab) “Quality assurance fee” means the quality assurance fee
2assessed pursuant to Section 14169.72 and collected on the basis
3of the quarterly quality assurance fee.

4(ac) (1) “Quarterly quality assurance fee” means, with respect
5to a hospital that is not a prepaid health plan hospital, the sum of
6all of the following:

7(A) The annual fee-for-service days for an individual hospital
8multiplied by the fee-for-service per diem quality assurance fee
9rate, divided by four.

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

13(C) The annual Medi-Cal days for an individual hospital
14multiplied by the Medi-Cal per diem quality assurance fee rate,
15divided by four.

16(2) “Quarterly quality assurance fee” means, with respect to a
17hospital that is a prepaid health plan hospital, the sum of all of the
18following:

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

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

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

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

31(ad) “Subject fiscal quarter” means a state fiscal quarter during
32the program period.

33(ae) “Subject fiscal year” means a state fiscal year that ends
34after July 1, 2013, and begins before January 1, 2016.

35(af) “Upper payment limit” means a federal upper payment limit
36on the amount of the Medicaid payment for which federal financial
37participation is available for a class of service and a class of health
38care providers, as specified in Part 447 of Title 42 of the Code of
39Federal Regulations. The applicable upper payment limit shall be
40separately calculated for inpatient and outpatient hospital services.

P101  1

14169.72.  

(a) There shall be imposed on each general acute
2care hospital that is not an exempt facility a quality assurance fee,
3provided that a quality assurance fee under this article shall not be
4imposed on a converted hospital for the periods when the hospital
5is a public hospital or a new hospital.

6(b) The department shall compute the quarterly quality assurance
7fee for each subject fiscal quarter starting on January 1, 2014, and
8through and including December 31, 2015.

9(c) Subject to Section 14169.74, upon receipt of federal
10approval, the following shall become operative:

11(1) Within 10 business days following receipt of the notice of
12federal approval from the federal government, the department shall
13send notice to each hospital subject to the quality assurance fee
14the following information:

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

16(B) The quarterly quality assurance fee for each subject fiscal
17year.

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

19(2) The hospitals shall pay the quarterly quality assurance fees,
20based on a schedule developed by the department. The department
21shall establish the date that each payment is due, provided that the
22 first payment shall be due no earlier than 20 days following the
23date the department sends the notice pursuant to paragraph (1),
24and the payments shall be paid at least one month apart, but if
25possible, the payments shall be paid on a quarterly basis.

26(3) Notwithstanding any other provision of this section, the
27amount of each hospital’s quarterly quality assurance fees for the
28program period that have not been paid by the hospital before
29December 15, 2015, shall be paid by the hospital no later than
30December 15, 2015.

31(4) Each hospital described in subdivision (a) shall pay the
32quarterly quality assurance fees that are due, if any, in the amounts
33and at the times set forth in the notice unless superseded by a
34subsequent notice from the department.

35(d) The quality assurance fee, as paid pursuant to this section,
36shall be paid by each hospital subject to the fee to the department
37for deposit in the Hospital Quality Assurance Revenue Fund
38established pursuant to Section 14167.35. Deposits may be
39accepted at any time and will be credited toward the program
40period.

P102  1(e) This section shall become inoperative if the federal Centers
2for Medicare and Medicaid Services denies approval for, or does
3not approve before July 1, 2016, the implementation of the quality
4assurance fee pursuant to this article or the supplemental payments
5to private hospitals described in Sections 14169.52 and 14169.53.

6(f) In no case shall the aggregate fees collected in a federal fiscal
7year pursuant to this section, former Section 14167.32, and Sections
814168.32 and 14169.32 exceed the maximum percentage of the
9annual aggregate net patient revenue for hospitals subject to the
10fee that is prescribed pursuant to federal law and regulations as
11necessary to preclude a finding that an indirect guarantee has been
12created.

13(g) (1) Interest shall be assessed on quality assurance fees not
14paid on the date due at the greater of 10 percent per annum or the
15rate at which the department assesses interest on Medi-Cal program
16overpayments to hospitals that are not repaid when due. Interest
17shall begin to accrue the day after the date the payment was due
18and shall be deposited in the Hospital Quality Assurance Revenue
19Fund.

20(2) If any fee payment is more than 60 days overdue, a penalty
21equal to the interest charge described in paragraph (1) shall be
22assessed and due for each month for which the payment is not
23received after 60 days.

24(h) When a hospital fails to pay all or part of the quality
25assurance fee on or before the date that payment is due, the
26department may immediately begin to deduct the unpaid assessment
27and interest from any Medi-Cal payments owed to the hospital,
28or, in accordance with Section 12419.5 of the Government Code,
29from any other state payments owed to the hospital until the full
30amount is recovered. All amounts, except penalties, deducted by
31the department under this subdivision shall be deposited in the
32Hospital Quality Assurance Revenue Fund. The remedy provided
33to the department by this section is in addition to other remedies
34available under law.

35(i) The payment of the quality assurance fee shall not be
36considered as an allowable cost for Medi-Cal cost reporting and
37reimbursement purposes.

38(j) The department shall work in consultation with the hospital
39community to implement this article and Article 5.230
40(commencing with Section 14169.51).

P103  1(k) This subdivision creates a contractually enforceable promise
2on behalf of the state to use the proceeds of the quality assurance
3fee, including any federal matching funds, solely and exclusively
4for the purposes set forth in this article as they existed on the
5effective date of this article, to limit the amount of the proceeds
6of the quality assurance fee to be used to pay for the health care
7coverage of children to the amounts specified in this article, to
8limit any payments for the department’s costs of administration
9to the amounts set forth in this article on the effective date of this
10article, to maintain and continue prior reimbursement levels as set
11forth in Section 14169.60 on the effective date of that section, and
12to otherwise comply with all its obligations set forth in Article
135.230 (commencing with Section 14169.51) and this article
14provided that amendments that arise from, or have as a basis for,
15a decision, advice, or determination by the federal Centers for
16Medicare and Medicaid Services relating to federal approval of
17the quality assurance fee or the payments set forth in this article
18or Article 5.230 (commencing with Section 14169.51) shall control
19for the purposes of this subdivision.

20(l) (1) Effective January 1, 2016, the rates payable to hospitals
21and managed health care plans under Medi-Cal shall be the rates
22then payable without the supplemental and increased capitation
23payments set forth in Article 5.230 (commencing with Section
2414169.51).

25(2) The supplemental payments and other payments under
26Article 5.230 (commencing with Section 14169.51) shall be
27regarded as quality assurance payments, the implementation or
28suspension of which does not affect a determination of the
29adequacy of any rates under federal law.

30(m) (1) Subject to paragraph (2), the director may waive any
31or all interest and penalties assessed under this article in the event
32that the director determines, in his or her sole discretion, that the
33hospital has demonstrated that imposition of the full quality
34assurance fee on the timelines applicable under this article has a
35high likelihood of creating a financial hardship for the hospital or
36a significant danger of reducing the provision of needed health
37care services.

38(2) Waiver of some or all of the interest or penalties under this
39subdivision shall be conditioned on the hospital’s agreement to
40make fee payments, or to have the payments withheld from
P104  1payments otherwise due from the Medi-Cal program to the hospital,
2on a schedule developed by the department that takes into account
3the financial situation of the hospital and the potential impact on
4services.

5(3) A decision by the director under this subdivision shall not
6be subject to judicial review.

7(4) If fee payments are remitted to the department after the date
8determined by the department to be the final date for calculating
9the final supplemental payments under this article and Article
105.230 (commencing with Section 14169.51), the fee payments
11shall be retained in the fund for purposes of funding supplemental
12payments supported by a hospital quality assurance fee program
13implemented under subsequent legislation. However, if
14supplemental payments are not implemented under subsequent
15legislation, then those fee payments shall be returned to the private
16hospitals pro rata based on each hospital’s total fee payments under
17this article to the extent consistent with federal law.

18(5) If during the implementation of this article, fee payments
19that were due under former Article 5.21 (commencing with Section
2014167.1) and former Article 5.22 (commencing with Section
2114167.31), or former Article 5.226 (commencing with Section
2214168.1) and Article 5.227 (commencing with Section 14168.31),
23or Article 5.228 (commencing with Section 14169.1) and Article
245.229 (commencing with Section 14169.31) are remitted to the
25department under a payment plan or for any other reason, and the
26final date for calculating the final supplemental payments under
27those articles has passed, then those fee payments shall be
28deposited in the fund to support the uses established by this article.

29

14169.73.  

(a) (1) All fees required to be paid to the state
30pursuant to this article shall be paid in the form of remittances
31payable to the department.

32(2) The department shall directly transmit the fee payments to
33the Treasurer to be deposited in the Hospital Quality Assurance
34Revenue Fund, created pursuant to Section 14167.35.
35Notwithstanding Section 16305.7 of the Government Code, any
36interest and dividends earned on deposits in the fund from the
37proceeds of the fee assessed pursuant to this article shall be retained
38in the fund for purposes specified in subdivision (b).

39(b) (1) Notwithstanding subdivision (c) of Section 14167.35,
40subdivision (b) of Section 14168.33, and subdivision (b) of Section
P105  114169.33, all funds from the proceeds of the fee assessed pursuant
2to this article in the Hospital Quality Assurance Revenue Fund,
3together with any interest and dividends earned on money in the
4fund, shall continue to be used exclusively to enhance federal
5financial participation for hospital services under the Medi-Cal
6program, to provide additional reimbursement to, and to support
7quality improvement efforts of, hospitals, and to minimize
8uncompensated care provided by hospitals to uninsured patients,
9as well as to pay for the state’s administrative costs and to provide
10funding for children’s health coverage, in the following order of
11priority:

12(A) To pay for the department’s staffing and administrative
13 costs directly attributable to implementing Article 5.230
14(commencing with Section 14169.51) and this article, not to exceed
15three million dollars ($3,000,000) for the program period.

16(B) To pay for the health care coverage for children in the
17amount of one hundred fifty-five million dollars ($155,000,000)
18for each subject fiscal quarter during the 2014 and 2015 calendar
19years.

20(C) To make increased capitation payments to managed health
21care plans pursuant to Article 5.230 (commencing with Section
2214169.51).

23(D) To make increased payments and direct grants to hospitals
24pursuant to Article 5.230 (commencing with Section 14169.51).

25(2) Notwithstanding subdivision (c) of Section 14167.35,
26subdivision (b) of Section 14168.33, and subdivision (b) of Section
2714169.33, and notwithstanding Section 13340 of the Government
28Code, the moneys in the Hospital Quality Assurance Revenue
29Fund shall be continuously appropriated without regard to fiscal
30year for the purposes of this article, Article 5.230 (commencing
31with Section 14169.51), Article 5.229 (commencing with Section
3214169.31), Article 5.228 (commencing with Section 14169.1),
33Article 5.227 (commencing with Section 14168.31), former Article
345.226 (commencing with Section 14168.1), former Article 5.22
35(commencing with Section 14167.31) and former Article 5.21
36(commencing with Section 14167.1).

37(c) Any amounts of the quality assurance fee collected in excess
38of the funds required to implement subdivision (b), including any
39funds recovered under subdivision (d) of Section 14169.61 or
40subdivision (e) of Section 14169.78, shall be refunded to general
P106  1acute care hospitals, pro rata with the amount of quality assurance
2fee paid by the hospital, subject to the limitations of federal law.
3If federal rules prohibit the refund described in this subdivision,
4the excess funds shall be returned to the private hospitals pro rata
5based on each hospital’s total fee payments under this article to
6the extent consistent with federal law.

7(d) Any methodology or other provision specified in Article
85.230 (commencing with Section 14169.51) or this article may be
9modified by the department, in consultation with the hospital
10community, to the extent necessary to meet the requirements of
11federal law or regulations to obtain federal approval or to enhance
12the probability that federal approval can be obtained, provided the
13modifications do not violate the spirit and intent of Article 5.230
14(commencing with Section 14169.51) or this article and are not
15inconsistent with the conditions of implementation set forth in
16 Section 14169.80.

17(e) The department, in consultation with the hospital community,
18shall make adjustments, as necessary, to the amounts calculated
19pursuant to Section 14169.72 in order to ensure compliance with
20the federal requirements set forth in Section 433.68 of Title 42 of
21the Code of Federal Regulations or elsewhere in federal law.

22(f) The department shall request approval from the federal
23Centers for Medicare and Medicaid Services for the implementation
24of this article. In making this request, the department shall seek
25specific approval from the federal Centers for Medicare and
26Medicaid Services to exempt providers identified in this article as
27exempt from the fees specified, including the submission, as may
28be necessary, of a request for waiver of the broad-based
29requirement, waiver of the uniform fee requirement, or both,
30pursuant to paragraphs (1) and (2) of subdivision (e) of Section
31433.68 of Title 42 of the Code of Federal Regulations.

32(g) Notwithstanding Chapter 3.5 (commencing with Section
3311340) of Part 1 of Division 3 of Title 2 of the Government Code,
34the department may implement this article or Article 5.230
35(commencing with Section 14169.51) by means of provider
36bulletins, all plan letters, or other similar instruction, without taking
37regulatory action. The department shall also provide notification
38to the Joint Legislative Budget Committee and to the appropriate
39policy and fiscal committees of the Legislature within five working
P107  1days when the above-described action is taken in order to inform
2the Legislature that the action is being implemented.

3

14169.74.  

(a) Notwithstanding any other provision of this
4article or Article 5.230 (commencing with Section 14169.51)
5requiring federal approvals, the department may impose and collect
6the quality assurance fee and may make payments under this article
7and Article 5.230 (commencing with Section 14169.51), including
8increased capitation payments, based upon receiving a letter from
9the federal Centers for Medicare and Medicaid Services or the
10United States Department of Health and Human Services that
11indicates likely federal approval, but only if and to the extent that
12the letter is sufficient as set forth in subdivision (b).

13(b) In order for the letter to be sufficient under this section, the
14director shall find that the letter meets both of the following
15requirements:

16(1) The letter is in writing and signed by an official of the federal
17Centers for Medicare and Medicaid Services or an official of the
18United States Department of Health and Human Services.

19(2) The director, after consultation with the hospital community,
20has determined, in the exercise of his or her sole discretion, that
21the letter provides a sufficient level of assurance to justify advanced
22implementation of the fee and payment provisions.

23(c) Nothing in this section shall be construed as modifying the
24requirement under Section 14169.61 that payments shall be made
25only to the extent a sufficient amount of funds collected as the
26 quality assurance fee are available to cover the nonfederal share
27of those payments.

28(d) Upon notice from the federal government that final federal
29approval for the fee model under this article or for the supplemental
30payments to private hospitals under Section 14169.52 or 14169.53
31has been denied, any fees collected pursuant to this section shall
32be refunded and any payments made pursuant to this article or
33Article 5.230 (commencing with Section 14169.51) shall be
34recouped, including, but not limited to, supplemental payments
35and grants, increased capitation payments, payments to hospitals
36by health care plans resulting from the increased capitation
37payments, and payments for the health care coverage of children.
38To the extent fees were paid by a hospital that also received
39payments under this section, the payments may first be recouped
P108  1from fees that would otherwise be refunded to the hospital prior
2to the use of any other recoupment method allowed under law.

3(e) Any payment made pursuant to this section shall be a
4conditional payment until final federal approval has been received.

5(f) The director shall have broad authority under this section to
6collect the quality assurance fee for an interim period after receipt
7of the letter described in subdivision (a) pending receipt of all
8necessary federal approvals. This authority shall include discretion
9to determine both of the following:

10(1) Whether the quality assurance fee should be collected on a
11full or pro rata basis during the interim period.

12(2) The dates on which payments of the quality assurance fee
13are due.

14(g) The department may draw against the Hospital Quality
15Assurance Revenue Fund for all administrative costs associated
16with implementation under this article or Article 5.230
17(commencing with Section 14169.51).

18(h) This section shall be implemented only to the extent federal
19financial participation is not jeopardized by implementation prior
20to the receipt of all necessary final federal approvals.

21

14169.75.  

(a) Notwithstanding any other law, the director shall
22have discretion to modify any timeline or timelines in this article
23or Article 5.230 (commencing with Section 14169.51) if the letter
24that indicates likely federal approval, as described in Section
2514169.74, is not secured by December 15, 2015, and the director
26determines that it is impossible from an operational perspective
27to implement a timeline or timelines without the modification.

28(b) The department shall notify the fiscal and policy committees
29of the Legislature prior to implementing a modified timeline or
30timelines under subdivision (a).

31(c) The department shall consult with representatives of the
32hospital community in developing a modified timeline or timelines
33pursuant to this section.

34(d) The discretion to modify timelines under this section shall
35include, but not be limited to, discretion to accelerate payments to
36plans or hospitals.

37

14169.76.  

(a) Upon receipt of a letter that indicates likely
38federal approval that the director determines is sufficient for
39implementation under Section 14169.74, or upon the receipt of
40federal approval, the following shall occur:

P109  1(1) To the maximum extent possible, and consistent with the
2availability of funds in the Hospital Quality Assurance Revenue
3Fund, the department shall make all of the payments under Sections
414169.52, 14169.53, and 14169.54, including, but not limited to,
5supplemental payments and increased capitation payments, prior
6to January 1, 2016, except that the increased capitation payments
7under Section 14169.54 shall not be made until federal approval
8is obtained for these payments.

9(2) The department shall make supplemental payments to
10hospitals under Article 5.230 (commencing with Section 14169.51)
11consistent with the timeframe described in Section 14169.59 or a
12modified timeline developed pursuant to Section 14169.75.

13(b) Notwithstanding any other provision of this article or Article
145.230 (commencing with Section 14169.51), if the director
15determines, on or after December 15, 2015, that there are
16insufficient funds available in the Hospital Quality Assurance
17Revenue Fund to make all scheduled payments under Article 5.230
18(commencing with Section 14169.51) before January 1, 2016, he
19or she shall consult with representatives of the hospital community
20to develop an acceptable plan for making additional payments to
21hospitals and managed health care plans to maximize the use of
22delinquent fee payments or other deposits or interest projected to
23become available in the fund after December 15, 2015, but before
24June 15, 2016.

25(c) Nothing in this section shall require the department to
26continue to make payments under Article 5.230 (commencing with
27Section 14169.51) if, after the consultation required under
28subdivision (b), the director determines in the exercise of his or
29her sole discretion that a workable plan for the continued payments
30cannot be developed.

31(d) Subdivisions (b) and (c) shall be implemented only if and
32to the extent federal financial participation is available for
33continued supplemental payments and to providers and continued
34increased capitation payments to managed health care plans.

35(e) If any payment or payments made pursuant to this section
36are found to be inconsistent with federal law, the department shall
37recoup the payments by means of withholding or any other
38available remedy.

39(f) Nothing in this section shall be read as affecting the
40department’s ongoing authority to continue, after December 31,
P110  12015, to collect quality assurance fees imposed on or before
2December 31, 2015.

3

14169.77.  

Notwithstanding any other law, if actual federal
4approval or a letter that indicates likely federal approval in
5accordance with Section 14169.74 has not been received on or
6before December 1, 2015, then this article shall become
7inoperative, and as of December 1, 2015, is repealed, unless a later
8enacted statute, that is enacted before December 1, 2015, deletes
9or extends that date.

10

14169.78.  

(a) This article shall be implemented only as long
11as all of the following conditions are met:

12(1) Subject to Section 14169.73, the quality assurance fee is
13established in a manner that is fundamentally consistent with this
14article.

15(2) The quality assurance fee, including any interest on the fee
16after collection by the department, is deposited in a segregated
17fund apart from the General Fund.

18(3) The proceeds of the quality assurance fee, including any
19interest and related federal reimbursement, may only be used for
20the purposes set forth in this article.

21(b) No hospital shall be required to pay the quality assurance
22fee to the department unless and until the state receives and
23maintains federal approval.

24(c) Hospitals shall be required to pay the quality assurance fee
25to the department as set forth in this article only as long as all of
26the following conditions are met:

27(1) The federal Centers for Medicare and Medicaid Services
28allows the use of the quality assurance fee as set forth in this article
29in accordance with federal approval.

30(2) Article 5.230 (commencing with Section 14169.51) is
31enacted and remains in effect and hospitals are reimbursed the
32increased rates for services during the program period, as defined
33in Section 14169.51.

34(3) The full amount of the quality assurance fee assessed and
35collected pursuant to this article remains available only for the
36purposes specified in this article.

37(d) This article shall become inoperative if either of the
38following occurs:

39(1) In the event, and on the effective date, of a final judicial
40determination made by any court of appellate jurisdiction or a final
P111  1determination by the United States Department of Health and
2Human Services or the federal Centers for Medicare and Medicaid
3Services that the quality assurance fee established pursuant to this
4article cannot be implemented. This paragraph shall not apply to
5a final judicial determination made by any court of appellate
6jurisdiction in a case brought by hospitals located outside the state.

7(2) In the event both of the following conditions exist:

8(A) The federal Centers for Medicare and Medicaid Services
9denies approval for, or does not approve before January 1, 2016,
10the implementation of Sections 14169.52 and 14169.53 or this
11article.

12(B) Section 14169.52, Section 14169.53, or this article cannot
13be modified by the department pursuant to subdivision (d) of
14Section 14169.73 in order to meet the requirements of federal law
15or to obtain federal approval.

16(e) If this article becomes inoperative pursuant to paragraph (1)
17of subdivision (d) and the determination applies to any period or
18periods of time prior to the effective date of the determination, the
19department may recoup all payments made pursuant to Article
205.230 (commencing with Section 14169.51) during that period or
21those periods of time.

22(f) (1) If all necessary final federal approvals are not received
23as described and anticipated under this article or Article 5.230
24(commencing with Section 14169.51), the director shall have the
25discretion and authority to develop procedures for recoupment
26from managed health care plans, and from hospitals under contract
27with managed health care plans, of any amounts received pursuant
28to this article or Article 5.230 (commencing with Section
2914169.51).

30(2) Any procedure instituted pursuant to this subdivision shall
31be developed in consultation with representatives from managed
32health care plans and representatives of the hospital community.

33(3) Any procedure instituted pursuant to this subdivision shall
34be in addition to all other remedies made available under the law,
35pursuant to contracts between the department and the managed
36health care plans, or pursuant to contracts between the managed
37health care plans and the hospitals.

38

14169.79.  

Notwithstanding any other provision of this article
39or Article 5.230 (commencing with Section 14169.51),
40supplemental payments or other payments under Article 5.230
P112  1(commencing with Section 14169.51) shall only be required and
2payable in any quarter for which a fee payment obligation exists.

3

14169.80.  

(a) This article and Article 5.230 (commencing with
4Section 14169.51) shall become inoperative and the requirements
5for supplemental payments or other payments under Article 5.230
6(commencing with Section 14169.51) shall be retroactively
7invalidated, on the first day of the first month of the calendar
8quarter following notification to the Joint Legislative Budget
9Committee by the Department of Finance, that any of the following
10have occurred:

11(1) A final judicial determination by the California Supreme
12Court or any California Court of Appeal that the revenues collected
13pursuant to this article that are deposited in the Hospital Quality
14Assurance Revenue Fund are either of the following:

15(A) General Fund proceeds of taxes appropriated pursuant to
16Article XIII B of the California Constitution, as used in subdivision
17(b) of Section 8 of Article XVI of the California Constitution.

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

20(2) The department has sought but has not received federal
21financial participation for the supplemental payments and other
22costs required by this article for which federal financial
23participation has been sought.

24(3) A lawsuit related to this article or Article 5.230 (commencing
25with Section 14169.51) is filed against the state and a preliminary
26injunction or other order has been issued that results in a financial
27disadvantage to the state.

28(4) The director, in consultation with the Department of Finance,
29determines that the implementation of this article or Article 5.230
30(commencing with Section 14169.51) has resulted in a financial
31disadvantage to the state.

32(b) For purposes of this section, “financial disadvantage to the
33state” means either of the following:

34(1) A loss of federal financial participation.

35(2) A cost to the General Fund, that is equal to or greater than
36one-quarter of 1 percent of the General Fund expenditures
37authorized in the most recent annual Budget Act.

38(c) (1) The director shall have the authority to recoup any
39payments made under Article 5.230 (commencing with Section
4014169.51) if any of the following apply:

P113  1(A) Recoupment of payments made under Article 5.230
2(commencing with Section 14169.51) is ordered by a court.

3(B) Federal financial participation is not available for payments
4made under Article 5.230 (commencing with Section 14169.51)
5for which federal financial participation has been sought.

6(C) Recoupment of payments made under Article 5.230
7(commencing with Section 14169.51) is necessary to prevent a
8General Fund cost that is estimated to be equal to or greater than
9one-quarter of 1 percent of the General Fund expenditures
10authorized in the most recent annual Budget Act and that results
11from implementation of a court order or the unavailability of
12federal financial participation.

13(2) In the event payments are recouped for a particular quarter,
14fees paid by a hospital for that quarter pursuant to this article shall
15be refunded to the extent that the hospital meets both of the
16following conditions:

17(A) The hospital has actually paid the fee for the subject quarter
18and for all prior quarters.

19(B) The hospital has returned the payment received pursuant to
20Article 5.230 (commencing with Section 14169.51) for that quarter,
21or has had that payment recouped through a withholding of funds
22owed by Medi-Cal or other state payments, or recouped through
23other means.

24(d) In the event the department determines that recoupment of
25supplemental payments is necessary to implement any provision
26of this section, the department may recoup payments made pursuant
27to Article 5.230 (commencing with Section 14169.51) from fees
28paid by the hospital pursuant to this article.

29(e) Concurrent with invoking any provision of this section, the
30director shall notify the fiscal and appropriate policy committees
31of the Legislature of the intended action and the specific reason
32or reasons for the proposed action.

33

14169.81.  

Notwithstanding Chapter 3.5 (commencing with
34Section 11340) of Part 1 of Division 3 of Title 2 of the Government
35Code, the department shall implement this article by means of
36policy letters or similar instructions, without taking further
37regulatory action.

38

14169.82.  

(a) This article shall remain operative only until the
39later of the following:

40(1) January 1, 2017.

P114  1(2) The date of the last payment of the quality assurance fee
2payments pursuant to this article.

3(3) The date of the last payment from the department pursuant
4to Article 5.230 (commencing with Section 14169.51).

5(b) If this article becomes inoperative under paragraph (1) of
6subdivision (a), this article shall be repealed on January 1, 2017,
7unless a later enacted statute enacted before that date, deletes or
8extends that date.

9(c) If this article becomes inoperative under paragraph (2) or
10(3) of subdivision (a), this article shall be repealed on January 1
11of the year following the date this article becomes inoperative,
12unless a later enacted statute enacted before that date, deletes or
13extends that date.

14

14169.83.  

If the director determines that this article has become
15inoperative pursuant to Section 14169.77, 14169.78, 14169.80, or
1614169.82, or that Section 14169.72 has become inoperative
17pursuant to subdivision (e) of that section, the director shall execute
18a declaration stating that this determination has been made and
19stating the basis for this determination. The director shall retain
20the declaration and provide a copy, within five working days of
21the execution of the declaration, to the fiscal and appropriate policy
22committees of the Legislature. In addition, the director shall post
23the declaration on the department’s Internet Web site and the
24director shall send the declaration to the Secretary of State, the
25Secretary of the Senate, the Chief Clerk of the Assembly, and the
26Legislative Counsel.

27

14169.84.  

(a) (1) Except as provided in this section, all data
28and other information relating to a hospital that are used for the
29purposes of this article, including, without limitation, the days data
30source, shall continue to be used to determine the quality assurance
31fees due from that hospital pursuant to this article, regardless of
32whether the hospital has undergone one or more changes of
33ownership.

34(2) All quality assurance fee payments under this article shall
35be paid by the licensee of a hospital on the date the quarterly
36quality assurance fee payment is due.

37(b) The data of separate facilities prior to a consolidation shall
38be aggregated for the purposes of this article if: (1) a private
39hospital consolidates with another private hospital, (2) the facilities
40operate under a consolidated hospital license, (3) data for a period
P115  1prior to the consolidation is used for purposes of this article, and
2(4) neither hospital has had a change of ownership on or after the
3effective date of this article unless paragraph (2) of subdivision
4(d) has been satisfied by the new owner. Data of a facility that was
5a separately licensed hospital prior to the consolidation shall not
6be included in the data, including the days data source, for the
7purpose of determining the quality assurance fees due from the
8facility under the article for any time period during which such
9facility is closed. A facility shall be deemed to be closed for
10purposes of this subdivision on the first day of any period during
11which the facility has no general acute, psychiatric, or rehabilitation
12inpatients for at least 30 consecutive days. A facility that has been
13deemed to be closed under this subdivision shall no longer be
14deemed to be closed on the first subsequent day on which it has
15general acute, psychiatric, or rehabilitation inpatients.

16(c) The quality assurance fees under this article shall not be due,
17for any period during which the hospital is closed. A hospital shall
18be deemed to be closed on the first day of any period during which
19the hospital has no general acute, psychiatric, or rehabilitation
20inpatients for at least 30 consecutive days. A hospital that has been
21deemed to be closed under this subdivision shall no longer be
22deemed to be closed on the first subsequent day on which it has
23general acute, psychiatric, or rehabilitation inpatients. Payments
24of the quality assurance fee under this article due from a hospital
25that is closed during any portion of a subject fiscal quarter shall
26be reduced by applying a fraction, expressed as a percentage, the
27numerator of which shall be the number of days during the
28applicable subject fiscal quarter that the hospital is closed during
29the subject fiscal year and the denominator of which shall be the
30number of days in the subject fiscal quarter.

31(d) The procedure established by the director pursuant to
32subdivision (d) of Section 14169.58 shall apply to this article.

33

SEC. 9.  

This act is an urgency statute necessary for the
34immediate preservation of the public peace, health, or safety within
35the meaning of Article IV of the Constitution and shall go into
36immediate effect. The facts constituting the necessity are:

37In order to make the necessary changes to increase Medi-Cal
38payments to hospitals and improve access at the earliest time, so
39as to allow this act to be operative as soon as approval from the
40federal Centers for Medicare and Medicaid Services is obtained
P116  1by the State Department of Health Care Services, it is necessary
2that this act takes effect immediately.

end delete


O

    94