BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Kevin de Le�n, Chair
SB 239 (Hernandez and Steinberg) - Medi-Cal: hospital quality
assurance fee.
Amended: April 17, 2013 Policy Vote: Health 8-0
Urgency: Yes Mandate: No
Hearing Date: May 23, 2013 Consultant: Brendan McCarthy
SUSPENSE FILE.
Bill Summary: SB 239, an urgency measure, would impose a quality
assurance fee on certain hospitals from January 1, 2014 to
December 30, 2015. The bill would require the Department of
Health Care Services to use the resulting revenues (and federal
matching funds) to make supplemental payments to private
hospitals and Medi-Cal managed care plans.
Fiscal Impact: At this time, the fiscal impacts of the bill are
not fully known. The Department of Health Care Services is
working with the California Hospital Association to determine
the maximum amount of federal funding that can be drawn down
with quality assurance fee revenues. The following fiscal
estimates are based on the current hospital quality assurance
fee (set to sunset on December 31, 2013).
Annual quality assurance fee revenue of $2.8 billion per
year for two years (Hospital Quality Assurance Revenue
Fund).
Annual payments to private hospitals of $3.1 billion per
year for two years (Hospital Quality Assurance Revenue Fund
and federal funds).
Annual payments to Medi-Cal managed care plans of $1.4
billion per year for two years (Hospital Quality Assurance
Revenue Fund and federal funds).
Annual expenditures of $475 million per year for two years
to support children's health care coverage (Hospital
Quality Assurance Revenue Fund and federal funds). By using
quality assurance fee revenues, the bill would allow the
state to reduce General Fund expenditure by a similar
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amount. See below.
Annual administrative costs of $2 million for two years for
oversight by the Department of Health Care Services
(Hospital Quality Assurance Revenue Fund and federal funds).
Background: Under federal law, states are authorized to impose
certain taxes on health care providers and then use the
resulting revenues to draw down federal matching funds to
support state Medicaid programs.
Under current state law, California has imposed quality
assurance fees on several types of medical providers to support
the state's Medi-Cal program and to generate General Fund
savings. The state has enacted a series of quality assurance
fees on private hospitals. The currently authorized hospital
quality assurance fee is scheduled to sunset on January 1, 2014.
In addition to supplemental payments made to private hospitals
and Medi-Cal managed care plans, the current hospital quality
assurance fee supports grants to certain public hospitals.
Federal law establishes an Upper Payment Limit which is the
maximum amount a state Medicaid program may pay a type of
provider in the aggregate, statewide, in fee-for-service
Medicaid programs. State Medicaid programs cannot claim federal
matching dollars for provider payments in excess of the
applicable Upper Payment Limit.
Proposed Law: SB 239 would impose a quality assurance fee on
certain hospitals from January 1, 2014 to December 30, 2015. The
bill would require the Department of Health Care Services to use
the resulting revenues (and federal matching funds) to make
supplemental payments to private hospitals and Medi-Cal managed
care plans.
Specific provisions of the bill would:
Extend the sunset on the existing Hospital Quality
Assurance Revenue Fund to January 1, 2017;
Impose a quality assurance fee on each general acute care
hospital (with certain exceptions), from January 1, 2014 to
December 31, 2015;
Require the state to use funds generated from the hospital
quality assurance fee for purposes included in the bill;
Require private hospitals to be paid supplemental payments
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for the provision of both inpatient and outpatient services;
Require the payments to private hospitals, when combined
with other payments for services to Medi-Cal beneficiaries,
to result in payments to private hospitals equal to the
federal Upper Payment Limit;
Require the Department of Health Care Services to increase
capitation payments made to Medi-Cal managed care plans to
reflect use of private hospital services;
Generally require Medi-Cal managed care plans to use all of
any increase in capitation payments under the bill for
payments to private hospitals;
Prohibit the state from reducing Medi-Cal payments to
hospitals (or capitated payments to Medi-Cal managed care
plans) below the rates that will be in effect on January 1,
2014;
Prohibit the state from reducing disproportionate share
replacement payments to private hospitals below the amount
in effect on the effective date of this bill.
This bill is an urgency measure.
Related Legislation:
SB 335 (Hernandez, Statutes of 2011) imposed a hospital
quality assurance fee from June 30, 2011 to December 31,
2013.
SB 90 (Steinberg, Statutes of 2010) repealed specified
Medi-Cal hospital rate reductions and imposed a hospital
quality assurance fee from January 1, 2011 to June 30, 2011.
AB 1383 (Jones, Statutes of 2009), AB 188 (Jones, Statutes
of 2009), and AB 1653 (Jones, Statutes of 2010) established
the original hospital quality assurance fee.
Staff Comments: As noted above, the federal upper payment limit
has not yet been determined, so the total amount of federal
funding that can be drawn down is not yet known. The bill in
print does not specify the amount to be generated by the quality
assurance fee or the uses of those revenues (including the
amount of funding that would be available to the state for
children's' health coverage).
The fiscal estimates above are based on the annualized revenues
and expenditures of the current hospital quality assurance fee.
Note that the payment to support children's health programs (and
the resulting General Fund savings) cited above are based on the
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projected expenditures for the current hospital quality
assurance fee, resulting from the prior bill establishing the
program and changes made in the 2012-13 Budget Act which
resulted in additional General Fund savings.