BILL ANALYSIS Ó
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UNFINISHED BUSINESS
Bill No: SB 239
Author: Hernandez (D) and Steinberg (D)
Amended: 9/11/13
Vote: 27 - Urgency
SENATE HEALTH COMMITTEE : 8-0, 5/8/13
AYES: Hernandez, Anderson, Beall, De León, DeSaulnier, Monning,
Nielsen, Pavley
NO VOTE RECORDED: Wolk
SENATE APPROPRIATIONS COMMITTEE : 7-0, 5/23/13
AYES: De León, Walters, Gaines, Hill, Lara, Padilla, Steinberg
SENATE HEALTH COMMITTEE : 8-0, 9/12/13
(Pursuant to Senate Rule 29.10)
AYES: Hernandez, Anderson, Beall, DeSaulnier, Monning, Nielsen,
Pavley, Wolk
NO VOTE RECORDED: De León
SENATE FLOOR : 36-0, 5/28/13
AYES: Anderson, Beall, Berryhill, Block, Calderon, Cannella,
Corbett, Correa, De León, DeSaulnier, Emmerson, Evans, Fuller,
Gaines, Galgiani, Hernandez, Hill, Hueso, Huff, Jackson, Lara,
Leno, Lieu, Liu, Monning, Nielsen, Padilla, Pavley, Price,
Roth, Torres, Walters, Wolk, Wright, Wyland, Yee
NO VOTE RECORDED: Hancock, Knight, Steinberg, Vacancy
ASSEMBLY FLOOR : Not available
SUBJECT : Medi-Cal: hospital quality assurance fee:
distinct part skilled nursing facilities
CONTINUED
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SOURCE : California Hospital Association
DIGEST : This bill enacts the Medi-Cal Hospital Reimbursement
Improvement Act of 2013 (Act), which imposes a hospital quality
assurance fee (QAF), as specified, on certain general acute care
hospitals from January 1, 2014, through December 30, 2016, and
which requires supplemental payments to be made to private
hospitals for certain services, direct grants to public
hospitals, increased capitation payments to Medi-Cal managed
care plans for hospital services, and for children's health
coverage and Department of Health Care Services (DHCS)
administration. This bill sunsets the Act on January 1, 2017.
This bill requires Medi-Cal reimbursement for nursing facilities
that are a distinct part of a general acute care hospital to be
determined without the Medi-Cal rate reduction and rate
roll-back required under existing law for dates of services on
and after October 1, 2013. This bill establishes
Intergovernmental Transfer (IGT) programs, and takes effect
immediately as an urgency statute.
Assembly Amendments (1) extend the duration of the fee and
related provisions by an additional year (from two to three
years) and sunset the fee January 1, 2017; (2) require, instead
of authorize, direct grants to the designated public hospitals
(DPH) and non-designated public hospitals (NDPHs) and specify
the amounts of the grants; (3) require children's health
coverage to receive 24% of the net benefit to the hospital
industry of the fee, beginning July 1, 2014; (4) establish new
IGT provisions to fund hospital services; (5) allow DHCS to
administer and distribute payments for the Construction
Renovation Reimbursement Program (known as the SB 1732 program
or CRRP), and eliminate the requirement that a hospital maintain
or negotiate a selective provider contract or a contract with a
county organized health system in order for the hospital to
participate in the CRRP; (6) establish a new structure for the
fee and payments by placing these provisions in one article of
law (rather than two as in prior fee bills); and (7) require
subsequent fee amounts be determined by DHCS, in consultation
with the hospital community, and included in provisional
language in the annual Budget Act (this provision would apply if
the sunset date in the bill is extended).
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ANALYSIS :
Existing law:
1. Establishes the Medi-Cal program, administered by DHCS,
under which health care services are provided to qualified
low-income persons. Establishes a schedule of benefits for
Medi-Cal beneficiaries, which includes inpatient and
outpatient hospital services and nursing facility services.
Defines, in the Medi-Cal state plan, a distinct part nursing
facility (DP-NF) as any nursing facility which is licensed
together with an acute care hospital.
2. Enacts the Medi-Cal Hospital Provider Rate Improvement Act
of 2011 (Prior Rate Act) to provide supplemental payments
from July 1, 2011, to
December 31, 2013 to private hospitals for inpatient and
outpatient services in Medi-Cal fee-for-service (FFS),
managed care and acute psychiatric days, and to make direct
grants to DPHs in support of health care expenditures.
3. Establishes the Private Hospital Quality Assurance Fee Act
of 2011 (Prior Fee Act), which levies a hospital QAF, from
July 1, 2011 to January 1, 2014, on each hospital that is not
an exempt hospital, with varying fee amounts by payor source
and type of payment.
4. Requires all funds from the QAF to be used exclusively to
enhance federal financial participation (FFP) for hospital
services under Medi-Cal, to provide additional reimbursement
to hospitals, to pay DHCS staffing and administrative costs,
to make increased payments to managed care health plans, and
to fund children's health coverage, in a specified order of
priority.
5. Requires Medi-Cal FFS provider payments to DP-NFs to be
reduced by 5% for dates of service on and after March 1,
2009. Requires payments to Medi-Cal managed care plans to be
reduced by the actuarially equivalent amount of the 5%
payment reduction.
6. Requires Medi-Cal FFS provider payments to DP-NFs to not
exceed the reimbursement rates to DP-NFs in the 2008-09 rate
year, reduced by 10% for dates of service on and after June
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1, 2011. Requires payments to be reduced by 10% for Medi-Cal
FFS benefits for dates of service on and after June 1, 2011.
Requires payments to Medi-Cal managed care plans to be
reduced by the actuarial equivalent amount of the 10% payment
reduction.
7. Requires the payment reductions in #5 above to cease to be
implemented for the same services provided by the same class
of providers when federal approval is obtained for the
payment reductions in #6 above. Requires the payment
reductions in #6 to be implemented retroactively to June 1,
2011, or on any other date or dates as may be applicable when
federal approval is obtained.
This bill:
Medi-Cal Hospital Reimbursement Improvement Act of 2013
1. Enacts the Medi-Cal Hospital Reimbursement Improvement Act
of 2013, which imposes a QAF on each general acute care
hospital that is not an exempt facility or a converted
hospital, computed starting on January 1, 2014, and
continuing through and including December 31, 2016, for
deposit in the Hospital Quality Assurance Revenue Fund
(Fund).
2. Imposes on hospitals that are not exempt a QAF. Exempts
DPHs, NDPHs, long-term care hospitals, specified specialty
hospitals, and small and rural hospitals. Exempts any
hospital that has been converted from a private hospital to a
public hospital after January 1, 2014, for the period the
hospital is a public hospital or qualifies as a new hospital.
3. Establishes an order of priority for funds from the proceeds
of the QAF of paying for DHCS' staffing and administrative
costs, to pay for health coverage of children, to make
increased capitation payments to managed health plans, and to
make increased payments to and direct grants to hospitals.
4. Continuously appropriates money in the Fund for the purposes
of this bill for the first program period (for the first
three years, until December 31, 2016).
5. Establishes under this bill a contractually enforceable
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promise on behalf of the state to use the proceeds of the
QAF, including any federal matching funds, solely and
exclusively for the purposes in this bill, to limit the
amount of the proceeds of the QAF to be used to pay for the
health care coverage of children as provided in this bill, to
limit any payments for DHCS' costs of administration to the
amounts set forth in this bill on the effective date of this
bill, to maintain and continue prior reimbursement levels,
and to otherwise comply with all its obligations set forth in
this bill, except that amendments that arise from, or have as
a basis for, a decision, advice, or determination by the
federal Centers for Medicare and Medicaid Services (CMS)
relating to federal approval of the QAF or the payments set
forth in this bill are required to control.
6. Permits DHCS to modify any methodology or other provision in
the hospital fee related provisions of this bill to meet the
requirements of federal law or regulations, to obtain federal
approval, or to enhance the probability of federal approval,
provided the modifications do not violate the spirit,
purposes, and intent of this bill and are not inconsistent
with the conditions of implementation.
7. Requires, after July 1, 2014, the amount of funding for
children's health coverage to equal 24% of the net benefit to
hospitals from the fee (aggregate payments for a net benefit
period minus aggregate fees for that period).
8. Requires private hospitals to be paid supplemental amounts
from the QAF that result in payments equal to the statewide
aggregate upper payment limit (UPL) for private hospitals for
each year of the fee.
9. Requires private hospitals to be paid supplemental amounts
for inpatient services that result in payments to hospitals
that equal the applicable federal UPL. Requires hospitals to
be paid additional amounts for general acute care days, acute
psychiatric days, high acuity days, high acuity trauma days,
transplant days, and for subacute supplemental services.
10.Requires DHCS to increase capitation payments to Medi-Cal
managed care plans, requires the aggregate amount of
increased capitation payments to be the maximum amount for
which FFP is available on an aggregate basis. Requires DHCS
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to determine the amount of the increased capitation payments
for each plan for each year, taking into account specified
factors, and requires the increased capitation payment under
this bill to be paid by the plans to hospitals for hospital
services to Medi-Cal enrollees of the plan, and requires
plans to expend 100% of any increased capitation payments it
receives on hospital services.
11.Requires DPHs and NDPHs to be paid direct grants of
specified amounts for the first three years, sets aside a
portion of the direct grant is set aside to draw down FFP to
make increased payments to managed care plans for rate range
room increases for managed care payments. Authorizes, for
subsequent programs, DPH and NDPHs to be paid direct grants
upon appropriation in the annual Budget Act. Requires the
director to determine the direct grant amounts, if any, and
allocation methodology after the first three years, and
requires these amounts to be specified in provisional
language in the Budget Act.
12.Requires, for the first program period (January 1, 2014 to
December 31, 2016), specific QAF rates, payment amounts and
data sources. Requires, for program years after January 1,
2017, provisions for rebasing the fee, including requiring
DHCS to retrieve data, determine rate amounts, requires the
rates to meet the requirements of federal law, to require
DHCS to consult with the hospital community in determining
the rates, and to require payment rates to equal as close as
possible the applicable federal UPL, and to require payment
to Medi-Cal managed care plans to result in the maximum
payments to plans permitted by federal law. Requires rates
to be specified in provisional language in the Budget Act.
13.Requires DHCS to provide a clear narrative description along
with fiscal detail in the Medi-Cal estimate package of all
the calculations made by DHS for the second and subsequent
program periods.
14.Grants the Director of DHCS the discretion to revise
specified fee rates, upon federal approval, based on the
funds required to make payments, in consultation with the
hospital community. Permits the Director of DHCS to correct
any identified material and egregious errors in data.
Permits the Director to modify and timeline related to the
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assessment of the QAF or Medi-Cal payments if it is
impossible to implement a timeline.
15.Prohibits payments for the period of time a hospital
qualifies as a new hospital or has converted from a private
to a public hospital depending on the date of conversion,
whether there is a days data source, as defined, for the
hospital, and whether the new ownership assumes financial
obligations to the Medi-Cal program, as specified. Makes,
notwithstanding the aforementioned exclusion, the private
non-profit replacement hospital for Los Angeles County Martin
Luther King, Jr.-Harbor Hospital eligible for funding from
the QAF, and requires DHCS to use the best available and
reasonable data in determining supplemental payments and the
QAF for this facility.
16.Establishes a funding maintenance of effort in order to
ensure that the proceeds of the QAF and federal matching
funds are used to supplement existing funding for hospital
services provided to Medi-Cal patients, and not supplant such
funding.
17.Requires the Director of DHCS to take specified actions to
obtain federal approval for and implement the QAF-related
provisions. Makes the QAF-related provisions inoperative if
specified actions occur, such as specified court actions,
failure to receive federal approval, and FFP not being
available, among other requirements.
18.Requires the Department of Finance, in the Governor's Budget
and May Revision, to report the difference in General Fund
(GF) benefit for the upcoming fiscal year resulting from this
bill and what was anticipated at the time the Budget Act of
2013 was enacted. States legislative intent that additional
GF benefit be appropriated to supplement and not supplant
funding for health and human services programs, which may
include the cost of medical interpreters.
19.Requires DHCS to make available all public documentation it
uses to administer and audit the fee program, and requires
DHCS to require Medi-Cal managed care plans to furnish
hospitals with the amounts the plan intends to pay to the
hospital, upon request of a hospital. Requires DHCS to post
specified QAF related information on DHCS' Web site,
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including the fee model, payments, fee schedules and
information on managed care rate approvals.
20.Makes legislative findings and declarations regarding the
roles of hospitals, the QAF, and the purpose of the fee.
21.Sunsets the Medi-Cal Hospital Reimbursement Improvement Act
of 2013 on January 1, 2017.
Medi-Cal Rates for Distinct Part-Nursing Facilities
22.Requires Medi-Cal reimbursement for nursing facilities that
are a distinct part of a general acute care hospital to be
determined without the Medi-Cal rate reduction and rate
roll-back required under existing law, for dates of service
on and after October 1, 2013.
IGTs
23.Permits DHCS to maximize available FFP to provide access to
services provided by hospitals that are not reimbursed by
certified public expenditures by authorizing the use of IGTs
to fund the non-federal share of supplemental payments to
private hospitals. I GTs are where governmental entities
transfer funds to another governmental entity to serve as the
state match to draw down additional federal Medicaid matching
funds.
24.Requires DHCS to design and implement, in consultation with
NDPH an IGT program for NDPHs related to Medi-Cal managed
care services provided by NDPHs in order to increase
capitation payments for the purpose of increasing NDPH
reimbursement.
25.Requires DHCS to develop proposed modifications to the QAF
established by this bill to collect additional fees to pay
Medi-Cal managed care plans rate range increases for the
purpose of increasing payments to private hospitals and NDPHs
in counties that do not have DPHs. Requires DHCS to consult
with the hospital community to enable IGTs from NDPHs solely
for use for this purpose. Requires NDPH to be given priority
relative to accessing rate range funds in counties where a
NDPH is the only public hospital. Conditions payments to
Medi-Cal managed care plans on the managed care plan paying
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all of the rate range increases as additional payments to
private hospitals and NDPH for providing and making available
services to Medi-Cal enrollees of the plans, and limits the
amount of increases to Medi-Cal managed care plans to the
total amount of payments possible, including FFP, based on
the amount of fees actually collected and IGTs actually
provided.
Out-of-state hospitals
26.Requires the Director of DHCS to develop and prescribe in
provider bulletins and on DHCS' Web site a process by which a
private general acute care hospital located outside of the
state that services Medi-Cal beneficiaries may opt in to pay
the QAF on all applicable categories of patient days, and
receive supplemental payments for the Medi-Cal program under
this bill in the same manner that the hospital could
participate if it were located in the state, to the extent
permitted by federal law and federal requirements. Requires
DHCS to rely on reliable data to make reasonable estimates or
projections to calculate the fees due and the supplemental
payments.
CRRP
27.Permits DHCS to administer and distribute payments for the
CRRP, but eliminates the requirement that a hospital maintain
or negotiate a selective provider contract or a contract with
a county organized health system in order for the hospital to
participate in the CRRP.
Hospital Quality Assurance Revenue Fund
28.Extends the sunset date of the Fund from January 1, 2015 to
January 1, 2018, and extends the authority of the State
Controller to use the Fund for cash flow loans to the GF
until that date.
Background
Federal Medicaid law authorizes states to levy fees on health
care providers if the fees meet federal requirements. Many
states (including California) fund a portion of their share of
Medicaid program costs through a fee on health care providers.
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Under these funding methods, states collect funds (through fees,
taxes, or other means) from providers, which are then matched to
allow increased Medicaid reimbursement to providers. The
Legislature enacted a series of bills establishing a
time-limited hospital QAF in 2009, and an additional six-month
QAF for the first six months of 2011. The current QAF sunsets
at the end of this calendar year. In addition to the hospital
QAF, California currently has a QAF for intermediate care
facilities for the developmentally disabled, and a separate QAF
for skilled nursing facilities.
Benefit to hospital industry from hospital fee . As part of the
establishment of the fee and related payment provisions, the
California Hospital Association (CHA, the bill's sponsor)
developed a model that estimates the revenue generated by the
fee, payments made to hospitals, payments made to the state for
program administration and children's health coverage, and the
net benefit to the hospital industry. CHA's model uses 2010
data to determine the payment amounts each hospital will receive
under the bill. CHA estimates that over the three year period
the bill is in effect (January 1, 2014 through December 31,
2016), $13.1 billion dollars in revenue would be raised from the
fee, which would provide total payments to hospitals (after
federal matching funds are drawn down) of $23.1 billion. The
state would receive nearly $2.4 billion for children's coverage
and administration, and the fee would provide a net benefit to
the hospital industry of $9.9 billion (total payments to
hospitals minus fees paid).
The primary beneficiaries of the fee program are private
hospitals (which pay the fee to draw down federal funds) as they
receive $22.6 billion from the fee (this is a gross amount and
does not deduct the amounts paid in fees by these facilities).
Public and district hospitals are exempt from paying the QAF.
DPHs are reimbursed at the maximum amount for which federal
Medicaid matching funds are available and are thus not able to
draw down additional matching funds from the QAF. However, DPHs
and NDPHs do receive direct grants under this bill, and DPHs
receive $274 million in payments from Medi-Cal managed care
plans that are funded by the hospital fees paid by private
hospitals and federal funds.
Funding for children's health coverage . In prior quality
assurance fee bills, the state has received a fixed amount per
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quarter from the fee, which is used to offset GF spending on
children's health coverage. As part of this year's Budget, the
state assumed it would $310 million for the first two quarters
of 2014. This bill contains funding for this purpose for the
first two fiscal quarters (till June 30, 2014).
Under this bill, beginning July 1, 2014, the state would receive
24% of the net benefit received by hospitals from the fee (total
payments to hospitals minus fees paid by hospitals). This
results in an increase in funding to the state to offset GF
spending on children's health coverage. The amount of funding
for children's health coverage the state is estimated to receive
is nearly $2.4 billion over the three years the bill is in
effect. The policy rationale for having the state receive a
percentage of the net benefit (rather than a fixed dollar
amount) is both the state and the hospitals have an interest in
maximizing the net benefit to hospitals. The hospitals'
incentive is to receive more money back above what they pay in
fees (through federal matching funds), thus maximizing their net
benefit. T he state benefits because additional GF savings are
generated when a greater net benefit is provided to hospitals.
Medi-Cal reimbursement for DP-NFs . This bill repeals the rate
freeze and 10% rate reduction that applies to DP-NFs for dates
of service on and after October 1, 2013. Existing law requires
Medi-Cal FFS provider payments to DP-NFs to not exceed the
reimbursement rates to DP-NFs in the 2008-09 rate year, reduced
by 10% for dates of service on and after June 1, 2011.
Effectively, this means rates are frozen at the 2008-09 levels
and then further reduced by 10% for dates of service on and
after June 1, 2011. These rate reductions were blocked by court
action until recently.
These Medi-Cal rate reductions are retroactive, meaning the
amounts DP-NFs have been paid since June 1, 2011 above the rates
contained in the State Plan Amendment (which contains the 10%
reduction) are going to have be returned to the state (because
they have been "overpaid" during the time the rate reduction was
blocked by court action). The state will recoup the overpayment
by reducing providers' Medi-Cal payments in the future to offset
the overpayment amounts.
On August 14, 2013, DHCS announced its implementation plan for
the Medi-Cal provider payment reductions. DHCS also announced
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that, in order to preserve and protect access to care for
Medi-Cal members, Medi-Cal provider payment reduction
exemptions, subject to federal approval of State Plan Amendments
for DP-NF facilities classified as rural or frontier, based upon
the California Medical Service Study Area's definitions, would
be exempted prospectively from the 10% payment reductions and
would not be subject to the rate freeze at the 2008-09 levels on
a prospective basis. DHCS had previously announced that it
exempted from the AB 97 reductions and rate freeze any DP/NF
which has a census of at least 90% pediatric patients, effective
February 18, 2012. The recently announced DHCS exemption
applies to 27 DP-NFs but leaves 53 DP-NFs subject to the rate
reduction, and disproportionately affects DP-NFs located in
urban areas of the state, such as Los Angeles, San Diego,
Sacramento, San Francisco, and Alameda Counties.
Framework for future fees . The QAF enacted by this bill sunsets
January 1, 2017. However, this bill establishes a framework for
an ongoing fee if the sunset date in this bill is extended or
repealed. After January 1, 2017, this bill requires DHCS to
determine the rates based on data retrieved by DHCS (rather than
having those amount places in policy legislation, as has been
past practice with QAF bills). To ensure legislative oversight
and public transparency, this bill requires that future
appropriations be made in the annual Budget Act (rather than be
continuously appropriated), that the amount of the rates be
contained in provisional language in the annual Budget Act, and
establishes a new requirement that DHCS provide a clear
narrative description along with fiscal detail in the Medi-Cal
Estimate submitted to the Legislature twice each year of all the
calculations made by DHCS.
Out-of-state hospital provisions . On August 27, 2010, 15
hospitals from outside California (Oregon, Arizona and Nevada)
filed a complaint seeking injunctive relief in federal court
against DHCS. The plaintiffs argued that distribution of the
fee money to hospitals only located in California would violate
the Commerce Clause, the 14th Amendment Equal Protection clause,
and the Supremacy Clause of the United States Constitution. CHA
intervened in the case, a confidential settlement was reached,
and the plaintiffs dismissed the complaint against DHCS. This
bill establishes a process by which a private general acute care
hospital located outside of the state that serves Medi-Cal
beneficiaries may opt in to pay the QAF on all applicable
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categories of patient days, and receive supplemental payments
for the Medi-Cal program under this bill in the same manner that
the hospital could participate if it were located in the state.
This language is intended to address any potential legal
challenges to this bill.
Ballot initiative filed . In July 2013, an attorney for CHA
filed a ballot initiative for title and summary with the
Attorney General's (AG) office. The proposed initiative would
amend the State Constitution to prohibit the Legislature from
imposing a new fee or continuing the imposition of an existing
fee on community hospitals for the purpose of obtaining FFP in
the Medicaid Program or any other similar program unless a
series of requirements are met. The measure also dictates the
use of the proceeds from such a fee. That measure is awaiting
title and summary from the AG. CHA has indicated it will
re-file a different ballot initiative if this measure becomes
law.
Comments
According to the author's office, this bill enacts a hospital
QAF for three additional years to provide a net benefit to
hospitals over of three years of nearly $10 billion in funds for
hospital services, and to provide over $2 billion dollars in
additional revenue for children's health coverage. Federal law
authorizes states to levy fees on health care providers if the
fees meet federal requirements. The author's office argues this
bill provides increased federal funding to hospitals without
using state GF dollars, and enables the state to achieve GF
savings by using revenue from the QAF to help fund children's
health coverage. In addition, this bill prospectively
eliminates the DP-NF rate freeze and rate rollback, which has
threatened the financial viability of many of these facilities.
Prior/Related Legislation
SB 646 (Nielsen), an urgency bill, exempts all DP-SNFs from the
Medi-Cal rate reduction. The bill was held on the Senate
Appropriations suspense file.
SB 640 (Lara) exempts from the Medi-Cal payment reduction
Medi-Cal FFS providers, pharmacy providers, DP-SNFs and subacute
care units that are a distinct part of a general acute care
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hospital for dates of service on or after June 1, 2011, and
Medi-Cal managed care plans. The bill will take effect
immediately as an urgency statute. The bill was held on the
Senate Appropriations suspense file.
AB 900 (Alejo) requires Medi-Cal reimbursement for DP-NFs to be
determined without the Medi-Cal rate reduction and rate
roll-back required under existing law. The bill takes effect
immediately as an urgency statute. The bill was held on the
Senate Appropriations suspense file.
AB 1383 (Jones, Chapter 627, Statutes of 2009) and AB 188
(Jones, Chapter 645, Statutes of 2009) enacted the original
Medi-Cal hospital QAF and a methodology for making supplemental
payments to hospitals, and provided funds for children's health
care coverage and grants to public hospitals. In response to
the state's request for federal approval, the CMS in June of
2010 sent a letter raising objections and concerns about the
methodology which concluded that the fee enacted by AB 1383 did
not meet federal standards. CMS also suggested modifications,
which were made by AB 1653 (Jones, Chapter 218, Statutes of
2010). AB 1653 also established an alternative mechanism for
funding supplemental grants to public hospitals and allowed the
state to retain the funds that were previously allocated to
these hospitals.
SB 90 (Steinberg, Chapter 19, Statutes of 2010) repealed
specified Medi-Cal hospital rate freezes and rate reductions
enacted in health budget trailer bills in 2008, 2010 and 2011.
The bill also imposed a QAF on hospitals for six months (January
1, 2011, until June 30, 2011), and used the resulting revenue to
draw down federal funds to provide supplemental payments to
private hospitals in FFS Medi-Cal, Medi-Cal managed care, and
for acute psychiatric days, to provide $210 million for
children's health coverage, and to pay for DHCS administrative
costs in administering the hospital fee and supplemental payment
provisions of this bill. The bill also reduced disproportionate
share GF payments to private hospitals by $105 million GF over
two fiscal years. The bill also required DHCS to design and
implement an inter-governmental transfer program for Medi-Cal
managed care services provided by DPH and NDPH for the purpose
of increasing reimbursement to NDPHs and DPHs.
In addition, The bill allows hospitals that have received
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extensions to January 1, 2013, of the January 1, 2008, seismic
deadline, for their Structural Performance Category 1 buildings,
to request an additional extension of up to seven years.
Last session, SB 335 (Hernandez, Chapter 286, Statutes 2011)
imposed a QAF on hospitals for 30 months (from June 30, 2011,
until December 31, 2013). The bill uses the resulting revenue
to draw down federal funds to provide supplemental payments to
private hospitals in FFS Medi-Cal, Medi-Cal managed care, and to
provide specified funding amounts from the QAF per quarter for
children's health coverage until December 31, 2013. In
addition, the bill requires DPH to be paid direct grants (not
Medi-Cal payments), funded from the QAF. SB 335 also reduced
disproportionate share hospital replacement payments and
supplemental payments from the Private Hospital Supplemental
Fund to hospitals by specified amounts in 2012-13 and 2013-14.
Finally, the bill appropriates $13.6 billion to DHCS for
purposes of that measure. The bill took effect as an urgency
statute upon signature by Governor Brown in September 2011.
FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: No
According to the Senate Health Committee, modeling done on this
bill estimates that the state will receive approximately $2.4
billion for children's health coverage and state administration
between January 1, 2014 and December 31, 2016. Statewide,
hospitals are projected to receive a net benefit of $9.9 billion
in payments above what they paid in QAFs.
SUPPORT : (Verified 9/12/13)
California Hospital Association (source)
Alliance of Catholic Health Care
California Coverage and Health Initiatives
Children Now
Children's Defense Fund-California
PICO California
Private Essential Access Community Hospitals
The Children's Partnership
OPPOSITION : (Verified 9/12/13)
Michelle Steele, Member of the Board of Equalization
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ARGUMENTS IN SUPPORT : This bill is sponsored by the
California Hospital Association (CHA) which argues the creation
and implementation of the hospital fee program in California has
been extremely successful. CHA states the program has been
critical for hospitals to bolster their ability to preserve
health care services for the state's most vulnerable patients.
The first two hospital fee programs are essentially completed
and have reached their goals of providing nearly $3.5 billion in
critical funding to California's hospitals that provide services
to Medi-Cal patients. In addition, the first two programs
fulfilled a commitment to provide the state with $770 million in
funding for children's health care coverage. The hospital
provider fee program remains crucial to the preservation of
California's entire safety net, and without this program the
number of hospitals forced to restrict or end services to
Medi-Cal patients will continue to increase. CHA concludes that
the provider fee will not solve the state's Medi-Cal shortfall,
but it will continue to be the largest programmatic action taken
since the founding of the program to mitigate the lack of
sufficient funding, and it is vital to California hospitals that
the provider fee be approved and implemented.
JL:ek 9/12/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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