Amended in Senate April 21, 2014

Amended in Senate March 25, 2014

Senate BillNo. 1352


Introduced by Senator Hancock

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(Coauthor: Senator Corbett)

end insert
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(Coauthors: Assembly Members Bonta, Quirk, and Skinner)

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February 21, 2014


An act to amend Section 101850 of, and to amend the heading of Chapter 5 (commencing with Section 101850) of Part 4 of Division 101 of, the Health and Safety Codebegin insert, and to amend Sections 14085.53, 14166.1, and 17612.2 of the Welfare and Institutions Codeend insert, relating to the Alameda Health System.

LEGISLATIVE COUNSEL’S DIGEST

SB 1352, as amended, Hancock. Alameda Health System.

Existing law authorizes the board of supervisors of Alameda County to establish an independent hospital authority strictly and exclusively dedicated to the management, administration, and control of the group of public hospitals, clinics, and programs that comprise the Alameda County Medical Center.

This bill would instead authorize the board to establish an independent hospital authority for the Alameda Health System, which was formerly known as the Alameda County Medical Center. The bill would make conforming changes with regard to legislative findings and declarations and would include additional legislative findings and declarations relating to the Alameda Health System.begin insert The bill would also make other conforming changes in existing law.end insert

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

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

P2    1

SECTION 1.  

The Legislature finds and declares all of the
2following:

3(a) The Alameda County Medical Center has evolved to include
4additional facilities that have expanded services and the quality of
5care to the residents of the County of Alameda.

6(b) In order to better reflect the regional availability of services
7to the residents of the County of Alameda, the Alameda County
8Medical Center is doing business as the Alameda Health System
9and it is appropriate that the name change be reflected statutorily
10to ensure that there is no confusion in the administration of state
11programs.

12(c) The Alameda Health System is a major public health care
13provider and medical training institution recognized for its world
14class patient and family-centered system of care.

15(d) The Alameda Health System provides comprehensive,
16high-quality medical treatment, health promotion, disease
17prevention, and health maintenance in an integrated system of
18hospitals, clinics, and health services.

19(e) As a training institution, the Alameda Health System
20maintains an environment that is supportive of a wide range of
21educational programs and activities, including the education of
22medical students, interns, residents, and continuing education for
23medical nursing, and other staff, along with medical research.

24(f) The Alameda Health System is a regional provider of health
25care services, and includes the following facilities:

26(1) Highland Hospital, located in Oakland, is a major regional
27trauma center and teaching hospital that delivers primary, specialty,
28and multispecialty care. Within the Highland campus are centers
29of excellence in maternity services, gastroenterology, surgery,
30orthopedics, geriatrics and senior care, and trauma.

31(2) John George Psychiatric Hospital, located in San Leandro,
32provides psychiatric emergency and acute care services to adults
33experiencing severe and disabling mental illnesses.

34(3) San Leandro Hospital, located in San Leandro, is a 93-bed
35facility in central Alameda County acquired in late 2013 and
36provides a wide range of medical services, including 24-hour
37emergency services, critical care, a full complement of skilled
38surgeons, rehabilitation services, and ancillary services.

P3    1(4) Fairmont Hospital, located in San Leandro, is an acute
2rehabilitation center that is one of the foremost providers of acute
3rehabilitation services in northern California, treating severe
4injuries such as stroke, brain, and multiple-trauma injuries.

5(5) Wellness Centers, in Oakland, Hayward, and Newark form
6a network of community-based wellness centers that expand access
7to primary care and Alameda Health System medical specialties.
8All primary services are offered at the Wellness Centers to provide
9continuity of care for patients. These services include pediatrics,
10immunizations, family planning, HIV/AIDS, breast health, dental,
11podiatry, tuberculosis, minor surgery, social work, and health
12education.

13

SEC. 2.  

The heading of Chapter 5 (commencing with Section
14101850) of Part 4 of Division 101 of the Health and Safety Code
15 is amended to read:

16 

17Chapter  5. Alameda Health System Hospital Authority
18

 

19

SEC. 3.  

Section 101850 of the Health and Safety Code is
20amended to read:

21

101850.  

The Legislature finds and declares the following:

22(a) (1) Due to the challenges facing the Alameda Health System
23arising from changes in the public and private health industries,
24the Alameda County Board of Supervisors has determined that a
25transfer of governance of the Alameda Health System to an
26independent governing body, a hospital authority, is needed to
27improve the efficiency, effectiveness, and economy of the
28community health services provided at the medical center. The
29board of supervisors has further determined that the creation of an
30independent hospital authority strictly and exclusively dedicated
31to the management, administration, and control of the medical
32center, in a manner consistent with the county’s obligations under
33Section 17000 of the Welfare and Institutions Code, is the best
34way to fulfill its commitment to the medically indigent, special
35needs, and general populations of Alameda County. To accomplish
36this, it is necessary that the board of supervisors be given authority
37to create a hospital authority. Because there is no general law under
38which this authority could be formed, the adoption of a special act
39and the formation of a special authority is required.

P4    1(2) The following definitions shall apply for purposes of this
2section:

3(A) “The county” means the County of Alameda.

4(B) “Governing board” means the governing body of the hospital
5authority.

6(C) “Hospital authority” means the separate public agency
7established by the Board of Supervisors of Alameda County to
8manage, administer, and control the Alameda Health System.

9(D) “Medical center” means the Alameda Health System, which
10was formerly known as the Alameda County Medical Center.

11(b) The board of supervisors of the county may, by ordinance,
12establish a hospital authority separate and apart from the county
13for the purpose of effecting a transfer of the management,
14administration, and control of the medical center in accordance
15with Section 14000.2 of the Welfare and Institutions Code. A
16hospital authority established pursuant to this chapter shall be
17strictly and exclusively dedicated to the management,
18administration, and control of the medical center within parameters
19set forth in this chapter, and in the ordinance, bylaws, and contracts
20adopted by the board of supervisors that shall not be in conflict
21with this chapter, Section 1442.5 of this code, or Section 17000
22of the Welfare and Institutions Code.

23(c) A hospital authority established pursuant to this chapter shall
24be governed by a board that is appointed, both initially and
25continually, by the Board of Supervisors of the County of Alameda.
26This hospital authority governing board shall reflect both the
27expertise necessary to maximize the quality and scope of care at
28the medical center in a fiscally responsible manner and the diverse
29interest that the medical center serves. The enabling ordinance
30shall specify the membership of the hospital authority governing
31board, the qualifications for individual members, the manner of
32appointment, selection, or removal of governing board members,
33their terms of office, and all other matters that the board of
34supervisors deems necessary or convenient for the conduct of the
35hospital authority’s activities.

36(d) The mission of the hospital authority shall be the
37management, administration, and other control, as determined by
38the board of supervisors, of the group of public hospitals, clinics,
39and programs that comprise the medical center, in a manner that
40ensures appropriate, quality, and cost-effective medical care as
P5    1required of counties by Section 17000 of the Welfare and
2Institutions Code, and, to the extent feasible, other populations,
3including special populations in the County of Alameda.

4(e) The board of supervisors shall adopt bylaws for the medical
5center that set forth those matters related to the operation of the
6medical center by the hospital authority that the board of
7supervisors deems necessary and appropriate. The bylaws shall
8become operative upon approval by a majority vote of the board
9of supervisors. Any changes or amendments to the bylaws shall
10be by majority vote of the board of supervisors.

11(f) The hospital authority created and appointed pursuant to this
12section is a duly constituted governing body within the meaning
13of Section 1250 and Section 70035 of Title 22 of the California
14Code of Regulations as currently written or subsequently amended.

15(g) Unless otherwise provided by the board of supervisors by
16way of resolution, the hospital authority is empowered, or the
17board of supervisors is empowered on behalf of the hospital
18authority, to apply as a public agency for one or more licenses for
19the provision of health care pursuant to statutes and regulations
20governing licensing as currently written or subsequently amended.

21(h) In the event of a change of license ownership, the governing
22body of the hospital authority shall comply with the obligations
23of governing bodies of general acute care hospitals generally as
24set forth in Section 70701 of Title 22 of the California Code of
25Regulations, as currently written or subsequently amended, as well
26as the terms and conditions of the license. The hospital authority
27shall be the responsible party with respect to compliance with these
28obligations, terms, and conditions.

29(i) (1) Any transfer by the county to the hospital authority of
30the administration, management, and control of the medical center,
31whether or not the transfer includes the surrendering by the county
32of the existing general acute care hospital license and corresponding
33application for a change of ownership of the license, shall not
34affect the eligibility of the county, or in the case of a change of
35license ownership, the hospital authority, to do any of the
36following:

37(A) Participate in, and receive allocations pursuant to, the
38California Healthcare for the Indigents Program (CHIP).

P6    1(B) Receive supplemental reimbursements from the Emergency
2Services and Supplemental Payments Fund created pursuant to
3Section 14085.6 of the Welfare and Institutions Code.

4(C) Receive appropriations from the Medi-Cal Inpatient Payment
5Adjustment Fund without relieving the county of its obligation to
6make intergovernmental transfer payments related to the Medi-Cal
7Inpatient Payment Adjustment Fund pursuant to Section 14163 of
8the Welfare and Institutions Code.

9(D) Receive Medi-Cal capital supplements pursuant to Section
1014085.5 of the Welfare and Institutions Code.

11(E) Receive any other funds that would otherwise be available
12to a county hospital.

13(2) Any transfer described in paragraph (1) shall not otherwise
14disqualify the county, or in the case of a change in license
15ownership, the hospital authority, from participating in any of the
16following:

17(A) Other funding sources either specific to county hospitals or
18county ambulatory care clinics or for which there are special
19provisions specific to county hospitals or to county ambulatory
20care clinics.

21(B) Funding programs in which the county, on behalf of the
22medical center and the Alameda County Health Care Services
23Agency, had participated prior to the creation of the hospital
24authority, or would otherwise be qualified to participate in had the
25hospital authority not been created, and administration,
26management, and control not been transferred by the county to the
27hospital authority, pursuant to this chapter.

28(j) A hospital authority created pursuant to this chapter shall be
29a legal entity separate and apart from the county and shall file the
30statement required by Section 53051 of the Government Code.
31The hospital authority shall be a government entity separate and
32apart from the county, and shall not be considered to be an agency,
33division, or department of the county. The hospital authority shall
34not be governed by, nor be subject to, the charter of the county
35and shall not be subject to policies or operational rules of the
36county, including, but not limited to, those relating to personnel
37and procurement.

38(k) (1) Any contract executed by and between the county and
39the hospital authority shall provide that liabilities or obligations
40of the hospital authority with respect to its activities pursuant to
P7    1the contract shall be the liabilities or obligations of the hospital
2authority, and shall not become the liabilities or obligations of the
3county.

4(2) Any liabilities or obligations of the hospital authority with
5respect to the liquidation or disposition of the hospital authority’s
6assets upon termination of the hospital authority shall not become
7the liabilities or obligations of the county.

8(3) Any obligation of the hospital authority, statutory,
9contractual, or otherwise, shall be the obligation solely of the
10hospital authority and shall not be the obligation of the county or
11the state.

12(l) (1) Notwithstanding any other provision of this section, any
13transfer of the administration, management, or assets of the medical
14center, whether or not accompanied by a change in licensing, shall
15not relieve the county of the ultimate responsibility for indigent
16care pursuant to Section 17000 of the Welfare and Institutions
17Code or any obligation pursuant to Section 1442.5 of this code.

18(2) Any contract executed by and between the county and the
19hospital authority shall provide for the indemnification of the
20county by the hospital authority for liabilities as specifically set
21forth in the contract, except that the contract shall include a
22provision that the county shall remain liable for its own negligent
23acts.

24(3) Indemnification by the hospital authority shall not be
25construed as divesting the county from its ultimate responsibility
26for compliance with Section 17000 of the Welfare and Institutions
27Code.

28(m) Notwithstanding the provisions of this section relating to
29the obligations and liabilities of the hospital authority, a transfer
30of control or ownership of the medical center shall confer onto the
31hospital authority all the rights and duties set forth in state law
32with respect to hospitals owned or operated by a county.

33(n) (1) A transfer of the maintenance, operation, and
34management or ownership of the medical center to the hospital
35authority shall comply with the provisions of Section 14000.2 of
36the Welfare and Institutions Code.

37(2) A transfer of maintenance, operation, and management or
38ownership to the hospital authority may be made with or without
39the payment of a purchase price by the hospital authority and
40otherwise upon the terms and conditions that the parties may
P8    1mutually agree, which terms and conditions shall include those
2found necessary by the board of supervisors to ensure that the
3transfer will constitute an ongoing material benefit to the county
4and its residents.

5(3) A transfer of the maintenance, operation, and management
6to the hospital authority shall not be construed as empowering the
7hospital authority to transfer any ownership interest of the county
8in the medical center except as otherwise approved by the board
9of supervisors.

10(o) The board of supervisors shall retain control over the use of
11the medical center physical plant and facilities except as otherwise
12specifically provided for in lawful agreements entered into by the
13board of supervisors. Any lease agreement or other agreement
14between the county and the hospital authority shall provide that
15county premises shall not be sublet without the approval of the
16board of supervisors.

17(p) The statutory authority of a board of supervisors to prescribe
18rules that authorize a county hospital to integrate its services with
19those of other hospitals into a system of community service that
20offers free choice of hospitals to those requiring hospital care, as
21set forth in Section 14000.2 of the Welfare and Institutions Code,
22shall apply to the hospital authority upon a transfer of maintenance,
23operation, and management or ownership of the medical center by
24the county to the hospital authority.

25(q) The hospital authority shall have the power to acquire and
26possess real or personal property and may dispose of real or
27personal property other than that owned by the county, as may be
28necessary for the performance of its functions. The hospital
29authority shall have the power to sue or be sued, to employ
30personnel, and to contract for services required to meet its
31obligations. Before January 1, 2024, the hospital authority shall
32not enter into a contract with any private person or entity to replace
33services being provided by physicians and surgeons who are
34employed by the hospital authority and in a recognized collective
35bargaining unit as of March 31, 2013, with services provided by
36a private person or entity without clear and convincing evidence
37that the needed medical care can only be delivered cost effectively
38by a private contractor. Prior to entering into a contract for any of
39those services, the authority shall negotiate with the representative
40of the recognized collective bargaining unit of its physician and
P9    1surgeon employees over the decision to privatize and, if unable to
2resolve any dispute through negotiations, shall submit the matter
3to final binding arbitration.

4(r) Any agreement between the county and the hospital authority
5shall provide that all existing services provided by the medical
6center shall continue to be provided to the county through the
7medical center subject to the policy of the county and consistent
8with the county’s obligations under Section 17000 of the Welfare
9and Institutions Code.

10(s) A hospital authority to which the maintenance, operation,
11and management or ownership of the medical center is transferred
12shall be a “district” within the meaning set forth in the County
13Employees Retirement Law of 1937 (Chapter 3 (commencing with
14Section 31450) of Part 3 of Division 4 of Title 3 of the Government
15Code). Employees of a hospital authority are eligible to participate
16in the County Employees Retirement System to the extent
17permitted by law, except as described in Section 101851.

18(t) Members of the governing board of the hospital authority
19shall not be vicariously liable for injuries caused by the act or
20omission of the hospital authority to the extent that protection
21applies to members of governing boards of local public entities
22generally under Section 820.9 of the Government Code.

23(u) The hospital authority shall be a public agency subject to
24the Meyers-Milias-Brown Act (Chapter 10 (commencing with
25Section 3500) of Division 4 of Title 1 of the Government Code).

26(v) Any transfer of functions from county employee
27classifications to a hospital authority established pursuant to this
28section shall result in the recognition by the hospital authority of
29the employee organization that represented the classifications
30performing those functions at the time of the transfer.

31(w) (1) In exercising its powers to employ personnel, as set
32forth in subdivision (p), the hospital authority shall implement,
33and the board of supervisors shall adopt, a personnel transition
34plan. The personnel transition plan shall require all of the
35following:

36(A) Ongoing communications to employees and recognized
37employee organizations regarding the impact of the transition on
38existing medical center employees and employee classifications.

39(B) Meeting and conferring on all of the following issues:

P10   1(i) The timeframe for which the transfer of personnel shall occur.
2The timeframe shall be subject to modification by the board of
3supervisors as appropriate, but in no event shall it exceed one year
4from the effective date of transfer of governance from the board
5of supervisors to the hospital authority.

6(ii) A specified period of time during which employees of the
7county impacted by the transfer of governance may elect to be
8appointed to vacant positions with the Alameda County Health
9Care Services Agency for which they have tenure.

10(iii) A specified period of time during which employees of the
11county impacted by the transfer of governance may elect to be
12considered for reinstatement into positions with the county for
13which they are qualified and eligible.

14(iv) Compensation for vacation leave and compensatory leave
15accrued while employed with the county in a manner that grants
16affected employees the option of either transferring balances or
17receiving compensation to the degree permitted employees laid
18off from service with the county.

19(v) A transfer of sick leave accrued while employed with the
20county to hospital authority employment.

21(vi) The recognition by the hospital authority of service with
22the county in determining the rate at which vacation accrues.

23(vii) The possible preservation of seniority, pensions, health
24benefits, and other applicable accrued benefits of employees of
25the county impacted by the transfer of governance.

26(2) Nothing in this subdivision shall be construed as prohibiting
27the hospital authority from determining the number of employees,
28the number of full-time equivalent positions, the job descriptions,
29and the nature and extent of classified employment positions.

30(3) Employees of the hospital authority are public employees
31for purposes of Division 3.6 (commencing with Section 810) of
32Title 1 of the Government Code relating to claims and actions
33against public entities and public employees.

34(x) Any hospital authority created pursuant to this section shall
35be bound by the terms of the memorandum of understanding
36executed by and between the county and health care and
37management employee organizations that is in effect as of the date
38this legislation becomes operative in the county. Upon the
39expiration of the memorandum of understanding, the hospital
40authority shall have sole authority to negotiate subsequent
P11   1memorandums of understanding with appropriate employee
2organizations. Subsequent memorandums of understanding shall
3be approved by the hospital authority.

4(y) The hospital authority created pursuant to this section may
5borrow from the county and the county may lend the hospital
6authority funds or issue revenue anticipation notes to obtain those
7funds necessary to operate the medical center and otherwise provide
8medical services.

9(z) The hospital authority shall be subject to state and federal
10taxation laws that are applicable to counties generally.

11(aa) The hospital authority, the county, or both, may engage in
12marketing, advertising, and promotion of the medical and health
13care services made available to the community at the medical
14center.

15(ab) The hospital authority shall not be a “person” subject to
16suit under the Cartwright Act (Chapter 2 (commencing with Section
1716700) of Part 2 of Division 7 of the Business and Professions
18Code).

19(ac) Notwithstanding Article 4.7 (commencing with Section
201125) of Chapter 1 of Division 4 of Title 1 of the Government
21Code related to incompatible activities, a member of the hospital
22authority administrative staff shall not be considered to be engaged
23in activities inconsistent and incompatible with his or her duties
24as a result of employment or affiliation with the county.

25(ad) (1) The hospital authority may use a computerized
26management information system in connection with the
27administration of the medical center.

28(2) Information maintained in the management information
29system or in other filing and records maintenance systems that is
30confidential and protected by law shall not be disclosed except as
31provided by law.

32(3) The records of the hospital authority, whether paper records,
33records maintained in the management information system, or
34records in any other form, that relate to trade secrets or to payment
35rates or the determination thereof, or which relate to contract
36negotiations with providers of health care, shall not be subject to
37disclosure pursuant to the California Public Records Act (Chapter
385 (commencing with Section 6250) of Division 7 of Title 1 of the
39Government Code). The transmission of the records, or the
40information contained therein in an alternative form, to the board
P12   1of supervisors shall not constitute a waiver of exemption from
2disclosure, and the records and information once transmitted shall
3be subject to this same exemption. The information, if compelled
4pursuant to an order of a court of competent jurisdiction or
5administrative body in a manner permitted by law, shall be limited
6to in-camera review, which, at the discretion of the court, may
7include the parties to the proceeding, and shall not be made a part
8of the court file unless sealed.

9(ae) (1) Notwithstanding any other law, the governing board
10may order that a meeting held solely for the purpose of discussion
11or taking action on hospital authority trade secrets, as defined in
12subdivision (d) of Section 3426.1 of the Civil Code, shall be held
13in closed session. The requirements of making a public report of
14actions taken in closed session and the vote or abstention of every
15member present may be limited to a brief general description
16devoid of the information constituting the trade secret.

17(2) The governing board may delete the portion or portions
18containing trade secrets from any documents that were finally
19approved in the closed session that are provided to persons who
20have made the timely or standing request.

21(3) Nothing in this section shall be construed as preventing the
22governing board from meeting in closed session as otherwise
23provided by law.

24(af) Open sessions of the hospital authority shall constitute
25official proceedings authorized by law within the meaning of
26Section 47 of the Civil Code. The privileges set forth in that section
27with respect to official proceedings shall apply to open sessions
28of the hospital authority.

29(ag) The hospital authority shall be a public agency for purposes
30of eligibility with respect to grants and other funding and loan
31guarantee programs. Contributions to the hospital authority shall
32 be tax deductible to the extent permitted by state and federal law.
33Nonproprietary income of the hospital authority shall be exempt
34from state income taxation.

35(ah) Contracts by and between the hospital authority and the
36state and contracts by and between the hospital authority and
37providers of health care, goods, or services may be let on a nonbid
38basis and shall be exempt from Chapter 2 (commencing with
39Section 10290) of Part 2 of Division 2 of the Public Contract Code.

P13   1(ai) (1) Provisions of the Evidence Code, the Government Code,
2including the Public Records Act (Chapter 5 (commencing with
3Section 6250) of Division 7 of Title 1 of the Government Code),
4the Civil Code, the Business and Professions Code, and other
5applicable law pertaining to the confidentiality of peer review
6activities of peer review bodies shall apply to the peer review
7activities of the hospital authority. Peer review proceedings shall
8constitute an official proceeding authorized by law within the
9meaning of Section 47 of the Civil Code and those privileges set
10forth in that section with respect to official proceedings shall apply
11to peer review proceedings of the hospital authority. If the hospital
12authority is required by law or contractual obligation to submit to
13the state or federal government peer review information or
14information relevant to the credentialing of a participating provider,
15that submission shall not constitute a waiver of confidentiality.
16The laws pertaining to the confidentiality of peer review activities
17shall be together construed as extending, to the extent permitted
18by law, the maximum degree of protection of confidentiality.

19(2) Notwithstanding any other law, Section 1461 shall apply to
20hearings on the reports of hospital medical audit or quality
21assurance committees.

22(aj) The hospital authority shall carry general liability insurance
23to the extent sufficient to cover its activities.

24(ak) In the event the board of supervisors determines that the
25hospital authority should no longer function for the purposes as
26set forth in this chapter, the board of supervisors may, by ordinance,
27terminate the activities of the hospital authority and expire the
28hospital authority as an entity.

29(al) A hospital authority which is created pursuant to this section
30but which does not obtain the administration, management, and
31control of the medical center or which has those duties and
32responsibilities revoked by the board of supervisors shall not be
33empowered with the powers enumerated in this section.

34(am) (1) The county shall establish baseline data reporting
35requirements for the medical center consistent with the Medically
36Indigent Health Care Reporting System (MICRS) program
37established pursuant to Section 16910 of the Welfare and
38Institutions Code and shall collect that data for at least one year
39prior to the final transfer of the medical center to the hospital
P14   1authority established pursuant to this chapter. The baseline data
2shall include, but not be limited to, all of the following:

3(A) Inpatient days by facility by quarter.

4(B) Outpatient visits by facility by quarter.

5(C) Emergency room visits by facility by quarter.

6(D) Number of unduplicated users receiving services within the
7medical center.

8(2) Upon transfer of the medical center, the county shall
9establish baseline data reporting requirements for each of the
10medical center inpatient facilities consistent with data reporting
11requirements of the Office of Statewide Health Planning and
12Development, including, but not limited to, monthly average daily
13census by facility for all of the following:

14(A) Acute care, excluding newborns.

15(B) Newborns.

16(C) Skilled nursing facility, in a distinct part.

17(3) From the date of transfer of the medical center to the hospital
18authority, the hospital authority shall provide the county with
19quarterly reports specified in paragraphs (1) and (2) and any other
20data required by the county. The county, in consultation with health
21care consumer groups, shall develop other data requirements that
22shall include, at a minimum, reasonable measurements of the
23changes in medical care for the indigent population of Alameda
24County that result from the transfer of the administration,
25management, and control of the medical center from the county
26to the hospital authority.

27(an) A hospital authority established pursuant to this section
28shall comply with the requirements of Sections 53260 and 53261
29of the Government Code.

30begin insert

begin insertSEC. 4.end insert  

end insert

begin insertSection 14085.53 of the end insertbegin insertWelfare and Institutions Codeend insert
31begin insert is amended to read:end insert

32

14085.53.  

(a) The Alamedabegin delete County Medical Centerend deletebegin insert Health
33Systemend insert
may revise plans submitted in accordance with
34subparagraph (C) of paragraph (1) of subdivision (b) of Section
3514085.5 for the Alamedabegin delete County Medical Centerend deletebegin insert Health Systemend insert
36 capital project and submit those revised plans pursuant to this
37section. The revised capital project plans shall qualify for
38supplemental reimbursement under Section 14085.5 for the revised
39 capital project as described in the revised plans, notwithstanding
P15   1the assignment of a different permit number, if all of the following
2conditions are met:

3(1) The revised capital project continues to meet all other
4requirements for eligibility as specified in Section 14085.5.

5(2) The revised plans are submitted to the Office of Statewide
6Health Planning and Development prior to June 30, 1997.

7(3) The modifications do not involve a deviation from the
8original capital project plan’s stated architectural building footprint.

9(b) The revised capital project plan forbegin insert theend insert Alamedabegin delete County
10Medical Centerend delete
begin insert Health Systemend insert may provide for any or all or any
11combination of the following:

12(1) A reduction in size and scope of the original project plan.

13(2) Tenant interior improvements for the entire building not
14specified in the original project plan.

15(3) Modifications to the foundation, structural frame, and
16building exterior shell, commonly known as the shell and core.

17(4) Modifications necessary to comply with current seismic
18safety standards.

19(c) The revised capital project plans for the Alamedabegin delete County
20Medical Centerend delete
begin insert Health Systemend insert, as described in this section, shall
21qualify for supplemental reimbursement as calculated pursuant to
22subdivision (c) of Section 14085.5, as limited by this section. The
23initial Medi-Cal inpatient utilization rate for the Alamedabegin delete County
24Medical Centerend delete
begin insert Health Systemend insert, for purposes of calculating the
25supplemental reimbursement, shall be that which was established
26at the point of the original project plan submission. The
27supplemental reimbursement shall be based on actual costs of the
28revised capital project eligible for reimbursement under Section
2914085.5. However, in no event shall the supplemental
30reimbursement for the revised capital project exceed 85 percent
31of the supplemental reimbursement for that portion of the original
32Alamedabegin delete County Medical Centerend deletebegin insert Health Systemend insert capital project
33that qualified for the supplemental reimbursement, the original
34qualifying amountbegin delete whichend deletebegin insert thatend insert was sixty-two million six hundred
35ninety-six thousand three hundred forty dollars ($62,696,340), as
36indicated by the budgetary estimate as prepared and submitted by
37Alameda County to the department July 11, 1994.

38begin insert

begin insertSEC. 5.end insert  

end insert

begin insertSection 14166.1 of the end insertbegin insertWelfare and Institutions Codeend insert
39begin insert is amended to read:end insert

P16   1

14166.1.  

For purposes of this article, the following definitions
2shall apply:

3(a) “Allowable costs” means those costs recognized as allowable
4under Medicare reasonable cost principles and additional costs
5recognized under the demonstration project and successor
6demonstration project, including those expenditures identified in
7Appendix D to the Special Terms and Conditions for the
8demonstration project and successor demonstration project.
9Allowable costs under this subdivision shall be determined in
10accordance with the Special Terms and Conditions and
11implementation documents for the demonstration project and
12successor demonstration project approved by the federal Centers
13for Medicare and Medicaid Services.

14(b) “Base year private DSH hospital” means a nonpublic
15hospital, nonpublic-converted hospital, or converted hospital, as
16those terms are defined in paragraphs (26), (27), and (28),
17respectively, of subdivision (a) of Section 14105.98, that was an
18eligible hospital under paragraph (3) of subdivision (a) of Section
1914105.98 for the 2004-05 state fiscal year.

20(c) “Demonstration project” means the Medi-Cal
21Hospital/Uninsured Care Demonstration, Number 11-W-00193/9,
22as approved by the federal Centers for Medicare and Medicaid
23Services, effective for the period of September 1, 2005, through
24October 31, 2010.

25(d) “Designated public hospital” means any one of the following
26hospitals to the extent identified in Attachment C,
27“Government-operated Hospitals to be Reimbursed on a Certified
28Public Expenditure Basis,” to the Special Terms and Conditions
29for the demonstration project and successor demonstration project,
30as applicable, issued by the federal Centers for Medicare and
31Medicaid Services:

32(1) UC Davis Medical Center.

33(2) UC Irvine Medical Center.

34(3) UC San Diego Medical Center.

35(4) UC San Francisco Medical Center.

36(5) UC Los Angeles Medical Center, including Santa
37Monica/UCLA Medical Center.

38(6) LA County Harbor/UCLA Medical Center.

39(7) LA County Martin Luther King Jr.-Harbor Hospital.

40(8) LA County Olive View UCLA Medical Center.

P17   1(9) LA County Rancho Los Amigos National Rehabilitation
2Center.

3(10) LA County University of Southern California Medical
4Center.

5(11) Alamedabegin delete County Medical Centerend deletebegin insert Health Systemend insert.

6(12) Arrowhead Regional Medical Center.

7(13) Contra Costa Regional Medical Center.

8(14) Kern Medical Center.

9(15) Natividad Medical Center.

10(16) Riverside County Regional Medical Center.

11(17) San Francisco General Hospital.

12(18) San Joaquin General Hospital.

13(19) San Mateo Medical Center.

14(20) Santa Clara Valley Medical Center.

15(21) Tuolumne General Hospital.

16(22) Ventura County Medical Center.

17(e) “Federal medical assistance percentage” means the federal
18medical assistance percentage applicable for federal financial
19participation purposes for medical services under the Medi-Cal
20state plan pursuant to Section 1396b(a) of Title 42 of the United
21States Code.

22(f) “Nondesignated public hospital” means a public hospital
23defined in paragraph (25) of subdivision (a) of Section 14105.98,
24excluding designated public hospitals.

25(g) “Project year” means the applicable state fiscal year of the
26Medi-Cal Hospital/Uninsured Care Demonstration Project through
27October 31, 2010.

28(h) “Project year private DSH hospital” means a nonpublic
29hospital, nonpublic-converted hospital, or converted hospital, as
30those terms are defined in paragraphs (26), (27), and (28),
31respectively, of subdivision (a) of Section 14105.98, that was an
32eligible hospital under paragraph (3) of subdivision (a) of Section
3314105.98, for the particular project year.

34(i) “Prior supplemental funds” means the Emergency Services
35and Supplemental Payments Fund, the Medi-Cal Medical Education
36Supplemental Payment Fund, the Large Teaching Emphasis
37Hospital and Children’s Hospital Medi-Cal Medical Education
38Supplemental Payment Fund, and the Small and Rural Hospital
39Supplemental Payments Fund, established under Sections 14085.6,
4014085.7, 14085.8, and 14085.9, respectively.

P18   1(j) “Private hospital” means a nonpublic hospital,
2nonpublic-converted hospital, or converted hospital, as those terms
3are defined in paragraphs (26) to (28), inclusive, respectively, of
4subdivision (a) of Section 14105.98.

5(k) “Safety net care pool” means the federal funds available
6under the Medi-Cal Hospital/Uninsured Care Demonstration
7Project and the successor demonstration project to ensure continued
8government support for the provision of health care services to
9uninsured populations.

10(l) “Uninsured” shall have the same meaning as that term has
11in the Special Terms and Conditions issued by the federal Centers
12for Medicare and Medicaid Services for the demonstration project
13and the successor demonstration project.

14(m) “Successor demonstration project” means the Medicaid
15demonstration project entitled “California’s Bridge to Reform,”
16No. 11-W-00193/9, as approved by the federal Centers for
17Medicare and Medicaid Services, effective for the period of
18November 1, 2010, through October 31, 2015.

19(n) “Successor demonstration year” means the demonstration
20year as identified in the Special Terms and Conditions for the
21successor demonstration project that corresponds to a specific
22period of time as follows:

23(1) Successor demonstration year 6 corresponds to the period
24of November 1, 2010, through June 30, 2011.

25(2) Successor demonstration year 7 corresponds to the period
26of July 1, 2011, through June 30, 2012.

27(3) Successor demonstration year 8 corresponds to the period
28of July 1, 2012, through June 30, 2013.

29(4) Successor demonstration year 9 corresponds to the period
30of July 1, 2013, through June 30, 2014.

31(5) Successor demonstration year 10 corresponds to July 1,
322014, through October 31, 2015.

33(o) “Low Income Health Program” means the county-based
34elective program to provide benefits for low-income individuals
35that is authorized by the successor demonstration project and
36implemented by Part 3.6 (commencing with Section 15909).

37(p) “Delivery system reform incentive pool” means the separate
38federal funding pool created within the safety net care pool under
39the successor demonstration project that is available to support
40programs of activity to enhance the quality of care and health of
P19   1patients served by designated public hospitals and nonhospital
2clinics and other provider types with which they are affiliated, and,
3under specified conditions and approval of the federal Centers for
4Medicare and Medicaid Services, to private disproportionate share
5hospitals and nondesignated public hospitals.

6begin insert

begin insertSEC. 6.end insert  

end insert

begin insertSection 17612.2 of the end insertbegin insertWelfare and Institutions Codeend insert
7begin insert is amended to read:end insert

8

17612.2.  

For purposes of this article, the following definitions
9shall apply:

10(a) “Adjusted patient day” means a county public hospital health
11system’s total number of patient census days, as defined by the
12Office of Statewide Health Planning and Development, multiplied
13by the following fraction: the numerator that is the sum of the
14county public hospital health system’s total gross revenue for all
15services provided to all patients, including nonhospital services,
16and the denominator that is the sum of the county public hospital
17health system’s gross inpatient revenue. The adjusted patient days
18shall pertain to those services that are provided by the county public
19hospital health system and shall exclude services that are provided
20by contract or out-of-network clinics or hospitals.

21(b) “Base year” means the fiscal year ending three years prior
22to the fiscal year for which the redirected amount is calculated.

23(c) “Blended CPI trend factor” means the blended percent
24change applicable for the fiscal year that is derived from the
25nonseasonally adjusted Consumer Price Index for All Urban
26Consumers (CPI-U), United States City Average, for Hospital and
27Related Services, weighted at 75 percent, and for Medical Care
28Services, weighted at 25 percent, all as published by the United
29States Bureau of Labor Statistics, computed as follows:

30(1) For each prior fiscal year within the period to be trended
31through the current fiscal year, the annual average of the monthly
32index amounts shall be determined separately for the Hospital and
33Related Services Index and the Medical Care Services Index.

34(2) The year-to-year percentage changes in the annual averages
35determined in paragraph (1) for each of the Hospital and Related
36Services Index and the Medical Care Services Index shall be
37calculated.

38(3) A weighted average annual percentage change for each
39year-to-year period shall be calculated from the determinations
40made in paragraph (2), with the percentage changes in the Hospital
P20   1and Related Services Index weighted at 75 percent, and the
2percentage changes in the Medical Care Services Index weighted
3at 25 percent. The resulting average annual percentage changes
4shall be expressed as a fraction, and increased by 1.00.

5(4) The product of the successive year-to-year amounts
6determined in paragraph (3) shall be the blended CPI trend factor.

7(d) “Cost containment limit” means the public hospital health
8system county’s Medi-Cal costs and uninsured costs determined
9for the 2014-15 fiscal year and each subsequent fiscal year,
10adjusted as follows:

11(1) Notwithstanding paragraphs (2) to (4), inclusive, at the public
12hospital health system county’s option it shall be deemed to comply
13with the cost containment limit if the county demonstrates that its
14total health care costs, including nursing facility, mental health,
15and substance use disorder services, that are not limited to
16Medi-Cal and uninsured patients, for the fiscal year did not exceed
17its total health care costs in the base year, multiplied by the blended
18CPI trend factor for the fiscal year. A county electing this option
19shall elect by November 1 following the end of the fiscal year, and
20submit its supporting reports for meeting this requirement,
21including the annual report of financial transactions required to be
22submitted to the Controller pursuant to Section 53891 of the
23Government Code.

24(2) (A) The public hospital health system county’s Medi-Cal
25costs, uninsured costs, and other entity intergovernmental transfer
26amounts for the fiscal year shall be added together. Medi-Cal costs,
27uninsured costs, and other entity intergovernmental transfer
28amounts for purposes of this paragraph are as defined in
29subdivisions (q), (t), and (y) for the relevant fiscal period.

30(B) The public hospital health system county’s Medi-Cal costs,
31uninsured costs, and imputed other entity intergovernmental
32transfer amounts for the base year shall be added together and
33multiplied by the blended CPI trend factor. The base year costs
34used shall not reflect any adjustments under this subdivision.

35(C) The fiscal year amount determined in subparagraph (A)
36shall be compared to the trended amount in subparagraph (B). If
37the amount in subparagraph (B) exceeds the amount in
38subparagraph (A), the public hospital health system county shall
39be deemed to have satisfied the cost containment limit. If the
P21   1amount in subparagraph (A) exceeds the amount in subparagraph
2(B), the calculation in paragraph (3) shall be performed.

3(3) (A) If the number of adjusted patient days of service
4provided by the county public hospital health system for the fiscal
5year exceeds its number of adjusted patient days of service rendered
6in the base year by at least 10 percent, the excess adjusted patient
7days above the base year for the fiscal year shall be multiplied by
8the cost per adjusted patient day of the county public hospital
9health system for the base year. The result shall be added to the
10trended base year amount determined in subparagraph (B) of
11paragraph (2), yielding the applicable cost containment limit,
12subject to paragraph (4).

13(B) If the number of adjusted patient days of service provided
14by a county’s public hospital health system for the fiscal year does
15not exceed its number of adjusted patient days of service rendered
16in the base year by 10 percent, the applicable cost containment
17limit is the trended base year amount determined in subparagraph
18(B) of paragraph (2), subject to paragraph (4).

19(4) If a public hospital health system county’s costs, as
20determined in subparagraph (A) of paragraph (2), exceeds the
21amount determined in subparagraph (B) of paragraph (2) as
22adjusted by paragraph (3), the portion of the following cost
23increases incurred in providing services to Medi-Cal beneficiaries
24and uninsured patients shall be added to and reflected in any cost
25containment limit:

26(A) Electronic Health Records and related implementation and
27infrastructure costs.

28(B) Costs related to state or federally mandated activities,
29requirements, or benefit changes.

30(C) Costs resulting from a court order or settlement.

31(D) Costs incurred in response to seismic concerns, including
32costs necessary to meet facility seismic standards.

33(E) Costs incurred as a result of a natural disaster or act of
34terrorism.

35(5) If a public hospital health system county’s costs, as
36determined in subparagraph (A) of paragraph (2), exceeds the
37amount determined in subparagraph (B) of paragraph (2) as
38adjusted by paragraphs (3) and (4), the county may request that
39the department consider other costs as adjustments to the cost
40containment limit, including, but not limited to, transfer amounts
P22   1in excess of the imputed other entity intergovernmental transfer
2amount trended by the blended CPI trend factor, costs related to
3case mix index increases, pension costs, expanded medical
4education programs, increased costs in response to delivery system
5changes in the local community, and system expansions, including
6capital expenditures necessary to ensure access to and the quality
7of health care. Costs approved by the department shall be added
8to and reflected in any cost containment limit.

9(e) “County indigent care health realignment amount” means
10the product of the health realignment amount times the health
11realignment indigent care percentage, as computed on a
12county-specific basis.

13(f) “County public hospital health system” means a designated
14public hospital identified in paragraphs (6) to (20), inclusive, and
15paragraph (22) of subdivision (d) of Section 14166.1, and its
16affiliated governmental entity clinics, practices, and other health
17care providers that do not provide predominantly public health
18services. A county public hospital health system does not include
19a health care service plan, as defined in subdivision (f) of Section
201345 of the Health and Safety Code. The Alamedabegin delete County Medical
21Centerend delete
begin insert Health Systemend insert and County of Alameda shall be considered
22affiliated governmental entities.

23(g) “Department” means the State Department of Health Care
24Services.

25(h) “Health realignment amount” means the amount that, in the
26absence of this article, would be payable to a public hospital health
27system county under Sections 17603, 17604, and 17606.20, as
28those sections read on January 1, 2012, and Section 17606.10, as
29it read on July 1, 2013, for the fiscal year that is deposited by the
30Controller into the local health and welfare trust fund health
31account of the public hospital health system county.

32(i) “Health realignment indigent care percentage” means the
33county-specific percentage determined in accordance with the
34following, and established in accordance with the procedures
35described in subdivision (c) of Section 17612.3.

36(1) Each public hospital health system county shall identify the
37portion of that county’s health realignment amount that was used
38to provide health services to the indigent, including Medi-Cal
39beneficiaries and the uninsured, for each of the historical fiscal
40years along with verifiable data in support thereof.

P23   1(2) The amounts identified in paragraph (1) shall be expressed
2as a percentage of the health realignment amount of that county
3for each historical fiscal year.

4(3) The average of the percentages determined in paragraph (2)
5shall be the county’s health realignment indigent care percentage.

6(4) To the extent a county does not provide the information
7required in paragraph (1) or the department determines that the
8information provided is insufficient, the amount under this
9subdivision shall be 85 percent.

10(j) “Historical fiscal years” means the state 2008-09 to 2011-12,
11inclusive, fiscal years.

12(k) “Hospital fee direct grants” means the direct grants described
13in Section 14169.7 that are funded by the Private Hospital Quality
14Assurance Fee Act of 2011 (Article 5.229 (commencing with
15Section 14169.31) of Chapter 7 of Part 3), or direct grants made
16in support of health care expenditures funded by a successor
17statewide hospital fee program.

18(l) “Imputed county low-income health amount” means the
19predetermined, county-specific amount of county general purpose
20funds assumed, for purposes of the calculation in Section 17612.
213, to be available to the county public hospital health system for
22services to Medi-Cal and uninsured patients. County general
23purpose funds shall not include any other revenues, grants, or funds
24otherwise defined in this section. The imputed county low-income
25health amount shall be determined as follows and established in
26accordance with subdivision (c) of Section 17612.3.

27(1) For each of the historical fiscal years, an amount determined
28to be the annual amount of county general fund contribution
29provided for health services to Medi-Cal beneficiaries and the
30uninsured, which does not include funds provided for nursing
31facility, mental health, and substance use disorder services, shall
32be determined through methodologies described in subdivision
33(ab).

34(2) If a year-to-year percentage increase in the amount
35determined in paragraph (1) was present, an average annual
36percentage trend factor shall be determined.

37(3) The annual amounts determined in paragraph (1) shall be
38averaged, and multiplied by the percentage trend factor, if
39applicable, determined in paragraph (2), for each fiscal year after
40the 2011-12 fiscal year through the applicable fiscal year.
P24   1However, if the percentage trend factor determined in paragraph
2(2) is greater than the applicable percentage change for any year
3of the same period in the blended CPI trend factor, the percentage
4change in the blended CPI trend factor for that year shall be used.
5The resulting determination is the imputed county low-income
6health amount for purposes of Section 17612.3.

7(m) “Imputed gains from other payers” means the
8predetermined, county-specific amount of revenues in excess of
9costs generated from all other payers for health services that is
10assumed to be available to the county public hospital health system
11for services to Medi-Cal and uninsured patients, which shall be
12determined as follows and established in accordance with
13subdivision (c) of Section 17612.3.

14(1) For each of the historical fiscal years, the gains from other
15payers shall be determined in accordance with methodologies
16described in subdivision (ab).

17(2) The amounts determined in paragraph (1) shall be averaged,
18 yielding the imputed gains from other payers.

19(n) “Imputed other entity intergovernmental transfer amount”
20means the predetermined average historical amount of the public
21hospital health system county’s other entity intergovernmental
22transfer amount, determined as follows and established in
23accordance with subdivision (c) of Section 17612.3.

24(1) For each of the historical fiscal years, the other entity
25intergovernmental transfer amount shall be determined based on
26the records of the public hospital health system county.

27(2) The annual amounts in paragraph (1) shall be averaged.

28(o) “Medicaid demonstration revenues” means payments paid
29or payable to the county public hospital health system for the fiscal
30year pursuant to the Special Terms and Conditions of the federal
31Medicaid demonstration project authorized under Section 1115 of
32the federal Social Security Act entitled the “Bridge to Health Care
33Reform” (waiver number 11-W-00193/9), for uninsured care
34services from the Safety Net Care Pool or as incentive payments
35from the Delivery System Reform Improvement Pool, or pursuant
36to mechanisms that provide funding for similar purposes under
37the subsequent demonstration project. Medicaid demonstration
38revenues do not include the nonfederal share provided by county
39public hospital health systems as certified public expenditures,
40and are reduced by any intergovernmental transfer by county public
P25   1hospital health systems or affiliated governmental entities that is
2for the nonfederal share of Medicaid demonstration payments to
3the county public hospital health system or payments to a Medi-Cal
4managed care plan for services rendered by the county public
5hospital health system, and any related fees imposed by the state
6on those transfers; and by any reimbursement of costs, or payment
7of administrative or other processing fees imposed by the state
8relating to payments or other Medicaid demonstration program
9functions. Medicaid demonstration revenues shall not include
10Safety Net Care Pool revenues for nursing facility, mental health,
11and substance use disorder services, as determined from the pro
12rata share of eligible certified public expenditures for such services,
13or revenues that are otherwise included as Medi-Cal revenues.

14(p) “Medi-Cal beneficiaries” means individuals eligible to
15receive benefits under Chapter 7 (commencing with Section 14000)
16of Part 3, except for: individuals who are dual eligibles, as defined
17in paragraph (4) of subdivision (c) of Section 14132.275, and
18individuals for whom Medi-Cal benefits are limited to cost sharing
19or premium assistance for Medicare or other insurance coverage
20as described in Section 1396d(a) of Title 42 of the United States
21Code.

22(q) “Medi-Cal costs” means the costs incurred by the county
23public hospital health system for providing Medi-Cal services to
24Medi-Cal beneficiaries during the fiscal year, which shall be
25determined in a manner consistent with the cost claiming protocols
26developed for Medi-Cal cost-based reimbursement for public
27providers and under Section 14166.8, and, in consultation with
28each county, shall be based on other cost reporting and statistical
29data necessary for an accurate determination of actual costs as
30required in Section 17612.4. Medi-Cal costs shall include all
31fee-for-service and managed care hospital and nonhospital
32components, managed care out-of-network costs, and related
33administrative costs. The Medi-Cal costs determined under this
34paragraph shall exclude costs incurred for nursing facility, mental
35health, and substance use disorder services.

36(r) “Medi-Cal revenues” means total amounts paid or payable
37to the county public hospital health system for medical services
38provided under the Medi-Cal State Plan that are rendered to
39Medi-Cal beneficiaries during the state fiscal year, and shall include
40payments from Medi-Cal managed care plans for services rendered
P26   1to Medi-Cal managed care plan members, Medi-Cal copayments
2received from Medi-Cal beneficiaries, but only to the extent
3actually received, supplemental payments for Medi-Cal services,
4and Medi-Cal disproportionate share hospital payments for the
5state fiscal year, but shall exclude Medi-Cal revenues paid or
6payable for nursing facility, mental health, and substance use
7disorder services. Medi-Cal revenues do not include the nonfederal
8share provided by county public hospital health systems as certified
9public expenditures. Medi-Cal revenues shall be reduced by all of
10the following:

11(1) Intergovernmental transfers by the county public hospital
12health system or its affiliated governmental entities that are for the
13nonfederal share of Medi-Cal payments to the county public
14hospital health system, or Medi-Cal payments to a Medi-Cal
15managed care plan for services rendered by the county public
16hospital health system for the fiscal year.

17(2) Related fees imposed by the state on the transfers specified
18in paragraph (1).

19(3) Administrative or other fees, payments, or transfers imposed
20by the state, or voluntarily provided by the county public hospital
21health systems or affiliated governmental entities, relating to
22payments or other Medi-Cal program functions for the fiscal year.

23(s) “Newly eligible beneficiaries” means individuals who meet
24the eligibility requirements in Section 1902(a)(10)(A)(i)(VIII) of
25Title XIX of the federal Social Security Act (42 U.S.C. Sec.
26 1396a(a)(10)(A)(i)(VIII)), and who meet the conditions described
27in Section 1905(y) of the federal Social Security Act (42 U.S.C.
28Sec. 1396d(y)) such that expenditures for services provided to the
29individual are eligible for the enhanced federal medical assistance
30percentage described in that section.

31(t) “Other entity intergovernmental transfer amount” means the
32amount of intergovernmental transfers by a county public hospital
33health system or affiliated governmental entities, and accepted by
34the department, that are for the nonfederal share of Medi-Cal
35payments or Medicaid demonstration payments for the fiscal year
36to any Medi-Cal provider other than the county public hospital
37health system, or to a Medi-Cal managed care plan for services
38rendered by those other providers, and any related fees imposed
39by the state on those transfers.

P27   1(u) “Public hospital health system county” means a county in
2which a county public hospital health system is located.

3(v) “Redirected amount” means the amount to be redirected in
4accordance with Section 17612.1, as calculated pursuant to
5subdivision (a) of Section 17612.3.

6(w) “Special local health funds” means the amount of the
7following county funds received by the county public hospital
8health system for health services during the fiscal year:

9(1) Assessments and fees restricted for health-related purposes.
10The amount of the assessment or fee for this purpose shall be the
11greater of subparagraph (A) or (B). If, because of restrictions and
12limitations applicable to the assessment or fee, the county public
13hospital health system cannot expend this amount, this amount
14shall be reduced to the amount actually expended.

15(A) The amount of the assessment or fee expended by the county
16public hospital health system for the provision of health services
17to Medi-Cal and uninsured beneficiaries during the fiscal year.

18(B) The amount of the assessment or fee multiplied by the
19average of the percentages of the amount of assessment or fees
20that were allocated to and expended by the county public hospital
21health system for health services to Medi-Cal and uninsured
22beneficiaries during the historical fiscal years. The percentages
23for the historical fiscal years shall be determined by dividing the
24amount allocated in each fiscal year as described in subparagraphs
25(B) and (C) of paragraph (2) of subdivision (ab) by the actual
26amount of assessment or fee expended in the fiscal year.

27(2) Funds available pursuant to the Master Settlement Agreement
28and related documents entered into on November 23, 1998, by the
29state and leading United States tobacco product manufacturers
30during a fiscal year. The amount of the tobacco settlement funds
31that may be used for this purpose shall be the greater of
32subparagraph (A) or (B), less any bond payments and other costs
33of securitization related to the funds described in this paragraph.

34(A) The amount of the funds expended by the county public
35hospital health system for the provision of health services to
36Medi-Cal and uninsured beneficiaries during the fiscal year.

37(B) The amount of the tobacco settlement funds multiplied by
38the average of the percentages of the amount of tobacco settlement
39funds that were allocated to and expended by the county public
40hospital health system for health services to Medi-Cal and
P28   1uninsured beneficiaries during the historical fiscal years. The
2percentages for the historical fiscal years shall be determined by
3dividing the amount allocated in each fiscal year as described in
4subparagraphs (B) and (C) of paragraph (2) of subdivision (ab) by
5the actual amount of tobacco settlement funds expended in the
6fiscal year.

7(x) “Subsequent demonstration project” means the federally
8approved Medicaid demonstration project implemented after the
9termination of the federal Medicaid demonstration project
10authorized under Section 1115 of the federal Social Security Act
11entitled the “Bridge to Health Care Reform” (waiver number
1211-W-00193/9), the extension of that demonstration project, or
13the material amendment to that demonstration project.

14(y) “Uninsured costs” means the costs incurred by the public
15hospital health system county and its affiliated government entities
16for purchasing, providing, or ensuring the availability of services
17to uninsured patients during the fiscal year. Uninsured costs shall
18be determined in a manner consistent with the cost-claiming
19protocols developed for the federal Medicaid demonstration project
20authorized under Section 1115 of the federal Social Security Act
21entitled the “Bridge to Health Care Reform” (waiver number
2211-W-00193/9), including protocols pending federal approval, and
23under Section 14166.8, and, in consultation with each county, shall
24be based on any other cost reporting and statistical data necessary
25for an accurate determination of actual costs incurred. For this
26purpose, no reduction factor applicable to otherwise allowable
27costs under the demonstration project or the subsequent
28demonstration project shall apply. Uninsured costs shall exclude
29costs for nursing facility, mental health, and substance use disorder
30services.

31(z) “Uninsured patients” means individuals who have no source
32of third-party coverage for the specific service furnished, as further
33defined in the reporting requirements established pursuant to
34Section 17612.4.

35(aa) “Uninsured revenues” means self-pay payments made by
36or on behalf of uninsured patients to the county public hospital
37health system for the services rendered in the fiscal year, but shall
38exclude revenues received for nursing facility, mental health, and
39substance use disorder services. Uninsured revenues do not include
40the health realignment amount or imputed county low-income
P29   1health amount and shall not include any other revenues, grants, or
2funds otherwise defined in this section.

3(ab) “Historical allocation” means the allocation for the amounts
4in the historical years described in subdivisions (l), (m), and (w)
5for health services to Medi-Cal beneficiaries and uninsured
6patients. The allocation of those amounts in the historical years
7shall be done in accordance with a process to be developed by the
8department, in consultation with the counties, which includes the
9following required parameters:

10(1) For each of the historical fiscal years, the Medi-Cal costs,
11uninsured costs, and costs of other entity intergovernmental transfer
12amounts, as defined in subdivisions (q), (t), and (y), and the
13Medicaid demonstration, Medi-Cal and uninsured revenues, and
14hospital fee direct grants with respect to the services as defined in
15subdivisions (k), (o), (r), and (aa), shall be determined. For these
16purposes, Medicaid demonstration revenues shall include
17applicable payments as described in subdivision (o) paid or payable
18to the county public hospital health system under the prior
19demonstration project defined in subdivision (c) of Section
2014166.1, under the Low Income Health Program (Part 3.6
21(commencing with Section 15909)), and under the Health Care
22Coverage Initiative (Part 3.5 (commencing with Section 15900)),
23none of which shall include the nonfederal share of the Medicaid
24demonstration payments. The revenues shall be subtracted from
25the costs, yielding the initial low-income shortfall for each of the
26historical fiscal years.

27(2) The following shall be applied in sequential order against,
28but shall not exceed in the aggregate, the initial low-income
29shortfall determined in paragraph (1) for each of the historical
30fiscal years:

31(A) First, the county indigent care health realignment amount
32shall be applied 100 percent against the initial low-income shortfall.

33(B) Second, special local health funds specifically restricted for
34indigent care shall be applied 100 percent against the initial
35low-income shortfall.

36(C) Third, the sum of clauses (iv), (v), and (vi). Clause (iv) is
37the special local health funds, as defined in subdivision (w) and
38not otherwise identified as restricted special local health funds
39under subparagraph (B), clause (v) is the imputed county
40low-income health amount defined in subdivision (l), and clause
P30   1(vi) is the one-time and carry-forward revenues as defined in
2subdivision (aj), all allocated to the historical low-income shortfall.
3These amounts shall be calculated as follows:

4(i) Determine the sum of the special local health funds, as
5defined in subdivision (w) and not otherwise identified as restricted
6special local health funds under subparagraph (B), the imputed
7county low-income health amount defined in subdivision (l), and
8one-time and carry-forward revenues as defined in subdivision
9(aj).

10(ii) Divide the historical total shortfall defined in subdivision
11(ah) by the sum in clause (i) to get the historical usage of funds
12 percentage defined in subdivision (ai). If this calculation produces
13a percentage above 100 percent in a given historical fiscal year,
14then the historical usage of funds percentage in that historical fiscal
15year shall be deemed to be 100 percent.

16(iii) Multiply the historical usage of funds percentage defined
17in subdivision (ai) and calculated in clause (ii) by each of the
18following funds:

19(I) Special local health funds, as defined in subdivision (w) and
20not otherwise identified as restricted special local health funds
21under subparagraph (B).

22(II) The imputed county low-income health amount defined in
23subdivision (l).

24(III) One-time and carry-forward revenues as defined in
25subdivision (aj).

26(iv) Multiply the product of subclause (I) of clause (iii) by the
27historical low-income shortfall percentage defined in subdivision
28(af) to determine the amount of special local health funds, as
29defined in subdivision (w) and not otherwise identified as restricted
30special local health funds under subparagraph (B), allocated to the
31historical low-income shortfall.

32(v) Multiply the product of subclause (II) of clause (iii) by the
33historical low-income shortfall percentage defined in subdivision
34(af) to determine the amount of the imputed county low-income
35health amount defined in subdivision (l) allocated to the historical
36low-income shortfall.

37(vi) Multiply the product of subclause (III) of clause (iii) by the
38historical low-income shortfall percentage defined in subdivision
39(af) to determine the amount of one-time and carry-forward
P31   1revenues as defined in subdivision (aj) allocated to the historical
2low-income shortfall.

3(D) Finally, to the extent that the process above does not result
4in completely allocating revenues up to the amount necessary to
5address the initial low-income shortfall in the historical years,
6gains from other payers shall be allocated to fund those costs only
7to the extent that such other payer gains exist.

8(ac) “Gains from other payers” means the county-specific
9amount of revenues in excess of costs generated from all other
10payers for health services. For purposes of this subdivision, patients
11with other payer coverage are patients who are identified in all
12other financial classes, including, but not limited to, commercial
13coverage and dual eligible, other than allowable costs and
14associated revenues for Medi-Cal and the uninsured.

15(ad) “New mandatory other entity intergovernmental transfer
16amounts” means other entity intergovernmental transfer amounts
17required by the state after July 1, 2013.

18(ae) “Historical low-income shortfall” means, for each of the
19historical fiscal years described in subdivision (j), the initial
20low-income shortfall for Medi-Cal and uninsured costs determined
21in paragraph (1) of subdivision (ab), less amounts identified in
22subparagraphs (A) and (B) of paragraph (2) of subdivision (ab).

23(af) “Historical low-income shortfall percentage” means, for
24each of the historical fiscal years described in subdivision (j), the
25historical low-income shortfall described in subdivision (ae)
26divided by the historical total shortfall described in subdivision
27(ah).

28(ag) “Historical other shortfall” means, for each of the historical
29fiscal years described in subdivision (j), the shortfall for all other
30types of costs incurred by the public hospital health system that
31are not Medi-Cal or uninsured costs, and is determined as total
32costs less total revenues, excluding any costs and revenue amounts
33used in the calculation of the historical low-income shortfall, and
34also excluding those costs and revenues related to mental health
35and substance use disorder services. If the amount of historical
36other shortfall in a given historical fiscal year is less than zero,
37then the historical other shortfall for that historical fiscal year shall
38be deemed to be zero.

39(ah) “Historical total shortfall” means, for each of the historical
40fiscal years described in subdivision (j), the sum of the historical
P32   1low-income shortfall described in subdivision (ae) and the historical
2other shortfall described in subdivision (ag).

3(ai) “Historical usage of funds percentage” means, for each of
4the historical fiscal years described in subdivision (j), the historical
5total shortfall described in subdivision (ah) divided by the sum of
6special local health funds as defined in subdivision (w) and not
7otherwise identified as restricted special local health funds under
8subparagraph (B) of paragraph (2) of subdivision (ab), the imputed
9county low-income health amount defined in subdivision (l), and
10one-time and carry-forward revenues as defined in subdivision
11(aj). If this calculation produces a percentage above 100 percent
12in a given historical fiscal year, then the historical usage of funds
13percentage in that historical fiscal year shall be deemed to be 100
14percent.

15(aj) “One-time and carry-forward revenues” mean, for each of
16the historical fiscal years described in subdivision (j), revenues
17and funds that are not attributable to services provided or
18obligations in the applicable historical fiscal year, but were
19available and utilized during the applicable historical fiscal year
20by the public hospital health system.



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