BILL ANALYSIS Ó AB 2213 Page 1 Date of Hearing: May 4, 2016 ASSEMBLY COMMITTEE ON APPROPRIATIONS Lorena Gonzalez, Chair AB 2213 (Dahle) - As Amended March 18, 2016 ----------------------------------------------------------------- |Policy |Health |Vote:|19 - 0 | |Committee: | | | | | | | | | | | | | | ----------------------------------------------------------------- Urgency: No State Mandated Local Program: NoReimbursable: No SUMMARY: This bill requires the Department of Health Care Services (DHCS) and Office of Statewide Health Planning and Development (OSHPD) to jointly develop and implement a three-year demonstration program, whereby the data collected by DHCS and OSHPD from the audits of non-designated public hospitals (NDPHs) for the cost reporting periods beginning on and after July 1, 2016, is evaluated for reimbursement relevancy. It also requires DHCS and OSHPD to prepare and submit a report to the Legislature that evaluates the effectiveness of the three-year demonstration program and makes recommendations AB 2213 Page 2 regarding continuing and expanding the project to all hospitals. FISCAL EFFECT: 1)Costs of $350,000 (GF/potentially federal) annually for DHCS staff costs to manage the project for the three-year life of the demonstration and minor costs to OSHPD for consultation and collaboration (Health Data and Planning Fund). 2)Unknown, potentially significant additional costs for training and costs, information technology contract costs, or related contract activities. 3)This bill does not make implementation contingent on federal approval, and it's unknown if the federal Center for Medicare and Medicaid Services (CMS) would approve a demonstration project for amending the federal cost report form. If DHCS does not obtain federal approval for the demonstration project, the cost of implementation would be 100% GF with no federal match. COMMENTS: 1)Purpose. According to the author, the Medi-Cal cost report is no longer needed as a reimbursement tool. Minimizing reporting burden and streamlining reporting to what is useful and necessary would benefit hospitals and the state. This bill is sponsored by the District Hospital Leadership Forum, who states it would reduce the administrative costs and burdens associated with the outdated cost report process. 2)Background. Hospital reimbursement in Medi-Cal is complex, and AB 2213 Page 3 how hospitals are paid depends on the status of the hospital as designated public hospital (DPH), non-designated public hospital (NDPH or district hospitals), and or a private hospital. NDPHs recently converted to a Medi-Cal inpatient reimbursement methodology called Diagnosis-Related Group (DRG). The methodology takes into account the patient's diagnosis, age, procedures performed, and discharge status. Hospitals indicate that since the inception of the new methodology, the Medi-Cal cost report is no longer used as a reimbursement tool. This bill allows hospitals to work with DHCS, OSHPD, and other stakeholders to determine the appropriate data needed. Analysis Prepared by:Lisa Murawski / APPR. / (916) 319-2081