Amended in Assembly June 9, 2016

Amended in Assembly June 2, 2016

Amended in Senate May 3, 2016

Amended in Senate April 11, 2016

Senate Bill No. 815

Introduced by Senators Hernandez and De León

January 4, 2016

An act to add Article 5.5 (commencing with Section 14184) to Chapter 7 of Part 3 of Division 9 of, the Welfare and Institutions Code, relating to Medi-Cal, making an appropriation therefor, and declaring the urgency thereof, to take effect immediately.

LEGISLATIVE COUNSEL’S DIGEST

SB 815, as amended, Hernandez. Medi-Cal: demonstration project.

Existing law provides for the Medi-Cal program, which is administered by the State Department of Health Care Services and under which qualified low-income persons receive health care benefits and services. The Medi-Cal program is, in part, governed and funded by federal Medicaid Program provisions. Existing law provides for a demonstration project, known as California’s “Bridge to Reform” Medicaid demonstration project, under the Medi-Cal program until October 31, 2015, to implement specified objectives, including better care coordination for seniors and persons with disabilities and maximization of opportunities to reduce the number of uninsured individuals.

Existing law establishes the Medi-Cal Hospital/Uninsured Care Demonstration Project Act, which revises hospital supplemental payment methodologies under the Medi-Cal program in order to maximize the use of federal funds consistent with federal Medicaid law and to stabilize the distribution of funding for hospitals that provide care to Medi-Cal beneficiaries and uninsured patients. This act provides for funding, in supplementation of Medi-Cal reimbursement, to various hospitals, including designated public hospitals, nondesignated public hospitals, and private hospitals, as defined, in accordance with certain provisions relating to disproportionate share hospitals.

Existing law establishes both of the following continuously appropriated funds to be expended by the department:

(1) The Demonstration Disproportionate Share Hospital Fund, which consists of federal funds claimed and received by the department as federal financial participation with respect to certified public expenditures.

(2) The Public Hospital Investment, Improvement, and Incentive Fund, which consists of moneys that a county, other political subdivision of the state, or other governmental entity in the state elects to transfer to the department for use as the nonfederal share of investment, improvement, and incentive payments to participating designated public hospitals, nondesignated public hospitals, and the governmental entities with which they are affiliated, that provide intergovernmental transfers for deposit into the fund.

Existing law requires the department to seek a subsequent demonstration project to implement specified objectives, including maximizing federal Medicaid funding for county public hospitals health systems and components that maintain a comparable level of support for delivery system reform in the county public hospital health systems as was provided under California’s “Bridge to Reform” Medicaid demonstration project.

This bill would establish the Medi-Cal 2020 Demonstration Project Act, under which the department is required to implement specified components of the subsequent demonstration project, referred to as California’s Medi-Cal 2020 demonstration project, consistent with the Special Terms and Conditions approved by the federal Centers for Medicare and Medicaid Services.

The bill would distinguish which payment methodologies and requirements under the Medi-Cal Hospital/Uninsured Care Demonstration Project Act apply to the Medi-Cal 2020 Demonstration Project Act. The bill would, in this regard, retain the continuously appropriated Demonstration Disproportionate Share Hospital Fund, which will continue to consist of all federal funds received by the department as federal financial participation with respect to certified public expenditures, and would require moneys in this fund to be continuously appropriated, thereby making an appropriation, to the department for disbursement to eligible designated public hospitals. The bill would provide for a reconciliation process for disproportionate share hospital payment allocations and safety net care pool payment allocations that were paid to certain designated public hospitals, as specified.

The bill would require the department to implement the Global Payment Program (GPP), under which GPP systems, as defined, would be eligible to receive global payments that are calculated using a value-based point methodology, to be developed by the department, based on the health care they provide to the uninsured. The bill would provide that these global payments payable to GPP systems are in lieu of the traditional disproportionate share hospital payments and the safety net care pool payments previously made available under the Medi-Cal Hospital/Uninsured Care Demonstration Project Act. The bill would establish the Global Payment Program Special Fund in the State Treasury, which would consist of moneys that a designated public hospital or affiliated governmental agency or entity elects to transfer to the department for deposit into the fund as a condition of participation in the program. The bill would provide that these funds shall be continuously appropriated, thereby making an appropriation, to the department to be used as the nonfederal share of global payment program payments authorized under California’s Medi-Cal 2020 demonstration project.

The bill would require the department to establish and operate the Public Hospital Redesign and Incentives in Medi-Cal (PRIME) program, under which participating PRIME entities, as defined, would be eligible to earn incentive payments by undertaking specified projects set forth in the Special Terms and Conditions, for which there are required project metrics and targets. The bill would require the department to provide participating PRIME entities the opportunity to earn the maximum amount of funds authorized for the PRIME program under the demonstration project. The bill would retain the continuously appropriated Public Hospital Investment, Improvement, and Incentive Fund for purposes of making PRIME payments to participating PRIME entities. The Public Hospital Investment, Improvement, and Incentive Fund would consist of moneys that a designated public hospital or affiliated governmental agency or entity, or a district and municipal public hospital-affiliated governmental agency or entity, elects to transfer to the department for deposit into the fund. The bill would provide that these funds are continuously appropriated, thereby making an appropriation, to the department to be used as the nonfederal share of PRIME program payments authorized under California’s Medi-Cal 2020 demonstration project.

The bill would require the department to amend its contract with its external quality review organization to complete an access assessment to, among other things, evaluate primary, core specialty, and facility access to care for managed care beneficiaries, as specified. The bill would require the department to establish an advisory committee to provide input into the structure of the access assessment, which would be comprised of specified stakeholders, including representatives from consumer advocacy organizations.

The bill would provide that these provisions shall be implemented only to the extent that any necessary federal approvals are obtained and federal financial participation is available and is not otherwise jeopardized. The bill would require the department to seek any federal approvals it deems necessary to implement these provisions during the course of the demonstration term.

The bill would authorize the department to implement the Medi-Cal 2020 Demonstration Project Act by means of all-county letters, provider bulletins, or other similar instructions without taking regulatory action.

This bill would become operative only if AB 1568 of the 2015-16 Regular Session is enacted and takes effect on or before January 1, 2017.

This bill would declare that it is to take effect immediately as an urgency statute.

Vote: ²⁄₃. Appropriation: yes. Fiscal committee: yes. State-mandated local program: no.

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

SECTION 1.  

Article 5.5 (commencing with Section 14184) is
added to Chapter 7 of Part 3 of Division 9 of the Welfare and
Institutions Code, to read:

 

Article 5.5.  Medi-Cal 2020 Demonstration Project Act

 

14184.  

(a) This article shall be known, and may be cited, as
the Medi-Cal 2020 Demonstration Project Act.

(b) The Legislature finds and declares all of the following:

(1) The implementation of the federal Patient Protection and
Affordable Care Act (Public Law 111-148) and California’s
“Bridge to Reform” Medicaid demonstration project have led to
the expansion of Medi-Cal coverage to more than 13 million
beneficiaries, driving health care delivery system reforms that
support expanded access to care, as well as higher quality,
efficiency, and beneficiary satisfaction.

(2) California’s “Medi-Cal 2020” Medicaid demonstration
project, No. 11-W-00193/9, expands on these achievements by
continuing to focus on expanded health care system capacity, better
coordinated care, and aligned incentives within the Medi-Cal
program in order to improve health outcomes for Medi-Cal
beneficiaries, while simultaneously containing health care costs.

(3) Public safety net providers, including designated public
hospitals, and nondesignated public hospitals, which are also
known as district and municipal public hospitals, play an essential
role in the Medi-Cal program, providing high-quality care to a
disproportionate number of low-income Medi-Cal and uninsured
populations in the state. Because Medi-Cal covers approximately
one-third of the state’s population, the strength of these essential
health care systems and hospitals is of critical importance to the
health and welfare of the people of California.

(4) As a component of the “Medi-Cal 2020” demonstration
project, the Global Payment Program provides an opportunity to
test an alternative payment model for the remaining uninsured that
rewards value and supports providing care at the appropriate place
and time, aligning incentives to enhance primary and preventive
services for California’s remaining uninsured seeking care in
participating public health care systems.

(5) As a component of the “Medi-Cal 2020” demonstration
project, the Public Hospital Redesign and Incentives in Medi-Cal
(PRIME) program seeks to improve health outcomes for patients
served by participating entities by building on the delivery system
transformation work from the “Bridge to Reform” demonstration
project. Using evidence-based quality improvement methods, the
PRIME program is intended to be ambitious in scope in order to
accelerate transformation in care delivery and maximize value for
patients, providers, and payers. The PRIME program also seeks
to strengthen the ability of designated public hospitals to
successfully perform under risk-based alternative payment models
(APMs) in the long term.

(6) As a component of the “Medi-Cal 2020” demonstration
project, the Whole Person Care pilot program creates an
opportunity for counties, Medi-Cal managed care plans, and
community providers to establish a new model for integrated care
delivery that incorporates health care needs, behavioral health, and
social support for the state’s most vulnerable, high-user
populations. The Whole Person Care pilot program encourages
coordination among local partners to address the root causes of
poor health outcomes, including immediate health needs and other
factors, such as housing and recidivism, that impact a beneficiary’s
health status.

(7) As a component of the “Medi-Cal 2020” demonstration
project, the Dental Transformation Initiative creates innovative
opportunities for the Medi-Cal Dental Program to improve access
to dental care, continuity of care, and increase the utilization of
preventive services aimed at reducing preventable dental conditions
for Medi-Cal beneficiaries identified within the project.

(c) The implementation of the “Medi-Cal 2020” demonstration
project, as set forth in this article, will support all of the following
goals:

(1) Improving access to health care and health care quality for
California’s Medi-Cal and uninsured populations.

(2) Promoting value and improving health outcomes for
low-income populations.

(3) Supporting whole person care by better integrating physical
health, behavioral health, and social support services for high-risk,
high-utilizing Medi-Cal beneficiaries.

(4) Improving the capacity of public safety net providers that
provide high-quality care to a disproportionate number of
low-income patients with complex health needs in the state.

(5) Transitioning from a cost-based reimbursement system
toward a reimbursement structure that incentivizes quality and
value by financially rewarding alternative models of care that
support providers’ ability to deliver care in the most appropriate
and cost-effective manner to patients.

14184.10.  

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

(a) “Demonstration project” means the California Medi-Cal
2020 Demonstration, Number 11-W-00193/9, as approved by the
federal Centers for Medicare and Medicaid Services, effective for
the period from December 30, 2015, to December 31, 2020,
inclusive, and any applicable extension period.

(b) “Demonstration term” means the entire period during which
the demonstration project is in effect, as approved by the federal
Centers for Medicare and Medicaid Services, including any
applicable extension period.

(c) “Demonstration year” means the demonstration year as
identified in the Special Terms and Conditions that corresponds
to a specific period of time as set forth in paragraphs (1) to (6),
inclusive. Individual programs under the demonstration project
may be operated on program years that differ from the
demonstration years identified in paragraphs (1) to (6), inclusive.

(1) Demonstration year 11 corresponds to the period of January
1, 2016, to June 30, 2016, inclusive.

(2) Demonstration year 12 corresponds to the period of July 1,
2016, to June 30, 2017, inclusive.

(3) Demonstration year 13 corresponds to the period of July 1,
2017, to June 30, 2018, inclusive.

(4) Demonstration year 14 corresponds to the period of July 1,
2018, to June 30, 2019, inclusive.

(5) Demonstration year 15 corresponds to the period of July 1,
2019, to June 30, 2020, inclusive.

(6) Demonstration year 16 corresponds to the period of July 1,
2020, to December 31, 2020, inclusive.

(d) “Dental Transformation Initiative” or “DTI” means the
waiver program intended to improve oral health services for
children, as authorized under the Special Terms and Conditions
and described in Section 14184.70.

(e) “Designated state health program” shall have the same
meaning as set forth in the Special Terms and Conditions.

(f) (1) “Designated public hospital” means any one of the
following hospitals, and any successor or differently named
hospital, which is operated by a county, a city and county, the
University of California, or special hospital authority described in
Chapter 5 (commencing with Section 101850) or Chapter 5.5
(commencing with Section 101852) of Part 4 of Division 101 of
the Health and Safety Code, or any additional public hospital, to
the extent identified as a “designated public hospital” in the Special
Terms and Conditions. Unless otherwise provided for in law, in
the Medi-Cal State Plan, or in the Special Terms and Conditions,
all references in law to a designated public hospital as defined in
subdivision (d) of Section 14166.1 shall be deemed to refer to a
hospital described in this section effective as of January 1, 2016,
except as provided in paragraph (2):

(A) UC Davis Medical Center.

(B) UC Irvine Medical Center.

(C) UC San Diego Medical Center.

(D) UC San Francisco Medical Center.

(E) UCLA Medical Center.

(F) Santa Monica/UCLA Medical Center, also known as the
Santa Monica-UCLA Medical Center and Orthopaedic Hospital.

(G) LA County Health System Hospitals:

(i) LA County Harbor/UCLA Medical Center.

(ii) LA County Olive View UCLA Medical Center.

(iii) LA County Rancho Los Amigos National Rehabilitation
Center.

(iv) LA County University of Southern California Medical
Center.

(H) Alameda Health System Hospitals, including the following:

(i) Highland Hospital, including the Fairmont and John George
Psychiatric facilities.

(ii) Alameda Hospital.

(iii) San Leandro Hospital.

(I) Arrowhead Regional Medical Center.

(J) Contra Costa Regional Medical Center.

(K) Kern Medical Center.

(L) Natividad Medical Center.

(M) Riverside University Health System-Medical Center.

(N) San Francisco General Hospital.

(O) San Joaquin General Hospital.

(P) San Mateo Medical Center.

(Q) Santa Clara Valley Medical Center.

(R) Ventura County Medical Center.

(2) For purposes of the following reimbursement methodologies,
the hospitals identified in clauses (ii) and (iii) of subparagraph (H)
of paragraph (1) shall be deemed to be a designated public hospital
as of the following effective dates:

(A) For purposes of the fee-for-service payment methodologies
established and implemented under Section 14166.4, the effective
date shall be the date described in paragraph (3) of subdivision (a)
of Section 14184.30.

(B) For purposes of Article 5.230 (commencing with Section
14169.50), the effective date shall be January 1, 2017.

(g) “Disproportionate share hospital provisions of the Medi-Cal
State Plan” means those applicable provisions contained in
Attachment 4.19-A of the California Medicaid state plan, approved
by the federal Centers for Medicare and Medicaid Services, that
implement the payment adjustment program for disproportionate
share hospitals.

(h) “Federal disproportionate share hospital allotment” means
the amount specified for California under Section 1396r-4(f) of
Title 42 of the United States Code for a federal fiscal year.

(i) “Federal medical assistance percentage” means the federal
medical assistance percentage applicable for federal financial
participation purposes for medical services under the Medi-Cal
State Plan pursuant to Section 1396b(a)(1) of Title 42 of the United
States Code.

(j) “Global Payment Program” or “GPP” means the payment
program authorized under the demonstration project and described
in Section 14184.40 that assists participating public health care
systems that provide health care for the uninsured and that
promotes the delivery of more cost-effective, higher-value health
care services and activities.

(k) “Nondesignated public hospital” means a public hospital as
that term is defined in paragraph (25) of subdivision (a) of Section
14105.98, excluding designated public hospitals.

(l) “Nonfederal share percentage” means the difference between
100 percent and the federal medical assistance percentage.

(m) “PRIME” means the Public Hospital Redesign and
Incentives in Medi-Cal program authorized under the
demonstration project and described in Section 14184.50.

(n) “Total computable disproportionate share hospital allotment”
means the federal disproportionate share hospital allotment for a
federal fiscal year, divided by the applicable federal medical
assistance percentage with respect to that same federal fiscal year.

(o) “Special Terms and Conditions” means those terms and
conditions issued by the federal Centers for Medicare and Medicaid
Services, including all attachments to those terms and conditions
and any subsequent amendments approved by the federal Centers
for Medicare and Medicaid Services, that apply to the
demonstration project.

(p) “Uninsured” means an individual for whom there is no
source of third-party coverage for the health care services the
individual receives, as determined pursuant to the Special Terms
and Conditions.

(q) “Whole Person Care pilot program” means a local
collaboration among local governmental agencies, Medi-Cal
managed care plans, health care and behavioral health providers,
or other community organizations, as applicable, that are approved
by the department to implement strategies to serve one or more
identified target populations, pursuant to Section 14184.60 and
the Special Terms and Conditions.

14184.20.  

(a) Consistent with federal law, the Special Terms
and Conditions, and this article, the department shall implement
the Medi-Cal 2020 demonstration project, including, but not limited
to, all of the following components:

(1) The Global Payment Program, as described in Section
14184.40.

(2) The Public Hospital Redesign and Incentives in Medi-Cal
(PRIME) program, as described in Section 14184.50.

(3) The Whole Person Care pilot program, as described in
Section 14184.60.

(4) The Dental Transformation Initiative, as described in Section
14184.70.

(b) In the event of a conflict between any provision of this article
and the Special Terms and Conditions, the Special Terms and
Conditions shall control.

(c) The department, as appropriate, shall consult with the
designated public hospitals, district and municipal public hospitals,
and other local governmental agencies with regard to the
implementation of the components of the demonstration project
under subdivision (a) in which they will participate, including, but
not limited to, the issuance of guidance pursuant to subdivision
(d).

(d) Notwithstanding Chapter 3.5 (commencing with Section
11340) of Part 1 of Division 3 of Title 2 of the Government Code,
the department may implement, interpret, or make specific this
article or the Special Terms and Conditions, in whole or in part,
by means of all-county letters, plan letters, provider bulletins, or
other similar instructions, without taking regulatory action. The
department shall provide notification to the Joint Legislative
Budget Committee and to the Senate Committees on
Appropriations, Budget and Fiscal Review, and Health, and the
Assembly Committees on Appropriations, Budget, and Health
within 10 business days after the above-described action is taken.
The department shall make use of appropriate processes to ensure
that affected stakeholders are timely informed of, and have access
to, applicable guidance issued pursuant to this authority, and that
this guidance remains publicly available until all payments related
to the applicable demonstration component are finalized.

(e) For purposes of implementing this article or the Special
Terms and Conditions, the department may enter into exclusive
or nonexclusive contracts, or amend existing contracts, on a bid
or negotiated basis. Contracts entered into or amended pursuant
to this subdivision shall be exempt from Chapter 6 (commencing
with Section 14825) of Part 5.5 of Division 3 of Title 2 of the
Government Code and Part 2 (commencing with Section 10100)
of Division 2 of the Public Contract Code, and shall be exempt
from the review or approval of any division of the Department of
General Services.

(f) During the course of the demonstration term, the department
shall seek any federal approvals it deems necessary to implement
the demonstration project and this article. This shall include, but
is not limited to, approval of any amendment, addition, or technical
correction to the Special Terms and Conditions, and any associated
state plan amendment, as deemed necessary. This article shall be
implemented only to the extent that any necessary federal approvals
are obtained and federal financial participation is available and is
not otherwise jeopardized.

(g) The director may modify any process or methodology
specified in this article to the extent necessary to comply with
federal law or the Special Terms and Conditions of the
demonstration project, but only if the modification is consistent
with the goals set forth in this article for the demonstration project,
and its individual components, and does not significantly alter the
relative level of support for participating entities. If the director,
after consulting with those entities participating in the applicable
demonstration project component and that would be affected by
that modification, determines that the potential modification would
not be consistent with the goals set forth in this article or would
significantly alter the relative level of support for affected
participating entities, the modification shall not be made and the
director shall execute a declaration stating that this determination
has been made. The director shall retain the declaration and provide
a copy, within five working days of the execution of the
declaration, to the fiscal and appropriate policy committees of the
Legislature, and shall work with the affected participating entities
and the Legislature to make the necessary statutory changes. The
director shall post the declaration on the department’s Internet
Web site and the director shall send the declaration to the Secretary
of State and the Legislative Counsel.

(h) In the event of a determination that the amount of federal
financial participation available under the demonstration project
is reduced due to the application of penalties set forth in the Special
Terms and Conditions, the enforcement of the demonstration
project’s budget neutrality limit, or other similar occurrence, the
department shall develop the methodology by which payments
under the demonstration project shall be reduced, in consultation
with the potentially affected participating entities and consistent
with the standards and process specified in subdivision (h). To the
extent feasible, those reductions shall protect the ability to claim
the full amount of the total computable disproportionate share
allotment through the Global Payment Program.

(i) During the course of the demonstration term, the department
may work to develop potential successor payment methodologies
that could continue to support entities participating in the
demonstration project following the expiration of the demonstration
term and that further the goals set forth in this article and in the
Special Terms and Conditions. The department shall consult with
the entities participating in the payment methodologies under the
demonstration project, affected stakeholders, and the Legislature
in the development of any potential successor payment
methodologies pursuant to this subdivision.

(j) The department may seek to extend the payment
methodologies described in this article through demonstration year
16 or to subsequent time periods by way of amendment or
extension of the demonstration project, amendment to the Medi-Cal
State Plan, or any combination thereof, consistent with the
applicable federal requirements. This subdivision shall only be
implemented after consultation with the entities participating in,
or affected by, those methodologies, and only to the extent that
any necessary federal approvals are obtained and federal financial
participation is available and is not otherwise jeopardized.

(k) (1) Notwithstanding any other law, and to the extent
authorized by the Special Terms and Conditions, the department
may claim federal financial participation for expenditures
associated with the designated state health programs identified in
the Special Terms and Conditions for use solely by the department
as specified in this subdivision.

(2) Any federal financial participation claimed pursuant to
paragraph (1) shall be used to offset applicable General Fund
expenditures. These amounts are hereby appropriated to the
department and shall be available for transfer to the General Fund
for this purpose.

(3) An amount of General Fund moneys equal to the federal
financial participation that may be claimed pursuant to paragraph
(1) is hereby appropriated to the Health Care Deposit Fund for use
by the department.

14184.30.  

The following payment methodologies and
requirements implemented pursuant to Article 5.2 (commencing
with Section 14166) shall be applicable as set forth in this section.

(a) (1) For purposes of Section 14166.4, the references to
“project year” and “successor demonstration year” shall include
references to the demonstration term, as defined under this article,
and to any extensions of the prior federal Medicaid demonstration
project entitled “California Bridge to Reform Demonstration
(Waiver No. 11-W-00193/9).”

(2) The fee-for-service payment methodologies established and
implemented under Section 14166.4 shall continue to apply with
respect to designated public hospitals approved under the Medi-Cal
State Plan.

(3) For the hospitals identified in clauses (ii) and (iii) of
subparagraph (H) of paragraph (1) of subdivision (f) of Section
14184.10, the department shall seek any necessary federal
approvals to apply the fee-for-service payment methodologies
established and implemented under Section 14166.4 to these
identified hospitals effective no earlier than the 2016-17 state
fiscal year. This paragraph shall be implemented only to the extent
that any necessary federal approvals are obtained and federal
financial participation is available and not otherwise jeopardized.
Prior to the effective date of any necessary federal approval
obtained pursuant to this paragraph, these identified hospitals shall
continue to be considered nondesignated public hospitals for
purposes of the fee-for-service methodology authorized pursuant
to Section 14105.28 and the applicable provisions of the Medi-Cal
State Plan.

(4) The department shall continue to make reimbursement
available to qualifying hospitals that meet the eligibility
requirements for participation in the supplemental reimbursement
program for hospital facility construction, renovation, or
replacement pursuant to Section 14085.5 and the applicable
provisions of the Medi-Cal State Plan. The department shall
continue to make inpatient hospital payments for services that were
historically excluded from a hospital’s contract under the Selective
Provider Contracting Program established under Article 2.6
(commencing with Section 14081) in accordance with the
applicable provisions of the Medi-Cal State Plan. These payments
shall not duplicate or supplant any other payments made under
this article.

(b) During the 2015-16 state fiscal year, and subsequent state
fiscal years that commence during the demonstration term, payment
adjustments to disproportionate share hospitals shall not be made
pursuant to Section 14105.98, except as otherwise provided in this
article. Payment adjustments to disproportionate share hospitals
shall be made solely in accordance with this article.

(1) Except as otherwise provided in this article, the department
shall continue to make all eligibility determinations and perform
all payment adjustment amount computations under the
disproportionate share hospital payment adjustment program
pursuant to Section 14105.98 and pursuant to the disproportionate
share hospital provisions of the Medi-Cal State Plan. For purposes
of these determinations and computations, which include those
made pursuant to Sections 14166.11 and 14166.16, all of the
following shall apply:

(A) The federal Medicaid DSH reductions pursuant to Section
1396r-4(f)(7) of Title 42 of the United States Code shall be
reflected as appropriate, including, but not limited to, the
calculations set forth in subparagraph (B) of paragraph (2) of
subdivision (am) of Section 14105.98.

(B) Services that were rendered under the Low Income Health
Program authorized pursuant to Part 3.6 (commencing with Section
15909) shall be included.

(2) (A) Notwithstanding Section 14105.98, the federal
disproportionate share hospital allotment specified for California
under Section 1396r-4(f) of Title 42 of the United States Code for
each of federal fiscal years 2016 to 2021, inclusive, shall be aligned
with the state fiscal year in which the applicable federal fiscal year
commences, and shall be distributed solely for the following
purposes:

(i) As disproportionate share hospital payments under the
methodology set forth in applicable disproportionate share hospital
provisions of the Medi-Cal State Plan, which, to the extent
permitted under federal law and the Special Terms and Conditions,
shall be limited to the following hospitals:

(I) Eligible hospitals, as determined pursuant to Section
14105.98 for each state fiscal year in which the particular federal
fiscal year commences, that meet the definition of a public hospital,
as specified in paragraph (25) of subdivision (a) of Section
14105.98, and that are not participating as GPP systems under the
Global Payment Program.

(II) Hospitals that are licensed to the University of California,
which meet the requirements set forth in Section 1396r-4(d) of
Title 42 of the United States Code.

(ii) As a funding component for payments under the Global
Payment Program, as described in subparagraph (A) of paragraph
(1) of subdivision (c) of Section 14184.40 and the Special Terms
and Conditions.

(B) The distribution of the federal disproportionate share hospital
allotment to hospitals described in this paragraph shall satisfy the
state’s payment obligations, if any, with respect to those hospitals
under Section 1396r-4 of Title 42 of the United States Code.

(3) (A) During the 2015-16 state fiscal year and subsequent
state fiscal years that commence during the demonstration term,
a public entity shall not be obligated to make any intergovernmental
transfer pursuant to Section 14163, and all transfer amount
determinations for those state fiscal years shall be suspended.
However, intergovernmental transfers shall be made with respect
to the disproportionate share hospital payment adjustments made
in accordance with clause (ii) of subparagraph (B) of paragraph
(6), as applicable.

(B) During the 2015-16 state fiscal year and subsequent state
fiscal years that commence during the demonstration term, transfer
amounts from the Medi-Cal Inpatient Payment Adjustment Fund
to the Health Care Deposit Fund, as described in paragraph (2) of
subdivision (d) of Section 14163, are hereby reduced to zero.
Unless otherwise specified in this article or the applicable
provisions of Article 5.2 (commencing with Section 14166), this
subparagraph shall be disregarded for purposes of the calculations
made under Section 14105.98 during the 2015-16 state fiscal year
and subsequent state fiscal years that commence during the
demonstration term.

(4) (A) During the state fiscal years for which the Global
Payment Program under Section 14184.40 is in effect, designated
public hospitals that are participating GPP systems shall not be
eligible to receive disproportionate share hospital payments
pursuant to otherwise applicable disproportionate share hospital
provisions of the Medi-Cal State Plan.

(B) Eligible hospitals described in clause (i) of subparagraph
(A) of paragraph (2) that are nondesignated public hospitals shall
continue to receive disproportionate share hospital payment
adjustments as set forth in Section 14166.16.

(C) Hospitals described in clause (i) of subparagraph (A) of
paragraph (2) that are licensed to the University of California shall
receive disproportionate share hospital payments as follows:

(i) Subject to clause (iii), each hospital licensed to the University
of California may draw and receive federal Medicaid funding from
the applicable federal disproportionate share hospital allotment on
the amount of certified public expenditures for the hospital’s
expenditures that are eligible for federal financial participation as
reported in accordance with Section 14166.8 and the applicable
disproportionate share hospital provisions of the Medi-Cal State
Plan.

(ii) Subject to clause (iii) and to the extent the hospital meets
the requirement in Section 1396r-4(b)(1)(A) of Title 42 of the
United States Code regarding the Medicaid inpatient utilization
rate or Section 1396r-4(b)(1)(B) of Title 42 of the United States
Code regarding the low-income utilization rate, each hospital shall
receive intergovernmental transfer-funded direct disproportionate
share hospital payments as provided for under the applicable
disproportionate share hospital provisions of the Medi-Cal State
Plan. The total amount of these payments to the hospital, consisting
of the federal and nonfederal components, shall in no case exceed
that amount equal to 75 percent of the hospital’s uncompensated
Medi-Cal and uninsured costs of hospital services as reported in
accordance with Section 14166.8.

(iii) Unless the provisions of subparagraph (D) apply, the
aggregate amount of the federal disproportionate share hospital
allotment with respect to payments for an applicable state fiscal
year to hospitals licensed to the University of California shall be
limited to an amount calculated as follows:

(I) The maximum amount of federal disproportionate share
hospital allotment for the state fiscal year, less the amounts of
federal disproportionate share hospital allotment associated with
payments to nondesignated public hospitals under subparagraph
(B) and other payments, if any, required to be made from the
federal disproportionate share hospital allotment, shall be
determined.

(II) For the 2015-16 state fiscal year, the amount determined
in subclause (I) shall be multiplied by 26.296 percent, resulting in
the maximum amount of the federal disproportionate share hospital
allotment available as disproportionate share hospital payments
for the state fiscal year to hospitals that are licensed to the
University of California.

(III) For the 2016-17 state fiscal year, the amount determined
in subclause (I) shall be multiplied by 24.053 percent, resulting in
the maximum amount of the federal disproportionate share hospital
allotment available as disproportionate share hospital payments
for the state fiscal year to hospitals that are licensed to the
University of California.

(IV) For the 2017-18 state fiscal year, the amount determined
in subclause (I) shall be multiplied by 23.150 percent, resulting in
the maximum amount of the federal disproportionate share hospital
allotment available as disproportionate share hospital payments
for the state fiscal year to hospitals that are licensed to the
University of California.

(V) For each of the 2018-19 and 2019-20 state fiscal years, the
amount determined in subclause (I) shall be multiplied by 21.896
percent, resulting in the maximum amount of the federal
disproportionate share hospital allotment available as
disproportionate share hospital payments for the state fiscal year
to hospitals that are licensed to the University of California.

(VI) To the extent the limitations set forth in this clause result
in payment reductions for the applicable year, those reductions
shall be applied pro rata, subject to clause (vii).

(iv) Each hospital licensed to the University of California shall
receive quarterly interim payments of its disproportionate share
hospital allocation during the applicable state fiscal year. The
determinations set forth in clauses (i) to (iii), inclusive, shall be
made on an interim basis prior to the start of each state fiscal year,
except that the determinations for the 2015-16 state fiscal year
shall be made as soon as practicable. The department shall use the
same cost and statistical data used in determining the interim
payments for Medi-Cal inpatient hospital services under Section
14166.4, and available payments and uncompensated and uninsured
cost data, including data from the Medi-Cal paid claims file and
the hospital’s books and records, for the corresponding period, to
the extent permitted under the Medi-Cal State Plan.

(v) No later than April 1 following the end of the relevant
reporting period for the applicable state fiscal year, the department
shall undertake an interim reconciliation of payments based on
Medi-Cal, Medicare, and other cost, payment, discharge, and
statistical data submitted by the hospital for the applicable state
fiscal year, and shall adjust payments to the hospital accordingly.

(vi) Except as otherwise provided in this article, each hospital
licensed to the University of California shall receive
disproportionate share hospital payments subject to final audits of
all applicable Medi-Cal, Medicare, and other cost, payment,
discharge, and statistical data submitted by the hospital for the
applicable state fiscal year.

(vii) Prior to the interim and final distributions of payments
pursuant to clauses (iv) begin delete through end delete begin insert to end insert (vi), inclusive, the department
shall consult with the University of California, and implement any
adjustments to the payment distributions for the hospitals as
requested by the University of California, so long as the aggregate
net effect of the requested adjustments for the affected hospitals
is zero.

(D) With respect to any state fiscal year commencing during
the demonstration term for which the Global Payment Program is
not in effect, designated public hospitals that are eligible hospitals
as determined pursuant to Section 14105.98, and hospitals
described in clause (i) of subparagraph (A) of paragraph (2) that
are licensed to the University of California, shall claim
disproportionate share hospital payments in accordance with the
applicable disproportionate share hospital provisions of the
Medi-Cal State Plan. The allocation of federal Medicaid funding
from the applicable federal disproportionate share hospital
allotment shall be made in accordance with the methodology set
forth in Section 14166.61.

(5) For each applicable state fiscal year during the demonstration
term, eligible hospitals, as determined pursuant to Section
14105.98, which are nonpublic hospitals, nonpublic-converted
hospitals, and converted hospitals, as those terms are defined in
paragraphs (26), (27), and (28), respectively, of subdivision (a) of
Section 14105.98, shall continue to receive Medi-Cal
disproportionate share hospital replacement payment adjustments
pursuant to Section 14166.11 and other provisions of this article
and applicable provisions of the Medi-Cal State Plan. The payment
adjustments so provided shall satisfy the state’s payment
obligations, if any, with respect to those hospitals under Section
1396r-4 of Title 42 of the United States Code. The provisions of
subdivision (j) of Section 14166.11 shall continue to apply with
respect to the 2015-16 state fiscal year and subsequent state fiscal
years commencing during the demonstration term. Except as may
otherwise be required by federal law, the federal share of these
payments shall not be claimed from the federal disproportionate
share hospital allotment.

(6) The nonfederal share of disproportionate share hospital
payments and disproportionate share hospital replacement payment
adjustments described in paragraphs (4) and (5) shall be derived
from the following sources:

(A) With respect to the payments described in subparagraph
(B) of paragraph (4) that are made to nondesignated public
hospitals, the nonfederal share shall consist solely of state General
Fund appropriations.

(B) With respect to the payments described in subparagraph (C)
or (D), as applicable, of paragraph (4) that are made to designated
public hospitals, the nonfederal share shall consist of both of the
following:

(i) Certified public expenditures incurred by the hospitals for
hospital expenditures eligible for federal financial participation as
reported in accordance with Section 14166.8.

(ii) Intergovernmental transfer amounts for direct
disproportionate share hospital payments provided for under
subparagraph (C) or (D) of paragraph (4) and the applicable
disproportionate share hospital provisions of the Medi-Cal State
Plan. A transfer amount shall be determined for each hospital that
is eligible for these payments, equal to the nonfederal share of the
payment amount established for the hospital. The transfer amount
determined shall be paid by the hospital, or the public entity with
which the hospital is affiliated, and deposited into the Medi-Cal
Inpatient Payment Adjustment Fund established pursuant to
subdivision (b) of Section 14163, as permitted under Section
433.51 of Title 42 of the Code of Federal Regulations or any other
applicable federal Medicaid laws.

(C) With respect to the payments described in paragraph (5),
the nonfederal share shall consist of state General Fund
appropriations.

(7) The Demonstration Disproportionate Share Hospital Fund
established in the State Treasury pursuant to subdivision (d) of
Section 14166.9 shall be retained during the demonstration term.
All federal funds received by the department with respect to the
certified public expenditures claimed pursuant to subparagraph
(C), and, as applicable in subparagraph (D), of paragraph (4) shall
be transferred to the fund and disbursed to the eligible designated
public hospitals pursuant to those applicable provisions.
Notwithstanding Section 13340 of the Government Code, moneys
deposited in the fund shall be continuously appropriated, without
regard to fiscal year, to the department solely for the purposes
specified in this article.

(c) (1) Disproportionate share hospital payment allocations
under Sections 14166.3 and 14166.61, and safety net care pool
payment allocations under Section 14166.71, that were paid to
designated public hospitals with respect to the period July 1, 2015,
through October 31, 2015, or for subsequent periods pursuant to
Section 14166.253, shall be reconciled to amounts payable to the
hospitals under this article as set forth in this subdivision.

(2) The disproportionate share hospital payments and safety net
care pool payments described in paragraph (1) that were paid to a
designated public hospital participating in a GPP system under
Section 14184.40 shall be deemed to be interim payments under
the Global Payment Program for GPP program year 2015-16, and
will be reconciled to and offset against the interim payment amount
due to the GPP system under subparagraph (B) of paragraph (4)
of subdivision (d) of Section 14184.40, consistent with the Special
Terms and Conditions.

(3) The disproportionate share hospital payments described in
paragraph (1) that were paid to designated public hospitals licensed
to the University of California shall be reconciled to and offset
against the disproportionate share hospital payments payable to
the hospitals under subparagraph (C) of paragraph (4) of
subdivision (b) for the 2015-16 state fiscal year.

(4) The safety net care pool payments described in paragraph
(1) that were paid to designated public hospitals licensed to the
University of California shall be recouped and included as available
funding under the Global Payment Program for the 2015-16 GPP
program year described in subparagraph (B) of paragraph (1) of
subdivision (c) of Section 14184.40.

(d) During the 2015-16 state fiscal year, and subsequent state
fiscal years that commence during the demonstration term, costs
shall continue to be determined and reported for designated public
hospitals in accordance with Sections 14166.8 and 14166.24,
except as follows:

(1) (A) The provisions of subdivision (c) of Section 14166.8
shall not apply.

(B) Notwithstanding subparagraph (A), the department may
require the reporting of any data the department deems necessary
to satisfy reporting requirements pursuant to the Special Terms
and Conditions.

(2) The provisions of Sections 14166.221 and 15916 shall not
apply with respect to any costs reported for the demonstration term
pursuant to Section 14166.8.

(e) (1) Notwithstanding subdivision (h) of Section 14166.61
and subdivision (c) of Section 14166.71, the disproportionate share
hospital allocation and safety net care pool payment determinations
and payments for the 2013-14 and 2014-15 state fiscal years shall
be deemed final as of the April 30 that is 22 months following the
close of the respective state fiscal year, to the extent permitted
under federal law and subject to recoupment pursuant to
subdivision (f) if it is later determined that federal financial
participation is not available for any portion of the applicable
payments.

(2) The determinations and payments shall be finalized using
the best available data, including unaudited data, and reasonable
current estimates and projections submitted by the designated
public hospitals. The department shall accept all appropriate
revisions to the data, estimates, and projections previously
submitted, including revised cost reports, for purposes of this
subdivision, to the extent these revisions are submitted in a timely
manner as determined by the department.

(f) Upon receipt of a notice of disallowance or deferral from
the federal government related to the certified public expenditures
or intergovernmental transfers of a designated public hospital or
governmental entity with which it is affiliated for disproportionate
share hospital payments or safety net care pool payments claimed
and distributed pursuant to Section 14166.61, 14166.71, or 15916
for the 2013-14 or 2014-15 state fiscal year, the department shall
promptly notify the designated public hospitals and proceed as
follows:

(1) To the extent there are additional certified public
expenditures for the applicable state fiscal year for which federal
funds have not been received, but for which federal funds could
have been received had additional federal funds been available,
including any subsequently allowable expenditures for designated
state health programs, the department shall first respond to the
deferral or disallowance by substituting the additional certified
public expenditures or allowable expenditures for those deferred
or disallowed, consistent with the claiming optimization priorities
set forth in Section 14166.9, in consultation with the designated
public hospitals, but only to the extent that any necessary federal
approvals are obtained or these actions are otherwise permitted by
federal law.

(2) The department shall consult with the designated public
hospitals and proceed in accordance with paragraphs (2) and (3)
of subdivision (d) of Section 14166.24.

(3) If the department elects to appeal pursuant to paragraph (3)
of subdivision (d) of Section 14166.24, the department shall not
implement any recoupment of payments from the affected
designated public hospitals, until a final disposition has been made
regarding the deferral or disallowance, including the conclusion
of applicable administrative and judicial review, if any.

(4) (A) Upon final disposition of the federal deferral or
disallowance, the department shall determine the resulting
aggregate repayment amount of federal funds for each affected
state fiscal year.

(B) The department shall determine the ratio of the aggregate
repayment amount to the total amount of the federal share of
payments finalized and distributed pursuant to Sections 14166.61
and 14166.71 and subdivision (e) for each affected state fiscal
year, expressed as a percentage.

(5) Notwithstanding paragraph (1) of subdivision (d) of Section
14166.24, the responsibility for repayment of the federal portion
of any deferral of disallowance for each affected year shall be
determined as follows:

(A) The provisions of subdivision (g) of Section 15916 shall be
applied to determine the department’s repayment responsibility
amount with respect to any deferral or disallowance related to
safety net care pool payments, which shall be in addition to
amounts determined under subparagraph (E).

(B) Using the most recent data for the applicable fiscal year,
and reflecting modifications to the applicable initial DSH claiming
ability and initial SNCP claiming ability for individual hospitals
resulting from the deferral or disallowance, the department shall
perform the calculations and determinations for each designated
public hospital as set forth in Sections 14166.61 and 14166.71.
For this purpose, the calculations and determinations shall assume
no reduction in the available federal disproportionate share hospital
allotment or in the amount of available safety net care pool
payments as a result of the deferral or disallowance.

(C) For each designated public hospital, the revised
determinations of disproportionate share hospital and safety net
care pool payment amounts under subparagraph (B) shall be
combined and compared to the combined disproportionate share
hospital and safety net care pool payment amounts determined and
received by the hospital pursuant to subdivision (e). For this
purpose and purposes of subparagraph (D), the applicable data for
designated public hospitals described in subparagraph (G) of
paragraph (1) of subdivision (f) of Section 14184.10 shall be
combined, and the applicable data for designated public hospitals
described in subparagraphs (E) and (F) of paragraph (1) of
subdivision (f) of Section 14184.10 shall be combined.

(D) (i) Subject to subparagraph (E), the repayment of the federal
portion of the deferral of disallowance, less the department’s
responsibility amount for safety net care pool payments, if any,
determined in subparagraph (A), shall be first allocated among
each of those designated public hospitals for which the combined
revised disproportionate share hospital and safety net care pool
payments as determined in subparagraph (B) are less than the
combined disproportionate share hospital and safety net care pool
payment amounts determined and received pursuant to subdivision
(e). Repayment shall be allocated under this initial stage among
these hospitals pro rata on the basis of each hospital’s relative
reduction as reflected in the revised calculations performed under
subparagraph (B), but in no case shall the allocation to a hospital
exceed the limit in clause (iii). Repayment amounts that are not
allocated due to this limitation shall be allocated pursuant to clause
(ii).

(ii) Subject to subparagraph (E), any repayment amounts that
were unallocated to hospitals due to the limitation in clause (iii)
shall be allocated in a second stage among each of the remaining
designated public hospitals that has not reached its applicable
repayment limit, including the hospitals that were not subject to
the allocations under clause (i), based pro rata on the amounts
determined and received by the hospital pursuant to subdivision
(e), except that no repayment amount for a hospital shall exceed
the limitation under clause (iii). The pro rata allocation process
will be repeated in subsequent stages with respect to any repayment
amounts that cannot be allocated in a prior stage to hospitals due
to the limitation under clause (iii), until the entire federal repayment
amount has been allocated among the hospitals.

(iii) The repayment amount allocated to a designated public
hospital pursuant to this subparagraph shall not exceed an amount
equal to the percentage of the combined payments determined and
received by the hospital pursuant to subdivision (e) that is twice
the percentage computed in subparagraph (B) of paragraph (4).

(E) Notwithstanding any other law, if the affiliated governmental
entity for the designated public hospital is a county subject to the
provisions of Article 12 (commencing with Section 17612.1) of
Chapter 6 of Part 5, the department, in consultation with the
affected designated public hospital, and the Department of Finance,
shall determine how to account for whether any repayment amount
determined for the designated public hospital pursuant to
subparagraph (D) for the 2013-14 and 2014-15 state fiscal years
would otherwise have affected, if at all, the applicable county’s
redirection obligation for the applicable state fiscal year pursuant
to paragraphs (4) and (5) of subdivision (a) of Section 17612.3
and shall determine what adjustments, if any, are necessary to
either the repayment amount or the applicable county’s redirection
obligation. For purposes of this subparagraph, the provisions of
subdivision (f) of Section 17612.2 and paragraph (7) of subdivision
(e) of Section 101853 of the Health and Safety Code shall apply.

(g) The provisions of Article 5.2 (commencing with Section
14166) shall remain in effect until all payments authorized pursuant
to that article have been paid, finalized, and settled, and to the
extent its provisions are retained for purposes of this article.

14184.40.  

(a) (1) The department shall implement the Global
Payment Program authorized under the demonstration project to
support participating public health care systems that provide health
care services for the uninsured. Under the Global Payment
Program, GPP systems receive global payments based on the health
care they provide to the uninsured, in lieu of traditional
disproportionate share hospital payments and safety net care pool
payments previously made available pursuant to Article 5.2
(commencing with Section 14166).

(2) The Global Payment Program is intended to streamline
funding sources for care for California’s remaining uninsured
population, creating a value-based mechanism to increase
incentives to provide primary and preventive care services and
other high-value services. The Global Payment Program supports
GPP systems for their key role providing and promoting effective,
higher value services to California’s remaining uninsured.
Promoting more cost-effective and higher value care means that
the payment structure rewards the provision of care in more
appropriate venues for patients, and will support structural changes
to the care delivery system that will improve the options for treating
both Medi-Cal and uninsured patients.

(3) Under the Global Payment Program, GPP systems will
receive Global Payment Program payments calculated using an
innovative value-based point methodology that incorporates
measures of value for the patient in conjunction with the
recognition of costs. To receive the full amount of Global Payment
Program payments, a GPP system shall provide a threshold level
of services, as measured in the point methodology described in
paragraph (2) of subdivision (c), and based on the GPP system’s
historical volume, cost, and mix of services. This payment
methodology is intended to support GPP systems that continue to
provide services to the uninsured, while incentivizing the GPP
systems to shift the overall delivery of services for the uninsured
to provide more cost-effective, higher value care.

(4) The department shall implement and oversee the operation
of the Global Payment Program in accordance with the Special
Terms and Conditions and the requirements of this section, to
maximize the amount of federal financial participation available
to participating GPP systems.

(b) For purposes of this article, the following definitions shall
apply:

(1) “GPP system” means a public health care system that
consists of a designated public hospital, as defined in subdivision
(f) of Section 14184.10 but excluding the hospitals operated by
the University of California, and its affiliated and contracted
providers. Multiple designated public hospitals operated by a single
legal entity may belong to the same GPP system, to the extent set
forth in the Special Terms and Conditions.

(2) “GPP program year” means a state fiscal year beginning on
July 1 and ending on June 30 during which the Global Payment
Program is authorized under the demonstration project, beginning
with state fiscal year 2015-16, and, as applicable, each state fiscal
year thereafter through 2019-20, and any years or partial years
during which the Global Payment Program is authorized under an
extension or successor to the demonstration.

(c) (1) For each GPP program year, the department shall
determine the Global Payment Program’s aggregate annual limit,
which is the maximum amount of funding available under the
demonstration project for the Global Payment Program and which
is the sum of the components described in subparagraphs (A) and
(B). To the extent feasible, the aggregate annual limit shall be
determined and made available by the department prior to the
implementation of a GPP program year, and shall be updated and
adjusted as necessary to reflect changes or adjustments to the
amount of funding available for the Global Payment Program.

(A) A portion of the federal disproportionate share allotment
specified for California under Section 1396r-4(f) of Title 42 of the
United States Code shall be included as a component of the
aggregate annual limit for each GPP program year. The amount
of this portion shall equal the state’s total computable
disproportionate share allotment reduced by the maximum amount
of funding projected for payments pursuant to subparagraphs (B)
and (C) of paragraph (4) of subdivision (b) of Section 14184.30
to disproportionate share hospitals that are not participating in the
Global Payment Program. For purposes of this determination, the
federal disproportionate share allotment shall be aligned with the
GPP program year in which the applicable federal fiscal year
commences.

(B) The aggregate annual limit shall also include the amount
authorized under the demonstration project for the uncompensated
care component of the Global Payment Program for the applicable
GPP program year, as determined pursuant to the Special Terms
and Conditions.

(2) The department shall develop a methodology for valuing
health care services and activities provided to the uninsured that
achieves the goals of the Global Payment Program, including those
values set forth in subdivision (a) and as expressed in the Special
Terms and Conditions. The points assigned to a particular service
or activity shall be the same across all GPP systems. Points for
specific services or activities may be increased or decreased over
time as the Global Payment Program progresses, to incentivize
appropriate changes in the mix of services provided to the
uninsured. To the extent necessary, the department shall obtain
federal approval for the methodology and any applicable changes
to the methodology.

(3) For each GPP system, the department shall perform a
baseline analysis of the GPP system’s historical volume, cost, and
mix of services to the uninsured to establish an annual threshold
for purposes of the Global Payment Program. The annual threshold
shall be measured in points established through the methodology
developed pursuant to paragraph (2) and as set forth in the Special
Terms and Conditions.

(4) The department shall determine a pro rata allocation
percentage for each GPP system by dividing the GPP system’s
annual threshold determined in paragraph (3) by the sum of all
GPP systems’ thresholds.

(5) For each GPP system, the department shall determine an
annual budget the GPP system will receive if it achieves its
threshold. A GPP system’s annual budget shall equal the allocation
percentage determined in paragraph (4) for the GPP system,
multiplied by the Global Payment Program’s aggregate annual
limit determined in paragraph (1).

(6) In the event of a change in the aggregate annual limit, the
department shall adjust and recalculate each GPP system’s annual
threshold and annual budget in proportion to changes in the
aggregate annual limit calculated in paragraph (1) in accordance
with the Special Terms and Conditions.

(d) The amount of Global Payment Program funding payable
to a GPP system for a GPP program year shall be calculated as
follows, subject to the Special Terms and Conditions:

(1) The full amount of a GPP system’s annual budget shall be
payable to the GPP system if the services it provided to the
uninsured during the GPP program year, as measured and scored
using the point methodology described under paragraph (2) of
subdivision (c), meets or exceeds its threshold for a given year.
For GPP systems that do not achieve their threshold, the amount
payable to the GPP system shall equal its annual budget reduced
by the proportion by which it fell short of its threshold.

(2) The department shall develop a methodology to redistribute
unearned Global Payment Program funds for a given GPP program
year to those GPP systems that exceeded their respective threshold
for that same year. To the extent sufficient funds are available for
all qualifying GPP systems, the GPP system’s redistributed amount
shall equal the GPP system’s annual budget multiplied by the
percentage by which the GPP system exceeded its threshold, and
any remaining amounts of unearned funds will remain
undistributed. If sufficient funds are unavailable to make all these
payments to qualifying GPP systems, the amounts of these
additional payments will be reduced for all qualifying GPP systems
by the same proportion, so that the full amount of unearned Global
Payment Program funds are redistributed. Redistributed payment
amounts calculated pursuant to this paragraph shall be added to
the amounts payable to a GPP system calculated pursuant to
paragraph (1).

(3) The department shall specify a reporting schedule for
participating GPP systems to submit an interim yearend report and
a final reconciliation report for each GPP program year. The interim
yearend report and the final reconciliation report shall identify the
services the GPP system provided to the uninsured during the GPP
program year, the associated point calculation, and the amount of
payments earned by the GPP system prior to any redistribution.
The method and format of the reporting shall be established by
the department, consistent with the approved Special Terms and
Conditions.

(4) Payments shall be made in the manner and within the
timeframes as follows, except if one or more GPP systems fail to
provide the intergovernmental transfer amount determined pursuant
to subdivision (g) by the date specified in this paragraph, the
timeframe for the associated payments shall be extended to the
extent necessary to allow the department to timely process the
payments. In no event, however, shall payment be delayed beyond
21 days after all the necessary intergovernmental transfers have
been made.

(A) Except as provided in subparagraph (B), for each of the first
three quarters of a GPP program year the department shall notify
GPP systems of their payment amounts and intergovernmental
transfer amounts and make a quarterly interim payment equal to
25 percent of each GPP system’s annual global budget to the GPP
system.

(i) For quarters ending September 30, the payment amount and
intergovernmental transfer amount notice shall be sent by
September 15, intergovernmental transfers shall be due by
September 22, and payments shall be made by October 15.

(ii) For quarters ending December 31, the payment amount and
intergovernmental transfer amount notice shall be sent by
December 15, intergovernmental transfers shall be due by
December 22, and payments shall be made by January 15.

(iii) For quarters ending March 31, the payment amount and
intergovernmental transfer amount notice shall be sent by March
15, intergovernmental transfers shall be due by March 22, and
payments shall be made by April 15.

(B) For the 2015-16 GPP program year, the department shall
make the quarterly interim payments described in subdivision (a)
in a single interim payment for the first three quarters as soon as
practicable following approval of the Global Payment Program
protocols as part of the Special Terms and Conditions and receipt
of the associated intergovernmental transfers. The amount of this
interim payment that is otherwise payable to a GPP system shall
be reduced by the payments described in paragraph (2) of
subdivision (c) of Section 14184.30 that were received by a
designated public hospital affiliated with the GPP system.

(C) By September 15 following the end of each GPP program
year, the department shall determine and notify each GPP system
of the amount the GPP system earned for the GPP program year
pursuant to paragraph (1) based on its interim yearend report, the
amount of additional interim payments necessary to bring the GPP
system’s aggregate interim payments for the GPP program year
to that amount, and the transfer amounts calculated pursuant to
subdivision (g). If the GPP system has earned less than 75 percent
of its annual budget, no additional interim payment will be made
for the GPP program year. Intergovernmental transfer amounts
shall be due by September 22 following the end of the GPP
program year, and interim payments shall be made by October 15
following the end of each GPP program year. All interim payments
shall be subject to reconciliation after the submission of the final
reconciliation report.

(D) By June 30 following the end of each GPP program year,
the department shall review the final reconciliation reports and
determine and notify each GPP system of the final amounts earned
by the GPP system for the GPP program year pursuant to paragraph
(1), as well as the redistribution amounts, if any, pursuant to
paragraph (2), the amount of the payment adjustments or
recoupments necessary to reconcile interim payments to those
amounts, and the transfer amount pursuant to subdivision (g).
Intergovernmental transfer amounts shall be due by July 14
following the notification, and final reconciliation payments for
the GPP program year shall be made no later than August 15
following this notification.

(e) The Global Payment Program provides a source of funding
for GPP systems to support their ability to make health care
activities and services available to the uninsured, and shall not be
construed to constitute or offer health care coverage for individuals
receiving services. Global Payment Program payments are not
paid on behalf of specific individuals, and participating GPP
systems may determine the scope, type, and extent to which
services are available, to the extent consistent with the Special
Terms and Conditions. The operation of the Global Payment
Program shall not be construed to decrease, expand, or otherwise
alter the scope of a county’s obligations to the medically indigent
pursuant to Part 5 (commencing with Section 17000) of Division
9.

(f) The nonfederal share of any payments under the Global
Payment Program shall consist of voluntary intergovernmental
transfers of funds provided by designated public hospitals or
affiliated governmental agencies or entities, in accordance with
this section.

(1) The Global Payment Program Special Fund is hereby
established in the State Treasury. Notwithstanding Section 13340
of the Government Code, moneys deposited in the Global Payment
Program Special Fund shall be continuously appropriated, without
regard to fiscal years, to the department for the purposes specified
in this section. All funds derived pursuant to this section shall be
deposited in the State Treasury to the credit of the Global Payment
Program Special Fund.

(2) The Global Payment Program Special Fund shall consist of
moneys that a designated public hospital or affiliated governmental
agency or entity elects to transfer to the department for deposit
into the fund as a condition of participation in the Global Payment
Program, to the extent permitted under Section 433.51 of Title 42
of the Code of Federal Regulations, the Special Terms and
Conditions, and any other applicable federal Medicaid laws. Except
as otherwise provided in paragraph (3), moneys derived from these
intergovernmental transfers in the Global Payment Program Special
Fund shall be used as the source for the nonfederal share of Global
Payment Program payments authorized under the demonstration
project. Any intergovernmental transfer of funds provided for
purposes of the Global Payment Program shall be made as specified
in this section. Upon providing any intergovernmental transfer of
funds, each transferring entity shall certify that the transferred
funds qualify for federal financial participation pursuant to
applicable federal Medicaid laws and the Special Terms and
Conditions, and in the form and manner as required by the
department.

(3) The department shall claim federal financial participation
for GPP payments using moneys derived from intergovernmental
transfers made pursuant to this section, and deposited in the Global
Payment Program Special Fund to the full extent permitted by law.
The moneys disbursed from the fund, and all associated federal
financial participation, shall be distributed only to GPP systems
and the governmental agencies or entities to which they are
affiliated, as applicable. In the event federal financial participation
is not available with respect to a payment under this section and
either is not obtained, or results in a recoupment of payments
already made, the department shall return any intergovernmental
transfer fund amounts associated with the payment for which
federal financial participation is not available to the applicable
transferring entities within 14 days from the date of the associated
recoupment or other determination, as applicable.

(4) As a condition of participation in the Global Payment
Program, each designated public hospital or affiliated governmental
agency or entity, agrees to provide intergovernmental transfer of
funds necessary to meet the nonfederal share obligation as
calculated under subdivision (g) for Global Payment Program
payments made pursuant to this section and the Special Terms and
Conditions. Any intergovernmental transfer of funds made pursuant
to this section shall be considered voluntary for purposes of all
federal laws. No state General Fund moneys shall be used to fund
the nonfederal share of any Global Payment Program payment.

(g) For each scheduled quarterly interim payment, interim
yearend payment, and final reconciliation payment pursuant to
subdivision (d), the department shall determine the
intergovernmental transfer amount for each GPP system as follows:

(1) The department shall determine the amount of the quarterly
interim payment, interim yearend payment, or final reconciliation
payment, as applicable, that is payable to each GPP system
pursuant to subdivision (d). For purposes of these determinations,
the redistributed amounts described in paragraph (2) of subdivision
(d) shall be disregarded.

(2) The department shall determine the aggregate amount of
intergovernmental transfers necessary to fund the nonfederal share
of the quarterly interim payment, interim yearend payment, or final
reconciliation payment, as applicable, identified in paragraph (1)
for all the GPP systems.

(3) With respect to each quarterly interim payment, interim
yearend payment, or final yearend reconciliation payment, as
applicable, an initial transfer amount shall be determined for each
GPP system, calculated as the amount for the GPP system
determined in paragraph (1), multiplied by the nonfederal share
percentage, as defined in Section 14184.10, and multiplied by the
applicable GPP system-specific IGT factor as follows:

(A) Los Angeles County Health System: 1.100.

(B) Alameda Health System: 1.137.

(C) Arrowhead Regional Medical Center: 0.923.

(D) Contra Costa Regional Medical Center: 0.502.

(E) Kern Medical Center: 0.581.

(F) Natividad Medical Center: 1.183.

(G) Riverside University Health System-Medical Center: 0.720.

(H) San Francisco General Hospital: 0.507.

(I) San Joaquin General Hospital: 0.803.

(J) San Mateo Medical Center: 1.325.

(K) Santa Clara Valley Medical Center: 0.706.

(L) Ventura County Medical Center: 1.401.

(4) The initial transfer amount for each GPP system determined
under paragraph (3) shall be further adjusted as follows to ensure
that sufficient intergovernmental transfers are available to make
payments to all GPP systems:

(A) With respect to each quarterly interim payment, interim
yearend payment, or final reconciliation payment, as applicable,
the initial transfer amounts for all GPP systems determined under
paragraph (3) shall be added together.

(B) The sum of the initial transfer amounts in subparagraph (A)
shall be subtracted from the aggregate amount of intergovernmental
transfers necessary to fund the payments as determined in
paragraph (2). The resulting positive or negative amount shall be
the aggregate positive or negative intergovernmental transfer
adjustment.

(C) Each GPP system-specific IGT factor, as specified in
subparagraphs (A) to (L), inclusive, of paragraph (3) shall be
subtracted from 2.000, yielding an IGT adjustment factor for each
GPP system.

(D) The IGT adjustment factor calculated in subparagraph (C)
for each GPP system shall be multiplied by the positive or negative
amount in subparagraph (B), and multiplied by the allocation
percentage determined for the GPP system in paragraph (4) of
subdivision (c), yielding the amount to be added or subtracted from
the initial transfer amount determined in paragraph (3) for the
applicable GPP system.

(E) The transfer amount to be paid by each GPP system with
respect to the applicable quarterly interim payment, interim yearend
payment, or final reconciliation payment, shall equal the initial
transfer amount determined in paragraph (3) as adjusted by the
amount determined in subparagraph (D).

(5) Upon the determination of the redistributed amounts
described in paragraph (2) of subdivision (d) for the final
reconciliation payment, the department shall, with respect to each
GPP system that exceeded its respective threshold, determine the
associated intergovernmental transfer amount equal to the
nonfederal share that is necessary to draw down the additional
payment, and shall include this amount in the GPP system’s
transfer amount.

(h) The department may initiate audits of GPP systems’ data
submissions and reports, and may request supporting
documentation. Any audits conducted by the department shall be
complete within 22 months of the end of the applicable GPP
program year to allow for the appropriate finalization of payments
to the participating GPP system, but subject to recoupment if it is
later determined that federal financial participation is not available
for any portion of the applicable payments.

(i) If the department determines, during the course of the
demonstration term and in consultation with participating GPP
systems, that the Global Payment Program should be terminated
for subsequent years, the department shall terminate the Global
Payment Program by notifying the federal Centers for Medicare
and Medicaid Services in accordance with the timeframes specified
in the Special Terms and Conditions. In the event of this type of
termination, the department shall issue a declaration terminating
the Global Payment Program and shall work with the federal
Centers for Medicare and Medicaid Services to finalize all
remaining payments under the Global Payment Program.
Subsequent to the effective date for any termination accomplished
pursuant to this subdivision, the designated public hospitals that
participated in the Global Payment Program shall claim and receive
disproportionate share hospital payments, if eligible, as described
in subparagraph (D) of paragraph (4) of subdivision (b) of Section
14184.30, but only to the extent that any necessary federal
approvals are obtained and federal financial participation is
available and not otherwise jeopardized.

14184.50.  

(a) (1) The department shall establish and operate
the Public Hospital Redesign and Incentives in Medi-Cal (PRIME)
program to build upon the foundational delivery system
transformation work, expansion of coverage, and increased access
to coordinated primary care achieved through the prior California’s
“Bridge to Reform” Medicaid demonstration project. The activities
supported by the PRIME program are designed to accelerate efforts
by participating PRIME entities to change care delivery to
maximize health care value and strengthen their ability to
successfully perform under risk-based alternative payment models
in the long term and consistent with the demonstration’s goals.
Participating PRIME entities consist of two types of entities:
designated public hospital systems and district and municipal
public hospitals.

(2) Participating PRIME entities shall be eligible to earn
incentive payments by undertaking projects set forth in the Special
Terms and Conditions, for which there are required project metrics
and targets. Additionally, a minimum number of required projects
is specified for each designated public hospital system.

(3) The department shall provide participating PRIME entities
the opportunity to earn the maximum amount of funds authorized
for the PRIME program under the demonstration project. Under
the demonstration project, funding is available for the designated
public hospital systems and the district and municipal public
hospitals through two separate pools. Subject to the Special Terms
and Conditions, up to one billion four hundred million dollars
($1,400,000,000) is authorized annually for the designated public
hospital systems pool, and up to two hundred million dollars
($200,000,000) is authorized annually for the district and municipal
public hospitals pool, during the first three years of the
demonstration project, with reductions to these amounts in the
fourth and fifth years. Except in those limited instances specifically
authorized by the Special Terms and Conditions, the funding that
is authorized for each respective pool shall only be available to
participating PRIME entities within that pool.

(4) PRIME payments shall be incentive payments, and are not
payments for services otherwise reimbursable under the Medi-Cal
program, nor direct reimbursement for expenditures incurred by
participating PRIME entities in implementing reforms. PRIME
incentive payments shall not offset payment amounts otherwise
payable by the Medi-Cal program, or to and by Medi-Cal managed
care plans for services provided to Medi-Cal beneficiaries, or
otherwise supplant provider payments payable to PRIME entities.

(b) For purposes of this article, the following definitions shall
apply:

(1) “Alternative payment methodology” or “APM” means a
payment made from a Medi-Cal managed care plan to a designated
public hospital system for services covered for a beneficiary
assigned to a designated public hospital system that meets the
conditions set forth in the Special Terms and Conditions and
approved by the department, as applicable.

(2) “Designated public hospital system” means a designated
public hospital, as listed in the Special Terms and Conditions, and
its affiliated governmental providers and contracted governmental
and nongovernmental entities that constitute a system with an
approved project plan under the PRIME program. A single
designated public hospital system may include multiple designated
public hospitals under common government ownership.

(3) “District and municipal public hospitals” means those
nondesignated public hospitals, as listed in the Special Terms and
Conditions, that have an approved project plan under the PRIME
program.

(4) “Participating PRIME entity” means a designated public
hospital system or district and municipal public hospital
participating in the PRIME program.

(5) “PRIME program year” means the state fiscal year beginning
on July 1 and ending on June 30 during which the PRIME program
is authorized, except that the first PRIME program year shall
commence on January 1, 2016, and, as applicable, means each
state fiscal year thereafter through the 2019-20 state fiscal year,
and any years or partial years during which the PRIME program
is authorized under an extension or successor to the demonstration.

(c) (1) Within 30 days following federal approval of the
protocols setting forth the PRIME projects, metrics, and funding
mechanics, each participating PRIME entity shall submit a
five-year PRIME project plan containing the specific elements
required in the Special Terms and Conditions. The department
shall review all five-year PRIME project plans and take action
within 60 days to approve or disapprove each five-year PRIME
project plan.

(2) Participating PRIME entities may modify projects or metrics
in their five-year PRIME project plan, to the extent authorized
under the demonstration project and approved by the department.

(d) (1) Each participating PRIME entity shall submit reports
to the department twice a year demonstrating progress toward
required metric targets. A standardized report form shall be
developed jointly by the department and participating PRIME
entities for this purpose. The mid-year report shall be due March
31 of each PRIME program year, except that, for the 2015-16
project year only, the submission of an acceptable five-year PRIME
project plan in accordance with the Special Terms and Conditions
shall constitute the submission of the mid-year report. The yearend
report shall be due September 30 following each PRIME program
year.

(2) The submission of the project reports pursuant to paragraph
(1) shall constitute a request for payment. Amounts payable to the
participating PRIME entity shall be determined based on the
achievement of the metric targets included in the mid-year report
and yearend report, as applicable.

(3) Within 14 days following the submission of the mid-year
and yearend reports, the department shall confirm the amounts
payable to participating PRIME entities and shall issue requests
to each participating PRIME entity for the intergovernmental
transfer amounts necessary to draw down the federal funding for
the applicable PRIME incentive payment to that entity.

(A) Any intergovernmental transfers provided for purposes of
this section shall be deposited in the Public Hospital Investment,
Improvement, and Incentive Fund established pursuant to Section
14182.4 and retained pursuant to paragraph (1) of subdivision (f).

(B) Participating PRIME entities or their affiliated governmental
agencies or entities shall make the intergovernmental transfer to
the department within seven days of receiving the department’s
request. In the event federal approval for a payment is not obtained,
the department shall return the intergovernmental transfer funds
to the transferring entity within 14 days.

(C) PRIME payments to a participating PRIME entity shall be
conditioned upon the department’s receipt of the intergovernmental
transfer amount from the applicable entity. If the intergovernmental
transfer is made within the appropriate timeframe, the incentive
payment shall be disbursed in accordance with paragraph (4),
otherwise the payment shall be disbursed within 14 days of when
the intergovernmental transfer is provided.

(4) Subject to paragraph (3), and except with respect to the
2015-16 project year, amounts payable based on the mid-year
reports shall be paid no later than April 30, and amounts payable
based on the yearend report shall be paid no later than October 31.
In the event of insufficient or misreported data, these payment
deadlines may be extended up to 60 days to allow time for the
reports to be adequately corrected for approval for payment. If
corrected data is not submitted to enable payment to be made
within the extended timeframe, the participating entity shall not
receive PRIME payment for the period in question. For the
2015-16 project year only, 25 percent of the annual allocation for
the participating PRIME entity shall be payable within 14 days
following the approval of the five-year PRIME project plan. The
remaining 75 percent of the participating PRIME entity’s annual
allocation shall be available following the 2015-16 yearend report,
subject to the requirements in paragraph (2) of subdivision (e).

(5) The department shall draw down the federal funding and
pay both the nonfederal and federal shares of the incentive payment
to the participating PRIME entity, to the extent federal financial
participation is available.

(e) The amount of PRIME incentive payments payable to a
participating PRIME entity shall be determined as follows:

(1) The department shall allocate the full amount of annual
funding authorized under the PRIME project pools across all
domains, projects, and metrics undertaken in the manner set forth
in the Special Terms and Conditions. Separate allocations shall be
determined for the designated public hospital system pool and the
district and municipal hospital pool. The allocations shall determine
the aggregate annual amount of funding that may be earned for
each domain, project, and metric for all participating PRIME
entities within the appropriate pool.

(A) The department shall allocate the aggregate annual amounts
determined for each project and metric under the designated public
hospital system pool among participating designated public hospital
systems through an allocation methodology that takes into account
available system-specific data, primarily based on the unique
number of Medi-Cal beneficiaries treated, consistent with the
Special Terms and Conditions. For the 2015−16 project year only,
the approval of the five-year PRIME project plans for designated
public hospital systems will be considered an appropriate metric
target and will equal up to 25 percent of a designated public
hospital system’s annual allocation for that year.

(B) The department shall allocate the aggregate annual amounts
determined for each project and metric under the district and
municipal public hospital system pool among participating district
and municipal public hospital systems through an allocation
methodology that takes into account available system-specific data
that includes Medi-Cal and uninsured care, the number of projects
being undertaken, and a baseline floor funding amount, consistent
with the Special Terms and Conditions. For the 2015-16 project
year only, the approval of the five-year PRIME project plans for
district and municipal public hospital systems will be considered
an appropriate metric target and will equal up to 25 percent of a
district and municipal public hospital system’s annual allocation
for that year.

(2) Amounts payable to each participating PRIME entity shall
be determined using the methodology described in the Special
Terms and Conditions, based on the participating PRIME entity’s
progress toward and achievement of the established metrics and
targets, as reflected in the mid-year and yearend reports submitted
pursuant to paragraph (1) of subdivision (d).

(A) Each participating PRIME entity shall be individually
responsible for progress toward and achievement of project specific
metric targets during the reporting period.

(B) The amounts allocated pursuant to subparagraphs (A) and
(B) of paragraph (1) shall represent the amounts the designated
public hospital system or district and municipal public hospital,
as applicable, may earn through achievement of a designated
project metric target for the applicable year, prior to any
redistribution.

(C) Participating PRIME entities shall earn reduced payment
for partial achievement at both the mid-year and yearend reports,
as described in the Special Terms and Conditions.

(3) If, at the end of a project year, a project metric target is not
fully met by a participating PRIME entity and that entity is not
able to fully claim funds that otherwise would have been earned
for meeting the metric target, participating PRIME entities shall
have the opportunity to earn unclaimed funds under the
redistribution methodology established under the Special Terms
and Conditions. Amounts earned by a participating PRIME entity
through redistribution shall be payable in addition to the amounts
earned pursuant to paragraph (2).

(f) The nonfederal share of payments under the PRIME program
shall consist of voluntary intergovernmental transfers of funds
provided by designated public hospitals or affiliated governmental
agencies or entities, or district and municipal public hospitals or
affiliated governmental agencies or entities, in accordance with
this section.

(1) The Public Hospital Investment, Improvement, and Incentive
Fund, established in the State Treasury pursuant to Section 14182.4,
shall be retained during the demonstration term for purposes of
making PRIME payments to participating PRIME entities.
Notwithstanding Section 13340 of the Government Code, moneys
deposited in the Public Hospital Investment, Improvement, and
Incentive Fund shall be continuously appropriated, without regard
to fiscal years, to the department for the purposes specified in this
section. All funds derived pursuant to this section shall be deposited
in the State Treasury to the credit of the Public Hospital Investment,
Improvement, and Incentive Fund.

(2) The Public Hospital Investment, Improvement, and Incentive
Fund shall consist of moneys that a designated public hospital or
affiliated governmental agency or entity, or a district and municipal
public hospital-affiliated governmental agency or entity, elects to
transfer to the department for deposit into the fund as a condition
of participation in the PRIME program, to the extent permitted
under Section 433.51 of Title 42 of the Code of Federal
Regulations, the Special Terms and Conditions, and any other
applicable federal Medicaid laws. Except as provided in paragraph
(3), moneys derived from these intergovernmental transfers in the
Public Hospital Investment, Improvement, and Incentive Fund
shall be used as the nonfederal share of PRIME program payments
authorized under the demonstration project. Any intergovernmental
transfer of funds provided for purposes of the PRIME program
shall be made as specified in this section. Upon providing any
intergovernmental transfer of funds, each transferring entity shall
certify that the transferred funds qualify for federal financial
participation pursuant to applicable federal Medicaid laws and the
Special Terms and Conditions, and in the form and manner as
required by the department.

(3) The department shall claim federal financial participation
for PRIME incentive payments using moneys derived from
intergovernmental transfers made pursuant to this section and
deposited in the Public Hospital Investment, Improvement, and
Incentive Fund to the full extent permitted by law. The moneys
disbursed from the fund, and all associated federal financial
participation, shall be distributed only to participating PRIME
entities and the governmental agencies or entities to which they
are affiliated, as applicable. No moneys derived from
intergovernmental transfers on behalf of district and municipal
public hospitals, including any associated federal financial
participation, shall be used to fund PRIME payments to designated
public hospital systems, and likewise, no moneys derived from
intergovernmental transfers provided by designated public hospitals
or their affiliated governmental agencies or entities, including any
associated federal financial participation, shall be used to fund
PRIME payments to district and municipal public hospitals. In the
event federal financial participation is not available with respect
to a payment under this section that results in a recoupment of
funds from one or more participating PRIME entities, the
department shall return any intergovernmental transfer fund
amounts associated with the payment for which federal financial
participation is not available to the applicable transferring entities
within 14 days from the date of the associated recoupment or other
determination, as applicable.

(4) This section shall not be construed to require a designated
public hospital, a district and municipal public hospital, or any
affiliated governmental agency or entity to participate in the
PRIME program. As a condition of participation in the PRIME
program, each designated public hospital or affiliated governmental
agency or entity, and each district and municipal public
hospital-affiliated governmental agency or entity agrees to provide
intergovernmental transfers of funds necessary to meet the
nonfederal share obligation for any PRIME payments made
pursuant to this section and the Special Terms and Conditions.
Any intergovernmental transfers made pursuant to this section
shall be considered voluntary for purposes of all federal laws.

(g) (1) PRIME incentive payments are intended to support
designated public hospital systems in their efforts to change care
delivery and strengthen those systems’ ability to participate under
an alternate payment methodology (APM). APMs shift some level
of risk to participating designated public hospital systems through
capitation and other risk-sharing agreements. Contracts entered
into, issued, or renewed between managed care plans and
participating designated public hospital systems shall include
language requiring the designated public hospital system to report
on metrics to meet quality benchmark goals and to ensure improved
patient outcomes, consistent with the Special Terms and
Conditions.

(2) In order to promote and increase the level of value-based
payments made to designated public hospital systems during the
course of the demonstration term, the department shall issue an
all-plan letter to Medi-Cal managed care plans that shall promote
and encourage positive system transformation. The department
shall issue an activities plan supporting designated public hospital
system efforts to meet those aggregate APM targets and
requirements as provided in the Special Terms and Conditions.

(3)  begin insert (A) end insert begin insert   end insert Designated public hospital systems shall contract with
at least one Medi-Cal managed care plan in the service area where
they operate using an APM methodology by January 1, 2018. If a
designated public hospital system is unable to meet this
requirement and can demonstrate that it has made a good faith
effort to contract with a Medi-Cal managed care plan in the service
area that it operates in or a gap in contracting period occurs, the
department has the discretion to waive this requirement.

begin insert

(B) Each designated public hospital system shall report to the
department, in a format determined by the department in
consultation with the designated public hospital systems and
Medi-Cal managed care plans, a summary of the contracting
arrangement the designated public hospital system has with
Medi-Cal managed care plans and the scope of services covered
under the contract.

end insert begin insert

(C) It is the intent of the Legislature to encourage contracting
between designated public hospital systems and multiple Medi-Cal
managed care plans so that Medi-Cal members have access to
medically necessary and appropriate covered services.

end insert

(4) Designated public hospital systems and Medi-Cal managed
care plans shall seek to strengthen their data and information
sharing for purposes of identifying and treating applicable
beneficiaries, including the timely sharing and reporting of
beneficiary data, assessment, and treatment information. Consistent
with the Special Terms and Conditions and the goals of the
demonstration project, and notwithstanding any other state law,
the department shall provide guidelines, state-level infrastructure,
and other mechanisms to support this data and information sharing.

14184.80.  

(a) Within 90 days of the effective date of the act
that added this section, the department shall amend its contract
with the external quality review organization (EQRO) currently
under contract with the department and approved by the federal
Centers for Medicare and Medicaid Services to complete an access
assessment. This one-time assessment is intended to do all of the
following:

(1) Evaluate primary, core specialty, and facility access to care
for managed care beneficiaries based on the current health plan
network adequacy requirements set forth in the Knox-Keene Health
Care Service Plan Act of 1975 (Chapter 2.2 (commencing with
Section 1340) of Division 2 of the Health and Safety Code) and
Medicaid managed care contracts, as applicable.

(2) Consider State Fair Hearing and Independent Medical
Review (IMR) decisions, and grievances and appeals or complaints
data.

(3) Report on the number of providers accepting new
beneficiaries.

(b) The department shall submit to the federal Centers for
Medicare and Medicaid Services for approval the access assessment
design no later than 180 days after approval by the federal Centers
for Medicare and Medicaid Services of the EQRO contract
amendment.

(c) The department shall establish an advisory committee that
will provide input into the structure of the access assessment. The
EQRO shall work with the department to establish the advisory
committee, which will provide input into the assessment structure,
including network adequacy requirements and metrics, that should
be considered.

(d) The advisory committee shall include one or more
representatives of each of the following stakeholders to ensure
diverse and robust input into the assessment structure and feedback
on the initial draft access assessment report:

(1) Consumer advocacy organizations.

(2) Provider associations.

(3) Health plans and health plan associations.

(4) Legislative staff.

(e) The advisory committee shall do all of the following:

(1) Begin to convene within 60 days of approval by the federal
Centers for Medicare and Medicaid Services of the EQRO contract
amendment.

(2) Participate in a minimum of two meetings, including an
entrance and exit event, with all events and meetings open to the
public.

(3) Provide all of the following:

(A) Feedback on the access assessment structure.

(B) An initial draft access assessment report.

(C) Recommendations that shall be made available on the
department’s Internet Web site.

(f) The EQRO shall produce and publish an initial draft and a
final access assessment report that includes a comparison of health
plan network adequacy compliance across different lines of
business. The report shall include recommendations in response
to any systemic network adequacy issues, if identified. The initial
draft and final report shall describe the state’s current compliance
with the access and network adequacy standards set forth in the
Medicaid Managed Care proposed rule (80 FR 31097) or the
finalized Part 438 of Title 42 of the Code of Federal Regulations,
if published prior to submission of the assessment design to the
federal Centers for Medicare and Medicaid Services.

(g) The access assessment shall do all of the following:

(1) Measure health plan compliance with network adequacy
requirements as set forth in the Knox-Keene Health Care Service
Plan Act of 1975 (Chapter 2.2 (commencing with Section 1340)
of Division 2 of the Health and Safety Code) and Medicaid
managed care contracts, as applicable. The assessment shall
consider State Fair Hearing and IMR decisions, and grievances
and appeals or complaints data, and any other factors as selected
with input from the advisory committee.

(2) Review encounter data, including a review of data from
subcapitated plans.

(3) Measure health plan compliance with timely access
requirements, as set forth in the Knox-Keene Health Care Service
Plan Act of 1975 (Chapter 2.2 (commencing with Section 1340)
of Division 2 of the Health and Safety Code) and Medicaid
managed care contracts using a sample of provider-level data on
the soonest appointment availability.

(4) Review compliance with network adequacy requirements
for managed care plans, and other lines of business for primary
and core specialty care areas and facility access, as set forth in the
Knox-Keene Health Care Service Plan Act of 1975 (Chapter 2.2
(commencing with Section 1340) of Division 2 of the Health and
Safety Code) and Medicaid managed care contracts, as applicable,
across the entire health plan network.

(5) Applicable network adequacy requirements of the proposed
or final Notice of Proposed Rulemaking, as determined under the
approved access assessment design, that are not already required
under the Knox-Keene Health Care Service Plan Act of 1975
(Chapter 2.2 (commencing with Section 1340) of Division 2 of
the Health and Safety Code) shall be reviewed and reported on
against a metric range as identified by the department and approved
by the federal Centers for Medicare and Medicaid Services in the
access assessment design.

(6) Determine health plan compliance with network adequacy
through reviewing information or data from a one-year period
using validated network data and utilize it for the time period
following conclusion of the preassessment stakeholder process but
no sooner than the second half of the 2016 calendar year in order
to ensure use of the highest quality data source available.

(7) Measure managed care plan compliance with network
adequacy requirements within the department and managed care
plan contract service areas using the Knox-Keene Health Care
Service Plan Act of 1975 (Chapter 2.2 (commencing with Section
1340) of Division 2 of the Health and Safety Code) and network
adequacy standards within Medicaid managed care contracts,
accounting for each of the following:

(A) Geographic differences, including provider shortages at the
local, state, and national levels, as applicable.

(B) Previously approved alternate network access standards, as
provided for under the Knox-Keene Health Care Service Plan Act
of 1975 (Chapter 2.2 (commencing with Section 1340) of Division
2 of the Health and Safety Code) and Medicaid managed care
contracts.

(C) Access to in-network providers and out-of-network providers
separately, presented and evaluated separately, when determining
overall access to care.

(D) The entire network of providers available to beneficiaries
as the state contractor plan level.

(E) Other modalities used for accessing care, including
telemedicine.

(h) The department shall post the initial draft report for a 30-day
public comment period after it has incorporated the feedback from
the advisory committee. The initial draft report shall be posted for
public comment no later than 10 months after the federal Centers
for Medicare and Medicaid Services approves the assessment
design.

(i) The department shall also make publicly available the
feedback from the advisory committee at the same time it posts
the initial draft of the report.

(j) The department shall submit the final access assessment
report to the federal Centers for Medicare and Medicaid Services
no later than 90 days after the initial draft report is posted for public
comment.

SEC. 2.  

This act shall become operative only if Assembly Bill
1568 of the 2015-16 Regular Session is enacted and takes effect
on or before January 1, 2017.

SEC. 3.  

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

In order to make changes to state-funded health care programs
at the earliest possible time, it is necessary that this act take effect
immediately.