BILL NUMBER: SB 474 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY SEPTEMBER 7, 2007
AMENDED IN ASSEMBLY AUGUST 31, 2007
AMENDED IN SENATE MAY 2, 2007
AMENDED IN SENATE APRIL 19, 2007
INTRODUCED BY Senator Kuehl
(Principal coauthor: Senator Ridley-Thomas)
(Coauthor: Senator Romero)
(Coauthors: Assembly Members Dymally, Feuer, and Krekorian)
FEBRUARY 21, 2007
An act to amend Sections 14166.1, 14166.5, 14166.9, 14166.12,
14166.13, 14166.20, 14166.21, and 14166.23 of, and to amend,
renumber, and add Section 14166.25 of, the Welfare and Institutions
Code, relating to Medi-Cal, and making an appropriation therefor.
LEGISLATIVE COUNSEL'S DIGEST
SB 474, as amended, Kuehl. Medi-Cal: hospital demonstration
project funding.
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. The Medi-Cal program is, in part, governed and funded by
federal Medicaid provisions.
Existing law establishes the Medi-Cal Hospital/Uninsured Care
Demonstration Project Act, which revises hospital reimbursement
methodologies under the Medi-Cal program in order to maximize the use
of federal funds consistent with federal Medicaid law and stabilize
the distribution of funding for hospitals that provide care to
Medi-Cal beneficiaries and uninsured patients. This demonstration
project 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. These provisions include a formula
for determining baseline funding of these hospitals, and for
adjustments to the baseline funding formula.
This bill would modify the formula for calculating a hospital's
adjusted baseline funding amount.
Existing law provides for the payment of safety net care pool
funds to designated public hospitals, or governmental entities with
which they are affiliated, pursuant to the demonstration project.
Existing law requires that the department claim safety net care pool
funds using the optimal combination of hospital certified public
expenditures and certified public expenditures of a hospital that
operates nonhospital clinics or provides physician, nonphysician
practitioner, or other health care services that are identified as
hospital services under the demonstration project.
This bill would require the department to separately identify and
account for federal safety net care pool funds claimed and received
by the department under a specified health care coverage initiative
program.
This bill would also require that $100,000,000 of the safety net
care pool funds claimed and received by the state pursuant to the
demonstration project that are based on the certified public
expenditures of the County of Los Angeles, or its designated public
hospitals, be deposited in the South Los Angeles Medical Services
Preservation Fund, which this bill would create in the State
Treasury, for each of the 3 project years, 2007-08, 2008-09, and
2009-10, to be continuously appropriated to the department for the
purpose of reimbursing the county for its specified costs. The bill
would require any unused funds in any project year to revert to the
Health Care Support Fund.
Existing law provides for the payment of stabilization funding to
certain designated public hospitals, project year private
disproportionate share hospitals, and nondesignated public hospitals,
as those terms are defined, under the demonstration project.
This bill would make various revisions to the calculation of that
stabilization funding.
The bill would require the County of Los Angeles to, as a
condition for receiving distributions from the South Los Angeles
Medical Services Preservation Fund in any project year, assure the
director that it will not reduce the county's ongoing, systemwide
financial contribution to the department during that project year for
health care services to the uninsured.
Existing law establishes the continuously appropriated Private
Hospital Supplemental Fund, and allows the California Medical
Assistance Commission to distribute certain amounts from the fund to
private hospitals that satisfy specified criteria.
This bill would require the County of Los Angeles to, for the
2007-08, 2008-09, and 2009-10 project years, make intergovernmental
transfers to the state to fund the nonfederal share of increased
Medi-Cal payments to those private hospitals that serve the South Los
Angeles population formerly served by Los Angeles County Martin
Luther King, Jr. - Harbor Hospital. The bill would require the
intergovernmental transfers to be funded by county tax revenues and
to total $5,000,000 per project year, subject to specified
exceptions. The bill would require these moneys to be deposited in
the Private Hospital Supplemental Fund, thus constituting an
appropriation, and distributed to the private hospitals designated by
the county.
Existing law establishes the Distressed Hospital Fund, and
provides for payments from the fund to hospitals that meet specified
criteria. Existing law requires, if funding is insufficient to make
payments to hospitals pursuant to specified provisions of law, funds
in the Distressed Hospital Fund to first be available for use under
contracts negotiated by the commission for hospitals contracting
under a specified selective provider contracting program.
This bill would prohibit the commission from considering the lack
of federal financial participation in direct grants to designated
public hospitals in determining which hospital may receive funding
under these provisions.
Vote: majority. Appropriation: yes. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 14166.1 of the Welfare and Institutions Code is
amended to read:
14166.1. For purposes of this article, the following definitions
shall apply:
(a) "Allowable costs" means those costs recognized as allowable
under Medicare reasonable cost principles and additional costs
recognized under the demonstration project, including those
expenditures identified in Appendix D to the Special Terms and
Conditions for the demonstration project. Allowable costs under this
subdivision shall be determined in accordance with the Special Terms
and Conditions for the demonstration project and demonstration
project implementation documents approved by the federal Centers for
Medicare and Medicaid Services.
(b) "Base year private DSH hospital" means a nonpublic hospital,
nonpublic-converted hospital, or converted hospital, as those terms
are defined in paragraphs (26), (27), and (28), respectively, of
subdivision (a) of Section 14105.98, that was an eligible hospital
under paragraph (3) of subdivision (a) of Section 14105.98 for the
2004-05 state fiscal year.
(c) "Demonstration project" means the Medi-Cal Hospital/Uninsured
Care Demonstration, Number 11-W-00193/9, as approved by the federal
Centers for Medicare and Medicaid Services.
(d) "Designated public hospital" means any one of the following 22
hospitals identified in Attachment C, "Government-operated Hospitals
to be Reimbursed on a Certified Public Expenditure Basis," to the
Special Terms and Conditions for the demonstration project issued by
the federal Centers for Medicare and Medicaid Services:
(1) UC Davis Medical Center.
(2) UC Irvine Medical Center.
(3) UC San Diego Medical Center.
(4) UC San Francisco Medical Center.
(5) UC Los Angeles Medical Center, including Santa Monica/UCLA
Medical Center.
(6) LA County Harbor/UCLA Medical Center.
(7) LA County Martin Luther King Jr.-Harbor Hospital.
(8) LA County Olive View UCLA Medical Center.
(9) LA County Rancho Los Amigos National Rehabilitation Center.
(10) LA County University of Southern California Medical Center.
(11) Alameda County Medical Center.
(12) Arrowhead Regional Medical Center.
(13) Contra Costa Regional Medical Center.
(14) Kern Medical Center.
(15) Natividad Medical Center.
(16) Riverside County Regional Medical Center.
(17) San Francisco General Hospital.
(18) San Joaquin General Hospital.
(19) San Mateo Medical Center.
(20) Santa Clara Valley Medical Center.
(21) Tuolumne General Hospital.
(22) Ventura County Medical Center.
(e) "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) of Title 42 of the United States
Code.
(f) "Nondesignated public hospital" means a public hospital
defined in paragraph (25) of subdivision (a) of Section 14105.98,
excluding designated public hospitals.
(g) "Project year" means the applicable state fiscal year of the
Medi-Cal Hospital/Uninsured Care Demonstration Project.
(h) "Project year private DSH hospital" means a nonpublic
hospital, nonpublic-converted hospital, or converted hospital, as
those terms are defined in paragraphs (26), (27), and (28),
respectively, of subdivision (a) of Section 14105.98, that was an
eligible hospital under paragraph (3) of subdivision (a) of Section
14105.98, for the particular project year.
(i) "Prior supplemental funds" means the Emergency Services and
Supplemental Payment Fund, the Medi-Cal Medical Education
Supplemental Payment Fund, the Large Teaching Emphasis Hospital and
Children's Hospital Medi-Cal Medical Education Supplemental Payment
Fund, and the Small and Rural Hospital Supplemental Payments Fund,
established under Sections 14085.6, 14085.7, 14085.8, and 14085.9,
respectively.
(j) "Private hospital" means a nonpublic hospital, nonpublic
converted hospital, or converted hospital, as those terms are defined
in paragraphs (26) to (28), inclusive, respectively, of subdivision
(a) of Section 14105.98.
(k) "Safety net care pool" means the federal funds available under
the Medi-Cal Hospital/Uninsured Care Demonstration Project to ensure
continued government support for the provision of health care
services to uninsured populations.
(l) "Uninsured" shall have the same meaning as that term has in
the Special Terms and Conditions issued by the federal Centers for
Medicare and Medicaid Services for the demonstration project.
SEC. 2. Section 14166.5 of the Welfare and Institutions Code is
amended to read:
14166.5. (a) With respect to each project year, the director
shall determine a baseline funding amount for each designated public
hospital. A hospital's baseline funding amount shall be an amount
equal to the total amount paid to the hospital for inpatient hospital
services rendered to Medi-Cal beneficiaries during the 2004-05
fiscal year, including the following Medi-Cal payments, but excluding
payments received under the Medi-Cal Specialty Mental Health
Services Consolidation Program:
(1) Base payments under the selective provider contracting program
as provided for under Article 2.6 (commencing with Section 14081).
(2) Emergency Services and Supplemental Payments Fund payments as
provided for under Section 14085.6.
(3) Medi-Cal Medical Education Supplemental Payment Fund payments
and Large Teaching Emphasis Hospital and Children's Hospital Medi-Cal
Medical Education Supplemental Payment Fund payments as provided for
under Sections 14085.7 and 14085.8, respectively.
(4) Disproportionate share hospital payment adjustments as
provided for under Section 14105.98.
(5) Administrative day payments as provided for under Section
51542 of Title 22 of the California Code of Regulations.
(b) The baseline funding amount for each designated public
hospital shall reflect a reduction for the total amount of
intergovernmental transfers made pursuant to Sections 14085.6,
14085.7, 14085.8, 14085.9, and 14163 for the 2004-05 state fiscal
year by the designated public hospital, or the governmental entity
with which it is affiliated.
(c) With respect to each project year beginning after the 2005-06
project year, the department shall determine an adjusted baseline
funding amount for each designated public hospital to reflect any
increase or decrease in volume. The adjustment for designated public
hospitals shall be calculated as follows:
(1) Applying the cost-finding methodology approved under the
demonstration project, and applying accounting and reporting
practices consistent with those applied in paragraph (2), the
department shall determine the total allowable costs incurred by the
hospital, or the governmental entity with which it is affiliated, in
rendering hospital services that would be recognized under the
demonstration project to Medi-Cal beneficiaries and the uninsured
during the 2004-05 state fiscal year.
(2) Applying the cost-finding methodology approved under the
demonstration project, and applying accounting and reporting
practices consistent with those applied in paragraph (1), the
department shall determine the total allowable costs incurred by the
hospital, or the governmental entity with which it is affiliated, in
rendering hospital services under the demonstration project to
Medi-Cal beneficiaries and the uninsured during the state fiscal year
preceding the project year for which the volume adjustment is being
calculated.
(3) The department shall:
(A) Calculate the difference between the amount determined under
paragraph (1) and the amount determined under paragraph (2).
(B) Determine the percentage increase or decrease by dividing the
difference in subparagraph (A) by the amount in paragraph (1).
(C) Apply the percentage determined in subparagraph (B) to that
amount that results from the hospital's baseline funding amount
determined under subdivision (a) as adjusted by subdivision (b),
except for the reduction for the amount of intergovernmental
transfers made pursuant to Section 14163, minus the amount of
disproportionate share hospital payments in paragraph (4) of
subdivision (a).
(4) The designated public hospital's adjusted baseline for the
project year is the amount determined for the hospital in subdivision
(a) as adjusted by subdivision (b), plus the amount in subparagraph
(C) of paragraph (3).
(5) Notwithstanding paragraphs (3) and (4), when, as determined by
the department, in consultation with the designated public hospital,
there has been a material reduction in patient services at the
designated public hospital during the project year, and the reduction
has resulted in a diminution of access for Medi-Cal and uninsured
patients and a related reduction in total costs at the designated
public hospital of at least 20 percent, the department may utilize
current or adjusted data that are reflective of the diminution of
access, even if the data are not annual data, to determine the
hospital's adjusted baseline amount.
(d) The aggregate designated public hospital baseline funding
amount for each project year shall be the sum of all baseline funding
amounts determined under subdivisions (a) and (b), as adjusted in
subdivision (c), as appropriate, for all designated public hospitals.
(e) (1) If, with respect to any project year, the difference
between the percentage adjustment in subparagraph (B) of paragraph
(3) of subdivision (c) of this section, computed in the aggregate for
designated public hospitals, excluding the percentage adjustment for
any designated public hospital that was not in operation for the
full project year, is greater than five percentage points more than
the aggregate percentage adjustment for private DSH hospitals
determined under subparagraph (B) of paragraph (3) of subdivision (c)
of Section 14166.13, then the aggregate percentage adjustment for
designated public hospitals shall be reduced in the amount necessary
to reduce the difference to five percentage points. The reduction
required by the previous sentence shall be allocated among designated
public hospitals pro rata based on the relationship between each
hospital's percentage determined under subparagraph (B) of paragraph
(3) of subdivision (c) of this section and the aggregate percentage
for designated public hospitals.
(2) Notwithstanding paragraph (1), the department may apply the
adjustments set forth in paragraph (5) of subdivision (c).
SEC. 3. Section 14166.9 of the Welfare and Institutions Code is
amended to read:
14166.9. (a) The department, in consultation with the designated
public hospitals, shall determine the mix of sources of federal funds
for payments to the designated public hospitals in a manner that
provides baseline funding to hospitals and maximizes federal Medicaid
funding to the state during the term of the demonstration project.
Federal funds shall be claimed according to the following priorities:
(1) The certified public expenditures of the designated public
hospitals for inpatient hospital services and physician and
nonphysician practitioner services, as identified in subdivision (e)
of Section 14166.4, rendered to Medi-Cal beneficiaries.
(2) Federal disproportionate share hospital allotment, subject to
the federal-hospital specific limit, in the following order:
(A) Those hospital expenditures that are eligible for federal
financial participation only from the federal disproportionate share
hospital allotment.
(B) Payments funded with intergovernmental transfers, consistent
with the requirements of the demonstration project, up to the
hospital's baseline funding amount or adjusted baseline funding
amount, as appropriate, for the project year.
(C) Any other certified public expenditures for hospital services
that are eligible for federal financial participation from the
federal disproportionate share hospital allotment.
(3) Safety net care pool funds, using the optimal combination of
hospital certified public expenditures and certified public
expenditures of a hospital, or governmental entity with which the
hospital is affiliated, that operates nonhospital clinics or provides
physician, nonphysician practitioner, or other health care services
that are not identified as hospital services under the Special Terms
and Conditions for the demonstration project, except that certified
public expenditures reported by the County of Los Angeles or its
designated public hospitals shall be the exclusive source of
certified public expenditures for claiming those federal funds
deposited in the South Los Angeles Medical Services Preservation Fund
under Section 14166.25.
(4) Health care expenditures of the state that represent alternate
state funding mechanisms approved by the federal Centers for
Medicare and Medicaid Services under the demonstration project as set
forth in Section 14166.22.
(b) The department shall implement these priorities, to the extent
possible, in a manner that minimizes the redistribution of federal
funds that are based on the certified public expenditures of the
designated public hospitals.
(c) The department may adjust the claiming priorities to the
extent that these adjustments result in additional federal Medicaid
funding during the term of the demonstration project or facilitate
the objectives of subdivision (b).
(d) There is hereby established in the State Treasury the
"Demonstration Disproportionate Share Hospital Fund," consisting of
all federal funds received by the department with respect to the
certified public expenditures claimed pursuant to subparagraphs (A)
and (C) of paragraph (2) of subdivision (a). Notwithstanding Section
13340 of the Government Code, the fund shall be continuously
appropriated to the department solely for the purposes specified in
Section 14166.6.
(e) (1) Except as provided in Section 14166.25, all federal safety
net care pool funds claimed and received by the department based on
health care expenditures incurred by the designated public hospitals,
or other governmental entities, shall be deposited in the Health
Care Support Fund, established pursuant to Section 14166.21.
(2) The department shall separately identify and account for
federal safety net care pool funds claimed and received by the
department under the health care coverage initiative program
authorized under Part 3.5 (commencing with Section 15900) and under
paragraphs 43 and 44 of the Special Terms and Conditions for the
demonstration project.
(3) With respect to those funds identified under paragraph (2),
the department shall separately identify and account for federal
safety net care pool funds claimed and received for inpatient
hospital services rendered under the health care coverage initiative,
including services rendered to enrollees of a managed care
organization, by designated public hospitals, nondesignated public
hospitals, and project year private DSH hospitals.
SEC. 4. Section 14166.12 of the Welfare and Institutions Code is
amended to read:
14166.12. (a) The California Medical Assistance Commission shall
negotiate payment amounts, in accordance with the selective provider
contracting program established pursuant to Article 2.6 (commencing
with Section 14081), from the Private Hospital Supplemental Fund
established pursuant to subdivision (b) for distribution to private
hospitals that satisfy the criteria of Section 14085.6, 14085.7,
14085.8, or 14085.9.
(b) The Private Hospital Supplemental Fund is hereby established
in the State Treasury. For purposes of this section, "fund" means the
Private Hospital Supplemental Fund.
(c) Notwithstanding Section 13340 of the Government Code, the fund
shall be continuously appropriated to the department for the
purposes specified in this section.
(d) Except as otherwise limited by this section, the fund shall
consist of all of the following:
(1) One hundred eighteen million four hundred thousand dollars
($118,400,000), which shall be transferred annually from General Fund
amounts appropriated in the annual Budget Act for the Medi-Cal
program.
(2) Any additional moneys appropriated to the fund.
(3) All stabilization funding transferred to the fund pursuant to
paragraph (2) of subdivision (a) of Section 14166.14.
(4) Any moneys that any county, other political subdivision of the
state, or other governmental entity in the state may elect to
transfer to the department for deposit into the fund, as permitted
under Section 433.51 of Title 42 of the Code of Federal Regulations
or any other applicable federal Medicaid laws.
(5) All private moneys donated by private individuals or entities
to the department for deposit in the fund as permitted under
applicable federal Medicaid laws.
(6) Any interest that accrues on amounts in the fund.
(e) Any public agency transferring moneys to the fund may, for
that purpose, utilize any revenues, grants, or allocations received
from the state for health care programs or purposes, unless otherwise
prohibited by law. A public agency may also utilize its general
funds or any other public moneys or revenues for purposes of
transfers to the fund, unless otherwise prohibited by law.
(f) The department may accept or not accept moneys offered to the
department for deposit in the fund. If the department accepts moneys
pursuant to this section, the department shall obtain federal
financial participation to the full extent permitted by law. With
respect to funds transferred or donated from private individuals or
entities, the department shall accept only those funds that are
certified by the transferring or donating entity that qualify for
federal financial participation under the terms of the Medicaid
Voluntary Contribution and Provider-Specific Tax Amendments of 1991
(P.L. 102-234) or Section 433.51 of Title 42 of the Code of Federal
Regulations, as applicable. The department may return any funds
transferred or donated in error.
(g) Moneys in the fund shall be used as the source for the
nonfederal share of payments to hospitals under this section.
(h) Any funds remaining in the fund at the end of a fiscal year
shall be carried forward for use in the following fiscal year.
(i) Moneys shall be allocated from the fund by the department and
shall be applied to obtain federal financial participation in
accordance with customary Medi-Cal accounting procedures for purposes
of payments under this section. Distributions from the fund shall be
supplemental to any other Medi-Cal reimbursement received by the
hospitals, including amounts that hospitals receive under the
selective provider contracting program (Article 2.6 (commencing with
Section 14081)), and shall not affect provider rates paid under the
selective provider contracting program.
(j) Each private hospital that was a private hospital during the
2002-03 fiscal year, received payments for the 2002-03 fiscal year
from any of the prior supplemental funds, and, during the project
year, satisfies the criteria in Section 14085.6, 14085.7, 14085.8, or
14085.9 to be eligible to negotiate for distributions under any of
those sections, shall receive no less from the Private Hospital
Supplemental Fund for the project year than 100 percent of the amount
the hospital received from the prior supplemental funds for the
2002-03 fiscal year. Each private hospital described in this
subdivision shall be eligible for additional payments from the fund
pursuant to subdivision (k).
(k) All amounts that are in the fund for a project year in excess
of the amount necessary to make the payments under subdivision (j)
shall be available for negotiation by the California Medical
Assistance Commission, along with corresponding federal financial
participation, for supplemental payments to private hospitals, which
for the project year satisfy the criteria under Section 14085.6,
14085.7, 14085.8, or 14085.9 to be eligible to negotiate for
distributions under any of those sections, and paid for services
rendered during the project year pursuant to the selective provider
contracting program established under Article 2.6 (commencing with
Section 14081).
(l) The amount of any stabilization funding transferred to the
fund, or the amount of intergovernmental transfers deposited to the
fund pursuant to subdivision (o), together with the associated
federal reimbursement, with respect to a particular project year,
may, in the discretion of the California Medical Assistance
Commission, be paid for services furnished in the same project year
regardless of when the stabilization funds or intergovernmental
transfer funds, and the associated federal reimbursement, become
available, provided the payment is consistent with other applicable
federal or state law requirements and does not result in a hospital
exceeding any applicable reimbursement limitations.
(m) The department shall pay amounts due to a private hospital
from the fund for a project year, with the exception of stabilization
funding, in up to four installment payments, unless otherwise
provided in the hospital's contract negotiated with the California
Medical Assistance Commission, except that hospitals that are not
described in subdivision (j) shall not receive the first installment
payment. The first payment shall be made as soon as practicable after
the issuance of the tentative disproportionate share hospital list
for the project year, and in no event later than January 1 of the
project year. The second and subsequent payments shall be made after
the issuance of the final disproportionate hospital list for the
project year, and shall be made only to hospitals that are on the
final disproportionate share hospital list for the project year. The
second payment shall be made by February 1 of the project year or as
soon as practicable after the issuance of the final disproportionate
share hospital list for the project year. The third payment, if
scheduled, shall be made by April 1 of the project year. The fourth
payment, if scheduled, shall be made by June 30 of the project year.
This subdivision does not apply to hospitals that are scheduled to
receive payments from the fund because they meet the criteria under
Section 14085.7 and do not meet the criteria under Section 14085.6,
14085.8, or 14085.9, which shall be paid in accordance with the
applicable contract or contract amendment negotiated by the
California Medical Assistance Commission.
(n) The department shall pay stabilization funding transferred to
the fund in amounts negotiated by the California Medical Assistance
Commission and shall pay the scheduled payments in accordance with
the applicable contract or contract amendment.
(o) Payments to private hospitals that are eligible to receive
payments pursuant to Section 14085.6, 14085.7, 14085.8, or 14085.9
may be made using funds transferred from governmental entities to the
state, at the option of the governmental entity. Any payments funded
by intergovernmental transfers shall remain with the private
hospital and shall not be transferred back to any unit of government.
An amount equal to 25 percent of the amount of any intergovernmental
transfer made in the project year that results in a supplemental
payment made for the same project year to a project year private DSH
hospital designated by the governmental entity that made the
intergovernmental transfer shall be deposited in the fund for
distribution as determined by the California Medical Assistance
Commission. An amount equal to 75 percent shall be deposited in the
fund and distributed to the private hospitals designated by the
governmental entity.
(p) A private hospital that receives payment pursuant to this
section for a particular project year shall not submit a notice for
the termination of its participation in the selective provider
contracting program established pursuant to Article 2.6 (commencing
with Section 14081) until the later of the following dates:
(1) On or after December 31 of the next project year.
(2) The date specified in the hospital's contract, if applicable.
(q) (1) For the 2007-08, 2008-09, and 2009-10 project years, the
County of Los Angeles shall make intergovernmental transfers to the
state to fund the nonfederal share of increased Medi-Cal payments to
those private hospitals that serve the South Los Angeles population
formerly served by Los Angeles County Martin Luther King, Jr.-Harbor
Hospital. The intergovernmental transfers required under this
subdivision shall be funded by county tax revenues and shall total
five million dollars ($5,000,000) per project year, except that, in
the event that the director determines that any amount is due to the
County of Los Angeles under the demonstration project for services
rendered during the portion of a project year during which Los
Angeles County Martin Luther King, Jr.-Harbor Hospital was
operational, the amount of intergovernmental transfers required under
this subdivision shall be reduced by a percentage determined by
reducing 100 percent by the percentage reduction in Los Angeles
County Martin Luther King, Jr.-Harbor Hospital's baseline, as
determined under subdivision (c) of Section 14166.5 for that project
year.
(2) Notwithstanding subdivision (o), an amount equal to 100
percent of the county's intergovernmental transfers under this
subdivision shall be deposited in the fund and distributed
, within 30 days after receipt of the
intergovernmental transfer, shall be distributed, together with
related federal financial particip ation, to the
private hospitals designated by the county in the amounts
designated by the county. The director shall disregard amounts
received pursuant to this subdivision in calculating the OBRA 1993
payment limitation, as defined in paragraph (24) of subdivision (a)
of Section 14105.98, for purposes of determining the amount of
disproportionate share hospital replacement payments due a private
hospital under Section 14166.11 .
SEC. 5. Section 14166.13 of the Welfare and Institutions Code is
amended to read:
14166.13. (a) With respect to each project year, the director
shall determine a baseline funding amount for each base year private
DSH hospital that is also a project year private DSH hospital. A
private hospital's baseline funding amount shall be an amount equal
to the total amount paid to the hospital for inpatient hospital
services rendered to Medi-Cal beneficiaries during the 2004-05 state
fiscal year, including the following Medi-Cal payments, but excluding
payments received under the Medi-Cal Specialty Mental Health
Services Consolidation Program:
(1) Base payments under
the selective provider contracting program as provided for under
Article 2.6 (commencing with Section 14081), or under the Medi-Cal
state plan cost reimbursement system for inpatient hospital services
for noncontracting hospitals.
(2) Emergency Services and Supplemental Payments Fund payments as
provided for under Section 14085.6.
(3) Medi-Cal Medical Education Supplemental Payment Fund payments
and Large Teaching Emphasis Hospital and Children's Hospital Medi-Cal
Medical Education Supplemental Payment Fund payments as provided for
under Sections 14085.7 and 14085.8, respectively.
(4) Small and Rural Hospital Supplemental Payments Fund payments
as provided for under Section 14085.9.
(5) Disproportionate share hospital payment adjustments as
provided for under Section 14105.98.
(6) Administrative day payments as provided for under Section
51542 of Title 22 of the California Code of Regulations.
(b) The aggregate project year private DSH hospital baseline
funding amount shall be the sum of all baseline funding amounts
determined under subdivision (a).
(c) With respect to each project year beginning after the 2005-06
project year, an aggregate project year private DSH hospital adjusted
baseline funding amount shall be determined as follows:
(1) The department shall determine the aggregate total Medi-Cal
revenue, using amounts determined under subdivision (a), for
inpatient hospital services rendered during the 2004-05 fiscal year
for project year private DSH hospitals, less the total amount of
disproportionate share hospital payments identified in paragraph (5)
of subdivision (a) for those hospitals.
(2) The department shall determine the aggregate total Medi-Cal
revenue paid or payable for inpatient hospital services rendered
during the fiscal year immediately preceding the project year for
which the private hospital adjusted baseline funding amount is being
calculated for project year private DSH hospitals. The aggregate
total revenue for services rendered in the relevant preceding fiscal
year shall include the payments described in paragraphs (1) and (6)
of subdivision (a), and all other payments made to project year
private DSH hospitals under this article, excluding disproportionate
share hospital replacement payments made under Section 14166.11,
stabilization funding under Section 14166.14, and distressed hospital
funding under Section 14166.23 and paragraph (3) of subdivision (b)
of Section 14166.20.
(3) The department shall:
(A) Calculate the difference between the amount determined under
paragraph (1) and the amount determined under paragraph (2).
(B) Determine the percentage increase or decrease by dividing the
difference in subparagraph (A) by the amount in paragraph (1).
(C) Apply the percentage in subparagraph (B) to the amount
determined under paragraph (1).
(4) The aggregate private DSH hospital adjusted baseline funding
amount is the amount determined in paragraph (1), plus the amount
determined in subparagraph (C), plus the amount in paragraph (5) of
subdivision (a).
(d) If, with respect to any project year, the difference between
the percentage adjustment in subparagraph (B) of paragraph (3) of
subdivision (c) of this section is greater than five percentage
points more than the aggregate percentage adjustment for designated
public hospitals, excluding the percentage adjustment for any
designated public hospital that was not in operation for the full
project year, determined under subparagraph (B) of paragraph (3) of
subdivision (c) of Section 14166.5, then the aggregate percentage
adjustment for private DSH hospitals shall be reduced in the amount
necessary to reduce the difference to five percentage points.
SEC. 6. Section 14166.20 of the Welfare and Institutions Code is
amended to read:
14166.20. (a) With respect to each project year, the total amount
of stabilization funding shall be the sum of the following:
(1) (A) Federal Medicaid funds available in the Health Care
Support Fund, established pursuant to Section 14166.21, reduced by
the amount necessary to meet the baseline funding amount, or the
adjusted baseline funding amount, as appropriate, for project years
after the 2005-06 project year for each designated public hospital,
project year private DSH hospitals in the aggregate, and
nondesignated public hospitals in the aggregate as determined in
Sections 14166.5, 14166.13, and 14166.18, respectively, taking into
account all other payments to each hospital under this article. This
amount shall be not less than zero.
(B) For purposes of subparagraph (A), federal Medicaid funds
available in the Health Care Support Fund shall not include health
care coverage initiative amounts identified under paragraph (2) of
subdivision (e) of Section 14166.9.
(2) The state general funds that were made available due to the
receipt of federal funding for previously state-funded programs
through the safety net care pool and any federal Medicaid hospital
reimbursements resulting from these expenditures, unless otherwise
recognized under paragraph (1), to the extent those funds are in
excess of the amount necessary to meet the baseline funding amount,
or the adjusted baseline funding amount, as appropriate, for project
years after the 2005-06 project year for each designated public
hospital, for project year private DSH hospitals in the aggregate,
and for nondesignated public hospitals in the aggregate, as
determined in Sections 14166.5, 14166.13, and 14166.18, respectively.
(3) To the extent not included in paragraph (1) or (2), the amount
of the increase in state General Fund expenditures for Medi-Cal
inpatient hospital services for the project year for project year
private DSH hospitals and nondesignated public hospitals, including
amounts expended in accordance with paragraph (1) of subdivision (c)
of Section 14166.23, that exceeds the expenditure amount for the same
purpose and the same hospitals necessary to provide the aggregate
baseline funding amounts applicable to the project determined
pursuant to Sections 14166.13 and 14166.18, and any direct grants to
designated public hospitals for services under the demonstration
project.
(4) To the extent not included in paragraph (2), federal Medicaid
funds received by the state as a result of the General Fund
expenditures described in paragraph (3).
(5) The federal Medicaid funds received by the state as a result
of federal financial participation with respect to Medi-Cal payments
for inpatient hospital services made to project year private DSH
hospitals and to nondesignated public hospitals for services rendered
during the project year, the state share of which was derived from
intergovernmental transfers or certified public expenditures of any
public entity that does not own or operate a public hospital.
(6) Federal safety net care pool funds claimed and received for
inpatient hospital services rendered under the health care coverage
initiative identified under paragraph (3) of subdivision (e) of
Section 14166.9.
(b) With respect to the 2005-06, 2006-07, and subsequent project
years, the stabilization funding determined under subdivision (a)
shall be allocated as follows:
(1) Eight million dollars ($8,000,000) shall be paid to San Mateo
Medical Center. All or a portion of this amount may be paid as
disproportionate share hospital payments in addition to the hospital'
s allocation that would otherwise be determined under Section
14166.6. The amount provided for in this paragraph shall be
disregarded in the application of the limitations described in
paragraph (3) of subdivision (a) of Section 14166.6, and in paragraph
(1) of subdivision (a) of Section 14166.7.
(2) (A) Ninety-six million two hundred twenty-eight thousand
dollars ($96,228,000) shall be allocated to designated public
hospitals to be paid in accordance with Section 14166.75.
(B) Forty-two million two hundred twenty-eight thousand dollars
($42,228,000) shall be allocated to private DSH hospitals to be paid
in accordance with Section 14166.14.
(C) Five hundred forty-four thousand dollars ($544,000) shall be
allocated to nondesignated public hospitals to be paid in accordance
with Section 14166.17.
(D) In the event that stabilization funding is less than one
hundred forty-seven million dollars ($147,000,000), the amounts
allocated to designated public hospitals, private DSH hospitals, and
nondesignated public hospitals under this paragraph shall be reduced
proportionately.
(3) An amount equal to the lesser of 10 percent of the total
amount determined under subdivision (a) or twenty-three million five
hundred thousand dollars ($23,500,000), but at least fifteen million
three hundred thousand dollars ($15,300,000), shall be made available
for additional payments to distressed hospitals that participate in
the selective provider contracting program under Article 2.6
(commencing with Section 14081), including designated public
hospitals, in amounts to be determined by the California Medical
Assistance Commission. The additional payments to designated public
hospitals shall be negotiated by the California Medical Assistance
Commission, but shall be paid by the department in the form of a
direct grant rather than as Medi-Cal payments.
(4) An amount equal to 0.64 percent of the total amount determined
under subdivision (a), to nondesignated public hospitals to be paid
in accordance with Section 14166.19.
(5) The amount remaining after subtracting the amount determined
in paragraphs (1) to (4), inclusive, shall be allocated as follows:
(A) Sixty percent to designated public hospitals to be paid in
accordance with Section 14166.75.
(B) Forty percent to project year private DSH hospitals to be paid
in accordance with Section 14166.14.
(c) By April 1 of the year following the project year for which
the payment is made, and after taking into account final amounts
otherwise paid or payable to hospitals under this article, the
director shall calculate in accordance with subdivision (a), allocate
in accordance with subdivision (b), and pay to hospitals in
accordance with Sections 14166.75, 14166.14, and 14166.19, as
applicable, the stabilization funding.
(d) For purposes of determining amounts paid or payable to
hospitals under subdivision (c), the department shall apply the
following:
(1) In determining amounts paid or payable to designated public
hospitals that are based on allowable costs incurred by the hospital,
or the governmental entity with which it is affiliated, the
following shall apply:
(A) If the final payment amount is based on the hospital's
Medicare cost report, the department shall rely on the cost report
filed with the Medicare fiscal intermediary for the project year for
which the calculation is made, reduced by a percentage that
represents the average percentage change from total reported costs to
final costs for the three most recent cost reporting periods for
which final determinations have been made, taking into account all
administrative and judicial appeals. Protested amounts shall not be
considered in determining the average percentage change unless the
same or similar costs are included in the project year cost report.
(B) If the final payment amount is based on costs not included in
subparagraph (A), the reported costs as of the date the determination
is made under subdivision (c), shall be reduced by 10 percent.
(C) In addition to adjustments required in subparagraphs (A) and
(B), the department shall adjust amounts paid or payable to
designated public hospitals by any applicable deferrals or
disallowances identified by the federal Centers for Medicare and
Medicaid Services as of the date the determination is made under
subdivision (c) not otherwise reflected in subparagraphs (A) and (B).
(2) Amounts paid or payable to project year private DSH hospitals
and nondesignated public hospitals shall be determined by the most
recently available Medi-Cal paid claims data increased by a
percentage to reflect an estimate of amounts remaining unpaid.
(e) The department shall consult with hospital representatives
regarding the appropriate calculation of stabilization funding before
stabilization funds are paid to hospitals. The calculation may be
comprised of multiple steps involving interim computations and
assumptions as may be necessary to determine the total amount of
stabilization funding under subdivision (a) and the allocations under
subdivision (b). No later than 30 days after this consultation, the
department shall establish a final determination of stabilization
funding that shall not be modified for any reason other than
mathematical errors or mathematical omissions on the part of the
department.
(f) The department shall distribute 75 percent of the estimated
stabilization funding on an interim basis throughout the project
year.
(g) The allocation and payment of stabilization funding shall not
reduce the amount otherwise paid or payable to a hospital under this
article or any other provision of law, unless the reduction is
required by the demonstration project's Special Terms and Conditions
or by federal law.
SEC. 7. Section 14166.21 of the Welfare and Institutions Code is
amended to read:
14166.21. (a) The Health Care Support Fund is hereby established
in the State Treasury. Notwithstanding Section 13340 of the
Government Code, the fund shall be continuously appropriated to the
department for the purposes specified in this article. The fund shall
include any interest that accrues on amounts in the fund.
(b) Amounts in the Health Care Support Fund shall be paid in the
following order of priority:
(1) To hospitals for services rendered to Medi-Cal beneficiaries
and the uninsured in an amount necessary to meet the aggregate
baseline funding amount, or the adjusted aggregate baseline funding
amount for project years after the 2005-06 project year, as specified
in subdivision (d) of Section 14166.5, subdivision (b) of Section
14166.13, and Section 14166.18, taking into account all other
payments to each hospital under this article, except payments made
from the Distressed Hospital Fund pursuant to Section 14166.23 and
payments made to distressed hospitals pursuant to paragraph (3) of
subdivision (b) of Section 14166.20. If the amount in the Health Care
Support Fund is inadequate to provide full aggregate baseline
funding, or adjusted aggregate baseline funding, to all designated
public hospitals, project year private DSH hospitals, and
nondesignated public hospitals, each group's payments shall be
reduced pro rata.
(2) To the extent necessary to maximize federal funding under the
demonstration project and consistent with Section 14166.22, the
department may claim safety net care pool funds based on health care
expenditures incurred by the department for uncompensated medical
care costs of medical services provided to uninsured individuals, as
approved by the federal Centers for Medicare and Medicaid Services.
(3) Stabilization funding, allocated and paid in accordance with
Sections 14166.75, 14166.14, and 14166.19, and paragraph (3) of
subdivision (b) of Section 14166.20.
(4) Any amounts remaining after final reconciliation of all
amounts due at the end of a project year shall remain available for
payments in accordance with this section in the next project year.
(c) Subdivision (b) shall not apply to federal safety net care
pool funds claimed and received for services rendered under the
health care coverage initiative identified under paragraph (2) of
subdivision (e) of Section 14166.9, which shall be paid in accordance
with Part 3.5 (commencing with Section 15900) and under paragraphs
43 and 44 of the Special Terms and Conditions for the demonstration
project.
SEC. 8. Section 14166.23 of the Welfare and Institutions Code is
amended to read:
14166.23. (a) For purposes of this section, "distressed hospitals"
are hospitals that participate in selective providers contracting
under Article 2.6 (commencing with Section 14081) and that meet all
of the following requirements, as determined by the California
Medical Assistance Commission in its discretion:
(1) The hospital serves a substantial volume of Medi-Cal patients
measured either as a percentage of the hospital's overall volume or
by the total volume of Medi-Cal services furnished by the hospital.
(2) The hospital is a critical component of the Medi-Cal program's
health care delivery system, such that the Medi-Cal health care
delivery system would be significantly disrupted if the hospital
reduced its Medi-Cal services or no longer participated in the
Medi-Cal program.
(3) The hospital is facing a significant financial hardship that
may impair its ability to continue its range of services for the
Medi-Cal program.
(b) The Distressed Hospital Fund is hereby created in the State
Treasury.
(c) Notwithstanding Section 13340 of the Government Code, the fund
shall be continuously appropriated to the department for the
purposes specified in this section.
(d) Except as otherwise limited by this section, the fund shall
consist of all of the following:
(1) The amounts transferred to the fund pursuant to subdivision
(e).
(2) Any additional amounts appropriated to the fund by the
Legislature.
(3) Any interest that accrues on amounts in the fund.
(e) The following amounts shall be transferred to the fund from
the prior supplemental funds at the beginning of each project year.
(1) Twenty percent of the amount in the prior supplemental funds
on the effective date of this article, less any and all payments for
services rendered prior to July 1, 2005, but paid after July 1, 2005.
(2) Interest that accrued on the prior supplemental funds during
the prior project year.
(f) No distributions, payments, transfers, or disbursements shall
be made from the prior supplemental funds except as set forth in this
section.
(g) Moneys in the fund shall be used as the source for the
nonfederal share of payments to hospitals under this section.
(h) Except as otherwise provided in subdivision (j), moneys shall
be applied to obtain federal financial participation to the extent
available in accordance with customary Medi-Cal accounting procedures
for purposes of payments under this section. Distributions from the
fund shall be supplemental to any other Medi-Cal reimbursement
received by the hospitals, including amounts that hospitals receive
under the selective provider contracting program, and shall not
affect provider rates paid under the selective provider contracting
program.
(i) Subject to subdivision (j), all amounts that are in the fund
shall be available for negotiation by the California Medical
Assistance Commission, along with corresponding federal financial
participation, for additional payments to distressed hospitals. These
amounts shall be paid under contracts entered into by the department
and negotiated by the California Medical Assistance Commission
pursuant to Article 2.6 (commencing with Section 14081), provided
that any amounts payable to a designated public hospital shall be
paid in the form of a direct grant of state general funds pursuant to
a contract negotiated by the California Medical Assistance
Commission. The commission shall not consider the lack of federal
financial participation in direct grants to designated public
hospitals in determining which hospital may receive funding under
this section.
(j) After April 1, 2007, and each April 1 thereafter, in the
event that funding under this article is insufficient to meet the
adjusted aggregate baseline funding amounts for a particular project
year, as determined in subdivision (d) of Section 14166.5, and in
Sections 14166.13 and 14166.18, funds under this section shall first
be available for use under contracts negotiated by the California
Medical Assistance Commission for hospitals contracting under the
selective provider contracting program under Article 2.6 (commencing
with Section 14081) in an effort to address the insufficiency, to the
extent funds under this section are available on or after April 1
for the particular project year.
(k) Any funds remaining in the fund at the end of a fiscal year
shall be carried forward for use in the following fiscal year.
SEC. 9. Section 14166.25 is added to the Welfare and Institutions
Code, to read:
14166.25. (a) The Legislature finds and declares all of the
following:
(1) In light of the closure of Los Angeles County Martin Luther
King, Jr.-Harbor Hospital, there is a need to ensure adequate funding
for continued health care services to the uninsured population of
South Los Angeles, including, but not limited to, the Cities of
Compton, Lynwood, South Gate, Huntington Park, the southern and
central portions of the Cities of Los Angeles, Inglewood, Gardena,
and surrounding unincorporated communities.
(2) The state, the County of Los Angeles, and all health care
providers in the South Los Angeles community must work together to
meet the health care needs of the community until the critical
hospital services previously provided by Los Angeles County Martin
Luther King, Jr. - Harbor Hospital can be restored at this location.
(3) The Medi-Cal Hospital/Uninsured Care Demonstration Project
provides a critical source of funding for services to low-income
communities throughout the state that are provided by California's
safety net hospital systems.
(4) The special funding provided in this section is predicated on
the express intent of the County of Los Angeles to restore hospital
services on the hospital campus, to be operated by either a private
or public entity. The county has undertaken a specific plan to do so
as quickly as possible.
(5) The Legislature anticipates that demonstration project funds
will be available to help fund the reopened hospital. The nature and
amount of that funding cannot be determined until the new structure
and operation of the hospital is known.
(6) As an interim response to the specific circumstances caused by
the closure of this hospital, and until hospital services can be
restored at this location, a special fund will be created to receive
demonstration project funding to be available to the County of Los
Angeles for expenditures to preserve health care services for the
uninsured population of South Los Angeles, as defined above.
(b) The South Los Angeles Medical Services Preservation Fund is
hereby created in the State Treasury. Notwithstanding Section 13340
of the Government Code, the fund shall be continuously appropriated
to the department for the purposes specified in this section.
(c) Subject to the conditions in this section, a maximum amount of
one hundred million dollars ($100,000,000) of the safety net care
pool funds claimed and received by the state that are based on the
certified public expenditures of the County of Los Angeles or its
designated public hospitals shall be deposited in the South Los
Angeles Medical Services Preservation Fund for each of the three
project years, 2007-08, 2008-09, and 2009-10.
(1) In the event that the director determines that any amount is
due to the County of Los Angeles under the demonstration project for
services rendered during the portion of a project year during which
Los Angeles County Martin Luther King, Jr. - Harbor Hospital was
operational, the amount deposited in the fund under this subdivision
shall be reduced by a percentage determined by reducing 100 percent
by the percentage reduction in the hospital's baseline as determined
under subdivision (c) of Section 14166.5 for that project year.
(2) If in the aggregate, the federal medical assistance percentage
of the certified public expenditures reported by the County of Los
Angeles and its designated public hospitals under Section 14166.8,
excluding those certified public expenditures reported under
paragraph (1) of subdivision (b) of Section 14166.8, in any project
year do not exceed the amounts paid or payable to the county and its
designated public hospitals in the aggregate under Section 14166.6,
excluding disproportionate share payments funded with
intergovernmental transfers, Section 14166.7, and subdivision (d) for
the same project year, then the amount deposited in the fund under
subdivision (c) shall be reduced by the amount of excess payments
over the federal medical assistance percentage of certified public
expenditures.
(d) Moneys in the South Los Angeles Medical Services Preservation
Fund shall be distributed to the County of Los Angeles in amounts
equal to the costs incurred by the county, including indirect costs
associated with adequately maintaining the hospital building so that
it can be reopened, in providing, or compensating other providers
for, health services rendered to the uninsured population of South
Los Angeles, including all of the following:
(1) Services provided in the multiservice ambulatory care center
operating on the former Los Angeles County Martin Luther King,
Jr.-Harbor Hospital campus.
(2) Services rendered to patients in beds at other designated
public hospitals operated by the County of Los Angeles that have been
opened specifically for the purpose of serving patients that would
have been served by the former Los Angeles County Martin Luther King,
Jr. - Harbor Hospital.
(3) Services rendered in the county operated health center and the
comprehensive health center formerly operated under Los Angeles
County Martin Luther King, Jr.-Harbor Hospital.
(4) Services rendered to the uninsured by other public or private
health care providers for which the County of Los Angeles has agreed
to pay under a contract with the provider as a result of the
downsizing or closure of Los Angeles County Martin Luther King,
Jr.-Harbor Hospital.
(e) As a condition for receiving distributions from the South Los
Angeles Medical Services Preservation Fund in any project year, the
County of Los Angeles shall assure the director that it will not
reduce the county's ongoing, systemwide financial contribution to the
State Department of Health Care Services during that project year
for health care services to the uninsured.
(f) No funds shall be available from the South Los Angeles Medical
Services Preservation Fund for services rendered when a hospital on
the former Los Angeles County Martin Luther King, Jr.-Harbor Hospital
campus is certified for Medi-Cal participation.
(g) If the full amount of the South Los Angeles Medical Services
Preservation Fund for any project year is not distributed to the
County of Los Angeles, based on the cost of services identified in
subdivision (d) that were rendered during that project year, any
remaining amounts shall revert to the Health Care Support
Fund established pursuant to
Section 14166.21.
(h) To the extent that the County of Los Angeles receives
distributions from the South Los Angeles Medical Services
Preservation Fund based on the cost of services rendered by county
operated providers, or based on payments made to private providers
for services rendered to the uninsured population of South Los
Angeles, the costs of the services rendered shall not be considered
for purposes of any of the following determinations with respect to
either the county or the private provider:
(1) Medi-Cal payments under the selective provider contracting
program under Article 2.6 (commencing with Section 14081), including
payments to distressed hospitals under Section 14166.23.
(2) Baseline amounts, or adjustments thereto, under Section
14166.5, 14166.13, or 14166.18.
(3) Any other payment under Medi-Cal or other health care program.
(i) This section shall be implemented only to the extent that the
director determines that it will not result in the loss of federal
funds under the demonstration project.
SEC. 10. Section 14166.25 of the Welfare and Institutions Code is
amended and renumbered to read:
14166.26. Unless this article is repealed pursuant to subdivision
(b) or (g) of Section 14166.2, this article shall become inoperative
on the date that the director executes a declaration, which shall be
retained by the director and provided to the fiscal and appropriate
policy committees of the Legislature, stating that the federal
demonstration project provided for in this article has been
terminated by the federal Centers for Medicare and Medicaid Services,
and shall, six months after the date the declaration is executed, be
repealed.