BILL ANALYSIS
AB 342
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Date of Hearing: May 6, 2009
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Kevin De Leon, Chair
AB 342 (Bass) - As Amended: April 13, 2009
Policy Committee: Health Vote:18-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill requires the California Department of Health Care
Services (DHCS) to establish a new Medi-Cal hospital financing
waiver, under Section 1115 of the federal Social Security Act.
This new waiver will replace hospital financing provisions
established by SB 1100 (Perata), Chapter 560, Statutes of 2005.
Specifically, this bill:
1)Requires DHCS to submit a waiver application to the federal
Centers for Medicare and Medicaid Services (CMS). Establishes
the requirements of the waiver to:
a) Strengthen California's health care safety net
b) Maximize opportunities to expand coverage to the
uninsured
c) Increase federal financial participation
d) Promote effective use of state and local funds
e) Improve health outcomes
2)Requires DHCS to consult with the Legislature and stakeholders
and to submit the waiver to CMS to allow for approval by
September 1, 2010.
FISCAL EFFECT
Unknown staffing costs, unlikely less than $50,000 to DHCS to
consult with the Legislature and stakeholders, establish
parameters of the new waiver, and garner final CMS approval.
COMMENTS
1)Rationale . This bill requires DHCS to submit an application to
AB 342
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CMS to renew California's hospital financing waiver
established by SB 1100. In the current session, SB 208
(Steinberg) is similar to AB 342 to allow for substantial
changes in hospital financing under the new waiver agreement
with the new federal administration.
2)Current Medi-Cal Hospital Financing Waiver . In 2005, a
California waiver agreement with the federal government
restructured the way Medi-Cal funding is used to fund
inpatient hospital services. SB 1100 implemented the related
waiver changes to increase overall funding levels while
ensuring that no hospital lost funding as a result of the
waiver. The waiver also sought to greatly reduce the use of
intergovernmental transfers (IGTs), which resulted in
"recycling", or establishing IGTs for the purposes of reducing
or eliminating state or local contributions used to draw down
federal funding. Annual funding to approximately 100 private
not-for-profit hospitals participating in the waiver and
caring for low-income and indigent patients is approximately
$2 billion. Annual funding to 22 public hospitals statewide
under the waiver totals $2.3 billion.
3)Federal Section 1115 Waivers . California's current and future
hospital waiver will be negotiated with the federal government
per requirements of Section 1115 of the federal Social
Security Act. Section 1115 provides broad authority to
authorize experimental, pilot, or demonstration projects to
allow states to expand eligibility to individuals not
otherwise eligible under the Medicaid program, provide
services that are not typically covered, or use innovative
service delivery systems. Section 1115 waiver projects are
approved for a five-year period and must be budget neutral
over the life of the project. Demonstrated cost neutrality
means states must show the federal government no more will be
spent on demonstration projects than would be spent under
traditional programming.
Analysis Prepared by : Mary Ader / APPR. / (916) 319-2081