BILL ANALYSIS
AB 367
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Date of Hearing: May 13, 2009
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Kevin De Leon, Chair
AB 367 (Galgiani) - As Introduced: February 24, 2009
Policy Committee: Health Vote:
17-0
Urgency: Yes State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill deletes a current law cap on a $2 billion (50% GF)
continuous appropriation of the Medi-Cal Providers Interim
Payment Fund (MPIF) established by AB 561 (Scott), Chapter 993,
Statutes of 1998. The MPIF funds are available to Medi-Cal
providers in the absence of an enacted state budget.
This bill also deletes the current law authority of the
California Department of Health Care Services (DHCS) to impose a
one-month cash delay on Medi-Cal provider payments.
FISCAL EFFECT
1)An annual increased continuous appropriation of Medi-Cal funds
of more than $2 billion (50% GF). Recent versions of bills
addressing the MPIF have proposed doubling the current cap to
add another $2 billion (50% GF) to the fund. AB 367, which
deletes the MPIF cap, could have an ever greater fiscal
impact, depending on the length of the budget delay and the
payment needs of providers during the delay.
2)Potential GF revenue losses of more than $2 million from
forgone Pooled Money Investment Account (PMIA) interest
earnings. This estimate assumes a five percent annual yield on
PMIA investments and disbursement of an additional $500
million during a month long budget delay.
3)This bill eliminates DHCS authority established in the 2009-10
budget act to delay one month of payments to Medi-Cal
institutional providers and managed care plans during any
month prior to June 2009. According to estimates, a delay of
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$440 million GF was planned to reduce California's cash needs
prior to the receipt of April tax revenues. However, the
delay did not occur because cash receipts improved enough to
reduce the scope of the delay.
4)This bill and its urgency clause would have minimal impact on
the budget year. Due to recent budget actions, California
enacted a state budget for 2009-10. In addition, and due to
the federal American Recovery and Reinvestment Act (ARRA),
many Medi-Cal providers will be held harmless with respect to
non-payment, late payment, or cash deferrals due to ARRA
prompt pay requirements and related to California's enhanced
Federal Medical Assistance Percentage (FMAP). California, due
to enhanced FMAP, is currently enjoying a 12% federal funding
participation (FFP) increase in addition to the customary 50%
FFP until December 2010.
COMMENTS
1)Purpose . This bill is sponsored by the California Association
of Health Facilities (CAHF). CAHF represents long-term care
providers such as skilled nursing facilities (SNFs) and
intermediate care facilities (ICFs) who receive Medi-Cal
payments for the care of elderly and disabled patients. This
bill increases the amount of emergency funding available to a
range of Medi-Cal providers during months when the state
budget passage is delayed. This bill has been proposed to
address the financial predicament of Medi-Cal providers in the
days and months following the failure of a budget being signed
by the start of the fiscal year.
According to the author and sponsor, many CAHF member
facilities are still recovering from the lack of Medi-Cal
payments during the unprecedented 2008 budget impasse and are
unable to cope with another cash flow interruption. CAHF
indicates member facilities have few reserves and are unable
to secure short-term loans in the current tight credit market.
This bill provides a more robust statutory emergency fund to
address the funding predicament of providers.
2)Medi-Cal Payments in the Absence of a State Budget . Federal
laws and regulations require certain providers to be paid in
the event of a late state budget, including most
non-institutional providers such as physicians, optometrists,
physician groups, occupational therapists, physical
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therapists, podiatrists, pharmacies, and psychologists.
Providers who draw on the MPIF include SNFs, inpatient and
outpatient community hospitals, clinics, and federally
qualified health center, adult day health centers, blood
banks, clinical labs, optical labs, home health agencies, and
managed care plan.
Data for the 30 years since 1977-78 indicate the state budget
has passed prior to July 1st, 30% of the time. For the four
most recent years, the continuous appropriation addressed by
this bill has had remaining MPIF balances (all funds) of $886
million, $1.2 billion, $1.4 billion and $2 billion,
respectively, by the time the budget has passed. Such
significant balances indicate the proposed removal of the
current cap on the $2 billion appropriation may not be
justified.
3)Related Legislation . Numerous legislative efforts to establish
or expand continuous appropriations in Medi-Cal have been
pursued in recent years. Most recently, AB 308 (Galgiani) in
2008 and AB 237 (Strickland) in 2007 addressed MPIF. AB 308
was never heard in Assembly Health Committee and AB 237 was
held on the Suspense File of this committee.
Analysis Prepared by : Mary Ader / APPR. / (916) 319-2081