BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 1462|
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THIRD READING
Bill No: AB 1462
Author: Feuer (D)
Amended: 7/14/09 in Senate
Vote: 21
SENATE HEALTH COMMITTEE : 11-0, 6/25/09
AYES: Alquist, Strickland, Aanestad, Cedillo, Cox,
DeSaulnier, Leno, Maldonado, Negrete McLeod, Pavley, Wolk
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 77-0, 5/21/09 (Consent) - See last page
for vote
SUBJECT : Medi-Cal: inpatient hospital services
contracts
SOURCE : Cedars-Sanai Medical Center
DIGEST : This bill requires the California Medical
Assistance Commission to include reimbursement for the
costs of graduate medical education, in addition to the
factors already required, when negotiating contracts for
inpatient care or developing specifications for competitive
bidding.
ANALYSIS :
Existing law:
CONTINUED
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1. Establishes the Medi-Cal program, administered by the
Department of Health Care Services (DHCS), which
provides comprehensive health care coverage for
low-income individuals and their families; pregnant
women; elderly, blind, or disabled persons; nursing home
residents; and refugees who meet specified eligibility
criteria.
2. Requires the Governor to designate a person in his/her
office to act as a special negotiator to negotiate
rates, terms, and conditions for contracts with
hospitals for inpatient services to be rendered to
Medi-Cal Program beneficiaries.
3. Permits the special negotiator to call for bids, in lieu
of negotiations, and requires the special negotiator to
consider, when contracting, the total funds appropriated
for inpatient hospital services.
4. Requires the negotiator to take into account specified
factors in negotiating contracts or in drawing
specifications for competitive bidding.
5. Requires California Medical Assistance Commission (CMAC)
to assume the duties and powers of the special
negotiator.
6. Creates the Medi-Cal Medical Education Supplemental
Payment and the Large Teaching Emphasis Hospital and
Children's Hospital Medi-Cal Medical Education
Supplemental Payment administered by CMAC for eligible
hospitals.
7. Requires that eligible hospitals must be in the
selective provider contract program and meet other
specified criteria.
This bill requires CMAC to include reimbursement for the
costs of graduate medical education (GME), along with a
number of existing factors, when negotiating contracts for
inpatient care or developing specifications for competitive
bidding.
This bill is double-jointed to AB 366 (Ruskin).
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Background
Since 1983, through what is known as the Selective Provider
Contracting Program (SPCP), CMAC has been the state agency
responsible for negotiating contracts with hospitals on
behalf of the state for inpatient services under the
fee-for-service Medi-Cal Program. Through CMAC, the state
selectively contracts on a competitive basis with hospitals
for fee-for-service inpatient services provided to Medi-Cal
beneficiaries. According to CMAC, the competitive
contracting model has resulted in savings to the state
General Fund of over $600 million this fiscal year. CMAC
has negotiated a rate on behalf of the state with 179
hospitals as of December 1, 2008.
Existing law requires CMAC, in negotiating contracts or in
drawing specifications for competitive bidding, to take
into account an enumerated list of factors. This list
includes beneficiary access, utilization controls, the
ability to render quality services efficiently and
economically and the capacity to provide a given tertiary
service, such as specialized children's services, on a
regional basis. Additionally, CMAC is required to give
special consideration to the reimbursement issues faced by
hospitals caring for Medi-Cal beneficiaries who are
receiving treatment for acquired immunodeficiency syndrome
(AIDS). Graduate medical education is not a specific
factor for consideration.
CMAC does administer two programs that provide supplemental
payment programs to hospitals to support graduate medical
education. The purpose of such programs is to recognize
medical education costs associated with health care
services rendered to Medi-Cal beneficiaries. To be
eligible for these programs, a hospital must: be a
contract hospital under the SPCP; and be a university
teaching hospital or major (non-university) teaching
hospital, or be a large teaching-emphasis hospital, or
children's hospital and be eligible under the
Disproportionate Share Hospital program.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
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SUPPORT : (Verified 8/19/09) (Per Senate Health Cmte.
analysis)
Cedars-Sinai Medical Center (source)
California Children's Hospital Association
California Hospital Association
Lucille Packard Children's Hospital, Stanford University
Medical Center
ARGUMENTS IN SUPPORT : Cedars-Sinai Medical Center, the
bill's sponsor, states that they are one of the leading
medical centers and provide an extensive program of GME.
They note that they contract with CMAC for payment of
treatment for Medi-Cal patients, but they want to be
eligible for compensation from CMAC for the portion of its
graduate medical education expenses related to providing
Medi-Cal services. Cedars-Sinai argues that current law
limits the ability of CMAC to negotiate this amount with
Cedars-Sinai. They also point out that the programs for
supplemental payments to hospitals for GME are very
restrictive and outdated since they are based on
definitions and determinations made in 1991.
Other supporters argue that many other hospitals operate
academic teaching programs that train future physicians and
other medical professionals each year. Supporters argue
that this effort is especially important in light of the
critical workforce shortage in the health care industry.
They argue that recognizing the important role that
graduate medical education programs play in the delivery of
care to the Medi-Cal population is an important issue for
CMAC to consider.
ASSEMBLY FLOOR :
AYES: Adams, Ammiano, Anderson, Arambula, Beall, Bill
Berryhill, Tom Berryhill, Blakeslee, Block, Blumenfield,
Brownley, Buchanan, Caballero, Charles Calderon, Carter,
Chesbro, Conway, Cook, Coto, Davis, De La Torre, De Leon,
DeVore, Duvall, Emmerson, Eng, Evans, Feuer, Fletcher,
Fong, Fuller, Furutani, Gaines, Galgiani, Garrick,
Gilmore, Hagman, Hall, Harkey, Hayashi, Hernandez, Hill,
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Huber, Huffman, Jeffries, Jones, Knight, Krekorian, Lieu,
Logue, Bonnie Lowenthal, Ma, Mendoza, Miller, Monning,
Nestande, Niello, Nielsen, John A. Perez, V. Manuel
Perez, Portantino, Price, Ruskin, Salas, Silva, Skinner,
Smyth, Solorio, Audra Strickland, Swanson, Torlakson,
Torres, Torrico, Tran, Villines, Yamada, Bass
NO VOTE RECORDED: Fuentes, Nava, Saldana
CTW:DLW:do 8/19/09 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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