BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 1653|
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THIRD READING
Bill No: AB 1653
Author: Jones (D), et al
Amended: 8/17/10 in Senate
Vote: 27 - Urgency
SENATE HEALTH COMMITTEE : 6-2, 6/30/10
AYES: Alquist, Cedillo, Leno, Negrete McLeod, Pavley,
Romero
NOES: Strickland, Aanestad
NO VOTE RECORDED: Cox
SENATE APPROPRIATIONS COMMITTEE : 10-1, 8/12/10
AYES: Kehoe, Ashburn, Alquist, Corbett, Emmerson, Leno,
Price, Wolk, Wyland, Yee
NOES: Walters
ASSEMBLY FLOOR : 63-14, 6/1/10 - See last page for vote
SUBJECT : Medi-Cal: hospitals: managed health care
plans: mental
health plans
SOURCE : California Childrens Hospital Association
California Hospital Association
Daughters of Charity Health System
DIGEST : This bill amends the methodology for the
calculation, collection, and distribution of the existing
provider fee on general acute care hospitals for the 21
months spanning April 1, 2009, to December 31, 2010.
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ANALYSIS : Existing law establishes the Medi-Cal program,
administered by the State Department of Health Care
Services, under which basic health care services are
provided to qualified low-income persons. The Medi-Cal
program is, in part, governed and funded by federal
Medicaid provisions.
Existing law, subject to federal approval, requires the
department to make supplemental payments for certain
services, as specified, to private hospitals, nondesignated
public hospitals, and designated public hospitals, as
defined, for subject federal fiscal years, as defined.
This bill makes various changes to the formulas used to
determine the amount of supplemental payments made to
private and designated public hospitals. This bill expands
the definition of a nondesignated public hospital.
Existing law proscribes certain deadlines by which the
above-described supplemental payments are required to be
made to hospitals depending upon the federal fiscal year
for which the payment is to be made.
This bill requires the department to make to hospitals the
supplemental payments for the 2008-09, 2009-10, and 2010-11
federal fiscal years in 7 payments, as specified.
Existing law requires the department to make enhanced
payments to managed health care plans, as defined, and
requires the state to make enhanced payments to mental
health plans, as defined, for each subject federal fiscal
year, as specified. Existing law requires the managed
health care plans and mental health plans that received
enhanced payments to make supplemental payments to subject
hospitals, as defined, pursuant to specified formulas.
This bill, instead, refers to the payments made by the
department to the managed health care plans and mental
health plans as increased capitation payments. The bill
would require the department to determine the amount of
increased capitation payments for each Medi-Cal managed
care plan and to consider certain factors in making that
determination.
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The bill prohibits the amount of increased capitation
payments to each Medi-Cal managed care health plan from
exceeding an amount that results in capitation payments
that are certified by the state's actuary as meeting
federal requirements. The bill would require each managed
health care plan to expend 100% of any increased capitation
payments it receives from the department on hospital
services.
The bill provides that the quality assurance fee shall not
be imposed on a converted hospital, as defined, for a
subject federal fiscal year in which the hospital becomes a
converted hospital or for subsequent federal fiscal years.
Prior to federal approval of implementation of the
above-described provisions, existing law requires each
general acute care hospital that is not an exempt facility
to certify to the best of its knowledge that the hospital
is prepared to pay the aggregate quality assurance fee, as
defined.
This bill deletes the above-described certification
requirement. The bill would require hospitals to pay the
quality assurance fee in 7 equal installments, as specified
and subject to federal approval of the above-described
provisions.
Existing law authorizes the department, as necessary to
receive federal approval for the implementation of the
above-described provisions, to increase or decrease certain
amounts used to calculate the quality assurance fee.
This bill deletes the above-described authorization.
Existing law, effective January 1, 2011, and subject to the
authority of a subsequent statute enacted to take effect on
or after January 1, 2011, that meets certain conditions,
imposes a quality assurance fee in a manner necessary to
obtain federal Medicaid matching funds that shall be due
and payable to the department by each general acute care
hospital at specified rates for the purpose of making
Medi-Cal payments to hospitals.
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This bill, effective January 1, 2011, imposes on each
general acute care hospital that is not an exempt facility,
as defined, a quality assurance fee, as a condition of
participation in state-funded health insurance programs,
other than the Medi-Cal program. This bill would require
the quality assurance fee to be computed starting on the
effective date of the bill and continue through and
including December 31, 2010. The bill would require the
proceeds from the fee to be used for the same purposes as
the above-described quality assurance fee that is imposed
on hospitals through and including December 31, 2010. The
bill would provide that the method of calculation and
collection of the quality assurance fee is to be determined
in an unspecified manner.
This bill requires the director to seek federal approvals
or waivers as may be necessary to implement the
above-described provisions and to obtain federal financial
participation to the maximum extent possible with the
proceeds from the quality assurance fee paid pursuant to
those provisions.
This bill requires the fee payments and any related federal
reimbursement under the above-described provisions that
become effective January 1, 2011, to be deposited in the
Hospital Quality Assurance Revenue Fund. The bill would
continuously appropriate these moneys in an unspecified
manner.
FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
Fiscal Impact (in thousands)
Major Provisions 2010-11 2011-12
2012-13 Fund
Fee revenue prior to ($3,081,000) $0
$0Special*
December 31, 2010
Supplemental payments $2,000,000 $0
$0Special/**
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to hospitals prior to $3,215,000
$0$0Federal
December 31, 2010
Grant to DPHs prior $516,000 $0
$0Special*
to December 31, 2010
Children's coverage prior $560,000 $0
$0Special***
to December 31, 2010 $560,000 - $1,040,000
$0$0Federal
QAF revenue January 1, (likely
$500 million - $1 billion)
Special*
2011, to June 30, 2011
Supplemental payments likely
$500 million - $1.5 billion
Special/**
to hospitals January 1, 2011, Federal
through June 30, 2011-includes
managed care, DPH payments,
children's coverage
DHCS QAF start-up and
likely hundreds of thousands of dollars
General/****
administration 1/1/11 tocommencing upon the passage of this
bill Federal
6/30/11
*Hospital Quality Assurance Revenue Fund (Hospital QA
Revenue Fund)
**Approximately 50 percent federal funds, 50 percent
Hospital QA Revenue Fund; significant General Fund cost
pressure upon the expiration of the QAF
***35-50 percent Hospital QA Revenue Fund, 50-65 percent
federal funds
****50 percent General Fund, 50 percent federal funds
SUPPORT : (Verified 8/17/10)
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California Children's Hospital Association (co-source)
California Hospital Association (co-source)
Daughters of Charity Health System (co-source)
Adventist Health
Alliance of Catholic Health Care
American Federation of State, County and Municipal
Employees
County of Los Angeles Board of Supervisors
County of San Bernardino Board of Supervisors
Health Access
Loma Linda University
Private Essential Access Community Hospitals, Inc. (PEACH)
Service Employees International Union
ARGUMENTS IN SUPPORT : According to the California
Hospital Association, California Children's Hospital
Association and Daughters of Charity, hospitals in
California are under serious financial pressures as a
result of the traditional low Medi-Cal reimbursement rate
in California, recent reductions, the increase in the
number of uninsured and the economic downturn. Supporters
state that this bill would extend the Medi-Cal hospital
provider fee to take maximum advantage of an extension for
the enhanced federal match for an additional six months, if
passed by Congress. The supporters note that this bill
could provide an additional $160 million to the state as
well.
ASSEMBLY FLOOR :
AYES: Adams, Ammiano, Arambula, Bass, Beall, Bill
Berryhill, Block, Blumenfield, Bradford, Brownley,
Buchanan, Caballero, Charles Calderon, Carter, Chesbro,
Conway, Cook, Coto, Davis, De La Torre, De Leon,
Emmerson, Eng, Evans, Feuer, Fletcher, Fong, Fuentes,
Fuller, Furutani, Galgiani, Gilmore, Hall, Hayashi,
Hernandez, Hill, Huber, Huffman, Jones, Lieu, Bonnie
Lowenthal, Ma, Mendoza, Monning, Nava, Nestande, Niello,
Nielsen, V. Manuel Perez, Portantino, Ruskin, Salas,
Saldana, Skinner, Smyth, Solorio, Swanson, Torlakson,
Torres, Torrico, Villines, Yamada, John A. Perez
NOES: Anderson, Blakeslee, DeVore, Gaines, Garrick, Hagman,
Harkey, Jeffries, Knight, Logue, Miller, Norby, Silva,
Tran
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NO VOTE RECORDED: Tom Berryhill, Audra Strickland, Vacancy
CTW:RJG:nl 8/18/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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