BILL ANALYSIS
AB 1653
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 1653 (Jones)
As Amended August 27, 2010
2/3. Urgency
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|ASSEMBLY: | |(June 1, 2010) |SENATE: |31-2 |(August |
| | | | | |27,2010) |
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(vote not relevant)
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|COMMITTEE VOTE: |16-0 |(August 30, 2010) |RECOMMENDATION: |concur |
| | | | | |
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Original Committee Reference: HEALTH
SUMMARY . Revises the Medi-Cal hospital provider fee and
supplemental payments enacted by
AB 1383 (Jones), Chapter 627, Statutes of 2009.
The Senate amendments delete the Assembly version of this bill, and
instead:
1)Reduce the annualized amount of the Medi-Cal hospital provider
fee revenue from $ 2.1 billion to $1.8 billion.
2)Revise the per diem fee rate to be paid by hospitals as follows:
a) Reduce the non-Medi-Cal managed care per day fee from
$27.25 to $22.50;
b) Reduce the Medi-Cal inpatient per day fee from $293.00 to $
232.00; and,
c) Reduce the non-Medi-Cal fee-for-service per diem fee from
$233.66 to $215.00.
3)Add a category that applies to a prepaid health plan hospital, as
defined, and establish a separate fee applicable to these
hospitals as follows:
a) A per diem fee on non-Medi-Cal managed care days of $12.60;
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and,
b) A per diem fee on Medi-Cal managed care days of $129.92
4)Revise the supplemental payments to private hospitals as follows:
a) Reduce the amount paid for inpatient days from $647.70 to
$640.46; and,
b) Revise the criteria for eligibility to receive supplemental
payments for high acuity and subacute inpatient days.
5)Revise the methodology for payment to Medi-Cal managed care
plans, by deleting the specific calculation methodology and
instead require the Department of Health Care Services (DHCS) to
determine the increase in capitation payments by considering
specified factors not to exceed an amount that is certified by
the state's actuary as meeting federal requirements and revise
the methodology by which the plans are to calculate the amount of
the increased capitation for hospital services.
6)Reduce the aggregate amount of annualized increased managed care
capitation payments from $1.5 million to $730 million.
7)Delete the methodology for calculating increased capitation
payments to mental health managed care plans and instead require
DHCS to make increased payments based on specified factors.
8)Delete the authority to allow the mental plans to receive an
administrative fee, delete the requirement that DHCS provide the
mental health plan with individual hospital payment amounts and
revise the timeframe for payments from the plan to hospitals.
9)Revise the definition of a converted and nondesignated public
hospital (district hospital) and require DHCS to seek approval to
make payments to a hospital that has undergone a change in
ownership status, and is also a district hospital, during the
period that the hospital provider fee is in effect. Require DHCS
seek federal approval for the overall implementation before
requesting a change for converted hospitals.
10)Establish a mechanism for the designated public hospitals
(county and University of California (UC)) to use certified
public expenditures (CPEs) to match excess federal funds
available under the current Section 1115 Medical
Hospital/Uninsured Care Demonstration Waiver.
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11)Reduce the amount of the grants to designated public hospitals
from $310 million to $295 million on an annual basis and provide
an alternative mechanism to allow up to $420 million total to be
retained by the state if an equal amount can be obtained by the
designated public hospitals as federal matching funds, using
CPEs, under the waiver.
12)Revise the implementation dates and effective dates of the
hospital provider fee and payments and authorize additional
flexibility at the discretion of DHCS to allow for additional
federal requirements or directions from the federal Centers for
Medicare and Medicaid Services (CMS).
13)Revise the timetable for DHCS to collect the fees and the
schedule for making supplemental payments to private and
nondesignated public hospitals, grants to public hospitals,
increased capitation payments to Medi-Cal managed care plans and
other payments and deductions and authorize additional
modifications as necessary.
14)Delete the requirement that a hospital is 60 days past due in
its payment of assessed fees prior to DHCS withholding funds and
replace with a one-day past due requirement.
15)Modify the provisions that create a contractually enforceable
promise to create an exception for revisions made by this bill.
16)Delete the authority of DHCS to make specified modifications in
the fee.
17)Allow for implementation based on receipt of a letter from CMS
indicating likely federal approval as specified and authorizes
the Director of DHCS to have broad collection authority pending
final approval.
18)Allow pro rata fee collection, quarterly deductions, and
payments based on accumulated amounts as specified.
19)Provide for refund and recoupment of all funds if federal
approval is denied.
20)Provide that if federal approval, as specified, is not obtained
by December 1, 2010 the statutes creating the hospital provider
fee and supplemental payments become inoperative.
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21)Make other technical and clarifying changes.
AS PASSED BY THE ASSEMBLY , this bill established a new Medi-Cal
hospital provider fee as specified on private general acute care
hospitals, as a condition of participation in state funded health
insurance programs other than the Medi-Cal Program, effective
January 1, 2011 until June 30, 2011.
FISCAL EFFECT : 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/**
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, 2011 (likely $500 million - $1
billion) Special*
to June 30, 2011
Supplemental payments likely $500 million - $1.5
billionSpecial/**
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
dollarsGeneral/****
administration 1/1/11 to commencing upon the passage of this
billFederal
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6/30/11
*Hospital Quality Assurance Revenue Fund (Hospital QA Revenue Fund)
**Approximately 50% federal funds, 50% Hospital QA Revenue Fund;
significant General Fund cost pressure upon the expiration of the
QAF
***35-50% Hospital QA Revenue Fund, 50 - 65% federal funds
****50% General Fund, 505 federal funds
This fiscal does not reflect the amendments that authorize the
state to retain up to $420 million from the grants to public
hospitals and establish a mechanism to allow public hospitals to
use certified CPEs to match an equivalent amount of federal funds
under the current waiver.
COMMENTS : According to the author, this bill is intended to make
the necessary revisions in the hospital provider fee that was
enacted by AB 1383 in order to obtain the approval of CMS.
Implementation of AB 1383 was dependent on this approval through a
State Plan Amendment (SPA). The SPA was first submitted in June
2009. Since the passage of AB 1383 there have been significant
discussions between the administration and CMS. These culminated
in CMS sending DHCS a letter on June 16, 2010 stating that CMS did
not believe the fee and payments proposed in AB 1383 met federal
requirements. CMS made extensive comments, has requested
additional information and suggested modifications to address the
specific concerns raised, as well as suggestions as to how to
develop a fee that meets federal law. This bill reflects the CMS
requested modifications necessary to obtain federal approval. The
delay in obtaining federal approval has also necessitated a
revision of the collection and payment timeframes.
This bill also adds authorization for the use of CPEs to draw down
federal funding. The current hospital/uninsured care waiver
included the receipt of $360 million in federal funds, over two
years, conditioned on the expansion of Medi-Cal Managed Care
through "mandatory" enrollment of seniors and persons with
disabilities. This expansion was not implemented and the $360
million was not provided to California. The July 2009 budget
assumed that California would obtain these federal funds pending
discussions with CMS.
DHCS has reached a tentative agreement to obtain the $360 million
in federal funding plus an additional $423.8 million in federal
funding to reflect the enhanced Federal Medical Assistance
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Percentage available for Medi-Cal under the American Recovery and
Reinvestment Act. The draw down of this additional federal funding
requires nonfederal matching funds.
Due to the structure of the current waiver, including the fixed
amount of the Safety Net Care Pool (SNCP) funding, not all of the
available CPE's are being used to match federal funds. Therefore,
these excess CPEs can be used to draw down this additional federal
funding.
This bill allows the state to retain up to $420 million of the
federal funding that was previously designated as grants to public
and UC hospitals from the hospital provider fee revenues. This
bill establishes an alternate mechanism for the hospitals to claim
an equal amount of federal funds from the SNCP, in effect allowing
a swap of funds between the state and the designated public
hospitals. It also includes protections to ensure that the swap
does not jeopardize other funding for these hospitals.
This bill was substantially amended in the Senate and the
Assembly-approved version of this bill was deleted. This bill, as
amended in the Senate, is inconsistent with Assembly actions and
the provisions of this bill, as amended in the Senate, have not
been heard in an Assembly policy committee.
Analysis Prepared by : Marjorie Swartz / HEALTH / (916) 319-2097
FN: 0006841