BILL ANALYSIS
AB 1864
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Date of Hearing: April 21, 2010
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 1864 (Strickland) - As Amended: April 6, 2010
Policy Committee: Health Vote:17-1
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill increases the cap on a continuous appropriation of the
Medi-Cal Providers Interim Payment Fund (MPIPF) from $1 billion
GF to $2.5 billion GF. The MPIPF was established by AB 561
(Scott), Chapter 993, Statutes of 1998 to provide continued
payments to Medi-Cal providers in the absence of an enacted
state budget.
FISCAL EFFECT
1)An annual increased continuous appropriation of Medi-Cal funds
of $1.5 billion GF in years when the budget is not enacted by
July 1.
2)Potential GF revenue losses of $5.6 million from forgone
Pooled Money Investment Account (PMIA) interest earnings. This
estimate assumes a three percent annual yield on PMIA
investments and disbursement of an additional $1.5 billion
during a two-month long budget delay.
3)During periods in which the state is facing particularly
severe cash-flow shortfalls, this bill could significantly
curtail short-term cash-management options. This would occur
because the state would be precluded from deferring up to $1.5
billion in GF expenditures during a budget delay.
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
AB 1864
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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 is not enacted by July 1. The author and sponsor
indicate many facilities that may benefit from this bill have
shallow reserves and are unable to access emergency,
short-term loans in today's tight credit market. In addition,
because CAHF member facilities are subject to stringent state
and federal law under Medi-Cal and Medicare, nursing homes are
unable to impose immediate cost-cutting moves related to
payroll or services.
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
therapists, podiatrists, pharmacies, and psychologists.
Providers who draw on the MPIPF include SNFs, inpatient and
outpatient community hospitals, clinics, and federally
qualified health centers, adult day health centers, blood
banks, clinical labs, optical labs, home health agencies, and
managed care plan.
3)Related Legislation . AB 1699 (Hernandez), also being heard in
this committee today, establishes a continuous appropriation
to pay state workers during a time when the state budget is
not enacted by July 1.
Numerous legislative efforts to establish or expand continuous
appropriations in Medi-Cal have been pursued in recent years.
Most recently, AB 367 (Galgiani) in 2009, AB 308 (Galgiani) in
2008, AB 237 (Strickland) in 2007, and AB 119 (Strickland)
addressed increases in the continuous appropriation of MPIPF.
a) AB 367 was held on the Suspense File of this committee.
b) AB 308 was never heard in the Senate Health Committee.
AB 308 did not address MPIPF when it was in the Assembly.
c) AB 237 was held on the Suspense File of this committee.
d) AB 119 was held on the Suspense File of the Senate
Appropriations Committee. AB 119 did not address MPIPF when
it was in the Assembly.
Analysis Prepared by : Mary Ader / APPR. / (916) 319-2081