BILL ANALYSIS
AB 1872
Page 1
Date of Hearing: March 23, 2010
ASSEMBLY COMMITTEE ON HEALTH
William W. Monning, Chair
AB 1872 (Galgiani) - As Introduced: February 16, 2010
SUBJECT : Health care programs: provider reimbursement rates.
SUMMARY : Repeals the January 1, 2011 sunset on the requirement
that hospital inpatient payment rates for the California
Children's Services Program (CCS Program), the Genetically
Handicapped Persons Program (GHPP), the Breast and Cervical
Cancer Early Detection Program (BCCEDP), the State-Only Family
Planning Program (State-Only FPP) and the Family Planning,
Access, Care, and Treatment (Family PACT) Waiver Program be 90%
of the Medi-Cal hospital interim rates of payment, as developed
by the Department of Health Care Services (DHCS) and repeals the
requirement that, effective January 1, 2011, the rates of
payment for non Medi-Cal patients be identical to payment rates
for the same service performed by the same provider type under
the Medi-Cal Program.
EXISTING LAW :
1)Requires provider payment rates for services rendered in CCS
Program, GHPP, BCCEDP, State-Only FPP, and Family PACT to be
identical to the rates of payment for the same service
performed by the same provider type pursuant to the Medi-Cal
Program.
2)Establishes an exception for hospital inpatient rates that
requires the rate to be 90% of the Medi-Cal hospital interim
rates of payment, as developed by DHCS and sunsets that
exception on January 1, 2011.
3)Authorizes services provided under the programs in 1) and 2)
above to be reimbursed at rates greater than the Medi-Cal rate
that would otherwise be applicable if those rates are
increased by the DHCS Director in regulations.
FISCAL EFFECT : This bill has not been analyzed by a fiscal
committee.
COMMENTS :
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1)PURPOSE OF THIS BILL . This bill is sponsored by the
California Children's Hospital Association (CCHA) to make
permanent a delay in the requirement that hospital inpatient
rates in the CCS Program and GHPP be reimbursed at their lower
California Medical Assistance Commission (CMAC) Medi-Cal rate.
The author argues hospitals such as childrens' hospitals
treat a disproportionate number of low-income patients;
including CCS Program patients and cannot absorb any
additional reimbursement reductions without seriously
compromising patent access.
2)BACKGROUND . This bill effectively only relates to inpatient
reimbursement in the CCS Program and GHPP for non-Medi-Cal
individuals enrolled in those programs because the other
programs (BCCEDP, State-Only FFP, and Family PACT) do not
reimburse for inpatient services.
The CCS Program provides diagnostic and treatment services,
medical case management, and medical and occupational therapy
services to eligible children and young adults less than 21
years of age. Eligibility includes diagnosis of specified
medical conditions such as cancer, congenital heart disease,
and sickle cell anemia. Children receive services in one of
three enrollment pathways: a) CCS-Medi-Cal, in which 131,730
children are estimated to be enrolled in 2009-10; b)
CCS-Healthy Families Program (HFP), in which 26,446 children
are estimated to be enrolled in 2009-10; and, c) CCS-only, in
which 18,459 children are estimated to be enrolled in 2009-10.
This bill affects inpatient reimbursement rates for CCS-HFP
and CCS-only children.
GHPP provides medical care to individuals with genetically
handicapping conditions, including cystic fibrosis,
hemophilia, sickle cell disease, Huntington's disease,
Friedreich's Ataxia, and certain hereditary metabolic
disorders. Individuals receive services in one of two
enrollment pathways: a) GHPP-Medi-Cal, in which 334
individuals are estimated to be enrolled in 2009-10; and, b)
GHPP-only, in which 1,400 individuals are estimated to be
enrolled in 2009-10. This bill affects inpatient
reimbursement rates for GHPP-only individuals.
3)MEDI-CAL HOSPITAL REIMBURSEMENT . CMAC is a state commission
established to negotiate Medi-Cal contracts with hospitals on
behalf of the state. Hospitals that treat Medi-Cal
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fee-for-service beneficiaries receive reimbursement either by
contracting with the state through CMAC, or billing for
services provided. CMAC rates are confidential for four
years. When hospitals do not contract with CMAC (referred to
as non-contract hospitals), they are initially paid an interim
rate. Hospitals are then required to submit a cost report
within five months of the close of their fiscal period, and
DHCS reviews each hospital's cost report and prepares a
tentative settlement, which is a determination of the
allowable reimbursable reported costs for a hospital's fiscal
period. DHCS compares what a hospital was paid in interim
payments, to the hospital's allowable reimbursable reported
costs. The difference may result in either an underpayment
that is paid to the hospital or an overpayment that is
recouped from the hospital.
4) CCS AND GHPP HOSPITAL REIMBURSEMT RATES . Under current law
(until January 1, 2011), hospital inpatient rates of payment
for non-Medi-Cal patients in the CCS Program and GHPP are
required to be 90% of the Medi-Cal hospital interim rate of
payment.
According to the sponsors, in 2008, a legal review by DHCS
brought into question the methodology for reimbursing
hospitals. During budget discussions, the DHCS practice of
reimbursing hospitals at the interim rate for individuals in
non-Medi-Cal CCS and GHPP appeared to be at odds with what was
required under law, that the payment rate is to be the same as
the provider's Medi-Cal rate. Instead, hospitals providing
services to children enrolled in the CCS Program and GHPP who
were not enrolled in Medi-Cal were being reimbursed at their
interim Medi-Cal rate, a higher rate. In addition, DHCS was
planning to recoup payments above the CMAC rate for each
hospital, possible tens of millions of dollars.
AB 2474 (Galgiani), Chapter 496, Statutes of 2008, was enacted
as an urgency measure to clarify that the hospital inpatient
rate of payment is 90% of the Medi-Cal hospital interim rates
of payment. AB 2474 also delayed until January 1, 2010 the
requirement that rates in the CCS Program and GHPP inpatient
hospital rates be reimbursed at their lower Medi-Cal CMAC
rate. In addition, AB 2474 makes legislative findings to
prevent a recoupment of previous year hospital inpatient
overpayments in the CCS Program and GHPP by stating that it
was never the Legislature's intent in enacting the 2002 health
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budget trailer bill that services to non-Medi-Cal children
enrolled in the CCS Program and GHPP be reimbursed at an
amount less than the Medi-Cal interim rate. The intent
language in AB 2474 was to protect hospitals that provide care
in the CCS Program and GHPP from being subject to recoupment
for overpayments, and to protect the state from being
obligated to reimburse the federal government for overpayments
in the HFP, which is generally funded 65% by federal funds.
AB 896 (Galgiani), Chapter 260, Statutes of 2009, extends the
reimbursement rate until January 1, 2011.
CCHA indicates that its members' non-contract Medi-Cal rates
are higher than their Medi-Cal contract rates. Because
children's hospitals are CMAC-contracting hospitals, their
payment rates for state-only and CCS-HFP children will be,
effective January 1, 2010, their lower CMAC Medi-Cal contract
rate, rather than their higher Medi-Cal interim rate.
5)SUPPORT . CCHA writes as sponsor that this bill clarifies the
legislative intent regarding hospital inpatient reimbursement
for non-Medi-Cal CCS patients. CCHA reports that currently,
the CCHA hospitals are operating with a -1.6% operating margin
and this will only worsen with increased Medi-Cal enrollment
and decreased non-operating revenues due to the continued
economic downturn. They go on to argue that the impact of
reducing hospital reimbursement for non-Medi-Cal CCS Program
patients to the individual hospital CMAC rate would be
significant for California's children's hospitals.
6)POLICY QUESTIONS .
a) Postponement of Payment Reduction Made Permanent . AB
2474 of 2008 delays until January 1, 2010, the requirement
that inpatient rates in the CCS Program and GHPP be
reimbursed at their Medi-Cal rate (their lower CMAC rate).
AB 896 (Galgiani), of 2009 proposed to also repeal this
requirement, but was amended to extend the delay until
January 1, 2011. This bill addresses an important issue in
that provider payment rates in public programs are a key
factor in beneficiaries' ability to access program
services. However, given the state's current fiscal
constraints and potential cuts to existing health programs,
should a temporary delay in a payment reduction be made
permanent?
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b) CCS Program and GHPP Reimbursement Different Depending
Upon Underlying Eligibility . In the health budget trailer
bill of 2002 (AB 434 (Committee on Budget), Chapter 1161,
Statutes of 2002), the Legislature required that provider
rates of payment for services rendered in CCS Program,
GHPP, BCCEDP, State-Only FPP, and Family PACT be identical
to the rates of payment for the same service performed by
the same provider type in the Medi-Cal Program. As
described above, this requirement was not implemented for
non-Medi-Cal inpatient services in the CCS Program and
GHPP.
CCHA argues the reason a higher rate is necessary for
non-Medi-Cal CCS is that when hospitals negotiate with
CMAC, they are considering the entire Medi-Cal patient
population they serve, which includes both the high-cost
services provided by the hospital along with the less
intensive, more moderate-cost services. However, CCHA
argues the services provided to the non-Medi-Cal CCS
Program population are all associated with the CCS
condition, so the services are primarily all high-cost.
Should inpatient reimbursement be different depending upon
whether the CCS Program or GHPP-eligible individual is
enrolled in Medi-Cal versus GHPP-only, CCS-only or CCS-HFP?
7)PREVIOUS LEGISLATION .
a) AB 896 . Delays to January 1, 2011 the requirement that
non-Medi-Cal hospital inpatient rates in the CCS Program,
GHPP, BCCEDP, and Family PACT Waiver Program be identical
to payment rates for the same service performed by the same
provider type under the Medi-Cal Program and clarifies that
the rate be 90% of the Medi-Cal hospital interim rate.
b) AB 2474 . Delays to January 1, 2010 the requirement that
non-Medi-Cal hospital inpatient rates in the CCS Program,
GHPP, BCCEDP, and Family PACT Waiver Program be identical
to payment rates for the same service performed by the same
provider type under the Medi-Cal program and clarifies that
the rate be 90% of the Medi-Cal hospital interim rate.
c) AB 434 . Requires that provider rates of payment for
services rendered in CCS Program, GHPP, BCCEDP, State-Only
FPP, and Family PACT be identical to the rates of payment
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for the same service performed by the same provider type in
the Medi-Cal program. As described above, this requirement
was not implemented for non-Medi-Cal inpatient services in
the CCS Program and GHPP
REGISTERED SUPPORT / OPPOSITION :
Support
California Children's Hospital Association (sponsor)
California Hospital Association
Opposition
None on file.
Analysis Prepared by : Marjorie Swartz / HEALTH / (916)
319-2097