BILL ANALYSIS
AB 1872
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Date of Hearing: April 21, 2010
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 1872 (Galgiani) - As Amended: April 6, 2010
Policy Committee: Health Vote:19-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill extends the sunset contained in AB 896 (Galgiani),
Chapter 260, Statutes of 2009 from January 1, 2011 until January
1, 2014. This bill addresses specific Medi-Cal hospital rates
and holds hospitals providing specialized high-cost inpatient
care to children harmless with respect to recent administrative
interpretation of Medi-Cal rate reductions. Specifically, this
bill:
1)Applies to hospital in-patient rates paid for services in two
programs:
a) California Children's Services (CCS) Program (state-only
and Healthy Families CCS) and
b) Genetically Handicapped Persons Program (GHPP).
2)Requires hospital in-patient rates paid under these programs
to be 90 % of the interim, cost-based Medi-Cal rate rather the
lower California Medical Assistance Commission (CMAC) rate.
The Department of Health Care Services (DHCS) was proceeding
to impose the CMAC rate several years ago under a new
statutory interpretation of a 2002 trailer bill unrelated to
the CCS program.
3)Contains a recent amendment for the rates in this bill to be
revisited in the context of federal health reform, if
appropriate.
FISCAL EFFECT
1)Annual Medi-Cal costs in the range of $15 million to $25
million (50% GF) to hold children's hospitals addressed by
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this bill harmless by extending the AB 896 sunset by several
years. These costs are already accounted for in the Medi-Cal
budget because this bill codifies a longstanding DHCS
reimbursement policy that has been followed for nearly a
decade. Costs in 2011 and 2014 will be half the annual costs
because of the timing of the sunset.
2)Costs for the hospital funding addressed in this bill can be
highly variable. Actual annual costs may be less to the extent
that certain patients costing $100,000 to $500,000 each for
in-patient services do not have significant health needs in a
given year.
3)The provisions of this bill may be revisited per recent
amendments. Cost shifts from public programs to private
insurance may occur for children with serious health
conditions due to recent changes in federal law. The federal
Patient Protection and Affordable Care Act (PL 111-148)
requires children be eligible for health insurance by the end
of 2010 without regard to pre-existing medical conditions.
This change, paired with the elimination of annual and
lifetime limits on health insurance, may reduce public payment
for children with serious health issues by shifting to private
payers.
COMMENTS
1)Rationale . This bill is sponsored by the California Children's
Hospital Association to continue to hold hospitals providing
CCS high-cost inpatient services harmless with respect to rate
cuts that were going to be imposed by DHCS in 2008 due to a
re-interpretation of budget trailer bill enacted in 2002.
2)Background . The CCS program provides a range of medical
services, including in-patient hospital stays to children from
low-income families (less than $40,000 per year) with major
medical conditions such as congenital heart disease and sickle
cell anemia. Children receive services in one of three
enrollment pathways: (a) CCS-Medi-Cal in which 130,000
children are enrolled, (b) CCS-Healthy Families in which
26,000 children are enrolled, and (c) CCS-only in which 20,000
children are enrolled.
3)High-cost conditions and services create significant fiscal
risk for in-patient children's hospitals. Due to the serious
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nature of CCS-eligible conditions, such as leukemia, parasitic
disease, cancer, and hemophilia, the hospitals providing
services may incur significant losses on expensive treatments
if reduced to the CMAC rate if this bill is not enacted.
For example, according to the sponsors of this bill, a four-year
old with recently diagnosed leukemia was hospitalized for
three weeks at a cost of $65,000. Without the hold harmless
rate protections, reimbursement would be $25,000 less than
cost. Another example demonstrating the impact of high-cost
service provision is a 12-year old with a cardiac valve
malformation resulting in six weeks of hospitalization and a
$141,000 cost. This would be reimbursed at $82,000 less than
cost without this legislation.
4)Related Legislation . AB 896 (Galgiani), Chapter 260, Statutes
of 2009 and AB 2474 (Galgiani), Chapter 496, Statutes of 2008
address the same hospital funding issue addressed by AB 1872.
Analysis Prepared by : Mary Ader / APPR. / (916) 319-2081