BILL ANALYSIS
AB 1872
Page 1
ASSEMBLY THIRD READING
AB 1872 (Galgiani)
As Amended April 6, 2010
Majority vote
HEALTH 19-0 APPROPRIATIONS 17-0
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|Ayes:|Monning, Adams, Ammiano, |Ayes:|Fuentes, Conway, Ammiano, |
| |Carter, Conway, De La | |Bradford, Charles |
| |Torre, De Leon, Emmerson, | |Calderon, Coto, Davis, |
| |Eng, Gaines, Hayashi, | |Monning, Ruskin, Harkey, |
| |Hernandez, Jones, Bonnie | |Miller, Nielsen, Norby, |
| |Lowenthal, Nava, V. | |Skinner, Solorio, |
| |Manuel Perez, Salas, | |Torlakson, Torrico |
| |Smyth, Audra Strickland | | |
| | | | |
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SUMMARY : Extends the sunset contained in AB 896 (Galgiani),
Chapter 260, Statutes of 2009, from January 1, 2011, until the
earlier of January 1, 2014, or full implementation of the
federal Patient Protection and Affordable Care Act (PPACA), (PL
111-148) and requires 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).
FISCAL EFFECT : According to the Assembly Appropriations
Committee:
1)Annual Medi-Cal costs in the range of $15 million to $25
million (50% General Fund) to hold children's hospitals
addressed by 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.
AB 1872
Page 2
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. PPACA
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 : 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. 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.
In 2008, a legal review by DHCS brought into question the
methodology for reimbursing hospitals in these programs. 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
AB 1872
Page 3
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, 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, extended the reimbursement rate until January 1, 2011.
Analysis Prepared by : Marjorie Swartz / HEALTH / (916)
319-2097
FN: 0004568