BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
1872 (Galgiani)
Hearing Date: 8/2/2010 Amended: 7/15/2010
Consultant: Katie Johnson Policy Vote: Health 6-0
_________________________________________________________________
____
BILL SUMMARY: AB 1872 would extend the January 1, 2011, sunset
to January 1, 2014, on the existing provisions that recently
made the reimbursement rate to hospitals that provide inpatient
care to enrollees in the California Children's Services (CCS)
program and the Genetically Handicapped Person's Program (GHPP)
90% of the interim, cost-based Medi-Cal rate rather than the
lower California Medical Assistance Commission (CMAC) negotiated
rate.
_________________________________________________________________
____
Fiscal Impact (in thousands)
Major Provisions 2010-11 2011-12 2012-13 Fund
Sunset elimination $2,750 - $5,500$5,500 -
10,500 $5,500 - 11,000 General/
$2,750 - $5,500 $5,500 -
10,500$5,500 - 11,000 Federal/ $2,750 - $5,500
$5,500 - 10,500$5,500 - 11,000 County*
*Costs are shared as follows: CCS-Healthy Families, 65% federal
funds, 17.5% General Fund, 17.5% county; CCS-state-only and
GHPP-state-only, 50% General Fund and 50% county.
_________________________________________________________________
____
STAFF COMMENTS: This bill meets the criteria for referral to the
Suspense File.
Existing law, established by AB 2474 (Galgiani), Chapter 496,
Statutes of 2008, and extended by AB 896 (Galgiani), Chapter
260, Statutes of 2009, requires that provider rates of payment
for services rendered be identical to the rates of payment for
the same service performed by the same provider for the Medi-Cal
program, except that hospital inpatient rates are required to be
90% of Medi-Cal hospital interim rates of payment, until January
1, 2011, for the following programs:
1) CCS
2) GHPP
3) The Breast and Cervical Cancer Early Detection Program
4) The State-Only Family Planning Program
5) The Family Planning, Access, Care, and Treatment (Family
PACT) Waiver Program.
This bill would only apply to enrollees in CCS and GHPP because
CCS and GHPP provide both inpatient and outpatient services,
whereas the other three programs provide only outpatient
services. This bill would extend that sunset to January 1, 2014.
AB 2474, existing law, provides that, until January 1, 2010,
DHCS would pay hospitals 90% of the interim Medi-Cal rate for
inpatient services rendered to CCS-state-only, CCS-Healthy
Families, and GHPP-state-only patients. Without the sunset
extension,
Page 2
AB 1872 (Galgiani)
beginning January 1, 2011, DHCS would reduce the rate of payment
to the CMAC negotiated Medi-Cal rate.
Statutorily, this bill would require DHCS to maintain the
increased rate of payment to all hospitals that provide
inpatient services under these programs, which would result in a
total of approximately $17 - 32 million ongoing costs annually,
or $5.5 million - $11 million each from federal funds, General
Fund, and county funds, assuming approximately half of the
enrollees are enrolled in Healthy Families and half are
state-only. These costs would vary based on the number and
length of a person's hospitalization each year. Costs are shared
as follows: CCS-Healthy Families, 65% federal funds, 17.5%
General Fund, 17.5% county; CCS-state-only and GHPP-state-only,
50% General Fund and 50% county. As of July 2008, of the 167,045
children enrolled in CCS, 123,988 were also enrolled in
Medi-Cal, 24,474 were also enrolled in Healthy Families, and
18,583 were enrolled in CCS-state-only. GHPP enrollees may also
be enrolled in Medi-Cal. As of July 2008, of the 1,688 people
enrolled in GHPP, 324 were also enrolled in Medi-Cal and 1,364
were enrolled in GHPP-state-only.
If the sunset went into effect on January 1, 2010, there would
be a savings of approximately $17 - 32 million in annual
payments, distributed among the funds as described above, to
hospitals as a result of the reduction in hospital reimbursement
rates for these programs. The savings due to the sunset were not
included in the Governor's proposed FY 2010-2011 budget.
Instead, the budget includes funding for a sunset extension.
In July 2008, DHCS was notified that it was misinterpreting the
language as set forth in AB 442 (Committee on Budget), Chapter
1161, Statutes of 2002, with regards to hospital reimbursement
rates for inpatient services to non-Medi-Cal members of CCS and
GHPP programs. Since 2002, DHCS should have paid hospitals that
treat CCS-state-only, CCS-Healthy Families, and GHPP-state-only
patients the lower CMAC negotiated Medi-Cal reimbursement rates
for services rendered, unless DHCS had adopted a regulation that
set the payment rate higher. Instead, from 2002 to 2008, DHCS
paid hospitals the higher Medi-Cal interim cost-based rate that
it had paid prior to 2002 without the adoption of a regulation
to authorize the higher rate of payment. Since DHCS paid a
higher rate of reimbursement to hospitals for inpatient
services, it requested a higher rate of reimbursement from the
federal government in matching funds for the CCS members who
were also enrolled in Healthy Families. The matching rate for
the Healthy Families Program is 65 percent federal, 35 percent
state funds.
AB 2474 (Galgiani), Chapter 496, Statutes of 2008, clarified,
with the following language, that the Legislature's "intent?as
enacted by Chapter 1161 of the Statutes of 2002, was that the
rates of reimbursement for all inpatient hospital services under
these paragraphs would be at the applicable Medi-Cal interim
rates of reimbursements paid to hospitals not under contract."
It appears to be the intent of this language to protect DHCS
from any obligation to repay the federal government for the
higher-priced matching funds that it received for the CCS
patients that were also enrolled in Healthy Families from
2002-2008.