BILL ANALYSIS
AB 2599
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Date of Hearing: May 19, 2010
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 2599 (Bass) - As Introduced: February 19, 2010
Policy Committee: Health Vote:17-0
Urgency: Yes State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill requires the California Department of Health Care
Services (DHCS) and the California Medical Assistance Commission
(CMAC) to ensure the availability of funding to open a new
private nonprofit hospital on the grounds where the Martin
Luther King Jr-Harbor Hospital (MLKH) was closed in August of
2007. Specifically, this bill requires DHCS and CMAC to ensure
once the facility reopens:
1)Reimbursement for hospital inpatient rates, negotiated by
California Medical Assistance Commission, at no less than 60%
of the hospital's costs.
2)Reimbursement related to enhanced Medi-Cal supplemental
payments for seismic safety-related debt service under
provisions of SB 1732 (Presley) Chapter 1635, Statutes of
1988.
3)Reimbursement for 100% cost-based reimbursement for outpatient
services pursuant to provisions by AB 131(Committee on
Budget), Chapter 80, Statutes of 2005. These provisions relate
specifically to services provided in facilities owned or
operated by Los Angeles County.
4)Reimbursement from the South Los Angeles Medical Services
Preservation Fund established by SB 474, Chapter 518, Statutes
of 2007.
FISCAL EFFECT
1)The funding mechanisms, providing a minimum of tens of
millions of dollars, addressed in this bill are:
a) California Medical Assistance Commission inpatient
AB 2599
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contracts (50% federal/50% GF)
b) SB 1732 supplemental seismic safety debt service
payments (50% federal/50% GF)
c) 100% cost-based outpatient reimbursement (50%
federal/50% GF)
d) South Los Angeles Medical Services Preservation fund
(50% federal/50% local certified public expenditures)
2)Several features of this bill propose establishing baselines
that are not typically available to hospitals, such as
guaranteeing a specified CMAC funding level. In addition, some
funding availability proposed in this bill is typically
available to public, not nonprofit facilities.
3)The precise fiscal impact of this bill is unknown because only
a tentative agreement has been established, facility seismic
safety efforts are ongoing, and the facility may not open
until some time in 2012. In addition, since the closure of
MLKH other hospitals in the area have provided care and
additional funding has been provided to support the safety net
in this medically underserved area of Los Angeles County. Some
of this funding will shift back toward MLKH once the facility
is re-opened.
COMMENTS
1)Rationale . This bill is co-sponsored by Los Angeles County (LA
County) and the University of California (UC). LA County and
UC recently reached a tentative agreement to re-open MLKH as
an independent nonprofit in the South Los Angeles area. This
bill establishes mechanisms to ensure baseline funding for the
re-opened facility. The tentative agreement between the county
and the UC is for the hospital to contract with UC for
physician services and to establish quality assurance and
training efforts.
2)Background . MLKH, is located in the Watts/Willowbrook area of
Los Angeles County. In August 2007, serious concerns involving
patient care activities led the county board of supervisors,
which had administrative and fiscal responsibility for the
hospital to close MLKH.
According to the author, when MLKH closed, the 1.6 million
residents of Service Planning Area 6 of Los Angeles County
were left without a public hospital in their area. The author
and supporters of this bill indicate the University of
California is a good choice for affiliation with the new
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nonprofit hospital because of the University's experience in
administering public hospitals and the need for physician and
health professional training.
3)CMAC rates . CMAC negotiates contracts with hospitals on behalf
of the Department of Health Care Services for inpatient
services under the Medi-Cal program. CMAC selectively
contracts on a competitive basis with hospitals for inpatient
services provided to beneficiaries in the fee-for-service
Medi-Cal program via the Selective Provider Contracting
Program (SPCP). CMAC contracts with about 200 general acute
care hospitals.
4)Cost-Based Reimbursement . This bill proposes ensuring the new
nonprofit MLKH has access to 100% cost-based reimbursement for
outpatient services. This funding mechanism was available
initially in a Los Angeles County-specific waiver and then
extended in budget trailer bill in 2005.
5)Seismic Safety Funding . The Construction and Renovation
Reimbursement Program was established by SB 1732 (Presley)
Chapter 1635, Statutes of 1988. This program provides
supplemental reimbursement for the debt service incurred on
revenue bonds for hospital construction, renovation, or
replacement of facilities or fixed equipment.
6)South Los Angeles Medical Services Preservation Fund . SB 474,
Chapter 518, Statutes of 2007 established the South Los
Angeles Medical Services Preservation Fund which made $100
million per year of hospital Safety Net Care Pool funds
available to hospitals in the South Los Angeles area from
2007-08 through 2009-10 to address the closure of MLKH.
7)Related Legislation . SB 1409 (Price) in the current session
and pending in the Senate extends the South Los Angeles
Medical Services Preservation Fund.
Analysis Prepared by : Mary Ader / APPR. / (916) 319-2081