BILL ANALYSIS
AB 2599
Page 1
ASSEMBLY THIRD READING
AB 2599 (Bass and Hall)
As Amended June 1, 2010
2/3 vote. Urgency
HEALTH 17-0 APPROPRIATIONS 12-5
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|Ayes:|Monning, Fletcher, |Ayes:|Fuentes, Ammiano, |
| |Ammiano, Carter, Conway, | |Bradford, |
| |De La Torre, De Leon, | |Charles Calderon, Coto, |
| |Emmerson, Eng, Hayashi, | |Davis, Monning, Ruskin, |
| |Hernandez, Jones, Nava, | |Skinner, Solorio, |
| |V. Manuel Perez, Salas, | |Torlakson, Torrico |
| |Smyth, Audra Strickland | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
| | |Nays:|Conway, Harkey, Miller, |
| | | |Nielsen, Norby |
| | | | |
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SUMMARY : Requires the Department of Health Care Services (DHCS)
and the California Medical Assistance Commission (CMAC) to
ensure Medi-Cal funding, as specified, for the new private
nonprofit hospital that will serve the population formerly
served by the Los Angeles County Martin Luther King, Jr.-Harbor
Hospital (MLK-Harbor). Specifically, this bill :
1)Requires the DHCS and CMAC to ensure that the successor
hospital to MLK-Harbor receives the following:
a) Payment for inpatient rates, negotiated by CMAC, at no
less than 60% of the hospital's costs;
b) Continued Medi-Cal supplemental payments for debt
service incurred by Los Angeles County for capital projects
under provisions of SB 1732 (Presley), Chapter 1635,
Statutes of 1988;
c) Payment for 100% cost-based reimbursement for outpatient
services pursuant to provisions of AB 131 (Budget
Committee), Chapter 80, Statutes of 2005, as is required
for county-owned or operated facilities under the original
Los Angeles waiver and continued under the
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Hospital/Uninsured Care waiver; and,
d) Funding from the South Los Angeles Medical Services
Preservation Fund established by SB 474, Chapter 518,
Statutes of 2007.
2)Makes specified legislative findings and declarations related
to a new hospital to be located in the seismically-compliant
patient tower on the campus of the former Los Angeles County
MLK-Harbor Hospital and states the Legislature's intent to
facilitate the success of the new hospital.
FISCAL EFFECT : According to the Assembly Appropriations
Committee:
1)The funding mechanisms, providing a minimum of tens of
millions of dollars, addressed in this bill are:
a) California Medical Assistance Commission inpatient
contracts (50% federal/50% General Fund (GF));
b) SB 1732 supplemental seismic safety debt service
payments (50% federal/50% GF);
c) 100% cost-based outpatient reimbursement (50%
federal/50% GF); and,
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
MLK-Harbor, 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 MLK-Harbor once
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the facility is re-opened.
COMMENTS : The former Los Angeles County MLK-Harbor Hospital,
located in the Willowbrook/Watts area, closed in August 2007.
According to Los Angeles County and the University of California
(UC), co-sponsors of this bill, ever since the closure, the
County has been committed to re-establishing the hospital
services at the MLK-Harbor site. The author states that this
bill codifies the agreement that resulted from the negotiations
between the parties and the State to reopen MLK-Harbor Hospital,
which would serve as a safety net provider in South Los Angeles
and would treat a high volume of Medi-Cal and uninsured
patients. The new MLK-Harbor Hospital will be a wholly
independent, nonprofit 501(c)(3) entity which will hold the
license. Neither County nor UC would operate the new hospital,
nor would the parties be financially liable for the activities
or debts. A new governing entity will be established with
appointments by UC and the County. The new hospital will
contract with UC for the provision of physician services.
This bill is necessary, according to the author, to assure the
critical fiscal elements necessary for the ongoing financial
viability of the new hospital. The author asserts that existing
law, particularly with regard to eligibility for state and
federal funding; either relates to the former hospital or does
not exist. According to the author, funding stability is
accomplished by requiring that funding streams previously
available to the former MLK-Harbor Hospital would become
available to the newly opened hospital.
After the Watts riots in 1965, a need for an accredited hospital
in the Watts and surrounding communities was identified. In
1972 the Martin Luther King, Jr General Hospital opened as a
full service medical center. Through a partnership with Drew
University it became the third teaching hospital in the County
of Los Angeles.
In 2004, the Los Angeles Times (Times) ran a series on
widespread neglect and mismanagement at MLK-Harbor. The Times
extensively reported on medical errors, staff problems, fiscal
mismanagement, and health and safety violations going back
almost to the beginning. In 2002 the Accreditation Council for
Graduate Medical Education had ordered the hospital to close
three of 18 training programs due to lax oversight.
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In November 2004, the Board of Supervisors voted to close the
trauma unit to focus on fixing the other operations. After the
federal Centers for Medicare and Medicaid Services (CMS)
threatened decertification of the hospital to serve Medicare and
Medicaid patients, Los Angeles County terminated the medical
residency program and attempted to restructure the hospital.
UCLA were also asked to take over management of the hospital.
In March 2007, an agreement was reached between CMS, the state
and the county to extend the Medicare contract for MLK-Harbor
until August 15, 2007. No further extensions of the agreement
were provided, and the hospital failed to meet CMS standards
prior to the August 15 expiration date and was closed.
The Assembly Health Committee conducted an informational hearing
called "Hospital Services and Emergency Care: An Emerging
Crisis" on May 18, 2007. According to the record from that
hearing, South Los Angeles had limited access to health care
services. The committee found that this area had the largest
need for additional beds and emergency department treatment
stations, shortages of specialty physicians and long wait times
for emergency room visits. The briefing paper also states that
South Los Angeles is confronted by the most difficult realities,
such as the highest rates of uninsured children, teen births,
obesity, high blood pressure, and mortality from cancer, stroke,
diabetes, and coronary heart disease. In 2006, Memorial
Hospital serviced 40,000 patients in its emergency room and
MLK-Harbor serviced 60,000, and now both are closed.
Analysis Prepared by : Marjorie Swartz / HEALTH / (916)
319-2097
FN: 0004570