BILL ANALYSIS
AB 2599
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 2599 (Bass and Hall)
As Amended August 20, 2010
Majority vote
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|ASSEMBLY: |57-15|(June 3, 2010) |SENATE: |22-12|(August 25, |
| | | | | |2010) |
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Original Committee Reference: HEALTH
SUMMARY : Requires the new nonprofit Martin Luther King, Jr.
(MLK) hospital that will serve the population that was served at
the former the Los Angeles County Martin Luther King, Jr.-Harbor
Hospital (MLK-Harbor) receive a minimum amount of Medi-Cal
funding as specified. Specifically, this bill :
1)Authorizes the Medi-Cal inpatient per diem rates for the new
MLK hospital to be negotiated through the California Medical
Assistance Commission (CMAC) and requires consideration of the
new hospital's projected Medi-Cal costs in the in the
negotiation.
2)Authorizes the new hospital to receive the Medi-Cal
supplemental payments for debt service incurred by Los Angeles
County for capital projects at the former MLK-Harbor hospital
under provisions of SB 1732 (Presley), Chapter 1635, Statutes
of 1988 or alternatively allows debt service payments to be
taken into account and reflected as increased per diem under a
CMAC contract.
3)Establishes a methodology for reimbursement if the new
hospital does not contract with CMAC including the following:
a) Cost-based reimbursement for Medi-Cal inpatient
services; and,
b) Supplemental payments, upon federal approval, funded by
Intergovernmental Transfer (IGT) of funds from the County
of Los Angeles and federal matching funds.
4)Authorizes the state to retain a limited portion of the IGT
funds for the benefit of the Medi-Cal program as specified.
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5)Requires, in the event federal approval is not obtained for
the IGT-funded supplemental payments, the new hospital be
reimbursed for Medi-Cal hospital inpatient services at no less
that 72% of the projected Medi-Cal costs.
6)Requires 100% cost-based reimbursement for outpatient services
pursuant to the provisions of AB 131 (Committee on Budget),
Chapter 80, Statutes of 2005, as is required for county-owned
or operated facilities under the original Los Angeles County
waiver and continued under the Section 1115 Medi-Cal
Hospital/Uninsured Care waiver and to the extent federal
approval is obtained.
7)Makes specified legislative findings and declarations related
to a new private non-profit hospital established pursuant to
terms agreed to by the County of Los Angeles and the
University of California (UC) 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 that adequate and predictable funding be
provided in support of the hospital.
AS PASSED BY THE ASSEMBLY , this bill was substantially similar
to the bill as passed by the Senate.
FISCAL EFFECT : According to the Senate Appropriations Committee:
Fiscal Impact (in thousands)
Major Provisions 2010-11 2011-12 2012-13 Fund
CMAC SPCP contract/ at least in the tens of
millionsGeneral/*
SB 1732 capital debt payments/ of dollars commencing
likelyFederal
outpatient services late 2012 or early 2013
South LA Medical Services $50,000 - $75,000
$100,000$100,000Federal**
Preservation Fund
* Costs shared 50% General Fund, 50% federal funds
** Federal funds matched by an equal amount of county funds
COMMENTS : This bill is co-sponsored by the County of Los
AB 2599
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Angeles and UC to codify a coordination agreement for the
establishment of the new MLK Hospital on the site of and serving
the same population as the MLK-Harbor hospital that was
previously operated by the County of Los Angeles, but closed in
August of 2007. The Senate amendments reflect recent agreements
with regard to the funding of the new hospital.
According to the sponsors, the county has been working on
developing options to provide hospital services at the MLK site
since the closure. In the spring of 2008, the County approached
UC to assist in the effort and the parties came to an agreement
in principle regarding the creation and financing of a new
private non-profit entity to operate the hospital. The
coordination agreement was approved by the Los Angeles County
Board of Supervisors on July 13, 2010.
On August 5, 2010, the County of Los Angeles announced seven
nominees to serve as the first Board of Directors. According to
the press announcement, the MLK Hospital Board of Directors will
be an autonomous governing body. It will have full authority
over the hospital independent of the County of Los Angeles. It
will be vested with full accountability for operations at the
new 120-bed medical facility. The new MLK Hospital will have an
emergency room, and an estimated capacity to provide more than
30,000 annual patient visits, 10,000 annual outpatient visits,
and follow-up care. All health and medical services to be
provided at the new hospital will be coordinated with outpatient
services provided by the L.A. County Department of Health
Services; MLK Multi-Service Ambulatory Care Center, which is
located on the same campus as the new hospital; and the nearby
Hubert H. Humphrey Comprehensive Care Center. It is anticipated
that services would commence in 2013.
The current Medicaid State Plan does not allow for supplemental
payments to a hospital that does not contract with CMAC as
authorized under this bill. As a private hospital, the new MLK
would also not be eligible for Disproportionate Share Hospital
payments that county hospitals typically receive. The State's
June 2010 application for a Medi-Cal Comprehensive Section 1115
Demonstration Waiver includes a request for authority to provide
supplemental payments to non-contracted private hospitals such
as the new MLK.
The agreement between UC and the County of Los Angles includes
one-time and ongoing funding from the County combined with
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Medi-Cal reimbursements as described in this bill. Included in
the agreement is the following:
1)One-time $50 million start up from the county at $10 million a
year over five years (commencing July 2010).
2)One-time $8 million reserve fund and access to up to $20
million in temporary funding.
3)Ongoing $50 million in IGT funds.
4)On going $13.3 million in annual support for indigent care
services.
Analysis Prepared by : Marjorie Swartz / HEALTH / (916)
319-2097
FN: 0006710