BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
1083 (Correa)
Hearing Date: 5/27/2010 Amended: 4/28/2010
Consultant: Katie Johnson Policy Vote: Health 5-0
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BILL SUMMARY: SB 1083 would permit children's hospitals to
maintain and operate facilities under a single, consolidated
license that are not more than 35 miles apart.
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Fiscal Impact (in thousands)
Major Provisions 2010-11 2011-12 2012-13 Fund
Potential increased Medi-Cal potentially millions of dollars
General/*
reimbursement rates annually per hospital Federal
Transfer of DSH up to $5 million per
yearGeneral/*
supplemental funds Federal
*50 percent General Fund, 50 percent federal funds
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STAFF COMMENTS: SUSPENSE FILE.
There are 56 single, consolidated hospital licenses in
California for facilities that are located no more than 15 miles
away from each other, except that this number includes one
single consolidated license for a children's hospital and its
satellite facility, authorized in statute, that is beyond 15
miles away. This bill would permit children's hospitals to form
single, consolidated licenses with facilities up to 35 miles
away. There are 8 children's hospitals and they are the sponsors
of this bill. It is likely that several hospitals would explore
the use of a single, consolidated license.
Any costs to the California Department of Public Health (CDPH),
the entity that licenses hospitals, would be minor and
absorbable and covered by per bed licensing fees.
Increase in Medi-Cal Payments to Tertiary Hospitals
Tertiary hospitals are defined in statute as Level I and II
trauma centers and 8 designated children's hospitals. Medi-Cal
managed care reimbursement rates for inpatient days at tertiary
and non-tertiary hospitals are determined annually by the
Department of Health Care Services (DHCS) and vary by region.
The FY 2009-2010 Tertiary and Non-Tertiary rates for the San
Francisco Bay Area, Southern California, and Other areas of the
state are as follows: 1) $2,749 and $1,707; 2) $1,982 and
$1,273; and, 3) $1,881 and $1,432. If a children's hospital,
pursuant to this bill, were to add beds at a non-tertiary
hospital to its single, consolidated license, there would be an
increase in costs to Medi-Cal managed care plans.
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SB 1083 (Correa)
If one were to assume that the rate of reimbursement were to
increase approximately $500 - $1,000 per day for 10 to 20 beds
at one facility, and those beds were occupied 50 to 75 percent
of the year by Medi-Cal enrollees, the annual reimbursement to a
Medi-Cal managed care plan could increase by $900,000 - $5.5
million. On the other hand, if a children's hospital were to add
beds that had been reimbursed at the same geographic tertiary
rate, there would likely be no increase in cost to a Medi-Cal
managed care plan. Actual costs would depend on the number of
beds brought under a children's hospital's single, consolidated
license and the tertiary or non-tertiary status of the satellite
beds' home hospital.
Medi-Cal managed care plan rates are developed annually by DHCS
based on reported plan cost data. If a Medi-Cal managed care
plan's costs increased as a result of this bill, there would be
a corresponding increase in the annual rates. These rates would
be shared 50 percent General Fund and 50 percent federal funds.
Transfer of DSH Replacement Payments
Disproportionate share hospitals (DSH) provide services to a
disproportionately high number of low-income and uninsured
individuals. DHCS remits payments to private DSH hospitals based
on a specified formula in statute and the annual federal DSH
allotment for designated public hospitals. The DSH replacement
payments are made up of General Fund and matching federal funds,
which are shared 38 percent General Fund and 62 percent federal
funds until December 31, 2010, and would be shared 50 percent
General Fund and 50 percent federal funds thereafter.
These provisions of this bill would not constitute an increase
in DSH payments; instead, they would redistribute the funds as
follows.
In the event that a children's hospital adds beds to its single,
consolidated license that are located at a DSH hospital pursuant
to this bill, DSH replacement payments would transfer from the
host hospital to the children's hospital. This bill would limit
that amount to a total of $5 million annually. If payments due
were to exceed $5 million in a given year, the children's
hospitals that would be receiving increased DSH funds would be
paid a fraction of the $5 million that would be proportionate to
their share. If a host hospital does not receive DSH replacement
funds, then the children's hospital would not receive increased
DSH funding.
These provisions would become inoperative on January 1, 2016, or
upon the expiration of the next 1115 Hospital Financing Waiver
enacted after June 30, 2010. After these provisions become
inoperative, Medi-Cal payment days and net revenues for hospital
beds located in hospitals that house satellite units that are
located between 15 and 35 miles from the main hospital campus
that are included in the children's hospital consolidated
license shall not be included in the calculation of DSH
replacement payment program for eligibility and payment
purposes.