BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
1409 (Price)
Hearing Date: 5/27/2010 Amended: 4/13/2010
Consultant: Katie Johnson Policy Vote: Health 5-0
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BILL SUMMARY: SB 1409 would require the County of Los Angeles
(LA County) and the State of California to continue to pay funds
to the private hospitals that currently serve the population
formerly served by Los Angeles County Martin Luther King,
Jr.-Harbor Hospital through FY 2012-13.
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Fiscal Impact (in thousands)
Major Provisions 2010-11 2011-12 2012-13 Fund
County mandate to $5,000 $5,000 $5,000County/*
draw down FFP $8,200 $5,000 $5,000Federal
SNCP transfers to $100,000 $100,000
$100,000Federal**
South LA Medical Services
Preservation Fund
*38 percent county, 62 percent federal financial participation
(FFP) until December 31, 2010; 50 percent county, 50 percent FFP
ongoing
**Safety Net Care Pool
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STAFF COMMENTS: SUSPENSE FILE.
This bill would require the County of Los Angeles (LA County) to
continue to send intergovernmental transfers (IGTs) to the state
to fund the nonfederal share of increased Medi-Cal payments to
those private hospitals that serve the South Los Angeles
population that was formerly served by Los Angeles County Martin
Luther King, Jr.-Harbor Hospital (MLK-Harbor) for FYs 2010-11,
2011-12, and 2012-13, in an amount not to exceed $5 million each
project year. These IGTs would draw down federal funds that
would then be allocated back to LA County in increased Medi-Cal
reimbursement rates to private hospitals.
Additionally, the bill would require that an amount not to
exceed $100 million annually of the Safety Net Care Pool (SNCP)
funds claimed and received by the state that are based on the
certified public expenditures (CPEs) of LA County or its
designated public hospitals would be transferred to the South
Los Angeles Medical Services Preservation Fund for each of the
three project years 2010-11, 2011-12, and 2012-13.
This bill would continue the system of reimbursement to private
hospitals that serve this population under the new Section 1115
Medi-Cal Hospital Financing Waiver. The existing 1115 Waiver
specifies the methodology by which the 22 designated public
hospitals, of which MLK-Harbor is one, access federal funds for
reimbursement for
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SB 1409 (Price)
CPEs for treatment of Medi-Cal beneficiaries and uninsured
Californians. It expires August 31, 2010, and is currently being
renegotiated by the Department of Health Care Services (DHCS).
This bill would assume that the existing funding structure for
public hospitals would continue and it would require that a
specified amount of future funding be set aside for LA County
area hospitals. Without this bill, the funds would be spent
elsewhere in California.
Medi-Cal fee-for-service CPEs are generally matched by federal
funds at 50 cents on the dollar. However, as a result of the
passage of the American Reinvestment and Recovery Act (ARRA) in
February of 2009, California's Federal Medical Assistance
Percentage (FMAP) increased from 50 percent to 61.59 percent.
Thus, retroactively from October 1, 2008, through December 31,
2010, the federal government would pay for approximately 62
cents for every CPE dollar spent. After December 31, 2010, the
FMAP reduces back to 50 cents on the dollar, unless Congress
approves and the President signs an extension.
MLK-Harbor, one of the designated public hospitals, closed in
August 2007. Existing law established the South Los Angeles
Medical Services Preservation Fund into which a maximum amount
of $100 million of SNCP funds could be deposited for the project
years 2007-2008, 2008-2009, and 2009-2010 to pay for services
provided by LA County facilities continuing to operate on the
MLK-Harbor site, other LA County designated public hospitals,
and other providers that contract with LA County. Existing law
also requires LA County to make IGTs to DHCS to provide the
nonfederal share of increased Medi-Cal payments to those private
hospitals that serve the population formerly served by
MLK-Harbor.
On November 19, 2009, LA County and the University of California
(UC) announced that they would partner to reopen MLK-Harbor as a
nonprofit organization. The hospital would no longer be run by
the county, but it would contribute $50 million in start-up
funds, $353.8 million in capital project commitment, and $63
million annually in operating funds, including $13.3 million to
support care for the uninsured. The facility is scheduled to
reopen as early as late 2012.