BILL ANALYSIS �
AB 113
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( Without Reference to File )
CONCURRENCE IN SENATE AMENDMENTS
AB 113 (Monning)
As Amended March 31, 2011
2/3 vote. Urgency
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|ASSEMBLY: | |(February 22, |SENATE: |37-0 |(April 7, 2011) |
| | |2011) | | | |
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(vote not relevant)
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|COMMITTEE VOTE: |17-0 |(April 7, 2011) |RECOMMENDATION: |Concur |
| | | | | |
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Original Committee Reference: Not applicable
SUMMARY : Establishes the Non-Designated Public Hospital (NDPH)
Inter-governmental Transfer (IGT) Program, administered by the
Department of Health Care Services (DHCS), under which public
entities would voluntarily transfer funds to the state for the
purpose of drawing down federal funds to make supplemental Medi-Cal
payments to these NDPHs.
The Senate amendments delete the Assembly-approved version of this
bill, and instead:
1)Establish an NDPH Medi-Cal Rate Stabilization Program to allow
NDPHs (District Hospitals) to use local public funds as IGTs that
can be matched with federal funds in the Medi-Cal program and
paid as supplemental payments for inpatient Medi-Cal
fee-for-service (FFS) days in a NDPH.
2)Make participation in the IGT program voluntary for public
entities and authorizes the state to retain 9% of each IGT amount
to reimburse DHCS for its administrative costs, and for the
benefit of Medi-Cal children's health care programs.
3)Require full implementation beginning with the 2010-11 fiscal
year, subject to federal approval.
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4)Establish a process for determining the federal Upper Payment
Limit (UPL) and the shortfall in UPL as a mechanism to determine
the maximum amount allowable for an IGT pool.
5)Require the available funds to be allocated from each pool
according to a point system formula based on the amount of
charity care, bad debt, percentage of Medi-Cal charges, and
whether the hospital meets specified conditions relating to
medically underserved, health professional shortage or critical
access criteria.
6)Categorize hospitals based on the point system and provide for
specific allocations within each category based on the actual
number of acute care beds.
7)Establish a process and timelines for determining the
participation, transfer of funds and IGT allocation from each
NDPH.
8)Establish a mechanism for transfer of funds to the state for
deposit in the existing Medi-Cal Inpatient Payment Adjustment
Fund, which is continuously appropriated.
9) Require DHCS must make supplemental payments to NDPHs by March
31st of each fiscal year.
10)Require DHCS to report annually for four years to the
Legislature on the NDPH IGT Program.
11)Authorize DHCS to implement this bill by means of policy letters
or similar instruction without further regulatory action.
12)Appropriate $1.5 billion from the Hospital Quality Assurance
Revenue (HQAR) Fund and $1.5 billion from the Federal Trust Fund
to DHCS to make supplemental payments to private hospitals under
SB 90 (Steinberg).
13)Make this bill operative only if SB 90 (Steinberg) is enacted
and becomes operative.
14)Add an urgency clause.
EXISTING LAW :
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1)Establishes the Medi-Cal Program, administered by DHCS, to
provide comprehensive health care services and long-term care to
pregnant women, children, and people who are aged, blind, and
disabled.
2)Provides for the payment of hospital services including FFS
negotiated, by contract with the California Medical Assistance
Commission (CMAC) or by with a Medi-Cal managed care (MCMC)
health plans.
AS PASSED BY THE ASSEMBLY , this bill contained content language
related to the Budget Act of 2011.
FISCAL EFFECT : According to the Senate Appropriation Committee:
The General Fund (GF) savings from all of the provisions of SB 90
are estimated to be $50 million in the current year and $305
million in the budget year. If the state is assumed to continue to
be unable to fully implement a Medi-Cal rate freeze due to a court
injunction, the savings resulting from this bill are estimated to
be greater, resulting in a net gain to the state of $88 million in
the current year and $412 million in the budget year, for a total
of $500 million.
Fiscal Impact (in thousands)
Major Provisions 2011-12 2012-13 2013-14 Fund
IGT Program local revenue ($30,700 in FY
2010-11) Local*
to state for federal matching(ongoing unknown)
IGT Program $36,300 in FY
2010-11Federal/*
state payments $27,700 in FY
2010-11;Local
to NDPHs ongoing unknown
9 percent IGT fee $3,000 in FY 2010-11;Local/
expenditures for ongoing unknownGeneral
state programs and administration
**HQAF Fund approp. $1,500,000 in FY
2010-11;Special**
for provisions of SB 90 available until January 1, 2014
Federal funds approp, $1,500,000
billion in FY 2010-11;Federal
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for provisions of SB 90 available until January 1, 2014
*Local funds are held in the Medi-Cal Inpatient Payment Adjustment
Fund and appropriated back to local entities; federal matching
funds come into the state via the Federal Trust Fund and are
deposited into the Health Care Deposit Fund for appropriation to
local entities.
** HQAR Fund revenue from private hospitals paid to the state under
the Hospital Quality Assurance Fee (HQAF) program to be established
by SB 90.
Medi-Cal costs between April 1, 2011, and June 30, 2011, are shared
56.9 percent federal funds and 43.1 percent non-federal funds.
Commencing July 1, 2011, and ongoing, Medi-Cal costs will be shared
50 percent federal funds and 50 percent non-federal funds. Here and
in SB 90, the non-federal share would consist of local funds.
COMMENTS : This bill would provide a source for supplemental
payments in the Medi-Cal Program for NDPHs, hospitals owned by
hospital districts. Hospitals in the Medi-Cal Program are
reimbursed in a variety of ways. Federal law generally requires
Medi-Cal providers to be paid for reasonable costs up to the amount
Medicare pays for a similar service. Hospitals under this rule are
paid costs on a FFS service basis. However California utilizes a
variety of creative payment systems, cost-cutting programs, and
rate reductions enacted through the budgets that have resulted in
an actual rate in California that is closer to 50% of Medicare.
For instance, in certain areas hospitals must contract with CMAC
and may also contract with a MCMC plan. This contracting allowed
CMAC to negotiate a competitive rate in place of the traditional
"cost-based" reimbursement system used by most states. According
to CMAC's Annual Report to the Legislature, 2009, this has saved
the state a total of approximately $10.9 billion in State GF
savings since 1983.
PUBLIC HOSPITAL REIMBURSEMENT. Reimbursement for 21 University of
California and county designated public hospitals is based on
certified public expenditures (CPEs) up to the Medicare limit and
the CPEs provide the match for federal funds, rather than GF.
NDPHs are reimbursed differently. NDPHs are paid by Medi-Cal with
federal funds and state GF, and the amounts vary by hospital.
NDPHs choosing to contract with the state through CMAC are paid by
Medi-Cal a per diem rate (a daily rate) for each day a Medi-Cal
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beneficiary is in the hospital that is negotiated between CMAC and
the hospital. Under the state's Medicaid 1115 waiver (called
"California Bridge to Reform Implementation"), CMAC payments can
include supplemental payments using GF and federal funds, provided
these payments do not exceed the federal UPL under federal
regulations.
NDPHs that do not contract with the state in the FFS Medi-Cal
program are known as non-contract hospitals, and they are initially
paid an interim rate. Noncontract hospitals are then required to
submit a cost report before the close of their fiscal period.
Based on each hospital's cost report Medi-Cal will pay up to the
allowable reimbursable reported costs for the noncontract
hospital's fiscal period.
In addition, NDPHs are eligible for Medicaid disproportionate share
(DSH) payments if they meet the criteria to be a DSH hospital.
Under the state's Medicaid 1115 waiver, the nonfederal share of DSH
payments to NDPHs is the state GF.
UPL LIMIT. There are 48 NDPHs in California. Federal law
establishes a maximum payment that categories of hospitals can
receive under Medicaid, known as the UPL. NDPHs are estimated to
have "room" under their UPL under Medicaid law that will allow them
to receive $64 million in supplemental Medi-Cal payments in
2010-11. Under this bill, public entities would transfer (through
an IGT) $30.7 million to the state, which would then be matched by
$33.2 million in federal funds. The resulting $64 million in total
revenue would be returned to these facilities under the allocation
formula contained in this measure. The IGT program established
under this bill would be an on-going program.
HOSPITAL PROVIDER FEE. Under the Medi-Cal hospital fee enacted by
legislation last session, NDPHs were exempt from paying the
Medi-Cal hospital provider fee but received supplemental payments
resulting from revenue. Under the six-month extension of the
hospital fee contained in SB 90 (Steinberg), NDPHs will not receive
supplemental payments. Instead, this bill establishes an IGT
program for these NDPHs whereby public entities would transfer
funds to the state, and these funds would be matched by federal
funds to provide additional funds up to the federal UPL. The
advantage of an IGT program is that, unlike the fee program, all
transferring hospitals benefit from additional federal funds above
amounts they contribute, up the amount of the contributions from
governmental entities.
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CONTINGENT ENACTMENT. Enactment of this bill is contingent on
enactment of SB 90 (Steinberg), which would make inoperative
specified Medi-Cal hospital rate freezes and rate reductions
enacted in the budgets of 2008-09, 2009-2010, and 2010-2011. SB 90
would also impose a new hospital provider fee on specified private
hospitals for six months (January 1, 2011 until June 30, 2011), and
use the resulting revenue to do several things: to draw down
federal funds to provide supplemental payments to private hospitals
in FFS Medi-Cal, MCMC, and for acute psychiatric days; to provide
$210 million in funding for children's health coverage in the
current year. SB 90 also reduces DSH-type payments to private
hospitals by $30 million in the current year and $75 million in the
2011-12 budget year.
SB 90 also requires DHCS to design and implement an IGT program for
MCMC services provided by designated and non-designated public
hospitals in order to increase capitation payments for the purpose
of increasing reimbursement to these hospitals.
In addition, SB 90 would also allow hospitals that have received
extensions to 2013 of the seismic deadlines for their SPC-1
(structural performance category) buildings to request an
additional extension of up to seven years, and would allow the
Office of Statewide Health Planning and Development (OSHPD) to
grant the extension if the hospital meets several interim
deadlines. In deciding whether to grant the extension, as well as
the length of the extension, OSHPD would be required to consider
several criteria, including the structural integrity of the
building(s), community access to the hospital services, and the
hospital owner's financial capacity. The length of any extension
could not exceed the amount of time that the owner reasonably needs
to complete construction; however, a hospital would be able to
adjust the length of the extension by up to six months under
certain circumstances. OSHPD would be authorized to revoke an
extension if a hospital falsifies information, fails to meet any
interim deadlines, or if construction is abandoned or suspended, as
specified. Hospital owners who apply for extensions under this
bill would be required to pay additional fees to cover OSHPD's
costs of reviewing the requests for extensions. OSHPD would be
allowed to use emergency regulations to implement the bill's
seismic extension provisions. The bill provides that the seismic
extension provisions would become operative on the date that DHCS
receives federal approvals for a 2011-12 hospital quality assurance
fee program that includes $320 million in fee revenue to pay for
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health coverage for children, as specified.
The GF savings from all of the provisions of SB 90 are estimated to
be $50 million in the current year and $305 million in the budget
year. If the state is assumed to continue to be unable to fully
implement a Medi-Cal rate freeze due to a court injunction, the
savings resulting from this bill are estimated to be greater,
resulting in a net gain to the state of $88 million in the current
year and $412 million in the budget year, for a total of $500
million.
This bill has been substantially amended in the Senate, the subject
matter in this bill has not been heard in an Assembly policy
committee.
Analysis Prepared by : Marjorie Swartz and Tanya Taylor-Robinson
/ HEALTH / (916) 319-2097
FN: 0000211