BILL ANALYSIS �
AB 715
Page 1
Date of Hearing: March 22, 2011
ASSEMBLY COMMITTEE ON HEALTH
William W. Monning, Chair
AB 715 (Galgiani) - As Amended: March 14, 2011
SUBJECT : Health care programs: provider reimbursement rate.
SUMMARY : Enacts an exception to the requirement that payment
rates for the California Children's Services Program (CCS
Program), the Genetically Handicapped Persons Program (GHPP),
the Breast and Cervical Cancer Early Detection Program (BCCEDP),
the State-Only Family Planning Program (State-Only FPP), and the
Family Planning, Access, Care, and Treatment (Family PACT)
Waiver Program for non Medi-Cal patients be identical to payment
rates for the same service performed by the same provider type
under the Medi-Cal Program and requires that hospital inpatient
rates instead be 90% of the Medi-Cal hospital interim rates of
payment, as developed by the Department of Health Care Services
(DHCS).
EXISTING LAW :
1)Requires provider payment rates for services rendered in CCS
Program, GHPP, BCCEDP, State-Only FPP, and Family PACT to be
identical to the rates of payment for the same service
performed by the same provider type pursuant to the Medi-Cal
Program.
2)Authorizes services provided under the programs in 1) above to
be reimbursed at rates greater than the Medi-Cal rate that
would otherwise be applicable if those rates are increased by
the DHCS Director in regulations.
FISCAL EFFECT : This bill has not been analyzed by a fiscal
committee.
COMMENTS :
1)PURPOSE OF THIS BILL . This bill is sponsored by the
California Children's Hospital Association (CCHA) to make
permanent a delay in the requirement that hospital inpatient
rates in the CCS Program and GHPP be reimbursed at the lower
California Medical Assistance Commission (CMAC) Medi-Cal rate.
The author argues hospitals such as children's hospitals
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treat a disproportionate number of low-income patients;
including CCS Program patients and cannot absorb any
additional reimbursement reductions without seriously
compromising patient access.
2)BACKGROUND . This bill effectively only relates to inpatient
reimbursement in the CCS Program and GHPP for non-Medi-Cal
individuals enrolled in those programs because the other
programs (BCCEDP, State-Only FFP, and Family PACT) do not
reimburse for inpatient services.
The CCS Program provides diagnostic and treatment services,
medical case management, and medical and occupational therapy
services to eligible children and young adults less than 21
years of age. Eligibility includes diagnosis of specified
medical conditions such as cancer, congenital heart disease,
and sickle cell anemia. Children receive services in one of
three enrollment pathways: a) CCS-Medi-Cal, in which 138,567
children were estimated to be enrolled in 2010-11; b)
CCS-Healthy Families Program (HFP), in which 25,828 children
are estimated to be enrolled in 2010-11; and, c) CCS-only, in
which 17,432 children are estimated to be enrolled in 2010-11.
This bill affects inpatient reimbursement rates for CCS-HFP
and CCS-only children.
GHPP provides medical care to individuals with genetically
handicapping conditions, including cystic fibrosis,
hemophilia, sickle cell disease, Huntington's disease,
Friedreich's Ataxia, and certain hereditary metabolic
disorders. Individuals receive services in one of two
enrollment pathways: a) GHPP-Medi-Cal, in which 432
individuals were estimated to be enrolled in 2010-11; and, b)
GHPP-only, in which 1,430 individuals were estimated to be
enrolled in 2010-11. This bill affects inpatient
reimbursement rates for GHPP-only individuals.
3)MEDI-CAL HOSPITAL REIMBURSEMENT . CMAC is a state commission
established to negotiate Medi-Cal contracts with hospitals on
behalf of the state. Hospitals that treat Medi-Cal
fee-for-service beneficiaries receive reimbursement either by
contracting with the state through CMAC, or billing for
services provided. CMAC rates are confidential for four
years. When hospitals do not contract with CMAC (referred to
as non-contract hospitals), they are initially paid an interim
rate. Hospitals are then required to submit a cost report
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within five months of the close of their fiscal period, and
DHCS reviews each hospital's cost report and prepares a
tentative settlement, which is a determination of the
allowable reimbursable reported costs for a hospital's fiscal
period. DHCS compares what a hospital was paid in interim
payments, to the hospital's allowable reimbursable reported
costs. The difference may result in either an underpayment
that is paid to the hospital or an overpayment that is
recouped from the hospital.
4) CCS AND GHPP HOSPITAL REIMBURSEMT RATES . AB 2474 (Galgiani),
Chapter 496, Statutes of 2008, was enacted as an urgency
measure to clarify that the hospital inpatient rate of payment
is 90% of the Medi-Cal hospital interim rates of payment. AB
2474 also delayed until January 1, 2010 the requirement that
rates in the CCS Program and GHPP inpatient hospital rates be
reimbursed at their lower Medi-Cal CMAC rate. In addition,
AB 2474 made legislative findings to prevent a recoupment of
previous year hospital inpatient overpayments in the CCS
Program and GHPP by stating that it was never the
Legislature's intent in enacting the 2002 health budget
trailer bill that services to non-Medi-Cal children enrolled
in the CCS Program and GHPP be reimbursed at an amount less
than the Medi-Cal interim rate. The intent language in AB
2474 was to protect hospitals that provide care in the CCS
Program and GHPP from being subject to recoupment for
overpayments, and to protect the state from being obligated to
reimburse the federal government for overpayments in the HFP,
which is generally funded 65% by federal funds. AB 896
(Galgiani), Chapter 260, Statutes of 2009, extended the
reimbursement rate until January 1, 2011. AB 1872 (Galgiani)
of 2010 would have extended the sunset to January 1, 2014.
However it died on suspense in Senate Appropriations and
therefore the law has reverted to the pre-AB 2474 version.
According to the sponsors, however, DHCS has not revised the
reimbursement rate.
The sponsors state that AB 2474 and AB 896 were in response to
a 2008 legal review by DHCS which brought into question the
methodology for reimbursing hospitals. During budget
discussions, the DHCS practice of reimbursing hospitals at the
interim rate for individuals in non-Medi-Cal CCS and GHPP
appeared to be at odds with what was required under law that
required the payment rate to be the same as the provider's
Medi-Cal rate. Instead, hospitals providing services to
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children enrolled in the CCS Program and GHPP who were not
enrolled in Medi-Cal were being reimbursed at their interim
Medi-Cal rate, a higher rate. In addition, DHCS was planning
to recoup payments above the CMAC rate for each hospital,
possibly tens of millions of dollars.
CCHA indicates that its members' non-contract Medi-Cal rates
are higher than their Medi-Cal contract rates. Because
children's hospitals are CMAC-contracting hospitals, their
payment rates for state-only and CCS-HFP children, without
this bill, would be the lower CMAC Medi-Cal contract rate,
rather than their higher Medi-Cal interim rate.
5)SUPPORT . CCHA writes as sponsor that this bill clarifies the
legislative intent regarding hospital inpatient reimbursement
for non-Medi-Cal CCS patients. CCHA reports that currently,
the CCHA hospitals are operating with a -1.6% operating margin
and this will only worsen with increased Medi-Cal enrollment
and decreased non-operating revenues due to the continued
economic downturn. They go on to argue that the impact of
reducing hospital reimbursement for non-Medi-Cal CCS Program
patients to the individual hospital CMAC rate would be
significant for California's children's hospitals.
6)POLICY QUESTIONS .
a) Postponement of Payment Reduction Made Permanent . AB
2474 of 2008 delayed until January 1, 2010, the requirement
that inpatient rates in the CCS Program and GHPP be
reimbursed at their Medi-Cal rate (their lower CMAC rate).
AB 896 of 2009 proposed to also repeal this requirement,
but was amended to extend the delay until January 1, 2011.
AB 1872 of 2010 would have extended the delay until 2014,
but died on suspense in the Senate Finance Committee. This
bill addresses an important issue in that provider payment
rates in public programs are a key factor in beneficiaries'
ability to access program services. However, given the
state's current fiscal constraints and potential cuts to
existing health programs, shouldn't the temporary delay in
a payment reduction be eliminated?
b) CCS Program and GHPP Reimbursement Different Depending
Upon Underlying Eligibility . In the health budget trailer
bill of 2002 (AB 434 (Committee on Budget), Chapter 1161,
Statutes of 2002), the Legislature required that provider
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rates of payment for services rendered in CCS Program,
GHPP, BCCEDP, State-Only FPP, and Family PACT be identical
to the rates of payment for the same service performed by
the same provider type in the Medi-Cal Program. As
described above, this requirement was not implemented for
non-Medi-Cal inpatient services in the CCS Program and
GHPP.
CCHA argues the reason a higher rate is necessary for
non-Medi-Cal CCS is that when hospitals negotiate with
CMAC, they are considering the entire Medi-Cal patient
population they serve, which includes both the high-cost
services provided by the hospital along with the less
intensive, more moderate-cost services. However, CCHA
argues the services provided to the non-Medi-Cal CCS
Program population are all associated with the CCS
condition, so the services are primarily all high-cost.
Should inpatient reimbursement be different depending upon
whether the CCS Program or GHPP-eligible individual is
enrolled in Medi-Cal versus GHPP-only, CCS-only or CCS-HFP?
7)PREVIOUS LEGISLATION .
a) AB 1872 would have delayed to January 1, 2014 the
requirement that non-Medi-Cal hospital inpatient rates in
the CCS Program, GHPP, BCCEDP, and Family PACT Waiver
Program be identical to payment rates for the same service
performed by the same provider type under the Medi-Cal
Program and clarifies that the rate be 90% of the Medi-Cal
hospital interim rate. AB 1872 died on suspense in the
Senate Appropriations Committee.
b) AB 896 extended the reimbursement rate until January 1,
2011.
c) AB 2474 delayed, to January 1, 2010, the requirement
that non-Medi-Cal hospital inpatient rates in the CCS
Program, GHPP, BCCEDP, and Family PACT Waiver Program be
identical to payment rates for the same service performed
by the same provider type under the Medi-Cal Program and
clarifies that the rate be 90% of the Medi-Cal hospital
interim rate.
d) AB 434 required that provider rates of payment for
services rendered in the CCS Program, GHPP, BCCEDP,
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State-Only FPP, and Family PACT be identical to the rates
of payment for the same service performed by the same
provider type in the Medi-Cal Program.
REGISTERED SUPPORT / OPPOSITION :
Support
California Children's Hospital Association (sponsor)
California Hospital Association
Children's Hospital Central California, Madera
Children's Hospital Los Angeles
CHOC Children's Hospital
Loma Linda University Children's Hospital
Lucille Packard Children's Hospital
Rady Children's Hospital, San Diego
Opposition
None on file.
Analysis Prepared by : Marjorie Swartz / HEALTH / (916)
319-2097