BILL ANALYSIS �
AB 1728
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Date of Hearing: April 25, 2012
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 1728 (Galgiani) - As Amended: April 16, 2012
Policy Committee: HealthVote:15-0
Urgency: Yes State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill requires that the Department of Health Care Services
(DHCS) revert to a prior, higher rate of payment for hospital
inpatient services in two non-Medi-Cal state health programs
(California Children's Services (CCS) and Genetically
Handicapped Persons Program (GHPP)).
FISCAL EFFECT
Savings from implementation of lower rates is already assumed in
the budget. Thus, this bill would result in additional CCS and
GHPP inpatient costs of $35 million ($12 million GF) in the
current fiscal year. The annual cost beginning in fiscal year
2012-13 and ongoing until January 1, 2016 is $26.5 million ($8
million GF).
COMMENTS
1)Rationale . This bill is sponsored by the California Children's
Hospital Association (CCHA) to exempt hospital inpatient rates
from the requirement that provider rates in the CCS Program
and GHPP be reimbursed at Medi-Cal rates negotiated with the
California Medical Assistance Commission (CMAC). This would
result in a significant rate increase as compared to current
law. The sponsor states that the CMAC rate is negotiated
based on provision of inpatient services to the general
Medi-Cal population, and is inadequate for treatment of
higher-acuity CCS conditions.
2)Background . The CCS program provides a range of medical
services, including inpatient hospital stays to children from
low-income families (less than $40,000 per year) with major
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medical conditions such as congenital heart disease and sickle
cell anemia. Children receive services in one of three
enrollment pathways: (a) CCS-Medi-Cal in which 130,000
children are enrolled, (b) CCS-Healthy Families in which
26,000 children are enrolled, and (c) CCS-only in which 18,000
children are enrolled. The Genetically Handicapped Persons
Program (GHPP) is a health care program for adults with
certain genetic diseases, in which about 1,500 people are
enrolled.
Current law, adopted as part of the 2002 health budget trailer
bill, specifies that hospital inpatient rates for non-Medi-Cal
patients in these programs shall be the same as the rates paid
for Medi-Cal patients (effectively the CMAC rate). Because
the rate methodology used prior to this resulted in rates
higher than the CMAC rates, this provision would have resulted
in a rate cut. However, this provision was not implemented.
In 2008, based on a re-interpretation of this trailer bill,
DHCS intended to implement this provision. The implementation
was further delayed until January 1, 2011 by prior legislation
as described below. Under current law, the lower CMAC rates
are effective January 1, 2011; this bill would instead
continue to pay hospitals using the higher rate methodology
that has been used for the last several years.
3)High-cost conditions and services create significant fiscal
risk for in-patient children's hospitals. Due to the serious
nature of CCS-eligible conditions, such as leukemia, parasitic
disease, cancer, and hemophilia, the hospitals providing
services indicate they may incur significant losses on
expensive treatments if reduced to the CMAC rate if this bill
is not enacted.
4)Urgency . This bill declares an urgency clause is necessary in
order to prevent the retroactive recoupment of funds paid to
hospitals for inpatient services. The Governor's budget
proposal for DHCS assumes a recoupment of funds from
overpayments to hospitals made in calendar years 2011 and
2012.
5)Related Legislation . AB 715 (Galgiani) addressed the same
hospital funding issue, and would have permanently eliminated
the provision that reduced rates. AB 715 was held on the
Suspense File of this committee.
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AB 1872 (Galgiani) of 2010, addressed the same issue, and
would have delayed implementation of reduced rates to January
1, 2014. AB 1872 was held on the Suspense File in Senate
Appropriations.
AB 896 (Galgiani), Chapter 260, Statutes of 2009 and AB 2474
(Galgiani), Chapter 496, Statutes of 2008 similarly delayed
implementation of reduced rates.
Analysis Prepared by : Lisa Murawski / APPR. / (916) 319-2081