BILL ANALYSIS �
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|SENATE RULES COMMITTEE | SB 920|
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THIRD READING
Bill No: SB 920
Author: Hernandez (D)
Amended: 01/04/12
Vote: 21
SENATE HEALTH COMMITTEE : 5-0, 1/11/12
AYES: Hernandez, Alquist, De Le�n, DeSaulnier, Wolk
NO VOTE RECORDED: Strickland, Anderson, Blakeslee, Rubio
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
SUBJECT : Medi-Cal: hospitals
SOURCE : Author
DIGEST : This bill extends the sunset date and
inoperative date of the Medi-Cal Hospital Provider Rate
Improvement Act of 2011 (Rate Act) so that it is the same
sunset and inoperative dates as the Private Hospital
Quality Assurance Fee Act of 2011 (Fee Act); requires the
Director of Department of Health Care Services (DHCS) to
state the basis for a determination that the Rate Act or
the Fee Act is made inoperative; and makes clarifying and
technical drafting corrections to the Rate Act and the Fee
Act.
ANALYSIS : Existing law:
1.Establishes the Medi-Cal program, administered by DHCS,
under which health care services are provided to
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qualified low-income persons. Inpatient and outpatient
hospital services are a covered benefit under the
Medi-Cal program, subject to utilization controls.
2.Enacts the Rate Act to provide supplemental payments from
July 1, 2011, to December 31, 2013 to private hospitals
for inpatient and outpatient services in Medi-Cal
fee-for-service, managed care and acute psychiatric days,
and to make direct grants to designated public hospitals
in support of health care expenditures.
3.Establishes the Fee Act, which levies a hospital quality
assurance fee (QAF), from July 1, 2011 to January 1,
2014, on each hospital that is not an exempt hospital,
with varying fee amounts by payor source and type of
payment.
4.Requires all funds from the QAF to be used exclusively to
enhance federal financial participation for hospital
services under Medi-Cal, to provide additional
reimbursement to hospitals, to pay DHCS staffing and
administrative costs, to make increased payments to
managed care health plans and mental health plans, and to
fund children's health coverage, in a specified order of
priority.
5.Requires, under the Rate Act, if federal approval or a
letter indicating likely federal approval has not been
received by September 1, 2013, then the body of law
establishing the Rate Act becomes inoperative and is
repealed. Requires, under the Fee Act, if federal
approval or a letter indicating likely federal approval
has not been received by December 1, 2013, then the body
of law establishing the Fee Act becomes inoperative and
is repealed.
6.Sunsets the Rate Act on July 1, 2014, the date the last
payment of QAF, or the date of the last payment from
DHCS, whichever is latest. Sunsets the Fee Act on
January 1, 2015, the date of the last payment of QAF
payments, or the date of the last payment from DHCS,
whichever is latest.
This bill:
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1.Extends the sunset date of the Rate Act to the later of
January 1, 2015 (instead of July 1, 2014), the date of
the last payment of the QAF, or the date of the last
payment from DHCS, whichever is latest.
2.Extends the inoperative date of the Rate Act from
September 1, 2013, to December 1, 2013.
3.Requires the DHCS Director, if he or she determines the
Rate Act or the Fee Act to be inoperative, to execute a
declaration stating that this determination has been
made, and would include as a reason for each Act becoming
inoperative, either Act sunsetting.
4.Makes other technical and clarifying changes including
correcting a drafting error in the Private Hospital
Supplemental Fund statute.
Background
Federal Medicaid law authorizes states to levy fees on
health care providers if the fees meet federal
requirements. Many states (including California) fund a
portion of their share of Medicaid program costs through a
fee on health care providers. Under these funding methods,
states collect funds (through fees, taxes, or other means)
from providers, which are then matched to allow increased
Medicaid reimbursement to providers. The Legislature
enacted a series of bills establishing a time-limited
hospital QAF in 2009, and an additional six-month QAF for
the first six months of 2011. In addition to the hospital
QAF, California currently has a QAF for intermediate care
facilities for the developmentally disabled, and a separate
QAF for skilled nursing facilities.
Last year, SB 335 (Hernandez), Chapter 286, Statutes of
2011, imposed a QAF on hospitals for 30 months (from June
30, 2011, until December 31, 2013). SB 335 uses the
resulting revenue to draw down federal funds to provide
supplemental payments to private hospitals in
fee-for-service Medi-Cal, Medi-Cal managed care, and for
acute psychiatric days, and to provide specified funding
amounts from the QAF per quarter for children's health
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coverage until December 31, 2013. In addition, SB 335
requires county and University of California hospitals to
be paid direct grants (not Medi-Cal payments), funded from
the QAF. SB 335 also reduced disproportionate share
hospital replacement payments and supplemental payments
from the Private Hospital Supplemental Fund to hospitals by
specified amounts in 2012-13 and 2013-14. Finally, SB 335
appropriates $13.6 billion to DHCS for purposes of that
measure. SB 335 took effect as an urgency statute upon
signature by the Governor in September 2011.
The California Hospital Association (CHA) estimates that
over the 30-month period, the QAF will raise approximately
$7 billion and will be matched with approximately $6.1
billion in federal funds with a net benefit to the hospital
industry of $5.2 billion. According to CHA, private
hospitals could receive up to approximately $6 billion in
supplemental payments for inpatient services, $1.8 billion
for outpatient services, and $475 million for
out-of-network emergency medical services to Low Income
Health
Program enrollees . All hospitals will be eligible for up
to $3.9 billion in payments from Medi-Cal managed care
plans. Public hospitals and district hospitals will be
eligible for up to $139 million in grants. In addition,
over $900 million will be available for children's health
care coverage and the administrative costs of DHCS.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 1/17/12)
California Hospital Association
California Childrens Hospital Association
Private Essential Access Community Hospitals
ARGUMENTS IN SUPPORT : The California Hospital
Association states this bill makes a number of technical
corrections and improvements to the hospital fee program
necessary for implementation of the program.
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CTW:nl 1/18/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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