BILL ANALYSIS �
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|SENATE RULES COMMITTEE | SB 920|
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UNFINISHED BUSINESS
Bill No: SB 920
Author: Hernandez (D)
Amended: 8/20/12
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
SENATE FLOOR : 34-0, 1/23/12
AYES: Alquist, Anderson, Berryhill, Calderon, Corbett,
Correa, De Le�n, DeSaulnier, Dutton, Emmerson, Fuller,
Gaines, Hancock, Harman, Hernandez, Huff, Kehoe, Leno,
Lieu, Liu, Lowenthal, Negrete McLeod, Padilla, Pavley,
Price, Rubio, Simitian, Steinberg, Strickland, Vargas,
Walters, Wolk, Wright, Yee
NO VOTE RECORDED: Blakeslee, Cannella, Evans, La Malfa,
Runner, Wyland
ASSEMBLY FLOOR : 76-1, 8/22/12 - See last page for vote
SUBJECT : Medi-Cal: hospitals
SOURCE : Author
DIGEST : This bill revises provisions of the Medi-Cal
Hospital Provider Rate Payment Act (Rate Act) of 2011 and
the Private Hospital Quality Assurance Fee (QAF) Act (Fee
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Act) of 2011.
Assembly Amendments require the Director of the Department
of Health Care Services (DHCS), effective the first year
that diagnosis-related group methodology reimbursement to
private hospitals is implemented, to allocate the Private
Hospital Supplemental Fund among eligible private hospitals
pursuant to a methodology developed in consultation with
the statewide associations representing children's
hospitals and private Disproportionate Share Hospitals. In
addition, for the 2013-14 fiscal year as a transition, the
methodology shall, to the extent possible, ensure that each
eligible hospital is allocated funding at a proportionate
level of payment it received for the 2011-12 fiscal year
(FY) taking into considering specified factors.
ANALYSIS : Existing law:
1.Establishes the Medi-Cal program, administered by DHCS,
under which health care services are provided to
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 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.
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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:
1.Increases direct grants to district owned or operated
hospitals known as nondesignated public hospitals from
the funds generated by the fee and provides that the
nondesignated public hospitals would no longer be
eligible for payments from the Low Income Health Plan
(LIHP) out-of-network supplemental fund.
2.Limits LIHP supplemental payments solely to private
hospitals and authorizes DHCS to make the payments
directly to the hospital instead of to the LIHP.
3.Extends the sunset date and inoperative date of the Rate
Act of 2011 to align it with the sunset and inoperative
dates of the Fee Act of 2011.
4.Requires the Director of DHCS to state the basis for a
determination that the Rate Act or the Fee Act is made
inoperative.
5.Adjusts the payment amounts to hospitals to address the
recently revised federal upper payment limit.
6.Revises the methodology used to determine the percentage
of the total fee each hospital must pay.
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7.Requires the Director of DHCS, effective the first year
that diagnosis-related group methodology reimbursement to
private hospitals is implemented, to allocate the Private
Hospital Supplemental Fund among eligible private
hospitals pursuant to a methodology developed in
consultation with the statewide associations representing
children's hospitals and private Disproportionate Share
Hospitals. In addition, for the 2013-14 fiscal year as a
transition, the methodology shall, to the extent
possible, ensure that each eligible hospital is allocated
funding at a proportionate level of payment it received
for the 2011-12 fiscal year (FY) taking into considering
specified factors.
8.Makes clarifying and technical drafting corrections to
the Rate Act and the Fee Act.
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
coverage until December 31, 2013. In addition, SB 335
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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 8/22/12)
California Children's Hospital Association
California Hospital Association
Children's Hospital Los Angeles
Community Hospital Long Beach
District Hospital Leadership Forum
Earl & Loraine Miller Children's Hospital
Long Beach Memorial Medical Center
Lucile Packard Children's Hospital
Private Essential Access Community Hospitals
Rady Children's Hospital - San Diego
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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.
ASSEMBLY FLOOR : 76-1, 8/22/12
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Beall,
Bill Berryhill, Block, Blumenfield, Bonilla, Bradford,
Brownley, Buchanan, Butler, Charles Calderon, Campos,
Carter, Cedillo, Chesbro, Conway, Cook, Davis, Dickinson,
Eng, Feuer, Fletcher, Fong, Fuentes, Furutani, Beth
Gaines, Galgiani, Garrick, Gatto, Gordon, Grove, Hagman,
Hall, Harkey, Hayashi, Hill, Huber, Hueso, Huffman,
Jeffries, Jones, Knight, Lara, Logue, Bonnie Lowenthal,
Ma, Mansoor, Mendoza, Miller, Mitchell, Monning, Morrell,
Nestande, Nielsen, Norby, Olsen, Pan, Perea, V. Manuel
P�rez, Portantino, Silva, Skinner, Smyth, Solorio,
Swanson, Torres, Valadao, Wagner, Wieckowski, Williams,
Yamada, John A. P�rez
NOES: Halderman
NO VOTE RECORDED: Donnelly, Gorell, Roger Hern�ndez
CTW:n 8/22/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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