BILL ANALYSIS Ó
SENATE COMMITTEE ON HEALTH
Senator Ed Hernandez, O.D., Chair
BILL NO: AB 468
AUTHOR: Chávez
AMENDED: June 16, 2014
HEARING DATE: June 25, 2014
CONSULTANT: Bain
SUBJECT : Medi-Cal: delivery system reform incentive pool
payments
SUMMARY : Makes non-designated public hospitals (NDPHs are known
as "district hospitals") eligible to receive federal delivery
system reform incentive pool (DSRIP) funding, subject to
specified conditions (DSRIP is a capped pool of federal funds
available under the state's "Bridge to Reform" Medicaid waiver).
Requires each NDPH, or governmental entity with which it is
affiliated, that operates non-hospital clinics or provides
physician, non-physician practitioner, or other health care
services to report and certify all of the uncompensated Medi-Cal
and uninsured costs of the services furnished that are not
identified as hospital services under the previous or current
waiver. Requires the Department of Health Care Services to seek
Medicaid federal financial participation for all expenditures
reported by the NDPHs and recognized under the state's current
Medicaid waiver.
Existing law:
1.Establishes the Medi-Cal program, administered by the
Department of Health Care Services (DHCS), under which
qualified low-income individuals receive health care services.
Requires inpatient hospital services to be a covered benefit
under the Medi-Cal program.
2.Requires DHCS to develop and implement a payment methodology
based on diagnosis-related groups, subject to federal
approval, that reflects the costs and staffing levels
associated with quality of care for patients in all general
acute care hospitals in state and out of state, including
Medicare critical access hospitals, but excluding designated
public hospitals (DPHs), psychiatric hospitals, and
rehabilitation hospitals, which include alcohol and drug
rehabilitation hospitals.
3.Makes the amount of DSRIP funding, consisting of both the
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federal and non-federal share of payments that is made
available to each DPH in the aggregate for the term of the
current waiver to be based initially on the delivery system
reform proposals that are submitted by DPHs to DHCS for review
and submission to the Center for Medicare and Medicaid
Services (CMS) for final approval. Conditions the receipt of
funds on the DPH's progress toward, and achievement of, the
specified milestones and other metrics established in its
approved DSRIP proposal.
This bill:
DSRIP Funding for NDPHs
1.Makes NDPHs eligible to receive DSRIP payments, to the extent
additional federal funding is made available for this purpose
under the DSRIP pool in the current waiver, and if the NDPH
comply with the DSRIP funding requirements in this bill.
2.Prohibits the amount of DSRIP funds that may be received from
exceeding the additional federal funding made available for
DSRIP payments to NDPHs. Prohibits reducing the amount of
DSRIP funding that would otherwise be made available to DPHs,
including the amounts that DPHs would be eligible to receive
under their DSRIP plans approved as of January 1, 2012.
3.Permits DHCS to authorize unused funding to be made available
to NDPHs if the DPHs are unable to claim the full amount of
federal funding made available to the DPHs under existing law
and the Special Terms and Conditions (STCs) of the state's
five year Section 1115 Medi-Cal Demonstration/Pilot Project
Waiver, entitled "A Bridge to Reform," and the unused amount
of federal funding made available to DPHs cannot be used in
later years under the current waiver.
4.Requires, beginning in the 2014-15 fiscal year, if federal
approval is obtained for an amendment to the current waiver,
NDPHs to receive payments from DSRIP funding, consisting of
both the federal and non-federal share of payments, that is
made available to each NDPH in the aggregate for the term of
the current waiver. Requires payment to be based initially on
the DSRIP reform proposals that are submitted by the NDPHs to
DHCS for review and submission to CMS for final approval.
Requires the initial percentages of DSRIP funding among NDPH
for each year of the current waiver to be determined based on
the annual components as contained in the approved proposals.
5.Requires the actual receipt of funds to be conditioned on the
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NDPH's progress toward, and achievement of, the specified
milestones and other metrics established in its approved DSRIP
proposal. Permits a NDPH to carry forward available DSRIP pool
funding associated with milestones and metrics from one year
to a subsequent period as authorized by the STCs and the final
DSRIP pool protocol.
6.Permits DHCS to reallocate the DSRIP funding available
pursuant to conditions specified, and as authorized by, the
STCs and the final DSRIP pool protocol.
7.Requires each NDPH to be individually responsible for progress
toward, and achievement of, milestones and other metrics in
its proposal, as well as other applicable requirements
specified in the STCs and the final DSRIP protocol, in order
to receive its specified allocation of DSRIP funding.
8.Requires the NDPH to submit semi-annual reports and requests
for payment to DHCS by March 31 and September 30 following the
end of the second and fourth quarters of the current waiver,
or comply with any other process as approved by CMS.
9.Requires the NDPH or its affiliated governmental entity,
within 14 days after the semi-annual report due date, to make
an intergovernmental transfer (IGT) of funds equal to the
non-federal share that is necessary to claim the federal
funding for the pool payment related to the achievement or
progress metric that is certified. Requires the IGT to be
deposited into the Public Hospital Investment, Improvement,
and Incentive Fund established in existing law.
10.Requires DHCS to claim the federal funding and pay both the
non-federal and federal shares of the incentive payment to the
NDPH or other affiliated governmental provider, as applicable.
11.Requires, if the IGT is made within the appropriate 14-day
time frame, the incentive payment to be disbursed within seven
days with the expedited payment process as approved by CMS.
Requires the payment to be disbursed within 20 days of when
the transfer is made otherwise.
12.Requires the NDPH or other affiliated governmental provider
to be responsible for any fee or cost required to implement
the expedited payment process in accordance with a specified
provision of the State Administrative Manual.
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13.Requires DHCS to submit for federal approval an amendment to
the current waiver to implement the DSRIP provisions of this
bill.
14.Requires, in the event of a conflict between any provision of
a provision of this bill and the STCs for the current waiver
and the final DSRIP protocol, the STCs and the final DSRIP
protocol to control.
Certified Public Expenditures (CPEs) for NDPHs
15.Requires each NDPH, or governmental entity with which it is
affiliated, that operates non-hospital clinics or provides
physician, non-physician practitioner, or other health care
services that are not identified as hospital services under
the STCs for the previous and current waiver, to report and
certify all of the uncompensated Medi-Cal and uninsured costs
of the services furnished. Permits the amount of these
uncompensated costs to be claimed by DHCS. Requires the amount
to be determined by DHCS in consultation with the governmental
entity so as to optimize the level of claimable federal
Medicaid reimbursement.
16.Requires NDPHs, beginning in the 2012-13 fiscal year, within
five months after the end of a current waiver year, to submit
to DHCS all of the following reports:
a. The hospital's Medicare cost report for the
prior or current waiver year; and,
b. Other cost reporting and statistical data
necessary for the determination of amounts due the
hospital under the prior or current waiver, as
requested by DHCS.
17.Requires, for each year of the previous or current waiver,
the reports to identify all of the following:
a. To the extent applicable, the costs incurred
in providing inpatient hospital services to Medi-Cal
beneficiaries on a fee-for-service basis and physician
and non-physician practitioner services costs; and,
b. The costs incurred in providing hospital
services to uninsured individuals.
18.Requires reports submitted to include all allowable costs.
19.Requires the appropriate public official to certify to all of
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the following:
a. The accuracy of the reports required;
b. That the expenditures, to meet the reported
costs comply with a specified provision of federal
regulation; and,
c. That the sources of funds used to make
certified public expenditures (CPEs) do not include
impermissible provider taxes or donations as defined
under federal law, or other federal funds. For this
purpose, federal funds do not include DSRIP payments
or patient care revenue received as payment for
services rendered under programs such as
non-designated state health programs, the Low Income
Health Program, Medicare, or Medicaid.
20.Requires the CPEs made to be based on a schedule established
by DHCS in accordance with federal requirements.
21.Permits the DHCS director to require the NDPH to submit
quarterly estimates of anticipated expenditures, if these
estimates are necessary to obtain interim payments of federal
Medicaid funds. Requires all reported expenditures to be
subject to reconciliation to allowable costs, as determined in
accordance with applicable implementing documents for the
prior and current waiver.
22.Requires the DHCS director to seek Medicaid federal financial
participation for all CPEs reported by the NDPHs and
recognized under the current waiver.
23.Permits the time frames for data submission and reporting
periods to be adjusted as necessary in accordance with federal
requirements.
24.Contains an urgency clause, which would make this bill
effective upon enactment.
FISCAL EFFECT : The current form of this bill has not been heard
by a fiscal committee.
PRIOR VOTES : Not applicable for the current form of this bill.
COMMENTS :
1.Author's statement. According to the author, this bill allows
for expanded access to federal dollars for district hospitals
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throughout California. This bill will allow district hospitals
to apply for additional federal grants for programs related to
the delivery system in their hospital. Pending approval from
CMS if enacted, this bill will allow public district/municipal
hospitals to participate in the final year of the 2010 1115
Waiver DSRIP for 2014-15. Some DSRIP projects could include
expanding primary and specialty care, implementing or
expanding telemedicine services, improving emergency services,
or other critical programs.
2.Background on NDPH and Medi-Cal reimbursement. NDPHs are
hospitals owned by hospital districts or municipal entities.
There are 46 NDPHs in California.
Last year, AB 498 (Chavez), Chapter 672, Statutes of 2013,
allowed DHCS to seek any necessary federal approvals or
waivers to make payments to NDPHs from the federally funded
Safety Net Care Pool (SNCP) under the state's Medicaid "Bridge
to Reform" waiver for uncompensated care for the 2013-14 and
2014-15 fiscal years if federal approval is not obtained to
implement the payment methodology established in the 2012
health budget trailer bill. Under AB 498, the state would
receive one-half of the funds for Medi-Cal related
expenditures if funds for uncompensated care are received by
the state for this purpose.
AB 498 was enacted after a broader proposal in the 2012 health
budget trailer bill (AB 1467, [Budget Committee], Chapter 23,
Statutes of 2012) for funding of NDPHs was not implemented due
to concerns from CMS. Part of that broader proposal would have
allowed NDPH to receive DSRIP funds, but it was subsequently
repealed by AB 498. AB 498 enabled one provision of AB 1467 to
go forward (allowing NDPH to receive funds from the SNCP) but
repealed provisions shifting NDPHs to CPEs and without
allowing these hospitals to access the DSRIP. This bill will,
in effect, re-enact the two provisions of AB 1647 that were
repealed by enabling NDPH to draw down federal Medicaid
matching funds for the uninsured (using CPEs) for whom they do
not currently received Medicaid reimbursement and allowing
NDPH to receive funds from DSRIP. The sponsor of this bill
(the District Hospital Leadership Forum [DHLF]) estimates NDPH
will be able to receive $60 million from DSRIP under this
bill.
3.Delivery System Reform Incentive Pool (DSRIP). State
implementing legislation for the 2010 Waiver requires DHCS, to
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the extent authorized under the previous or current waiver
that is approved by CMS, to establish a program of investment,
improvement, and incentive payments for DPHs to encourage and
incentivize delivery system transformation and innovation in
preparation for the implementation of federal health care
reform. To implement this provision, the continuously
appropriated Public Hospital Investment, Improvement, and
Incentive Fund was established, which contains any moneys that
a county, other political subdivision of the state, or other
governmental entity in the state voluntarily elects to
transfer to DHCS for deposit into the fund.
Moneys in that fund must be used as the source for the
non-federal share of investment, improvement, and incentive
payments to participating DPHs and the governmental entities
with which they are affiliated, that provide the IGTs for
deposit into the fund. DHCS is required to obtain federal
financial participation (FFP) for moneys in the fund to the
full extent permitted by law. Moneys disbursed from the fund,
and all associated FFP are required to be distributed solely
to the DPHs and the governmental entities with which they are
affiliated. Under the federal STCs of the waiver, total
funding for DSRIP cannot exceed total computable expenditures
of $6.671 billion over five years. Under the waiver STCs, both
DPH and NDPHs are eligible for DSRIP funding. Each public
hospital system is responsible for providing the non-federal
share of its DSRIP payments through an IGT.
4.Prior legislation. AB 1467 proposed to change the
reimbursement methodology and fund source for reimbursement to
NDPHs, as described above.
AB 113 (Monning), Chapter 20, Statutes of 2011, established
the NDPH IGT Program, administered by the DHCS, under which
public entities voluntarily transfer funds to the state for
the purpose of drawing down federal funds to make supplemental
Medi-Cal payments to these NDPHs.
AB 102 (Budget Committee), Chapter 29, Statutes of 2011,
requires DHCS to implement a new inpatient payment methodology
based on diagnosis-related groups (DRGs).
SB 853 (Budget and Fiscal Review Committee), Chapter 717,
Statutes of 2010, requires DHCS, subject to federal approval,
to develop and implement a Medi-Cal payment methodology based
on DRGs for private inpatient hospital services.
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SB 208 (Steinberg), Chapter 714, Statutes of 2010, implemented
provisions of the 2010 Section 1115 Medicaid waiver including
establishing the DSRIP Fund consisting of IGTs from counties
or other specified governmental entities, to be matched with
federal funds and to be used for investment, improvement, and
incentive payments for DPHs.
5.Support. This bill is sponsored by DHLF to allow NDPHs to
create hospital-specific DSRIPs for 2014-15 that would allow
these NDPHs to use IGTs to draw down federal funds to improve
delivery systems which will benefit the communities served by
these hospitals. DHLF states that, in recent discussions
between DHCS and CMS, DHCS reports CMS' preference is that
district/municipal hospitals, similar to county/UC hospitals,
participate in delivery system reforms, which could result in
incentive payments if particular milestones are met. As with
the SNCP, this would not cost the state General Fund and would
not divert funding away from DPHs. Some DSRIP projects could
include expanding primary and specialty care, implementing or
expanding telemedicine services; improving emergency services,
or other critical programs. This bill allows for expanded
access to federal dollars for NDPHs throughout California by
allowing these hospitals to apply for additional federal
grants for programs related to the delivery system in their
hospital.
SUPPORT AND OPPOSITION :
Support: District Hospital Leadership Forum (sponsor)
Oppose: None received
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