Source: http://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201120120SB90
Timestamp: 2019-09-19 05:15:40
Document Index: 470119067

Matched Legal Cases: ['art 3', 'art 1', 'art 1', 'art 3', 'art 1', 'art 3', 'art 2', 'art 2', 'art 447', 'art 1', 'art 2', 'art 3']

Bill Text - SB-90 Health: hospitals: Medi-Cal.
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SB-90 Health: hospitals: Medi-Cal.(2011-2012)
An act to amend Section 130060 of the Health and Safety Code, and to amend Sections 14105.281, 14166.115, and 14167.10 of, to amend and repeal Section 14166.245 of, and to add and repeal Article 5.226 (commencing with Section 14168.1) and Article 5.227 (commencing with Section 14168.31) of Chapter 7 of Part 3 of Division 9 of, the Welfare and Institutions Code, relating to health, making an appropriation therefor, and declaring the urgency thereof, to take effect immediately.
(1) Existing law establishes the Medi-Cal program, administered by the State Department of Health Care Services, under which basic health care services are provided to qualified low-income persons. The Medi-Cal program is, in part, governed and funded by federal Medicaid provisions.
Existing law authorizes the Director of Health Care Services to limit the rates of payment for health care services provided under the Medi-Cal program. Existing law requires, subject to federal approval, the department to freeze rates applicable to inpatient hospital services, as specified, and authorizes the department to modify the rate freeze in order to comply with federal Medicaid requirements.
This bill would provide that the rate freeze pursuant to these provisions shall become inoperative, and that any rate that was frozen pursuant to those provisions shall be restored retroactively to the rate that would have been in effect absent those provisions, on the effective date of this bill.
(2) Existing law requires the department to seek a demonstration project or federal waiver of Medicaid law to implement specified objectives, which may include better care coordination for seniors, persons with disabilities, and children with special health care needs. Existing law provides that to the extent the provisions under the Medi-Cal Hospital/Uninsured Care Demonstration Project Act do not conflict with the provisions of, or the Special Terms and Conditions of, this demonstration project, the provisions of the Medi-Cal Hospital/Uninsured Care Demonstration Project Act shall apply. Existing law requires the department to reduce disproportionate share hospital replacement payments to private hospitals by 10%, as specified.
This bill would provide that, in addition to the 10% reduction, disproportionate share hospital replacement payments to private hospitals shall be reduced in the 2010–11 fiscal year by an additional $30 million in General Fund moneys and by the corresponding federal financial participation. To the extent permitted by federal law, the bill would provide that the additional room under the federal Upper Payment Limit created by this reduction shall be used to increase the above-described supplemental payments. This bill would also provide that, in addition to the 10% reduction, disproportionate share hospital replacement payments to private hospitals shall be reduced in the 2011–12 fiscal year by an additional $75 million in General Fund moneys and by the corresponding federal financial participation. To the extent permitted by federal law, the bill would provide that the additional room under the federal Upper Payment Limit created by this reduction shall be used to increase supplemental payments under subsequent legislation extending or creating a new supplemental hospital payment program supported by a fee.
(3) Existing law, until January 1, 2013, reduces interim payments by 10% for inpatient hospital services provided on and after July 1, 2008, at all hospitals that receive Medi-Cal reimbursement from the department and that are not under selective contracts with the department.
This bill would, commencing on the effective date of this bill, provide that these provisions shall no longer be applicable to fee-for-service hospital rates but shall continue to be applicable as specified.
(4) Existing law, subject to federal approval, imposes a quality assurance fee, as specified, on certain general acute care hospitals through and including December 31, 2010. Existing law creates the Hospital Quality Assurance Revenue Fund in the State Treasury and requires that the money collected from the quality assurance fee be deposited into the fund.
Existing law, subject to federal approval, requires the department to make supplemental payments for certain services, as specified, to private hospitals, nondesignated public hospitals, and designated public hospitals, as defined, for subject fiscal years, as defined. Existing law also requires the department to increase capitation payments to Medi-Cal managed care plans, increase payments to mental health plans, and make direct grants to designated public hospitals, as specified. Existing law provides that the moneys in the Hospital Quality Assurance Revenue Fund shall, upon appropriation by the Legislature, be available only for certain purposes, including providing the supplemental payments to hospitals, direct grants to designated public hospitals, increased capitation payments to Medi-Cal managed care plans, and increased payments to mental health plans. Existing law also establishes the continuously appropriated Distressed Hospital Fund, which consists of moneys transferred to the fund or appropriated by the Legislature and used as the nonfederal share of payments to distressed hospitals, as defined.
This bill would, subject to federal approval, commencing January 1, 2011, through and including June 30, 2011, impose a quality assurance fee, as specified, on certain general acute care hospitals. This bill would require that the moneys collected from the quality assurance fee be deposited into the Hospital Quality Assurance Revenue Fund. The bill would, subject to federal approval, provide that the moneys in the Hospital Quality Assurance Revenue Fund shall, upon appropriation by the Legislature, be available only for certain purposes, including providing supplemental payments for certain services to private hospitals, increased capitation payments to Medi-Cal managed care plans, and increased payments to mental health plans. The bill would provide that if quality assurance fee payments are remitted to the department after the date determined by the department to be the final date for calculating the final supplemental payments, the fee payments shall be retained in the fund for purposes of funding supplemental payments supported by a hospital quality assurance fee program under subsequent legislation, but provides that if supplemental payments are not implemented under subsequent legislation, then those quality assurance fee payments shall be deposited into the Distressed Hospital Fund. The bill would also provide that if amounts of the quality assurance fees are collected in excess of the funds required to make the payments above and federal rules prohibit the department from refunding the fee payments to the general acute care hospitals, the excess funds shall be deposited into the Distressed Hospital Fund. By increasing the amount of money that may be deposited into the Distressed Hospital Fund, this bill would make an appropriation. The bill would also require that the department design and implement, in consultation with the designated and nondesignated public hospitals, an intergovernmental transfer program relating to Medi-Cal managed care services provided by designated and nondesignated public hospitals in order to increase capitation payments for the purpose of increasing their reimbursement.
(5) Existing law requires, after January 1, 2008, that any general acute care hospital building that is determined to be a potential risk of collapse or pose significant loss of life may only be used for nonacute care hospital purposes, unless granted an extension as prescribed.
This bill would authorize the Office of Statewide Health Planning and Development to grant a hospital an additional extension of up to 7 years for a hospital building that it owns or operates if the hospital meets specified milestones. This bill would require a hospital that applies for this extension to pay the office an additional fee, to be determined by the office, sufficient to cover the additional reasonable costs incurred by the office for maintaining the additional reporting requirements established by these provisions. This bill would provide that this provision shall become operative on the date the department receives all necessary federal approvals for a 2011–12 fiscal year hospital quality assurance fee program that includes $320 million in fee revenue to pay for health care coverage for children, as specified.
(6) This bill would become operative only if AB 113 of the 2011–12 Regular Session of the Legislature is enacted.
(A) The hospital owner submits to the office, no later than March 31, 2012, a letter of intent stating whether it intends to rebuild, replace, or retrofit the building, or remove all general acute care beds and services from the building, and the amount of time necessary to complete the construction.
(B) The hospital owner submits to the office, no later than March 31, 2012, a schedule detailing why the requested extension is necessary, and specifically how the hospital intends to meet the requested deadline.
Section 14105.281 of the Welfare and Institutions Code is amended to read:
14105.281.
(1) That because the implementation of Section 14105.28 is expected to require several years and further rate changes may make the transition to an inpatient hospital reimbursement methodology based on diagnosis-related groups more difficult, and because of the need to take into account the amount of base payments when combined with supplemental payments made to inpatient hospitals, including payments provided as a result of the hospital fee set forth in Article 5.22 (commencing with Section 14167.31) and Article 5.225 (commencing with Section 14167.41), it is necessary to impose the rate freeze enacted in this section.
(2) (A) Upon implementation of Article 5.21 (commencing with Section 14167.1) and Article 5.22 (commencing with Section 14167.31), as added by Assembly Bill 1383 of the 2009–10 Regular Session, supplemental payments shall be made to hospitals that have contracts negotiated pursuant to the Selective Provider Contracting Program, provided that rates under these contracts are not reduced below the contract rates in effect on the effective date of Article 5.21 (commencing with Section 14167.1), as added by Assembly Bill 1383 of the 2009–10 Regular Session.
(B) Assembly Bill 1383 of the 2009–10 Regular Session was signed into law on October 11, 2009, and the effective date of Article 5.21 (commencing with Section 14167.1) was January 1, 2010. Therefore, in consideration of the notice provided by Assembly Bill 1383 of the 2009–10 Regular Session, and in further consideration that the negotiated contract rates in effect on January 1, 2010, or the rates in effect on July 1, 2010, to the extent those rates are lower than the rates in effect on January 1, 2010, as provided in paragraph (1) of subdivision (c), are sufficient to conform with the standards set forth in Section 1396a(a)(30)(A) of Title 42 of the United States Code, as well as the existence of supplemental payments to be made under Article 5.21 (commencing with Section 14167.1), the Legislature exercises its discretion, in consultation with the department, to freeze rates at the levels in effect for these hospitals on January 1, 2010, or the rates in effect on July 1, 2010, to the extent that those rates are lower than the rates in effect on January 1, 2010, as provided in paragraph (1) of subdivision (c).
(3) The freeze shall remain in effect during the period of time supplemental payments are made under Article 5.21 (commencing with Section 14167.1), and thereafter, to the extent that the rates, alone or in combination with any available supplemental payments, are consistent with federal law as provided in this section.
(b) Notwithstanding any other provision of law, in order to develop and implement changes in the methodology for payments for hospital inpatient services, the director shall freeze rates applicable to inpatient hospital services, as specified in this section.
(c) (1) Reimbursement rates for inpatient hospital services for all hospitals, except designated public hospitals, as defined in subdivision (d) of Section 14166.1, that receive Medi-Cal reimbursement from the State Department of Health Care Services, both under contract with the Selective Provider Contracting Program as well as noncontract hospitals, shall be frozen to the lesser of the amount paid on January 1, 2010, or the amount paid on July 1, 2010. The rate freeze shall be in effect for reimbursements for inpatient hospital services provided to Medi-Cal beneficiaries beginning on July 1, 2010, through and including the date on which the Medicaid Management Information System converts to claim processing based on the new reimbursement methodology developed pursuant to Section 14105.28 and described in paragraph (1) of subdivision (b) of that section.
(2) In the event a contract hospital terminates its contract and becomes a noncontract hospital, the hospital shall receive the same rate or rates as provided in paragraph (1) as a contract hospital for inpatient hospital services provided to Medi-Cal eligible individuals while the rate freeze specified in paragraph (1) remains in effect.
(3) This section nullifies any agreement between the state and a hospital for rate adjustments that would be inconsistent with this section. Other provisions of any of those agreements shall be unchanged by this section.
(4) In the event a noncontract hospital elects to become a contract hospital after July 1, 2010, at a negotiated rate or negotiated rates less than the freeze amount provided in paragraph (1), the hospital shall receive the contract rate or rates while the freeze remains in effect.
(d) For purposes of this section, the reimbursement for inpatient hospital services includes the amounts paid for all categories of inpatient services allowable by Medi-Cal and shall not include any supplemental payments. The reimbursement includes the amounts paid for routine services together with all related ancillary services.
(e) Within 90 days of the date this section becomes effective, the department shall develop and provide to all hospitals the methodology that will be utilized to implement the rate freeze required by this section for noncontract hospitals.
(f) (1) For dates of service on and after July 1, 2010, the department shall reconcile the payments, as limited by subdivision (c), to the amounts that the hospitals, that are subject to the new methodology set forth in Section 14105.28, would have received if the new methodology had been in effect. The department shall identify the data that will be used in making the reconciliations.
(2) The department shall implement the reconciliation process on the date that the payment methodology based on diagnosis-related groups has been made final, but no later than June 30, 2012. The director shall execute a declaration stating the date on which the new payment methodology has become final.
(3) In the process of reconciliation, no payment, with respect to dates of service prior to the effective date of the act that added this section, shall be reduced below the amount paid pursuant to subdivision (c).
(4) Rates paid to hospitals, or for specified services, that are not subject to the methodology in paragraph (1) of subdivision (b) of Section 14105.28, shall be increased subject to the annual Budget Act.
(g) Notwithstanding subdivision (c) or any other provision of this section, for the 2011–12 fiscal year and each fiscal year thereafter, or portion thereof, in which subdivision (c) remains in effect, the department shall, subject to an appropriation in the annual Budget Act applicable to the particular fiscal year, apply an increase in reimbursement rates for all hospital services that result from the freeze imposed pursuant to subdivision (c).
(h) Notwithstanding the rulemaking provisions of Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, the department may take the actions specified in this section by means of provider bulletins or notices, policy letters, or other similar instructions, without taking regulatory action.
(i) (1) The rates provided for in this section shall be implemented only if the director determines that the rates, as established by this section, will comply with applicable federal Medicaid requirements and that federal financial participation will be available.
(2) In assessing whether federal financial participation is available, the director shall determine whether the rates comply with applicable federal Medicaid requirements, including those set forth in Section 1396a(a)(30)(A) of Title 42 of the United States Code.
(3) To the extent that the director determines that the rates do not comply with the federal Medicaid requirements, the director retains the discretion not to implement that rate and may revise the rate as necessary to comply with federal Medicaid requirements.
(j) The director shall seek any necessary federal approval for the implementation of this section. To the extent that federal financial participation is not available with respect to any rate of reimbursement described by this section, the director retains the discretion not to implement that rate and may revise the rate as necessary to comply with the federal Medicaid requirements.
(k) Subdivisions (a) to (g), inclusive, shall become inoperative, and any rate that was frozen pursuant to this section shall be restored retroactively to the rate that would have been in effect absent this section, on the effective date of the act that added this subdivision. The department shall explore other avenues that do not involve a rate freeze for achieving the stability needed, including determining base payment rates, in order to transition to an inpatient hospital reimbursement methodology based on diagnosis-related groups.
Section 14166.115 of the Welfare and Institutions Code is amended to read:
14166.115.
(a) Due to the state budget deficit and in order to implement changes in the level of funding for health care services, the department shall reduce disproportionate share hospital replacement payments to private hospitals made pursuant to Section 14166.11 as specified in this section.
(b) (1) Disproportionate share hospital replacement payments to private hospitals pursuant to Section 14166.11 shall be reduced by 10 percent. The reductions shall be applied to all disproportionate share hospital replacement payments to private hospitals made for the 2009–10 fiscal year, including, but not limited to, interim payments, tentative adjusted monthly payments, data corrected payments, and the final adjusted payment.
(2) In addition to the reduction provided for in paragraph (1), disproportionate share hospital replacement payments to private hospitals pursuant to Section 14166.11 shall be reduced in the 2010–11 fiscal year by an additional thirty million dollars ($30,000,000) in General Fund moneys and by the corresponding federal financial participation. To the extent permitted by federal law, the additional room created by this paragraph under the federal upper payment limit shall be used to increase supplemental payments under Article 5.226 (commencing with Section 14168.1) and Article 5.227 (commencing with Section 14168.31).
(3) In addition to the reduction provided for in paragraph (1), disproportionate share hospital replacement payments to private hospitals pursuant to Section 14166.11 shall be reduced in the 2011–12 fiscal year by an additional seventy-five million dollars ($75,000,000) in General Fund moneys and by the corresponding federal financial participation. To the extent permitted by federal law, the additional room created by this paragraph under the federal upper payment limit shall be used to increase supplemental payments under subsequent legislation extending or creating a new supplemental hospital payment program supported by a fee.
(c) Notwithstanding Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, the department may implement and administer this section by means of provider bulletins, or similar instructions, without taking further regulatory action.
(d) The reductions described in this section shall apply only to payments for services when the General Fund share of the payment is paid with funds appropriated to the department in the annual Budget Act.
(e) The department shall promptly seek any necessary federal approvals for the implementation of this section.
Section 14166.245 of the Welfare and Institutions Code, as amended by Section 50 of Chapter 5 of the Fourth Extraordinary Session of the Statutes of 2009, is amended to read:
14166.245.
(a) The Legislature finds and declares that the state faces a fiscal crisis that requires unprecedented measures to be taken to reduce General Fund expenditures to avoid reducing vital government services necessary for the protection of the health, safety, and welfare of the citizens of the State of California.
(b) (1) Notwithstanding any other provision of law, except as provided in Article 2.93 (commencing with Section 14091.3), for hospitals that receive Medi-Cal reimbursement from the State Department of Health Care Services and that are not under contract with the State Department of Health Care Services pursuant to Article 2.6 (commencing with Section 14081) of Chapter 7 of Part 3 of Division 9, the amounts paid as interim payments for inpatient hospital services provided on and after July 1, 2008, shall be reduced by 10 percent.
(2) (A) Beginning on October 1, 2008, amounts paid that are calculated pursuant to paragraph (1) shall not exceed the applicable regional average per diem contract rate for tertiary hospitals and for all other hospitals established as specified in subparagraph (C), reduced by 5 percent, multiplied by the number of Medi-Cal covered inpatient days for which the interim payment is being made.
(B) This paragraph shall not apply to small and rural hospitals specified in Section 124840 of the Health and Safety Code, or to hospitals in open health facility planning areas that were open health facility planning areas on October 1, 2008, unless either of the following apply:
(i) The open health facility planning area at any time on or after July 1, 2005, was a closed health facility planning area as determined by the California Medical Assistance Commission.
(ii) The open health facility planning area has three or more hospitals with licensed general acute care beds. State-owned or operated hospitals shall not be included in determining whether this clause shall apply.
(C) (i) For purposes of this subdivision and subdivision (c), the average regional per diem contract rates shall be derived from unweighted average contract per diem rates that are publicly available on June 1 of each year, trended forward based on the trends in the California Medical Assistance Commission’s Annual Report to the Legislature. For tertiary hospitals, and for all other hospitals, the regional average per diem contract rates shall be based on the geographic regions in the California Medical Assistance Commission’s Annual Report to the Legislature. The applicable average regional per diem contract rates for tertiary hospitals and for all other hospitals shall be published by the department on or before October 1, 2008, and these rates shall be updated annually for each state fiscal year and shall become effective each July 1, thereafter. Supplemental payments shall not be included in this calculation.
(ii) For purposes of clause (i), both the federal and nonfederal share of the designated public hospital cost-based rates shall be included in the determination of the average contract rates by multiplying the hospital’s interim rate, established pursuant to Section 14166.4 and that is in effect on June 1 of each year, by two.
(iii) For the purposes of this section, a tertiary hospital is a children’s hospital specified in Section 10727, or a hospital that has been designated as a Level I or Level II trauma center by the Emergency Medical Services Authority established pursuant to Section 1797.1 of the Health and Safety Code.
(D) For purposes of this section, the terms “open health facility planning area” and “closed health facility planning area” shall have the same meaning and be applied in the same manner as used by the California Medical Assistance Commission in the implementation of the hospital contracting program authorized in Article 2.6 (commencing with Section 14081).
(c) (1) Notwithstanding any other provision of law, for hospitals that receive Medi-Cal reimbursement from the State Department of Health Care Services and that are not under contract with the State Department of Health Care Services, pursuant to Article 2.6 (commencing with Section 14081), the reimbursement amount paid by the department for inpatient services provided to Medi-Cal recipients for dates of service on and after July 1, 2008, shall not exceed the amount determined pursuant to paragraph (3).
(2) For purposes of this subdivision, the reimbursement for inpatient services includes the amounts paid for all categories of inpatient services allowable by Medi-Cal. The reimbursement includes the amounts paid for routine services, together with all related ancillary services.
(3) When calculating a hospital’s cost report settlement for a hospital’s fiscal period that includes any dates of service on and after July 1, 2008, the settlement for dates of service on and after July 1, 2008, shall be limited to the lesser of the following:
(A) Ninety percent of the hospital’s audited allowable cost per day for those services multiplied by the number of Medi-Cal covered inpatient days in the hospital’s fiscal year on or after July 1, 2008.
(B) Beginning for dates of service on and after October 1, 2008, the applicable average regional per diem contract rate established as specified in subparagraph (A) of paragraph (2) of subdivision (b), reduced by 5 percent, multiplied by the number of Medi-Cal covered inpatient days in the hospital’s fiscal year, or portion thereof. This subparagraph shall not apply to small and rural hospitals specified in Section 124840 of the Health and Safety Code, or to hospitals in open health facility planning areas that were open health facility planning areas on July 1, 2008, unless either of the following apply:
(d) Except as provided in Article 2.93 (commencing with Section 14091.3), hospitals that participate in the Selective Provider Contracting Program pursuant to Article 2.6 (commencing with Section 14081) and designated public hospitals under Section 14166.1, except Los Angeles County Martin Luther King, Jr./Charles R. Drew Medical Center and Tuolumne General Hospital, shall be exempt from the limitations required by this section.
(e) Notwithstanding the rulemaking provisions of Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, the director may implement and administer this section by means of provider bulletins, or other similar instructions, without taking regulatory action.
(f) The director shall promptly seek all necessary federal approvals in order to implement this section, including necessary amendments to the state plan.
(g) (1) Notwithstanding any other provision of this section, small and rural hospitals, as defined in Section 124840 of the Health and Safety Code, shall be exempt from the payment reductions set forth in this section for dates of service on and after November 1, 2008, through and including June 30, 2009. On and after July 1, 2009, small and rural hospitals as defined in this paragraph shall be subject to the reductions set forth in paragraph (1) of subdivision (b) and subparagraph (A) of paragraph (3) of subdivision (c), but shall be exempt from the provisions of subparagraph (A) of paragraph (2) of subdivision (b) and subparagraph (B) of paragraph (3) of subdivision (c).
(2) Notwithstanding any other provision of this section, hospitals that are certified by Medicare as Medical Critical Access Providers or as Rural Referral Centers shall be exempt from the payment reductions set forth in this section for dates of service on and after July 1, 2009.
(h) For hospitals that are subject to clauses (i) and (ii) of subparagraph (B) of paragraph (2) of subdivision (b) and that choose to contract pursuant to Article 2.6 (commencing with Section 14081), the California Medical Assistance Commission shall negotiate rates taking into account factors specified in Section 14083.
(i) In January 2010 and in January 2011, the department and the California Medical Assistance Commission shall submit a written report to the policy and fiscal committees of the Legislature on the implementation and impact of the changes made by this section, including, but not limited to, the impact of those changes on the number of hospitals that are contract and noncontract, patient access, and cost savings to the state.
(j) Commencing on the effective date of the act that added this subdivision, all of the following shall occur:
(1) Subdivisions (a) to (d), inclusive, and subdivisions (g) to (h), inclusive, shall no longer be applicable to fee-for-service hospital rates but shall continue to be applicable under subdivision (c) of Section 14091.3, in the same manner and to the same extent as if this section continued to be applicable to fee-for-service hospital rates.
(2) Medi-Cal reimbursement for inpatient hospital services for hospitals that receive Medi-Cal reimbursement from the department and that are not under contract with the department pursuant to Article 2.6 (commencing with Section 14081) for inpatient hospital services shall be determined in accordance with the applicable provisions in state law and the California Code of Regulations, and the applicable provisions of the California Medicaid State Plan that have been approved by the federal Centers for Medicare and Medicaid Services without application of subdivisions (a) to (d), inclusive, and subdivisions (g) to (h), inclusive.
(k) The reimbursement reductions and limits set forth in, or adopted pursuant to, Section 14105.192 do not apply to payments for inpatient hospital services furnished on a fee-for-service basis under Medi-Cal to hospitals that are not under contract with the department pursuant to Article 2.6 (commencing with Section 14081) for inpatient services provided to Medi-Cal beneficiaries.
(l) This section shall remain in effect only until January 1, 2013, and as of that date is repealed, unless a later enacted statute, that is enacted before January 1, 2013, deletes or extends that date.
Section 14166.245 of the Welfare and Institutions Code, as added by Section 58 of Chapter 758 of the Statutes of 2008, is repealed.
Section 14167.10 of the Welfare and Institutions Code is amended to read:
14167.10.
(a) Each managed health care plan receiving increased capitation payments under Section 14167.6 shall expend the capitation rate increases in a manner consistent with actuarial certification, enrollment, and utilization on hospital services. Each managed health care plan shall expend increased capitation payments on hospital services within 30 days of receiving the increased capitation payments to the extent they are made for a subject month that is prior to the date on which the payments are received by the managed health care plan.
(b) For each subject fiscal year, the sum of all expenditures made by a managed health care plan for hospital services pursuant to this section shall equal, or approximately equal, all increased capitation payments received by the managed health care plan, consistent with actuarial certification, enrollment, and utilization, from the department pursuant to Section 14167.6.
(d) The supplemental hospital payments made by managed health care plans pursuant to this section should reflect the overall purpose of this article.
(e) This article is not intended to create a private right of action by a hospital against a managed care plan, provided that the managed health care plan expends all increased capitation payments for hospital services.
Article 5.226 (commencing with Section 14168.1) is added to Chapter 7 of Part 3 of Division 9 of the Welfare and Institutions Code, to read:
Article 5.226. Medi-Cal Hospital Rate Stabilization Act of 2011
(a) “Acute psychiatric days” means the total number of Short-Doyle administrative days, Short-Doyle acute care days, acute psychiatric administrative days, and acute psychiatric acute days identified in the Final Medi-Cal Utilization Statistics for the 2008–09 state fiscal year as calculated by the department on September 15, 2008.
(b) “Converted hospital” means a private hospital that becomes a designated public hospital or a nondesignated public hospital on or after January 1, 2011, a nondesignated public hospital that becomes a private hospital or a designated public hospital on or after January 1, 2011, or a designated public hospital that becomes a private hospital or a nondesignated public hospital on or after January 1, 2011.
(c) “Days data source” means the following:
(d) “Designated public hospital” shall have the meaning given in subdivision (d) of Section 14166.1 as of January 1, 2011.
(e) “General acute care days” means the total number of Medi-Cal general acute care days paid by the department to a hospital in the 2008 calendar year, as reflected in the state paid claims files on July 10, 2009.
(f) “High acuity days” means Medi-Cal coronary care unit days, pediatric intensive care unit days, intensive care unit days, neonatal intensive care unit days, and burn unit days paid by the department during the 2008 calendar year, as reflected in the state paid claims files on July 10, 2009.
(i) “Individual hospital acute psychiatric supplemental payment” means the total amount of acute psychiatric hospital supplemental payments to a subject hospital for a quarter for which the supplemental payments are made. The “individual hospital acute psychiatric supplemental payment” shall be calculated for subject hospitals by multiplying the number of acute psychiatric days for the individual hospital for which a mental health plan was financially responsible by four hundred eighty-five dollars ($485) and dividing the result by four.
(i) Mental health plan contracting to provide mental health care for Medi-Cal beneficiaries pursuant to Part 2.5 (commencing with Section 5775) of Division 5.
(ii) Health plan not covering inpatient services such as primary care case management plans operating pursuant to Section 14088.85.
(iii) Long-Term Care Demonstration Projects for All-Inclusive Care for the Elderly operating pursuant to Chapter 8.75 (commencing with Section 14590).
(k) “Medi-Cal managed care days” means the total number of general acute care days, including well baby days, listed for the county organized health system and prepaid health plans identified in the Final Medi-Cal Utilization Statistics for the 2008–09 fiscal year, as calculated by the department on September 15, 2008, except that the general acute care days, including well baby days, for the Santa Barbara Health Care Initiative shall be derived from the Final Medi-Cal Utilization Statistics for the 2007–08 fiscal year.
(l) “Medicaid inpatient utilization rate” means Medicaid inpatient utilization rate as defined in Section 1396r-4 of Title 42 of the United States Code and as set forth in the final disproportionate share hospital eligibility list for the 2008–09 fiscal year released by the department on October 22, 2008.
(m) “Mental health plan” means a mental health plan that contracts with the State Department of Mental Health to furnish or arrange for the provision of mental health services to Medi-Cal beneficiaries pursuant to Part 2.5 (commencing with Section 5775) of Division 5.
(q) “Outpatient base amount” means the total amount of payments for hospital outpatient services made to a hospital in the 2007 calendar year, as reflected in state paid claims files on January 26, 2008.
(s) “Program period” means the period from January 1, 2011, to June 30, 2011, inclusive.
(t) “Subject fiscal quarter” means a state fiscal quarter beginning on or after January 1, 2011, and ending before July 1, 2011.
(u) “Subject hospital” shall mean a hospital that meets all of the following conditions:
(v) “Subject month” means a calendar month beginning on or after January 1, 2011, and ending before July 1, 2011.
(w) “Upper payment limit” means a federal upper payment limit on the amount of the Medicaid payment for which federal financial participation is available for a class of service and a class of health care providers, as specified in Part 447 of Title 42 of the Code of Federal Regulations.
14168.2.
(a) Private hospitals shall be paid supplemental amounts for the provision of hospital outpatient services as set forth in this section. The supplemental amounts shall be in addition to any other amounts payable to hospitals with respect to those services and shall not affect any other payments to hospitals.
(b) Except as set forth in subdivisions (e) and (f), each private hospital shall be paid an amount for the program period equal to a percentage of the hospital’s outpatient base amount. The percentage shall be the same for each hospital and shall result in payments to hospitals that equal the applicable federal upper payment limit, less any amounts paid pursuant to Section 14167.2 and accounted toward the federal upper payment limits for the entire 2010–11 fiscal year. For purposes of this subdivision the applicable federal upper payment limit shall be the federal upper payment limit for hospital outpatient services furnished by private hospitals for the entire 2010–11 fiscal year.
(c) In the event federal financial participation is not available for all of the supplemental amounts payable to private hospitals under subdivision (b) due to the application of a federal upper payment limit or for any other reason, both of the following shall apply:
(e) No payments shall be made under this section to a new hospital.
14168.3.
(a) Private hospitals shall be paid supplemental amounts for the provision of hospital inpatient services as set forth in this section. The supplemental amounts shall be in addition to any other amounts payable to hospitals with respect to those services and shall not affect any other payments to hospitals.
(b) Except as set forth in subdivisions (g) and (h), each private hospital shall be paid 50 percent of the following amounts as applicable for the provision of hospital inpatient services for the program period:
(1) Nine hundred eleven dollars and forty-eight cents ($911.48) multiplied by the hospital’s general acute care days.
(2) Four hundred eighty-five dollars ($485) multiplied by the hospital’s acute psychiatric days that were paid directly by the department and were not the financial responsibility of a mental health plan.
(3) One thousand three hundred fifty dollars ($1,350) multiplied by the number of the hospital’s high acuity days if the hospital’s Medicaid inpatient utilization rate is less than 41.1 percent and greater than 5 percent and at least 5 percent of the hospital’s general acute care days are high acuity days. This amount shall be in addition to the amounts specified in paragraphs (1) and (2).
(4) One thousand three hundred fifty dollars ($1,350) multiplied by the number of the hospital’s high acuity days if the hospital qualifies to receive the amount set forth in paragraph (3) and has been designated as a Level I, Level II, Adult/Ped Level I, or Adult/Ped Level II trauma center by the Emergency Medical Services Authority established pursuant to Section 1797.1 of the Health and Safety Code. This amount shall be in addition to the amounts specified in paragraphs (1), (2), and (3).
(c) A private hospital that provides Medi-Cal subacute services during the program period and has a Medicaid inpatient utilization rate that is greater than 5 percent and less than 41.1 percent shall be paid a supplemental amount equal to 20 percent of the Medi-Cal subacute payments made to the hospital during the 2008 calendar year.
(d) (1) In the event federal financial participation is not available for all of the supplemental amounts payable to private hospitals under subdivision (b) due to the application of a federal upper payment limit or for any other reason, both of the following shall apply:
(A) The total amount payable to private hospitals under subdivision (b) shall be reduced to reflect the amount for which federal financial participation is available.
(B) The amount payable under subdivision (b) to each private hospital shall be equal to the amount computed under subdivision (b) multiplied by the ratio of the total amount for which federal financial participation is available to the total amount computed under subdivision (b).
(2) In the event federal financial participation is not available for all of the supplemental amounts payable to private hospitals under subdivision (c) due to the application of a federal upper payment limit or for any other reason, both of the following shall apply:
(A) The total amount payable to private hospitals under subdivision (c) shall be reduced to reflect the amount for which federal financial participation is available.
(B) The amount payable under subdivision (c) to each private hospital shall be equal to the amount computed under subdivision (c) multiplied by the ratio of the total amount for which federal financial participation is available to the total amount computed under subdivision (c).
(e) In the event the amount otherwise payable to a hospital under this section exceeds the amount for which federal financial participation is available for that hospital, the amount due to the hospital shall be reduced to the amount for which federal financial participation is available.
(g) No payments shall be made under this section to a new hospital.
(h) No payments shall be made under this section to a converted hospital.
(i) (1) The department shall increase payments to mental health plans for the program period exclusively for the purpose of making payments to hospitals. The aggregate amount of the increased payments for a subject fiscal quarter shall be the total of the individual hospital acute psychiatric supplemental payment amounts for all hospitals for which federal financial participation is available.
(a) The department shall increase capitation payments to Medi-Cal managed health care plans for the program period as set forth in this section.
(c) The aggregate amount of increased capitation payments to all Medi-Cal managed health care plans for the program period shall be three hundred twenty-three million six hundred forty-nine thousand eight hundred fifty seven dollars ($323,649,857), or the maximum amount for which federal financial participation is available, whichever is lower.
(e) The amount of increased capitation payments to each Medi-Cal managed care health plan shall not exceed an amount that results in capitation payments that are certified by the state’s actuary as meeting federal requirements, taking into account the requirement that all of the increased capitation payments under this section shall be paid by the Medi-Cal managed health care plans to hospitals for hospital services to Medi-Cal enrollees of the plan.
(f) (1) The increased capitation payments to managed health care plans under this section shall be made to support the availability of hospital services and ensure access to hospital services for Medi-Cal beneficiaries. The increased capitation payments to managed health care plans shall commence no later than June 30, 2011, or within 60 days of the date on which all necessary federal approvals have been received, and shall include, but not be limited to, the sum of the increased payments for all prior months for which payments are due.
(2) To secure the necessary funding for the payment or payments made pursuant to paragraph (1), the department may accumulate funds in the Hospital Quality Assurance Revenue Fund for the purpose of funding managed care capitation payments under this article regardless of the date on which capitation payments are scheduled to be paid in order to secure the necessary total funding for managed care payments by June 30, 2011. To the extent feasible, the funds shall be accumulated as follows, provided that the department may adjust the following dates and amounts as necessary to accumulate sufficient funding by June 1, 2011:
(A) Fifty percent of total necessary funding shall be accumulated from the first payment of quality assurance fees received from the hospitals and made pursuant to Article 5.227 (commencing with Section 14168.31).
(B) Fifty percent of total funding necessary shall be retained from the final payment of quality assurance fees received from the hospitals and made pursuant to Article 5.227 (commencing with Section 14168.31).
(g) Payments to managed health care plans that would be paid consistent with actuarial certification and enrollment in the absence of the payments made pursuant to this section shall not be reduced as a consequence of payment under this section.
(i) In the event federal financial participation is not available for all of the increased capitation payments determined for a month pursuant to this section for any reason, the increased capitation payments mandated by this section for that month shall be reduced proportionately to the amount for which federal financial participation is available.
(j) Notwithstanding Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, the department shall implement this section by means of policy letters or similar instructions, without taking further regulatory action.
14168.6.
(a) Each managed health care plan receiving increased capitation payments under Section 14168.5 shall expend the capitation rate increases in a manner consistent with actuarial certification, enrollment, and utilization on hospital services. Each managed health care plan shall expend increased capitation payments on hospital services within 30 days of receiving the increased capitation payments to the extent they are made for a subject month that is prior to the date on which the payments are received by the managed health care plan.
(b) The sum of all expenditures made by a managed health care plan for hospital services pursuant to this section shall equal, or approximately equal, all increased capitation payments received by the managed health care plan, consistent with actuarial certification, enrollment, and utilization, from the department pursuant to Section 14168.5.
14168.8.
(a) The amount of any payments made under this article to private hospitals, including the amount of payments made under Sections 14168.2 and 14168.3 and additional payments to private hospitals by managed health care plans pursuant to Section 14168.5, shall not be included in the calculation of the low-income percent or the OBRA 1993 payment limitation, as defined in paragraph (24) of subdivision (a) of Section 14105.98, for purposes of determining payments to private hospitals.
14168.9.
The payments to a hospital under this article shall not be made for any portion of the program period during which the hospital is closed. A hospital shall be deemed to be closed on the first day of any period during which the hospital has no acute inpatients for at least 30 consecutive days. Payments under this article to a hospital that is closed during any portion of the program period shall be reduced by applying a fraction, expressed as a percentage, the numerator of which shall be the number of days during the program period that the hospital is closed and the denominator of which shall be 181.
14168.10.
(a) The amount of any supplemental payment under this article for a new noncontract hospital shall be reduced by the amount by which that hospital’s overall payment for services for Medi-Cal patients during the program period was increased by reason of its becoming a noncontract hospital.
14168.11.
(b) The funds shall be disbursed in accordance with the order of priority set forth in subdivision (b) of Section 14168.33, subject to the following:
(1) The amount disbursed for children’s health coverage shall not exceed one hundred five million dollars ($105,000,000) until at least one-half of the aggregate supplemental payments to hospitals due under Sections 14168.2 and 14168.3 are made.
(2) Funds may be set aside for increased capitation payment to managed care health plans pursuant to subdivision (f) of Section 14168.5.
(c) The funds shall be disbursed in each payment cycle in accordance with the order of priority set forth in subdivision (b) of Section 14168.33 as modified by subdivision (b), and so that the supplemental payments to hospitals, increased capitation payment to managed health care plans, and increased payments to mental health plans, and direct payments to hospitals of acute psychiatric supplemental payments are made to the maximum extent for which funds are available.
(d) To the maximum extent possible, consistent with the availability of funds in the quality assurance fund and the timing of federal approvals, the supplemental payments to hospitals, increased capitation payments to managed health care plans, and increased payments to mental health plans under this article shall be made before July 1, 2011.
(e) The aggregate amount of funds to be disbursed to private hospitals shall be determined under Sections 14168.2 and 14168.3. The aggregate amount of funds to be disbursed to managed health care plans shall be determined under Section 14168.5.
14168.12.
(a) Exclusive of payments made under Article 5.21, payment rates for hospital outpatient services, furnished by private hospitals, nondesignated public hospitals, and designated public hospitals before July 1, 2011, exclusive of amounts payable under this article, shall not be reduced below the rates in effect on January 1, 2011.
(b) Rates payable to hospitals for hospital inpatient services furnished before January 1, 2011, under contracts negotiated pursuant to the Selective Provider Contracting Program shall not be reduced below the lower of the contract rates in effect on January 1, 2010, or the contract rates in effect on July 1, 2010. This subdivision shall not prohibit changes to the supplemental payments paid to individual hospitals under Sections 14166.12, 14166.17, and 14166.23, provided that the aggregate amount of the payments for the 2010–11 fiscal year are not less than the minimum amount permitted under Section 14167.13.
(c) Subject to Section 14105.281, exclusive of payments made under Article 5.21, payments to private hospitals for hospital inpatient services furnished before July 1, 2011, that are not reimbursed under a contract negotiated pursuant to the Selective Provider Contracting Program, exclusive of amounts payable under this article, shall not be less than the amount of payments that would have been made under the payment methodology in effect on the effective date of this article.
(d) Solely for purposes of this article, a rate reduction or a change in a rate methodology that is enjoined by a court shall be included in the determination of a rate or a rate methodology until all appeals or judicial review have been exhausted and the rate reduction or change in rate methodology has been permanently enjoined, denied by the federal government, or otherwise permanently prevented from being implemented.
14168.13.
(3) Amend the contracts between the managed health care plans and the department as necessary to incorporate the provisions of Sections 14168.5 and 14168.6 and promptly seek all necessary federal approvals of those amendments. The department shall pursue amendments to the contracts as soon as possible after the effective date of this article and Article 5.227 (commencing with Section 14168.31), and shall not wait for federal approval of this article or Article 5.227 (commencing with Section 14168.31) prior to pursuing amendments to the contracts. The amendments to the contracts shall, among other provisions, set forth an agreement to increase capitation payments to managed health care plans under Section 14168.5 and increase payments to hospitals under Section 14168.6 in a manner that relates back to January 1, 2011, or as soon thereafter as possible, conditioned on obtaining all federal approvals necessary for federal financial participation for the increased capitation payments to the managed health care plans.
(b) In implementing this article, the department may utilize the services of the Medi-Cal fiscal intermediary through a change order to the fiscal intermediary contract to administer this program, consistent with the requirements of Sections 14104.6, 14104.7, 14104.8, and 14104.9. Contracts entered into for purposes of implementing this article or Article 5.227 (commencing with Section 14168.31) shall not be subject to Part 2 (commencing with Section 10100) of Division 2 of the Public Contract Code.
(1) In the event, and on the effective date, of a final judicial determination made by any court of appellate jurisdiction or a final determination by the federal Department of Health and Human Services or the federal Centers for Medicare and Medicaid Services that any element of this article or any provision of Section 14166.115 cannot be implemented.
(A) The federal Centers for Medicare and Medicaid Services denies approval for, or does not approve before January 1, 2012, the implementation of Article 5.227 (commencing with Section 14168.31) or this article.
(B) Either or both articles cannot be modified by the department pursuant to subdivision (e) of Section 14168.33 in order to meet the requirements of federal law or to obtain federal approval.
(e) In the event any hospital, or any party on behalf of a hospital, shall initiate a case or proceeding in any state or federal court in which the hospital seeks any relief of any sort whatsoever, including, but not limited to, monetary relief, injunctive relief, declaratory relief, or a writ, based in whole or in part on a contention that any or all of this article is unlawful and may not be lawfully implemented, both of the following shall apply:
(1) No payments shall be made to the hospital pursuant to this article until the case or proceeding is finally resolved, including the final disposition of all appeals.
(f) Subject to Section 14168.34, no payment shall be made under this article until all necessary federal approvals for the payment and for the fee provisions in Article 5.227 (commencing with Section 14168.31) have been obtained and the fee has been imposed and collected. Notwithstanding any other provision of law, payments under this article shall be made only to the extent that the fee established in Article 5.227 (commencing with Section 14168.31) is collected and available to cover the nonfederal share of the payments.
(1) The quality assurance fee set forth in Article 5.227 (commencing with Section 14168.31) and due and payable on or before June 30, 2011, along with any interest or other investment income thereon.
14168.14.
Notwithstanding any other provision of this article or Article 5.227 (commencing with Section 14168.31), the director may proportionately reduce the amount of any supplemental payments, increased capitation payments, or grants under this article to the extent that the payment or grant would result in the reduction of other amounts payable to a hospital or managed health care plan or mental health plan due to the application of federal law.
14168.15.
The director may, pursuant to Section 14168.40, decide not to implement or to discontinue implementation of this article and Article 5.227 (commencing with Section 14168.31), and to retroactively invalidate the requirements for supplemental payments or other payments under this article.
14168.16.
14168.17.
Notwithstanding any other provision of law, if federal approval or a letter that indicates likely federal approval in accordance with Section 14168.34 has not been received on or before June 1, 2011, then this article shall become inoperative, and as of June 1, 2011, is repealed, unless a later enacted statute, that is enacted before June 1, 2011, deletes or extends that date.
14168.175.
Article 5.227 (commencing with Section 14168.31) is added to Chapter 7 of Part 3 of Division 9 of the Welfare and Institutions Code, to read:
Article 5.227. Hospital Quality Assurance Fee Act of 2011
This act shall become operative only if Assembly Bill 113 of the 2011–12 Regular Session of the Legislature is enacted and becomes effective.