BILL NUMBER: SB 90 ENROLLED
BILL TEXT
PASSED THE SENATE APRIL 7, 2011
PASSED THE ASSEMBLY APRIL 7, 2011
AMENDED IN ASSEMBLY APRIL 7, 2011
AMENDED IN ASSEMBLY MARCH 31, 2011
INTRODUCED BY Senator Steinberg
(Principal coauthor: Senator Hernandez)
(Principal coauthor: Assembly Member Monning)
JANUARY 10, 2011
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.
LEGISLATIVE COUNSEL'S DIGEST
SB 90, Steinberg. Health: hospitals: Medi-Cal.
(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 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.
(7) This bill would declare that it is to take effect immediately
as an urgency statute.
Appropriation: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 130060 of the Health and Safety Code is amended
to read:
130060. (a) (1) After January 1, 2008, any general acute care
hospital building that is determined to be a potential risk of
collapse or pose significant loss of life shall only be used for
nonacute care hospital purposes. A delay in this deadline may be
granted by the office upon a demonstration by the owner that
compliance will result in a loss of health care capacity that may not
be provided by other general acute care hospitals within a
reasonable proximity. In its request for an extension of the
deadline, a hospital shall state why the hospital is unable to comply
with the January 1, 2008, deadline requirement.
(2) Prior to granting an extension of the January 1, 2008,
deadline pursuant to this section, the office shall do all of the
following:
(A) Provide public notice of a hospital's request for an extension
of the deadline. The notice, at a minimum, shall be posted on the
office's Internet Web site, and shall include the facility's name and
identification number, the status of the request, and the beginning
and ending dates of the comment period, and shall advise the public
of the opportunity to submit public comments pursuant to subparagraph
(C). The office shall also provide notice of all requests for the
deadline extension directly to interested parties upon request of the
interested parties.
(B) Provide copies of extension requests to interested parties
within 10 working days to allow interested parties to review and
provide comment within the 45-day comment period. The copies shall
include those records that are available to the public pursuant to
the California Public Records Act (Chapter 3.5 (commencing with
Section 6250) of Division 7 of Title 1 of the Government Code).
(C) Allow the public to submit written comments on the extension
proposal for a period of not less than 45 days from the date of the
public notice.
(b) (1) It is the intent of the Legislature, in enacting this
subdivision, to facilitate the process of having more hospital
buildings in substantial compliance with this chapter and to take
nonconforming general acute care hospital inpatient buildings out of
service more quickly.
(2) The functional contiguous grouping of hospital buildings of a
general acute care hospital, each of which provides, as the primary
source, one or more of the hospital's eight basic services as
specified in subdivision (a) of Section 1250, may receive a five-year
extension of the January 1, 2008, deadline specified in subdivision
(a) of this section pursuant to this subdivision for both structural
and nonstructural requirements. A functional contiguous grouping
refers to buildings containing one or more basic hospital services
that are either attached or connected in a way that is acceptable to
the State Department of Health Care Services. These buildings may be
either on the existing site or a new site.
(3) To receive the five-year extension, a single building
containing all of the basic services or at least one building within
the contiguous grouping of hospital buildings shall have obtained a
building permit prior to 1973 and this building shall be evaluated
and classified as a nonconforming, Structural Performance Category-1
(SPC-1) building. The classification shall be submitted to and
accepted by the Office of Statewide Health Planning and Development.
The identified hospital building shall be exempt from the requirement
in subdivision (a) until January 1, 2013, if the hospital agrees
that the basic service or services that were provided in that
building shall be provided, on or before January 1, 2013, as follows:
(A) Moved into an existing conforming Structural Performance
Category-3 (SPC-3), Structural Performance Category-4 (SPC-4), or
Structural Performance Category-5 (SPC-5) and Non-Structural
Performance Category-4 (NPC-4) or Non-Structural Performance
Category-5 (NPC-5) building.
(B) Relocated to a newly built compliant SPC-5 and NPC-4 or NPC-5
building.
(C) Continued in the building if the building is retrofitted to a
SPC-5 and NPC-4 or NPC-5 building.
(4) A five-year extension is also provided to a post-1973 building
if the hospital owner informs the Office of Statewide Health
Planning and Development that the building is classified as SPC-1,
SPC-3, or SPC-4 and will be closed to general acute care inpatient
service use by January 1, 2013. The basic services in the building
shall be relocated into a SPC-5 and NPC-4 or NPC-5 building by
January 1, 2013.
(5) SPC-1 buildings, other than the building identified in
paragraph (3) or (4), in the contiguous grouping of hospital
buildings shall also be exempt from the requirement in subdivision
(a) until January 1, 2013. However, on or before January 1, 2013, at
a minimum, each of these buildings shall be retrofitted to a SPC-2
and NPC-3 building, or no longer be used for general acute care
hospital inpatient services.
(c) On or before March 1, 2001, the office shall establish a
schedule of interim work progress deadlines that hospitals shall be
required to meet to be eligible for the extension specified in
subdivision (b). To receive this extension, the hospital building or
buildings shall meet the year 2002 nonstructural requirements.
(d) A hospital building that is eligible for an extension pursuant
to this section shall meet the January 1, 2030, nonstructural and
structural deadline requirements if the building is to be used for
general acute care inpatient services after January 1, 2030.
(e) Upon compliance with subdivision (b), the hospital shall be
issued a written notice of compliance by the office. The office shall
send a written notice of violation to hospital owners that fail to
comply with this section. The office shall make copies of these
notices available on its Internet Web site.
(f) (1) A hospital that has received an extension of the January
1, 2008, deadline pursuant to subdivision (a) or (b) may request an
additional extension of up to two years for a hospital building that
it owns or operates and that meets the criteria specified in
paragraph (2), (3), or (5).
(2) The office may grant the additional extension if the hospital
building subject to the extension meets all of the following
criteria:
(A) The hospital building is under construction at the time of the
request for extension under this subdivision and the purpose of the
construction is to meet the requirements of subdivision (a) to allow
the use of the building as a general acute care hospital building
after the extension deadline granted by the office pursuant to
subdivision (a) or (b).
(B) The hospital building plans were submitted to the office and
were deemed ready for review by the office at least four years prior
to the applicable deadline for the building. The hospital shall
indicate, upon submission of its plans, the SPC-1 building or
buildings that will be retrofitted or replaced to meet the
requirements of this section as a result of the project.
(C) The hospital received a building permit for the construction
described in subparagraph (A) at least two years prior to the
applicable deadline for the building.
(D) The hospital submitted a construction timeline at least two
years prior to the applicable deadline for the building demonstrating
the hospital's intent to meet the applicable deadline. The timeline
shall include all of the following:
(i) The projected construction start date.
(ii) The projected construction completion date.
(iii) Identification of the contractor.
(E) The hospital is making reasonable progress toward meeting the
timeline set forth in subparagraph (D), but factors beyond the
hospital's control make it impossible for the hospital to meet the
deadline.
(3) The office may grant the additional extension if the hospital
building subject to the extension meets all of the following
criteria:
(A) The hospital building is owned by a health care district that
has, as owner, received the extension of the January 1, 2008,
deadline, but where the hospital is operated by an unaffiliated
third-party lessee pursuant to a facility lease that extends at least
through December 31, 2009. The district shall file a declaration
with the office with a request for an extension stating that, as of
the date of the filing, the district has lacked, and continues to
lack, unrestricted access to the subject hospital building for
seismic planning purposes during the term of the lease, and that the
district is under contract with the county to maintain hospital
services when the hospital comes under district control. The office
shall not grant the extension if an unaffiliated third-party lessee
will operate the hospital beyond December 31, 2010.
(B) The hospital building plans were submitted to the office and
were deemed ready for review by the office at least four years prior
to the applicable deadline for the building. The hospital shall
indicate, upon submission of its plans, the SPC-1 building or
buildings that will be retrofitted or replaced to meet the
requirements of this section as a result of the project.
(C) The hospital received a building permit for the construction
described in subparagraph (B) by December 31, 2011.
(D) The hospital submitted, by December 31, 2011, a construction
timeline for the building demonstrating the hospital's intent and
ability to meet the deadline of December 31, 2014. The timeline shall
include all of the following:
(i) The projected construction start date.
(ii) The projected construction completion date.
(iii) Identification of the contractor.
(E) The hospital building is under construction at the time of the
request for the extension, the purpose of the construction is to
meet the requirements of subdivision (a) to allow the use of the
building as a general acute care hospital building after the
extension deadline granted by the office pursuant to subdivision (a)
or (b), and the hospital is making reasonable progress toward meeting
the timeline set forth in subparagraph (D).
(F) The hospital granted an extension pursuant to this paragraph
shall submit an additional status report to the office, equivalent to
that required by subdivision (c) of Section 130061, no later than
June 30, 2013.
(4) An extension granted pursuant to paragraph (3) shall be
applicable only to the health care district applicant and its
affiliated hospital while the hospital is operated by the district or
an entity under the control of the district.
(5) The office may grant the additional extension if the hospital
building subject to the extension meets all of the following
criteria:
(A) The hospital owner submitted to the office, prior to June 30,
2009, a request for review using current computer modeling utilized
by the office and based upon software developed by the Federal
Emergency Management Agency, referred to as Hazards US, and the
building was deemed SPC-1 after that review.
(B) The hospital building plans for the building are submitted to
the office and deemed ready for review by the office prior to July 1,
2010. The hospital shall indicate, upon submission of its plans, the
SPC-1 building or buildings that shall be retrofitted or replaced to
meet the requirements of this section as a result of the project.
(C) The hospital receives a building permit from the office for
the construction described in subparagraph (B) prior to January 1,
2012.
(D) The hospital submits, prior to January 1, 2012, a construction
timeline for the building demonstrating the hospital's intent and
ability to meet the applicable deadline. The timeline shall include
all of the following:
(i) The projected construction start date.
(ii) The projected construction completion date.
(iii) Identification of the contractor.
(E) The hospital building is under construction at the time of the
request for the extension, the purpose of the construction is to
meet the requirements of subdivision (a) to allow the use of the
building as a general acute care hospital building after the
extension deadline granted by the office pursuant to subdivision (a)
or (b), and the hospital is making reasonable progress toward meeting
the timeline set forth in subparagraph (D).
(F) The hospital owner completes construction such that the
hospital meets all criteria to enable the office to issue a
certificate of occupancy by the applicable deadline for the building.
(6) A hospital denied an extension pursuant to this subdivision
may appeal the denial to the Hospital Building Safety Board.
(7) The office may revoke an extension granted pursuant to this
subdivision for any hospital building where the work of construction
is abandoned or suspended for a period of at least one year, unless
the hospital demonstrates in a public document that the abandonment
or suspension was caused by factors beyond its control.
(g) (1) Notwithstanding subdivisions (a), (b), (c), and (f), and
Sections 130061.5 and 130064, a hospital that has received an
extension of the January 1, 2008, deadline pursuant to subdivision
(a) or (b) also may request an additional extension of up to seven
years for a hospital building that it owns or operates. The office
may grant the extension subject to the hospital meeting the
milestones set forth in paragraph (2).
(2) The hospital building subject to the extension shall meet all
of the following milestones, unless the hospital building is
reclassified as SPC-2 or higher as a result of its Hazards US score:
(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.
(C) The hospital owner submits to the office, no later than
September 30, 2012, an application ready for review seeking
structural reassessment of each of its SPC-1 buildings using current
computer modeling based upon software developed by FEMA, referred to
as Hazards US.
(D) The hospital owner submits to the office, no later than
January 1, 2015, plans ready for review consistent with the letter of
intent submitted pursuant to subparagraph (A) and the schedule
submitted pursuant to subparagraph (B).
(E) The hospital owner submits a financial report to the office at
the time the plans are submitted pursuant to subparagraph (D). The
report shall demonstrate the hospital owner's financial capacity to
implement the construction plans submitted pursuant to subparagraph
(D).
(F) The hospital owner receives a building permit consistent with
the letter of intent submitted pursuant to subparagraph (A) and the
schedule submitted pursuant to subparagraph (B), no later than July
1, 2018.
(3) To evaluate public safety and determine whether to grant an
extension of the deadline, the office shall consider the structural
integrity of the hospital's SPC-1 buildings based on its Hazards US
scores, community access to essential hospital services, and the
hospital owner's financial capacity to meet the deadline as
determined by either a bond rating of BBB or below or the financial
report on the hospital owner's financial capacity submitted pursuant
to subparagraph (E) of paragraph (2). The criteria contained in this
paragraph shall be considered by the office in its determination of
the length of an extension or whether an extension should be granted.
(4) The extension or subsequent adjustments granted pursuant to
this subdivision may not exceed the amount of time that is reasonably
necessary to complete the construction specified in paragraph (2).
(5) If the circumstances underlying the request for extension
submitted to the office pursuant to paragraph (2) change, the
hospital owner shall notify the office as soon as practicable, but in
no event later than six months after the hospital owner discovered
the change of circumstances. The office may adjust the length of the
extension granted pursuant to paragraphs (2) and (3) as necessary,
but in no event longer than the period specified in paragraph (1).
(6) A hospital denied an extension pursuant to this subdivision
may appeal the denial to the Hospital Building Safety Board.
(7) The office may revoke an extension granted pursuant to this
subdivision for any hospital building when it is determined that any
information submitted pursuant to this section was falsified, or if
the hospital failed to meet a milestone set forth in paragraph (2),
or where the work of construction is abandoned or suspended for a
period of at least six months, unless the hospital demonstrates in a
publicly available document that the abandonment or suspension was
caused by factors beyond its control.
(8) Regulatory submissions made by the office to the California
Building Standards Commission to implement this section shall be
deemed to be emergency regulations and shall be adopted as emergency
regulations.
(9) The hospital owner that applies for an extension pursuant to
this subdivision shall 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 under this section,
including, but not limited to, the costs of reviewing and verifying
the extension documentation submitted pursuant to this subdivision.
This additional fee shall not include any cost for review of the
plans or other duties related to receiving a building or occupancy
permit.
(10) This subdivision shall become operative on the date that the
State Department of Health Care Services receives all necessary
federal approvals for a 2011-12 fiscal year hospital quality
assurance fee program that includes three hundred twenty million
dollars ($320,000,000) in fee revenue to pay for health care coverage
for children, which is made available as a result of the legislative
enactment of a 2011-12 fiscal year hospital quality assurance fee
program.
SEC. 2. Section 14105.281 of the Welfare and Institutions Code is
amended to read:
14105.281. (a) The Legislature finds and declares all of the
following:
(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.
SEC. 3. 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.
SEC. 4. 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:
(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.
(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.
SEC. 5. Section 14166.245 of the Welfare and Institutions Code, as
added by Section 58 of Chapter 758 of the Statutes of 2008, is
repealed.
SEC. 6. 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.
(c) Any delegation or attempted delegation by a managed health
care plan of its obligation to expend the capitation rate increases
under this section shall not relieve the plan from its obligation to
expend those capitation rate increases. Managed health care plans
shall submit the documentation the department may require to
demonstrate compliance with this subdivision. The documentation shall
demonstrate actual expenditure of the capitation rate increases for
hospital services, and not assignment to subcontractors of the
managed health care plan's obligation of the duty to expend the
capitation rate increases.
(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.
SEC. 7. 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
14168.1. For the purposes of this article, the following
definitions shall apply:
(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:
(1) For a hospital that did not submit an Annual Financial
Disclosure Report to the Office of Statewide Health Planning and
Development for a fiscal year ending during 2007, but submitted that
report for a fiscal period ending in 2008 that includes at least 10
months of 2007, the Annual Financial Disclosure Report submitted by
the hospital to the Office of Statewide Health Planning and
Development for the fiscal period in 2008 that includes at least 10
months of 2007.
(2) For a hospital owned by Kaiser Foundation Hospitals that
submitted corrections to reported patient days to the Office of
Statewide Health Planning and Development for its fiscal year ending
in 2007 before July 31, 2009, the corrected data.
(3) For all other hospitals, the hospital's Annual Financial
Disclosure Report in the Office of Statewide Health Planning and
Development files as of October 31, 2008, for its fiscal year ending
during 2007.
(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.
(g) "Hospital inpatient services" means all services covered under
Medi-Cal and furnished by hospitals to patients who are admitted as
hospital inpatients and reimbursed on a fee-for-service basis by the
department directly or through its fiscal intermediary. Hospital
inpatient services include outpatient services furnished by a
hospital to a patient who is admitted to that hospital within 24
hours of the provision of the outpatient services that are related to
the condition for which the patient is admitted. Hospital inpatient
services do not include services for which a managed health care plan
is financially responsible.
(h) "Hospital outpatient services" means all services covered
under Medi-Cal furnished by hospitals to patients who are registered
as hospital outpatients and reimbursed by the department on a
fee-for-service basis directly or through its fiscal intermediary.
Hospital outpatient services do not include services for which a
managed health care plan is financially responsible, or services
rendered by a hospital-based federally qualified health center for
which reimbursement is received pursuant to Section 14132.100.
(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.
(j) (1) "Managed health care plan" means a health care delivery
system that manages the provision of health care and receives prepaid
capitated payments from the state in return for providing services
to Medi-Cal beneficiaries.
(2) (A) Managed health care plans include county organized health
systems and entities contracting with the department to provide
services pursuant to two-plan models and geographic managed care.
Entities providing these services contract with the department
pursuant to any of the following:
(i) Article 2.7 (commencing with Section 14087.3).
(ii) Article 2.8 (commencing with Section 14087.5).
(iii) Article 2.81 (commencing with Section 14087.96).
(iv) Article 2.91 (commencing with Section 14089).
(B) Managed health care plans do not include any of the following:
(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.
(n) "New hospital" means a hospital operation, business, or
facility functioning under current or prior ownership as a private
hospital that does not have a days data source or a hospital that has
a days data source in whole, or in part, from a previous operator
where there is an outstanding monetary liability owed to the state in
connection with the Medi-Cal program and the new operator did not
assume liability for the outstanding monetary obligation.
(o) "New noncontract hospital" means a private hospital that was a
contract hospital on March 1, 2011, and elects to become a
noncontract hospital at any time between March 1, 2011, and the end
of the program period.
(p) "Nondesignated public hospital" means either of the following:
(1) A public hospital that is licensed under subdivision (a) of
Section 1250 of the Health and Safety Code, is not designated as a
specialty hospital in the hospital's annual financial disclosure
report for the hospital's latest fiscal year ending in 2007, and
satisfies the definition in paragraph (25) of subdivision (a) of
Section 14105.98, excluding designated public hospitals.
(2) A tax-exempt nonprofit hospital that is licensed under
subdivision (a) of Section 1250 of the Health and Safety Code, is not
designated as a specialty hospital in the hospital's annual
financial disclosure report for the hospital's latest fiscal year
ending in 2007, is operating a hospital owned by a local health care
district, and is affiliated with the health care district hospital
owner by means of the district's status as the nonprofit corporation'
s sole corporate member.
(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.
(r) "Private hospital" means a hospital that meets all of the
following conditions:
(1) Is licensed pursuant to subdivision (a) of Section 1250 of the
Health and Safety Code.
(2) Is in the Charitable Research Hospital peer group, as set
forth in the 1991 Hospital Peer Grouping Report published by the
department, or is not designated as a specialty hospital in the
hospital's Office of Statewide Health Planning and Development Annual
Financial Disclosure Report for the hospital's latest fiscal year
ending in 2007.
(3) Does not satisfy the Medicare criteria to be classified as a
long-term care hospital.
(4) Is a nonpublic hospital, nonpublic converted hospital, or
converted hospital as those terms are defined in paragraphs (26) to
(28), inclusive, respectively, of subdivision (a) of Section
14105.98.
(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:
(1) Is licensed pursuant to subdivision (a) of Section 1250 of the
Health and Safety Code.
(2) Is in the Charitable Research Hospital peer group, as set
forth in the 1991 Hospital Peer Grouping Report published by the
department, or is not designated as a specialty hospital in the
hospital's Office of Statewide Health Planning and Development Annual
Financial Disclosure Report for the hospital's latest fiscal year
ending in 2007.
(3) Does not satisfy the Medicare criteria to be classified as a
long-term care hospital.
(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:
(1) The total amount payable to private hospitals under
subdivision (b) for the subject fiscal year shall be reduced to the
amount for which federal financial participation is available.
(2) The amount payable under subdivision (b) to each private
hospital for the subject fiscal year 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).
(d) The supplemental amounts set forth in this section are
inclusive of federal financial participation.
(e) No payments shall be made under this section to a new
hospital.
(f) No payments shall be made under this section to a converted
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.
(f) The amounts set forth in this section are inclusive of federal
financial participation.
(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.
(2) The payments described in paragraph (1) may be made directly
by the department to hospitals when federal law does not require that
the payments be transmitted to hospitals via mental health plans.
14168.5. (a) The department shall increase capitation payments to
Medi-Cal managed health care plans for the program period as set
forth in this section.
(b) The increased capitation payments shall be made as part of the
monthly capitated payments made by the department to managed health
care plans.
(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.
(d) The department shall determine the amount of the increased
capitation payments for each managed health care plan. The department
shall consider the composition of Medi-Cal enrollees in the plan,
the anticipated utilization of hospital services by the plan's
Medi-Cal enrollees, and other factors that the department determines
are reasonable and appropriate to ensuring access to high-quality
hospital services by the plan's enrollees.
(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.
(h) (1) Each managed health care plan shall expend 100 percent of
any increased capitation payments it receives under this section on
hospital services.
(2) The department may issue change orders to amend contracts with
managed health care plans as needed to adjust monthly capitation
payments in order to implement this section.
(3) For entities contracting with the department pursuant to
Article 2.91 (commencing with Section 14089), any incremental
increase in capitation rates pursuant to this section shall not be
subject to negotiation and approval by the California Medical
Assistance Commission.
(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.
(c) Any delegation or attempted delegation by a managed health
care plan of its obligation to expend the capitation rate increases
under this section shall not relieve the plan from its obligation to
expend those capitation rate increases. Managed health care plans
shall submit the documentation the department may require to
demonstrate compliance with this subdivision. The documentation shall
demonstrate actual expenditure of the capitation rate increases for
hospital services, and not assignment to subcontractors of the
managed health care plan's obligation of the duty to expend the
capitation rate increases.
(d) The supplemental hospital payments made by managed health care
plans pursuant to this section shall reflect the overall purpose of
the act.
(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.
14168.7. (a) The department shall design and implement, in
consultation with designated and nondesignated public hospitals, an
IGT 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.
(b) For purposes of this section, the department shall follow the
requirements as specified in subdivision (f) of Section 14165.57.
(c) The increased capitation payments under this section shall be
actuarially sound and, in regard to the payments for nondesignated
public hospitals, shall be in proportion to the intergovernmental
transfers pursuant to Section 14165.57 in order to help maximize
reimbursement for designated and nondesignated public hospitals to
the extent permissible under federal law.
(d) This section shall be implemented on the later of June 30,
2011, or the date on which all necessary federal approvals have been
received.
(e) Participation in the intergovernmental transfers under this
section is voluntary on the part of the transferring entities for the
purposes of all applicable federal laws.
(f) This section shall be implemented only to the extent federal
financial participation is available for the reimbursement specified
in subdivision (a).
(g) This section shall be implemented only to the extent federal
financial participation is not jeopardized.
(h) To the extent that the director determines that the payments
do not comply with the federal Medicaid requirements, the director
retains the discretion not to implement an intergovernmental transfer
and may adjust the payment as necessary to comply with federal
Medicaid requirements.
(i) To the extent federal approval is secured, the increased
capitation payments under this section may cover services for periods
beginning on or after July 1, 2011.
(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.
14168.8. (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.
(b) The amount of any payments made to a hospital under this
article shall not be included in the calculation of stabilization
funding under Article 5.2 (commencing with Section 14166) or any
successor legislation, including legislation implementing California'
s Bridge to Reform Section 1115(a) Medicaid Demonstration
(11-W-00193/9).
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.
(b) The amount of the nonfederal share of any supplemental payment
reduction under subdivision (a) shall be transferred from the
Hospital Quality Assurance Revenue Fund to the General Fund at the
time the reduced supplemental payment under subdivision (a) is made.
(c) 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.
14168.11. The department shall make disbursements from the
Hospital Quality Assurance Revenue Fund consistent with the
following:
(a) Fund disbursements shall be made periodically within 15 days
of each date on which quality assurance fees are due from hospitals.
(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. (a) The director shall do all of the following:
(1) Promptly submit any state plan amendment or waiver request
that may be necessary to implement this article.
(2) Promptly seek federal approvals or waivers as may be necessary
to implement this article and to obtain federal financial
participation to the maximum extent possible for the payments under
this article.
(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.
(c) This article shall become inoperative if either of the
following occurs:
(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.
(2) In the event both of the following conditions exist:
(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.
(d) If this article becomes inoperative pursuant to paragraph (1)
of subdivision (c) and the determination applies to any period or
periods of time prior to the effective date of the determination, the
department shall have authority to recoup all payments made pursuant
to this article during that period or those periods of time.
(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.
(2) Any amount computed to be payable to the hospital pursuant to
this section for a project year shall be withheld by the department
and shall be paid to the hospital only after 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.
(g) A hospital's receipt of payments under this article for
services rendered prior to the effective date of this article is
conditioned on the hospital's continued participation in Medi-Cal for
at least 30 days after the effective date of this article.
(h) All payments made by the department to hospitals, managed
health care plans, and mental health plans under this article shall
be made only from the following:
(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.
(2) Federal reimbursement and any other related federal funds.
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. This article 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.
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. 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 article by means of policy letters
or similar instructions, without taking further regulatory action.
SEC. 8. 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
14168.31. For the purposes of this article, the following
definitions shall apply:
(a) (1) "Aggregate quality assurance fee" means, with respect to a
hospital that is not a prepaid health plan hospital, the sum of all
of the following:
(A) The annual fee-for-service days for an individual hospital
multiplied by the fee-for-service per diem quality assurance fee
rate, divided by two.
(B) The annual managed care days for an individual hospital
multiplied by the managed care per diem quality assurance fee rate,
divided by two.
(C) The annual Medi-Cal days for an individual hospital multiplied
by the Medi-Cal per diem quality assurance fee rate, divided by two.
(2) "Aggregate quality assurance fee" means, with respect to a
hospital that is a prepaid health plan hospital, the sum of all of
the following:
(A) The annual fee-for-service days for an individual hospital
multiplied by the fee-for-service per diem quality assurance fee
rate, divided by two.
(B) The annual managed care days for an individual hospital
multiplied by the prepaid health plan hospital managed care per diem
quality assurance fee rate, divided by two.
(C) The annual Medi-Cal managed care days for an individual
hospital multiplied by the prepaid health plan hospital Medi-Cal
managed care per diem quality assurance fee rate, divided by two.
(D) The annual Medi-Cal fee-for-service days for an individual
hospital multiplied by the Medi-Cal per diem quality assurance fee
rate, divided by two.
(3) "Aggregate quality assurance fee after the application of the
fee percentage" means the aggregate quality assurance fee multiplied
by the fee percentage for the program period.
(b) "Annual fee-for-service days" means the number of
fee-for-service days of each hospital subject to the quality
assurance fee, as reported on the day's data source.
(c) "Annual managed care days" means the number of managed care
days of each hospital subject to the quality assurance fee, as
reported on the day's data source.
(d) "Annual Medi-Cal days" means the number of Medi-Cal days of
each hospital subject to the quality assurance fee, as reported on
the day's data source.
(e) "Converted hospital" shall mean a hospital described in
subdivision (b) of Section 14168.1.
(f) "Days data source" means the following:
(1) For a hospital that did not submit an Annual Financial
Disclosure Report to the Office of Statewide Health Planning and
Development for a fiscal year ending during 2007, but submitted that
report for a fiscal period ending in 2008 that includes at least 10
months of 2007, the Annual Financial Disclosure Report submitted by
the hospital to the Office of Statewide Health Planning and
Development for the fiscal period in 2008 that includes at least 10
months of 2007.
(2) For a hospital owned by Kaiser Foundation Hospitals that
submitted corrections to reported patient days to the Office of
Statewide Health Planning and Development for its fiscal year ending
in 2007 before July 31, 2009, the corrected data.
(3) For all other hospitals, the hospital's Annual Financial
Disclosure Report in the Office of Statewide Health Planning and
Development files as of October 31, 2008, for its fiscal year ending
during 2007.
(g) "Designated public hospital" shall have the meaning given in
subdivision (d) of Section 14166.1 as of January 1, 2011.
(h) "Exempt facility" means any of the following:
(1) A public hospital, which shall include either of the
following:
(A) A hospital, as defined in paragraph (25) of subdivision (a) of
Section 14105.98.
(B) A tax-exempt nonprofit hospital that is licensed under
subdivision (a) of Section 1250 of the Health and Safety Code and
operating a hospital owned by a local health care district, and is
affiliated with the health care district hospital owner by means of
the district's status as the nonprofit corporation's sole corporate
member.
(2) With the exception of a hospital that is in the Charitable
Research Hospital peer group, as set forth in the 1991 Hospital Peer
Grouping Report published by the department, a hospital that is a
hospital designated as a specialty hospital in the hospital's Office
of Statewide Health Planning and Development Hospital Annual
Disclosure Report for the hospital's fiscal year ending in the 2007
calendar year.
(3) A hospital that satisfies the Medicare criteria to be a
long-term care hospital.
(4) A small and rural hospital as specified in Section 124840 of
the Health and Safety Code designated as that in the hospital's
Office of Statewide Health Planning and Development Hospital Annual
Disclosure Report for the hospital's fiscal year ending in the 2007
calendar year.
(i) "Federal approval" means the last approval by the federal
government required for the implementation of this article and
Article 5.226 (commencing with Section 14168.1).
(j) (1) "Fee-for-service per diem quality assurance fee rate"
means a fixed daily fee on fee-for-service days.
(2) The fee-for-service per diem quality assurance fee rate must
be no greater than or equal to two hundred fifty-three dollars and
twenty-nine cents ($253.29) per day.
(3) Upon federal approval or conditional federal approval
described in Section 14168.34, the director shall determine the
fee-for-service per diem quality assurance fee rate based on the
funds required to make the payments specified in Article 5.226
(commencing with Section 14168.1), in consultation with the hospital
community.
(k) "Fee-for-service days" means inpatient hospital days where the
service type is reported as "acute care," "psychiatric care," and
"chemical dependency care and rehabilitation care," and the payer
category is reported as "Medicare traditional," "county indigent
programs-traditional," "other third parties-traditional," "other
indigent," and "other payers," for purposes of the Annual Financial
Disclosure Report submitted by hospitals to the Office of Statewide
Health Planning and Development.
(l) "Fee percentage" means a fraction, expressed as a percentage,
the numerator of which is the amount of payments for the program
period under Sections 14168.2, 14168.3, and 14168.5, for which
federal financial participation is available and the denominator of
which is one billion eight hundred ninety-nine million eight hundred
eleven thousand one hundred eighty-three dollars ($1,899,811,183).
(m) "General acute care hospital" means any hospital licensed
pursuant to subdivision (a) of Section 1250 of the Health and Safety
Code.
(n) "Hospital community" means any hospital industry organization
or system that represents children's hospitals, nondesignated public
hospitals, designated public hospitals, private safety-net hospitals,
and other public or private hospitals.
(o) "Managed care days" means inpatient hospital days where the
service type is reported as "acute care," "psychiatric care," and
"chemical dependency care and rehabilitation care," and the payer
category is reported as "Medicare managed care," "county indigent
programs-managed care," and "other third parties-managed care," for
purposes of the Annual Financial Disclosure Report submitted by
hospitals to the Office of Statewide Health Planning and Development.
(p) "Managed care per diem quality assurance fee rate" means a
fixed fee on managed care days of twenty-seven dollars and
twenty-five cents ($27.25) per day.
(q) "Medi-Cal days" means inpatient hospital days where the
service type is reported as "acute care," "psychiatric care," and
"chemical dependency care and rehabilitation care," and the payer
category is reported as "Medi-Cal traditional" and "Medi-Cal managed
care," for purposes of the Annual Financial Disclosure Report
submitted by hospitals to the Office of Statewide Health Planning and
Development.
(r) "Medi-Cal fee-for-service days" means inpatient hospital days
where the service type is reported as "acute care," "psychiatric
care," and "chemical dependency care and rehabilitation care," and
the payer category is reported as "Medi-Cal traditional" for purposes
of the Annual Financial Disclosure Report submitted by hospitals to
the Office of Statewide Health Planning and Development.
(s) "Medi-Cal managed care days" means inpatient hospital days as
reported on the days data source where the service type is reported
as "acute care," "psychiatric care," and "chemical dependency care
and rehabilitation care," and the payer category is reported as
"Medi-Cal managed care" for purposes of the Annual Financial
Disclosure Report submitted by hospitals to the Office of Statewide
Health Planning and Development.
(t) "Medi-Cal per diem quality assurance fee rate" means a fixed
fee on Medi-Cal days of two hundred seventy-five dollars ($275) per
day.
(u) "New hospital" means a hospital operation, business, or
facility functioning under current or prior ownership as a private
hospital that does not have a days data source or a hospital that has
a days data source in whole, or in part, from a previous operator
where there is an outstanding monetary liability owed to the state in
connection with the Medi-Cal program and the new operator did not
assume liability for the outstanding monetary obligation.
(v) "Nondesignated public hospital" means either of the following:
(1) A public hospital that is licensed under subdivision (a) of
Section 1250 of the Health and Safety Code, is not designated as a
specialty hospital in the hospital's annual financial disclosure
report for the hospital's latest fiscal year ending in 2007, and
satisfies the definition in paragraph (25) of subdivision (a) of
Section 14105.98, excluding designated public hospitals.
(2) A tax-exempt nonprofit hospital that is licensed under
subdivision (a) of Section 1250 of the Health and Safety Code, is not
designated as a specialty hospital in the hospital's annual
financial disclosure report for the hospital's latest fiscal year
ending in 2007, is operating a hospital owned by a local health care
district, and is affiliated with the health care district hospital
owner by means of the district's status as the nonprofit corporation'
s sole corporate member.
(w) "Prepaid health plan hospital" means a hospital owned by a
nonprofit public benefit corporation that shares a common board of
directors with a nonprofit health care service plan.
(x) "Prepaid health plan hospital managed care per diem quality
assurance fee rate" means a fixed fee on non-Medi-Cal managed care
days for prepaid health plan hospitals of fifteen dollars and
twenty-six cents ($15.26) per day.
(y) "Prepaid health plan hospital Medi-Cal managed care per diem
quality assurance fee rate" means a fixed fee on Medi-Cal managed
care days for prepaid health plan hospitals of one hundred fifty-four
dollars ($154) per day.
(z) "Prior fiscal year data" means any data taken from sources
that the department determines are the most accurate and reliable at
the time the determination is made, or may be calculated from the
most recent audited data using appropriate update factors. The data
may be from prior fiscal years, current fiscal years, or projections
of future fiscal years.
(aa) "Private hospital" means a hospital that meets all of the
following conditions:
(1) Is licensed pursuant to subdivision (a) of Section 1250 of the
Health and Safety Code.
(2) Is in the Charitable Research Hospital peer group, as set
forth in the 1991 Hospital Peer Grouping Report published by the
department, or is not designated as a specialty hospital in the
hospital's Office of Statewide Health Planning and Development Annual
Financial Disclosure Report for the hospital's latest fiscal year
ending in 2007.
(3) Does not satisfy the Medicare criteria to be classified as a
long-term care hospital.
(4) Is a nonpublic hospital, nonpublic converted hospital, or
converted hospital as those terms are defined in paragraphs (26) to
(28), inclusive, respectively, of subdivision (a) of Section
14105.98.
(ab) "Program period" means the period from January 1, 2011, to
June 30, 2011, inclusive.
(ac) "Subject fiscal quarter" means a state fiscal quarter during
the program period.
(ad) "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.
14168.32. (a) There shall be imposed on each general acute care
hospital that is not an exempt facility a quality assurance fee,
provided that a quality assurance fee under this article shall not be
imposed on a converted hospital.
(b) The quality assurance fee shall be computed starting on
January 1, 2011, and continue through and including June 30, 2011.
(c) Subject to Section 14168.34, upon receipt of federal approval,
the following shall become operative:
(1) Within 10 business days following receipt of the notice of
federal approval from the federal government, the department shall
send notice to each hospital subject to the quality assurance fee,
and publish on its Internet Web site, the following information:
(A) The date that the state received notice of federal approval.
(B) The fee percentage for the program period.
(2) The notice to each hospital subject to the quality assurance
fee shall also state the following:
(A) The aggregate quality assurance fee after the application of
the fee percentage for the program period.
(B) The aggregate quality assurance fee.
(C) The amount of each payment due from the hospital with respect
to the aggregate quality assurance fee.
(D) The date on which each payment is due.
(3) The hospitals shall pay the aggregate quality assurance fee,
as follows:
(A) If the notice of federal approval is received before March 15,
2011, the aggregate quality assurance fee shall be paid on or before
the later of March 1, 2011, or the fifth day after the receipt of
the notice of federal approval.
(B) If the notice of federal approval is received on or after
March 15, 2011, the aggregate quality assurance fee shall be made in
one or more payments. The payments shall be made on the sixth of each
month on or after the date federal approval is received and June 6,
2011.
(4) Notwithstanding paragraph (3), the amount of each hospital's
aggregate quality assurance fee after the application of the fee
percentage that has not been paid by the hospital before June 15,
2011, pursuant to paragraph (3), shall be paid by the hospital no
later than June 15, 2011.
(d) The quality assurance fee, as paid pursuant to this section,
shall be paid by each hospital subject to the fee to the department
for deposit in the Hospital Quality Assurance Revenue Fund. Deposits
may be accepted at any time and will be credited toward the program
period.
(e) This section shall become inoperative if the federal Centers
for Medicare and Medicaid Services denies approval for, or does not
approve before January 1, 2012, the implementation of this article or
Article 5.226 (commencing with Section 14168.1), and either or both
articles cannot be modified by the department pursuant to subdivision
(d) of Section 14168.33 in order to meet the requirements of federal
law or to obtain federal approval.
(f) In no case shall the aggregate fees collected in a federal
fiscal year pursuant to this section and Section 14167.32 exceed the
maximum percentage of the annual aggregate net patient revenue for
hospitals subject to the fee that is prescribed pursuant to federal
law and regulations as necessary to preclude a finding that an
indirect guarantee has been created.
(g) (1) Interest shall be assessed on quality assurance fees not
paid on the date due at the greater of 10 percent per annum or the
rate at which the department assesses interest on Medi-Cal program
overpayments to hospitals that are not repaid when due. Interest
shall begin to accrue the day after the date the payment was due and
shall be deposited in the Hospital Quality Assurance Revenue Fund.
(2) In the event that any fee payment is more than 60 days
overdue, a penalty equal to the interest charge described in
paragraph (1) shall be assessed and due for each month for which the
payment is not received after 60 days.
(h) When a hospital fails to pay all or part of the quality
assurance fee on or before the date that payment is due, the
department may the following day immediately begin to deduct the
unpaid assessment and interest owed from any Medi-Cal payments or
other state payments to the hospital in accordance with Section
12419.5 of the Government Code until the full amount is recovered.
All amounts, except penalties, deducted by the department under this
subdivision shall be deposited in the Hospital Quality Assurance
Revenue Fund. The remedy provided to the department by this section
is in addition to other remedies available under law.
(i) The payment of the quality assurance fee shall not be
considered as an allowable cost for Medi-Cal cost reporting and
reimbursement purposes.
(j) The department shall work in consultation with the hospital
community to implement this article and Article 5.226 (commencing
with Section 14168.1).
(k) This subdivision creates a contractually enforceable promise
on behalf of the state to use the proceeds of the quality assurance
fee, including any federal matching funds, solely and exclusively for
the purposes set forth in this article as they existed on the
effective date of this article, to limit the amount of the proceeds
of the quality assurance fee to be used to pay for the health care
coverage of children to the amounts specified in this article, to
limit any payments for the department's costs of administration to
the amounts set forth in this article on the effective date of this
article, to maintain and continue prior reimbursement levels as set
forth in Section 14168.14 on the effective date of that article, and
to otherwise comply with all its obligations set forth in Article
5.226 (commencing with Section 14168.1) and this article provided
that amendments that arise from, or have as a basis, a decision,
advice, or determination by the federal Centers for Medicare and
Medicaid Services relating to federal approval of the quality
assurance fee or the payments set forth in this article or Article
5.226 (commencing with Section 14168.1) shall control for the
purposes of this subdivision.
(l) For the purpose of this article, references to the receipt of
notice by the state of federal approval of the implementation of this
article shall refer to the last date that the state receives notice
of all federal approval or waivers required for implementation of
this article and Article 5.226 (commencing with Section 14168.1).
(m) (1) Effective July 1, 2011, the rates payable to hospitals and
managed health care plans under Medi-Cal shall be the rates then
payable without the supplemental and increased capitation payments
set forth in Article 5.226 (commencing with Section 14168.1).
(2) The supplemental payments and other payments under Article
5.226 (commencing with Section 14168.1) shall be regarded as quality
assurance payments, the implementation or suspension of which does
not affect a determination of the adequacy of any rates under federal
law.
(n) (1) Subject to paragraph (2), the director may waive any or
all interest and penalties assessed under this article in the event
that the director determines, in his or her sole discretion, that the
hospital has demonstrated that imposition of the full quality
assurance fee on the timelines applicable under this article has a
high likelihood of creating a financial hardship for the hospital or
a significant danger of reducing the provision of needed health care
services.
(2) Waiver of some or all of the interest or penalties under this
subdivision shall be conditioned on the hospital's agreement to make
fee payments, or to have the payments withheld from payments
otherwise due from the Medi-Cal program to the hospital, on a
schedule developed by the department that takes into account the
financial situation of the hospital and the potential impact on
services.
(3) A decision by the director under this subdivision shall not be
subject to judicial review.
(4) If 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 under this article and Article 5.226
(commencing with Section 14168.1), the fee payments shall be retained
in the fund for purposes of funding supplemental payments supported
by a hospital quality assurance fee program implemented under
subsequent legislation, provided however that if supplemental
payments are not implemented under subsequent legislation, then those
fee payments shall be deposited to the Distressed Hospital Fund.
(5) If during the implementation of this article, fee payments
that were due under Articles 5.21 and 5.22 are remitted to the
department under a payment plan or for any other reason, and the
final date for calculating the final supplemental payments under
Articles 5.21 and 5.22 has passed, then those fee payments shall be
deposited to the fund to support the uses established by this
article.
14168.33. (a) (1) All fees required to be paid to the state
pursuant to this article shall be paid in the form of remittances
payable to the department.
(2) The department shall directly transmit the fee payments to the
Treasurer to be deposited in the Hospital Quality Assurance Revenue
Fund, created pursuant to Section 14167.35. Notwithstanding Section
16305.7 of the Government Code, any interest and dividends earned on
deposits in the fund from the proceeds of the fee assessed pursuant
to this article shall be retained in the fund for purposes specified
in subdivision (b).
(b) Notwithstanding subdivision (c) of Section 14167.35, all funds
from the proceeds of the fee assessed pursuant to this article in
the Hospital Quality Assurance Revenue Fund, together with any
interest and dividends earned on money in the fund, shall, upon
appropriation by the Legislature, continue to be used exclusively to
enhance federal financial participation for hospital services under
the Medi-Cal program, to provide additional reimbursement to, and to
support quality improvement efforts of, hospitals, and to minimize
uncompensated care provided by hospitals to uninsured patients, in
the following order of priority:
(1) To pay for the department's staffing and administrative costs
directly attributable to implementing Article 5.226 (commencing with
Section 14168.1) and this article, not to exceed five hundred
thousand dollars ($500,000).
(2) To pay for the health care coverage for children in the amount
of one hundred five million dollars ($105,000,000) for each subject
fiscal quarter for which payments are made under Article 5.226
(commencing with Section 14168.1).
(3) To make increased capitation payments to managed health care
plans pursuant to Article 5.226 (commencing with Section 14168.1).
(4) To reimburse the General Fund for the increase in the overall
compensation to a private hospital that is attributable to its change
in status from contract hospital to noncontract hospital, pursuant
to subdivision (a) of Section 14168.10.
(5) To make increased payments to hospitals pursuant to Article
5.226 (commencing with Section 14168.1).
(6) To make increased payments to mental health plans pursuant to
Article 5.226 (commencing with Section 14168.1).
(c) Any amounts of the quality assurance fee collected in excess
of the funds required to implement subdivision (b), including any
funds recovered under subdivision (d) of Section 14168.13 or
subdivision (e) of Section 14168.38, shall be refunded to general
acute care hospitals, pro rata with the amount of quality assurance
fee paid by the hospital, subject to the limitations of federal law.
If federal rules prohibit the refund described in this subdivision,
the excess funds shall be deposited in the Distressed Hospital Fund
to be used for the purposes described in Section 14166.23, and shall
be supplemental to and not supplant existing funds.
(d) Any methodology or other provision specified in Article 5.226
(commencing with Section 14168.1) or this article may be modified by
the department, in consultation with the hospital community, to the
extent necessary to meet the requirements of federal law or
regulations to obtain federal approval or to enhance the probability
that federal approval can be obtained, provided the modifications do
not violate the spirit and intent of Article 5.226 (commencing with
Section 14168.1) or this article and are not inconsistent with the
conditions of implementation set forth in Section 14168.40.
(e) The department, in consultation with the hospital community,
shall make adjustments, as necessary, to the amounts calculated
pursuant to Section 14168.32 in order to ensure compliance with the
federal requirements set forth in Section 433.68 of Title 42 of
the Code of Federal Regulations
or elsewhere in federal law.
(f) The department shall request approval from the federal Centers
for Medicare and Medicaid Services for the implementation of this
article. In making this request, the department shall seek specific
approval from the federal Centers for Medicare and Medicaid Services
to exempt providers identified in this article as exempt from the
fees specified, including the submission, as may be necessary, of a
request for waiver of the broad-based requirement, waiver of the
uniform fee requirement, or both, pursuant to paragraphs (1) and (2)
of subdivision (e) of Section 433.68 of Title 42 of the Code of
Federal Regulations.
(g) 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 this article or Article 5.226 (commencing
with Section 14168.1) by means of provider bulletins, all plan
letters, or other similar instruction, without taking regulatory
action. The department shall also provide notification to the Joint
Legislative Budget Committee and to the appropriate policy and fiscal
committees of the Legislature within five working days when the
above-described action is taken in order to inform the Legislature
that the action is being implemented.
14168.34. (a) Notwithstanding any other provision of this article
or Article 5.226 (commencing with Section 14168.1) requiring federal
approvals, the department may impose and collect the quality
assurance fee and may make payments under this article and Article
5.226 (commencing with Section 14168.1), including increased
capitation payments, based upon receiving a letter from the federal
Centers for Medicare and Medicaid Services or the United States
Department of Health and Human Services that indicates likely federal
approval, but only if and to the extent that the letter is
sufficient as set forth in subdivision (b).
(b) In order for the letter to be sufficient under this section,
the director shall find that the letter meets both of the following
requirements:
(1) The letter is in writing and signed by an official of the
federal Centers for Medicare and Medicaid Services or an official of
the United States Department of Health and Human Services.
(2) The director, after consultation with the hospital community,
has determined, in the exercise of his or her sole discretion, that
the letter provides a sufficient level of assurance to justify
advanced implementation of the fee and payment provisions.
(c) Nothing in this section shall be construed as modifying the
requirement under Section 14168.13 that payments shall be made only
to the extent a sufficient amount of funds collected as the quality
assurance fee are available to cover the nonfederal share of those
payments.
(d) Upon notice from the federal government that final federal
approval for the fee model under this article or for any payment
method under Article 5.226 (commencing with Section 14168.1) has been
denied, any fees collected pursuant to this section shall be
refunded and any payments made pursuant to this article or Article
5.226 (commencing with Section 14168.1) shall be recouped, including,
but not limited to, supplemental payments, increased capitation
payments, payments to hospitals by health care plans resulting from
the increased capitation payments, increased payments to mental
health plans, and payments for the health care coverage of children.
To the extent fees were paid by a hospital that also received
payments under this section, the payments may first be recouped from
fees that would otherwise be refunded to the hospital prior to the
use of any other recoupment method allowed under law.
(e) Any payment made pursuant to this section shall be a
conditional payment until all final federal approvals necessary to
fully implement this article and Article 5.226 (commencing with
Section 14168.1) have been received.
(f) The director shall have broad authority under this section to
collect the quality assurance fee for an interim period after receipt
of the letter described in subdivision (a) pending receipt of all
necessary federal approvals. This authority shall include discretion
to determine both of the following:
(1) Whether the quality assurance fee should be collected on a
full or pro rata basis during the interim period.
(2) The dates on which payments of the quality assurance fee are
due.
(g) The department may draw against the Hospital Quality Assurance
Revenue Fund for all administrative costs associated with
implementation under this article or Article 5.226 (commencing with
Section 14168.1).
(h) This section shall be implemented only to the extent federal
financial participation is not jeopardized by implementation prior to
the receipt of all necessary final federal approvals.
14168.35. (a) Notwithstanding any other provision of law, the
director shall have discretion to modify any timeline or timelines in
this article or Article 5.226 (commencing with Section 14168.1) if
the letter that indicates likely federal approval, as described in
Section 14168.34, is not secured by March 15, 2011, and the director
determines that it is impossible from an operational perspective to
implement a timeline or timelines without the modification.
(b) The department shall notify the fiscal and policy committees
of the Legislature prior to implementing a modified timeline or
timelines under subdivision (a).
(c) The department shall consult with representatives of the
hospital community in developing a modified timeline or timelines
pursuant to this section.
(d) The discretion to modify timelines under this section shall
include, but not be limited to, discretion to accelerate payments to
plans or hospitals.
14168.36. (a) Upon receipt of a letter that indicates likely
federal approval that the director determines is sufficient for
implementation under Section 14168.34, or upon the receipt of all
final federal approvals necessary for the implementation of this
article and Article 5.226 (commencing with Section 14168.1), the
following shall occur:
(1) To the maximum extent possible, and consistent with the
availability of funds in the Hospital Quality Assurance Revenue Fund,
the department shall make all of the payments under Sections
14168.2, 14168.3, and 14168.5, including, but not limited to,
supplemental payments and increased capitation payments, prior to
July 1, 2011.
(2) The department shall make supplemental payments to hospitals
under Article 5.226 (commencing with Section 14168.1) consistent with
the timeframe described in Section 14168.11 or a modified timeline
developed pursuant to Section 14168.35.
(b) Notwithstanding any other provision of this article or Article
5.226 (commencing with Section 14168.1), if the director determines,
on or after June 15, 2011, that there are insufficient funds
available in the Hospital Quality Assurance Revenue Fund to make all
scheduled payments under Article 5.226 (commencing with Section
14168.1) before July 1, 2011, he or she shall consult with
representatives of the hospital community to develop an acceptable
plan for making additional payments to hospitals and managed health
care plans in the third and fourth quarters of 2011 to maximize the
use of delinquent fee payments or other deposits or interest
projected to become available in the fund after June 15, 2011, but
before September 15, 2011.
(c) Nothing in this section shall require the department to
continue to make payments under Article 5.226 (commencing with
Section 14168.1) if, after the consultation required under
subdivision (b), the director determines in the exercise of his or
her sole discretion that a workable plan for the continued payments
cannot be developed.
(d) Subdivisions (b) and (c) shall be implemented only if and to
the extent federal financial participation is available for continued
supplemental payments and to providers and continued increased
capitation payments to managed health care plans.
(e) If any payment or payments made pursuant to this section are
found to be inconsistent with federal law, the department shall
recoup the payments by means of withholding or any other available
remedy.
(f) Nothing in this section shall be read as affecting the
department's ongoing authority to continue, after June 30, 2011, to
collect quality assurance fees imposed on or before June 30, 2011.
14168.37. Notwithstanding any other provision of law, if actual
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.
14168.38. (a) This article shall be implemented only as long as
all of the following conditions are met:
(1) Subject to Section 14168.33, the quality assurance fee is
established in a manner that is fundamentally consistent with this
article.
(2) The quality assurance fee, including any interest on the fee
after collection by the department, is deposited in a segregated fund
apart from the General Fund.
(3) The proceeds of the quality assurance fee, including any
interest and related federal reimbursement, may only be used for the
purposes set forth in this article.
(b) No hospital shall be required to pay the quality assurance fee
to the department unless and until the state receives and maintains
federal approval of the quality assurance fee as set forth in this
article and Article 5.226 (commencing with Section 14168.1) from the
federal Centers for Medicare and Medicaid Services.
(c) Hospitals shall be required to pay the quality assurance fee
to the department as set forth in this article only as long as all of
the following conditions are met:
(1) The federal Centers for Medicare and Medicaid Services allows
the use of the quality assurance fee as set forth in this article.
(2) Article 5.226 (commencing with Section 14168.1) is enacted and
remains in effect and hospitals are reimbursed the increased rates
for services during the program period, as defined in Section
14168.1.
(3) The full amount of the quality assurance fee assessed and
collected pursuant to this article remains available only for the
purposes specified in this article.
(d) This article shall become inoperative if either of the
following occurs:
(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 United States 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.
(2) In the event both of the following conditions exist:
(A) The federal Centers for Medicare and Medicaid Services denies
approval for, or does not approve before January 1, 2012, the
implementation of Article 5.226 (commencing with Section 14168.1) or
this article.
(B) Either or both articles cannot be modified by the department
pursuant to subdivision (d) of Section 14168.33 in order to meet the
requirements of federal law or to obtain federal approval.
(e) If this article becomes inoperative pursuant to paragraph (1)
of subdivision (d) and the determination applies to any period or
periods of time prior to the effective date of the determination, the
department may recoup all payments made pursuant to Article 5.226
(commencing with Section 14168.1) during that period or those periods
of time.
(f) (1) In the event that all necessary final federal approvals
are not received as described and anticipated under this article or
Article 5.226 (commencing with Section 14168.1), the director shall
have the discretion and authority to develop procedures for
recoupment from managed health care plans, and from hospitals under
contract with managed health care plans, of any amounts received
pursuant to this article or Article 5.226 (commencing with Section
14168.1).
(2) Any procedure instituted pursuant to this subdivision shall be
developed in consultation with representatives from managed health
care plans and representatives of the hospital community.
(3) Any procedure instituted pursuant to this subdivision shall be
in addition to all other remedies made available under the law,
pursuant to contracts between the department and the managed health
care plans, or pursuant to contracts between the managed health care
plans and the hospitals.
14168.39. Notwithstanding any other provision of this article or
Article 5.226 (commencing with Section 14168.1), supplemental
payments or other payments under Article 5.226 (commencing with
Section 14168.1) shall only be required and payable in any quarter
for which a fee payment obligation exists.
14168.40. (a) This article and Article 5.226 (commencing with
Section 14168.1) shall become inoperative and the requirements for
supplemental payments or other payments under Article 5.226
(commencing with Section 14168.1) shall be retroactively invalidated,
on the first day of the first month of the calendar quarter
following notification to the Joint Legislative Budget Committee by
the Department of Finance, that any of the following have occurred:
(1) A final judicial determination by the California Supreme Court
or any California Court of Appeal that the revenues collected
pursuant to this article that are deposited in the Hospital Quality
Assurance Revenue Fund are either of the following:
(A) "General Fund proceeds of taxes appropriated pursuant to
Article XIII B of the California Constitution," as used in
subdivision (b) of Section 8 of Article XVI of the California
Constitution.
(B) "Allocated local proceeds of taxes," as used in subdivision
(b) of Section 8 of Article XVI of the California Constitution.
(2) The department has sought but has not received federal
financial participation for the supplemental payments and other costs
required by this article for which federal financial participation
has been sought.
(3) A lawsuit related to this article, Article 5.226 (commencing
with Section 14168.1), or Section 14166.115 is filed against the
state and a preliminary injunction or other order has been issued
that results in a financial disadvantage to the state.
(4) The director, in consultation with the Department of Finance,
determines that the implementation of this article or Article 5.226
(commencing with Section 14168.1) has resulted in a financial
disadvantage to the state.
(b) For purposes of this section, "financial disadvantage to the
state" means either:
(1) A loss of federal financial participation.
(2) A cost to the General Fund, that is equal to or greater than
one-quarter of 1 percent of the General Fund expenditures authorized
in the most recent annual Budget Act.
(c) (1) The director shall have the authority to recoup any
payments made under Article 5.226 (commencing with Section 14168.1)
if any of the following apply:
(A) Recoupment of payments made under Article 5.226 (commencing
with Section 14168.1) is ordered by a court.
(B) Federal financial participation is not available for payments
made under Article 5.226 (commencing with Section 14168.1) for which
federal financial participation has been sought.
(C) Recoupment of payments made under Article 5.226 (commencing
with Section 14168.1) is necessary to prevent a General Fund cost
that is estimated to be equal to or greater than one-quarter of 1
percent of the General Fund expenditures authorized in the most
recent annual Budget Act and that results from implementation of a
court order or the unavailability of federal financial participation.
(2) In the event payments are recouped for a particular quarter,
fees paid by a hospital for that quarter pursuant to this article
shall be refunded to the extent that the hospital meets both of the
following conditions:
(A) The hospital has actually paid the fee for the subject quarter
and for all prior quarters.
(B) The hospital has returned the payment received pursuant to
Article 5.226 (commencing with Section 14168.1) for that quarter, or
has had that payment recouped through a withholding of funds owed by
Medi-Cal or other state payments, or recouped through other means.
(d) In the event the department determines that recoupment of
supplemental payments is necessary to implement any provision of this
section, the department may recoup payments made pursuant to Article
5.226 (commencing with Section 14168.1) from fees paid by the
hospital pursuant to this article.
(e) Concurrent with invoking any provision of this section, the
director shall notify the fiscal and appropriate policy committees of
the Legislature of the intended action and the specific reason or
reasons for the proposed action.
14168.40.5. 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 article by means of policy letters
or similar instructions, without taking further regulatory action.
14168.41. This article shall remain in effect only until January
1, 2013, the date of the last payment of quality assurance fee
payments pursuant to this article, or the date of the last payment
from the department pursuant to Article 5.226 (commencing with
Section 14168.1), whichever is later, and as of that date is
repealed, unless a later enacted statute, that is enacted before that
date, deletes or extends that date.
SEC. 9. This act shall become operative only if Assembly Bill 113
of the 2011-12 Regular Session of the Legislature is enacted and
becomes effective.
SEC. 10. This act is an urgency statute necessary for the
immediate preservation of the public peace, health, or safety within
the meaning of Article IV of the Constitution and shall go into
immediate effect. The facts constituting the necessity are:
In order to make the necessary statutory changes to increase
Medi-Cal payments to hospitals and improve access at the earliest
possible time, so as to allow this act to be operative as soon as
approval from the federal Centers for Medicare and Medicaid Services
is obtained by the State Department of Health Care Services, it is
necessary that this act take effect immediately.