(1)Existing law establishes the Medi-Cal program, administered by the State Department of Health Care Services, under which basic health care services are provided to qualified low-income persons. The Medi-Cal program is, in part, governed and funded by federal Medicaid provisions.

Existing law authorizes the Director of Health Care Services to limit the rates of payment for health care services provided under the Medi-Cal program. Existing law requires, subject to federal approval, the department to freeze rates applicable to inpatient hospital services, as specified, and authorizes the department to modify the rate freeze in order to comply with federal Medicaid requirements.

This bill would provide that the rate freeze pursuant to these provisions shall become inoperative, and that any rate that was frozen pursuant to those provisions shall be restored retroactively to the rate that would have been in effect absent those provisions, on the effective date of this bill.

(2)Existing law requires the department to seek a demonstration project or federal waiver of Medicaid law to implement specified objectives, which may include better care coordination for seniors, persons with disabilities, and children with special health care needs. Existing law provides that to the extent the provisions under the Medi-Cal Hospital/Uninsured Care Demonstration Project Act do not conflict with the provisions of, or the Special Terms and Conditions of, this demonstration project, the provisions of the Medi-Cal Hospital/Uninsured Care Demonstration Project Act shall apply. Existing law requires the department to reduce disproportionate share hospital replacement payments to private hospitals by 10%, as specified.

This bill would provide that, in addition to the 10% reduction, disproportionate share hospital replacement payments to private hospitals shall be reduced in the 2010–11 fiscal year by an additional $30 million in General Fund moneys and by the corresponding federal financial participation. To the extent permitted by federal law, the bill would provide that the additional room under the federal Upper Payment Limit created by this reduction shall be used to increase the above-described supplemental payments. This bill would also provide that, in addition to the 10% reduction, disproportionate share hospital replacement payments to private hospitals shall be reduced in the 2011–12 fiscal year by an additional $75 million in General Fund moneys and by the corresponding federal financial participation. To the extent permitted by federal law, the bill would provide that the additional room under the federal Upper Payment Limit created by this reduction shall be used to increase supplemental payments under subsequent legislation extending or creating a new supplemental hospital payment program supported by a fee.

(3)Existing law, until January 1, 2013, reduces interim payments by 10% for inpatient hospital services provided on and after July 1, 2008, at all hospitals that receive Medi-Cal reimbursement from the department and that are not under selective contracts with the department.

This bill would, commencing on the effective date of this bill, provide that these provisions shall no longer be applicable to fee-for-service hospital rates but shall continue to be applicable as specified.

(4)Existing law, subject to federal approval, imposes a quality assurance fee, as specified, on certain general acute care hospitals through and including December 31, 2010. Existing law creates the Hospital Quality Assurance Revenue Fund in the State Treasury and requires that the money collected from the quality assurance fee be deposited into the fund.

Existing law, subject to federal approval, requires the department to make supplemental payments for certain services, as specified, to private hospitals, nondesignated public hospitals, and designated public hospitals, as defined, for subject fiscal years, as defined. Existing law also requires the department to increase capitation payments to Medi-Cal managed care plans, increase payments to mental health plans, and make direct grants to designated public hospitals, as specified. Existing law provides that the moneys in the Hospital Quality Assurance Revenue Fund shall, upon appropriation by the Legislature, be available only for certain purposes, including providing the supplemental payments to hospitals, direct grants to designated public hospitals, increased capitation payments to Medi-Cal managed care plans, and increased payments to mental health plans. Existing law also establishes the continuously appropriated Distressed Hospital Fund, which consists of moneys transferred to the fund or appropriated by the Legislature and used as the nonfederal share of payments to distressed hospitals, as defined.

This bill would, subject to federal approval, commencing January 1, 2011, through and including June 30, 2011, impose a quality assurance fee, as specified, on certain general acute care hospitals. This bill would require that the moneys collected from the quality assurance fee be deposited into the Hospital Quality Assurance Revenue Fund. The bill would, subject to federal approval, provide that the moneys in the Hospital Quality Assurance Revenue Fund shall, upon appropriation by the Legislature, be available only for certain purposes, including providing supplemental payments for certain services to private hospitals, increased capitation payments to Medi-Cal managed care plans, and increased payments to mental health plans. The bill would provide that if quality assurance fee payments are remitted to the department after the date determined by the department to be the final date for calculating the final supplemental payments, the fee payments shall be retained in the fund for purposes of funding supplemental payments supported by a hospital quality assurance fee program under subsequent legislation, but provides that if supplemental payments are not implemented under subsequent legislation, then those quality assurance fee payments shall be deposited into the Distressed Hospital Fund. The bill would also provide that if amounts of the quality assurance fees are collected in excess of the funds required to make the payments above and federal rules prohibit the department from refunding the fee payments to the general acute care hospitals, the excess funds shall be deposited into the Distressed Hospital Fund. By increasing the amount of money that may be deposited into the Distressed Hospital Fund, this bill would make an appropriation. The bill would also require that the department design and implement, in consultation with the designated and nondesignated public hospitals, an intergovernmental transfer program relating to Medi-Cal managed care services provided by designated and nondesignated public hospitals in order to increase capitation payments for the purpose of increasing their reimbursement.

(5)Existing law requires, after January 1, 2008, that any general acute care hospital building that is determined to be a potential risk of collapse or pose significant loss of life may only be used for nonacute care hospital purposes, unless granted an extension as prescribed.

This bill would authorize the Office of Statewide Health Planning and Development to grant a hospital an additional extension of up to 7 years for a hospital building that it owns or operates if the hospital meets specified milestones. This bill would require a hospital that applies for this extension to pay the office an additional fee, to be determined by the office, sufficient to cover the additional reasonable costs incurred by the office for maintaining the additional reporting requirements established by these provisions. This bill would provide that this provision shall become operative on the date the department receives all necessary federal approvals for a 2011–12 fiscal year hospital quality assurance fee program that includes $320 million in fee revenue to pay for health care coverage for children, as specified.

(6)This bill would become operative only if AB 113 of the 2011–12 Regular Session of the Legislature is enacted.

(7)This bill would declare that it is to take effect immediately as an urgency statute.