BILL NUMBER: SB 1409	AMENDED
	BILL TEXT

	AMENDED IN SENATE  APRIL 13, 2010

INTRODUCED BY   Senator Price
    (   Coauthor:   Assembly Member  
Hall   ) 

                        FEBRUARY 19, 2010

   An act to amend  Section 14166.12   Sections
14166.12 and 14166.25  of the Welfare and Institutions Code,
relating to Medi-Cal, and making an appropriation therefor.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 1409, as amended, Price. Medi-Cal: hospital demonstration
project funding: County of Los Angeles.
   Existing law provides for the Medi-Cal program, which is
administered by the State Department of Health Care Services and
under which qualified low-income persons receive health care
benefits. The Medi-Cal program is, in part, governed and funded by
federal Medicaid provisions.
   Existing law establishes the Medi-Cal Hospital/Uninsured Care
Demonstration Project Act, which revises hospital reimbursement
methodologies under the Medi-Cal program in order to maximize the use
of federal funds consistent with federal Medicaid law and stabilize
the distribution of funding for hospitals that provide care to
Medi-Cal beneficiaries and uninsured patients. This demonstration
project provides for funding, in supplementation of Medi-Cal
reimbursement, to various hospitals, including designated public
hospitals, nondesignated public hospitals, and private hospitals, as
defined, in accordance with certain provisions relating to
disproportionate share hospitals.
   Existing law establishes the continuously appropriated Private
Hospital Supplemental Fund, and allows the California Medical
Assistance Commission to distribute certain amounts from the fund to
private hospitals that satisfy specified criteria.
   Existing law requires the County of Los Angeles to, for the
2007-08, 2008-09, and 2009-10 project years, make intergovernmental
transfers to the state to fund the nonfederal share of increased
Medi-Cal payments to those private hospitals that serve the South Los
Angeles population formerly served by Los Angeles County Martin
Luther King,  Jr. - Harbor   Jr.-Harbor 
Hospital. Existing law requires the intergovernmental transfers to be
funded by county tax revenues and to total $5,000,000 per project
year, subject to specified exceptions. Existing law requires these
moneys to be deposited in the Private Hospital Supplemental Fund,
thus constituting an appropriation, and distributed to the private
hospitals designated by the county.
   This bill would additionally require the County of Los Angeles to
make intergovernmental transfers to the state to fund the nonfederal
share of increased Medi-Cal payments to those private hospitals that
serve the South Los Angeles population formerly served by Los Angeles
County Martin Luther King,  Jr. - Harbor  
Jr.-Harbor  Hospital for the 2010-11, 2011-12, and 2012-13
project years in accordance with the above-described provisions,
thereby constituting an appropriation. 
   Existing law provides for the payment of safety net care pool
funds to designated public hospitals, or governmental entities with
which they are affiliated, pursuant to the demonstration project.
Existing law requires a maximum of $100,000,000 of the safety net
care pool funds claimed and received by the state pursuant to the
demonstration project, that are based on the certified public
expenditures of the County of Los Angeles, or its designated public
hospitals, to be deposited in the continuously appropriated South Los
Angeles Medical Services Preservation Fund, for each of the 3
project years, 2007-08, 2008-09, and 2009-10, for the purpose of
reimbursing counties for specified costs.  
   This bill would extend the requirement for deposits into the South
Los Angeles Medical Services Preservation Fund to the 2010-11,
2011-12, and 2012-13 project years, thus making an appropriation.

   Vote: majority. Appropriation: yes. Fiscal committee: yes.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 14166.12 of the Welfare and Institutions Code
is amended to read:
   14166.12.  (a) The California Medical Assistance Commission shall
negotiate payment amounts, in accordance with the selective provider
contracting program established pursuant to Article 2.6 (commencing
with Section 14081), from the Private Hospital Supplemental Fund
established pursuant to subdivision (b) for distribution to private
hospitals that satisfy the criteria of Section 14085.6, 14085.7,
14085.8, or 14085.9.
   (b) The Private Hospital Supplemental Fund is hereby established
in the State Treasury. For purposes of this section, "fund" means the
Private Hospital Supplemental Fund.
   (c) Notwithstanding Section 13340 of the Government Code, the fund
shall be continuously appropriated to the department for the
purposes specified in this section.
   (d) Except as otherwise limited by this section, the fund shall
consist of all of the following:
   (1) One hundred eighteen million four hundred thousand dollars
($118,400,000), which shall be transferred annually from General Fund
amounts appropriated in the annual Budget Act for the Medi-Cal
program, except that for the 2008-09 fiscal year, this amount shall
be reduced by thirteen million six hundred thousand dollars
($13,600,000) and by an amount equal to one-half of the difference
between eighteen million three hundred thousand dollars ($18,300,000)
and the amount of any reduction in the additional payments for
distressed hospitals calculated pursuant to subparagraph (B) of
paragraph (3) of subdivision (b) of Section 14166.20.
   (2) Any additional moneys appropriated to the fund.
   (3) All stabilization funding transferred to the fund pursuant to
paragraph (2) of subdivision (a) of Section 14166.14.
   (4) Any moneys that any county, other political subdivision of the
state, or other governmental entity in the state may elect to
transfer to the department for deposit into the fund, as permitted
under Section 433.51 of Title 42 of the Code of Federal Regulations
or any other applicable federal Medicaid laws.
   (5) All private moneys donated by private individuals or entities
to the department for deposit in the fund as permitted under
applicable federal Medicaid laws.
   (6) Any interest that accrues on amounts in the fund.
   (e) Any public agency transferring moneys to the fund may, for
that purpose, utilize any revenues, grants, or allocations received
from the state for health care programs or purposes, unless otherwise
prohibited by law. A public agency may also utilize its general
funds or any other public moneys or revenues for purposes of
transfers to the fund, unless otherwise prohibited by law.
   (f) The department may accept or not accept moneys offered to the
department for deposit in the fund. If the department accepts moneys
pursuant to this section, the department shall obtain federal
financial participation to the full extent permitted by law. With
respect to funds transferred or donated from private individuals or
entities, the department shall accept only those funds that are
certified by the transferring or donating entity that qualify for
federal financial participation under the terms of the Medicaid
Voluntary Contribution and Provider-Specific Tax Amendments of 1991
(Public Law 102-234) or Section 433.51 of Title 42 of the Code of
Federal Regulations, as applicable. The department may return any
funds transferred or donated in error.
   (g) Moneys in the fund shall be used as the source for the
nonfederal share of payments to hospitals under this section.
   (h) Any funds remaining in the fund at the end of a fiscal year
shall be carried forward for use in the following fiscal year.
   (i) Moneys shall be allocated from the fund by the department and
shall be applied to obtain federal financial participation in
accordance with customary Medi-Cal accounting procedures for purposes
of payments under this section. Distributions from the fund shall be
supplemental to any other Medi-Cal reimbursement received by the
hospitals, including amounts that hospitals receive under the
selective provider contracting program (Article 2.6 (commencing with
Section 14081)), and shall not affect provider rates paid under the
selective provider contracting program.
   (j) Each private hospital that was a private hospital during the
2002-03 fiscal year, received payments for the 2002-03 fiscal year
from any of the prior supplemental funds, and, during the project
year, satisfies the criteria in Section 14085.6, 14085.7, 14085.8, or
14085.9 to be eligible to negotiate for distributions under any of
those sections, shall receive no less from the Private Hospital
Supplemental Fund for the project year than 100 percent of the amount
the hospital received from the prior supplemental funds for the
2002-03 fiscal year. Each private hospital described in this
subdivision shall be eligible for additional payments from the fund
pursuant to subdivision (k).
   (k) All amounts that are in the fund for a project year in excess
of the amount necessary to make the payments under subdivision (j)
shall be available for negotiation by the California Medical
Assistance Commission, along with corresponding federal financial
participation, for supplemental payments to private hospitals, which
for the project year satisfy the criteria under Section 14085.6,
14085.7, 14085.8, or 14085.9 to be eligible to negotiate for
distributions under any of those sections, and paid for services
rendered during the project year pursuant to the selective provider
contracting program established under Article 2.6 (commencing with
Section 14081).
   (l) The amount of any stabilization funding transferred to the
fund, or the amount of intergovernmental transfers deposited to the
fund pursuant to subdivision (o), together with the associated
federal reimbursement, with respect to a particular project year,
may, in the discretion of the California Medical Assistance
Commission, be paid for services furnished in the same project year
regardless of when the stabilization funds or intergovernmental
transfer funds, and the associated federal reimbursement, become
available, provided the payment is consistent with other applicable
federal or state law requirements and does not result in a hospital
exceeding any applicable reimbursement limitations.
   (m) The department shall pay amounts due to a private hospital
from the fund for a project year, with the exception of stabilization
funding, in up to four installment payments, unless otherwise
provided in the hospital's contract negotiated with the California
Medical Assistance Commission, except that hospitals that are not
described in subdivision (j) shall not receive the first installment
payment. The first payment shall be made as soon as practicable after
the issuance of the tentative disproportionate share hospital list
for the project year, and in no event later than January 1 of the
project year. The second and subsequent payments shall be made after
the issuance of the final disproportionate hospital list for the
project year, and shall be made only to hospitals that are on the
final disproportionate share hospital list for the project year. The
second payment shall be made by February 1 of the project year or as
soon as practicable after the issuance of the final disproportionate
share hospital list for the project year. The third payment, if
scheduled, shall be made by April 1 of the project year. The fourth
payment, if scheduled, shall be made by June 30 of the project year.
This subdivision does not apply to hospitals that are scheduled to
receive payments from the fund because they meet the criteria under
Section 14085.7 and do not meet the criteria under Section 14085.6,
14085.8, or 14085.9, which shall be paid in accordance with the
applicable contract or contract amendment negotiated by the
California Medical Assistance Commission.
   (n) The department shall pay stabilization funding transferred to
the fund in amounts negotiated by the California Medical Assistance
Commission and shall pay the scheduled payments in accordance with
the applicable contract or contract amendment.
   (o) Payments to private hospitals that are eligible to receive
payments pursuant to Section 14085.6, 14085.7, 14085.8, or 14085.9
may be made using funds transferred from governmental entities to the
state, at the option of the governmental entity. Any payments funded
by intergovernmental transfers shall remain with the private
hospital and shall not be transferred back to any unit of government.
An amount equal to 25 percent of the amount of any intergovernmental
transfer made in the project year that results in a supplemental
payment made for the same project year to a project year private DSH
hospital designated by the governmental entity that made the
intergovernmental transfer shall be deposited in the fund for
distribution as determined by the California Medical Assistance
Commission. An amount equal to 75 percent shall be deposited in the
fund and distributed to the private hospitals designated by the
governmental entity.
   (p) A private hospital that receives payment pursuant to this
section for a particular project year shall not submit a notice for
the termination of its participation in the selective provider
contracting program established pursuant to Article 2.6 (commencing
with Section 14081) until the later of the following dates:
   (1) On or after December 31 of the next project year.
   (2) The date specified in the hospital's contract, if applicable.
   (q) (1) For the 2007-08, 2008-09, 2009-10, 2010-11, 2011-12, and
2012-13 project years, the County of Los Angeles shall make
intergovernmental transfers to the state to fund the nonfederal share
of increased Medi-Cal payments to those private hospitals that serve
the South Los Angeles population formerly served by Los Angeles
County Martin Luther King, Jr.-Harbor Hospital. The intergovernmental
transfers required under this subdivision shall be funded by county
tax revenues and shall total five million dollars ($5,000,000) per
project year, except that, in the event that the director determines
that any amount is due to the County of Los Angeles under the
demonstration project for services rendered during the portion of a
project year during which Los Angeles County Martin Luther King,
Jr.-Harbor Hospital was operational, the amount of intergovernmental
transfers required under this subdivision shall be reduced by a
percentage determined by reducing 100 percent by the percentage
reduction in Los Angeles County Martin Luther King, Jr.-Harbor
Hospital's baseline, as determined under subdivision (c) of Section
14166.5 for that project year.
   (2) Notwithstanding subdivision (o), an amount equal to 100
percent of the county's intergovernmental transfers under this
subdivision shall be deposited in the fund and, within 30 days after
receipt of the intergovernmental transfer, shall be distributed,
together with related federal financial participation, to the private
hospitals designated by the county in the amounts designated by the
county. The director shall disregard amounts received pursuant to
this subdivision in calculating the OBRA 1993 payment limitation, as
defined in paragraph (24) of subdivision (a) of Section 14105.98, for
purposes of determining the amount of disproportionate share
hospital replacement payments due a private hospital under Section
14166.11.
   SEC. 2.    Section 14166.25 of the   Welfare
and Institutions Code   is amended to read: 
   14166.25.  (a) The Legislature finds and declares all of the
following:
   (1) In light of the closure of Los Angeles County Martin Luther
King, Jr.-Harbor Hospital, there is a need to ensure adequate funding
for continued health care services to the uninsured population of
South Los Angeles, including, but not limited to, the Cities of
Compton, Lynwood, South Gate, and Huntington Park, the southern and
central portions of the Cities of Los Angeles, Inglewood, Gardena,
and surrounding unincorporated communities.
   (2) The state, the County of Los Angeles, and all health care
providers in the South Los Angeles community must work together to
meet the health care needs of the community until the critical
hospital services previously provided by Los Angeles County Martin
Luther King, Jr.-Harbor Hospital can be restored at this location.
   (3) The Medi-Cal Hospital/Uninsured Care Demonstration Project
provides a critical source of funding for services to low-income
communities throughout the state that are provided by California's
safety net hospital systems.
   (4) The special funding provided in this section is predicated on
the express intent of the County of Los Angeles to restore hospital
services on the hospital campus, to be operated by either a private
or public entity. The county has undertaken a specific plan to do so
as quickly as possible.
   (5) The Legislature anticipates that demonstration project funds
will be available to help fund the reopened hospital. The nature and
amount of that funding cannot be determined until the new structure
and operation of the hospital is known.
   (6) As an interim response to the specific circumstances caused by
the closure of this hospital, and until hospital services can be
restored at this location, a special fund will be created to receive
demonstration project funding to be available to the County of Los
Angeles for expenditures to preserve health care services for the
uninsured population of South Los Angeles, as defined above.
   (b) The South Los Angeles Medical Services Preservation Fund is
hereby created in the State Treasury. Notwithstanding Section 13340
of the Government Code, the fund shall be continuously appropriated
to the department for the purposes specified in this section.
   (c) Subject to the conditions in this section, a maximum amount of
one hundred million dollars ($100,000,000) of the safety net care
pool funds claimed and received by the state that are based on the
certified public expenditures of the County of Los Angeles or its
designated public hospitals shall be transferred to the South Los
Angeles Medical Services Preservation Fund for each of the three
project years,  2007-08, 2008-09, and 2009-10  
2010-11, 2011-12, and 2012-13  .
   (1) In the event that the director determines that any amount is
due to the County of Los Angeles under the demonstration project for
services rendered during the portion of a project year during which
Los Angeles County Martin Luther King, Jr.-Harbor Hospital was
operational, the amount deposited in the fund under this subdivision
shall be reduced by a percentage determined by reducing 100 percent
by the percentage reduction in the hospital's baseline as determined
under subdivision (c) of Section 14166.5 for that project year.
   (2) If, in the aggregate, the federal medical assistance
percentage of the certified public expenditures reported by the
County of Los Angeles and its designated public hospitals under
Section 14166.8, excluding those certified public expenditures
reported under paragraph (1) of subdivision (b) of Section 14166.8,
in any project year do not exceed the amounts paid or payable to the
county and its designated public hospitals in the aggregate under
Section 14166.6, excluding disproportionate share payments funded
with intergovernmental transfers, Section 14166.7, and subdivision
(d) for the same project year, then the amount deposited in the fund
under subdivision (c) shall be reduced by the amount of excess
payments over the federal medical assistance percentage of certified
public expenditures.
   (d) Moneys in the South Los Angeles Medical Services Preservation
Fund shall be distributed to the County of Los Angeles in amounts
equal to the costs incurred by the county, including indirect costs
associated with adequately maintaining the hospital building so that
it can be reopened, in providing, or compensating other providers
for, health services rendered to the uninsured population of South
Los Angeles, including all of the following:
   (1) Services provided in the multiservice ambulatory care center
operating on the former Los Angeles County Martin Luther King,
Jr.-Harbor Hospital campus.
   (2) Services rendered to patients in beds at other designated
public hospitals operated by the County of Los Angeles that have been
opened specifically for the purpose of serving patients that would
have been served by the former Los Angeles County Martin Luther King,
Jr.-Harbor Hospital.
   (3) Services rendered in the county-operated health center and the
comprehensive health center formerly operated under Los Angeles
County Martin Luther King, Jr.-Harbor Hospital.
   (4) Services rendered to the uninsured by other public or private
health care providers for which the County of Los Angeles has agreed
to pay under a contract with the provider as a result of the
downsizing or closure of Los Angeles County Martin Luther King,
Jr.-Harbor Hospital.
   (e) As a condition for receiving distributions from the South Los
Angeles Medical Services Preservation Fund in any project year, the
County of Los Angeles shall assure the director that it will not
reduce the county's ongoing, systemwide financial contribution to the
county department of health services during that project year for
health care services to the uninsured.
   (f) No funds shall be available from the South Los Angeles Medical
Services Preservation Fund for services rendered when a hospital on
the former Los Angeles County Martin Luther King, Jr.-Harbor Hospital
campus is certified for Medi-Cal participation.
   (g) If the full amount of the South Los Angeles Medical Services
Preservation Fund for any project year is not distributed to the
County of Los Angeles, based on the cost of services identified in
subdivision (d) that were rendered during that project year, any
remaining amounts shall revert to the Health Care Support Fund
established pursuant to Section 14166.21.
   (h) To the extent that the County of Los Angeles receives
distributions from the South Los Angeles Medical Services
Preservation Fund based on the cost of services rendered by
county-operated providers, or based on payments made to private
providers for services rendered to the uninsured population of South
Los Angeles, the costs of the services rendered shall not be
considered for purposes of any of the following determinations with
respect to either the county or the private provider:
   (1) Medi-Cal payments under the selective provider contracting
program under Article 2.6 (commencing with Section 14081), including
payments to distressed hospitals under Section 14166.23.
   (2) Baseline amounts, or adjustments thereto, under Section
14166.5, 14166.13, or 14166.18.
   (3) Any other payment under Medi-Cal or other health care program.

   (i) This section shall be implemented only to the extent that the
director determines that it will not result in the loss of federal
funds under the demonstration project.