Bill Text: CA SB1423 | 2023-2024 | Regular Session | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Medi-Cal: critical access hospitals.

Spectrum: Moderate Partisan Bill (Republican 8-2)

Status: (Introduced) 2024-05-10 - Set for hearing May 16. [SB1423 Detail]

Download: California-2023-SB1423-Amended.html

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Amended  IN  Senate  April 08, 2024

CALIFORNIA LEGISLATURE— 2023–2024 REGULAR SESSION

Senate Bill

No. 1423

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Introduced by Senator Dahle
(Coauthors: Senators Alvarado-Gil, Grove, Hurtado, Jones, and Ochoa Bogh)
(Coauthors: Assembly Members Megan Dahle, Vince Fong, Gallagher, and Jim Patterson)

February 16, 2024

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An act to amend Sections 14105.17, 14105.191, and 14105.192 of add Section 14105.175 to the Welfare and Institutions Code, relating to Medi-Cal.

LEGISLATIVE COUNSEL'S DIGEST

SB 1423, as amended, Dahle. Medi-Cal: critical access hospitals.

Existing law establishes the Medi-Cal program, which is administered by the State Department of Health Care Services and under which qualified low-income individuals receive health care services. The Medi-Cal program is, in part, governed and funded by federal Medicaid program provisions.

Under existing law, each hospital designated by the department as a critical access hospital, and certified as such by the Secretary of the United States Department of Health and Human Services under the federal Medicare rural hospital flexibility program, is eligible for supplemental payments for Medi-Cal covered outpatient services rendered to Medi-Cal eligible persons. Existing law conditions those payments on receipt of federal financial participation and an appropriation in the annual Budget Act for the nonfederal share of those payments, with supplemental payments being apportioned among critical access hospitals based on their number of Medi-Cal outpatient visits.

This bill would remove the provisions relating to supplemental payments and would instead require the reimbursement to a critical access hospital for Medi-Cal covered outpatient services at a rate equal to the actual cost to the hospital of providing the services or the amount charged by the hospital for the services, whichever is less. The bill would also require reimbursement to those hospitals, under the same terms, for swing-bed services, relating to beds licensed for general acute care that may be used as skilled nursing beds.

Existing law sets forth various Medi-Cal payment reductions by specified percentages for certain providers, including rural swing-bed facilities.

This bill would make an exception to those payment reductions for rural-swing bed facilities in the case of critical access hospitals under the above-described reimbursement provisions.

This bill would require that each critical access hospital that elects to participate be reimbursed at 100% of the hospital’s projected reasonable and allowable costs for covered Medi-Cal services, as defined, furnished in the Medi-Cal fee-for-service and managed care delivery systems for each subject calendar year, effective for dates of service on or after January 1, 2026. The bill would require the department to develop and maintain one or more reimbursement methodologies, or revise one or more existing reimbursement methodologies applicable to participating critical access hospitals, or both, to implement the minimum cost-based payment levels.

The bill would set forth a timeline and a procedure for the department to notify each critical access hospital of the ability to elect to participate in those methodologies, and for a critical access hospital to inform the department of its election to participate, its discontinuance, or its later participation. Under the bill, these provisions would not be construed to preclude a participating critical access hospital from receiving any other Medi-Cal payment for which it is eligible, including, but not limited to, supplemental payments, with specified exceptions.

The bill would require the department to determine the projected reasonable and allowable Medi-Cal costs prior to each applicable calendar year, as specified. The bill would require the department to require each applicable Medi-Cal managed care plan to reimburse a participating hospital for covered services, and would require the department to develop and pay actuarially sound capitation rates to each applicable managed care plan, as specified.

The bill would require the department to promptly seek any federal approvals that it deems necessary to implement these provisions, as specified. The bill would condition implementation of these provisions on receipt of any necessary federal approvals and the availability of federal financial participation. The bill would authorize the department to modify the requirements described in these provisions under certain conditions for federal purposes.

Digest Key

Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

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Bill Text

The people of the State of California do enact as follows:

SECTION 1.

 Section 14105.175 is added to the Welfare and Institutions Code, immediately following Section 14105.17, to read:

14105.175.

 (a) Notwithstanding any other law, each critical access hospital that elects to participate as described in subdivision (c) shall, at a minimum, be reimbursed at 100 percent of the hospital’s projected reasonable and allowable costs for covered Medi-Cal services furnished in the Medi-Cal fee-for-service and managed care delivery systems for each subject calendar year, effective for dates of service on or after January 1, 2026.

(b) In consultation with critical access hospitals and other affected stakeholders, as applicable, the department shall develop and maintain one or more reimbursement methodologies, or revise one or more existing reimbursement methodologies applicable to participating critical access hospitals, or both, to implement the minimum cost-based payment levels described in subdivision (a).

(c) (1) (A) No less than 180 calendar days prior to the start of the first calendar year in which the methodologies developed or revised pursuant to subdivision (b) are to be implemented, the department shall notify each critical access hospital in the state of the hospital’s ability to elect to participate in those methodologies for that subject calendar year.

(B) A critical access hospital that elects to participate in the methodologies developed or revised pursuant to subdivision (b) for the first calendar year of implementation shall inform the department of its election no less than 90 calendar days prior to the start of that subject calendar year.

(2) A participating critical access hospital may opt to discontinue its election to participate in the methodologies developed or revised pursuant to subdivision (b) for a subsequent calendar year subject to a notice requirement of no less than 180 calendar days prior to the start of that applicable calendar year.

(3) A critical access hospital that elects not to participate in the methodologies developed or revised pursuant to subdivision (b) for a subject calendar year may opt to participate in those methodologies for the immediately subsequent calendar year subject to a notice requirement of no less than 180 calendar days prior to the start of that applicable calendar year.

(d) For purposes of this section, the department shall, in consultation with participating critical access hospitals, determine the projected reasonable and allowable Medi-Cal costs prior to each applicable calendar year, using the best available and reasonable current estimates or projections made with respect to participating critical access hospitals for the subject calendar year period. These projected Medi-Cal costs shall be considered final as of the start of each applicable calendar year for purposes of the minimum payment levels described in subdivision (a). Subject to subdivision (g), projected Medi-Cal costs of participating critical access hospitals shall be based on the cost-finding principles applied under subdivision (b) of Section 14166.4, except that the projected Medi-Cal costs shall not be multiplied by the federal medical assistance percentage and are not subject to the reimbursement limitations set forth in Article 7.5 (commencing with Section 51536) of Chapter 3 of Subdivision 1 of Division 3 of Title 22 of the California Code of Regulations.

(e) (1) For any contract period for which all necessary federal approvals have been obtained to implement this section with respect to the Medi-Cal managed care delivery system, the department shall do both of the following:

(A) Require each applicable Medi-Cal managed care plan to reimburse a participating critical access hospital for covered Medi-Cal services furnished to an enrollee of that plan in accordance with the minimum cost-based payment levels described in subdivision (a) and in accordance with the applicable federal approval or approvals obtained pursuant to Section 438.6 of Title 42 of the Code of Federal Regulations or any other applicable federal Medicaid managed care authority.

(B) Develop and pay actuarially sound capitation rates to each applicable Medi-Cal managed care plan that properly account for the minimum cost-based payment levels for participating hospitals described in subdivision (a).

(2) The department may require Medi-Cal managed care plans and participating critical access hospitals to submit information that the department deems necessary to implement this subdivision, at the times and in the form and manner specified by the department.

(f) (1) Notwithstanding any other law, except as provided in paragraph (2) and subject to subdivision (g), this section shall not be construed to preclude a participating critical access hospital from receiving any other Medi-Cal payment for which it is eligible, including, but not limited to, supplemental payments pursuant to Section 14105.17 or any other applicable provision of this chapter, or managed care-based directed or pass-through payments federally approved pursuant to Section 438.6 of Title 42 of the Code of Federal Regulations or any other applicable federal Medicaid managed care authority, in addition to the payments required by this section.

(2) In developing or revising the applicable methodologies pursuant to subdivision (b), the department shall determine, in consultation with critical access hospitals, those existing Medi-Cal supplemental payments, if any, that are specifically intended to allow a critical access hospital to be reimbursed at 100 percent of their reasonable and actual costs of providing covered Medi-Cal services above what would otherwise be payable in base reimbursement to the hospital by the department. To the extent that the department identifies any such supplemental payments, the department shall seek federal approvals for having the applicable federal authority amended or waived as is necessary to preclude a participating critical access hospital’s eligibility for those supplemental payments for periods in which the minimum cost-based payment level pursuant to this section is effective with respect to the applicable Medi-Cal covered service category.

(g) (1) The department shall promptly seek any federal approvals that it deems necessary to implement this section, in consultation with critical access hospitals and other affected stakeholders, as applicable.

(2) This section shall be implemented only to the extent that any necessary federal approvals are obtained and federal financial participation is available and not otherwise jeopardized.

(3) Each of the reimbursement methodologies developed or revised pursuant to this section with respect to a category of covered Medi-Cal services or a specific Medi-Cal delivery system may be implemented independently as federal approval is received for that applicable methodology, so long as the department determines that federal financial participation would not be otherwise jeopardized as a result.

(h) (1) The department, after consultation with critical access hospitals and other affected stakeholders, as applicable, may modify the requirements set forth in this section to the extent necessary to meet federal requirements, to obtain or maintain federal approval, or to ensure associated federal financial participation is available and maximized or is not otherwise jeopardized.

(2) If the department determines that federal approval is only available with significant limitations or modifications, the department shall consult with critical access hospitals and other affected stakeholders, as applicable, to consider alternative methodologies.

(3) If a modification is made pursuant to this subdivision, the department shall notify critical access hospitals, Medi-Cal managed care plans as applicable, the Joint Legislative Budget Committee, and the relevant policy and fiscal committees of the Legislature within 10 business days of that modification, in accordance with Section 9795 of the Government Code.

(i) 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, interpret, or make specific this section, in whole or in part, by means of plan letters, provider bulletins, information notices, or other similar instructions, without taking any further regulatory action.

(j) For purposes of this section, the following definitions apply:

(1) “Covered Medi-Cal services” means all of the following:

(A) Inpatient hospital services.

(B) Outpatient hospital services.

(C) Skilled nursing facility services provided in a distinct part of a critical access hospital.

(2) “Critical access hospital” means a hospital designated by the State Department of Public Health as a critical access hospital, and certified as such by the Secretary of the United States Department of Health and Human Services under the federal Medicare Rural Hospital Flexibility Program, as described in Section 1250.7 of the Health and Safety Code.

(3) “Medi-Cal managed care plan” has the same meaning as set forth in subdivision (j) of Section 14184.101.

(4) “Reasonable and allowable costs” means those costs that are eligible for federal financial participation under the Medicaid program pursuant to applicable federal cost reimbursement principles, including, but not limited to, Part 413 (commencing with Section 413.1) of Title 42 of the Code of Federal Regulations.