October Recap of DHLF Activities

Following is a summary of the issues the DHLF has been focusing on since our last monthly recap. As outlined below, most activities have been (and will continue to be) focused on the state budget which changed Medi-Cal inpatient fee-for-service reimbursement for District and Municipal hospitals, effective July 1, 2012. Most of our activities have been focused specifically the Delivery System Reform Incentive Program (DSRIP) over the past month. The DSRIP provides supplemental waiver funds to district/municipal hospitals in recognition of hospitals improving delivery systems and implementing quality initiatives.

Activities Related to District Hospitals’ Transition to CPEs/Obtaining New Federal Waiver Funding

Current and Ongoing Activities
The Department of Health Care Services (DHCS) is awaiting approval (from the Centers for Medicare and Medicaid Services – CMS) on all components of the 2012-13 state budget proposal to transition non-designated public hospitals (NDPHs) to using certified public expenditures (CPE) for Medi-Cal fee-for-service inpatient services coupled with receiving waiver funding (for uncompensated care costs and delivery system improvements).

Delivery System Reform Incentive Payments (DSRIP)
In year 1, $40 million is available to District/Municipal hospitals as incentive payments ($62.5 million/year will be available in years 2 and 3) for making delivery system improvements.  DHLF staff and hospital representatives are meeting weekly with DHCS on this subject.

All NDPHs will be required to submit a 3-year DSRIP plan for categories 1 and 2 (category 1 – infrastructure; category 2 – innovation and redesign) by Friday, November 9.  All federal funding in year 1 (2012-13) will be distributed based on these two categories.  If a district/municipal hospital is unable to meet Friday’s deadline, please contact DHLF staff right away to outline the extenuating circumstances that make an extension necessary.  DHCS will consider requests for extensions on a hospital-by-hospital basis.

Within two to three weeks, NDPHs will be required to submit their 3-year DSRIP plan that also includes categories 3 (population-focused improvement) and 4 (patient safety).  As a reminder, the non-federal share for DSRIP payments will be intergovernmental transfers provided by public District/Municipal hospitals.

Detailed information on DSRIP requirements has been provided to all NDPHs previously through ongoing emails, conference calls and these monthly updates.
If you or staff within your hospital are interested in participating in the DHLF DSRIP workgroup, please respond to this email expressing your interest.

Uncompensated Care
As previously noted, in year 1 (2012-13), $45 million in federal funds is available to District/Municipal hospitals in recognition of the care provided to the uninsured ($50 million will be available in year 2 and $55 million in year 3).  These funds will be accessed utilizing hospital certified public expenditures and the actual process/timing is a topic of ongoing discussion with DHCS based on receipt of CMS approval and hospitals completing the reports necessary to access funding.

The DHLF will work with DHCS to convene a webinar(s) to discuss requirements related to reporting of CPEs both for Medi-Cal and the uninsured once DHCS has finalized reporting requirements.

Cash Flow
In addition to raising hospitals’ cash flow concerns to DHCS once all components of the budget proposal are ready for implementation (Medi-Cal CPEs plus supplemental waiver funding), DHLF staff is planning to meet with Xerox, the Medi-Cal fiscal agent to ensure they are aware of the concerns and DHCS’ commitment to minimize, to the extent possible, the impact.

Hospital Provider Fee
The first three installments of direct grants to all NDPHs contained in the 30-month hospital provider fee (the term of the fee is July 1, 2011 through December 31, 2013) has been distributed to hospitals.  Subsequent installments will be made periodically (approximately 10 installments in total) over the term of the fee.

DHLF Board Meeting
The DHLF Board met in Sacramento on October 17.  Much of this meeting was devoted to planning for 2013 and beyond.  It was noted that much of the DHLF legislative agenda could be driven by the outcome of the November 6 election, specifically the result of the vote on Proposition 30.  Please see the attached election recap on the outcome of the ballot measures. Despite the passage of Proposition 30, other 2013-14 state budget implications currently are unknown.

The next Board meeting will be in the first quarter of 2013.  Additionally, we are planning the 2nd annual DHLF Legislative Day for February.  Specific dates will be provided soon for calendaring purposes.

Hospital Charges
The California Hospital Association (CHA) has convened a group of CFOs and other interested parties (including DHLF and other hospital constituency group staff) to consider options to improve or replace the current hospital billing/charging system.  This is driven by two primary goals, the first of which is to find a solution to proactively mitigate near-term and future efforts by others to mandate unreasonable and unsustainable pricing policies on hospitals.  The second is to improve the public’s perception about hospital bills and pricing.

DHLF staff plans to convene a workgroup of district/municipal hospital CFOs to provide input to CHA’s workgroup to ensure NDPHs are not disadvantaged by proposals that result from CHA’s work in this area.  The next meeting of the CHA group is in early December so the DHLF group will be formed and meet prior to that time.

Medi-Cal Managed Care Expansion to Rural Areas
Beginning in June 2013, the Governor’s Budget expands Medi-Cal managed care into rural areas that are now fee-for-service (FFS).  The expansion of managed care includes the following rural counties: Alpine, Amador, Butte, Calaveras, Colusa, Del Norte, El Dorado, Glenn, Humboldt, Imperial, Inyo, Lake, Lassen, Mariposa, Modoc, Mono, Nevada, Placer, Plumas, San Benito, Shasta, Sierra, Siskiyou, Sutter, Tehama, Trinity Tuolumne and Yuba.

DHLF staff is working with DHCS regarding administrative issues such as ensuring plans in these areas have adequate provider networks, and financial issues, such as determining potential funding opportunities especially in the context of district/municipal hospitals’ move to CPEs.  Additionally, staff is working with the Department of Managed Health Care (DMHC) on the workability of managed care in rural areas.  We will provide periodic updates as information becomes known.

Medi-Cal Managed Care “Rate Range” IGTs
One ongoing issue that DHLF staff continues to track is ensuring the opportunity for district/municipal hospitals to participate in the “rate range” intergovernmental transfers (IGTs) for Medi-Cal managed care.  Currently, Medi-Cal managed care plans’ rates are set at the low-range (based on actuarial estimates) and there is an opportunity to improve rates to the high-range if there is a non-federal share of funding available.  District/municipal hospital generated IGTs would provide the non-federal share with the difference (less an administrative fee) then available to providers.

Moving forward on the “rate range” IGTs is a priority of the DHLF but unfortunately is dependent upon DHCS both completing work on determining rates for managed care plans and diverting some of their resources to this project.  We will keep you apprised of our progress via future communications.

November 2012 Election Recap
Kathryn Scott and Meghan Loper, DHLF legislative advocates have provided an initial analysis of this week’s election and some upcoming 2013 issues.  It is attached for your review, along with a breakdown of the districts. They will provide a breakdown of the hospitals and their new legislative members in the near future.