February 2012 Recap of DHLF Activities

Following is a summary of the issues the DHLF has been focusing on in February.  Your feedback on all communications is welcome and encouraged.

DHLF Events:  Legislative Day and Board Meeting Recap, Upcoming Washington DC Visit and May Educational Session/Board Meeting

The DHLF Board met February 15 and then members participated in the first DHLF Legislative Day in the State Capitol.  Reports both from members and legislative offices indicate the day was a success.  Key issues that members discussed in legislative meetings included the two DHLF sponsored bills (see next section) and key issues in the proposed state budget.
The DHLF Executive Committee is traveling to Washington D.C. next month to meet with Congressional representatives and invited Centers for Medicare and Medicaid Services (CMS) staff.  The focus will be the 2010 1115 Waiver and our requested changes to it (as outlined in the next section).  Once materials are prepared, we will forward to all DHLF members and an update will be provided to all members after the meeting.
Please mark your calendars:  as discussed at the February Board meeting, the DHLF will combine the May Board meeting with an education session the day before (education session and reception: May 16 / Board meeting: May 17).  Some of the issues under consideration for the education session include California’s Health Benefit Exchange (invited speaker: Diana Dooley, Secretary of California Health & Human Services and member of the Exchange Board); charity care/uncompensated care reporting (for OSHPD, IRS and cost reports); compliance and claims review to name a few.  Your input/suggestions regarding the education session is invited.  The agenda will be formalized and sent to members soon.  Additionally, we are inviting all District hospitals (including non-DHLF members) to participate in the May meetings.

State Legislative Update

Waiver Funding in Recognition of Uncompensated Care – AB 1081 (M. Perez, D- Cathedral City) was introduced this week, which will allow district and other non-designated public hospitals to use certified public expenditures to access 2010 Waiver funding in recognition of their uncompensated care.  Diverting any of the funds currently allocated to county/UC hospitals ($1.8 billion over the 5-year term of the 2010 Waiver currently allocated to these hospitals) will be challenging at best.  However, DHLF staff and advocacy team believe AB 1081 will allow for the education of the Legislature and Administration about the role of District hospitals and ultimately will better position District hospitals for a greater role in the subsequent hospital waiver.
Low-Income Health Program (LIHP) – The Forum is sponsoring AB 2096 (Fuller, R-Bakersfield) which will modify the waiver terms/conditions to allow a public District hospital to become an MCE-LIHP contractor in counties that are both without a county hospital or are not interested in becoming a LIHP contractor.  The bill contains an urgency clause which means it will become effective upon the governor’s signature.  We hope to have the bill on the governor’s desk by mid-year.
We will keep you apprised of the status of the above legislation and will request your grassroots advocacy with legislators when the bills are up for a vote.

Provider Fee Update

As reported last month, the California Hospital Association (CHA) Board reviewed the proposal advanced by the DHLF to bring better equity in the 30-month hospital provider fee.  We are pleased to report, the CHA Board voted unanimously to increase the direct grants to nondesignated public hospitals by $8.6 million, annually ($21.5 million for the 30-months of the fee program).  This brings the total direct grant to NDPHs to $46.5 million ($25 million already in law plus $21.5 million in this proposal).
Legislative language has been drafted and will be amended into a 2012 legislative vehicle.  Once statute has been enacted, the program will require CMS approval prior to implementation.

Medi-Cal Payment Delays

Due to the state’s ongoing budget and cash flow issues, the Department of Health Care Services announced the following Medi-Cal payment delays:
Payments Held: March 5th
Payments Released: March 19th (this will include payments for March 5th and those regularly scheduled for March 19th).
Payments Held March 12th
Payments Released: March 26th (this will include payments for March 12th and those regularly scheduled for March 26th)
Additional details regarding the delayed payments are available on the Medi-Cal website at http://files.medi-cal.ca.gov/pubsdoco/newsroom/newsroom_20297.asp.

Medi-Cal IGT Program

To accommodate the above payment delays, there has been a small change to the 2011-12 FFS IGT Transfer of Funds and Agreement completion deadline. The deadline has been moved from March 23 to March 30.
The 2011-12 Medi-Cal managed care IGT process has not yet begun, however DHCS has indicated they will be ready to initiate this program shortly.
DHCS is anticipating the 2010-11 managed care IGT amounts will be received by facilities from the plans by mid- to late-March and the 2011-12 FFS IGT payment is anticipated to be received by facilities in early May.
We will continue to keep you apprised of the process relative to both the managed care and FFS components of this important program.


The DHLF continues to participate in and monitor the statewide workgroup activities relative to the proposed transition to a DRG payment type of reimbursement methodology for Medi-Cal fee-for-service (FFS) inpatient services.  In addition to the Department’s announcements relative to the implementation (the planned implementation date has been delayed until January 1, 2013 and a 3-year transition period), DHCS recently announced that all supplemental payments (DSH, Private and Non-designated Hospital Supplemental Funds – formerly SB 1255 funds) will not be included in the base and distributed to all hospitals.  Instead these funds will remain separate and therefore distributed to DSH-eligible hospitals.
As the new payment methodology results in a redistribution of current reimbursement (there are “winners” and “losers” in each hospital constituency group, including districts), consideration must be given to both financial implications, as well as numerous programmatic and philosophical concerns.  The DHLF currently is advocating for an extension beyond the January 1, 2013 implementation due to the significant work and decisions yet to be completed.

State Budget

DHLF advocacy efforts have begun relative to the proposed state budget.

  • We are opposing the proposed reduction in reimbursement to FQHCs and RHCs participating in Medi-Cal managed care.
  • We have expressed concern regarding implementation of “operational flexibility” in the Medi-Cal program as details on this proposal are scarce and the budget does assign a savings to this item.
  • Also of concern to District hospitals are the proposed changes to Medi-Cal managed care:  1) improving care coordination for seniors and disabled Medi-Cal beneficiaries, including the dual eligibles by providing managed care plans with a blended payment consisting of federal, state and county funds along with the responsibility for delivering the full array of health and social services, including long-term care; 2) expanding Medi-Cal managed care into rural counties; and 3) transitioning children from the Healthy Families Program to Medi-Cal managed care coupled with a rate reduction in the Healthy Families Program.

U.S. Supreme Court Decision in Medi-Cal Case

Last week, the U.S. Supreme Court issued a decision in the Medi-Cal case, addressing whether or not providers may sue state officials to challenge Medicaid rate cuts because rates violate the federal requirement that rates be consistent to ensure quality and access of care.  The court, in a 5-to-4 decision, indicated that beneficiaries and providers likely may challenge these types of rate cuts in federal court.
The basis for much of California’s provider organizations’ (including CHA) lawsuits is the Supremacy Clause of the constitution, arguing that the reductions to Medi-Cal rates are preempted by federal law.  The Supreme Court heard the case last fall and last week’s ruling remanded the case back to the Ninth Circuit Court, concluding that actions taken by CMS (which retroactively approved the state rate cuts in October 2011) made the Supremacy Clause question no longer applicable.
The U.S. Supreme Court appears to have recognized the ability of beneficiaries and providers to challenge Medicaid rate reductions.