February/Early March 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 focused on the transition to certified public expenditures (CPEs) for Medi-Cal inpatient fee-for-service coupled with waiver funding required by last year’s state budget.  The other key focus is the Medi-Cal reductions to hospital distinct-part nursing facilities (DP/NF) that were effective June 1, 2011 (that may be implemented later this year).  
This newsletter, as well as additional information and resources related to Forum activities, is available on our newly-launched website – www. cadhlf.org. 
DHLF Legislative Day
The DHLF held a successful Legislative Day in Sacramento on February 27.  Key issues covered in meetings with legislators included those covered in this newsletter: the Medi-Cal reduction to the hospital-based distinct-part nursing facilities; an update on transition to CPEs; opposition to a county-based implementation of Medi-Cal expansion under health care reform; and Medi-Cal managed care expansion in rural areas.  
Additionally, some members were scheduled to meet with Health and Human Services Secretary Diana Dooley, but due to a scheduling change met with the Assistant Secretary, Robert Ducay and DHCS Chief Deputy Director, Mari Cantwell.  The focus of the meeting in the Secretary’s office was opposition to the DP/NFs.  
DP/NF Medi-Cal Rate Reduction 
The Forum and members are putting significant efforts behind the CHA-led effort to rollback the Medi-Cal reduction to hospital-based distinct-part nursing facilities (DP/NFs).
There currently are three avenues at work to oppose this reduction: the plaintiffs in the court case have requested an en banc review (a review by the entire court; not just the justices that provided the decision). The en banc review was filed January 28.   If the en banc request is not approved (or if the decision isn’t favorable), a request will be made to the U.S. Supreme Court to hear this appeal (not all cases appealed to the US Supreme Court are heard, however).  CHA, the DHLF and other hospital constituencies are requesting the Administration NOT implement the reduction.  Finally, AB 900 (Alejo) has been introduced to unravel this reduction. 
Affected hospitals and the hospital industry are continuing to advocate with the Administration, although they have not backed away from their plans move forward with implementation as soon as June (including the retroactive recoupment; although legal proceedings could delay this by another six months).  CHA has implemented a grassroots advocacy campaign requesting hospitals with DP/NFs contact the DHCS Director and the Secretary of California’s Health and Human Services Agency to outline the hospital story.  It is important that all hospitals with a DP/NF participate in this grassroots effort.  Additionally, if you could provide the DHLF a copy of your letter, we will use it in our advocacy in Sacramento.  
Regarding the legislative avenue, it is important for all hospitals operating a DP/NF to contact their state Assembly Member and Senator right away to urge an “aye” vote on AB 900 (Alejo) and let them know how devastating this reduction is and to tell the specific hospital story of what the reduction will mean to the community.  Community members and others also are encouraged to join the grassroots campaign.  It is important that we not let up on expressing concern about this reduction as legislators will be hearing from other organizations with competing non-hospital interests and we need to keep this one at the forefront. 
If you need talking points for use with your legislators or information on identifying your representatives, please let Forum staff know and these will be provided to you. 
In conjunction with the above, CHA rolled out plans for a public relations campaign at their Legislative Day earlier this week.  This includes paid and earned media, targeting efforts in some legislative districts, a hospital PR toolkit, etc. 
Finally, in recent meetings both with CHA and the DHLF, DHCS staff has indicated a willingness to continue to review the access issue related to the DP/NF reduction (based on their feedback to date), another reason to continue to provide specific examples of lack of beds when attempting to transfer patients and challenges related to distance between facilities. 
DP/NF Supplemental Program for Public Hospitals 
There is a supplemental program that allows public DP/NFs to CPE any unreimbursed costs.  While this program has been in place for several years, many district hospitals were not able to take advantage of it since they were receiving their allowable costs.  
DHCS has been working with Forum staff on this program to ensure district hospitals are able to use CPEs for the recouped amounts (and prospectively).  There is a 2-year claiming deadline for the CPEs, so an estimate will be prepared by DHCS (based on input from hospitals and Forum staff) so they can submit the claim.  The claim will then be amended to reflect actual costs and what was ultimately paid.  
Activities Related to District Hospitals’ Transition to CPEs/Obtaining New Federal Waiver Funding 
Current Status
There has been no movement on this issue as the Department of Health Care Services (DHCS) is still awaiting approval (from the Centers for Medicare and Medicaid Services – CMS) on all components of transition for non-designated public hospitals (NDPHs) to using CPEs.  NDPHs have continued to receive Medi-Cal inpatient reimbursement for fee-for-service, with the exception of the AB 113 program, the intergovernmental transfer program for acute inpatient services (see more below). 
Delivery System Reform Incentive Payments (DSRIP)
DHLF staff and hospital representatives are meeting weekly with DHCS on this subject although due to the pending CMS approval, most activities have slowed.  Hospitals should have already submitted plans for categories 1 and 2; if you have not yet submitted that component of your plan, please do so as soon as possible.  
Plans for Category 4 are on hold pending additional information on the issue of determining improvement in patient safety projects for hospitals with a small number of patients.  This issue, as well as the overall concerns related to the timing of the DSRIP program (based on approval delays) are outlined in the attached letter recently provided to DHCS. 
Once the program is approved, federal DSRIP funds in recognition of meeting project measures and milestones will be accessed via the use of district hospital intergovernmental transfers. 
Uncompensated Care
In addition to the waiver funding available to district hospitals via the DSRIP, there also is federal funding available for care provided to the uninsured.  These funds will be accessed using CPEs and the CPEs will be reported likely quarterly.  Most of the data used to complete the CPE form is obtained from a hospital’s cost report.  
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 and once timelines are known. 
Next Steps
The CPE transition/waiver funding was planned to be implemented July 1, 2012.  Originally, DHCS believed there would be approval prior to now and they would have been able to reprocess claims with dates of service back to July 1 and ensure waiver funding (the uncompensated care and DSRIP) distribution to hospitals was underway. 
Due to the CMS delays in approval, the Forum discussed contingency plans at its March 12 Board meeting both internally and with DHCS.  One contingency item is to re-implement the AB 113 program (IGT program for fee-for-service inpatient).  Additional discussion was had regarding not implementing in the current budget year, but instead doing so beginning July 1, 2013.  A challenge from the DHCS perspective is the savings of state General Fund (approximately $100 million annually) associated with this transition. 
DHCS staff indicated they anticipate information from CMS within the next two weeks that will inform the next steps on timing of the transition to this reimbursement methodology.  
Regardless of the timing (implementation retroactive to July 1, 2012 or beginning July 1, 2013), DHCS does not believe district/municipal hospitals will transition to DRGs, as private hospitals are scheduled to do July 1, 2013.  (However, it is important to note that without approvals, there is at least some uncertainty around the future reimbursement methodology for NDPHs.) 
Health Care Reform Implementation 
The 2013-14 state budget indicated that the expansion of Medi-Cal as part of the federal health care reform could be done via the state or locally via counties.  Several DHLF members (and other private hospitals) have expressed concern that implementation via the counties could disadvantage non-county hospitals while adding administrative burden to providers and counties alike (58 sets of procedures rather than 1).  Additionally, the not-always-smooth experience of the district hospitals in working with counties on the Low Income Health Program (LIHP) only heightens the concern with the responsibility for health care reform being implemented locally. 
This issue has been debated in the Senate and Assembly budget committees and generally there isn’t an appetite, even among most counties, for this to be done at the county level. 
Medi-Cal Managed Care Expansion in Rural Areas
Beginning in June 2013, the Governor’s Budget expands managed care into rural areas that are now fee-for-service (FFS) only.  The expansion of managed care includes the following rural FFS 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.  The Partnership Health Plan of California is the plan for Del Norte, Humboldt, Lassen, Modoc, Shasta, Siskiyou and Trinity.  And Anthem Blue Cross has been selected as the plan for the remainder of the counties except Imperial (for which county a health plan has not yet been selected).  CMS approval has not yet been obtained on this expansion, which may delay implementation. 
For district/municipal hospitals in these areas, there will be an opportunity to use IGTs in conjunction with plan rates to potentially improve reimbursement.  More information will be provided as details/rates are determined in coming weeks.  DHLF staff has begun meeting with DHCS Medi-Cal managed care on this subject.  
DHLF March Board Meeting
The Forum held a Board meeting March 12 in addition to convening its Annual Meeting to address election of Directors and Executive Committee members and adoption of bylaws. 
C. Duane Dauner, president of CHA attended and gave an update on CHA’s activities, including those related to the efforts to oppose the DP/NF reduction.  He also outlined activities at the federal level and other CHA initiatives (such as opposing AB 975, the bill mandating charity care for not-for-profit hospitals). 
DHCS staff participated in the meeting to provide an update on the CPE transition, Medi-Cal managed care expansion in rural areas, the use of IGTs for “rate range” improvements in Medi-Cal managed care reimbursement, and the DP/NF reduction.  The agenda also included a discussion of Covered California, the Health Benefit Exchange.  
DHLF Calendar
Upcoming DHLF Board Events:

  • July 11 – DHLF Board Meeting and tour of 2 district hospitals, Carlsbad
  • Fall meeting:  TBD 

DHLF Staff Activities
In addition to several ongoing informal meetings, DHLF staff has recently or is planning to attend: 
DHCS DSRIP Workgroup (with member hospitals), weekly
Health & Human Services – Health Care Reform Stakeholder Group
DHCS Medi-Cal Managed Care Expansion to Rural Areas Stakeholder Group
DHCS Medi-Cal Managed Care staff (re rural expansion)
CHA Legislative Day
CHA Rural Hospital Symposium
CHA Disproportionate Share Hospital (DSH) Task Force 
Please let us know if you’d like additional information or have input on any of these items. 
2013 Legislation
A legislative report is attached.  Legislative advocates are still reviewing 2013 bills, but this is the initial report, with our highest priority being AB 900.