January 2013 Recap of DHLF Activities

Happy New Year!
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 2012-13 state budget which changed Medi-Cal inpatient fee-for-service reimbursement for District and Municipal hospitals, effective July 1, 2012. Additionally, we have been working with members on the 2013-14 proposed state budget, specifically the reductions to hospital distinct-part nursing facilities (DP/NF).
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 (still) 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). The transition is for Medi-Cal fee-for-service inpatient services and will be coupled with receiving waiver funding (for uncompensated care costs and delivery system improvements). CMS has indicated to DHCS that approval on the concept is imminent with approval of the program details to come soon thereafter.
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 are 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 (2 projects) were due earlier in January, however many district/municipal hospitals ran into an issue due to low (or no) numbers in the patient safety projects outlined and/or already have achieved improvements that land them in the top quartile. DHCS changed a previously-stated position that a starting point in the top quartile would be approved by CMS (previously DHCS and district/municipal hospitals were moving forward with the belief that maintaining the results in patient safety categories would be appropriate).
The next step to address this issue is a technical assistance conference call with DHCS and the hospitals. Scheduling the call will be done when DHCS has more feedback from CMS. Unfortunately, until then many hospitals are in a “wait and see” mode on completing plans for category 4. However, if you are able to complete a category 4 plan, please do so for submission (through the DHLF) to DHCS.
Uncompensated Care
DHCS has been revising the certified public expenditure (CPE) reporting form and met with DHLF staff recently to review the components (still in draft form). Many questions were raised in the meeting (both from Forum staff and DHCS staff). Once some of the questions are answered and the form is further revised, a few district/municipal hospitals will be asked to test it. Most of the data used to complete the form is obtained from a hospital’s cost report (and the form will be submitted twice – once using filed cost reports and then again with revised audited cost reports).
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.
Waiver Funding Allocation
The DHLF Board met earlier this month and approved the slightly revised (by DHCS) waiver funding (both uncompensated care and DSRIP) allocation. DHCS attempted to craft a formula that would be approved by CMS while maintaining the DHLF Board-approved principles. Those principles are: year 1 – all district/municipal hospitals see the same reduction; year 2 – more overall funding is available and a bump should be provided to rurals and CMAC-contracting hospitals; and year 3 – all hospitals will achieve the same level of cost reimbursement (approximately 98 percent based on current estimates).
A spreadsheet with the revised allocation estimates was provided to the DHLF membership January 25. For the allocation to work, it is to the advantage of all hospitals to accurately capture all costs related to the uninsured (for the uncompensated care pool) and to complete a DSRIP plan and then to meet all requirements, including reporting, related to the plan.
2013-14 State Budget
DP/NF Medi-Cal Rate Reduction
As reported in mid-December, the 9th Circuit Court of Appeals upheld the Medi-Cal rate reductions included in 2011’s AB 97. These include 10 percent reductions to many providers (physicians, pharmacy, etc.), but also include onerous reductions to hospital DP/NFs. Due to the methodology included in AB 97 (reducing 2008 rates by 10 percent), the ultimate reduction for DP/NFs is closer to 20 to 30 percent. Additionally, these new reduced rates are frozen in perpetuity – there are no plans for updates as occurred previously.
The proposed state budget for 2013-14 assumed the savings from the AB 97 reductions ($488 million for all providers; approximately $50 – $100 million for 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 (a copy of the plaintiffs’ press release is attached).  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 (at least while some of the legal proceedings are pending). Finally, legislation will be introduced to unravel this reduction.
While all of us in the hospital advocacy world are continuing to advocate with the Administration, they have indicated they plan to 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 let them know how devastating this reduction is and to tell the specific hospital story of what the reduction will mean to the community.
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.
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. More information on the estimated claim will be provided in the next few days.
Forum staff has secured a meeting with Health and Human Services Secretary Diana Dooley on February 27 (the DHLF Legislative Day) to discuss this issue and the following budget item. A few district hospital representatives will be asked to represent the Forum (along with staff) in the meeting with the Secretary. DHLF staff will ask for representatives from the hospitals that are most significantly impacted by the DP/NF reduction.
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.
The Forum is expressing this concern in our advocacy messages on the proposed budget and is participating in the stakeholder process to explore the options.
Hospital Provider Fee
The current hospital provider fee sunsets in December 2013. CHA is putting together a new two-year fee program that likely will be similar to the current fee. However, the 2013-14 state budget proposes the state continue the increased rake-off of funds from the fee that they initiated in 2012-13. This will be a point of negotiation between CHA and the Administration as the 2014-15 fee proposal is drafted. Additionally, the hospital community is planning a 2014 ballot measure which will protect the fee from future rake-offs. More information on the 2014 fee and ballot measure will be provided as details are available. The DHLF will advocate continued participation in the fee program through direct grants.
Hospital Charges
As previously reported, CHA has convened a group of CFOs and other interested parties (including the DHLF) 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.
At the most recent workgroup meeting earlier in January, a number of legal questions raised by the group were discussed with Lloyd Bookman of Hooper Lundy and Bookman. Subgroups will be meeting over the next couple of weeks to address issues specific to critical access hospitals and business office issues.
More information will be provided and addressed via the DHLF charges workgroup.
DHLF Calendar
Upcoming DHLF Board Events:

  • February 27 – DHLF Legislative Day, Sacramento
  • March 12 – DHLF Board Meeting, Sacramento
  • July 11 – DHLF Board Meeting and tour of 2 district hospitals, Carlsbad

If you have not yet RSVP’d for the Legislative Day or March Board meeting, please do so.
DHLF Staff Activities
In addition to several ongoing informal meetings, DHLF staff has recently or is planning to attend:

  • Hospital Charges Workgroup (with member hospitals)
  • CAH Charges Subgroup
  • CHA Board Meeting,
  • DHCS DSRIP Workgroup (with member hospitals), weekly
  • DHCS CPE Reporting
  • Health & Human Services – Health Care Reform Stakeholder Group

Please let us know if you’d like additional information or have input on any of these items.
2013 Legislation
As bills currently are being introduced, a more complete 2013 legislative report will be included in next month’s recap.