May/June Recap of DHLF Activities

Following is a summary of the issues the DHLF has been focusing on since our last monthly recap.  This newsletter, as well as additional information and resources related to Forum activities, is available on our website – www. 
2013-14 State Budget 
On June 27, the governor signed the 2013-14 state budget.  There are two items of importance to district/municipal hospitals (both done “behind closed doors” in the last-minute negotiations between the Administration and Legislative leadership).  
The May Revise (which revises the Governor’s January budget based on revenue estimates) proposed to eliminate last year’s proposal which would have transitioned district/municipal hospitals to certified public expenditures (CPEs) for fee-for-service Medi-Cal inpatient reimbursement.  Coupled with the transition to CPEs was the ability to access waiver funding by district/municipal hospitals for costs of care provided to the uninsured and incentive payments for meeting milestones related to delivery system improvements. 
The DHLF opposed this change and during the negotiations with the Administration and Legislature, a compromise was crafted which would have eliminated the CPE/delivery system reform incentive payments, but continued efforts to obtain funding for costs of care provided to the uninsured.  The Department of Health Care Services (DHCS) cautions that such an effort likely will not result in success, but as part of the proposal, 50 percent of the funding be diverted to the state.  Potential available funds are $50 million for 2013-14 and $55 million for 2014-15 (which would be reduced by the 50 percent cited above.)  Advocacy efforts resulted in this compromise being included in the Budget Conference Committee report, but unfortunately, it was removed when final negotiations were done by the governor, Senate pro tem and speaker of the Assembly.  (See further discussion below.) 
Also of importance to district/municipal hospitals was the proposal which would have re-based the prospective Medi-Cal reductions to hospital-based distinct-part nursing facilities.  The Senate had included language which would have reduced the prospective reduction by using current rates as the base year rather than 2008, as 2011’s AB 97 did when implementing the cuts.  Similar to the above CPE proposal, this item also was removed from the final budget, signed by the governor.  (See further discussion below.) 
CPE/Waiver Proposal/AB 498 (Chavez) 
While the removal of the language related to waiver funding is a disappointment, Forum staff already is moving forward with other avenues to accomplish the same.  First, the DHLF-sponsored, AB 498 (Chavez), was recently amended to accomplish the same thing the budget language would have – directing the Administration to access waiver funding for district/municipal hospitals.  We are pleased to report, the bill passed the Senate Health Committee unanimously on July 3.  This is due in large part to the significant grassroots efforts on behalf of district and municipal hospitals (a copy of the committee analysis is attached indicating the hospitals that submitted letters prior to the June 26 deadline; a few others were submitted after that date).  Staff and legislative advocates thank you for taking the time to submit a letter. 
This bill next will be heard in the Senate Appropriations Committee and we will be contacting you for additional grassroots support.  We anticipate concerns of this committee related to potential state cost, but will be advocating that the 50 percent rake-off required by the state will more than compensate DHCS for any costs incurred. 
Secondly, the Forum is beginning a campaign with the Centers for Medicare and Medicaid Services (CMS) for them to apply pressure to the state Administration to accomplish waiver funding for district/municipal hospitals.  
Participation in the current Medi-Cal 1115 waiver (as would be done via accessing funding for costs of care provided to the uninsured) is a DHLF priority as efforts between the state Administration and CMS likely will begin very soon on the subsequent waiver (originally scheduled for implementation in 2015 but now believed to be implemented in late 2013/early 2014).  In addition, to potentially accessing funding, participation in the waiver could allow for implementation of innovative programs otherwise prohibited. 
Medi-Cal Distinct-Part Nursing Facility Reduction 
Regarding the DP/NF re-basing, this also was a disappointment, but AB 900 (Alejo) remains viable in the Legislature and members’ grassroots advocacy on this bill will continue to be as important as it has been to date.  On a related note, CHA and the other parties to the original litigation have requested this matter be considered by the U.S. Supreme Court.  
Affected hospitals should have received information regarding preparation for the potential state lawsuit on the same matter.  State litigation will not be pursued until the outcome of efforts in the current legislative session are known (the current session adjourns mid-September).  
On a related matter, the Forum recently received confirmation from DHCS that, while retroactive recoupments related to the above reductions can begin legally, they are nine to ten months away from implementing the recoupments.  DHCS will post information related to both the prospective and retroactive recoupments on their website at  
DP/NF Supplemental Program for Public Hospitals 
There is a supplemental program that allows public DP/NFs to claim any unreimbursed costs through a CPE federal match program.  The effect of the supplemental is to cut the reductions – both retroactive and prospective — in half for all public hospitals through the receipt of federal funds.  Forum staff has been working with DHCS to ensure hospitals have the necessary tools to take advantage of this program when/if the reductions occur.  The program may only be accessed when the actual reductions occur (when costs are not obtained).  DHCS has submitted a draft claim for all public DP/NFs which will be amended if/when the reductions are implemented. 
Medi-Cal APR-DRGs 
Since district/municipal hospitals will not transition to CPEs for Medi-Cal inpatient fee-for-service, the proposal is to move these hospitals to APR-DRGs beginning January 1, 2014.  APR-DRG rate notifications were mailed to district/municipal hospitals in late June.  These notifications cover the six-month period from January – June of 2014.  A subsequent notification will go out to all hospitals (including district/municipals) that will cover year 2 and year 3 of APR-DRG implementation in mid-July.  DHCS indicates the best place to direct questions  Also, DHCS is planning a rate setting webinar for interested hospitals, tentatively set for July 17.  For interested hospitals, it would be helpful if you request and receive hospital-specific data in advance of the webinar.  If you submit your data request to the DRG inbox this week, that should be sufficient time to complete the data use agreement and receive the data.  The cover letter that accompanied the rate notification also provided information on requesting hospital-specific data.                                                                             
Finally, if you could provide a copy of the rate notification to Forum staff via email or fax, it will be used to build a district/municipal hospital database which we can then use as part of our advocacy. 
District Municipal Hospital Supplemental Funds – AB 113 and Non-Designated Public Hospital Supplemental Fund 
Forum staff has been meeting with DHCS regarding the distribution of funds for 2012-13 under the AB 113 program (Medi-Cal intergovernmental transfer – IGT – program for fee-for-service).  As you recall, this program is being re-implemented due to the 2012-13 budget item to not move forward with certified public expenditures for Medi-Cal inpatient fee-for-service for district/municipal hospitals. 
DHCS has committed to providing hospitals with 2012-13 funding amounts under the AB 113 program by the end of July.  Further, they have committed to a distribution of funds in the first quarter 2013-14.  A schedule of when the IGTs are due and the other administrative mechanics will be provided to all of you within the next several days.  
As many of you are closing out 2012-13, Forum staff has calculated estimates for the AB 113 program and those were emailed to you a week ago and are available on the DHLF website (  DHCS obviously will need to verify the numbers and the overall program size may shift up or down slightly due to the upper payment limit calculation, but we hope you find this beneficial.  To reiterate, these numbers are estimates only and some variables could change which would impact the results of the entire model prior to finalization by DHCS. 
Once DHCS has distributed the funding for 2012-13, their attention will turn to the process for the 2013-14 funds. 
A similar process will begin for those eligible district hospitals participating in the non-designated public hospital supplemental program (formerly SB 1255) regarding the distribution of those funds for 2012-13, including the requirement that hospitals submit a proposal for the funds (similar to the proposals submitted previously to the California Medical Assistance Commission). 
Medi-Cal Managed Care Expansion in Rural Areas
Beginning October 2013, Medi-Cal managed care will be expanded 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.  
Hospital Provider Fee
The CHA Board of Directors has approved the next 2-year hospital provider fee (calendar years 2014-15) and CHA staff reports work will get underway on modeling, etc. within the next few weeks. DHLF staff is working closely with CHA on potential mechanisms to ensure district/municipal hospitals participate fully in the fee.  Additionally, Forum staff will participate with the broader CHA provider fee workgroup to ensure district/municipal hospitals interests’ are protected.
DHLF Executive Committee Retreat
A full report will be provided at the upcoming DHLF Board meeting as the Executive Committee met last month for a full-day retreat primarily to address strategic planning and priorities of the Forum.  
DHLF Calendar
Upcoming DHLF Board Events:

  • July 10/July 11 – DHLF Board Meeting and tour of 2 district hospitals, Carlsbad
  • November 13 – DHLF Board Meeting, Sacramento