September Recap of DHLF Activities

Following is a summary of the issues the DHLF has been focusing on since our last monthly recap.  Most of the activities during September were related to the next iteration of the hospital provider fee, our federal advocacy program, and working to resume the AB 113, district hospital intergovernmental transfer (IGT) program.  This newsletter, as well as additional information and resources related to Forum activities, is available on our website – www.
Hospital Provider Fee – SB 239 (Hernandez/Steinberg)
We are pleased to report that yesterday Governor Brown signed SB 239, the next iteration of the hospital provider fee.  The hospital provider fee contained in SB 239 is a 3-year program (calendar years 2014-16) and will be coupled with a hospital industry initiative to protect additional rake-offs by the state. The initiative also addresses back-door rake-offs by prohibiting reductions to hospital Medi-Cal reimbursement. 
The latest version of the hospital provider fee is fairly convoluted to minimize the impact on private hospitals paying the fee while maximizing the benefit to district/municipal hospitals.  Below is a summary of the impact on district municipal hospitals:

District Hospital Leadership Forum Proposal          
2014-16 Hospital Provider Fee – annual amounts in millions        
  District/Muni Benefit   Cost to Privates District/Muni Benefit  
  years 1 and 2     year 3  
Direct Grants





Fund rate range for private hospitals






Subtotal (used for smallest districts without ability to use IGTs for other funds)





Increase districts’ managed care payments (actuarially determined based on AB 113); accessed via IGTs





Net provider fee managed care increased payments (dist/muni provide IGT)












Current 30-month fee – annual amounts          
Direct Grants



Forum staff has begun meeting with DHCS on the managed care payments related to the AB 113 program and the full hospital industry will be meeting to determine how to craft the Medi-Cal managed care rate range component.  A key component included in SB 239 based on DHLF advocacy and work with DHCS is protections related to the rate range IGT.  We were successful in obtaining legislative language that gives district hospitals priority to the rate range funding in counties without a county/UC hospital.  Additionally, Forum staff has begun working with staff from the California Association of Public Hospitals (CAPH) on this issue in counties with both district and county/UC hospitals. 
CHA was successful in including the elimination of the prospective Medi-Cal rate reduction for all hospital-based distinct-part nursing facilities in SB 239.  The potential retroactive recoupment remains, but numerous efforts are underway to mitigate this, including CHA’s efforts with CMS (and other states in similar situations) and the potential for DHLF-led state litigation on this matter.
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 retroactive reductions 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
The DHLF Board requested the Forum work with DHCS to obtain a six-month delay in the implementation of APR-DRGs for Medi-Cal.  Reasons cited included training for staff and physicians on documentation, IT and care coordination, system changes required, and purchase of the 3M grouper.  We will be providing an update on the timing of the implementation within the next few days.
CPE/Waiver Proposal/AB 498 (Chavez)
AB 498 directs DHCS to work with CMS in an effort to obtain new funding under the Safety Net Care Pool as part of the current hospital 1115 Medi-Cal waiver.  Potential new funds available for district/municipal hospitals are $20 million in 2013-14 and $25 million in 2014-15 (with the state receiving the same amount as the pool of new funds will be shared 50-50).  This is a component of our federal advocacy efforts (encouraging CMS to work with DHCS to approve these funds). This bill is on the governor’s desk and he has until October 13 to sign or veto.  The bill passed the Legislature with bipartisan support and with several co-authors added through the process.
This bill also includes language that will allow public hospital-based DP/NFs to use the DP/NF supplemental program (outlined above) to obtain actual costs rather than the current projected costs. 
District Municipal Hospital Supplemental Funds – AB 113
The Medi-Cal intergovernmental transfer – IGT – program for fee-for-service (FFS) is being re-implemented retroactively for 2012-13.  Many district hospitals have submitted the IGT necessary to draw down federal funds and the federal match should be available to hospitals within approximately three weeks.  We have received confirmation from DHCS that the government shutdown will not delay the federal funds to district hospitals.
Many thanks to all district/municipal hospitals for their prompt attention in submitting the letters of intent and IGTs.  Once DHCS has distributed the funding for 2012-13, their attention will turn to the process for the 2013-14 funds.
DHLF Federal Advocacy Program
As reported to you in the email of October 5, the kick-off of the DHLF federal advocacy program occurred earlier this month with numerous visits to U.S. Senate and Congressional offices in Washington, D.C.  Staff is providing follow-up with several of the offices and will be contacting hospitals to assist with scheduling congressional member visits/tours to California district/municipal hospitals.  The timing of our efforts currently is on hold due to the government shutdown, however we will provide a revised timeline once more information is known.
DHLF Calendar
Upcoming DHLF Board Events:

  • November 13 – DHLF Board Meeting, Sacramento