SECTIONS 14081-14087.29 - California Statutes

WELFARE AND INSTITUTIONS CODE

SECTION 14081-14087.29

14081. It is the purpose of this article to ensure that the
Medi-Cal program shall be operated in the most cost-effective and
efficient manner possible with the optimum number of inpatient
hospital service providers. In order to carry out this purpose it is
the specific intent of the Legislature that the special negotiator
have maximum discretion and flexibility in order to select among
various methods of arranging for the provision of health services
while achieving significant cost savings. This article shall be the
exclusive means of providing inpatient hospital services to
recipients qualifying for such care under this chapter.
All previously eligible hospitals may continue to participate in
the Medi-Cal program and receive reimbursement for the provision of
inpatient hospital services under this article until the special
negotiator has negotiated contracts with a sufficient number of
hospitals to assure bed capacity to meet the needs of Medi-Cal
beneficiaries in an area and notifies the hospital that it is no
longer eligible to serve Medi-Cal inpatients except as provided for
in Section 14087. A determination by the negotiator under this
section shall not require a hearing under Section 14123 or any other
section.

14081.1. (a) The Legislature finds and declares the need to improve
the reporting relationship between the state and hospitals eligible
to contract with the state for the provision of inpatient services to
Medi-Cal eligible persons as provided for in the Medi-Cal reform
legislation enacted during the 1981-82 Legislative Session.
(b) Existing statutes require hospitals to file a multiplicity of
reports with various state agencies for a variety of purposes,
including, but not limited to, the development of Medi-Cal
reimbursement rates for inpatient services. The Medi-Cal reform
legislation enacted during the 1981-82 Legislative Session
significantly altered the manner in which hospitals are reimbursed
under the program for these services, thereby establishing the
opportunity to redefine and restructure the existing hospital
reporting requirements.
(c) It is the Legislature's intent, therefore, that the existing
reporting requirements be reviewed and revised for efficiency,
wherever possible, with consideration given to the development of a
consolidated, single, multipurpose report for use by all state
agencies.
(d) It is the Legislature's further intent that, in determining
these efficiencies, the purposes for which the reports are required
be preserved.

14081.5. Hospitals that are not selected for contracting under this
article and that have negotiated in good faith to obtain a contract
need not fulfill preexisting obligations relating to the provision of
inpatient services to Medi-Cal beneficiaries arising under Section
15459 of the Government Code, and subdivision (j) of Section 129050
of, paragraph (4) of subdivision (b) of Section 127175 of, the Health
and Safety Code, so long as this article remains in effect.

14082. Notwithstanding any other provision of law, the Governor
shall designate a person in his office to act as a special negotiator
to negotiate rates, terms, and conditions for contracts with
hospitals for inpatient services to be rendered to Medi-Cal program
beneficiaries. The negotiator may also, if he or she deems it
expedient, call for bids, in lieu of negotiations. The special
negotiator shall consider, when contracting, the total funds
appropriated for inpatient hospital services.
The department and every other state agency concerned with health
care or public social services shall provide such assistance as the
negotiator may require. The department shall enter into contracts
with hospitals and shall be bound by the rates, terms, and conditions
negotiated by the negotiator.
The negotiator shall have the powers of a head of a department
pursuant to Chapter 2 (commencing with Section 11150) of Part 1 of
Division 3 of Title 2 of the Government Code, except, that he or she
shall adopt only such rules and regulations pursuant to Section 11152
of the Government Code as are necessary to carry out those duties
specifically conferred upon the negotiator by Articles 2.6
(commencing with Section 14081), 2.8 (commencing with Section
14087.5), 2.91 (commencing with Section 14089), and 2.92 (commencing
with Section 14090) of this chapter.
The negotiator shall adopt such regulations as emergency
regulations in accordance with the provisions of Chapter 3.5
(commencing with Section 11340) of Part 1 of Division 3 of Title 2 of
the Government Code. For the purposes of the Administrative
Procedure Act, the adoption of the regulations shall be deemed to be
an emergency and necessary for the immediate preservation of the
public peace, health and safety, or general welfare.
Notwithstanding the provisions of Chapter 3.5 (commencing with
Section 11340) of Part 1 of Division 3 of Title 2 of the Government
Code, emergency regulations adopted in accordance with this section
shall not be subject to the review and approval of the Office of
Administrative Law. These regulations shall become effective
immediately upon filing with the Secretary of State.
In addition to the powers specified in this section, the
negotiator has the authority to negotiate contracts under Article 2.8
(commencing with Section 14087.5), Article 2.91 (commencing with
Section 14089), and Article 2.92 (commencing with Section 14090) of
this chapter. Also, the California Medical Assistance Commission
shall have the authority to enter into contracts for the provision of
acute inpatient hospital services for the care of County Medical
Services Program beneficiaries pursuant to Section 16809 of the
Welfare and Institutions Code.
Nothing in this article or the Budget Act of 1984 prohibits the
negotiator from adjusting rates paid to hospitals to reflect
inflation, provided that such adjustments are determined during the
negotiating process.
The amendment of this section made at the 1983-84 Regular Session
of the Legislature does not constitute a change in, but is
declaratory of, the existing law.

14082.5. The negotiator provided for in Section 14082 shall serve
in such capacity for the 1982-83 fiscal year, after which his or her
functions shall be assumed by the California Medical Assistance
Commission. Commencing on July 1, 1983, any reference in this article
or in Article 2.8 (commencing with Section 14087.5), and Article
2.91 (commencing with Section 14089) of this chapter to the
negotiator shall be deemed to be references to the California Medical
Assistance Commission.
As of July 1, 1983, the negotiator shall serve as the executive
director of the commission.

14083. The factors to be considered by the negotiator in
negotiating contracts under this article, or in drawing
specifications for competitive bidding, include, but are not limited
to, all of the following:
(a) Beneficiary access.
(b) Utilization controls.
(c) Ability to render quality services efficiently and
economically.
(d) Demonstrated ability to provide or arrange needed specialized
services.
(e) Protection against fraud and abuse.
(f) Any other factor which would reduce costs, promote access, or
enhance the quality of care.
(g) The capacity to provide a given tertiary service, such as
specialized children's services, on a regional basis.
(h) Recognition of the variations in severity of illness and
complexity of care.
(i) Existing labor-management collective bargaining agreements.
(j) The situation of county hospitals and university medical
centers contracting with counties for provision of health care to
indigent persons entitled to care under Section 17000, which are
burdened to a greater extent than private hospitals with bad debts,
indirect costs, medical education programs, and capital needs.
(k) The special circumstances of hospitals serving a
disproportionate number of Medi-Cal beneficiaries and patients who
are not covered by other third-party payers, including the costs
associated with assuring an adequate supply of registered nurses.
(l) The costs of providing complex emergency services, including
the costs of meeting and maintaining state and local requirements for
trauma center designation.
(m) The hospital does any of the following:
(1) Provides additional obstetrical beds.
(2) Contracts with one or more comprehensive perinatal providers.
(3) Permits certified nurse midwives, subject to hospital rules,
and consistent with existing laws and regulations, to admit patients
to the health facility.
(4) Expands overall obstetrical services in the hospital.
(n) The special circumstances of hospitals whose Medi-Cal
inpatient utilization rate exceeds the mean Medicaid inpatient
utilization rate by at least one-half of one standard deviation.
(o) The ability and capacity of the contracting hospital in a
closed health facility planning area to provide health care services
to beneficiaries who are in life-threatening or emergency situations,
but have been sufficiently stabilized at another noncontracting
facility in order to facilitate transportation to the contracting
hospital.
(p) The ability of the contracting hospital to provide a secure
environment for the provision of health care services. In this
regard, the negotiator shall consider additional security measures
that the contracting hospital may have taken to provide a secure
environment, including, but not limited to, the use of detection
equipment or procedures to detect lethal weapons, the appropriate use
of surveillance cameras, limiting access of unauthorized personnel
to the emergency department, installation of bullet proof glass as
appropriate in designated areas, the use of emergency "panic" buttons
to alert local law enforcement agencies, and assigning full-time
security personnel to the emergency department.

14083.5. In addition to considering factors specified in Section
14083, the negotiator, in negotiating contracts under this article,
or in drawing specifications for competitive bidding, shall give
special consideration to the reimbursement issues faced by hospitals
caring for Medi-Cal beneficiaries who are receiving treatment for
acquired immune deficiency syndrome (AIDS).

14084. (a) Payments to the contractor may be either on a capitation
or prepayment basis, or on a combination of both methods of payment,
or such other methods as the negotiator determines to be feasible.
Hospitals may assume all or part of the risk of utilization of
services, or costs of services, or both.
(b) The department shall insure that the system for reimbursing
contracting hospitals is capable of making contract payments in the
manner determined pursuant to subdivision (a). At a minimum, the
department shall insure that the reimbursement system is capable of
making contract payments on a per diem and a per case basis.

14085. All utilization controls applied to inpatient hospital
services by the director in accordance with Section 14133.1 shall
continue to be applied to inpatient hospital services rendered under
this article, except that the director may waive utilization controls
which are no longer necessary in the case of hospitals entering into
negotiated, capitated, at-risk contracts under this article.

14085.5. (a) Each disproportionate share hospital contracting to
provide services under this article or contracting with a county
organized health system, and which has or would have met the state
criteria developed pursuant to the federal medicaid requirements
regarding disproportionate hospitals for the three most recent years
prior to submitting final plans for an eligible project in accordance
with subparagraph (C) of paragraph (1) of subdivision (b), may, in
addition to the rate of payment provided for in the contract entered
into under this article, receive supplemental reimbursement to the
extent provided for in this section.
(b) (1) (A) A hospital qualifying pursuant to subdivision (a)
shall submit documentation regarding debt service on revenue bonds
used for financing the construction, renovation, or replacement of
hospital facilities, including buildings and fixed equipment.
(B) Qualified hospitals may submit debt service instruments to the
department and to the commission regarding debt issued for new
capital projects.
(C) Eligible projects shall include those new capital projects
funded by new debt for which final plans have been submitted to the
Office of the State Architect and the Office of Statewide Health
Planning and Development after September 1, 1988, and prior to June
30, 1994, except that projects submitted between September 1, 1988,
and June 30, 1989, shall be eligible only if the submitting hospital
had all of the following additional characteristics during the 1989
calendar year:
(i) No less than 400 general acute care licensed beds.
(ii) An average Medi-Cal patient census of not less than 30
percent of the total patient days.
(iii) No less than 50,000 emergency department visits.
(iv) An existing basic emergency department, obstetrical services,
and a neonatal intensive care unit.
(D) The department shall confirm in writing hospital and project
eligibility for partial financing under this section.
(E) Department advisory letters, conditioned on hospital and
project conformity to plans, may be requested by hospitals prior to
final plan submission.
(F) Capital projects receiving partial financing under this
section shall finance the upgrading or construction of buildings and
equipment to a level required by currently accepted medical practice
standards, including projects designed to correct Joint Commission on
Accreditation of Hospitals and Health Systems fire and life safety,
seismic, or other related regulatory standards.
(2) Projects may also expand service capacity as needed to
maintain current or reasonably foreseeable necessary bed capacity to
meet the needs of Medi-Cal beneficiaries after giving consideration
to bed capacity needed for other patients, including unsponsored
patients.
(3) (A) Debt service shall only be paid for projects, or for that
portion of projects, that are available and accessible to patients
treated under this article or by successor programs.
(B) Each project shall cost at least five million dollars
($5,000,000) or, if less than five million dollars ($5,000,000), the
project shall be necessary for retention of federal and state
licensing and certification and for meeting fire and life safety,
seismic, or other related regulatory standards.
(4) Supplemental reimbursement payments shall commence no later
than 30 days after receipt of the certificate of occupancy by the
hospital.
(5) (A) The state shall pledge to, and agree with, the holders of
any revenue bonds issued to finance projects qualifying under this
section that until debt service on the revenue bonds is fully paid,
or until the supplemental rate is no longer required as provided by
this section, the state will not limit or alter the rights vested in
the hospital to receive supplemental reimbursement pursuant to this
section.
(B) The state shall pledge, and the hospital shall, as a condition
of encumbering supplemental reimbursement payments received pursuant
to this section, pledge that supplemental reimbursement payments
shall be used for the payment of debt service on the revenue bonds.
The hospital shall include its pledge and the agreement with the
state in any agreement with the holders of the revenue bonds.
(c) The hospital's supplemental reimbursement for a project
qualifying pursuant to subdivisions (a) and (b) shall be calculated
as follows:
(1) For any fiscal year for which the hospital is eligible to
receive reimbursement, the hospital shall report to the department
the amount of debt service on the revenue bonds issued to finance the
project.
(2) (A) The department shall use the medicaid inpatient
utilization rate as determined pursuant to Section 4112 of the
Omnibus Budget Reconciliation Act of 1987 (Public Law 100-203) to
determine the ratio of the hospital's total paid Medi-Cal patient
days to total patient days.
(B) (i) Notwithstanding any other provision of law, in determining
the hospital's medicaid inpatient utilization rate for the purposes
of this section, the department shall include in both the numerator
and denominator all Medi-Cal inpatient days of care provided by the
hospital after December 31, 1994, to Medi-Cal beneficiaries who are
enrolled in prepaid health plans contracting with the department.
Where reliable data regarding those days are available from Medi-Cal
prepaid health plans contracting with participating hospitals for
services rendered prior to January 1, 1995, that data may be used by
the department in the calculations.
(ii) For purposes of this section, Medi-Cal prepaid health plan
programs, and the days relating thereto, shall include, but not be
limited to, the programs listed in paragraph (1) of subdivision (b)
of Section 14105.985, Section 14089, and any prepaid programs
implemented under Section 14087.3, including the two-plan model
described in the report issued on March 31, 1993, by the department,
entitled "The State Department of Health Services' Plan for Expanding
Medi-Cal Managed Care: Protecting Vulnerable Populations."
(3) (A) (i) The supplemental Medi-Cal reimbursement to the
hospital for each fiscal year shall equal the amount determined
annually in paragraph (1) multiplied by the percentage figure
determined in paragraph (2). In no instance shall the percentage
figure determined pursuant to the ratio derived under paragraph (2)
be decreased by more than 10 percent of the initial ratio determined
pursuant to paragraph (2) prior to the retirement of the debt.
(ii) Hospitals whose Medi-Cal ratio falls below 90 percent of the
initial level established at the point of final plan submission shall
at least maintain the volume of Medi-Cal utilization which was
recorded at the time of final plan submission unless forces beyond
the hospital's control have decreased the absolute volume of care.
(B) (i) In no instance shall the total amount of reimbursement
received under this section combined with that received from all
other sources dedicated exclusively to debt service exceed 100
percent of the debt service over the life of the loan.
(ii) A hospital qualifying for and receiving supplemental Medi-Cal
reimbursement shall continue to receive the reimbursement until the
qualifying loan is paid off, or the hospital is terminated as a
Medi-Cal selective contractor and the hospital does not contract with
a county organized health system.
(iii) It is the intent of the Legislature that the state and the
qualifying hospital shall negotiate in good faith for rates
sufficient to ensure continued hospital participation in the program
and to ensure adequate access to services for Medi-Cal beneficiaries.
(iv) The state shall not terminate a contract with a qualified
provider for the purpose of terminating the capital supplement.
(v) If negotiations fail to permit continuation of a contract of a
hospital qualifying for the supplemental Medi-Cal reimbursement, the
supplemental Medi-Cal reimbursement shall cease as of the date of
discontinuance of the selective provider contract.
(4) In order to ensure provision of qualified supplemental
payments to disproportionate share hospitals contracting with county
organized health systems, the department shall make the qualified
supplemental payments directly to these hospitals.
(5) Funding for these supplemental payments shall be separately
appropriated as a line item in the Budget Act for each fiscal year
for any project for which a request for payment is received after
April 1 of each fiscal year. The department shall request a
deficiency appropriation if funds for the payment are not
appropriated in the Budget Act.
(6) (A) Paragraphs (1) to (4), inclusive, shall be incorporated
into an amendment to any contract entered into by a hospital pursuant
to this article.
(B) (i) Any contract amendment required by paragraph (A) shall
include a payment methodology based on inpatient hospital services
rendered to Medi-Cal patients, either on a per diem basis, a
per-discharge basis, or any other federally permissible basis, and
which is consistent with the hospital's Medi-Cal contract.
(ii) The payment methodology specified in clause (i) shall ensure
that the hospital, on an annual basis, receives the amount of
supplemental reimbursement calculated pursuant to paragraph (3),
excluding only the federal portion of costs which have been
determined by the federal government not to be allowable under Title
XIX of the federal Social Security Act (Subchapter 19 (commencing
with Section 1396) of Chapter 7 of Title 42 of the United States
Code).
(iii) The payment methodology specified in clause (i) shall
contain a retrospective adjustment mechanism to ensure that,
regardless of the payment methodology, the department shall pay the
hospital the full amount owed to the hospital for the year, as
determined pursuant to this section.
(7) In negotiating contracts with hospitals receiving payments
under this section, the commission shall take appropriate steps to
ensure the duplicate payments are not made to the hospital for the
debt service costs relating to the eligible project.
(d) All reimbursement received by a hospital pursuant to this
section shall be placed in a special account, the funds in which
shall be used exclusively for the payment of debt service on the
revenue bonds issued to finance the project.
(e) If contracting under this section is superseded by other
arrangements for payment of inpatient hospital services, the
successor program shall include separate reimbursement, as determined
pursuant to paragraph (3) of subdivision (c).
(f) (1) For purposes of this section, "revenue bonds" are defined
as that term is defined in subdivision (c) of Section 15459 of the
Government Code, and shall also include general obligation bonds
issued by or on behalf of eligible hospitals for projects of more
than five million dollars ($5,000,000).
(2) (A) The aggregate principal amount of general obligation bonds
to be issued as revenue bonds under this subdivision for the
anticipated allowable portion of projects shall not, in any fiscal
year, exceed a statewide amount established in the Medi-Cal estimates
submitted to the fiscal committees of the Legislature pursuant to
Section 14100.5, or as otherwise statutorily determined by the
Legislature.
(B) In preparing Medi-Cal estimates, the department shall
consider, but need not include, all actual and anticipated projects.
(g) (1) The department shall promptly seek any necessary federal
approvals for the implementation of this section, and, if necessary
to obtain federal approval, the department may, for federal purposes,
limit the program to those costs which are allowable expenditures
under Title XIX of the federal Social Security Act (Subchapter 19
(commencing with Section 1396) of Chapter 7 of Title 42 of the United
States Code), subject to paragraph (2).
(2) The department shall continue to be responsible for the
reimbursement of eligible providers from state funds for the amount
of supplemental reimbursement pursuant to paragraph (3) of
subdivision (c), excluding only the federal portion of costs which
have been determined by the federal government not to be allowable
under Title XIX of the federal Social Security Act.
(h) (1) A hospital receiving supplemental reimbursement pursuant
to this section shall be liable for any reduced federal financial
participation resulting from the implementation of this section.
(2) The department shall submit claims for federal financial
participation for all elements of the supplemental reimbursements
which are allowable expenditures under federal law.
(3) The department shall, on an annual basis, submit any necessary
materials to the federal government to provide assurances that
claims for federal financial participation will include only those
expenditures which are allowable under federal law.
(4) (A) The department may require that hospitals receiving
supplemental reimbursement submit data necessary for the department
to determine the appropriate amounts to claim as expenditures
qualifying for federal financial participation.
(B) Unless otherwise permitted by federal law, the total statewide
payment under the selective provider contracting program, in the
aggregate on an annual basis, shall not exceed an amount that would
otherwise have been paid under the Medi-Cal program on a statewide
basis for the same services, in the aggregate on an annual basis, if
the contracting program were not implemented.
(i) (1) Subject to paragraph (2), any hospital that met the
criteria specified in subdivision (a) at the time it submitted its
final plans for an eligible project in accordance with subparagraph
(C) of paragraph (1) of subdivision (b) shall continue to receive
reimbursement as set forth in this section irrespective of whether or
not the hospital qualifies as a disproportionate share hospital
after submission of its final plans.
(2) A hospital that fails to meet the criteria for
disproportionate share status on or before June 30, 2002, shall be
required to submit data to the department that demonstrates that the
hospital failed to meet the criteria for a disproportionate share
hospital because its low-income utilization rate, as determined
pursuant to Section 4112 of the Omnibus Budget Reconciliation Act of
1987 (Public Law 100-203), does not exceed 25 percent due to one or
more of the following factors:
(A) An increase in outpatient utilization.
(B) A decrease in the average length of stay for Medi-Cal
beneficiaries or charity care patients due to technological advances
in the provision of care.
(C) Increased implementation within the state of Medi-Cal prepaid
health plan programs.
(D) The level of reimbursement that the hospital receives for
outpatient visits.
(E) Other circumstances beyond the hospital's control that affect
the hospital's ability to meet the criteria for disproportionate
status, even though the hospital continues to have a mission to
provide care to Medi-Cal and charity care patients.

14085.51. (a) A disproportionate share hospital that qualifies
under Section 14085.5 that has submitted final plans for an eligible
capital project in accordance with subparagraph (C) of paragraph (1)
of subdivision (b) of Section 14085.5 may submit substitute final
plans and shall qualify for supplemental reimbursement under Section
14085.5 for the revised capital project as described in the
substitute final plans if all of the following conditions are met:
(1) The substituted capital project continues to meet the
requirements for eligible projects as specified in Section 14085.5.
(2) The hospital provides written notification to the department
of the status of the project on or before January 1 of each year
commencing January 1, 1999. This notification shall, at a minimum,
include a narrative description of the project, identification of
medical services to be provided, documentation substantiating service
needs, projected construction timeframes, and total estimated
revised capital project costs.
(3) The substitute final plans are submitted to the Office of
Statewide Health Planning and Development prior to June 30, 1995, or,
where debt was issued prior to July 1, 1996, for the capital project
for which the plans were originally submitted, the substitute final
plans are submitted to the Office of Statewide Health Planning and
Development prior to December 31, 2000.
(b) The revised capital project may provide for any one or more of
the following:
(1) A reduction in size and scope of the original project plan.
(2) Tenant interior improvements for the entire building not
specified in the original project plan.
(3) Modifications to the foundation, structural frame, and
building exterior shell, commonly known as the shell and core.
(4) Modifications necessary to comply with current seismic safety
standards.
(c) The supplemental reimbursement under Section 14085.5 for the
revised capital project shall be no greater than the supplemental
reimbursement for the original capital project as evidenced by the
architects' and engineers' certified cost estimate of the original
plan submission and the substitute plan submission.
(d) (1) A project, if eligible under the criteria set forth in
this section and Section 14085.5, shall commence construction on or
before January 1, 2002.
(2) In addition, the project shall be licensed for operation and
available for occupancy on or before January 1, 2009.

14085.52. (a) A disproportionate share hospital that qualifies
under Section 14085.5 that has submitted final plans for an eligible
capital project in accordance with subparagraph (C) of paragraph (1)
of subdivision (b) of Section 14085.5 may submit revised plans and
shall qualify for supplemental reimbursement under Section 14085.5
for the revised capital project as described in the revised plans if
all of the following conditions are met:
(1) The revised capital project continues to meet all other
requirements for eligibility as specified in Section 14085.5.
(2) The revised plans are submitted to the Office of Statewide
Health Planning and Development prior to December 31, 1996.
(3) The modifications in the revised plans are necessary to comply
with current seismic safety standards.
(b) The supplemental reimbursement under Section 14085.5 for the
revised capital project shall be no greater than the supplemental
reimbursement for the original capital project as evidenced by the
architects' and engineers' certified cost estimate of the original
plan submission and substitute plans submitted between July 1, 1994,
and June 30, 1995, whichever is less.

14085.53. (a) The Alameda County Medical Center may revise plans
submitted in accordance with subparagraph (C) of paragraph (1) of
subdivision (b) of Section 14085.5 for the Alameda County Medical
Center capital project and submit those revised plans pursuant to
this section. The revised capital project plans shall qualify for
supplemental reimbursement under Section 14085.5 for the revised
capital project as described in the revised plans, notwithstanding
the assignment of a different permit number, if all of the following
conditions are met:
(1) The revised capital project continues to meet all other
requirements for eligibility as specified in Section 14085.5.
(2) The revised plans are submitted to the Office of Statewide
Health Planning and Development prior to June 30, 1997.
(3) The modifications do not involve a deviation from the original
capital project plan's stated architectural building footprint.
(b) The revised capital project plan for Alameda County Medical
Center may provide for any or all or any combination of the
following:
(1) A reduction in size and scope of the original project plan.
(2) Tenant interior improvements for the entire building not
specified in the original project plan.
(3) Modifications to the foundation, structural frame, and
building exterior shell, commonly known as the shell and core.
(4) Modifications necessary to comply with current seismic safety
standards.
(c) The revised capital project plans for the Alameda County
Medical Center, as described in this section, shall qualify for
supplemental reimbursement as calculated pursuant to subdivision (c)
of Section 14085.5, as limited by this section. The initial Medi-Cal
inpatient utilization rate for the Alameda County Medical Center, for
purposes of calculating the supplemental reimbursement, shall be
that which was established at the point of the original project plan
submission. The supplemental reimbursement shall be based on actual
costs of the revised capital project eligible for reimbursement under
Section 14085.5. However, in no event shall the supplemental
reimbursement for the revised capital project exceed 85 percent of
the supplemental reimbursement for that portion of the original
Alameda County Medical Center capital project that qualified for the
supplemental reimbursement, the original qualifying amount which was
sixty-two million six hundred ninety-six thousand three hundred forty
dollars ($62,696,340), as indicated by the budgetary estimate as
prepared and submitted by Alameda County to the department July 11,
1994.

14085.54. (a) The Los Angeles County University of Southern
California (LAC-USC) Medical Center may submit revised final plans to
the Office of Statewide Health Planning and Development to replace
the original capital expenditure project plans that met the initial
eligibility requirements provided for under Section 14085.5 if all of
the following conditions are met:
(1) The revised capital expenditure project meets all other
requirements for eligibility as specified in Section 14085.5.
(2) The revised plans are submitted to the Office of Statewide
Health Planning and Development on or before December 31, 2002,
except that, with respect to a facility in the San Gabriel Valley of
not less than 80 beds, the revised plans may be submitted not later
than December 31, 2003.
(3) The scope of the capital project shall consist of two
facilities with not less than a total of 680 beds.
(b) Funding under Section 14085.5 shall not be provided unless all
of the conditions specified in subdivision (a) are met.
(c) The revised plans for the LAC-USC Medical Center capital
expenditure project may provide for one or more of the following
variations from the original capital expenditure project plan
submission:
(1) Total revisions or reconfigurations, or reductions in size and
scope.
(2) Reduction in, or modification of, some or all inpatient
project components.
(3) Tenant interior improvements not specified in the original
capital expenditure project plan submission.
(4) Modifications to the foundation, structural frame, and
building exterior shell, commonly known as the shell and core.
(5) Modifications necessary to comply with current seismic safety
standards.
(6) Expansion of outpatient service facilities that operate under
the LAC-USC Medical Center license.
(d) The revised capital expenditure project may provide for an
additional inpatient service site to the current LAC-USC Medical
Center only if the additional inpatient service site meets both of
the following criteria:
(1) The San Gabriel Valley site is owned and operated by the
County of Los Angeles.
(2) The San Gabriel Valley site is consolidated under the LAC-USC
Medical Center license.
(e) (1) Supplemental reimbursement for the revised capital
expenditure project for LAC-USC Medical Center, as described in this
section, shall be calculated pursuant to subdivision (c) of Section
14085.5, as authorized and limited by this section. The initial
Medi-Cal inpatient utilization rate for the LAC-USC Medical Center,
for purposes of calculating the supplemental reimbursement, shall be
that which was established at the point of the original capital
expenditure project plan submission. The revised capital expenditure
project costs, including project costs related to the additional
inpatient service site, eligible for supplemental reimbursement under
this section shall not exceed 85 percent of the project costs,
including all eligible construction, architectural and engineering,
design, management and consultant costs that would have qualified for
supplemental reimbursement under the original capital project. The
Legislature finds that the original qualifying amount was one billion
two hundred sixty-nine million seven hundred thirty-five thousand
dollars ($1,269,735,000).
(2) Notwithstanding any other provision of this section, any
portion of the revised capital expenditure project for which the
County of Los Angeles is reimbursed by the Federal Emergency
Management Agency and the California Emergency Management Agency
shall not be considered eligible project costs for purposes of
determining supplemental reimbursement under Section 14085.5.
(3) The department shall seek a Medicaid state plan amendment in
order to maximize federal financial participation. However, if the
department is unable to obtain federal financial participation at the
Medi-Cal inpatient adjustment rate as described in paragraph (1),
the state shall fully fund any amount that would otherwise be funded
under this section, but for which federal financial participation
cannot be obtained.
(f) The LAC-USC Medical Center shall provide written notification
to the department of the status of the project on or before January 1
of each year, commencing January 1, 2002. This notification shall,
at a minimum, include a narrative description of the project,
identification of services to be provided, documentation
substantiating service needs, projected construction timeframes, and
total estimated revised capital project costs.
(g) The project, if eligible under the criteria set forth in this
section and Section 14085.5, shall commence construction at both
facilities referred to in subdivision (a) on or before January 1,
2004.
(h) In addition to the requirements of subdivision (f), the
project shall be licensed for operation and available for occupancy
on or before January 1, 2009.
(i) On or before August 15, 2001, the County of Los Angeles may
withdraw any revised final plans that are submitted pursuant to this
section prior to that date if the Board of Supervisors of Los Angeles
County finds that insufficient funds are available to carry out the
capital expenditure project described in this section.

14085.55. Notwithstanding subparagraph (C) of paragraph (1) of
subdivision (b) of Section 14085.5, eligible projects shall include
those new capital projects funded by new debt for which final plans
for the foundation, frame, and building shell, commonly known as the
shell and core, have been submitted to the Office of the State
Architect and the Office of Statewide Health Planning and Development
after September 1, 1988, and prior to June 30, 1994, and for which
final plans for tenant improvements have been submitted to the Office
of the State Architect and the Office of Statewide Health Planning
and Development after September 1, 1988, and prior to January 1,
1995.

14085.56. (a) For the purposes of this section, "Los Medanos site,"
means the site of the former Los Medanos Medical Center.
(b) Contra Costa County Regional Medical Center may construct or
renovate, or both, at the former Los Medanos site, and the
construction or renovation, or both, may be considered eligible for
supplemental reimbursement under Section 14085.5, if the Los Medanos
site meets both of the following conditions:
(1) The site is owned or leased, and operated, by Contra Costa
County.
(2) The site is consolidated under the Contra Costa County
Regional Medical Center general acute care license.
(c) Contra Costa County Regional Medical Center shall qualify to
receive supplemental reimbursement for revised final plans for
construction or renovation, or both, submitted to the Office of
Statewide Health Planning and Development on or before November 30,
1998, for the Los Medanos site, and shall qualify for supplemental
reimbursement under Section 14085.5 for the revised capital project
if the revised capital project continues to meet the requirements for
eligibility specified in Section 14085.5, as modified by this
section.
(d) The revised final plans may provide for a capital project with
one or more of the following variations from the original capital
project plan submission:
(1) Total revision or reconfiguration, or a reduction in size and
scope.
(2) Modifications necessary to comply with current seismic safety
standards.
(3) Expansion of outpatient service facilities.
(4) Modifications to the foundation, structural frame, and
building exterior shell, commonly known as the shell and core.
(e) For purposes of calculating supplemental reimbursement
pursuant to Section 14085.5 for a revised capital project complying
with this section, the initial Medi-Cal inpatient utilization rate
shall be that which is determined at the time of submission of the
revised capital project plan.
(f) For purposes of determining supplemental reimbursement under
Section 14085.5 for a revised capital project complying with this
section, supplemental reimbursement shall be based on actual costs of
the revised capital project eligible for reimbursement under Section
14085.5. However, in no event shall the revised capital project
costs be considered eligible for supplemental reimbursement for the
construction or renovation, or both, of the Los Medanos site if these
costs exceed eight million five hundred ten thousand dollars
($8,510,000).
(g) Supplemental reimbursement paid under this section for
construction shall not duplicate any reimbursement received by the
Contra Costa County Regional Medical Center for services provided at
the Los Medanos site.
(h) Subject to subdivisions (g) and (h) of Section 14085.5, Contra
Costa County Regional Medical Center shall receive supplemental
reimbursement under this section for debt service associated with the
revised capital project over the lesser of the following periods:
(1) The life of the revenue bonds.
(2) The period during which the Los Medanos site is either leased
or owned by Contra Costa County.

14085.57. (a) A designated public hospital, as defined in
subdivision (d) of Section 14166.1, that is contracting to provide
services under this article, and that has or would have fulfilled the
criteria set forth in Section 14105.98 or subparagraph (B) of
paragraph (1) of subdivision (c) of Section 14166.3 for the three
most recent years prior to submitting final plans for an eligible
project in accordance with paragraph (3) of subdivision (b), may
receive supplemental reimbursement to the extent provided for in
Section 14085.5, subject to subdivision (c), in addition to the rate
of payment provided for in the contract entered into under this
article.
(b) (1) A hospital qualifying pursuant to subdivision (a) that
elects to receive reimbursement under this section shall submit
documentation to the department regarding debt service on general
obligation bonds or revenue bonds used for financing the
construction, renovation, or replacement of hospital facilities,
including buildings and fixed equipment.
(2) A hospital qualifying pursuant to subdivision (a) shall remain
open for the life of the supplemental reimbursements provided for
pursuant to this section.
(3) (A) Eligible projects shall include those new capital projects
funded by new debt for which final plans have been submitted to the
Office of Statewide Health Planning and Development after January 1,
2007, and prior to December 31, 2011.
(B) Eligible projects that may receive supplemental reimbursement
pursuant to subdivision (a) are limited to projects related to
meeting seismic safety deadlines.
(c) No expenditure of state funds, either from the General Fund or
any special fund, shall be made for the nonfederal share of the
supplemental reimbursement provided for in this section. The
department shall, for designated public hospitals that meet the
criteria in subdivision (a), claim federal expenditures through the
use of certified public expenditures or intergovernmental transfers,
as necessary and appropriate.
(d) The department shall promptly seek any necessary, and all
available, federal approvals for the implementation of this section.
This section shall be implemented only to the extent that federal
approval and federal financial participation are available.

14085.6. (a) Except as stated in subdivision (g), each hospital
contracting to provide services under this article that meets the
criteria contained in the state medicaid plan for disproportionate
share hospital status shall be eligible to negotiate with the
commission for distributions from the Emergency Services and
Supplemental Payments Fund, which is hereby created. All
distributions from the fund shall be pursuant to this section.
(b) (1) To the extent permitted by federal law, the department
shall administer the fund in accordance with this section.
(2) The money in this fund shall be available for expenditure by
the department for the purposes of this section, subject to approval
through the regular budget process.
(c) The fund shall include all of the following:
(1) Subject to subdivision (l), all public funds transferred by
public agencies to the department for deposit in the fund, as
permitted under Section 433.51 of Title 42 of the Code of Federal
Regulations or any other applicable federal medicaid laws. These
transfers shall constitute local government financial participation
in Medi-Cal as permitted under Section 1902 (a)(2) of the Social
Security Act (Title 42 U.S.C. Sec. 1396a (a)(2)) and other applicable
federal medicaid laws.
(2) Subject to subdivision (l), all private donated funds
transferred by private individuals or entities for deposit in the
fund as permitted under applicable federal medicaid laws.
(3) Any amounts appropriated to the fund by the Legislature.
(4) Interest that accrues on amounts in the fund.
(5) Moneys appropriated to the fund, or appropriated for poison
control center grants and transferred to the fund, pursuant to the
annual Budget Act.
(d) Amounts in the fund shall be used as the source for the
nonfederal share of payments to hospitals under this section. Moneys
shall be allocated from the fund by the department and matched by
federal funds in accordance with customary Medi-Cal accounting
procedures for purposes of payments under this section.
(e) Distributions from the fund shall be supplemental to any and
all other amounts that hospitals would have received under the
contracting program, and under the state medicaid plan, including
contract rate increases and supplemental payments and payment
adjustments under distribution programs relating to disproportionate
share hospitals.
(f) Distributions from the fund shall not serve as the state's
payment adjustment program under Section 1923 of the Social Security
Act (42 U.S.C. Sec. 1396 r-4). To the extent permitted by federal
law, and except as otherwise provided in this section, distributions
from the fund shall not be subject to requirements contained in or
related to Section 1923 of the Social Security Act (42 U.S.C. Sec.
1396 r-4). Distributions from the fund shall be supplemental contract
payments and may be structured on any federally permissible basis,
as negotiated between the commission and the hospital.
(g) In order to qualify for distributions from the fund, a
hospital shall meet all of the following criteria:
(1) Be a contracting hospital under this article.
(2) Satisfy the state medicaid plan criteria referred to in
subdivision (a).
(3) Be one of the following:
(A) A licensed provider of basic emergency services as described
in Sections 70411 and following of Title 22 of the California Code of
Regulations.
(B) A licensed provider of comprehensive emergency medical
services as defined in Sections 70451 and following of Title 22 of
the California Code of Regulations.
(C) A children's hospital as defined in Section 14087.21 that
satisfies subparagraph (A) or (B) or that jointly provides basic or
comprehensive emergency services in conjunction with another licensed
hospital.
(D) A hospital owned and operated by a public agency that operates
two or more hospitals that qualify under subparagraph (A) or (B)
with respect to the particular state fiscal year.
(E) A hospital designated by the National Cancer Institute as a
comprehensive or clinical cancer research center that primarily
treats acutely ill cancer patients and that is exempt from the
federal Medicare prospective payment system pursuant to Section 1886
(d)(1)(B)(v) of the Social Security Act (42 U.S.C. Sec. 1395ww(d)(1)
(B)(v)).
(4) Be able to demonstrate a purpose for additional funding under
the selective provider contracting program including proposals
relating to emergency services and other health care services,
including infrequent yet high-cost services, such as anti-AB human
antitoxin treatment for infant botulism (human botulinum immune
globulin (HBIG), commonly referred to as "Baby-BIG"), that are made
available, or will be made available, to Medi-Cal beneficiaries.
(h) (1) The department shall seek federal financial participation
for expenditures made from the fund to the full extent permitted by
federal law.
(2) The department shall promptly seek any necessary federal
approvals regarding this section.
(i) Any funds remaining in the fund at the end of a fiscal year
shall be carried forward for use in following fiscal years.
(j) For purposes of this section, "fund" means the Emergency
Services and Supplemental Payments Fund.
(k) (1) Any public agency transferring amounts to the fund, as
specified in paragraph (1) of subdivision (c), may for that purpose,
utilize any revenues, grants, or allocations received from the state
for health care programs or purposes, unless otherwise prohibited by
law. A public agency may also utilize its general funds or any other
public funds or revenues for purposes of transfers to the fund,
unless otherwise prohibited by law.
(2) Notwithstanding paragraph (1), a public agency may transfer to
the fund only those moneys that have a source that will qualify for
federal financial participation under the provisions of the Medicaid
Voluntary Contribution and Provider-Specific Tax Amendments of 1991
(P.L. 102-234) or other applicable federal medicaid laws.
(l) Public funds transferred pursuant to paragraph (1) of
subdivision (c), and private donated funds transferred pursuant to
paragraph (2) of subdivision (c), shall be deposited into the fund,
and expended pursuant to this section. The director may accept only
those funds that are certified by the transferring entity as
qualifying for federal financial participation under the terms of the
Medicaid Voluntary Contributions and Provider-Specific Tax
Amendments of 1991 (P.L. 102-234) and may return any funds
transferred in error.
(m) The department may adopt emergency regulations, if necessary,
for the purposes of this section.
(n) The state shall be held harmless from any federal disallowance
resulting from this section. A hospital receiving supplemental
reimbursement pursuant to this section shall be liable for any
reduced federal financial participation resulting from the
implementation of this section with respect to that hospital. The
state may recoup that federal disallowance from the hospital in any
manner authorized by law or contract.

14085.7. (a) The Medi-Cal Medical Education Supplemental Payment
Fund is hereby created in the State Treasury. Notwithstanding Section
13340 of the Government Code, the fund shall be continuously
appropriated to, and under the administrative control of, the
department for the purposes specified in this section. Except as
otherwise limited by this section, the fund shall consist of all of
the following:
(1) All public moneys transferred by public agencies to the
department for deposit into the fund, as permitted under Section
433.51 of Title 42 of the Code of Federal Regulations or any other
applicable federal medicaid laws.
(2) All private moneys donated by private individuals or entities
to the department for deposit in the fund as permitted under
applicable federal medicaid laws.
(3) Any amounts appropriated to the fund by the Legislature.
(4) Any interest that accrues on amounts in the fund.
(b) Any public agency transferring moneys to the fund may, for
that purpose, utilize any revenues, grants, or allocations received
from the state for health care programs or purposes, unless otherwise
prohibited by law. A public agency may also utilize its general
funds or any other public moneys or revenues for purposes of
transfers to the fund, unless otherwise prohibited by law.
(c) The department shall have the discretion to accept or not
accept moneys offered to the department for deposit in the fund. If
the department accepts moneys pursuant to this section, the
department shall obtain federal matching funds to the full extent
permitted by law. The department shall accept only those funds that
are certified by the transferring or donating entity as qualifying
for federal financial participation under the terms of the Medicaid
Voluntary Contribution and Provider-Specific Tax Amendments of 1991
(P.L. 102-234) or Section 433.51 of Title 42 of the Code of Federal
Regulations, as applicable, and may return any funds transferred or
donated in error.
(d) Moneys in the fund shall be used as the source for the
nonfederal share of payments to hospitals under this section. Moneys
shall be allocated from the fund by the department and matched by
federal funds in accordance with customary Medi-Cal accounting
procedures for purposes of payments under subdivision (e).
Distributions from the fund shall be supplemental to any other
amounts that hospitals receive under the contracting program.
(e) For purposes of recognizing medical education costs incurred
for services rendered to Medi-Cal beneficiaries, payments from this
fund shall be negotiated between the California Medical Assistance
Commission and hospitals contracting under this article that meet the
definition of university teaching hospitals or major (nonuniversity)
teaching hospitals as set forth on page 51 and as listed on page 57
of the department's report dated May 1991, entitled "Hospital Peer
Grouping." Payments from the fund shall be used solely for the
purposes identified in the contract between the hospital and the
state.
(f) The state shall be held harmless from any federal disallowance
resulting from this section. A hospital receiving supplemental
reimbursement pursuant to this section shall be liable for any
reduced federal financial participation resulting from the
implementation of this section with respect to that hospital. The
state may recoup any federal disallowance from the hospital.

14085.8. (a) The Large Teaching Emphasis Hospital and Children's
Hospital Medi-Cal Medical Education Supplemental Payment Fund is
hereby created in the State Treasury.
(b) Notwithstanding Section 13340 of the Government Code, the fund
shall be continuously appropriated to, and under the administrative
control of, the department for the purposes specified in this
section.
(c) Except as otherwise limited by this section, the fund shall
consist of all of the following:
(1) All public moneys transferred by public agencies to the
department for deposit into the fund, as permitted under Section
433.51 of Title 42 of the Code of Federal Regulations or any other
applicable federal medicaid laws.
(2) All private moneys donated by private individuals or entities
to the department for deposit in the fund as permitted under
applicable federal medicaid laws.
(3) Any amounts appropriated to the fund by the Legislature.
(4) Any interest that accrues on amounts in the fund.
(d) Any public agency transferring moneys to the fund may, for
that purpose, utilize any revenues, grants, or allocations received
from the state for health care programs or purposes, unless otherwise
prohibited by law. A public agency may also utilize its general
funds or any other public moneys or revenues for purposes of
transfers to the fund, unless otherwise prohibited by law.
(e) The department may accept or not accept moneys offered to the
department for deposit in the fund. If the department accepts moneys
pursuant to this section, the department shall obtain federal
matching funds to the full extent permitted by law. The department
shall accept only those funds that are certified by the transferring
or donating entity as qualifying for federal financial participation
under the terms of the Medicaid Voluntary Contribution and
Provider-Specific Tax Amendments of 1991 (P.L. 102-234) or Section
433.51 of Title 42 of the Code of Federal Regulations, as applicable,
and may return any funds transferred or donated in error.
(f) Moneys in the fund shall be used as the source for the
nonfederal share of payments to hospitals under this section. Moneys
shall be allocated from the fund by the department and matched by
federal funds in accordance with customary Medi-Cal accounting
procedures for purposes of payments under subdivision (g).
Distributions from the fund shall be supplemental to any other
amounts that hospitals receive under the contracting program.
(g) (1) For purposes of recognizing medical education costs
incurred for services rendered to Medi-Cal beneficiaries, contracts
for payments from the fund may, at the discretion of the California
Medical Assistance Commission, be negotiated between the commission
and hospitals contracting under this article that are defined as
either of the following:
(A) A large teaching emphasis hospital, as set forth on page 51
and listed on page 57 of the department's report dated May 1991,
entitled "Hospital Peer Grouping," and meets the definition of
eligible hospital as defined in paragraph (3) of subdivision (a) of
Section 14105.98.
(B) A children's hospital pursuant to Section 10727 and meets the
definition of eligible hospital as defined in paragraph (3) of
subdivision (a) of Section 14105.98.
(2) Payments from the fund shall be used solely for the purposes
identified in the contract between the hospital and the state.
(h) The state shall be held harmless from any federal disallowance
resulting from this section. A hospital receiving supplemental
reimbursement pursuant to this section shall be liable for any
reduced federal financial participation resulting from the
implementation of this section with respect to that hospital. The
state may recoup any federal disallowance from the hospital.

14085.81. Notwithstanding the requirement in subparagraph (A) of
paragraph (1) of subdivision (3) of Section 14085.8 that a hospital
must be listed on page 57 of the department's report dated May 1991,
entitled "Hospital Peer Grouping," any hospital whose license
pursuant to Chapter 2 (commencing with Section 1250) of Division 2 of
the Health and Safety Code was consolidated during the 1999 calendar
year with a large teaching emphasis hospital that is listed on page
57 of the above described report shall be eligible to negotiate
payments pursuant to paragraph (1) of subdivision (g) of Section
14085.8. All other requirements of Section 14085.8 shall continue to
apply.

14085.9. (a) Except as provided in subdivision (g), each hospital
contracting to provide services under this article that meets the
criteria contained in the state medicaid plan for disproportionate
share hospital status shall be eligible to negotiate with the
commission for distributions from the Small and Rural Hospital
Supplemental Payments Fund, which is hereby created and,
notwithstanding Section 13340 of the Government Code, is continuously
appropriated for the purposes specified in this section. All
distributions from the fund shall be pursuant to this section.
(b) (1) To the extent permitted by federal law, the department
shall administer the fund in accordance with this section.
(2) The money in this fund shall be available for expenditure by
the department for the purposes of this section, subject to approval
through the regular budget process.
(c) The fund shall include all of the following:
(1) Subject to subdivision (l), all public funds transferred by
public agencies to the department for deposit in the fund, as
permitted under Section 433.51 of Title 42 of the Code of Federal
Regulations or any other applicable federal medicaid laws. These
transfers shall constitute local government financial participation
in Medi-Cal as permitted under Section 1902(a)(2) of the Social
Security Act (Title 42 U.S.C. Sec. 1396a(a)(2)) and other applicable
federal medicaid laws.
(2) Subject to subdivision (l), all private donated funds
transferred by private individuals or entities for deposit in the
fund as permitted under applicable federal medicaid laws.
(3) Any amounts appropriated to the fund by the Legislature.
(4) Interest that accrues on amounts in the fund.
(d) Amounts in the fund shall be used as the source for the
nonfederal share of payments to hospitals under this section. Moneys
shall be allocated from the fund by the department and matched by
federal funds in accordance with customary Medi-Cal accounting
procedures for purposes of payments under this section.
(e) Distributions from the fund shall be supplemental to any and
all other amounts that hospitals would have received under the
contracting program, and under the state medicaid plan, including
contract rate increases and supplemental payments and payment
adjustments under distribution programs relating to disproportionate
share hospitals.
(f) Distributions from the fund shall not serve as the state's
payment adjustment program under Section 1923 of the Social Security
Act (42 U.S.C. Sec. 1396r-4). To the extent permitted by federal law,
and except as otherwise provided in this section, distributions from
the fund shall not be subject to requirements contained in or
related to Section 1923 of the Social Security Act (42 U.S.C. Sec.
1396r-4). Distributions from the fund shall be supplemental contract
payments and may be structured on any federally permissible basis, as
negotiated between the commission and the hospital.
(g) In order to qualify for distributions from the fund, a
hospital shall meet all of the following criteria:
(1) Be a contracting hospital under this article.
(2) Satisfy the state medicaid plan criteria referred to in
subdivision (a).
(3) Be a small and rural hospital as defined in Section 124840 of
the Health and Safety Code.
(4) Be a licensed provider of standby emergency services as
described in Section 70649 and following of Title 22 of the
California Code of Regulations.
(5) Be able to demonstrate a purpose for additional funding under
the selective provider contracting program with proposals relating to
health care services that are made available, or will be made
available, to Medi-Cal beneficiaries.
(6) Be determined by the California Medical Assistance Commission
to be a hospital that provides an important community service that
otherwise would not be provided in the community.
(h) (1) The department shall seek federal financial participation
for expenditures made from the fund to the full extent permitted by
federal law.
(2) The department shall promptly seek any necessary federal
approvals regarding this section.
(i) Any funds remaining in the fund at the end of a fiscal year
shall be carried forward for use in following fiscal years.
(j) For purposes of this section, "fund" means the Small and Rural
Hospital Supplemental Payments Fund.
(k) (1) Any public agency transferring amounts to the fund, as
specified in paragraph (1) of subdivision (c), may for that purpose,
utilize any revenues, grants, or allocations received from the state
for health care programs or purposes, unless otherwise prohibited by
law. A public agency may also utilize its general funds or any other
public funds or revenues for purposes of transfers to the fund,
unless otherwise prohibited by law.
(2) Notwithstanding paragraph (1), a public agency may transfer to
the fund only those moneys that have a source that will qualify for
federal financial participation under the provisions of the Medicaid
Voluntary Contribution and Provider-Specific Tax Amendments of 1991
(P.L. 102-234) or other applicable federal medicaid laws.
(l) Public funds transferred pursuant to paragraph (1) of
subdivision (c), and private donated funds transferred pursuant to
paragraph (2) of subdivision (c), shall be deposited into the fund,
and expended pursuant to this section. The director may accept only
those funds that are certified by the transferring entity as
qualifying for federal financial participation under the terms of the
Medicaid Voluntary Contributions and Provider-Specific Tax
Amendments of 1991 (P.L. 102-234) and may return any funds
transferred in error.
(m) The department may adopt emergency regulations for the
purposes of this section.
(n) The state shall be held harmless from any federal disallowance
resulting from this section. A hospital receiving supplemental
reimbursement pursuant to this section shall be liable for any
reduced federal financial participation resulting from the
implementation of this section with respect to that hospital. The
state may recoup that federal disallowance from the hospital in any
manner authorized by law or contract.

14086. (a) The provisions of this art