SECTIONS 14167.1-14167.18 - California Statutes

WELFARE AND INSTITUTIONS CODE

SECTION 14167.1-14167.18

14167.1. For purposes of this article, the following definitions
shall apply:
(a) "Acute psychiatric days" means the total number of Short-Doyle
administrative days, Short-Doyle acute care days, acute psychiatric
administrative days, and acute psychiatric acute days identified in
the Final Medi-Cal Utilization Statistics for the 2008-09 state
fiscal year as calculated by the department on September 15, 2008.
(b) "Converted hospital" means a private hospital that becomes a
designated public hospital or a nondesignated public hospital after
the implementation date, a nondesignated public hospital that becomes
a private hospital or a designated public hospital after the
implementation date, or a designated public hospital that becomes a
private hospital or a nondesignated public hospital after the
implementation date.
(c) "Current Section 1115 Waiver" means California's Medi-Cal
Hospital/Uninsured Care Section 1115 Waiver Demonstration in effect
on the effective date of the article.
(d) "Designated public hospital" shall have the meaning given in
subdivision (d) of Section 14166.1 as that section may be amended
from time to time.
(e) "General acute care days" means the total number of Medi-Cal
general acute care days paid by the department to a hospital in the
2008 calendar year, as reflected in the state paid claims files on
July 10, 2009.
(f) "High acuity days" means Medi-Cal coronary care unit days,
pediatric intensive care unit days, intensive care unit days,
neonatal intensive care unit days, and burn unit days paid by the
department during the 2008 calendar year, as reflected in the state
paid claims files on July 10, 2009.
(g) "Hospital inpatient services" means all services covered under
Medi-Cal and furnished by hospitals to patients who are admitted as
hospital inpatients and reimbursed on a fee-for-service basis by the
department directly or through its fiscal intermediary. Hospital
inpatient services include outpatient services furnished by a
hospital to a patient who is admitted to that hospital within 24
hours of the provision of the outpatient services that are related to
the condition for which the patient is admitted. Hospital inpatient
services do not include services for which a managed health care plan
is financially responsible.
(h) "Hospital outpatient services" means all services covered
under Medi-Cal furnished by hospitals to patients who are registered
as hospital outpatients and reimbursed by the department on a
fee-for-service basis directly or through its fiscal intermediary.
Hospital outpatient services do not include services for which a
managed health care plan is financially responsible, or services
rendered by a hospital-based federally qualified health center for
which reimbursement is received pursuant to Section 14132.100.
(i) (1) "Implementation date" means the latest effective date of
all federal approvals or waivers necessary for the implementation of
this article and Article 5.22 (commencing with Section 14167.31),
including, but not limited to, any approvals on amendments to
contracts between the department and managed health care plans or
mental health plans necessary for the implementation of this article.
The effective date of a federal approval or waiver shall be the
earlier of the stated effective date or the first day of the first
quarter to which the computation of the payments or fee under the
federal approval or waiver is applicable, which may be prior to the
date that the federal approval or waiver is granted or the applicable
contract is amended.
(2) If federal approval is sought initially for only the 2008-09
federal fiscal year and separately secured for subsequent federal
fiscal years, the implementation date for the 2008-09 federal fiscal
year shall occur when all necessary federal approvals have been
secured for that federal fiscal year.
(j) "Individual hospital acute psychiatric supplemental payment"
means the total amount of acute psychiatric hospital supplemental
payments to a subject hospital for a quarter for which the
supplemental payments are made. The "individual hospital acute
psychiatric supplemental payment" shall be calculated for subject
hospitals by multiplying the number of acute psychiatric days for the
individual hospital for which a mental health plan was financially
responsible by four hundred eighty-five dollars ($485) and dividing
the result by 4.
(k) (1) "Managed health care plan" means a health care delivery
system that manages the provision of health care and receives prepaid
capitated payments from the state in return for providing services
to Medi-Cal beneficiaries.
(2) (A) Managed health care plans include county organized health
systems and entities contracting with the department to provide
services pursuant to two-plan models and geographic managed care.
Entities providing these services contract with the department
pursuant to any of the following:
(i) Article 2.7 (commencing with Section 14087.3).
(ii) Article 2.8 (commencing with Section 14087.5).
(iii) Article 2.81 (commencing with Section 14087.96).
(iv) Article 2.91 (commencing with Section 14089).
(B) Managed health care plans do not include any of the following:
(i) Mental health plan contracting to provide mental health care
for Medi-Cal beneficiaries pursuant to Part 2.5 (commencing with
Section 5775) of Division 5.
(ii) Health plan not covering inpatient services such as primary
care case management plans operating pursuant to Section 14088.85.
(iii) Long-Term Care Demonstration Projects for All-Inclusive Care
for the Elderly operating pursuant to Chapter 8.75 (commencing with
Section 14590).
(l) "Medi-Cal managed care days" means the total number of general
acute care days, including well baby days, listed for the county
organized health system and prepaid health plans identified in the
Final Medi-Cal Utilization Statistics for the 2008-09 state fiscal
year, as calculated by the department on September 15, 2008, except
that the general acute care days, including well baby days, for the
Santa Barbara Health Care Initiative shall be derived from the Final
Medi-Cal Utilization Statistics for the 2007-08 state fiscal year.
(m) "Medicaid inpatient utilization rate" means Medicaid inpatient
utilization rate as defined in Section 1396r-4 of Title 42 of the
United States Code and as set forth in the final disproportionate
share hospital eligibility list for the 2008-09 state fiscal year
released by the department on October 22, 2008.
(n) "Mental health plan" means a mental health plan that contracts
with the State Department of Mental Health to furnish or arrange for
the provision of mental health services to Medi-Cal beneficiaries
pursuant to Part 2.5 (commencing with Section 5775) of Division 5.
(o) "New hospital" means a hospital that was not in operation
under current or prior ownership as a private hospital, a
nondesignated public hospital, or a designated public hospital for
any portion of the 2008-09 state fiscal year.
(p) "Nondesignated public hospital" means either of the following:
(1) A public hospital that is licensed under subdivision (a) of
Section 1250 of the Health and Safety Code, is not designated as a
specialty hospital in the hospital's annual financial disclosure
report for the hospital's latest fiscal year ending in 2007, and
satisfies the definition in paragraph (25) of subdivision (a) of
Section 14105.98, excluding designated public hospitals.
(2) A tax-exempt nonprofit hospital that is licensed under
subdivision (a) of Section 1250 of the Health and Safety Code, is not
designated as a specialty hospital in the hospital's annual
financial disclosure report for the hospital's latest fiscal year
ending in 2007, is operating a hospital owned by a local health care
district, and is affiliated with the health care district hospital
owner by means of the district's status as the nonprofit corporation'
s sole corporate member.
(q) "Outpatient base amount" means the total amount of payments
for hospital outpatient services made to a hospital in the 2007
calendar year, as reflected in state paid claims files on January 26,
2008.
(r) "Private hospital" means a hospital that meets all of the
following conditions:
(1) Is licensed pursuant to subdivision (a) of Section 1250 of the
Health and Safety Code.
(2) Is in the Charitable Research Hospital peer group, as set
forth in the 1991 Hospital Peer Grouping Report published by the
department, or is not designated as a specialty hospital in the
hospital's Office of Statewide Health Planning and Development Annual
Financial Disclosure Report for the hospital's latest fiscal year
ending in 2007.
(3) Does not satisfy the Medicare criteria to be classified as a
long-term care hospital.
(4) Is a nonpublic hospital, nonpublic converted hospital, or
converted hospital as those terms are defined in paragraphs (26) to
(28), inclusive, respectively, of subdivision (a) of Section
14105.98.
(s) "Subject federal fiscal year" means a federal fiscal year that
ends after the implementation date and begins before December 31,
2010.
(t) "Subject fiscal quarter" means a fiscal quarter beginning on
or after the implementation date and ending before January 1, 2011.
(u) "Subject fiscal year" means a state fiscal year that ends
after the implementation date and begins before December 31, 2010.
(v) "Subject hospital" shall mean a hospital that meets all of the
following conditions:
(1) Is licensed pursuant to subdivision (a) of Section 1250 of the
Health and Safety Code.
(2) Is in the Charitable Research Hospital peer group, as set
forth in the 1991 Hospital Peer Grouping Report published by the
department, or is not designated as a specialty hospital in the
hospital's Office of Statewide Health Planning and Development Annual
Financial Disclosure Report for the hospital's latest fiscal year
ending in 2007.
(3) Does not satisfy the Medicare criteria to be classified as a
long-term care hospital.
(w) "Subject month" means a calendar month beginning on or after
the implementation date and ending before January 1, 2011.
(x) "Upper payment limit" means a federal upper payment limit on
the amount of the Medicaid payment for which federal financial
participation is available for a class of service and a class of
health care providers, as specified in Part 447 of Title 42 of the
Code of Federal Regulations.

14167.2. (a) Private hospitals shall be paid supplemental amounts
for the provision of hospital outpatient services as set forth in
this section. The supplemental amounts shall be in addition to any
other amounts payable to hospitals with respect to those services and
shall not affect any other payments to hospitals.
(b) Except as set forth in subdivisions (e) and (f), each private
hospital shall be paid an amount for each subject fiscal year equal
to a percentage of the hospital's outpatient base amount. The
percentage shall be the same for each hospital for a subject fiscal
year and shall result in payments to hospitals that equal the
applicable federal upper payment limit.
(c) In the event federal financial participation for a subject
fiscal year is not available for all of the supplemental amounts
payable to private hospitals under subdivision (b) due to the
application of a federal upper limit or for any other reason, both of
the following shall apply:
(1) The total amount payable to private hospitals under
subdivision (b) for the subject fiscal year shall be reduced to the
amount for which federal financial participation is available.
(2) The amount payable under subdivision (b) to each private
hospital for the subject fiscal year shall be equal to the amount
computed under subdivision (b) multiplied by the ratio of the total
amount for which federal financial participation is available to the
total amount computed under subdivision (b).
(d) The supplemental amounts set forth in this section are
inclusive of federal financial participation.
(e) No payments shall be made under this section to a new
hospital.
(f) No payments shall be made under this section to a converted
hospital for the portion of the subject fiscal year that begins on
October 1 and ends on June 30 for the subject fiscal year that
includes the first day of the subject federal fiscal year in which
the hospital becomes a converted hospital, and for all subsequent
subject fiscal years. In the event of a conflict between the
provisions of this subdivision and the terms of a state plan
amendment required for the receipt of approval by the federal Centers
for Medicare and Medicaid Services, the state plan amendment shall
control.
(g) In the event that the amounts payable as calculated under
subdivision (b) for the 2008-09 subject fiscal year are reduced by
the operation of subdivision (c) and the ratio for the 2008-09
subject fiscal year described in paragraph (2) of subdivision (c) is
less than 0.25, the difference between 25 percent of the amounts
payable as calculated under subdivision (b) and the amounts payable
after the application of subdivision (c) shall be added to the
supplemental payments for each private hospital calculated under
subdivision (b) for the 2009-10 subject fiscal year.
(h) In the event that the amounts payable as calculated under
subdivision (b) for the 2009-10 subject fiscal year, including any
carryover amounts determined under subdivision (g), are reduced by
the operation of subdivision (c), the difference between the amounts
payable as calculated under subdivision (b), including any carryover
amounts, and the amounts payable after the application of subdivision
(c) shall be added to the supplemental payments for each private
hospital calculated under subdivision (b) for the 2010-11 subject
fiscal year.

14167.3. (a) Private hospitals shall be paid supplemental amounts
for the provision of hospital inpatient services and subacute
services as set forth in this section. The supplemental amounts shall
be in addition to any other amounts payable to hospitals with
respect to those services and shall not affect any other payments to
hospitals.
(b) Except as set forth in subdivisions (g) and (h), each private
hospital shall be paid the following amounts as applicable for the
provision of hospital inpatient services for each subject fiscal
year:
(1) Six hundred forty dollars and forty-six cents ($640.46)
multiplied by the hospital's general acute care days.
(2) Four hundred eighty-five dollars ($485) multiplied by the
hospital's acute psychiatric days that were paid directly by the
department and were not the financial responsibility of a mental
health plan.
(3) One thousand three hundred fifty dollars ($1,350) multiplied
by the number of the hospital's high acuity days if the hospital's
Medicaid inpatient utilization rate is less than 41.1 percent and
greater than 5 percent and at least 5 percent of the hospital's
general acute care days are high acuity days. This amount shall be in
addition to the amounts specified in paragraphs (1) and (2).
(4) One thousand three hundred fifty dollars ($1,350) multiplied
by the number of the hospital's high acuity days if the hospital
qualifies to receive the amount set forth in paragraph (3) and has
been designated as a Level I, Level II, Adult/Ped Level I, or
Adult/Ped Level II trauma center by the emergency medical services
authority established pursuant to Section 1797.1 of the Health and
Safety Code. This amount shall be in addition to the amounts
specified in paragraphs (1), (2), and (3).
(c) A private hospital that provides Medi-Cal subacute services
during a subject fiscal year and has a Medicaid inpatient utilization
rate that is greater than 5.0 percent and less than 41.1 percent
shall be paid for the provision of subacute services during each
subject fiscal year a supplemental amount equal to 40 percent of the
Medi-Cal subacute payments made to the hospital during the 2008
calendar year.
(d) (1) In the event federal financial participation for a subject
fiscal year is not available for all of the supplemental amounts
payable to private hospitals under subdivision (b) due to the
application of a federal limit or for any other reason, both of the
following shall apply:
(A) The total amount payable to private hospitals under
subdivision (b) for the subject fiscal year shall be reduced to
reflect the amount for which federal financial participation is
available.
(B) The amount payable under subdivision (b) to each private
hospital for the subject fiscal year shall be equal to the amount
computed under subdivision (b) multiplied by the ratio of the total
amount for which federal financial participation is available to the
total amount computed under subdivision (b).
(2) In the event federal financial participation for a subject
fiscal year is not available for all of the supplemental amounts
payable to private hospitals under subdivision (c) due to the
application of a federal upper limit or for any other reason, both of
the following shall apply:
(A) The total amount payable to private hospitals under
subdivision (c) for the subject fiscal year shall be reduced to
reflect the amount for which federal financial participation is
available.
(B) The amount payable under subdivision (c) to each private
hospital for the subject fiscal year shall be equal to the amount
computed under subdivision (c) multiplied by the ratio of the total
amount for which federal financial participation is available to the
total amount computed under subdivision (c).
(e) In the event the amount otherwise payable to a hospital under
this section for a subject fiscal year exceeds the amount for which
federal financial participation is available for that hospital, the
amount due to the hospital for that fiscal year shall be reduced to
the amount for which federal financial participation is available.
(f) The amounts set forth in this section are inclusive of federal
financial participation.
(g) No payments shall be made under this section to a new
hospital.
(h) No payments shall be made under this section to a converted
hospital for the portion of the subject fiscal year that begins on
October 1 and ends on June 30 for the subject fiscal year that
includes the first day of the subject federal fiscal year in which
the hospital becomes a converted hospital, and for all subsequent
subject fiscal years. In the event of a conflict between the
provisions of this subdivision and the terms of a state plan
amendment required for receipt of approval by the federal Centers for
Medicare and Medicaid Services, the state plan amendment shall
control.
(i) In the event that the amounts payable as calculated under
subdivision (b) for the 2008-09 subject fiscal year are reduced by
the operation of subdivision (d) and the ratio for the 2008-09
subject fiscal year described in subparagraph (B) of paragraph (1) of
subdivision (d) is less than 0.25, the difference between 25 percent
of the amounts payable as calculated under subdivision (b) and the
amounts payable after the application of subdivision (d) shall be
added to the supplemental payments for each private hospital
calculated under subdivision (b) for the 2009-10 subject fiscal year.
(j) In the event that the amounts payable as calculated under
subdivision (b) for the 2009-10 subject fiscal year, including any
carryover amounts determined under subdivision (i), are reduced by
the operation of subdivision (d), the difference between the amounts
payable as calculated under subdivision (b), including any carryover
amounts, and the amounts payable after the application of subdivision
(d) shall be added to the supplemental payments for each private
hospital calculated under subdivision (b) for the 2010-11 subject
fiscal year.
(k) In the event that the amounts payable as calculated under
subdivision (c) for the 2008-09 subject fiscal year are reduced by
the operation of subdivision (d) and the ratio for the 2008-09
subject fiscal year described in subparagraph (B) of paragraph (2) of
subdivision (d) is less than 0.25, the difference between 25 percent
of the amounts payable as calculated under subdivision (c) and the
amounts payable after the application of subdivision (d) shall be
added to the supplemental payments for each private hospital
calculated under subdivision (c) for the 2009-10 subject fiscal year.
(l) In the event that the amounts payable as calculated under
subdivision (c) for the 2009-10 subject fiscal year, including any
carryover amounts determined under subdivision (k), are reduced by
the operation of subdivision (d), the difference between the amounts
payable as calculated under subdivision (c), including any carryover
amounts, and the amounts payable after the application of subdivision
(d) shall be added to the supplemental payments for each private
hospital calculated under subdivision (c) for the 2010-11 subject
fiscal year.

14167.4. (a) Nondesignated public hospitals shall be paid
supplemental amounts for the provision of hospital inpatient services
as set forth in this section. The supplemental amounts shall be in
addition to any other amounts payable to hospitals with respect to
those services and shall not affect any other payments to hospitals.
(b) Except as set forth in subdivisions (f) and (g), each
nondesignated public hospital shall be paid the following amounts for
each subject fiscal year:
(1) Two hundred eighteen dollars and eighty-two cents ($218.82)
multiplied by the hospital's general acute care days.
(2) Four hundred eighty-five dollars ($485) multiplied by the
hospital's acute psychiatric days that were paid directly by the
department and were not the financial responsibility of a mental
health plan.
(c) In the event federal financial participation for a subject
fiscal year is not available for all of the supplemental amounts
payable to nondesignated public hospitals under subdivision (b) due
to the application of a federal upper payment limit or for any other
reason, both of the following shall apply:
(1) The total amount payable to nondesignated public hospitals
under subdivision (b) for the subject fiscal year shall be reduced to
the amount for which federal financial participation is available.
(2) The amount payable under subdivision (b) to each nondesignated
public hospital for the subject fiscal year shall be equal to the
amount computed under subdivision (b) multiplied by the ratio of the
total amount for which federal financial participation is available
to the total amount computed under subdivision (b).
(d) In the event the amount otherwise payable to a hospital under
this section for a subject fiscal year exceeds the amount for which
federal financial participation is available for that hospital, the
amount due to the hospital for that federal fiscal year shall be
reduced to the amount for which federal financial participation is
available.
(e) The amounts set forth in this section are inclusive of federal
financial participation.
(f) No payments shall be made under this section to a new
hospital.
(g) (1) No payments shall be made under this section to a
converted hospital for the portion of the subject fiscal year that
begins on October 1 and ends on June 30 for the subject fiscal year
that includes the first day of the subject federal fiscal year in
which the hospital becomes a converted hospital, and for all
subsequent subject fiscal years. In the event of a conflict between
the provisions of this subdivision and the terms of a state plan
amendment required for receipt of approval by the federal Centers for
Medicare and Medicaid Services, the state plan amendment shall
control.
(2) Notwithstanding paragraph (1), the director shall seek federal
approval to allow payments to be made under this section for the
period beginning July 1, 2010, and ending June 30, 2011, to a
converted hospital which is a hospital described in paragraph (2) of
subdivision (p) of Section 14167.1, and shall make payments under
this section consistent with any approvals, subject to all of the
following:
(A) Federal approval shall be sought after all final federal
approvals necessary to implement this article and Article 5.22
(commencing with Section 14167.31) are received by the department.
(B) The director shall have determined prior to seeking federal
approval that obtaining federal approval and implementing the
payments described in this paragraph will not jeopardize the
implementation of this article or Article 5.22 (commencing with
Section 14167.31), or delay any payments to hospitals and managed
health care plans under this article or Article 5.22 (commencing with
Section 14167.31), or the collection of the quality assurance fee
from hospitals under Article 5.22 (commencing with Section 14167.31),
beyond December 31, 2010.
(C) The director shall withdraw any request for federal approval
made under this paragraph if, after submitting the request, the
director has determined that obtaining federal approval and
implementing the payments described in this paragraph will jeopardize
the implementation of this article or Article 5.22 (commencing with
Section 14167.31) or delay any payments to hospitals and managed
health care plans under this article or Article 5.22, (commencing
with Section 14167.31) or the collection of the quality assurance fee
from hospitals under Article 5.22, (commencing with Section
14167.31) beyond December 31, 2010.
(h) In the event that the amounts payable as calculated under
subdivision (b) for the 2008-09 subject fiscal year are reduced by
the operation of subdivision (c) and the ratio for the 2008-09
subject fiscal year described in paragraph (2) of subdivision (c) is
less than 0.25, the difference between 25 percent of the amounts
payable as calculated under subdivision (b) and the amounts payable
after the application of subdivision (c) shall be added to the
supplemental payments for each nondesignated public hospital
calculated under subdivision (b) for the 2009-10 subject fiscal year.
(i) In the event that the amounts payable as calculated under
subdivision (b) for the 2009-10 subject fiscal year, including any
carryover amounts determined under subdivision (h), are reduced by
the operation of subdivision (c), the difference between the amounts
payable as calculated under subdivision (b), including any carryover
amounts, and the amounts payable after the application of subdivision
(c) shall be added to the supplemental payments for each
nondesignated public hospital calculated under subdivision (b) for
the 2010-11 subject fiscal year.

14167.5. (a) Designated public hospitals shall be paid direct
grants in support of health care expenditures, which shall not
constitute Medi-Cal payments, and which shall be funded by the
quality assurance fee set forth in Article 5.22 (commencing with
Section 14167.31). The aggregate amount of the grants to designated
public hospitals for each subject fiscal quarter shall be
seventy-three million seven hundred and fifty thousand dollars
($73,750,000).
(b) The director shall allocate the amount specified in
subdivision (a) among the designated public hospitals in accordance
with this subdivision. In determining the allocation, the director
shall rely on data from the Interim Hospital Payment Rate Workbooks.
For purposes of this section, "Interim Hospital Payment Rate Workbook"
means the Interim Hospital Payment Rate Workbook, developed by the
department and approved by the federal Centers for Medicare and
Medicaid Services for use in connection with the Medi-Cal
Hospital/Uninsured Care 1115 Waiver Demonstration, as submitted by
each designated public hospital, or the governmental entity with
which the hospital is affiliated, on or around June 2009 for the
period of July 1, 2007, to June 30, 2008, inclusive.
(1) Each designated public hospital's share of 80 percent of the
amount specified in subdivision (a) shall be determined by applying a
fraction, the numerator of which is the certified public
expenditures reported by the designated public hospital as allowable
Medi-Cal inpatient expenditures on Schedule 2.1, Column 5, Step 5 of
the Interim Hospital Payment Rate Workbook, and the denominator of
which is the total amount of certified public expenditures reported
as allowable Medi-Cal inpatient expenditures by all designated public
hospitals on Schedule 2.1, Column 5, Step 5 of the Interim Hospital
Payment Rate Workbooks.
(2) Each designated public hospital's share of 20 percent of the
amount described in subdivision (a) shall be determined by applying a
fraction, the numerator of which is the sum of the uninsured days of
inpatient hospital services reported by the designated public
hospital on Schedule 1, Column 5a, lines 25 through 33 of the Interim
Hospital Payment Rate Workbook, and the denominator of which is the
total uninsured days of inpatient hospital services reported by all
designated public hospitals on Schedule 1, Column 5a, lines 25
through 33 of the Interim Hospital Payment Rate Workbooks.
(c) In the event federal financial participation for a subject
fiscal quarter is not available for all of the supplemental amounts
payable to private hospitals under Section 14167.3, due to the
limitations on supplemental payments based on a partial-year federal
upper payment limit, the amount payable to each designated public
hospital under subdivision (b) shall equal the designated public
hospital's allocated grant amount under subdivision (b) multiplied by
a fraction, the numerator of which is the total number of months in
the subject fiscal quarter for which federal financial participation
is available for supplemental payment amounts to private hospitals up
to the federal upper payment limit, and the denominator of which is
three.
(d) Designated public hospitals shall be paid supplemental
Medi-Cal amounts for acute inpatient psychiatric services that are
paid directly by the department and are not the financial
responsibility of a mental health plan, as set forth in this
subdivision. The supplemental amounts shall be in addition to any
other amounts payable to designated public hospitals, or a
governmental entity with which the hospital is affiliated, with
respect to those services and shall not affect any other payments to
hospitals or to any governmental entity with which the hospital is
affiliated.
(1) Each designated public hospital shall be paid an amount for
each subject fiscal year equal to four hundred eighty-five dollars
($485) multiplied by the hospital's acute psychiatric days that were
paid directly by the department and were not the financial
responsibility of a mental health plan, inclusive of federal
financial participation.
(2) In the event federal financial participation for a subject
fiscal year is not available for all of the supplemental amounts
payable to designated public hospitals under paragraph (1) due to the
application of a federal upper payment limit or for any other
reason, both of the following shall apply:
(A) The total amount payable to designated public hospitals under
paragraph (1) for the subject fiscal year shall be reduced to the
amount for which federal financial participation is available.
(B) The amount payable under paragraph (1) to each designated
public hospital for the subject fiscal year shall be equal to the
amount computed under paragraph (1) multiplied by the ratio of the
total amount for which federal financial participation is available
to the total amount computed under paragraph (1).
(3) In the event the amount otherwise payable to a designated
public hospital under this subdivision for a subject fiscal year
exceeds the amount for which federal financial participation is
available for that hospital, the amount due to the hospital for that
subject fiscal year shall be reduced to the amount for which federal
financial participation is available.
(e) Notwithstanding subdivision (a) and subject to subdivisions
(g) and (h) of Section 14166.221, the state may retain for the state'
s use the funds described in subdivision (a) that would otherwise be
payable pursuant to subdivision (c) of Section 14167.9 in an
aggregate amount not to exceed four hundred twenty million dollars
($420,000,000) for the period in which this article and Article 5.22
(commencing with Section 14167.31) are in effect, provided that the
state allocates to the designated public hospitals an equal amount of
federal funds available under the Medi-Cal Hospital/Uninsured Care
Demonstration Project pursuant to subdivision (c) of Section
14166.221, and the state has determined, after consultation with the
designated public hospitals, that the designated public hospitals, or
the governmental entities with which they are affiliated, have
incurred sufficient expenditures so that the full amount allocated
can be received as federal matching funds. Federal funds allocated to
the designated public hospitals under this subdivision and claimed
under subdivision (g) of Section 14166.221 shall be distributed among
the designated public hospitals in accordance with subdivision (b).
(f) In the event that the amounts payable as calculated under
paragraph (1) of subdivision (d) for the 2008-09 subject fiscal year
are reduced by the operation of paragraph (2) of subdivision (d) and
the ratio for the 2008-09 subject fiscal year described in
subparagraph (B) of paragraph (2) of subdivision (d) is less than
0.25, the difference between 25 percent of the amounts payable as
calculated under paragraph (1) of subdivision (d) and the amounts
payable after the application of paragraph (2) of subdivision (d)
shall be added to the supplemental payments for each private hospital
calculated under paragraph (1) of subdivision (d) for the 2009-10
subject fiscal year.
(g) In the event that the amounts payable as calculated under
paragraph (1) of subdivision (d) for the 2009-10 subject fiscal year,
including any carryover amounts determined under subdivision (f),
are reduced by the operation of paragraph (2) of subdivision (d), the
difference between the amounts payable as calculated under paragraph
(1) of subdivision (d), including any carryover amounts, and the
amounts payable after the application of paragraph (2) of subdivision
(d) shall be added to the supplemental payments for each private
hospital calculated under paragraph (1) of subdivision (d) for the
2010-11 subject fiscal year.

14167.6. (a) The department shall increase capitation payments to
Medi-Cal managed health care plans for the subject fiscal years as
set forth in this section.
(b) The increased capitation payments shall be made as part of the
monthly capitated payments made by the department to managed health
care plans.
(c) The aggregate amount of increased capitation payments to all
Medi-Cal managed health care plans for all subject fiscal years shall
be one billion two hundred seventy-seven million two hundred one
thousand two hundred nine dollars ($1,277,201,209), or the maximum
amount for which federal financial participation is available,
whichever is lower.
(d) The department shall determine the amount of the increased
capitation payments for each managed health care plan. The department
shall consider the composition of Medi-Cal enrollees in the plan,
the anticipated utilization of hospital services by the plan's
Medi-Cal enrollees, and other factors that the department determines
are reasonable and appropriate to ensuring access to high-quality
hospital services by the plan's enrollees.
(e) The amount of increased capitation payments to each Medi-Cal
managed care health plan shall not exceed an amount that results in
capitation payments that are certified by the state's actuary as
meeting federal requirements, taking into account the requirement
that all of the increased capitation payments under this section
shall be paid by the Medi-Cal managed health care plans to hospitals
for hospital services to Medi-Cal enrollees of the plan.
(f) (1) The increased capitation payments to managed health care
plans under this section shall be made to support the availability of
hospital services and ensure access to hospital services for
Medi-Cal beneficiaries. The increased capitation payments to managed
health care plans shall commence no later than December 31, 2010, and
shall include, but not be limited to, the sum of the increased
payments for all prior months for which payments are due.
(2) To secure the necessary funding for the payment or payments
made pursuant to paragraph (1), the department may accumulate funds
in the Hospital Quality Assurance Fee Fund for the purpose of funding
managed care capitation payments under this article regardless of
the date on which capitation payments are scheduled to be paid in
order to secure the necessary total funding for managed care payments
by December 1, 2010. To the extent feasible, the funds shall be
accumulated as follows, provided that the department may adjust the
following dates and amounts as necessary to accumulate sufficient
funding by December 1, 2010:
(A) Thirty percent of total necessary funding shall be accumulated
from each of the first three installments of quality assurance fees
received from the hospitals.
(B) Ten percent of total funding necessary shall be retained from
the fourth installment of quality assurance fees received from the
hospitals.
(g) Payments to managed health care plans that would be paid
consistent with actuarial certification and enrollment in the absence
of the payments made pursuant to this section shall not be reduced
as a consequence of payment under this section.
(h) (1) Each managed health care plan shall expend 100 percent of
any increased capitation payments it receives under this section, on
hospital services.
(2) The department may issue change orders to amend contracts with
managed health care plans as needed to adjust monthly capitation
payments in order to implement this section.
(3) For entities contracting with the department pursuant to
Article 2.91 (commencing with Section 14089), any incremental
increase in capitation rates pursuant to this section shall not be
subject to negotiation and approval by the California Medical
Assistance Commission.
(i) In the event federal financial participation is not available
for all of the increased capitation payments determined for a month
pursuant to this section for any reason, the increased capitation
payments mandated by this section for that month shall be reduced
proportionately to the amount for which federal financial
participation is available.
(j) Notwithstanding Chapter 3.5 (commencing with Section 11340) of
Part 1 of Division 3 of Title 2 of the Government Code, the
department shall implement this section by means of policy letters or
similar instructions, without taking further regulatory action.

14167.7. (a) The amount of any payments made under this article to
private hospitals, including the amount of payments made under
Sections 14167.2 and 14167.3 and additional payments to private
hospitals by managed health care plans pursuant to Section 14167.6,
shall not be included in the calculation of the low-income percent or
the OBRA 1993 payment limitation, as defined in paragraph (24) of
subdivision (a) of Section 14105.98, for purposes of determining
payments to private hospitals pursuant to Section 14166.11.
(b) The amount of any payments made to a hospital under this
article shall not be included in the calculation of stabilization
funding under Article 5.20 (commencing with Section 14166).

14167.8. The payments to a hospital under this article shall not be
made for a subject fiscal year or any portion of a subject fiscal
year during which the hospital is closed. A hospital shall be deemed
to be closed on the first day of any period during which the hospital
has no acute inpatients for at least 30 consecutive days. A hospital'
s payments under this article for a subject fiscal year during which
a hospital is closed for a portion of the subject fiscal year shall
be reduced by applying a fraction, expressed as a percentage, the
numerator of which shall be the number of days after the
implementation date during the subject fiscal year that the hospital
is closed and the denominator of which is the number of days in the
subject fiscal year after the implementation date.

14167.9. Subject to the limitations in Section 14167.14, the
following shall apply:
(a) (1) The department shall make to hospitals the payments
described in Sections 14167.2, 14167.3, 14167.4, and subdivision (d)
of Section 14167.5 for the 2008-09, 2009-10, and 2010-11 subject
fiscal years in seven payments.
(2) (A) The first payment shall be made on or before the later of
September 30, 2010, or the 30th day after the notice described in
Section 14167.32 is sent to each hospital.
(B) The subsequent payments shall be made in six consecutive
semimonthly payments that shall be made on or before the later of
each of the 14th and 30th days of October, November, and December
2010, or the 30th day after the notice described in Section 14167.32
is sent to each hospital.
(3) The amount of each payment made pursuant to this subdivision
shall be one-seventh of the amount of payments calculated for each
hospital under Sections 14167.2, 14167.3, 14167.4, and subdivision
(d) of Section 14167.5.
(b) Notwithstanding subdivision (a), all amounts due to hospitals
under Sections 14167.2, 14167.3, 14167.4, and subdivision (d) of
Section 14167.5 that have not been paid to hospitals before December
30, 2010, pursuant to subdivision (a), shall be paid to hospitals no
later than December 30, 2010.
(c) (1) The department shall make to hospitals the payments
described in subdivisions (a), (b), and (c) of Section 14167.5 in
seven payments.
(2) (A) (i) The first six payments shall be made in consecutive
semimonthly payments that shall be made on or before the later of
each of the first and 15th days of October, November, and December
2010, or the 30th day after the notice described in Section 14167.32
is sent to each hospital.
(ii) The amount of each of the first six payments shall be
one-seventh of the amount of payments calculated for each hospital
under subdivisions (a), (b), and (c) of Section 14167.5.
(B) (i) The seventh payment shall be made on or before December
30, 2010.
(ii) The amount of the seventh payment shall be the total amount
due to hospitals under subdivisions (a), (b), and (c) of Section
14167.5 minus the amounts previously paid to the hospitals under
subparagraph (A).

14167.10. (a) Each managed health care plan receiving increased
capitation payments under Section 14167.6 shall expend the capitation
rate increases in a manner consistent with actuarial certification,
enrollment, and utilization on hospital services. Each managed health
care plan shall expend increased capitation payments on hospital
services within 30 days of receiving the increased capitation
payments to the extent they are made for a subject month that is
prior to the date on which the payments are received by the managed
health care plan.
(b) For each subject fiscal year, the sum of all expenditures made
by a managed health care plan for hospital services pursuant to this
section shall equal, or approximately equal, all increased
capitation payments received by the managed health care plan,
consistent with actuarial certification, enrollment, and utilization,
from the department pursuant to Section 14167.6.
(c) Any delegation or attempted delegation by a managed health
care plan of its obligation to expend the capitation rate increases
under this section shall not relieve the plan from its obligation to
expend those capitation rate increases. Managed health care plans
shall submit the documentation the department may require to
demonstrate compliance with this subdivision. The documentation shall
demonstrate actual expenditure of the capitation rate increases for
hospital services, and not assignment to subcontractors of the
managed health care plan's obligation of the duty to expend the
capitation rate increases.

14167.11. (a) The department shall increase payments to mental
health plans for the subject fiscal years as set forth in this
section. The aggregate amount of the increased payments for a subject
fiscal quarter shall be the total of the individual hospital acute
psychiatric supplemental payment amounts for all hospitals for which
federal financial participation is available.
(b) For each subject fiscal quarter, the state shall make
increased payments to each mental health plan. The department shall
consider the composition of Medi-Cal enrollees in the mental health
plan, the anticipated utilization of hospital services by the mental
health plan's Medi-Cal enrollees, and other factors that the
department determines are reasonable and appropriate to ensure access
to high-quality hospital services by the mental health plan's
enrollees.
(c) The state shall make increased payments to mental health plans
exclusively for the purpose of making payments to hospitals, in
order to support the availability of hospital mental health services
and ensure access for Medi-Cal beneficiaries to hospital mental
health services. The increased payments to mental health plans shall
be made as follows:
(1) The increased payments shall commence on or before the later
of the last day of the second month of the quarter in which federal
approval is granted or the 45th day following the day on which
federal approval is granted. Subsequent increased payments shall be
made on the last day of the second month of each quarter. The last
increased payments made pursuant to this section shall be made during
November 2010.
(2) The increased payments made for the first quarter for which
increased payments are made under this section shall include the sum
of increased payments for all prior quarters for which payments are
due under subdivision (b).
(3) The increased payments made during November 2010 shall include
payments computed under subdivision (b) for all quarters in the
2010-11 subject fiscal year to the extent that federal financial
participation is available for the payments.
(4) If all necessary federal approvals are not received on or
before September 1, 2010, the department shall make semimonthly
payments starting within one month of receipt of all necessary
federal approvals until December 31, 2010.
(d) Each mental health plan shall expend, in the form of
additional payments to hospitals, the increased payments it receives
under this section, pursuant to Section 14167.12.
(e) In the event federal financial participation for a subject
fiscal year is not available for all of the increased acute
psychiatric payments determined for a quarter pursuant to this
section for any reason, the increased payments mandated by this
section for that quarter shall be reduced proportionately to the
amount for which federal financial participation is available.
(f) Payments to mental health plans that would be paid in the
absence of the payments made pursuant to this section shall not be
reduced as a consequence of the payments under this section.
(g) Notwithstanding any other provision of this article or Article
5.22 (commencing with Section 14167.31), individual hospital acute
psychiatric supplemental payments under this section and Section
14167.12 may be made directly by the department to hospitals in
accordance with Section 14167.9 when federal law does not require
that the payments be transmitted to the hospitals via mental health
plans.
(h) The department may, as necessary, allocate money appropriated
to it from the Hospital Quality Assurance Revenue Fund to the State
Department of Mental Health for the purposes of making increased
payments to mental health plans pursuant to this article.
(i) The amount, if any, by which the aggregate individual hospital
acute psychiatric supplemental payment amounts for a subject fiscal
quarter, including any carryover amount under this subdivision,
exceeds the amount for which federal financial participation is
available for that quarter due to the application of a federal upper
payment limit shall be added to the aggregate individual hospital
acute psychiatric supplemental payment amounts for the succeeding
subject fiscal quarter. In the event there is a carryover amount for
the subject fiscal quarter ending December 31, 2010, the amount shall
be payable under this section for the quarter ending March 31, 2011,
and, if necessary due to the application of a federal upper payment
limit, the quarter ending June 30, 2011.

14167.12. (a) At the same time that the state makes an increased
payment to a mental health plan under Section 14167.11, the state
shall notify the mental health plan that the plan shall make payments
to each subject hospital located in each county in which the mental
health plan operates as a consequence of receiving the increased
payment.
(b) The payments made to hospitals pursuant to this section shall
be in addition to any other amounts payable to hospitals by a mental
health plan or otherwise and shall not affect any other payments to
hospitals.
(c) For each subject fiscal year, the sum of all payments made by
a mental health plan to subject hospitals pursuant to this section
shall equal all increased payments received by the mental health plan
from the state pursuant to Section 14167.11.
(d) Mental health plans shall not take into account payments made
pursuant to this article in negotiating the amount of payments to
hospitals that are not made pursuant to this article.
(e) A mental health plan is obligated to make payments under this
section only to the extent of the payments it receives under Section
14167.11. A mental health plan may retain any interest it earns on
funds it receives under Section 14167.11 prior to making payments of
the funds to hospitals under this section.
(f) No payments shall be made under this section to a new
hospital.
(g) In the event federal financial participation for a quarter is
not available for all of the increased mental health payments made
pursuant to Section 14167.11 for any reason, the payments to
hospitals under this section shall be reduced proportionately to the
amount for which federal financial participation is available and the
department's notice under subdivision (a) shall reflect the
reduction.

14167.13. (a) Payment rates for hospital outpatient services,
furnished by private hospitals, nondesignated public hospitals, and
designated public hospitals before January 1, 2011, exclusive of
amounts payable under this article, shall not be reduced below the
rates in effect on the effective date of this article.
(b) Rates payable to hospitals for hospital inpatient services
furnished before January 1, 2011, under contracts negotiated pursuant
to the Selective Provider Contracting Program shall not be reduced
below the contract rates in effect on the effective date of this
article. This subdivision shall not prohibit changes to the
supplemental payments paid to individual hospitals under Sections
14166.12, 14166.17, and 14166.23. The aggregate supplemental payments
under Sections 14166.12, 14166.17, and 14166.23 that are not derived
from the funding made available under Section 14166.20, or
intergovernmental transfers described in paragraph (4) of subdivision
(d) of Section 14166.12, and paragraph (4) of subdivision (d) of
Section 14166.17, for the 2009-10 and 2010-11 state fiscal years,
shall not be less than the aggregate payments under each of these
sections during the 2008-09 state fiscal year that are not derived
from the funding made available under Section 14166.20, or
intergovernmental transfers described in paragraph (4) of subdivision
(d) of Section 14166.12, and paragraph (4) of subdivision (d) of
Section 14166.17.
(c) Payments to private hospitals and nondesignated public
hospitals for hospital inpatient services furnished before January 1,
2011, that are not reimbursed under a contract negotiated pursuant
to the Selective Provider Contracting Program, exclusive of amounts
payable under this article, shall not be less than the amount of
payments that would have been made under the payment methodology in
effect on the effective date of this article.
(d) Payments to hospitals under Sections 14166.6, 14166.11, and
14166.16 for the 2009-10 and 2010-11 state fiscal years shall not be
less than the payments due under the methodology set forth in those
sections in effect on the effective date of this article.
(e) Reimbursement to designated public hospitals, or the
governmental units with which they are affiliated, for services
furnished before January 1, 2011, pursuant to Sections 14166.4 and
14166.7, shall not be reduced below the level of reimbursement
provided for in the applicable methodologies in effect on the
effective date of this article.
(f) Payments for subacute services furnished by private hospitals,
nondesignated public hospitals, and designated public hospitals
before January 1, 2011, exclusive of amounts payable under this
article, shall not be reduced below the payments that would be made
under rates or methodologies in effect on the effective date of this
article.
(g) Solely for purposes of this article, a rate reduction or a
change in a rate methodology made on or before the effective date of
this article that is enjoined by a court shall be included in the
determination of a rate or a rate methodology in effect on the
effective date of this article until all appeals or judicial review
have been exhausted and the rate reduction or change in rate
methodology has been permanently enjoined or otherwise permanently
prevented from being implemented.

14167.14. (a) The director shall do all of the following:
(1) Submit any state plan amendment or waiver request that may be
necessary to implement this article.
(2) Seek federal approval for the use of the entire federal upper
payment limits applicable to hospital services for payments under
this article for the 2008-09, 2009-10, and 2010-11 subject fiscal
years.
(3) Seek federal approvals or waivers as may be necessary to
implement this article and to obtain federal financial participation
to the maximum extent possible for the payments under this article.
(4) Amend the contracts between the managed health care plans and
the department as necessary to incorporate the provisions of Sections
14167.6 and 14167.10 and promptly seek all necessary federal
approvals of those amendments. The department shall pursue amendments
to the contracts as soon as possible after the effective date of
this article and Article 5.22 (commencing with Section 14167.31), and
shall not wait for federal approval of this article or Article 5.22
(commencing with Section 14167.31) prior to pursuing amendments to
the contracts. The amendments to the contracts shall, among other
provisions, set forth an agreement to increase payment rates to
managed health care plans under Section 14166.6 and increase payments
to hospitals under Section 14166.10 effective April 2009 or as soon
thereafter as possible, conditioned on obtaining all federal
approvals necessary for federal financial participation for the
increased capitation payments to the managed health care plans.
(b) In implementing this article, the department may utilize the
services of the Medi-Cal fiscal intermediary through a change order
to the fiscal intermediary contract to administer this program,
consistent with the requirements of Sections 14104.6, 14104.7,
14104.8, and 14104.9. Contracts entered into for purposes of
implementing this article or Article 5.22 (commencing with Section
14167.31) shall not be subject to Part 2 (commencing with Section
10100) of Division 2 of the Public Contract Code.
(c) This article shall become inoperative if either of the
following occurs:
(1) In the event, and on the effective date, of a final judicial
determination made by any court of appellate jurisdiction or a final
determination by the federal Department of Health and Human Services
or the federal Centers for Medicare and Medicaid Services that any
element of this article cannot be implemented.
(2) In the event both of the following conditions exist:
(A) The federal Centers for Medicare and Medicaid Services denies
approval for, or does not approve before January 1, 2012, the
implementation of Article 5.22 (commencing with Section 14167.31) or
this article.
(B) Either or both articles cannot be modified by the department
pursuant to subdivision (e) of Section 14167.35 in order to meet the
requirements of federal law or to obtain federal approval.
(d) If this article becomes inoperative pursuant to paragraph (1)
of subdivision (c) and the determination applies to any period or
periods of time prior to the effective date of the determination, the
department shall have authority to recoup all payments made pursuant
to this article during that period or those periods of time.
(e) In the event any hospital, or any party on behalf of a
hospital, shall initiate a case or proceeding in any state or federal
court in which the hospital seeks any relief of any sort whatsoever,
including, but not limited to, monetary relief, injunctive relief,
declaratory relief, or a writ, based in whole or in part on a
contention that any or all of this article is unlawful and may not be
lawfully implemented, both of the following shall apply:
(1) No payments shall be made to the hospital pursuant to this
article until the case or proceeding is finally resolved, including
the final disposition of all appeals.
(2) Any amount computed to be payable to the hospital pursuant to
this section for a project year shall be withheld by the department
and shall be paid to the hospital only after the case or proceeding
is finally resolved, including the final disposition of all appeals.
(f) Subject to Section 14167.352, no payment shall be made under
this article until all necessary federal approvals for the payment
and for the fee provisions in Article 5.22 (commencing with Section
14167.31) have been obtained and the fee has been imposed and
collected. Notwithstanding any other provision of law, payments under
this article shall be made only to the extent that the fee
established in Article 5.22 (commencing with Section 14167.31) is
collected and available to cover the nonfederal share of the
payments.
(g) Supplemental payments for the 2008-09 federal fiscal year
shall not reduce the maximum federal funds available annually
pursuant to the Special Terms and Conditions, as amended October 5,
2007, of the Current Section 1115 Waiver.
(h) (1) The director shall negotiate the federal approvals
required to implement this article and Article 5.22 (commencing with
Section 14167.31) for the 2009-10 and 2010-11 federal fiscal years
concurrently with the negotiation of a federal waiver that will
replace the Current Section 1115 Waiver, with a goal of obtaining
federal approvals that do not adversely impact the federal funds that
would otherwise be available for services to Medi-Cal beneficiaries
and the uninsured. The director may initiate the concurrent
negotiations required by this subdivision by submitting a concept
paper to the federal Centers for Medicare and Medicaid Services
outlining the key elements of the replacement waiver consistent with
the goals set forth in this subdivision.
(2) In negotiating the terms of a federal waiver that will replace
the Current 1115 Waiver, the department shall explore opportunities
for reform of the Medi-Cal program and strengthen California's health
care safety net. Subject to subsequent legislative approval, the
department shall explore program reforms, that may include, but need
not be limited to, strategies to accomplish payment system reforms
for hospital inpatient and outpatient care, including incentive based
payments, new payment methodologies such as diagnostic-related
group-based (DRG-based), or similar methodologies, patient safety
protocols, and quality measurement.
(3) This article and Article 5.22 (commencing with Section
14167.31) shall not be implemented with respect to the 2009-10 and
2010-11 federal fiscal years until the earlier of April 30, 2010, or
the date the federal government approves a federal waiver for a
demonstration that will replace the Current Section 1115 Waiver.
(i) A hospital's receipt of payments under this article for
services rendered prior to the effective date of this article is
conditioned on the hospital's continued participation in Medi-Cal for
at least 30 days after the effective date of this article.
(j) All payments made by the department to hospitals, managed
health care plans, and mental health plans under this article shall
be made only from the following:
(1) The quality assurance fee set forth in Article 5.22
(commencing with Section 14167.31) and due and payable on or before
December 31, 2010.
(2) Federal reimbursement and any other related federal funds.

14167.15. Notwithstanding any other provision of this article or
Article 5.22 (commencing with Section 14167.31), the director may
proportionately reduce the amount of any supplemental payments,
increased capitation payments, or grants under this article to the
extent that the payment or grant would result in the reduction of
other amounts payable to a hospital or managed health care plan or
mental health plan due to the application of federal law.

14167.16. The director may, pursuant to Section 14167.39, decide
not to implement or to discontinue implementation of this article and
Article 5.22 (commencing with Section 14167.31), and to
retroactively invalidate the requirements for supplemental payments
or other payments under this article.

14167.17. This article shall remain in effect only until January 1,
2013, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2013, deletes or extends
that date.

14167.18. Notwithstanding any other provision of law, if the letter
that indicates likely federal approval in accordance with Section
14167.352 has not been received on or before December 1, 2010, then
this article shall become inoperative, and as of December 1, 2010, is
repealed, unless a later enacted statute, that is enacted before
December 1, 2010, deletes or extends that date.