SECTIONS 14167.31-14167.40 - California Statutes

WELFARE AND INSTITUTIONS CODE

SECTION 14167.31-14167.40

14167.31. For the purposes of this article, the following
definitions shall apply:
(a) (1) "Aggregate annual quality assurance fee" means, with
respect to a hospital that is not a prepaid health plan hospital, the
sum of all of the following:
(A) The annual fee-for-service days for an individual hospital
multiplied by the fee-for-service per diem quality assurance fee
rate.
(B) The annual managed care days for an individual hospital
multiplied by the managed care per diem quality assurance fee rate.
(C) The annual Medi-Cal days for an individual hospital multiplied
by the Medi-Cal per diem quality assurance fee rate.
(2) "Aggregate annual quality assurance fee" means, with respect
to a hospital that is a prepaid health plan hospital, the sum of all
of the following:
(A) The annual fee-for-service days for an individual hospital
multiplied by the fee-for-service per diem quality assurance fee
rate.
(B) The annual managed care days for an individual hospital
multiplied by the prepaid health plan hospital managed care per diem
quality assurance fee rate.
(C) The annual Medi-Cal managed care days for an individual
hospital multiplied by the prepaid health plan hospital Medi-Cal
managed care per diem quality assurance fee rate.
(D) The annual Medi-Cal fee-for-service days for an individual
hospital multiplied by the Medi-Cal per diem quality assurance fee
rate.
(3) "Aggregate quality assurance fee after the application of the
fee percentage" shall be determined separately for each subject
federal fiscal year and means the aggregate annual quality assurance
fee multiplied by the fee percentage for the subject federal fiscal
year.
(4) "Aggregate quality assurance fee" means the sum of the
aggregate quality assurance fee after the application of the fee
percentage for a hospital for each subject federal fiscal year.
(b) "Annual fee-for-service days" means the number of
fee-for-service days of each hospital subject to the quality
assurance fee in the 2007 calendar year, as reported on the days data
source.
(c) "Annual managed care days" means the number of managed care
days of each hospital subject to the quality assurance fee in the
2007 calendar year, as reported on the days data source.
(d) "Annual Medi-Cal days" means the number of Medi-Cal days of
each hospital subject to the quality assurance fee in the 2007
calendar year, as reported on the days data source.
(e) "Converted hospital" shall mean a hospital described in
subdivision (b) of Section 14167.1.
(f) "Days data source" means the following:
(1) For a hospital that did not submit an Annual Financial
Disclosure Report to the Office of Statewide Health Planning and
Development for a fiscal year ending during 2007, but submitted that
report for a fiscal period ending in 2008 that includes at least 10
months of 2007, the Annual Financial Disclosure Report submitted by
the hospital to the Office of Statewide Health Planning and
Development for the fiscal period in 2008 that includes at least 10
months of 2007.
(2) For a hospital owned by Kaiser Foundation Hospitals that
submitted corrections to reported patient days to the Office of
Statewide Health Planning and Development for its fiscal year ending
in 2007 before July 31, 2009, the corrected data.
(3) For all other hospitals, the hospital's Annual Financial
Disclosure Report in the Office of Statewide Health Planning and
Development files as of October 31, 2008, for its fiscal year ending
during 2007.
(g) "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.
(h) "Exempt facility" means any of the following:
(1) A public hospital, which shall include either of the
following:
(A) A hospital, as defined in paragraph (25) of subdivision (a) of
Section 14105.98.
(B) A tax-exempt nonprofit hospital that is licensed under
subdivision (a) of Section 1250 of the Health and Safety Code and
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.
(2) With the exception of a hospital that is in the Charitable
Research Hospital peer group, as set forth in the 1991 Hospital Peer
Grouping Report published by the department, a hospital that is a
hospital designated as a specialty hospital in the hospital's Office
of Statewide Health Planning and Development Hospital Annual
Disclosure Report for the hospital's fiscal year ending in the 2007
calendar year.
(3) A hospital that satisfies the Medicare criteria to be a
long-term care hospital.
(4) A small and rural hospital as specified in Section 124840 of
the Health and Safety Code designated as that in the hospital's
Office of Statewide Health Planning and Development Hospital Annual
Disclosure Report for the hospital's fiscal year ending in the 2007
calendar year.
(i) (1) "Federal approval" means the last approval by the federal
government required for the implementation of this article and
Article 5.21 (commencing with Section 14167.1).
(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, as defined in subdivision (i)
of Section 14167.1, for the 2008-09 federal fiscal year shall occur
when all necessary federal approvals have been secured for that
federal fiscal year.
(j) "Fee-for-service per diem quality assurance fee rate" means a
fixed fee on fee-for-service days of two hundred fifteen dollars and
thirty cents ($215.30) per day.
(k) "Fee-for-service days" means inpatient hospital days where the
service type is reported as "acute care," "psychiatric care," and
"chemical dependency care and rehabilitation care," and the payer
category is reported as "Medicare traditional," "county indigent
programs-traditional," "other third parties-traditional," "other
indigent," and "other payers," for purposes of the Annual Financial
Disclosure Report submitted by hospitals to the Office of Statewide
Health Planning and Development.
(l) "Fee percentage" means, for each subject federal fiscal year,
a fraction, expressed as a percentage, the numerator of which is the
amount of payments for the subject federal fiscal year under Sections
14167.2, 14167.3, and 14167.4, subdivision (d) of Section 14167.5,
and Sections 14167.6 and 14167.11, including payments made directly
to hospitals pursuant to subdivision (g) of Section 14167.11, for
which federal financial participation is available and the
denominator of which is two billion nine hundred eighty-two million
one hundred twenty thousand five hundred sixty dollars
($2,982,120,560).
(m) "General acute care hospital" means any hospital licensed
pursuant to subdivision (a) of Section 1250 of the Health and Safety
Code.
(n) "Hospital community" means any hospital industry organization
or system that represents children's hospitals, nondesignated public
hospitals, designated public hospitals, private safety-net hospitals,
and other public or private hospitals.
(o) "Managed care days" means inpatient hospital days as reported
on the days data source where the service type is reported as "acute
care," "psychiatric care," and "chemical dependency care and
rehabilitation care," and the payer category is reported as "Medicare
managed care," "county indigent programs-managed care," and "other
third parties-managed care," for purposes of the Annual Financial
Disclosure Report submitted by hospitals to the Office of Statewide
Health Planning and Development.
(p) "Managed care per diem quality assurance fee rate" means a
fixed fee on managed care days of twenty-two dollars and fifty cents
($22.50) per day.
(q) "Medi-Cal days" means inpatient hospital days as reported on
the days data source where the service type is reported as "acute
care," "psychiatric care," and "chemical dependency care and
rehabilitation care," and the payer category is reported as
"Medi-Cal-traditional" and "Medi-Cal-managed care," for purposes of
the Annual Financial Disclosure Report submitted by hospitals to the
Office of Statewide Health Planning and Development.
(r) "Medi-Cal fee-for-service days" means inpatient hospital days
as reported on the days data source where the service type is
reported as "acute care," "psychiatric care," and "chemical
dependency care and rehabilitation care," and the payer category is
reported as "Medi-Cal traditional" for purposes of the Annual
Financial Disclosure Report submitted by hospitals to the Office of
Statewide Health Planning and Development.
(s) "Medi-Cal managed care days" means inpatient hospital days as
reported on the days data source where the service type is reported
as "acute care," "psychiatric care," and "chemical dependency care
and rehabilitation care," and the payer category is reported as
"Medi-Cal managed care" for purposes of the Annual Financial
Disclosure Report submitted by hospitals to the Office of Statewide
Health Planning and Development.
(t) "Medi-Cal per diem quality assurance fee rate" means a fixed
fee on Medi-Cal days of two hundred thirty-two dollars ($232) per
day.
(u) "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.
(v) "Prepaid health plan hospital" means a hospital owned by a
nonprofit public benefit corporation that shares a common board of
directors with a nonprofit health care service plan.
(w) "Prepaid health plan hospital managed care per diem quality
assurance fee rate" means a fixed fee on non-Medi-Cal managed care
days for prepaid health plan hospitals of twelve dollars and sixty
cents ($12.60) per day.
(x) "Prepaid health plan hospital Medi-Cal managed care per diem
quality assurance fee rate" means a fixed fee on Medi-Cal managed
care days for prepaid health plan hospitals of one hundred
twenty-nine dollars and ninety-two cents ($129.92) per day.
(y) "Prior fiscal year data" means any data taken from sources
that the department determines are the most accurate and reliable at
the time the determination is made, or may be calculated from the
most recent audited data using appropriate update factors. The data
may be from prior fiscal years, current fiscal years, or projections
of future fiscal years.
(z) "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.
(aa) "Subject federal fiscal year" means a federal fiscal year
ending after the implementation date, as defined in Section 14167.1,
and beginning before December 31, 2010.
(ab) "Subject fiscal quarter" means a state fiscal quarter ending
after the implementation date, as defined in Section 14167.1, and
beginning before January 1, 2011.
(ac) "Subject fiscal year" means a state fiscal year ending after
the implementation date, as defined in Section 14167.1, and beginning
before December 31, 2010.
(ad) "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.

14167.32. (a) There shall be imposed on each general acute care
hospital that is not an exempt facility a quality assurance fee,
provided that a quality assurance fee under this article shall not be
imposed on a converted hospital for a subject federal fiscal year in
which the hospital becomes a converted hospital or for subsequent
federal fiscal years.
(b) The quality assurance fee shall be computed starting on the
implementation date, as defined in Section 14167.1, and continue
through and including December 31, 2010.
(c) Subject to Section 14167.352, upon receipt of federal
approval, the following shall become operative:
(1) Within 30 days following receipt of the notice of federal
approval from the federal government, the department shall send
notice to each hospital subject to the quality assurance fee, and
publish on its Internet Web site, the following information:
(A) The date that the state received notice of federal approval.
(B) The fee percentage or percentages for each subject federal
fiscal year.
(2) The notice to each hospital subject to the quality assurance
fee shall also state the following:
(A) The aggregate quality assurance fee after the application of
the fee percentage for each subject federal fiscal year.
(B) The aggregate quality assurance fee.
(C) The amount of each installment payment due from the hospital
with respect to the aggregate quality assurance fee.
(D) The date on which each installment payment is due.
(3) (A) The hospitals shall pay the aggregate quality assurance
fee in seven equal installments.
(B) (i) The first installment payment shall be made on or before
the later of September 14, 2010, or the 14th day after the notice
described in this section is sent to each hospital.
(ii) The additional installment payments shall be made in six
consecutive semimonthly payments that shall be due and payable on or
before the later of each of the first and 15th days of October,
November, and December 2010, or the 14th day after the notice
described in this section is sent to each hospital.
(4) Notwithstanding paragraph (3), the amount of each hospital's
aggregate quality assurance fee that has not been paid by the
hospital before December 15, 2010, pursuant to paragraph (3), shall
be paid by the hospital no later than December 15, 2010.
(d) The quality assurance fee, as paid pursuant to this
subdivision, shall be paid by each hospital subject to the fee to the
department for deposit in the Hospital Quality Assurance Revenue
Fund. Deposits may be accepted at any time and will be credited
toward the fiscal year for which they were assessed.
(e) This section shall become inoperative if the federal Centers
for Medicare and Medicaid Services denies approval for, or does not
approve before January 1, 2012, the implementation of this article or
Article 5.21 (commencing with Section 14167.1), and 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.
(f) In no case shall the aggregate fees collected in a subject
federal fiscal year pursuant to this section exceed the maximum
percentage of the annual aggregate net patient revenue for hospitals
subject to the fee that is prescribed pursuant to federal law and
regulations as necessary to preclude a finding that an indirect
guarantee has been created.
(g) (1) Interest shall be assessed on quality assurance fees not
paid on the date due at the greater of 10 percent per annum or the
rate at which the department assesses interest on Medi-Cal program
overpayments to hospitals that are not repaid when due. Interest
shall begin to accrue the day after the date the payment was due and
shall be deposited in the Hospital Quality Assurance Revenue Fund.
(2) In the event that any fee payment is more than 60 days
overdue, a penalty equal to the interest charge described in
paragraph (1) shall be assessed and due for each month for which the
payment is not received after 60 days.
(h) When a hospital fails to pay all or part of the quality
assurance fee on or before the date that payment is due, the
department may the following day immediately begin to deduct the
unpaid assessment and interest owed from any Medi-Cal payments or
other state payments to the hospital in accordance with Section
12419.5 of the Government Code until the full amount is recovered.
All amounts, except penalties, deducted by the department under this
subdivision shall be deposited in the Hospital Quality Assurance
Revenue Fund. The remedy provided to the department by this section
is in addition to other remedies available under law.
(i) The payment of the quality assurance fee shall not be
considered as an allowable cost for Medi-Cal cost reporting and
reimbursement purposes.
(j) The department shall work in consultation with the hospital
community to implement the quality assurance fee.
(k) This subdivision creates a contractually enforceable promise
on behalf of the state to use the proceeds of the quality assurance
fee, including any federal matching funds, solely and exclusively for
the purposes set forth in this article as they existed on the
effective date of this article, to limit the amount of the proceeds
of the quality assurance fee to be used to pay for the health care
coverage of children to the amounts specified in this article and to
make any payments for the department's costs of administration to the
amounts set forth in this article on the effective date of this
article to maintain and continue prior reimbursement levels as set
forth in Article 5.21 (commencing with Section 14167.1) on the
effective date of that article, and to otherwise comply with all its
obligations set forth in Article 5.21 (commencing with Section
14167.1) and this article provided that the following amendments to
this article or Article 5.21 (commencing with Section 14167.1) made
during the 2010 portion of the 2009-10 Regular Session, or included
in Senate Bill 208 of the 2009-10 Regular Session, shall control for
purposes of this section:
(1) Amendments affecting the timing of the fee to be imposed or
the payments to be made to a hospital or hospital group.
(2) Amendments affecting the amount of fee to be imposed on a
hospital or hospital group, or the amount or method of payments to be
made to any hospital or hospital group that are contained in
Assembly Bill 1653, if enacted in the 2009-10 Regular Session, or
arise from, or have as a basis, a decision, advice, or determination
by the federal Centers for Medicare and Medicaid Services relating to
federal approval of the quality assurance fee or the payments set
forth in this article or Article 5.21 (commencing with Section
14167.1).
(3) Amendments modifying the priority given to Medi-Cal managed
care payments.
(4) Amendments modifying the responsibility of nonexempt hospitals
to make fee payments.
(l) For the purpose of this article, references to the receipt of
notice by the state of federal approval of the implementation of this
article shall refer to the last date that the state receives notice
of all federal approval or waivers required for implementation of
this article and Article 5.21 (commencing with Section 14167.1),
subject to Section 14167.14.
(m) (1) Effective January 1, 2011, the rates payable to hospitals
and managed health care plans under Medi-Cal shall be the rates then
payable without the supplemental and increased capitation payments
set forth in Article 5.21 (commencing with Section 14167.1).
(2) The supplemental payments and other payments under Article
5.21 (commencing with Section 14167.1) shall be regarded as quality
assurance payments, the implementation or suspension of which does
not affect a determination of the adequacy of any rates under federal
law.
(n) (1) Subject to paragraph (2), the director may waive any or
all interest and penalties assessed under this article in the event
that the director determines, in his or her sole discretion, that the
hospital has demonstrated that imposition of the full quality
assurance fee on the timelines applicable under this article has a
high likelihood of creating a financial hardship for the hospital or
a significant danger of reducing the provision of needed healthcare
services.
(2) Waiver of some or all of the interest or penalties under this
subdivision shall be conditioned on the hospital's agreement to make
fee payments, or to have the payments withheld from payments
otherwise due from the Medi-Cal program to the hospital, on a
schedule developed by the department that takes into account the
financial situation of the hospital and the potential impact on
services.
(3) A decision by the director under this subdivision shall not be
subject to judicial review.

14167.35. (a) The Hospital Quality Assurance Revenue Fund is hereby
created in the State Treasury.
(b) (1) All fees required to be paid to the state pursuant to this
article shall be paid in the form of remittances payable to the
department.
(2) The department shall directly transmit the fee payments to the
Treasurer to be deposited in the Hospital Quality Assurance Revenue
Fund. Notwithstanding Section 16305.7 of the Government Code, any
interest and dividends earned on deposits in the fund shall be
retained in the fund for purposes specified in subdivision (c).
(c) All funds in the Hospital Quality Assurance Revenue Fund,
together with any interest and dividends earned on money in the fund,
shall, upon appropriation by the Legislature, be used exclusively to
enhance federal financial participation for hospital services under
the Medi-Cal program, to provide additional reimbursement to, and to
support quality improvement efforts of, hospitals, and to minimize
uncompensated care provided by hospitals to uninsured patients, in
the following order of priority:
(1) To pay for the department's staffing and administrative costs
directly attributable to implementing Article 5.21 (commencing with
Section 14167.1) and this article, including any administrative fees
that the director determines shall be paid to mental health plans
pursuant to subdivision (d) of Section 14167.11 and repayment of the
loan made to the department from the Private Hospital Supplemental
Fund pursuant to the act that added this section.
(2) To pay for the health care coverage for children in the amount
of eighty million dollars ($80,000,000) for each subject fiscal
quarter for which payments are made under Article 5.21 (commencing
with Section 14167.1).
(3) To make increased capitation payments to managed health care
plans pursuant to Article 5.21 (commencing with Section 14167.1).
(4) To pay funds from the Hospital Quality Assurance Revenue Fund
pursuant to Section 14167.5 that would have been used for grant
payments and that are retained by the state, and to make increased
payments to hospitals, including grants, pursuant to Article 5.21
(commencing with Section 14167.1), both of which shall be of equal
priority.
(5) To make increased payments to mental health plans pursuant to
Article 5.21 (commencing with Section 14167.1).
(d) Any amounts of the quality assurance fee collected in excess
of the funds required to implement subdivision (c), including any
funds recovered under subdivision (d) of Section 14167.14 or
subdivision (e) of Section 14167.36, shall be refunded to general
acute care hospitals, pro rata with the amount of quality assurance
fee paid by the hospital, subject to the limitations of federal law.
If federal rules prohibit the refund described in this subdivision,
the excess funds shall be deposited in the Distressed Hospital Fund
to be used for the purposes described in Section 14166.23, and shall
be supplemental to and not supplant existing funds.
(e) Any methodology or other provision specified in Article 5.21
(commencing with Section 14167.1) and this article may be modified by
the department, in consultation with the hospital community, to the
extent necessary to meet the requirements of federal law or
regulations to obtain federal approval or to enhance the probability
that federal approval can be obtained, provided the modifications do
not violate the spirit and intent of Article 5.21 (commencing with
Section 14167.1) or this article and are not inconsistent with the
conditions of implementation set forth in Section 14167.36.
(f) The department, in consultation with the hospital community,
shall make adjustments, as necessary, to the amounts calculated
pursuant to Section 14167.32 in order to ensure compliance with the
federal requirements set forth in Section 433.68 of Title 42 of the
Code of Federal Regulations or elsewhere in federal law.
(g) The department shall request approval from the federal Centers
for Medicare and Medicaid Services for the implementation of this
article. In making this request, the department shall seek specific
approval from the federal Centers for Medicare and Medicaid Services
to exempt providers identified in this article as exempt from the
fees specified, including the submission, as may be necessary, of a
request for waiver of the broad based requirement, waiver of the
uniform fee requirement, or both, pursuant to paragraphs (1) and (2)
of subdivision (e) of Section 433.68 of Title 42 of the Code of
Federal Regulations.
(h) (1) For purposes of this section, a modification pursuant to
this section shall be implemented only if the modification, change,
or adjustment does not do either of the following:
(A) Reduces or increases the supplemental payments or grants made
under Article 5.21 (commencing with Section 14167.1) in the aggregate
for the 2008-09, 2009-10, and 2010-11 federal fiscal years to a
hospital by more than 2 percent of the amount that would be
determined under this article without any change or adjustment.
(B) Reduces or increases the amount of the fee payable by a
hospital in total under this article for the 2008-09, 2009-10, and
2010-11 federal fiscal years by more than 2 percent of the amount
that would be determined under this article without any change or
adjustment.
(2) The department shall provide the Joint Legislative Budget
Committee and the fiscal and appropriate policy committees of the
Legislature a status update of the implementation of Article 5.21
(commencing with Section 14167.1) and this article on January 1,
2010, and quarterly thereafter. Information on any adjustments or
modifications to the provisions of this article or Article 5.21
(commencing with Section 14167.1) that may be required for federal
approval shall be provided coincident with the consultation required
under subdivisions (f) and (g).
(i) Notwithstanding Chapter 3.5 (commencing with Section 11340) of
Part 1 of Division 3 of Title 2 of the Government Code, the
department may implement this article or Article 5.21 (commencing
with Section 14167.1) by means of provider bulletins, all plan
letters, or other similar instruction, without taking regulatory
action. The department shall also provide notification to the Joint
Legislative Budget Committee and to the appropriate policy and fiscal
committees of the Legislature within five working days when the
above-described action is taken in order to inform the Legislature
that the action is being implemented.

14167.351. It is the intent of the Legislature that the funds in
the Hospital Quality Assurance Revenue Fund identified pursuant to
paragraph (2) of subdivision (c) of Section 14167.35 are to be used
to expand and enhance health services for children when the health of
the economy and state budget are strong enough to allow for the
expansion of children's health services programs, and strong enough
to ensure that these funds supplement, rather than supplant, existing
funding for children's health services during the time that this
article is in effect.

14167.352. (a) Notwithstanding any other provision of this article
or Article 5.21 (commencing with Section 14167.1) requiring federal
approvals, the department may impose and collect the quality
assurance fee and may make payments under this article and Article
5.21 (commencing with Section 14167.1), including increased
capitation payments, based upon receiving a letter from the federal
Centers for Medicare and Medicaid Services or the United States
Department of Health and Human Services that indicates likely federal
approval, but only if and to the extent that the letter is
sufficient as set forth in subdivision (b).
(b) In order for the letter to be sufficient under this section,
the director shall find that the letter meets all of the following
requirements:
(1) The letter is in writing and signed by an official of the
federal Centers for Medicare and Medicaid Services or an official of
the United States Department of Health and Human Services.
(2) The director, after consultation with the hospital community,
has determined, in the exercise of his or her sole discretion, that
the letter provides a sufficient level of assurance to justify
advanced implementation of the fee and payment provisions.
(c) Nothing in this section shall be construed as modifying the
requirement under Section 14167.14 that payments shall be made only
to the extent a sufficient amount of funds collected as the quality
assurance fee are available to cover the nonfederal share of those
payments.
(d) (1) Upon notice from the federal government that final federal
approval for the fee model under this article or for any payment
method under Article 5.21 (commencing with Section 14167.1) has been
denied, any fees collected pursuant to this section shall be refunded
and any payments made pursuant to this article or Article 5.21
(commencing with Section 14167.1) shall be recouped, including, but
not limited to, supplemental payments, increased capitation payments,
payments to hospitals by health care plans resulting from the
increased capitation payments, grants, increased payments, and
payments for the health care coverage of children. To the extent fees
were paid by a hospital that also received payments under this
section, the payments may first be recouped from fees that would
otherwise be refunded to the hospital prior to the use of any other
recoupment method allowed under law.
(e) Any payment made pursuant to this section shall be a
conditional payment until all final federal approvals necessary to
fully implement this article and Article 5.21 (commencing with
Section 14167.1) have been received.
(f) The director shall have broad authority under this section to
collect the quality assurance fee for an interim period pending
receipt of all necessary federal approvals. This authority shall
include discretion to determine both of the following:
(1) Whether the quality assurance fee should be collected on a
full or pro rata basis during the interim period.
(2) The dates on which payments of the quality assurance fee are
due.
(g) The department may draw against the Hospital Quality Assurance
Revenue Fund for all administrative costs associated with
implementation under this article or Article 5.21 (commencing with
Section 14167.1).
(h) This section shall be implemented only to the extent federal
financial participation is not jeopardized by implementation prior to
the receipt of all necessary final federal approvals.

14167.353. (a) Notwithstanding any other provision of law, the
director shall have discretion to modify any timeline or timelines in
this article or Article 5.21 (commencing with Section 14167.1) if
the letter that indicates likely federal approval, as described in
Section 14167.352, is not secured by September 1, 2010, and the
director determines that it is impossible from an operational
perspective to implement a timeline or timelines without the
modification.
(b) The department shall notify the fiscal and policy committees
of the Legislature prior to implementing a modified timeline or
timelines under subdivision (a).
(c) The department shall consult with representatives of the
hospital community in developing a modified timeline or timelines
pursuant to this section.
(d) The discretion to modify timelines under this section shall
include, but not be limited to, discretion to accelerate payments to
plans or hospitals.

14167.354. (a) (1) Upon receipt of a letter that indicates likely
federal approval that the director determines is sufficient for
implementation under Section 14167.352, or upon the receipt of all
final federal approvals necessary for the implementation of this
article and Article 5.21 (commencing with Section 14167.1), the
following shall occur:
(A) To the maximum extent possible, and consistent with the
availability of funds in the Hospital Quality Assurance Revenue Fund,
the department shall make all of the payments under Sections
14167.2, 14167.3, 14167.4, 14167.6, and 14167.11, and subdivision (d)
of Section 14167.5, including, but not limited to, supplemental
payments and increased capitation payments, prior to January 1, 2011.
(B) The department shall make supplemental payments to hospitals
under Article 5.21 (commencing with Section 14167.1) consistent with
the timeframe described in Section 14167.9 or a modified timeline
developed pursuant to Section 14167.353.
(2) (A) In determining the amount available for the nonfederal
share of payments in a particular payment cycle, the department shall
deduct no more than the following amounts to account for the
priority payments to the state under paragraph (2) of subdivision (c)
of Section 14167.35:
(i) Eighty million dollars ($80,000,000) for children's health
coverage for each subject fiscal quarter for which some or all
supplemental payments to hospitals have already been made.
(ii) Eighty million dollars ($80,000,000) for children's health
coverage for each subject fiscal quarter for which supplemental
payments are being calculated to be paid to hospitals, subject to the
availability of funding, in the current payment cycle.
(B) Notwithstanding any other provision of law, in determining the
amount available for the nonfederal share of payments in a payment
cycle described in subparagraph (A), the department shall not
consider any payments for children's health care coverage previously
made under paragraph (2) of subdivision (c) of Section 14167.35.
(3) (A) In determining the amount available in a particular
payment cycle, the department shall deduct no more than the following
amounts whether made directly to the designated public hospitals or
retained by the state:
(i) Seventy-three million seven hundred fifty thousand dollars
($73,750,000) for each subject fiscal quarter for which some or all
supplemental payments to hospitals have already been made.
(ii) Seventy-three million seven hundred fifty thousand dollars
($73,750,000) for each subject fiscal quarter for which supplemental
payments are being calculated to be paid to hospitals, subject to the
availability of funding, in the current payment cycle.
(B) Notwithstanding any other provision of law, in determining the
amount available for a payment cycle described in subparagraph (A),
the department shall not consider any payments of direct grants
previously made to the designated public hospitals or transferred to
the state from the Quality Assurance Revenue Fund under Section
14167.5 to account for the direct grants described in Section
14167.5.
(b) Notwithstanding any other provision of this article or Article
5.21 (commencing with Section 14167.1), if the director determines,
on or after December 15, 2010, that there are insufficient funds
available in the Hospital Quality Assurance Revenue Fund to make all
scheduled payments under Article 5.21 (commencing with Section
14167.1) by the end of the 2010 calendar year, he or she shall
consult with representatives of the hospital community to develop an
acceptable plan for making additional payments to providers in the
first two quarters of 2011 to maximize the use of delinquent fee
payments or other deposits or interest projected to become available
in the fund after December 15, 2010, but before June 30, 2011.
(c) Nothing in this section shall require the department to
continue to make payments under Article 5.21 (commencing with Section
14167.1) if, after the consultation required under subdivision (b),
the director determines in the exercise of his or her sole discretion
that a workable plan for the continued payments cannot be developed.
(d) Subdivisions (b) and (c) shall be implemented only if and to
the extent federal financial participation is available for continued
supplemental payments to providers.
(e) If any payment or payments made pursuant to this section are
found to be inconsistent with federal law, the department shall
recoup the payments by means of withholding or any other available
remedy.
(f) Nothing in this section shall be read as affecting the
department's ongoing authority to continue, after December 31, 2010,
to collect quality assurance fees imposed on or before December 31,
2010.

14167.355. 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.

14167.36. (a) This article shall only be implemented so long as the
following conditions are met:
(1) Subject to Section 14167.35, the quality assurance fee is
established in a manner that is fundamentally consistent with this
article.
(2) The quality assurance fee, including any interest on the fee
after collection by the department, is deposited in a segregated fund
apart from the General Fund.
(3) The proceeds of the quality assurance fee, including any
interest and related federal reimbursement, may only be used for the
purposes set forth in this article.
(b) No hospital shall be required to pay the quality assurance fee
to the department unless and until the state receives and maintains
federal approval of the quality assurance fee and Article 5.21
(commencing with Section 14167.1) from the federal Centers for
Medicare and Medicaid Services.
(c) Hospitals shall be required to pay the quality assurance fee
to the department as set forth in this article only as long as all of
the following conditions are met:
(1) The federal Centers for Medicare and Medicaid Services allows
the use of the quality assurance fee as set forth in this article.
(2) Article 5.21 (commencing with Section 14167.1) is enacted and
remains in effect and hospitals are reimbursed the increased rates
beginning on the implementation date, as defined in Section 14167.1.
(3) The full amount of the quality assurance fee assessed and
collected pursuant to this article remains available only for the
purposes specified in this article.
(d) 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 5.21 (commencing with Section 14167.1) 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.
(e) If this article becomes inoperative pursuant to paragraph (1)
of subdivision (d) and the determination applies to any period or
periods of time prior to the effective date of the determination, the
department may recoup all payments made pursuant to Article 5.21
(commencing with Section 14167.1) during that period or those periods
of time.
(f) This article and Article 5.21 (commencing with Section
14167.1) 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, as
defined in subdivision (c) of Section 14167.1.
(g) (1) In the event that all necessary final federal approvals
are not received as described and anticipated under this article or
under Article 5.21 (commencing with Section 14167.1), the director
shall have the discretion and authority to develop procedures for
recoupment from managed health care plans, and from hospitals under
contract with managed health care plans, of any amounts received
pursuant to this article or Article 5.21 (commencing with Section
14167.1).
(2) Any procedure instituted pursuant to this subdivision shall be
developed in consultation with representatives from managed health
care plans and representatives of the hospital community.
(3) Any procedure instituted pursuant to this subdivision shall be
in addition to all other remedies made available under the law,
pursuant to contracts between the department and the managed health
care plans, or pursuant to contracts between the managed health care
plans and the hospitals.

14167.37. Each report or informational submission required from
providers pursuant to this article shall contain a legal verification
to be signed by the provider verifying that the information provided
is true and correct to the best of the provider's knowledge, and
that any information in supporting documents submitted by the
provider is true and correct.

14167.38. Notwithstanding any other provision of this article or
Article 5.21 (commencing with Section 14167.1), supplemental payments
or other payments under Article 5.21 (commencing with Section
14167.1) shall only be required and payable in any quarter for which
a fee payment obligation exists. In any quarter where payments under
Article 5.21 (commencing with Section 14167.1) are based on upper
payment limit room resulting from other quarters, no payment shall be
made that reflects the room resulting from other quarters unless the
fee payment is similarly increased.

14167.39. (a) This article and Article 5.21(commencing with Section
14167.1) shall become inoperative and the requirements for
supplemental payments or other payments under Article 5.21
(commencing with Section 14167.1) shall be retroactively invalidated,
on the first day of the first month of the calendar quarter
following notification to the Joint Legislative Budget Committee by
the Department of Finance, that any of the following have occurred:
(1) A final judicial determination by the California Supreme Court
or any California Court of Appeal that the revenues collected
pursuant to this article that are deposited in the Hospital Quality
Assurance Fund are either of the following:
(A) "General Fund proceeds of taxes appropriated pursuant to
Article XIII B of the California Constitution," as used in
subdivision (b) of Section 8 of Article XVI of the California
Constitution.
(B) "Allocated local proceeds of taxes," as used in subdivision
(b) of Section 8 of Article XVI of the California Constitution.
(2) The department has sought but has not received federal
financial participation for the supplemental payments and other costs
required by this article for which federal financial participation
has been sought.
(3) A lawsuit related to this article or Article 5.21 (commencing
with Section 14167.1) is filed against the state and a preliminary
injunction or other order has been issued that results in a financial
disadvantage to the state.
(4) The director, in consultation with the Department of Finance,
determines that the implementation of this article or Article 5.21
(commencing with Section 14167.1) has resulted in a financial
disadvantage to the state.
(b) For purposes of this section, "financial disadvantage to the
state" means either:
(1) A loss of federal financial participation.
(2) A cost to the General Fund, that is equal to or greater than
one-quarter of a percent of the General Fund expenditures authorized
in the most recent annual Budget Act.
(c) (1) The director shall have the authority to recoup any
payments made under Article 5.21 (commencing with Section 14167.1) if
any of the following apply:
(A) Recoupment of payments made under Article 5.21 (commencing
with Section 14167.1) is ordered by a court.
(B) Federal financial participation is not available for payments
made under Article 5.21 (commencing with Section 14167.1) for which
federal financial participation has been sought.
(C) Recoupment of payments made under Article 5.21 (commencing
with Section 14167.1) is necessary to prevent a General Fund cost
that is estimated to be equal to or greater than one-quarter of a
percent of the General Fund expenditures authorized in the most
recent annual Budget Act and that results from implementation of a
court order or the unavailability of federal financial participation.
(2) In the event payments are recouped for a particular quarter,
fees paid by a hospital for that quarter pursuant to this article
shall be refunded to the extent that the hospital meets both of the
following conditions:
(A) The hospital has actually paid the fee for the subject quarter
and for all prior quarters.
(B) The hospital has returned the payment received pursuant to
Article 5.21 (commencing with Section 14167.1) for that quarter, or
has had that payment recouped through a withholding of funds owed by
Medi-Cal or other state payments, or recouped through other means.
(d) In the event the department determines that recoupment of
supplemental payments is necessary to implement any provision of this
section, the department may recoup payments made pursuant to Article
5.21 (commencing with Section 14167.1) from fees paid by the
hospital pursuant to this article.
(e) Concurrent with invoking any provision of this section, the
director shall notify the fiscal and appropriate policy committees of
the Legislature of the intended action and the specific reason or
reasons for the proposed action.

14167.40. 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.