DPH AB 85 ADA

Assembly Bill (AB) 85Redirection of 1991 Realignment Designated Public Hospital Counties

BackgroundCalifornia elected to implement a state-run Medicaid Expansion starting in 2014. With the state taking on the obligation for the county indigent population currently served by counties, it is assumed that counties costs associated with the indigent population will decrease. Assembly Bill (AB) 85 lays out a process by which a portion of the 1991 County Health Realignment Funds would be redirected to support Social Services programs.

2Designated Public Hospital CountiesBackgroundDPH Counties formula should they not choose to redirect 60% of health realignment is addressed in Section 17612.

Formula components that differ for LA County are specified under Section 17612.5.

Redirection to begin effective January 2014.

3Designated Public Hospital CountiesList of 11 DPH CountiesAlamedaContra CostaKernMontereyRiversideSan Bernardino

San FranciscoSan MateoSan JoaquinSanta ClaraVentura

*Los Angeles County formula specified in Section 17612.5 and addressed in a separate presentation4Designated Public Hospital CountiesOverviewDPH Counties have 2 options for determining the redirected amount. Each county must inform DHCS of tentative decision by 11/1/13Must adopt a resolution by 1/22/1460% of 1991 Health Realignment Funds +60% of Maintenance of EffortMOE is capped at 25.9% of the total value of counties 2010-11 health realignment allocation

County Savings Determination Process (Formula)Lesser of: (Revenues Costs) x.80 (.70 in 13/14) OrCounty Indigent Care Realignment (Health realignment amount x health realignment indigent care percentage)If DPH counties do not adopt a resolution or fail to inform DHCS of their chosen option, then the calculation is 62.5% of County Realignment funds and 62.5% of the MOE.

Counties that select the 60%/40% option may later petition the Health Care Funding Resolution Committee to elect the formula option.5Designated Public Hospital CountiesCounty Savings Determination ProcessThe purpose of the formula is to calculate the health care savings the county is experiencing as a result of health care reform. This is achieved by determining if the overall available revenues exceed the costs the county is incurring (subject to a cost containment limit) RevenuesMedi-Cal revenuesUninsured revenues Medicaid Waiver demonstration revenues Hospital fee direct grants Special local health funds*County indigent care health realignment amountImputed county low income health amount (county subsidy)*Imputed gains from other payers (profits)*

*calculated based on historical allocation

6Designated Public Hospital CountiesCounty Savings Determination Process (continued)Costs (not to exceed the cost containment limit)Medi-Cal CostsUninsured CostsLesser of: actual other entity IGT amount in FY or imputed other entity IGT amount based on historical period New mandatory other entity IGT amounts required by the state

County Indigent Care Health Realignment Amount Health Realignment Amount x Health Realignment Indigent Care Percentage

= MIN((SUM(items 1+2+3+4+5+6+7+8) SUM(9+10+11+12)) x .80*[or] County Indigent Care Health Realignment Amount)*In 2013/14, the savings percentage will be .70 7Designated Public Hospital CountiesREVENUES8Designated Public Hospital CountiesDefinitions Medi-Cal RevenueTotal amount paid to the county public hospital health system for services provided to Medi-Cal beneficiaries.Includes: Medi-Cal FFS, payments from Medi-Cal managed care plans; supplemental payments; DSH payments Excludes:Nonfederal share (CPEs and IGTs)Payments to Medi-Cal managed care plansFees imposed on transfersAdministrative or processing feesNursing facility, mental health and substance use disorder services revenues

9Designated Public Hospital CountiesDefinitions Uninsured RevenuesSelf-pay payments made by or on behalf of uninsured patients to the county public hospital system. Excludes:Health realignment amountImputed low-income health amount Nursing facility, mental health and substance use disorder services revenues

10Designated Public Hospital CountiesDefinitions Medicaid Demonstration RevenuesPayments under the Bridge to Health Care Reform section 1115 Waiver, including:Safety Net Care Pool Uncompensated CareDelivery System Reform Incentive PoolExcludes:Nonfederal share (CPEs and IGTs)Payments to Medi-Cal managed care plansFees imposed on transfersAdministrative or processing feesNursing facility, mental health and substance use disorder services revenues

11Designated Public Hospital Counties11Definitions Hospital Fee Direct GrantsDirect grants, if any, funded by the current or future Hospital Quality Assurance Fee (QAF) program

12Designated Public Hospital CountiesDefinitions - Special Local Health FundsAssessments and fees used for health-related purposes Calculated as the greater of:The actual amount expended by a county for the provision of health services to Medi-Cal and uninsured beneficiaries during the fiscal year ORThe amount that a county receives x the average of the historical percentages (FY08/09-FY11/12) for the provision of health services to Medi-Cal and uninsured beneficiaries

13Designated Public Hospital CountiesDefinitions - Special Local Health Funds (continued)Tobacco Settlement FundsThe amount of tobacco settlement funds used in the revenue calculation will be the greater of:

The actual amount of tobacco settlement funds expended by the county during the fiscal yearORThe tobacco settlement funds that the counties receive x the average of the historical percentages expended.

14Designated Public Hospital CountiesDefinitions County Indigent Care Health Realignment Amount= Health Realignment amount for that fiscal yearXHistorical health realignment indigent care percentage15Designated Public Hospital CountiesHealth Realignment Indigent Care PercentageCounty-specific percentage determined as follows:The average of the percentages for each historical fiscal year of the percentage of county health realignment that was used to provide health services to the indigent.If the county does not provide the required information or insufficient data, the percentage shall be set at 85%.16Designated Public Hospital CountiesDefinitions Imputed County Low Income Health AmountPredetermined county general fund subsidy used for services to Medi-Cal and uninsured patientsCalculated as follows:Take the historical amount for each historical fiscal year (FY08/09-FY11/12)Find the average percentage increaseAverage the historical amounts in (1.) and multiply it by the lessor of the average percentage increase in (2.) or the applicable blended CPI

17Designated Public Hospital CountiesDefinitions - Imputed Gains from Other Payers (Profits)Predetermined county revenues in excess of costs generated from all other payers available for services to Medi-Cal and uninsured patientsCalculated as:The average of gains from other payers used to offset the low-income shortfall for each of the historical years (FY 08/0911/12)

18Designated Public Hospital CountiesHistorical Allocation of Revenues to the Low Income Shortfall AB 85 requires the DHCS to submit to the Legislature by August 1, 2013 a fair and reasonable methodology to allocate three specific funding amounts for the purposes of determining the historical amounts and percentages necessary for the county public hospital health system formula. Section 17612.2(ab)(2)(C) identifies the three funding amounts:Unrestricted special local health funds One time and carry-forward revenues County general purpose funds A reasonable allocation methodology for these amounts was necessary given the nature of these funding sources as they are available to fund the entire health system costs and are not specified for use for any specific populations. 19Designated Public Hospital CountiesCOSTS20Designated Public Hospital CountiesDefinitions - Medi-Cal CostsCosts incurred for providing Medi-Cal services to Medi-Cal beneficiariesIncludes:Fee-for-service costsManaged care hospital and non-hospital costsManaged care out-of-network costsRelated administrative costs

21Designated Public Hospital CountiesDefinitions - Uninsured CostsCosts incurred purchasing, providing or ensuring the availability of services to uninsured patients during the fiscal year

Determined pursuant to Bridge to Health Care Reform Section 1115 Waiver protocols and WIC 14166.8

No reduction factor applied for undocumented persons

Excludes nursing facility, mental health and substance use disorder services costs

22Designated Public Hospital CountiesDefinitions Other Entity Intergovernmental Transfers (IGTs)IGTs and related state imposed fees by a county public hospital health system used to fund the nonfederal share of Medi-Cal payments and Demonstration payments to an entity other than the county public hospital health system or to a Medi-Cal managed care plan

23Designated Public Hospital CountiesDefinitions - Imputed Other Entity Intergovernmental Transfers (IGTs)Average of the predetermined historical other entity IGT amounts (FY08/09- FY11/12)Each historical year amount is determined based on the public hospital health system countys records.24Designated Public Hospital CountiesDefinitions - New Mandatory Intergovernmental Transfers (IGTs)Other entity IGTs required by the state after July 1, 201325Designated Public Hospital CountiesBlended Consumer Price Index (CPI)Bureau of Labor Statistics dataNon-seasonally adjusted CPI for All Urban Consumers US city average Hospital and Related Services weighted at 75%Medical Care Services Weighted at 25%

26Designated Public Hospital CountiesCost Containment Limit (Formula)Base Year Total CostsXBlended CPI

*base year = FY ending 3 years prior to subject FY.

27Designated Public Hospital CountiesCost Containment LimitIF the subject years actual costs exceed the calculated cost containment limit for the year THEN the cost containment limit is used for the calculation OR adjustments to the cost containment limit can be soughtIf the cost containment limit is applied, a reduction to the revenues in the formula is also applied. The reduction to revenues is calculated as 50% of the amount that actual costs exceed the cost containment limit.28Designated Public Hospital CountiesAdjustments to the Cost Containment LimitIf adjusted patient days of service in subject FY is in excess of 10% of those in the base year, the excess days will be multiplied by the cost per adjusted patient day for the base year and added to the trended base year amount.Electronic health records and related implementation and infrastructureCosts related to state or federally mandated activities, requirements, or benefit changesCosts resulting from a court order settlement

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Adjustments to the Cost Containment Limit (Continued)Costs incurred in response to seismic concerns, including costs to meet facility standardsCosts incurred as a result of a natural disaster or acts of terrorismOther costs as approved by DHCS

30Designated Public Hospital CountiesTimelineFY 2013/1410/31/13 County calculates and provides the predetermined amounts and historical percentages and submits calculations, supporting documentation to DHCS for:Imputed County Low-Income Health AmountImputed gains from other payersImputed other entity IGT amountSpecial local health funds12/15/13 State notifies counties if we disagree with data listed above1/13/14 If no agreement has been reached regarding data, DHCS shall use countys data until a decision is made.The County Health Care Funding Resolution Committee shall decide whether the data is accurate/sufficient within 45 days.By 6/30/15 Counties submit final data to stateBy 12/31/15 State provides final FY 2013/14 calculations to counties

31Designated Public Hospital CountiesTimeline (continued)FY 2014/15 and future yearsNovember - 5 months after the end of each fiscal year, counties using the formula submit reports on all revenue and cost data to DHCS.January - DHCS completes the interim calculation the January prior to the starting fiscal year, using the most current/accurate data available.May DHCS updates the interim calculation in May before the start of the fiscal year.June - 12 months/by June 30th of the year after subject fiscal year, counties submit final data to DHCS.July - December DHCS completes the final calculation and submits to counties by December 31st of the fiscal year following the receipt of the final data one and a half years after the subject fiscal year.

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