Section 14166.151.

(a) It is the intent of the Legislature to reform the inpatient fee-for-service reimbursement methodology for nondesignated public hospitals based on their public structure in order to provide new opportunities for nondesignated public hospitals to receive reimbursement under the successor demonstration project for care provided to the uninsured and to receive new incentive payments for achievement related to delivery system reform.

(b) Subject to subdivision (c), beginning with services provided on or after July 1, 2012, fee-for-service payments to nondesignated public hospitals for inpatient services shall be governed by this subdivision. Each nondesignated public hospital shall receive as payment for inpatient hospital services provided to Medi-Cal beneficiaries during any successor demonstration year, the federal financial participation claimed by the department based on the hospital's allowable costs incurred in providing those services, subject to all of the following:

(1) Nondesignated public hospitals shall comply with the requirements of Section 14166.152. The payments authorized in this section shall be subject to audit and a final reconciliation where an overpayment to the nondesignated public hospital shall result in a collection of the overpayment and an underpayment to the nondesignated public hospital shall result in a corrective payment.

(2) (A) Nondesignated public hospitals shall be eligible to receive safety net care pool payments for uncompensated care costs to the extent that additional federal funding is made available pursuant to the Special Terms and Conditions for the safety net care pool uncompensated care limit of the successor demonstration project and if they comply with the requirements set forth in Section 14166.154.

(B) The amount of funds that may be claimed pursuant to subparagraph (A) shall not exceed the additional federal funding made available under the safety net care pool for nondesignated public hospital uncompensated care costs, and shall not reduce the amounts of federal funding for safety net care pool uncompensated care costs that would otherwise be made available to designated public hospitals in the absence of this paragraph, including the amounts available under the Special Terms and Conditions in effect as of April 1, 2012, and amounts available pursuant to Section 15916.

(C) (i) Notwithstanding subparagraph (B), if the designated public hospitals do not have sufficient certified public expenditures to claim the full amount of federal funding made available to the designated public hospitals as referenced in subparagraph (B), including consideration of the potential for the designated public hospitals to have sufficient certified public expenditures in a subsequent year, the department may authorize the funding to be claimed by the nondesignated public hospitals.

(ii) The department may determine whether designated public hospitals do not have sufficient certified public expenditures to claim the full amount of federal funding pursuant to clause (i) no sooner than after the submission of the cost reporting information required pursuant to Section 14166.8 for the applicable successor demonstration year.

(iii) If the department makes the determination identified in clause (ii) based on as-filed cost reporting information submitted prior to a final audit, the department shall make the determination in consultation with the designated public hospitals and shall apply an audit cushion of at least 5 percent to the as-filed cost information. If the department makes the determination identified in clause (ii) based on audited cost reporting information, no audit cushion shall be applied.

(3) (A) Nondesignated public hospitals shall be eligible to receive delivery system reform incentive pool payments to the extent additional federal funding is made available for this purpose under the delivery system reform incentive pool in the successor demonstration project and if the nondesignated public hospitals comply with the delivery system reform incentive pool funding requirements set forth in Section 14166.155.

(B) The amount of funds that may be received shall not exceed the additional federal funding made available for delivery system reform incentive pool payments to nondesignated public hospitals, and shall not reduce the amounts that would otherwise be made available to designated public hospitals in the absence of this paragraph, including the amounts that designated public hospitals would be eligible to receive under their delivery system reform incentive pool plans approved as of January 1, 2012.

(C) Notwithstanding subparagraph (B), if the designated public hospitals are unable to claim the full amount of federal funding made available to the designated public hospitals pursuant to Section 14166.77 and the Special Terms and Conditions, including through reallocations made pursuant to paragraph (3) of subdivision (a) of Section 14166.77 as authorized by the Special Terms and Conditions, and the unused amount of federal funding made available to the designated public hospitals cannot be used in a later demonstration year, the department may authorize such unused funding to be made available to the nondesignated public hospitals.

(c) (1) (A) The reimbursement methodology developed pursuant to subdivision (b) shall be effective beginning July 1, 2012. If all necessary federal approvals have not been received by July 1, 2012, then the effective date shall be retroactive to July 1, 2012. Between July 1, 2012, and when all necessary federal approvals have been received, any payments made pursuant to any methodology replaced by subdivision (b) shall be deemed as interim payments subject to offsetting and recoupment against payments made under subdivision (b) pursuant to Section 51047 of Title 22 of the California Code of Regulations.

(B) Subject to paragraph (2), beginning January 1, 2014, the reimbursement methodology developed pursuant to subdivision (b), which shall be in effect July 1, 2012, through and including December 31, 2013, shall continue for those nondesignated public hospitals that certify voluntary participation as described in clause (i), if the director executes a declaration on or before December 31, 2013, certifying all of the following:

(i) The governmental entities that own or operate a nondesignated public hospital, or hospitals, have provided certifications of voluntary participation in the reimbursement methodology pursuant to subdivision (b).

(ii) Any necessary federal approvals have been obtained.

(iii) Continuation of the reimbursement methodology for those nondesignated public hospitals certifying voluntary participation would be cost beneficial to the state.

(2) On December 31, 2013, if one or more of the nondesignated public hospitals subject to the reimbursement methodology described in subdivision (b) have not provided written certification of voluntariness described in clause (i) of subparagraph (B) of paragraph (1), or if the director determines, for any reason, that the reimbursement methodology described in subdivision (b) cannot be implemented on or after January 1, 2014, then the director shall execute a declaration certifying that the reimbursement methodology described in subdivision (b) cannot continue to be implemented for all or one or more of the nondesignated public hospitals, in which case subdivision (e) shall be implemented on January 1, 2014.

(d) Upon implementation of subparagraph (A) of paragraph (1) of subdivision (c), implementation of the laws and regulations listed in paragraphs (1) to (4), inclusive, shall be suspended with respect to fee-for-service payments to all nondesignated public hospitals for inpatient services through and including December 31, 2013. Implementation of the laws and regulations listed in paragraphs (1) to (4), inclusive, shall also be suspended with respect to fee-for-service payments to nondesignated public hospitals that certify voluntary participation if a declaration is executed pursuant to subparagraph (B) of paragraph (1) of subdivision (c), beginning on January 1, 2014, and until the expiration of the successor demonstration project.

(1) The Nondesignated Public Hospital Medi-Cal Rate Stabilization Act in Article 5.17 (commencing with Section 14165.55).

(2) The inpatient fee-for-service per diem rate authorized in Article 2.6 (commencing with Section 14081).

(3) The reimbursement methodology for fee-for-service inpatient services in Sections 14105 and 14105.15, and Article 7.5 (commencing with Section 51536) of Title 22 of the California Code of Regulations.

(4) Section 14166.17.

(e) Subject to the conditions in paragraph (2) of subdivision (c), on January 1, 2014, the percentage of each intergovernmental transfer amount retained pursuant to subdivision (j) of Section 14165.57 shall be increased to 20 percent to reimburse the department, or transferred to the General Fund, for the administrative costs of operating the Nondesignated Public Hospital Intergovernmental Transfer Program and for the benefit of the Medi-Cal program.

(f) This section and Sections 14166.152, 14166.153, 14166.154, and 14166.155 shall become operative on the date all necessary federal approvals have been obtained to implement all of these sections.

(Added by Stats. 2012, Ch. 23, Sec. 92. Effective June 27, 2012. Conditionally operative as provided in subd. (f). If this section becomes fully operative, it may become inoperative under conditions in Section 14166.26 or in subd. (b) or (g) of Section 14166.2. Repealed on date prescribed in Section 14166.26 or in subd. (b) or (g) of Section 14166.2.)