Slide 1

Redirection of 1991 Realignment Designated Public Hospital Counties

Slide 2

Background California 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 Counties

Slide 3

Background DPH 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 Counties

Slide 4

List of 11 DPH Counties Alameda Contra Costa Kern Monterey Riverside San Bernardino San Francisco San Mateo San Joaquin Santa Clara Ventura *Los Angeles County formula specified in Section 17612.5 and addressed in a separate presentation 4Designated Public Hospital Counties

Slide 5

Overview DPH Counties have 2 options for determining the redirected amount. Each county must inform DHCS of tentative decision by 11/1/13 Must adopt a resolution by 1/22/14 60% of 1991 Health Realignment Funds + 60% of Maintenance of Effort MOE 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) Or County 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 Counties

Slide 6

County Savings Determination Process The 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) Revenues 1. Medi-Cal revenues 2. Uninsured revenues 3. Medicaid Waiver demonstration revenues 4. Hospital fee direct grants 5. Special local health funds* 6. County indigent care health realignment amount 7. Imputed county low income health amount (county subsidy)* 8. Imputed gains from other payers (profits)* *calculated based on historical allocation 6Designated Public Hospital Counties

Slide 7

County Savings Determination Process ( continued) Costs (not to exceed the cost containment limit) 9. Medi-Cal Costs 10. Uninsured Costs 11. Lesser of: actual other entity IGT amount in FY or imputed other entity IGT amount based on historical period 12. 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 Counties

Slide 8

REVENUES 8Designated Public Hospital Counties

Slide 9

Definitions Medi-Cal Revenue Total 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 plans Fees imposed on transfers Administrative or processing fees Nursing facility, mental health and substance use disorder services revenues 9Designated Public Hospital Counties

Slide 10

Definitions Uninsured Revenues Self-pay payments made by or on behalf of uninsured patients to the county public hospital system. Excludes: Health realignment amount Imputed low-income health amount Nursing facility, mental health and substance use disorder services revenues 10Designated Public Hospital Counties

Slide 11

Definitions Medicaid Demonstration Revenues Payments under the Bridge to Health Care Reform section 1115 Waiver, including: Safety Net Care Pool Uncompensated Care Delivery System Reform Incentive Pool Excludes: Nonfederal share (CPEs and IGTs) Payments to Medi-Cal managed care plans Fees imposed on transfers Administrative or processing fees Nursing facility, mental health and substance use disorder services revenues 11Designated Public Hospital Counties

Slide 12

Definitions Hospital Fee Direct Grants Direct grants, if any, funded by the current or future Hospital Quality Assurance Fee (QAF) program 12Designated Public Hospital Counties

Slide 13

Definitions - Special Local Health Funds Assessments and fees used for health-related purposes Calculated as the greater of: 1. The actual amount expended by a county for the provision of health services to Medi-Cal and uninsured beneficiaries during the fiscal year OR 2. The 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 Counties

Slide 14

Definitions - Special Local Health Funds (continued) Tobacco Settlement Funds The amount of tobacco settlement funds used in the revenue calculation will be the greater of: A. The actual amount of tobacco settlement funds expended by the county during the fiscal year OR B. The tobacco settlement funds that the counties receive x the average of the historical percentages expended. 14Designated Public Hospital Counties

Slide 15

Definitions County Indigent Care Health Realignment Amount = Health Realignment amount for that fiscal year X Historical health realignment indigent care percentage 15Designated Public Hospital Counties

Slide 16

Health Realignment Indigent Care Percentage County-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 Counties

Slide 17

Definitions Imputed County Low Income Health Amount Predetermined county general fund subsidy used for services to Medi-Cal and uninsured patients Calculated as follows: 1. Take the historical amount for each historical fiscal year (FY08/09-FY11/12) 2. Find the average percentage increase 3. Average 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 Counties

Slide 18

Definitions - 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 patients Calculated 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 Counties

Slide 19

Historical 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 Counties

Slide 20

COSTS 20Designated Public Hospital Counties

Slide 21

Definitions - Medi-Cal Costs Costs incurred for providing Medi-Cal services to Medi-Cal beneficiaries Includes: Fee-for-service costs Managed care hospital and non-hospital costs Managed care out-of-network costs Related administrative costs 21Designated Public Hospital Counties

Slide 22

Definitions - Uninsured Costs Costs 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 Counties

Slide 23

Definitions 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 Counties

Slide 24

Definitions - 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 Counties

Slide 25

Definitions - New Mandatory Intergovernmental Transfers (IGTs) Other entity IGTs required by the state after July 1, 2013 25Designated Public Hospital Counties

Slide 26

Blended Consumer Price Index (CPI) Bureau of Labor Statistics data Non-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 Counties

Slide 27

Cost Containment Limit (Formula) Base Year Total Costs X Blended CPI *base year = FY ending 3 years prior to subject FY. 27Designated Public Hospital Counties

Slide 28

Cost Containment Limit IF 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 sought If 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 Counties

Slide 29

Adjustments to the Cost Containment Limit If 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 infrastructure Costs related to state or federally mandated activities, requirements, or benefit changes Costs resulting from a court order settlement 29Designated Public Hospital Counties

Slide 30

Adjustments to the Cost Containment Limit ( Continued) Costs incurred in response to seismic concerns, including costs to meet facility standards Costs incurred as a result of a natural disaster or acts of terrorism Other costs as approved by DHCS 30Designated Public Hospital Counties

Slide 31

Timeline FY 2013/14 10/31/13 County calculates and provides the predetermined amounts and historical percentages and submits calculations, supporting documentation to DHCS for: Imputed County Low-Income Health Amount Imputed gains from other payers Imputed other entity IGT amount Special local health funds 12/15/13 State notifies counties if we disagree with data listed above 1/13/14 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 state By 12/31/15 State provides final FY 2013/14 calculations to counties 31Designated Public Hospital Counties

Slide 32

Timeline (continued) FY 2014/15 and future years November - 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 31 st of the fiscal year following the receipt of the final data one and a half years after the subject fiscal year. 32Designated Public Hospital Counties