100620.
(a) (1) Beginning July 1, 2019, and annually thereafter, the commission shall establish base amounts that health care entities shall accept as payment in full for health care services, in addition to applicable cost sharing. The base amount shall apply to a contract with a health care entity that was issued, amended, or renewed on or after the effective date of the base amount. The commission shall determine the effective date or dates of base amounts, which shall be no earlier than July 1, 2019.(2) On or before July 1, 2019, the commission shall adopt regulations governing the annual determination of base amounts. In its determination of the base amounts, the commission shall allow the submission of written comments and testimony by health care entities and purchasers.
(3) The annual determination of base amounts shall be exempt from the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2).
(b) The commission shall annually determine the percentage of Medicare rates used to determine the base amount. For health care providers, the percentage determined by the commission shall not be lower than 100 percent of Medicare rates, and may exceed Medicare rates.
(1) For health care providers, base amounts shall be a percentage of the rate that Medicare reimburses for the same or similar services in the general geographic region in which the services were rendered, unless those services are provided on a contractual basis to a health care service plan or health insurer licensed by the state.
(2) For a health care service plan contract or a policy of health insurance, the base amount shall be a percentage of the capitated rate a health plan receives for Medicare Advantage for the county where an enrollee or insured resides, adjusted for all of the following:
(A) Age.
(B) Risk mix.
(C) Differences in cost sharing between the Medicare Advantage plan and the coverage offered by the health care service plan or health insurer.
(D) Other actuarial factors permissible under state and federal law.
(3) In determining the base amounts, the commission shall take into account all of the following:
(A) Evidence of the financial status of hospitals, other health care providers, and Medicare Advantage plans, as well as the compensation of physicians and other health professionals in California. As part of that determination, the commission shall consider whether or not the health care entity is receiving a fair return on investment and avoidance of confiscatory results.
(B) Changes in state or federal laws that result in a change in costs.
(C) Reasonable increases in labor costs, including salaries and benefits, and changes in collective bargaining agreements or prevailing wage.
(D) Reasonable increases in capital investments, including those associated with compliance with state or federal law.
(E) Changes in the delivery of care that require adjustments in rates, such as the development of new modalities of care or new systems of care.
(4) The commission may allow different percentages of Medicare rates to be used for different health care entities, including different percentages for Medicare Advantage than for the amounts paid to health care providers.
(5) A health care service plan or health insurer may negotiate contracted rates with contracting health care providers that are not based on the Medicare rates as provided in this section.
(6) For a health care service plan contract or a policy of health insurance, the base amount determined by the commission shall constitute the allowed premium.
(c) (1) The commission shall establish a process for developing base amounts for health care services not currently reimbursed by Medicare or Medicare Advantage.
(2) The commission shall establish a process for determining reimbursement rates for health care services infrequently reimbursed by Medicare or Medicare Advantage. This shall include, at a minimum, pediatrics, obstetrics, and gynecology.
(3) On an annual basis, the commission shall review Medi-Cal reimbursement, including both fee-for-service and managed care rates, in comparison to the base amounts allowed under this title. In reviewing the Medi-Cal managed care rates, the commission shall review information regarding the adequacy of networks and timely access to care, as well as the rates paid by managed care plans to health professionals. To further the goals and purposes of this title, the commission shall consider Medi-Cal reimbursement in determining base amounts. In determining the base amounts for health care providers, the commission shall consider whether the base amounts should be adjusted to create an incentive for providers to participate in Medi-Cal.
(d) The commission shall determine whether or not to include or alter Medicare rating factors, such as Medicare disproportionate share hospital rates, graduate medical education, readmission penalties, and other added rates as Medicare may allow. Until the commission makes that determination, the base amount shall not include those factors.
(e) The commission shall review and adjust overall rates or specific rates to maintain the workforce necessary to deliver quality, equitable health care throughout the state, and may make adjustments to ensure access to care for underserved populations throughout the state.
(f) The commission shall review the base amounts annually to ensure that the amounts are sufficient to ensure all of the following:
(1) The financial solvency requirements under state law for each of the following:
(A) Health care service plans licensed under Chapter 2.2 (commencing with Section 1340) of Division 2 of the Health and Safety Code.
(B) Insurers offering policies of health insurance as defined in subdivision (b) of Section 106 of the Insurance Code.
(C) Risk-bearing organizations as defined in Section 1375.4 of the Health and Safety Code.
(2) A fair return on investment for the health care entity.
(3) Avoidance of confiscatory results.
(4) Improvements in health outcomes.
(5) Improvements in health disparities and reductions in health system costs consistent with this title.
(6) Availability and accessibility of health care services, including compliance with state requirements regarding network adequacy, timely access, and language access.
(g) The commission shall separately consider the impact of the base amounts in underserved areas, including rural areas determined to be underserved in accordance with state and federal requirements. To mitigate the impact of the base amounts on the availability and accessibility of health care services in underserved areas, the commission may adjust the base amounts for health care entities providing services in those areas.
(h) In determining base amounts, the commission may take into account the reliance of the category of hospital or health professional on reimbursement by the Medi-Cal program, including supplemental Medi-Cal rates, such as disproportionate share hospital payments, intergovernmental transfers, prospective payment system rates for clinics, reimbursement based on quality assurance fees, or other supplemental Medi-Cal rates that the provider receives.
(i) If the commission determines that the Medicare rates or rate methodology has changed substantially, then the commission shall consider that in determining the base amount.