Today's Law As Amended


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AB-2303 Health and care facilities: prospective payment system rate increase.(2023-2024)



As Amends the Law Today


SECTION 1.
 The Legislature finds and declares all of the following:
(a) Community health centers are a vital part of California’s safety net, providing high-quality comprehensive care to 7,700,000 people. More than one in five Californians receive care at a community health center and more than one in three of those are on Medi-Cal. Community Health Centers encompass California’s federally qualified health centers, community clinics, tribal health centers, free clinics, and rural health centers. Over 1,270 community health centers in California provide the full spectrum of care, from primary care to dental to behavioral health, to everyone who walks through their doors, regardless of their ability to pay, their immigration status, or their individual circumstances.
(b) Community health centers are paid a predetermined rate for the health care services they provide through a restrictive and complex structure governed by state and federal law called the Prospective Payment System (PPS). A community health center is only allowed to request a reevaluation of its PPS rate, essentially a rate change request, under very strict circumstances. Those circumstances do not include state-mandated increases in the minimum wage. Community Health Centers are essentially on a fixed income and, unlike other entities or businesses, cannot raise the prices of their services to adjust to increases in the minimum wage.
(c) In 2023, the Governor signed a historic increase in the minimum wage for California’s health care workers. Community health centers are eager to support their workers with higher wages but will struggle to pay state-mandated higher wages and maintain high-quality patient care, without rates that match their actual operational costs. Ensuring community health centers have a mechanism to address mandatory wage increases is crucial to community health centers’ long-term sustainability.
(d) Based on these findings, the Legislature declares its intent to support community health centers in their mission to provide accessible, affordable, equitable, and high-quality health care for all Californians, by adjusting their rates to accurately cover the costs of the health care services they provide.

SEC. 2.

 Section 14124.17 is added to the Welfare and Institutions Code, to read:

14124.17.
 (a) The department shall develop and apply a minimum wage add-on as an alternative payment methodology to increase rates of payment for covered health care facilities to account for the costs of complying with the health care minimum wage requirements in Section 1182.14 of the Labor Code for covered health care employees. The methodology shall be applied retroactively to January 1, 2025.
(b) The department shall consult with covered health care facilities, as defined in this section, in the development and implementation of the minimum wage add-on.
(c) To the extent not prohibited by federal law or regulations, the minimum wage add-on to a covered health care facility’s prospective payment system rate may continue until such time as those costs are included in the health care facility’s prospective payment system rate and shall not be considered during, or factored into, any annual reconciliation.
(d) The department shall seek all necessary federal approvals in order to implement this section, including any amendments to the state plan. To the extent that any element or requirement of this section is not approved, the department shall submit a request to the federal Centers of Medicare and Medicaid Services for any waivers that would be necessary to implement this section. The department shall make any state plan amendments or waiver requests public at least 45 days prior to submitting to the federal Centers for Medicare and Medicaid Services, and the department shall work with stakeholders to address the public comments in the state plan amendment or waiver request.
(e) For purposes of this section, the following definitions apply:
(1) “Covered health care employee” means an employee described in clause (i) of subparagraph (A) of paragraph (2) of subdivision (b) of Section 1182.14 of the Labor Code.
(2) “Covered health care facility” means any clinic described in clause (i), (ii), (iii), or (iv) of subparagraph (A) of paragraph (3) of subdivision (c) of Section 1182.14 of the Labor Code.
(f) This section shall become operative upon an appropriation by the Legislature for the express purpose of implementing this section.