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AB-942 California Advancing and Innovating Medi-Cal initiative.(2021-2022)



Current Version: 05/24/21 - Amended Assembly Compare Versions information image


AB942:v96#DOCUMENT

Amended  IN  Assembly  May 24, 2021
Amended  IN  Assembly  May 11, 2021
Amended  IN  Assembly  April 19, 2021

CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Assembly Bill
No. 942


Introduced by Assembly Member Wood

February 17, 2021


An act to add Sections amend Section 4011.11 of the Penal Code, and to amend Sections 14184.10, 14184.30, 14184.40, and 14197.4 of, to add Sections 14184.300, 14184.301, 14184.400, 14184.401, 14184.402, 14184.403, and 14184.404 to, 14184.404, and 14184.600 to, and to add Article 3.3 (commencing with Section 14124.3) to Chapter 7 of Part 3 of Division 9 of, the Welfare and Institutions Code, relating to Medi-Cal. Medi-Cal, and making an appropriation therefor.


LEGISLATIVE COUNSEL'S DIGEST


AB 942, as amended, Wood. Specialty mental health services and substance use disorder treatment. California Advancing and Innovating Medi-Cal initiative.
(1) Existing law authorizes the board of supervisors in each county to designate an entity or entities to assist county jail inmates with applying for a health insurance affordability program, as defined, consistent with federal requirements.
Commencing January 1, 2023, this bill would instead require the board of supervisors, in consultation with the county sheriff, to designate an entity or entities to assist both county jail inmates and juvenile inmates with the application process. The bill would make conforming changes to provisions relating to the coordination duties of jail administrators. By creating new duties for local officials, including boards of supervisors and jail administrators, the bill would impose a state-mandated local program.
No sooner than January 1, 2023, this bill would require the department to develop and implement a mandatory process for county jails and county juvenile facilities to coordinate with Medi-Cal managed care plans and Medi-Cal behavioral health delivery systems to facilitate continued behavioral health treatment in the community for inmates, as specified. The bill would authorize the sharing of health information, records, and other data with and among counties and other specified entities to the extent the department determines necessary to implement these provisions.

(1)

(2) Existing law establishes the Medi-Cal program, which is administered by the State Department of Health Care Services, under which qualified low-income individuals receive health care services, including mental health and substance use disorder services, pursuant to a schedule of benefits. benefits, and through a fee-for-service or managed care delivery system. The Medi-Cal program is, in part, governed and funded by federal Medicaid program provisions.
Under existing law, for individuals 21 years of age and older, a service is “medically necessary” if it is reasonable and necessary to protect life, to prevent significant illness or significant disability, or to alleviate severe pain. Existing law provides that for individuals under 21 years of age, “medically necessary” or “medical necessity” standards are governed by the definition in federal law.
This bill would provide that the above-specified medical necessity standards do not preclude coverage for, and reimbursement of, a clinically appropriate and covered mental health or substance use disorder assessment, screening, or treatment service under specified circumstances, including before a provider renders their diagnosis. The bill would provide that the above-described medical necessity criteria for a Medi-Cal beneficiary under 21 years of age is applicable to the Drug Medi-Cal Treatment Program and the Drug Medi-Cal organized delivery system. For the 2022–23 and 2023–24 fiscal years, the bill would require the department to include as part of the Medi-Cal program assumptions and estimates certain information relating to Medi-Cal specialty mental health services, including changes to the department’s clinical auditing standards. The bill would require the department to develop, in consultation with specified individuals, including certain Medi-Cal providers, standardized screening tools and statewide transition tools, and to require the use of these tools after those tools have been field tested. The bill would authorize the department to implement these provisions by various means, including provider bulletins, and, by July 1, 2023, would require the department to promulgate regulations, as necessary, on these provisions.

(2)

(3) For purposes of the Medi-Cal program, behavioral health services, which encompass specialty mental health services and substance use disorder treatment are provided under the Medi-Cal Specialty Mental Health Services Program, the Drug Medi-Cal Treatment Program, and the Drug Medi-Cal organized delivery system, respectively. Under existing law, specialty mental health services and substance use disorder treatment are funded through certified public expenditures. Existing law requires the department to implement managed mental health care for purposes of delivering specialty mental health services to Medi-Cal beneficiaries through contracts with county mental health plans.
Existing law, the Medi-Cal 2020 Demonstration Project Act, requires the department to implement specified components of a Medi-Cal demonstration project, including the Global Payment Program, the Whole Person Care pilot program, the Public Hospital Redesign and Incentives in Medi-Cal (PRIME) program, and the Dental Transformation Initiative, consistent with the Special Terms and Conditions approved by the federal Centers for Medicare and Medicaid Services. Pursuant to existing law, the department has created a multiyear initiative, the California Advancing and Innovating Medi-Cal (CalAIM) initiative, for purposes of building upon the outcomes of various Medi-Cal pilots and demonstration projects, including the Medi-Cal 2020 demonstration project.
This bill would require the department to establish, implement, and administer the Behavioral Health Quality Improvement Program to assist county mental health plans and counties that administer the Drug Medi-Cal Treatment Program or the Drug Medi-Cal organized delivery system for purposes of preparing those entities for implementation of the behavioral health components included in CalAIM, and would establish in the State Treasury the Behavioral Health Quality Improvement Account to fund those efforts. The bill would require the department to determine the methodology and distribution of funds appropriated to those entities. The bill would authorize the department to implement these provisions by various means, including provider bulletin, without taking regulatory action, and to enter into contracts that would be exempt from specified provisions of state contracting requirements. The bill would condition the implementation of these provisions to the extent that the department determines that federal financial participation is not jeopardized.
For purposes of the CalAIM initiative, commencing January 1, 2022, this bill would require the department to continue to implement the Medi-Cal Specialty Mental Health Services Program and the Drug Medi-Cal organized delivery system, as a component of CalAIM and consistent with the Special Terms and Conditions approved by the federal Centers for Medicare and Medicaid Services. Commencing no sooner than July 1, 2022, the bill would require each Medi-Cal behavioral health delivery system to comply with the behavioral health payment reform provisions approved in the CalAIM Terms and Conditions. As a component of these payment reforms, the bill would require the department to design and implement, at a minimum, an intergovernmental transfer-based reimbursement methodology to replace the use of certified public expenditures for specified claims provided through Medi-Cal behavioral health delivery systems. Commencing no sooner than July 1, 2022, the bill would require the nonfederal share of any payments associated with Medi-Cal behavioral health systems to consist of voluntary intergovernmental transfers of funds provided by eligible governmental agencies or public entities associated with those systems. The bill would require the department to establish and implement prospective reimbursement rate methodologies utilizing past county cost experience for specified covered services provided through Medi-Cal behavioral health delivery systems. Commencing January 1, 2027, the bill would require a county, or counties acting jointly, to provide and administer covered behavioral health Medi-Cal benefits under a single Medi-Cal behavioral health delivery system contract pursuant to the CalAIM Terms and Conditions.
Under the GPP, existing law makes designated public hospitals, and any successor or differently named hospital, eligible to receive global payments that are calculated using a value-based point methodology based on the health care that they provide to the uninsured.
This bill would allow those designated hospitals, if restructured or reorganized, to continue to participate in the GPP. Commencing January 1, 2021, the bill would authorize the continuation of the GPP, as modified, and as a component of the CalAIM initiative.
Existing law establishes the Medi-Cal Hospital/Uninsured Care Demonstration Project Act, which revises hospital reimbursement methodologies in order to maximize the use of federal funds consistent with federal Medicaid law and stabilize the distribution of funding for hospitals that provide care to Medi-Cal beneficiaries and uninsured patients. Under the Medi-Cal 2020 demonstration project, existing law establishes prescribed payment methodologies and requirements relating to the Medi-Cal Hospital/Uninsured Care Demonstration Project Act.
This bill would generally extend the specified payment methodologies set forth under the Medi-Cal 2020 demonstration project as part of the CalAIM initiative, and would make technical and conforming changes. For the 2020–21 state fiscal year, and subsequent state fiscal years, the bill would modify reimbursement methodologies for designated public hospitals, as prescribed.
Existing law requires the department to establish and maintain the County Administrative Cost Control Plan, whereby costs for county administration of the determination of eligibility for benefits under the Medi-Cal program are effectively controlled within the amounts annually appropriated for that administration. Existing law requires this plan to establish standards and performance criteria, including workload, productivity, and support services standards, and requires counties to adhere to these requirements. Existing law imposes various duties on counties relating to Medi-Cal eligibility, such as requiring counties to submit reconciliation files of its Medi-Cal eligible population to the department every 3 months.
No later than July 1, 2022, this bill would require the department to issue guidance, in consultation with specified individuals and entities, including the exclusive representative of county eligibility workers, to restart county performance reporting and monitoring processes. During the consultation process, the bill would require the department to perform specified duties, such as reviewing the corrective action processes relating to prescribed provisions, including those on the County Administrative Cost Control Plan.
Commencing with the 2017–18 state fiscal year, existing law requires the department, in consultation with the designated public hospital systems and applicable Medi-Cal managed care plans, to establish a program under which a designated public hospital system may earn performance-based quality incentive payments from Medi-Cal managed care plans, as specified, and requires payments to be earned by each designated public hospital system based on its performance in achieving identified targets for quality of care. Under existing law, these payments are federally and nonfederally funded, and the nonfederal share may consist of voluntary intergovernmental transfers of funds that the department, in its discretion, may deposit the transfer in the Medi-Cal Inpatient Payment Adjustment Fund, a continuously appropriated fund. Existing law requires the department to establish uniform performance measures and parameters for the designated public hospital systems to select the applicable measures and requires these performance measures to advance at least one goal identified in the state’s Medicaid quality strategy.
Commencing with the 2020–21 state fiscal year, this bill would additionally require the department to consult with district and municipal hospitals, would expand the performance-based quality incentive payments to district and municipal hospitals, and would make various conforming changes relating to this expansion. By increasing the intergovernmental transfers of funds that the department may deposit in the Medi-Cal Inpatient Payment Adjustment Fund, a continuously appropriated fund, the bill would make an appropriation. Through and until June 30, 2020, the bill would provide that specified performance measures shall not duplicate measures utilized in the PRIME program. Commencing with the 2020–21 state fiscal year, this bill would require specified payments to be earned by a district and municipal public hospital based on its performance in achieving identified targets for quality of care, would require the department to establish a class of district or municipal public hospitals, and would impose specified requirements relating to the implementation of these payments to district and municipal public hospitals. The bill would cease the implementation of the expanded quality incentive payments if the implementation is no longer financially and programmatically supportive of the Medi-Cal program, as determined pursuant to prescribed factors.

(3)

(4) The bill would make its provisions severable and would make other legislative findings and declarations.
(5) The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to the statutory provisions noted above.
Vote: MAJORITY   Appropriation: NOYES   Fiscal Committee: YES   Local Program: NOYES  

The people of the State of California do enact as follows:


SECTION 1.

 Section 4011.11 of the Penal Code is amended to read:

4011.11.
 (a) (1) The Through December 31, 2022, the board of supervisors in each county, in consultation with the county sheriff, may designate an entity or entities to assist county jail inmates with submitting an application for a health insurance affordability program consistent with federal requirements.
(2) The board of supervisors shall not designate the county sheriff as an entity to assist with submitting an application for a health insurance affordability program for county jail inmates unless the county sheriff agrees to perform this function.
(3) If the board of supervisors designates a community-based organization as an entity to assist with submitting an application for a health insurance affordability program for county jail inmates, the designation shall be subject to approval by the jail administrator or his or her their designee.
(b) (1) The jail administrator, or his or her their designee, may coordinate with an entity designated pursuant to subdivision (a). (a), through December 31, 2022.
(2) Commencing January 1, 2023, the jail administrator, or their designee, shall coordinate with an entity designated pursuant to subdivision (h), as applicable.
(c) Consistent with federal law, a county jail inmate who is currently enrolled in the Medi-Cal program shall remain eligible for, and shall not be terminated from, the program due to his or her detention their incarceration unless required by federal law, he or she becomes they become otherwise ineligible, or the inmate’s suspension of benefits has ended pursuant to Section 14011.10 of the Welfare and Institutions Code.
(d) Notwithstanding any other state law, and only to the extent federal law allows and federal financial participation is available, an entity designated pursuant to subdivision (a) or (h) is authorized to act on behalf of a county jail inmate for the purpose of applying for, or determinations of, Medi-Cal eligibility for acute inpatient hospital services authorized by Section 14053.7 of the Welfare and Institutions Code. An entity designated pursuant to subdivision (a) or (h) shall not determine Medi-Cal eligibility or redetermine Medi-Cal eligibility, unless the entity is the county human services agency.
(e) The fact that an applicant is an inmate shall not, in and of itself, preclude a county human services agency from processing an application for the Medi-Cal program submitted to it by, or on behalf of, that inmate.
(f) For purposes of this section, “health insurance affordability program” means a program that is one of the following:
(1) The state’s Medi-Cal program under Title XIX of the federal Social Security Act.
(2) The state’s children’s health insurance program (CHIP) under Title XXI of the federal Social Security Act.
(3) A program that makes coverage in a qualified health plan through the California Health Benefit Exchange established pursuant to Section 100500 of the Government Code with advance payment of the premium tax credit established under Section 36B of the Internal Revenue Code available to qualified individuals.
(4) A program that makes available coverage in a qualified health plan through the California Health Benefit Exchange established pursuant to Section 100500 of the Government Code with cost-sharing reductions established under Section 1402 of the federal Patient Protection and Affordable Care Act (Public Law 111-148) and any subsequent amendments to that act.
(g) Notwithstanding Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, the department State Department of Health Care Services may implement this section section, in whole or in part, by means of all-county letters or similar instructions, without taking any further regulatory action.
(h) (1) Notwithstanding any other law, commencing January 1, 2023, the board of supervisors in each county, in consultation with the county sheriff, shall designate an entity or entities to assist county jail inmates and juvenile inmates in county juvenile facilities with submitting an application for, or otherwise assisting with an application for enrollment in, a health insurance affordability program consistent with federal requirements.
(2) The board of supervisors shall not designate the county sheriff as an entity to assist with submitting an application for a health insurance affordability program for county jail inmates and juvenile inmates unless the county sheriff agrees to perform this function.
(3) If the board of supervisors designates a community-based organization as an entity to assist with submitting an application for a health insurance affordability program for county jail inmates and juvenile inmates, the designation shall be subject to approval by the jail administrator or their designee.
(4) (A) No sooner than January 1, 2023, the State Department of Health Care Services, in consultation with counties, Medi-Cal managed care plans, and Medi-Cal behavioral health delivery systems, shall develop and implement a mandatory process by which county jails and county juvenile facilities coordinate with Medi-Cal managed care plans and Medi-Cal behavioral health delivery systems to facilitate continued behavioral health treatment in the community for county jail inmates and juvenile inmates that were receiving behavioral health services prior to their release.
(B) Notwithstanding any other law, including, but not limited to, Sections 11812 and 11845.5 of the Health and Safety Code and Section 5328 of the Welfare and Institutions Code, the sharing of health information, records, and other data with and among counties, Medi-Cal managed care plans, Medi-Cal behavioral health delivery systems, and other authorized providers or plan entities shall be permitted to the extent the State Department of Health Care Services determines it necessary to implement this paragraph.
(C) For purposes of this paragraph, the following definitions apply:
(i) “Medi-Cal behavioral health delivery system” has the same meaning as set forth in subdivision (d) of Section 14184.402 of the Welfare and Institutions Code.
(ii) “Medi-Cal managed care plan” has the same meaning as set forth in subdivision (m) of Section 14184.101 of the Welfare and Institutions Code.

SECTION 1.SEC. 2.

 Article 3.3 (commencing with Section 14124.3) is added to Chapter 7 of Part 3 of Division 9 of the Welfare and Institutions Code, to read:
Article  3.3. Behavioral Health Quality Improvement Program

14124.3.
 (a) The department shall establish, implement, and administer the Behavioral Health Quality Improvement Program to assist county mental health plans and counties that administer the Drug Medi-Cal Treatment Program or the Drug Medi-Cal organized delivery system for purposes of preparing those entities and their contracting health care providers for implementation of the behavioral health components included in the California Advancing and Innovating Medi-Cal initiative.
(b) (1) There is hereby created in the State Treasury the Behavioral Health Quality Improvement Program Account for purposes of the Behavioral Health Quality Improvement Program. Moneys in this account shall be exclusively used to achieve the purpose of the program.
(2) The department shall determine the methodology and distribution of the moneys included in the Behavioral Health Quality Improvement Program Account to county mental health plans and counties that administer the Drug Medi-Cal Treatment Program or the Drug Medi-Cal organized delivery system that the department deems qualified.
(c) This section shall be implemented only if and to the extent that the department determines that federal financial participation is not jeopardized.
(d) Notwithstanding Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, the department may implement, interpret, or make specific this section, in whole or in part, by means of information notices or other similar instructions, without taking regulatory action.
(e) For purposes of implementing this section, the department may enter into exclusive or nonexclusive contracts, or amend existing contracts, on a bid or negotiated basis. Any contract entered into or amended pursuant to this section shall be exempt from Chapter 6 (commencing with Section 14825) of Part 5.5 of Division 3 of Title 2 of the Government Code, Section 19130 of the Government Code, Part 2 (commencing with Section 10100) of Division 2 of the Public Contract Code, and the State Administrative Manual, and from the review or approval of any division of the Department of General Services.

SEC. 3.

 Section 14184.10 of the Welfare and Institutions Code is amended to read:

14184.10.
 For purposes of this article, the following definitions shall apply:
(a) “Demonstration project” means the California Medi-Cal 2020 Demonstration, Number 11-W-00193/9, as approved by the federal Centers for Medicare and Medicaid Services, effective for the period from December 30, 2015, to December 31, 2020, inclusive, and any applicable extension period.
(b) “Demonstration term” means the entire period during which the demonstration project is in effect, as approved by the federal Centers for Medicare and Medicaid Services, including any applicable extension period.
(c) “Demonstration year” means the demonstration year as identified in the Special Terms and Conditions that corresponds to a specific period of time as set forth in paragraphs (1) to (6), inclusive. Individual programs under the demonstration project may be operated on program years that differ from the demonstration years identified in paragraphs (1) to (6), inclusive.
(1) Demonstration year 11 corresponds to the period of January 1, 2016, to June 30, 2016, inclusive.
(2) Demonstration year 12 corresponds to the period of July 1, 2016, to June 30, 2017, inclusive.
(3) Demonstration year 13 corresponds to the period of July 1, 2017, to June 30, 2018, inclusive.
(4) Demonstration year 14 corresponds to the period of July 1, 2018, to June 30, 2019, inclusive.
(5) Demonstration year 15 corresponds to the period of July 1, 2019, to June 30, 2020, inclusive.
(6) Demonstration year 16 corresponds to the period of July 1, 2020, to December 31, 2020, inclusive.
(d) “Dental Transformation Initiative” or “DTI” means the waiver program intended to improve oral health services for children, as authorized under the Special Terms and Conditions and described in Section 14184.70.
(e) “Designated state health program” shall have the same meaning as set forth in the Special Terms and Conditions.
(f) (1) “Designated public hospital” means any one of the following hospitals, and any successor successor, including any restructured, reorganized, or differently named hospital, which that is operated by a county, a city and county, the University of California, or special hospital authority described in Chapter 5 (commencing with Section 101850) or Chapter 5.5 (commencing with Section 101852) of Part 4 of Division 101 of the Health and Safety Code, or any additional public hospital, to the extent identified as a “designated public hospital” in the Special Terms and Conditions. Unless otherwise provided for in law, in the Medi-Cal State Plan, or in the Special Terms and Conditions, all references in law to a designated public hospital as defined in subdivision (d) of Section 14166.1 shall be deemed to refer to a hospital described in this section effective as of January 1, 2016, except as provided in paragraph (2):
(A) UC Davis Medical Center.
(B) UC Irvine Medical Center.
(C) UC San Diego Medical Center.
(D) UC San Francisco Medical Center.
(E) UCLA Medical Center.
(F) Santa Monica/UCLA Medical Center, also known as the Santa Monica-UCLA Medical Center and Orthopaedic Hospital.
(G) LA County Health System Hospitals:
(i) LA County Harbor/UCLA Medical Center.
(ii) LA County Olive View UCLA Medical Center.
(iii) LA County Rancho Los Amigos National Rehabilitation Center.
(iv) LA County University of Southern California Medical Center.
(H) Alameda Health System Hospitals, including the following:
(i) Highland Hospital, including the Fairmont and John George Psychiatric facilities.
(ii) Alameda Hospital.
(iii) San Leandro Hospital.
(I) Arrowhead Regional Medical Center.
(J) Contra Costa Regional Medical Center.
(K) Kern Medical Center.
(L) Natividad Medical Center.
(M) Riverside University Health System-Medical Center.
(N) San Francisco General Hospital.
(O) San Joaquin General Hospital.
(P) San Mateo Medical Center.
(Q) Santa Clara Valley Medical Center.
(R) Ventura County Medical Center.
(2) For purposes of the following reimbursement methodologies, the hospitals identified in clauses (ii) and (iii) of subparagraph (H) of paragraph (1) shall be deemed to be a designated public hospital as of the following effective dates:
(A) For purposes of the fee-for-service payment methodologies established and implemented under Section 14166.4, the effective date shall be the date described in paragraph (3) of subdivision (a) of Section 14184.30.
(B) For purposes of Article 5.230 (commencing with Section 14169.50), the effective date shall be January 1, 2017.
(g) “Disproportionate share hospital provisions of the Medi-Cal State Plan” means those applicable provisions contained in Attachment 4.19-A of the California Medicaid state plan, approved by the federal Centers for Medicare and Medicaid Services, that implement the payment adjustment program for disproportionate share hospitals.
(h) “Federal disproportionate share hospital allotment” means the amount specified for California under Section 1396r-4(f) of Title 42 of the United States Code for a federal fiscal year.
(i) “Federal medical assistance percentage” means the federal medical assistance percentage applicable for federal financial participation purposes for medical services under the Medi-Cal State Plan pursuant to Section 1396b(a)(1) of Title 42 of the United States Code.
(j) “Global Payment Program” or “GPP” means the payment program authorized under the demonstration project and described in Section 14184.40 that assists participating public health care systems that provide health care for the uninsured and that promotes the delivery of more cost-effective, higher-value health care services and activities.
(k) “Nondesignated public hospital” means a public hospital as that term is defined in paragraph (25) of subdivision (a) of Section 14105.98, excluding designated public hospitals.
(l) “Nonfederal share percentage” means the difference between 100 percent and the federal medical assistance percentage.
(m) “PRIME” means the Public Hospital Redesign and Incentives in Medi-Cal program authorized under the demonstration project and described in Section 14184.50.
(n) “Total computable disproportionate share hospital allotment” means the federal disproportionate share hospital allotment for a federal fiscal year, divided by the applicable federal medical assistance percentage with respect to that same federal fiscal year.
(o) “Special Terms and Conditions” means those terms and conditions issued by the federal Centers for Medicare and Medicaid Services, including all attachments to those terms and conditions and any subsequent amendments approved by the federal Centers for Medicare and Medicaid Services, that apply to the demonstration project.
(p) “Uninsured” means an individual for whom there is no source of third-party coverage for the health care services the individual receives, as determined pursuant to the Special Terms and Conditions.
(q) “Whole Person Care pilot program” means a local collaboration among local governmental agencies, Medi-Cal managed care plans, health care and behavioral health providers, or other community organizations, as applicable, that are approved by the department to implement strategies to serve one or more identified target populations, pursuant to Section 14184.60 and the Special Terms and Conditions.

SEC. 4.

 Section 14184.30 of the Welfare and Institutions Code is amended to read:

14184.30.
 The following payment methodologies and requirements implemented pursuant to Article 5.2 (commencing with Section 14166) shall be applicable as set forth in this section.
(a) (1) (A) For purposes of Section 14166.4, the references to “project year” and “successor demonstration year” shall include references to the demonstration term, as defined under this article, and to any extensions of the prior federal Medicaid demonstration project entitled “California Bridge to Reform Demonstration (Waiver No. 11-W-00193/9).”
(B) For purposes of Section 14166.4, the references to “project year” and “successor demonstration year” shall include references to the CalAIM term, as defined in subdivision (b) of Section 14184.101, and to any extensions of the demonstration project pursuant to this article.
(2) The fee-for-service payment methodologies established and implemented under Section 14166.4 shall continue to apply with respect to designated public hospitals approved under the Medi-Cal State Plan.
(3) For the hospitals identified in clauses (ii) and (iii) of subparagraph (H) of paragraph (1) of subdivision (f) of Section 14184.10, the department shall seek any necessary federal approvals to apply the fee-for-service payment methodologies established and implemented under Section 14166.4 to these identified hospitals effective no earlier than the 2016–17 state fiscal year. This paragraph shall be implemented only to the extent that any necessary federal approvals are obtained and federal financial participation is available and not otherwise jeopardized. Prior to the effective date of any necessary federal approval obtained pursuant to this paragraph, these identified hospitals shall continue to be considered nondesignated public hospitals for purposes of the fee-for-service methodology authorized pursuant to Section 14105.28 and the applicable provisions of the Medi-Cal State Plan.
(4) The department shall continue to make reimbursement available to qualifying hospitals that meet the eligibility requirements for participation in the supplemental reimbursement program for hospital facility construction, renovation, or replacement pursuant to Section 14085.5 and the applicable provisions of the Medi-Cal State Plan. The department shall continue to make inpatient hospital payments for services that were historically excluded from a hospital’s contract under the Selective Provider Contracting Program established under Article 2.6 (commencing with Section 14081) in accordance with the applicable provisions of the Medi-Cal State Plan. These payments shall not duplicate or supplant any other payments made under this article.
(b) During the 2015–16 state fiscal year, and subsequent state fiscal years that commence during the demonstration term, term or the CalAIM term, payment adjustments to disproportionate share hospitals shall not be made pursuant to Section 14105.98, except as otherwise provided in this article. article or Article 5.51 (commencing with Section 14184.100). Payment adjustments to disproportionate share hospitals shall be made solely in accordance with this article. article or Article 5.51 (commencing with Section 14184.100).
(1) Except as otherwise provided in this article, article or Article 5.51 (commencing with Section 14184.100), the department shall continue to make all eligibility determinations and perform all payment adjustment amount computations under the disproportionate share hospital payment adjustment program pursuant to Section 14105.98 and pursuant to the disproportionate share hospital provisions of the Medi-Cal State Plan. For purposes of these determinations and computations, which include those made pursuant to Sections 14166.11 and 14166.16, all of the following shall apply:
(A) The federal Medicaid DSH reductions pursuant to Section 1396r-4(f)(7) of Title 42 of the United States Code shall be reflected as appropriate, including, but not limited to, the calculations set forth in subparagraph (B) of paragraph (2) of subdivision (am) of Section 14105.98.
(B) Services that were rendered under the Low Income Health Program authorized pursuant to Part 3.6 (commencing with Section 15909) shall be included.
(2) (A) Notwithstanding Section 14105.98, the federal disproportionate share hospital allotment specified for California under Section 1396r-4(f) of Title 42 of the United States Code for each of federal fiscal years 2016 to 2021, inclusive, shall be aligned with the state fiscal year in which the applicable federal fiscal year commences, and shall be distributed solely for the following purposes:
(i) As disproportionate share hospital payments under the methodology set forth in applicable disproportionate share hospital provisions of the Medi-Cal State Plan, which, to the extent permitted under federal law and the Special Terms and Conditions, or the CalAIM Terms and Conditions, shall be limited to the following hospitals:
(I) Eligible hospitals, as determined pursuant to Section 14105.98 for each state fiscal year in which the particular federal fiscal year commences, that meet the definition of a public hospital, as specified in paragraph (25) of subdivision (a) of Section 14105.98, and that are not participating as GPP systems under the Global Payment Program.
(II) Hospitals that are licensed to the University of California, which meet the requirements set forth in Section 1396r-4(d) of Title 42 of the United States Code.
(ii) As a funding component for payments under the Global Payment Program, as described in subparagraph (A) of paragraph (1) of subdivision (c) of Section 14184.40 14184.40, or Section 14184.300, and the Special Terms and Conditions. Conditions or the CalAIM Terms and Conditions.
(B) The distribution of the federal disproportionate share hospital allotment to hospitals described in this paragraph shall satisfy the state’s payment obligations, if any, with respect to those hospitals under Section 1396r-4 of Title 42 of the United States Code.
(3) (A) During the 2015–16 state fiscal year and subsequent state fiscal years that commence during the demonstration term or the CalAIM term, a public entity shall not be obligated to make any intergovernmental transfer pursuant to Section 14163, and all transfer amount determinations for those state fiscal years shall be suspended. However, intergovernmental transfers shall be made with respect to the disproportionate share hospital payment adjustments made in accordance with clause (ii) of subparagraph (B) of paragraph (6), as applicable.
(B) During the 2015–16 state fiscal year and subsequent state fiscal years that commence during the demonstration term or the CalAIM term, transfer amounts from the Medi-Cal Inpatient Payment Adjustment Fund to the Health Care Deposit Fund, as described in paragraph (2) of subdivision (d) of Section 14163, are hereby reduced to zero. Unless otherwise specified in this article or the applicable provisions of Article 5.2 (commencing with Section 14166), this subparagraph shall be disregarded for purposes of the calculations made under Section 14105.98 during the 2015–16 state fiscal year and subsequent state fiscal years that commence during the demonstration term or the CalAIM term.
(4) (A) During the state fiscal years for which the Global Payment Program under Section 14184.40 14184.40, or Section 14184.300, is in effect, designated public hospitals that are participating GPP systems shall not be eligible to receive disproportionate share hospital payments pursuant to otherwise applicable disproportionate share hospital provisions of the Medi-Cal State Plan.
(B) Eligible hospitals described in clause (i) of subparagraph (A) of paragraph (2) that are nondesignated public hospitals shall continue to receive disproportionate share hospital payment adjustments as set forth in Section 14166.16.
(C) Hospitals described in clause (i) of subparagraph (A) of paragraph (2) that are licensed to the University of California shall receive disproportionate share hospital payments as follows:
(i) Subject to clause (iii), each hospital licensed to the University of California may draw and receive federal Medicaid funding from the applicable federal disproportionate share hospital allotment on the amount of certified public expenditures for the hospital’s expenditures that are eligible for federal financial participation as reported in accordance with Section 14166.8 and the applicable disproportionate share hospital provisions of the Medi-Cal State Plan.
(ii) Subject to clause (iii) and to the extent the hospital meets the requirement in Section 1396r-4(b)(1)(A) of Title 42 of the United States Code regarding the Medicaid inpatient utilization rate or Section 1396r-4(b)(1)(B) of Title 42 of the United States Code regarding the low-income utilization rate, each hospital shall receive intergovernmental transfer-funded direct disproportionate share hospital payments as provided for under the applicable disproportionate share hospital provisions of the Medi-Cal State Plan. The total amount of these payments to the hospital, consisting of the federal and nonfederal components, shall in no case exceed that amount equal to 75 percent of the hospital’s uncompensated Medi-Cal and uninsured costs of hospital services as reported in accordance with Section 14166.8.
(iii) Unless the provisions of subparagraph (D) apply, the aggregate amount of the federal disproportionate share hospital allotment with respect to payments for an applicable state fiscal year to hospitals licensed to the University of California shall be limited to an amount calculated as follows:
(I) The maximum amount of federal disproportionate share hospital allotment for the state fiscal year, less the amounts of federal disproportionate share hospital allotment associated with payments to nondesignated public hospitals under subparagraph (B) and other payments, if any, required to be made from the federal disproportionate share hospital allotment, shall be determined.
(II) For the 2015–16 state fiscal year, the amount determined in subclause (I) shall be multiplied by 26.296 percent, resulting in the maximum amount of the federal disproportionate share hospital allotment available as disproportionate share hospital payments for the state fiscal year to hospitals that are licensed to the University of California.
(III) For the 2016–17 state fiscal year, the amount determined in subclause (I) shall be multiplied by 24.053 percent, resulting in the maximum amount of the federal disproportionate share hospital allotment available as disproportionate share hospital payments for the state fiscal year to hospitals that are licensed to the University of California.
(IV) For the 2017–18 state fiscal year, the amount determined in subclause (I) shall be multiplied by 23.150 percent, resulting in the maximum amount of the federal disproportionate share hospital allotment available as disproportionate share hospital payments for the state fiscal year to hospitals that are licensed to the University of California.
(V) For each of the 2018–19 and 2019–20 state fiscal years, the amount determined in subclause (I) shall be multiplied by 21.896 percent, resulting in the maximum amount of the federal disproportionate share hospital allotment available as disproportionate share hospital payments for the state fiscal year to hospitals that are licensed to the University of California.
(VI) For the 2020–21 state fiscal year, and subsequent state fiscal years or portions thereof during the CalAIM term, the amount determined in subclause (I) shall be multiplied by a percentage as determined by the department, in consultation with designated public hospitals and consistent with the applicable federal terms and conditions, resulting in the maximum amount of the federal disproportionate share hospital allotment available as disproportionate share hospital payments for the state fiscal year to hospitals that are licensed to the University of California. The percentage shall be communicated in writing to all of the designated public hospitals.

(VI)

(VII) To the extent the limitations set forth in this clause result in payment reductions for the applicable year, those reductions shall be applied pro rata, subject to clause (vii).
(iv) Each hospital licensed to the University of California shall receive quarterly interim payments of its disproportionate share hospital allocation during the applicable state fiscal year. The determinations set forth in clauses (i) to (iii), inclusive, shall be made on an interim basis prior to the start of each state fiscal year, except that the determinations for the 2015–16 state fiscal year shall be made as soon as practicable. The department shall use the same cost and statistical data used in determining the interim payments for Medi-Cal inpatient hospital services under Section 14166.4, and available payments and uncompensated and uninsured cost data, including data from the Medi-Cal paid claims file and the hospital’s books and records, for the corresponding period, to the extent permitted under the Medi-Cal State Plan.
(v) No later than April 1 following the end of the relevant reporting period for the applicable state fiscal year, the department shall undertake an interim reconciliation of payments based on Medi-Cal, Medicare, and other cost, payment, discharge, and statistical data submitted by the hospital for the applicable state fiscal year, and shall adjust payments to the hospital accordingly.
(vi) Except as otherwise provided in this article, or Article 5.51 (commencing with Section 14184.100), each hospital licensed to the University of California shall receive disproportionate share hospital payments subject to final audits of all applicable Medi-Cal, Medicare, and other cost, payment, discharge, and statistical data submitted by the hospital for the applicable state fiscal year.
(vii) Prior to Before the interim and final distributions of payments pursuant to clauses (iv) to (vi), inclusive, the department shall consult with the University of California, and implement any adjustments to the payment distributions for the hospitals as requested by the University of California, so long as the aggregate net effect of the requested adjustments for the affected hospitals is zero.
(D) With respect to any state fiscal year commencing during the demonstration term or the CalAIM term for which the Global Payment Program pursuant to Section 14184.40 or 14184.300 is not in effect, designated public hospitals that are eligible hospitals as determined pursuant to Section 14105.98, and hospitals described in clause (i) of subparagraph (A) of paragraph (2) that are licensed to the University of California, shall claim disproportionate share hospital payments in accordance with the applicable disproportionate share hospital provisions of the Medi-Cal State Plan. The allocation of federal Medicaid funding from the applicable federal disproportionate share hospital allotment shall be made in accordance with the methodology set forth in Section 14166.61.
(5) For each applicable state fiscal year during the demonstration term, term or the CalAIM term, eligible hospitals, as determined pursuant to Section 14105.98, which are nonpublic hospitals, nonpublic-converted hospitals, and converted hospitals, as those terms are defined in paragraphs (26), (27), and (28), respectively, of subdivision (a) of Section 14105.98, shall continue to receive Medi-Cal disproportionate share hospital replacement payment adjustments pursuant to Section 14166.11 and other provisions of this article or Article 5.51 (commencing with Section 14184.100) and applicable provisions of the Medi-Cal State Plan. The payment adjustments so provided shall satisfy the state’s payment obligations, if any, with respect to those hospitals under Section 1396r-4 of Title 42 of the United States Code. The provisions of subdivision (j) of Section 14166.11 shall continue to apply with respect to the 2015–16 state fiscal year and subsequent state fiscal years commencing during the demonstration term or the CalAIM term. Except as may otherwise be required by federal law, the federal share of these payments shall not be claimed from the federal disproportionate share hospital allotment.
(6) The nonfederal share of disproportionate share hospital payments and disproportionate share hospital replacement payment adjustments described in paragraphs (4) and (5) shall be derived from the following sources:
(A) With respect to the payments described in subparagraph (B) of paragraph (4) that are made to nondesignated public hospitals, the nonfederal share shall consist solely of state General Fund appropriations.
(B) With respect to the payments described in subparagraph (C) or (D), as applicable, of paragraph (4) that are made to designated public hospitals, the nonfederal share shall consist of both of the following:
(i) Certified public expenditures incurred by the hospitals for hospital expenditures eligible for federal financial participation as reported in accordance with Section 14166.8.
(ii) Intergovernmental transfer amounts for direct disproportionate share hospital payments provided for under subparagraph (C) or (D) of paragraph (4) and the applicable disproportionate share hospital provisions of the Medi-Cal State Plan. A transfer amount shall be determined for each hospital that is eligible for these payments, equal to the nonfederal share of the payment amount established for the hospital. The transfer amount determined shall be paid by the hospital, or the public entity with which the hospital is affiliated, and deposited into the Medi-Cal Inpatient Payment Adjustment Fund established pursuant to subdivision (b) of Section 14163, as permitted under Section 433.51 of Title 42 of the Code of Federal Regulations or any other applicable federal Medicaid laws.
(C) With respect to the payments described in paragraph (5), the nonfederal share shall consist of state General Fund appropriations.
(7) The Demonstration Disproportionate Share Hospital Fund established in the State Treasury pursuant to subdivision (d) of Section 14166.9 shall be retained during the demonstration term and the CalAIM term. All federal funds received by the department with respect to the certified public expenditures claimed pursuant to subparagraph (C), and, as applicable in subparagraph (D), of paragraph (4) shall be transferred to the fund and disbursed to the eligible designated public hospitals pursuant to those applicable provisions. Notwithstanding Section 13340 of the Government Code, moneys deposited in the fund shall be continuously appropriated, without regard to fiscal year, to the department solely for the purposes specified in this article. article and Article 5.51 (commencing with Section 14184.100).
(c) (1) Disproportionate share hospital payment allocations under Sections 14166.3 and 14166.61, and safety net care pool payment allocations under Section 14166.71, that were paid to designated public hospitals with respect to the period July 1, 2015, through October 31, 2015, or for subsequent periods pursuant to Section 14166.253, shall be reconciled to amounts payable to the hospitals under this article as set forth in this subdivision.
(2) The disproportionate share hospital payments and safety net care pool payments described in paragraph (1) that were paid to a designated public hospital participating in a GPP system under Section 14184.40 shall be deemed to be interim payments under the Global Payment Program for GPP program year 2015–16, and will be reconciled to and offset against the interim payment amount due to the GPP system under subparagraph (B) of paragraph (4) of subdivision (d) of Section 14184.40, consistent with the Special Terms and Conditions.
(3) The disproportionate share hospital payments described in paragraph (1) that were paid to designated public hospitals licensed to the University of California shall be reconciled to and offset against the disproportionate share hospital payments payable to the hospitals under subparagraph (C) of paragraph (4) of subdivision (b) for the 2015–16 state fiscal year.
(4) The safety net care pool payments described in paragraph (1) that were paid to designated public hospitals licensed to the University of California shall be recouped and included as available funding under the Global Payment Program for the 2015–16 GPP program year described in subparagraph (B) of paragraph (1) of subdivision (c) of Section 14184.40.
(d) During the 2015–16 state fiscal year, and subsequent state fiscal years that commence during the demonstration term or the CalAIM term, costs shall continue to be determined and reported for designated public hospitals in accordance with Sections 14166.8 and 14166.24, except as follows:
(1) (A) The provisions of subdivision (c) of Section 14166.8 shall not apply.
(B) Notwithstanding subparagraph (A), the department may require the reporting of any data the department deems necessary to satisfy reporting requirements pursuant to the Special Terms and Conditions or the CalAIM Terms and Conditions.
(2) The provisions of Sections 14166.221 and 15916 shall not apply with respect to any costs reported for the demonstration term or the CalAIM term pursuant to Section 14166.8.
(e) (1) Notwithstanding subdivision (h) of Section 14166.61 and subdivision (c) of Section 14166.71, the disproportionate share hospital allocation and safety net care pool payment determinations and payments for the 2013–14 and 2014–15 state fiscal years shall be deemed final as of the April 30 that is 22 months following the close of the respective state fiscal year, to the extent permitted under federal law and subject to recoupment pursuant to subdivision (f) if it is later determined that federal financial participation is not available for any portion of the applicable payments.
(2) The determinations and payments shall be finalized using the best available data, including unaudited data, and reasonable current estimates and projections submitted by the designated public hospitals. The department shall accept all appropriate revisions to the data, estimates, and projections previously submitted, including revised cost reports, for purposes of this subdivision, to the extent these revisions are submitted in a timely manner as determined by the department.
(f) Upon receipt of a notice of disallowance or deferral from the federal government related to the certified public expenditures or intergovernmental transfers of a designated public hospital or governmental entity with which it is affiliated for disproportionate share hospital payments or safety net care pool payments claimed and distributed pursuant to Section 14166.61, 14166.71, or 15916 for the 2013–14 or 2014–15 state fiscal year, the department shall promptly notify the designated public hospitals and proceed as follows:
(1) To the extent there are additional certified public expenditures for the applicable state fiscal year for which federal funds have not been received, but for which federal funds could have been received had additional federal funds been available, including any subsequently allowable expenditures for designated state health programs, the department shall first respond to the deferral or disallowance by substituting the additional certified public expenditures or allowable expenditures for those deferred or disallowed, consistent with the claiming optimization priorities set forth in Section 14166.9, in consultation with the designated public hospitals, but only to the extent that any necessary federal approvals are obtained or these actions are otherwise permitted by federal law.
(2) The department shall consult with the designated public hospitals and proceed in accordance with paragraphs (2) and (3) of subdivision (d) of Section 14166.24.
(3) If the department elects to appeal pursuant to paragraph (3) of subdivision (d) of Section 14166.24, the department shall not implement any recoupment of payments from the affected designated public hospitals, until a final disposition has been made regarding the deferral or disallowance, including the conclusion of applicable administrative and judicial review, if any.
(4) (A) Upon final disposition of the federal deferral or disallowance, the department shall determine the resulting aggregate repayment amount of federal funds for each affected state fiscal year.
(B) The department shall determine the ratio of the aggregate repayment amount to the total amount of the federal share of payments finalized and distributed pursuant to Sections 14166.61 and 14166.71 and subdivision (e) for each affected state fiscal year, expressed as a percentage.
(5) Notwithstanding paragraph (1) of subdivision (d) of Section 14166.24, the responsibility for repayment of the federal portion of any deferral of disallowance for each affected year shall be determined as follows:
(A) The provisions of subdivision (g) of Section 15916 shall be applied to determine the department’s repayment responsibility amount with respect to any deferral or disallowance related to safety net care pool payments, which shall be in addition to amounts determined under subparagraph (E).
(B) Using the most recent data for the applicable fiscal year, and reflecting modifications to the applicable initial DSH claiming ability and initial SNCP claiming ability for individual hospitals resulting from the deferral or disallowance, the department shall perform the calculations and determinations for each designated public hospital as set forth in Sections 14166.61 and 14166.71. For this purpose, the calculations and determinations shall assume no reduction in the available federal disproportionate share hospital allotment or in the amount of available safety net care pool payments as a result of the deferral or disallowance.
(C) For each designated public hospital, the revised determinations of disproportionate share hospital and safety net care pool payment amounts under subparagraph (B) shall be combined and compared to the combined disproportionate share hospital and safety net care pool payment amounts determined and received by the hospital pursuant to subdivision (e). For this purpose and purposes of subparagraph (D), the applicable data for designated public hospitals described in subparagraph (G) of paragraph (1) of subdivision (f) of Section 14184.10 shall be combined, and the applicable data for designated public hospitals described in subparagraphs (E) and (F) of paragraph (1) of subdivision (f) of Section 14184.10 shall be combined.
(D) (i) Subject to subparagraph (E), the repayment of the federal portion of the deferral of disallowance, less the department’s responsibility amount for safety net care pool payments, if any, determined in subparagraph (A), shall be first allocated among each of those designated public hospitals for which the combined revised disproportionate share hospital and safety net care pool payments as determined in subparagraph (B) are less than the combined disproportionate share hospital and safety net care pool payment amounts determined and received pursuant to subdivision (e). Repayment shall be allocated under this initial stage among these hospitals pro rata on the basis of each hospital’s relative reduction as reflected in the revised calculations performed under subparagraph (B), but in no case shall the allocation to a hospital exceed the limit in clause (iii). Repayment amounts that are not allocated due to this limitation shall be allocated pursuant to clause (ii).
(ii) Subject to subparagraph (E), any repayment amounts that were unallocated to hospitals due to the limitation in clause (iii) shall be allocated in a second stage among each of the remaining designated public hospitals that has not reached its applicable repayment limit, including the hospitals that were not subject to the allocations under clause (i), based pro rata on the amounts determined and received by the hospital pursuant to subdivision (e), except that no repayment amount for a hospital shall exceed the limitation under clause (iii). The pro rata allocation process will be repeated in subsequent stages with respect to any repayment amounts that cannot be allocated in a prior stage to hospitals due to the limitation under clause (iii), until the entire federal repayment amount has been allocated among the hospitals.
(iii) The repayment amount allocated to a designated public hospital pursuant to this subparagraph shall not exceed an amount equal to the percentage of the combined payments determined and received by the hospital pursuant to subdivision (e) that is twice the percentage computed in subparagraph (B) of paragraph (4).
(E) Notwithstanding any other law, if the affiliated governmental entity for the designated public hospital is a county subject to the provisions of Article 12 (commencing with Section 17612.1) of Chapter 6 of Part 5, the department, in consultation with the affected designated public hospital, and the Department of Finance, shall determine how to account for whether any repayment amount determined for the designated public hospital pursuant to subparagraph (D) for the 2013–14 and 2014–15 state fiscal years would otherwise have affected, if at all, the applicable county’s redirection obligation for the applicable state fiscal year pursuant to paragraphs (4) and (5) of subdivision (a) of Section 17612.3 and shall determine what adjustments, if any, are necessary to either the repayment amount or the applicable county’s redirection obligation. For purposes of this subparagraph, the provisions of subdivision (f) of Section 17612.2 and paragraph (7) of subdivision (e) of Section 101853 of the Health and Safety Code shall apply.
(g) The provisions of Article 5.2 (commencing with Section 14166) shall remain in effect until all payments authorized pursuant to that article have been paid, finalized, and settled, and to the extent its provisions are retained for purposes of this article. article or Article 5.51 (commencing with Section 14184.100).
(h) For purposes of this article, commencing January 1, 2021, and thereafter, any references to “designated public hospital,” “CalAIM term,” or “CalAIM Terms and Conditions” shall have the same meanings as set forth in Section 14184.101.

SEC. 5.

 Section 14184.40 of the Welfare and Institutions Code is amended to read:

14184.40.
 (a) (1) The department shall implement the Global Payment Program authorized under the demonstration project to support participating public health care systems that provide health care services for the uninsured. Under the Global Payment Program, GPP systems receive global payments based on the health care they provide to the uninsured, in lieu of traditional disproportionate share hospital payments and safety net care pool payments previously made available pursuant to Article 5.2 (commencing with Section 14166).
(2) The Global Payment Program is intended to streamline funding sources for care for California’s remaining uninsured population, creating a value-based mechanism to increase incentives to provide primary and preventive care services and other high-value services. The Global Payment Program supports GPP systems for their key role in providing and promoting effective, higher value services to California’s remaining uninsured. Promoting more cost-effective and higher value care means that the payment structure rewards the provision of care in more appropriate venues for patients, and will support structural changes to the care delivery system that will improve the options for treating both Medi-Cal and uninsured patients.
(3) Under the Global Payment Program, GPP systems will shall receive Global Payment Program payments calculated using an innovative value-based point methodology that incorporates measures of value for the patient in conjunction with the recognition of costs. To receive the full amount of Global Payment Program payments, a GPP system shall provide a threshold level of services, as measured in the point methodology described in paragraph (2) of subdivision (c), and based on the GPP system’s historical volume, cost, and mix of services. This payment methodology is intended to support GPP systems that continue to provide services to the uninsured, while incentivizing the GPP systems to shift the overall delivery of services for the uninsured to provide more cost-effective, higher value care.
(4) The department shall implement and oversee the operation of the Global Payment Program in accordance with the Special Terms and Conditions and the requirements of this section, to maximize the amount of federal financial participation available to participating GPP systems.
(b) For purposes of this article, the following definitions apply:
(1) “GPP system” means a public health care system that consists of a designated public hospital, as defined in subdivision (f) of Section 14184.10 but excluding the hospitals operated by the University of California, and its affiliated and contracted providers. Multiple designated public hospitals operated by a single legal entity may belong to the same GPP system, to the extent set forth in the Special Terms and Conditions.
(2) “GPP program year” means a state fiscal year beginning on July 1 and ending on June 30 during which the Global Payment Program is authorized under the demonstration project, beginning with state fiscal year 2015–16, and, as applicable, each state fiscal year thereafter through 2019–20, and any years or partial years during which the Global Payment Program is authorized under an extension or successor to the demonstration project.
(c) (1) For each GPP program year, the department shall determine the Global Payment Program’s aggregate annual limit, which is the maximum amount of funding available under the demonstration project for the Global Payment Program and which is the sum of the components described in subparagraphs (A) and (B). To the extent feasible, the aggregate annual limit shall be determined and made available by the department before the implementation of a GPP program year, and shall be updated and adjusted as necessary to reflect changes or adjustments to the amount of funding available for the Global Payment Program.
(A) A portion of the federal disproportionate share allotment specified for California under Section 1396r-4(f) of Title 42 of the United States Code shall be included as a component of the aggregate annual limit for each GPP program year. The amount of this portion shall equal the state’s total computable disproportionate share allotment reduced by the maximum amount of funding projected for payments pursuant to subparagraphs (B) and (C) of paragraph (4) of subdivision (b) of Section 14184.30 to disproportionate share hospitals that are not participating in the Global Payment Program. For purposes of this determination, the federal disproportionate share allotment shall be aligned with the GPP program year in which the applicable federal fiscal year commences.
(B) The aggregate annual limit shall also include the amount authorized under the demonstration project for the uncompensated care component of the Global Payment Program for the applicable GPP program year, as determined pursuant to the Special Terms and Conditions.
(2) The department shall develop a methodology for valuing health care services and activities provided to the uninsured that achieves the goals of the Global Payment Program, including those values set forth in subdivision (a) and as expressed in the Special Terms and Conditions. The points assigned to a particular service or activity shall be the same across all GPP systems. Points for specific services or activities may be increased or decreased over time as the Global Payment Program progresses, to incentivize appropriate changes in the mix of services provided to the uninsured. To the extent necessary, the department shall obtain federal approval for the methodology and any applicable changes to the methodology.
(3) For each GPP system, the department shall perform a baseline analysis of the GPP system’s historical volume, cost, and mix of services to the uninsured to establish an annual threshold for purposes of the Global Payment Program. The annual threshold shall be measured in points established through the methodology developed pursuant to paragraph (2) and as set forth in the Special Terms and Conditions.
(4) The department shall determine a pro rata allocation percentage for each GPP system by dividing the GPP system’s annual threshold determined in paragraph (3) by the sum of all GPP systems’ thresholds.
(5) For each GPP system, the department shall determine an annual budget the GPP system will receive if it achieves its threshold. A GPP system’s annual budget shall equal the allocation percentage determined in paragraph (4) for the GPP system, multiplied by the Global Payment Program’s aggregate annual limit determined in paragraph (1).
(6) In the event of a change in the aggregate annual limit, the department shall adjust and recalculate each GPP system’s annual threshold and or the annual budget in proportion to changes in the aggregate annual limit calculated in paragraph (1) in accordance with the Special Terms and Conditions.
(d) The amount of Global Payment Program funding payable to a GPP system for a GPP program year shall be calculated as follows, subject to the Special Terms and Conditions:
(1) The full amount of a GPP system’s annual budget shall be payable to the GPP system if the services it provided to the uninsured during the GPP program year, as measured and scored using the point methodology described under paragraph (2) of subdivision (c), meets or exceeds its threshold for a given year. For GPP systems that do not achieve their threshold, the amount payable to the GPP system shall equal its annual budget reduced by the proportion by which it fell short of its threshold.
(2) The department shall develop a methodology to redistribute unearned Global Payment Program funds for a given GPP program year to those GPP systems that exceeded their respective threshold for that same year. To the extent sufficient funds are available for all qualifying GPP systems, the GPP system’s redistributed amount shall equal the GPP system’s annual budget multiplied by the percentage by which the GPP system exceeded its threshold, and any remaining amounts of unearned funds will remain undistributed. If sufficient funds are unavailable to make all these payments to qualifying GPP systems, the amounts of these additional payments will be reduced for all qualifying GPP systems by the same proportion, so that the full amount of unearned Global Payment Program funds are redistributed. Redistributed payment amounts calculated pursuant to this paragraph shall be added to the amounts payable to a GPP system calculated pursuant to paragraph (1).
(3) The department shall specify a reporting schedule for participating GPP systems to submit an interim yearend report and a final reconciliation report for each GPP program year. The interim yearend report and the final reconciliation report shall identify the services the GPP system provided to the uninsured during the GPP program year, the associated point calculation, and the amount of payments earned by the GPP system before any redistribution. The method and format of the reporting shall be established by the department, consistent with the approved Special Terms and Conditions.
(4) Payments shall be made in the manner and within the timeframes as follows, except if one or more GPP systems fail to provide the intergovernmental transfer amount determined pursuant to subdivision (g) by the date specified in this paragraph, the timeframe for the associated payments shall be extended to the extent necessary to allow the department to timely process the payments. In no event, however, shall payment be delayed beyond 21 days after all the necessary intergovernmental transfers have been made.
(A) Except as provided in subparagraph (B), for each of the first three quarters of a GPP program year the department shall notify GPP systems of their payment amounts and intergovernmental transfer amounts and make a quarterly interim payment equal to 25 percent of each GPP system’s annual global budget to the GPP system.
(i) For quarters ending September 30, the payment amount and intergovernmental transfer amount notice shall be sent by September 15, intergovernmental transfers shall be due by September 22, and payments shall be made by October 15.
(ii) For quarters ending December 31, the payment amount and intergovernmental transfer amount notice shall be sent by December 15, intergovernmental transfers shall be due by December 22, and payments shall be made by January 15.
(iii) For quarters ending March 31, the payment amount and intergovernmental transfer amount notice shall be sent by March 15, intergovernmental transfers shall be due by March 22, and payments shall be made by April 15.
(B) For the 2015–16 GPP program year, the department shall make the quarterly interim payments described in subdivision (a) in a single interim payment for the first three quarters as soon as practicable following approval of the Global Payment Program protocols as part of the Special Terms and Conditions and receipt of the associated intergovernmental transfers. The amount of this interim payment that is otherwise payable to a GPP system shall be reduced by the payments described in paragraph (2) of subdivision (c) of Section 14184.30 that were received by a designated public hospital affiliated with the GPP system.
(C) By September 15 following the end of each GPP program year, the department shall determine and notify each GPP system of the amount the GPP system earned for the GPP program year pursuant to paragraph (1) based on its interim yearend report, the amount of additional interim payments necessary to bring the GPP system’s aggregate interim payments for the GPP program year to that amount, and the transfer amounts calculated pursuant to subdivision (g). If the GPP system has earned less than 75 percent of its annual budget, no additional interim payment will be made for the GPP program year. Intergovernmental transfer amounts shall be due by September 22 following the end of the GPP program year, and interim payments shall be made by October 15 following the end of each GPP program year. All interim payments shall be subject to reconciliation after the submission of the final reconciliation report.
(D) By June 30 following the end of each GPP program year, the department shall review the final reconciliation reports and determine and notify each GPP system of the final amounts earned by the GPP system for the GPP program year pursuant to paragraph (1), as well as the redistribution amounts, if any, pursuant to paragraph (2), the amount of the payment adjustments or recoupments necessary to reconcile interim payments to those amounts, and the transfer amount pursuant to subdivision (g). Intergovernmental transfer amounts shall be due by July 14 following the notification, and final reconciliation payments for the GPP program year shall be made no later than August 15 following this notification.
(e) The Global Payment Program provides a source of funding for GPP systems to support their ability to make health care activities and services available to the uninsured, and shall not be construed to constitute or offer health care coverage for individuals receiving services. Global Payment Program payments are not paid on behalf of specific individuals, and participating GPP systems may determine the scope, type, and extent to which services are available, to the extent consistent with the Special Terms and Conditions. The operation of the Global Payment Program shall not be construed to decrease, expand, or otherwise alter the scope of a county’s obligations to the medically indigent pursuant to Part 5 (commencing with Section 17000) of Division 9.
(f) The nonfederal share of any payments under the Global Payment Program shall consist of voluntary intergovernmental transfers of funds provided by designated public hospitals or affiliated governmental agencies or entities, in accordance with this section. section or Section 14184.300.
(1) The Global Payment Program Special Fund is hereby established in the State Treasury. Notwithstanding Section 13340 of the Government Code, moneys deposited in the Global Payment Program Special Fund shall be continuously appropriated, without regard to fiscal years, to the department for the purposes specified in this section. section or Section 14184.300. All funds derived pursuant to this section or Section 14184.300 shall be deposited in the State Treasury to the credit of the Global Payment Program Special Fund.
(2) The Global Payment Program Special Fund shall consist of moneys that a designated public hospital or affiliated governmental agency or entity elects to transfer to the department for deposit into the fund as a condition of participation in the Global Payment Program, to the extent permitted under Section 433.51 of Title 42 of the Code of Federal Regulations, the Special Terms and Conditions, and any other applicable federal Medicaid laws. Except as otherwise provided in paragraph (3), moneys derived from these intergovernmental transfers in the Global Payment Program Special Fund shall be used as the source for the nonfederal share of Global Payment Program payments authorized under the demonstration project. Any intergovernmental transfer of funds provided for purposes of the Global Payment Program shall be made as specified in this section. section or Section 14184.300. Upon providing any intergovernmental transfer of funds, each transferring entity shall certify that the transferred funds qualify for federal financial participation pursuant to applicable federal Medicaid laws and the Special Terms and Conditions, and in the form and manner as required by the department.
(3) The department shall claim federal financial participation for GPP payments using moneys derived from intergovernmental transfers made pursuant to this section, section or Section 14184.300, and deposited in the Global Payment Program Special Fund to the full extent permitted by law. The moneys disbursed from the fund, and all associated federal financial participation, shall be distributed only to GPP systems and the governmental agencies or entities to which they are affiliated, as applicable. In the event federal financial participation is not available with respect to a payment under this section or Section 14184.300 and either is not obtained, or results in a recoupment of payments already made, the department shall return any intergovernmental transfer fund amounts associated with the payment for which federal financial participation is not available to the applicable transferring entities within 14 days from the date of the associated recoupment or other determination, as applicable.
(4) As a condition of participation in the Global Payment Program, each designated public hospital or affiliated governmental agency or entity, agrees to provide intergovernmental transfer of funds necessary to meet the nonfederal share obligation as calculated under subdivision (g) for Global Payment Program payments made pursuant to this section or Section 14184.300 and the Special Terms and Conditions. Any intergovernmental transfer of funds made pursuant to this section or Section 14184.300 shall be considered voluntary for purposes of all federal laws. No state General Fund moneys shall be used to fund the nonfederal share of any Global Payment Program payment.
(g) For each scheduled quarterly interim payment, interim yearend payment, and final reconciliation payment pursuant to subdivision (d), the department shall determine the intergovernmental transfer amount for each GPP system as follows:
(1) The department shall determine the amount of the quarterly interim payment, interim yearend payment, or final reconciliation payment, as applicable, that is payable to each GPP system pursuant to subdivision (d). For purposes of these determinations, the redistributed amounts described in paragraph (2) of subdivision (d) shall be disregarded.
(2) The department shall determine the aggregate amount of intergovernmental transfers necessary to fund the nonfederal share of the quarterly interim payment, interim yearend payment, or final reconciliation payment, as applicable, identified in paragraph (1) for all the GPP systems.
(3) With respect to each quarterly interim payment, interim yearend payment, or final yearend reconciliation payment, as applicable, an initial transfer amount shall be determined for each GPP system, calculated as the amount for the GPP system determined in paragraph (1), multiplied by the nonfederal share percentage, as defined in Section 14184.10, and multiplied by the applicable GPP system-specific IGT factor as follows:
(A) Los Angeles County Health System: 1.100.
(B) Alameda Health System: 1.137.
(C) Arrowhead Regional Medical Center: 0.923.
(D) Contra Costa Regional Medical Center: 0.502.
(E) Kern Medical Center: 0.581.
(F) Natividad Medical Center: 1.183.
(G) Riverside University Health System-Medical Center: 0.720.
(H) San Francisco General Hospital: 0.507.
(I) San Joaquin General Hospital: 0.803.
(J) San Mateo Medical Center: 1.325.
(K) Santa Clara Valley Medical Center: 0.706.
(L) Ventura County Medical Center: 1.401.
(4) The initial transfer amount for each GPP system determined under paragraph (3) shall be further adjusted as follows to ensure that sufficient intergovernmental transfers are available to make payments to all GPP systems:
(A) With respect to each quarterly interim payment, interim yearend payment, or final reconciliation payment, as applicable, the initial transfer amounts for all GPP systems determined under paragraph (3) shall be added together.
(B) The sum of the initial transfer amounts in subparagraph (A) shall be subtracted from the aggregate amount of intergovernmental transfers necessary to fund the payments as determined in paragraph (2). The resulting positive or negative amount shall be the aggregate positive or negative intergovernmental transfer adjustment.
(C) Each GPP system-specific IGT factor, as specified in subparagraphs (A) to (L), inclusive, of paragraph (3) shall be subtracted from 2.000, yielding an IGT adjustment factor for each GPP system.
(D) The IGT adjustment factor calculated in subparagraph (C) for each GPP system shall be multiplied by the positive or negative amount in subparagraph (B), and multiplied by the allocation percentage determined for the GPP system in paragraph (4) of subdivision (c), yielding the amount to be added or subtracted from the initial transfer amount determined in paragraph (3) for the applicable GPP system.
(E) The transfer amount to be paid by each GPP system with respect to the applicable quarterly interim payment, interim yearend payment, or final reconciliation payment, shall equal the initial transfer amount determined in paragraph (3) as adjusted by the amount determined in subparagraph (D).
(5) Upon the determination of the redistributed amounts described in paragraph (2) of subdivision (d) for the final reconciliation payment, the department shall, with respect to each GPP system that exceeded its respective threshold, determine the associated intergovernmental transfer amount equal to the nonfederal share that is necessary to draw down the additional payment, and shall include this amount in the GPP system’s transfer amount.
(h) The department may initiate audits of GPP systems’ data submissions and reports, and may request supporting documentation. Any audits conducted by the department shall be complete within 22 months of the end of the applicable GPP program year to allow for the appropriate finalization of payments to the participating GPP system, but subject to recoupment if it is later determined that federal financial participation is not available for any portion of the applicable payments.
(i) If the department determines, during the course of the demonstration term and in consultation with participating GPP systems, that the Global Payment Program should be terminated for subsequent years, the department shall terminate the Global Payment Program by notifying the federal Centers for Medicare and Medicaid Services in accordance with the timeframes specified in the Special Terms and Conditions. In the event of this type of termination, the department shall issue a declaration terminating the Global Payment Program and shall work with the federal Centers for Medicare and Medicaid Services to finalize all remaining payments under the Global Payment Program. Subsequent to the effective date for any termination accomplished pursuant to this subdivision, the designated public hospitals that participated in the Global Payment Program shall claim and receive disproportionate share hospital payments, if eligible, as described in subparagraph (D) of paragraph (4) of subdivision (b) of Section 14184.30, but only to the extent that any necessary federal approvals are obtained and federal financial participation is available and not otherwise jeopardized.
(j) Commencing January 1, 2021, the Global Payment Program shall be continued as modified pursuant to Section 14184.300.

SEC. 6.

 Section 14184.300 is added to the Welfare and Institutions Code, to read:

14184.300.
 (a) (1) To the extent federal financial participation is available, the department shall continue to implement the Global Payment Program (GPP) as described in Section 14184.40 during the CalAIM term. The department shall continue to administer the GPP in accordance with Section 14184.40, except to the extent changes are approved in the CalAIM Terms and Conditions and except as provided in subdivision (b).
(b) (1) Commencing January 1, 2021, the GPP program year shall be aligned with the calendar year. The department shall provide to the GPP systems a revised schedule for the reporting, notification, intergovernmental transfer, and payment set forth in paragraphs (3) and (4) of subdivision (d) of Section 14184.40, which shall maintain the same conditions and timeline, adjusted by six months to align with the calendar year, and consistent with the CalAIM Terms and Conditions.
(2) Commencing January 1, 2021, the GPP system-specific intergovernmental transfer factors identified in paragraph (3) of subdivision (g) of Section 14184.40 shall be inapplicable and the initial transfer amount calculated for each GPP system shall be identified by the department and communicated in writing to each GPP system for each applicable GPP program year.
(3) Commencing January 1, 2021, for purposes of determining the applicable GPP’s aggregate annual limit, applicable portions of the federal disproportionate share allotment for the federal fiscal year that ends in the GPP program year, and for the federal fiscal year that commences in the applicable GPP program year, shall be appropriately aligned with the GPP program year.
(c) Prior to implementing any of the modifications described in subdivision (b), the department shall consult with the GPP systems.
(d) Except as otherwise provided in the CalAIM Terms and Conditions or in this section, and without limiting the authority in subdivision (g) of Section 14184.102, the rights, obligations, and limitations set forth in Section 14184.40 shall apply to the GPP as continued pursuant to this section.

SEC. 7.

 Section 14184.301 is added to the Welfare and Institutions Code, to read:

14184.301.
 The payment methodologies and requirements described in Section 14184.30, as amended by the act that added this section, shall continue to apply during the entirety of the CalAIM term and any extension periods in which the Global Payment Program pursuant to Section 14184.300 is authorized.

SEC. 2.SEC. 8.

 Section 14184.400 is added to the Welfare and Institutions Code, to read:

14184.400.
 (a) Commencing January 1, 2022, subject to subdivision (f) of Section 14184.102, the department shall continue to implement the Medi-Cal Specialty Mental Health Services Program, as described in Chapter 8.9 (commencing with Section 14700), as a component of CalAIM and in accordance with the CalAIM Terms and Conditions.
(b) Each mental health plan contracting with the department to provide Medi-Cal specialty mental health services pursuant to Chapter 8.9 (commencing with Section 14700) shall comply with all applicable CalAIM Terms and Conditions and any guidance issued by the department pursuant to subdivision (d) of Section 14184.102.

SEC. 3.SEC. 9.

 Section 14184.401 is added to the Welfare and Institutions Code, to read:

14184.401.
 (a) Commencing January 1, 2022, subject to subdivision (f) of Section 14184.102, the department shall continue to implement the Drug Medi-Cal organized delivery system (DMC-ODS) program, previously authorized under the California Medi-Cal 2020 Demonstration pursuant to Article 5.5 (commencing with Section 14184), as a component of CalAIM and in accordance with the CalAIM Terms and Conditions.
(b) A county, or consortium of counties in a regional model, that elects to administer, or elects to continue to administer, a DMC-ODS pilot shall enter into and maintain an intergovernmental agreement with the department. Those counties shall comply with all applicable CalAIM Terms and Conditions and any guidance issued by the department pursuant to subdivision (d) of Section 14184.102 as a condition of participation.
(c) An election by a county, or consortium of counties in a regional model, to participate as a DMC-ODS pilot shall be considered voluntary for purposes of all state and federal laws.

SEC. 4.SEC. 10.

 Section 14184.402 is added to the Welfare and Institutions Code, to read:

14184.402.
 (a) (1) Section 14059.5 does not preclude coverage for, or reimbursement of, a clinically appropriate and covered mental health or substance use disorder assessment, screening, or treatment service under any of the following circumstances:
(A) Before a provider renders their diagnosis.
(B) During a provider’s treatment of a Medi-Cal beneficiary as part of an assessment.
(C) For a provider treating a Medi-Cal beneficiary who has a cooccurring mental health condition and substance use disorder.
(D) For a provider who provides specialty mental health services to a Medi-Cal beneficiary under a contract with a county mental health plan when that beneficiary concurrently receives nonspecialty mental health services from a Medi-Cal managed care plan or under the Medi-Cal fee-for-service delivery system, if those services are coordinated between the specialty and nonspecialty mental health systems and those services are not duplicated.
(E) For a provider who provides nonspecialty mental health services to a Medi-Cal beneficiary pursuant to a contract with a Medi-Cal managed care plan or under the fee-for-service delivery system when that beneficiary concurrently receives specialty mental health services from a county mental health plan, if those services are coordinated between the nonspecialty and specialty mental health systems and those services are not duplicated.
(2) Section 14059.5 shall not preclude clinically appropriate and covered mental health or substance use disorder services during the assessment process.
(b) The department shall not impose a requirement for a covered diagnosis, such as the diagnoses described under paragraph (1) of subdivision (a) of Section 1820.205, or paragraph (2) of subdivision (b) of Section 1830.205, of Title 9 of the California Code of Regulations, as a condition to receive Medi-Cal specialty mental health services.
(c) (1) The medical necessity criteria for a Medi-Cal beneficiary under 21 years of age in the Drug Medi-Cal Treatment Program and the Drug Medi-Cal organized delivery system shall be consistent with paragraph (1) of subdivision (b) of Section 14059.5.
(2) A provider who treats a Medi-Cal beneficiary under 21 years of age shall only apply the American Society of Addiction Medicine placement criteria when that provider determines placement level following their determination of medical necessity.
(d) A county that does not participate in the Drug Medi-Cal organized delivery system shall provide, or arrange for the provision of all medically necessary services required under the Drug Medi-Cal organized delivery system for an individual under 21 years of age, consistent with the federal requirements for Early and Periodic Screening, Diagnostic, and Treatment services set forth in Section 1396d(r) of Title 42 of the United States Code.
(e) A dispute between a county mental health plan and a Medi-Cal managed care health plan shall not delay the provision of medically necessary services by the county mental health plan or the Medi-Cal managed care health plan. Pending resolution of the dispute, those plans shall comply with Section 1850.525 of Title 9 of the California Code of Regulations.
(f) For the 2022–23 and 2023–24 fiscal years, the department shall include as part of the Medi-Cal program assumptions and estimates, as described under Section 14100.5, a description of all of the following as it relates to Medi-Cal specialty mental health services:
(1) Documentation requirements, including changes to the documentation requirements for the treatment plan and chart notes.
(2) The status of the proposed transition to Healthcare Common Procedure Coding System Level 1 Code.
(3) Changes to the department’s clinical auditing standards.
(g) (1) The department shall develop, in consultation with county behavioral health directors, consumer advocates, labor organization representing county mental health workers, mental health and substance use disorder treatment providers, standardized screening tools to guide a referral to a behavioral health delivery system. The department shall develop a standardized screening tool for Medi-Cal beneficiaries who are under 21 years of age and those who are over 21 years of age. The department shall require the use of these standardized screening tools.
(2) The department shall develop, in consultation with county behavioral health directors, consumer advocates, labor organization representing county mental health workers, mental health and substance use disorder treatment providers, standardized statewide transition tools to ensure that Medi-Cal beneficiaries requiring transition between delivery systems receive timely coordinated care. The department shall develop standardized statewide transition tools for Medi-Cal beneficiaries who are under 21 years of age and those who are over 21 years of age. The department shall require the use of these statewide transition tools.
(3) The department shall field test the tools described under paragraphs (1) and (2) before implementing these tools.
(h) Notwithstanding Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, the department, without taking any further regulatory action, shall implement, interpret, and make specific this subdivision by means of all-county letters, plan letters, plan provider bulletins, manuals, plan contract amendments, or similar instructions until regulations are revised or adopted.
(i) By July 1, 2023, the department shall promulgate regulations, as necessary, in accordance with the requirements of Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code.

SEC. 5.SEC. 11.

 Section 14184.403 is added to the Welfare and Institutions Code, to read:

14184.403.
 (a) Notwithstanding any other law, commencing no sooner than July 1, 2022, subject to subdivision (f) of Section 14184.102, each Medi-Cal behavioral health delivery system shall comply with the behavioral health payment reform provisions approved in the CalAIM Terms and Conditions and any associated instruction issued by the department pursuant to subdivision (d) of Section 14184.102.
(b) As a component of behavioral health payment reform under CalAIM, the department shall design and implement, at a minimum, an intergovernmental transfer-based reimbursement methodology to replace the use of certified public expenditures for claims associated with covered Medi-Cal specialty mental health services and Medi-Cal drug services provided through Medi-Cal behavioral health delivery systems.
(c) Notwithstanding any other law, commencing no sooner than July 1, 2022, the nonfederal share of any payments associated with each Medi-Cal behavioral health delivery system shall consist of voluntary intergovernmental transfers of funds provided by eligible governmental agencies or public entities associated with a respective Medi-Cal behavioral delivery system. Upon providing any intergovernmental transfer of funds, each transferring entity shall certify that the transferred funds qualify for federal financial participation pursuant to Section 433.51 of Title 42 of the Code of Federal Regulations, any other applicable federal Medicaid laws, and the CalAIM Terms and Conditions, and in the form and manner specified by the department. Any intergovernmental transfer of funds made pursuant to this section shall be considered voluntary for purposes of all state and federal laws. Notwithstanding any other law, the department shall not assess the fee described in subdivision (d) of Section 14301.4 or any other similar fee on the intergovernmental transfers made pursuant to this section.
(d) The department shall establish and implement prospective reimbursement rate methodologies utilizing past county cost experience for covered Medi-Cal specialty mental health services and Medi-Cal drug services provided through Medi-Cal behavioral health delivery systems. Those methodologies shall make use of peer groups whereby counties are grouped according to past cost experience, as determined appropriate by the department. The department shall determine the frequency of payments and intergovernmental transfers made pursuant to this section.
(e) For purposes of this section, “Medi-Cal behavioral health delivery system” means an entity or local agency that contracts with the department to provide covered behavioral health Medi-Cal benefits pursuant to Article 3.2 (commencing with Section 14124.20), Section 14184.400, or Chapter 8.9 (commencing with Section 14700), or a county Drug Medi-Cal organized delivery system pilot authorized under the CalAIM Terms and Conditions and described in Section 14184.401.

SEC. 6.SEC. 12.

 Section 14184.404 is added to the Welfare and Institutions Code, to read:

14184.404.
 (a) Notwithstanding any other law, commencing January 1, 2027, subject to subdivision (f) of Section 14184.102, an individual county, or counties acting jointly, shall provide and administer covered behavioral health Medi-Cal benefits under a single Medi-Cal behavioral health delivery system contract, in accordance with the CalAIM Terms and Conditions.
(b) During the CalAIM term, the department, in consultation with counties, shall conduct any planning activities it deems necessary and issue related guidance pursuant to subdivision (d) of Section 14184.102 to facilitate implementation of subdivision (a).
(c) The department may authorize a noncounty organization that it contracts with pursuant to subdivision (a) of Section 14712 or Section 14124.21 to provide and administer covered behavioral health Medi-Cal benefits under a single Medi-Cal Behavioral Health Delivery System contract, in accordance with the CalAIM Terms and Conditions.
(d) For purposes of this section, “Medi-Cal behavioral health delivery system” means an entity or local agency that contracts with the department to provide covered behavioral health Medi-Cal benefits pursuant to Article 3.2 (commencing with Section 14124.20), or Section 14184.400 and Chapter 8.9 (commencing with Section 14700), or a county Drug Medi-Cal organized delivery system, as authorized under the CalAIM Terms and Conditions and described in Section 14184.401.

SEC. 13.

 Section 14184.600 is added to the Welfare and Institutions Code, to read:

14184.600.
 (a) No later than July 1, 2022, the department shall issue guidance, in consultation with the County Welfare Directors Association of California, representatives of county human services agencies, the exclusive representative of county eligibility workers, and representatives of client advocacy organizations, to restart county performance reporting and monitoring processes consistent with Sections 14154 and 14154.5. During the consultation process, as required by this section, the department shall do all of the following:
(1) Review the current corrective action processes, set forth in Sections 14154 and 14154.5, and related guidance, and recommend changes to create a continuous quality improvement process in lieu of a process that could result in sanctions to a county.
(2) Review and update its processes on providing technical assistance to counties on measures where performance is consistently below expectations and on other performance issues that may be identified in the course of other performance or quality assurance reviews.
(3) Determine an agreed-upon method for periodically sharing county performance measure data gathered pursuant to Sections 14154 and 14154.5 in a public dashboard to the extent that a method does not already exist.
(4) Review and update, as needed, any previous guidance regarding the processes required by Sections 14154 and 14145.5.
(5) Recommend other actions that could improve performance in areas where one or more counties are performing below the measures set forth in Sections 14154 and 14154.5. These actions shall include, but not are not limited to, undertaking a review of guidance and regulations related to Medi-Cal eligibility, developing a process for updating regulation and guidance on program rules and requirements, making this information accessible to counties, and updating it regularly going forward.
(b) During the CalAIM term, the department shall convene a workgroup consisting of counties and other applicable stakeholders to develop and implement one or more initiatives to improve the collection and use of beneficiary demographic and contact information for the purpose of administering the Medi-Cal program and other applicable public assistance programs.

SEC. 14.

 Section 14197.4 of the Welfare and Institutions Code is amended to read:

14197.4.
 (a) The Legislature finds and declares all of the following:
(1) Designated public hospital systems play an essential role in the Medi-Cal program, providing high-quality care to a disproportionate number of low-income Medi-Cal and uninsured populations in the state. Because Medi-Cal covers approximately one-third of the state’s population, the strength of these essential public health care systems is of critical importance to the health and welfare of the people of California.
(2) Designated public hospital systems provide comprehensive health care services to low-income patients and lifesaving trauma, burn, and disaster-response services for entire communities, and train the next generation of doctors and other health care professionals, such as nurses and paramedical professionals, who are critical to new team-based care models that achieve more efficient and patient-centered care.
(3) The Legislature intends to continue to provide levels of support for designated public hospital systems in light of their reliance on Medi-Cal funding to provide quality care to everyone, regardless of insurance status, ability to pay, or other circumstance, the significant proportion of Medi-Cal services provided under managed care by these public hospital systems, and new federal requirements related to Medicaid managed care.
(4) It is the intent of the Legislature that Medi-Cal managed care plans and designated public hospital systems that may enter into contracts to provide services for Medi-Cal beneficiaries shall in good faith negotiate for, and implement, contract rates, the provision and arrangement of services and member assignment that are sufficient to ensure continued participation by Medi-Cal managed care plans and designated public hospital systems and to maintain access to services for Medi-Cal managed care beneficiaries and other low-income patients.
(5) It is the intent of the Legislature that, in order to ensure both the financial viability of Medi-Cal managed care plans and support the participation of designated public hospital systems in Medi-Cal managed care, the department shall provide Medi-Cal managed care plans actuarially sound rates reflecting the directed contract services payments implemented to comply with the new federal requirements relating to Medicaid managed care.
(b) Commencing with the 2017–18 state fiscal year, and for each state fiscal year or rate year, as applicable, thereafter, and notwithstanding any other law, the department shall require each Medi-Cal managed care plan to increase contract services payments to the designated public hospital systems by amounts determined under a directed payment methodology that meets federal requirements and as described in this subdivision. The directed payments may be determined and applied as distributions from directed payment pools, as a uniform percentage increase, or other basis, and may incorporate acuity adjustments or other factors.
(1) The directed payments may separately account for inpatient hospital services and noninpatient hospital services. The directed payments shall be developed and applied separately for classes of designated public hospital systems. The department, in consultation with the designated public hospital systems, shall establish the classes of designated public hospital systems consistent with the objectives set forth in subdivisions (a) and (d) and that take into account differences in services provided, service delivery systems, and in the level of risk assumed from managed care plans. The factors to be considered shall include, but are not limited to, operation by the University of California, designated public hospital systems comprised of multiple acute care hospitals, level 1 or level 2 trauma designation, and the assumption of risk for the provision of inpatient hospital services.
(2) To the extent permitted by federal law and to meet the objectives identified in subdivisions (a) and (d), the department shall develop and implement the directed payment program in consultation with designated public hospital systems or Medi-Cal managed care plans, or both, as follows:
(A) The department, in consultation with the designated public hospital systems, shall annually determine on a prospective basis the aggregate amount of payments that will be directed to each class of designated public hospital systems pursuant to this subdivision and the classification of each designated public hospital system. Once the department determines the classification for each designated public hospital system for a particular state fiscal year or rate year, that classification shall not be eligible to change until no sooner than the subsequent state fiscal year. For state fiscal years or rate years following the 2017–18 state fiscal year, the aggregate amounts of payments to a class of designated public hospital systems shall account for trend adjustments to the aggregate amounts available during the prior state fiscal year, subject to any modifications to account for changes in the classification of designated public hospital systems, changes required by federal law, changes to account for the size of the payments made pursuant to subdivision (c), or other material changes.
(B) The department, in consultation with the designated public hospital systems, shall develop the methodologies for determining the required directed payments for each designated public hospital system.
(C) To the extent necessary to meet the objectives identified in subdivisions (a) and (d) or to comply with federal requirements, the department may, in consultation with the designated public hospital systems, adjust or modify the amounts of the aggregate directed payments for any class of designated public hospital systems, the method for determining the distribution of the directed payment amounts within any class of designated public hospital systems, and may modify, consolidate, or subdivide the classes of designated public hospital systems established pursuant to paragraph (1).
(D) After the aggregate amounts and the distribution methodology of directed payments for each designated public hospital system class have been established, the department shall consult with the designated public hospital systems and each affected Medi-Cal managed care plan with regard to the impact on the Medi-Cal managed care plan capitation ratesetting process and implementation of the directed payment requirements, including applicable interim and final payment processes, to ensure that 100 percent of the aggregate amounts are paid to the applicable designated public hospital system.
(3) The required directed payment amounts shall be paid by the Medi-Cal managed care plans as adjustments, in a form and manner specified by the department, to the total amounts of contract services payments otherwise paid to the designated public hospital systems.
(4) The directed payments required under this subdivision shall be implemented and documented by each Medi-Cal managed care plan and designated public hospital system in accordance with all of the following parameters and any guidance issued by the department:
(A) A Medi-Cal managed care plan and the designated public hospital systems shall determine the manner, timing, and amount of payment for contract services, including through fee-for-service, capitation, or other permissible manner. The rates of payment for contract services agreed upon by the Medi-Cal managed care plan and the designated public hospital system shall be established and documented without regard to the directed payments and quality incentive payments required by this section.
(B) The required directed payment enhancements provided pursuant to this subdivision shall not supplant amounts that would otherwise be payable by a Medi-Cal managed care plan to a designated public hospital system for an applicable state fiscal year or rate year, and the Medi-Cal managed care plan shall not impose a fee or retention amount that would result in a direct or indirect reduction to the amounts required under this subdivision.
(C) A contract between a Medi-Cal managed care plan and a designated public hospital system shall not be terminated by either party for the specific purpose of circumventing or otherwise impacting the payment obligations implemented pursuant to this subdivision.
(D) In the event a Medi-Cal managed care plan subcontracts or delegates responsibility to a separate entity for either or both the arrangement or payment of services, the Medi-Cal managed care plan shall be responsible for paying the designated public hospital system the directed payment described in this subdivision with respect to the services it provides that are covered by that arrangement. The designated public hospital system and the applicable subcontractor or delegated entity shall work together with the Medi-Cal managed care plan to provide the information necessary to facilitate the Medi-Cal managed care plan’s compliance with the payment requirements under this subdivision.
(5) Each state fiscal year, a Medi-Cal managed care plan shall provide to the department, at the times and in the form and manner specified by the department, an accounting of amounts paid or payable to the designated public hospital systems it contracts with, including both contract rates and the directed payments, to demonstrate compliance with this subdivision. To the extent the department determines that a Medi-Cal managed care plan is not in compliance with the requirements of this subdivision, or is otherwise circumventing the purposes thereof, to the material detriment of an applicable designated public hospital system, the department may, after providing notice of its determination to the affected Medi-Cal managed care plan and allowing a reasonable period for the Medi-Cal managed care plan to cure the specified deficiencies, reduce the default assignment into the Medi-Cal managed care plan with respect to all Medi-Cal managed care beneficiaries by up to 25 percent in the applicable county, so long as the other Medi-Cal managed care plan or Medi-Cal managed care plans in the applicable county have the capacity to receive the additional default membership. The department’s determination whether to exercise discretion under this paragraph shall not be subject to judicial review, except that a Medi-Cal managed care plan that has its default assignment reduced pursuant to this paragraph may bring a writ of mandate under Section 1085 of the Code of Civil Procedure to rectify an abuse of discretion by the department under this paragraph. Nothing in this paragraph shall be construed to preclude or otherwise limit the right of any Medi-Cal managed care plan or designated public hospital system to pursue a breach of contract action, or any other available remedy as appropriate, in connection with the requirements of this subdivision.
(6) Capitation rates paid by the department to a Medi-Cal managed care plan shall be actuarially sound and account for the Medi-Cal managed care plan’s obligation to pay the directed payments to designated public hospital systems in accordance with this subdivision. The department may require Medi-Cal managed care plans and the designated public hospital systems to submit information regarding contract rates and expected or actual utilization of services, at the times and in the form and manner specified by the department. To the extent consistent with federal law and actuarial standards of practice, the department shall utilize the most recently available data and reasonable projections, as determined by the department, when accounting for the directed payments required under this subdivision, and shall account for additional clinics, practices, or other health care providers added to a designated public hospital system. In implementing the requirements of this section, including the Medi-Cal managed care plan ratesetting process, the department may additionally account for material adjustments, as appropriate under federal law and actuarial standards, as described above, and as determined by the department, to contracts entered into between a Medi-Cal managed care plan or applicable subcontracted or delegated entity and a designated public hospital system.
(c) Commencing with the 2017–18 state fiscal year, year for designated public hospital systems, and commencing with the 2020–21 state fiscal year for district and municipal public hospitals, and for each state fiscal year or rate year, as applicable, thereafter, the department, in consultation with the designated public hospital systems systems, district and municipal public hospitals, and applicable Medi-Cal managed care plans, as applicable, shall establish and implement a program or programs under which a designated public hospital system or a district and municipal public hospital may earn performance-based quality incentive payments from the Medi-Cal managed care plan they contract with in accordance with this subdivision.
(1) Payments shall be earned by each designated public hospital system based on its performance in achieving identified targets for quality of care.
(A) The department, in consultation with the designated public hospital systems and applicable Medi-Cal managed care plans, shall establish and provide a method for updating uniform performance measures for the performance-based quality incentive payment program and parameters for the designated public hospital systems to select the applicable measures. The performance measures shall advance at least one goal identified in the state’s Medicaid quality strategy. Measures Through and until June 30, 2020, performance measures pursuant to this subdivision shall not duplicate measures utilized in the PRIME program established pursuant to Section 14184.50.
(B) Each designated public hospital system shall submit reports to the department containing information required to evaluate its performance on all applicable performance measures, at the times and in the form and manner specified by the department. A Medi-Cal managed care plan shall assist a designated public hospital system in collecting and distributing information necessary for these reports.
(2) The department, in consultation with each designated public hospital system, shall determine a maximum amount that each class established pursuant to paragraph (1) of subdivision (b) may earn in quality incentive payments for the state fiscal year.
(3) The department shall calculate the amount earned by each designated public hospital system based on its performance score established pursuant to paragraph (1).
(A) This amount shall be paid to the designated public hospital system by each of its contracted Medi-Cal managed care plans. If a designated public hospital system contracts with multiple Medi-Cal managed care plans, the department shall identify each Medi-Cal managed care plan’s proportionate amount of the designated public hospital system’s payment. The timing and amount of the distributions and any related reporting requirements for interim payments shall be established and agreed to by the designated public hospital system and each of the applicable Medi-Cal managed care plans.
(B) A contract between a Medi-Cal managed care plan and designated public hospital system shall not be terminated by either party for the specific purpose of circumventing or otherwise impacting the payment obligations implemented pursuant to this subdivision.
(C) Each Medi-Cal managed care plan shall be responsible for payment of the quality incentive payments described in this subdivision, subject to funding by the department pursuant to paragraph (4). (5).
(4) Commencing with the 2020–21 state fiscal year, payments under this paragraph shall be earned by a district and municipal public hospital based on its performance in achieving identified targets for quality of care.
(A) The department, in consultation with district and municipal public hospitals, shall establish a class of district and municipal public hospitals, or multiple classes to the extent federal approval is available, for purposes of payments under this paragraph.
(B) The department, in consultation with district and municipal public hospitals, shall determine a maximum amount that the class, or classes, of district and municipal hospitals established pursuant to subparagraph (A) may earn in quality incentive payments for an applicable state fiscal year.
(C) The department, in consultation with district and municipal public hospitals and applicable Medi-Cal managed care plans, shall establish and provide a method for updating uniform performance measures for the performance-based quality incentive payments and parameters for district and municipal public hospitals to select the applicable measures. The performance measures shall advance at least one goal identified in the state’s Medicaid quality strategy.
(D) Each district and municipal public hospital shall submit reports to the department containing information required to evaluate its performance on all applicable performance measures, at the time and in the form and manner specified by the department. A Medi-Cal managed care plan shall assist a district and municipal public hospital in collecting and distributing information necessary for these reports.
(E) The department shall calculate the amount earned by each district and municipal public hospital based on its performance score established pursuant to subparagraphs (C) and (D). This amount shall be paid to the district and municipal public hospital by each of its contracted Medi-Cal managed care plans. If a district and municipal public hospital contracts with multiple Medi-Cal managed care plans, the department shall identify each Medi-Cal managed care plan’s proportionate amount of the district and municipal public hospital’s payment. The timing and amount of the distributions and any related reporting requirements for interim payments shall be established and agreed to by the district and municipal public hospital and each of the applicable Medi-Cal managed care plans.
(F) A contract between a Medi-Cal managed care plan and district and municipal public hospital shall not be terminated by either party for the specific purpose of circumventing or otherwise impacting the payment obligations implemented pursuant to this paragraph.
(G) Each Medi-Cal managed care plan shall be responsible for payment of the quality incentive payments described in this paragraph, subject to funding by the department pursuant to paragraph (5).

(4)

(5) The department shall provide appropriate funding to each Medi-Cal managed care plan, to account for and to enable them to make the quality incentive payments described in this subdivision, through the incorporation into actuarially sound capitation rates or any other federally permissible method. The amounts designated by the department for the quality incentive payments made pursuant to this subdivision shall be reserved for the purposes of the performance-based quality incentive payment program.
(d) (1) In determining the amount of the required directed payments described in paragraph (2) of subdivision (b), and the aggregate size of the quality incentive payment program described in paragraph (2) of subdivision (c), the department shall consult with designated public hospital systems to establish levels for these payments that, in combination with one another, are projected to result in aggregate payments that will advance the quality and access objectives reflected in prior payment enhancement mechanisms for designated public hospital systems. To the extent necessary to meet these objectives or to comply with any federal requirements, the department may, in consultation with the designated public hospital systems, adjust or modify either or both the directed payments or quality incentive payment program. Once these payment levels are established, the department shall consult with the designated public hospital systems and the Medi-Cal managed care plans in the development of the Medi-Cal managed care rates needed for the directed payments and the structure of the quality incentive payment program.
(2) (A) For the 2017–18 state fiscal year, the department shall, as soon as practicable after receipt of necessary federal approvals pursuant to paragraph (1) of subdivision (g), provide written notice of the directed payment and quality incentive payment amounts established pursuant to this section. A Medi-Cal managed care plan’s obligation to pay the directed payments and quality incentive payments required under subdivisions (b) and (c), respectively, to a designated public hospital system for the 2017–18 state fiscal year shall be contingent on the receipt of the written notice described in this subparagraph.
(B) For each annual determination, commencing with the 2018–19 state fiscal year and each state fiscal year or rate year thereafter, the department shall provide written notice, as soon as practicable, to each affected Medi-Cal managed care plan and plan, designated public hospital system system, and, commencing with the 2020–21 state fiscal year, each district and municipal public hospital of the applicable Medi-Cal managed care plan’s directed payment amounts, the classification of designated public hospital systems, systems and district and municipal public hospitals, as applicable, quality incentive payment amounts, and any other information deemed necessary for the Medi-Cal managed care plan to fulfill its payment obligations under subdivisions (b) and (c), as applicable, for the subject state fiscal year. If the modification of either or both directed payment amounts or quality incentive payment amounts is necessary after receipt of the written notification, the department shall notify the Medi-Cal managed care plan and plan, designated public hospital system system, and district and municipal public hospital, as applicable, in writing of the revised amounts prior to implementation of the revised amounts.
(e) (1) The provisions of paragraphs (3), (4), and (5) of subdivision (a), paragraphs (3) and (4) of subdivisions (b) and subdivision (b), paragraphs (3) and (5) of subdivision (c), and paragraph (2) of subdivision (d) shall be deemed incorporated into each contract between a designated public hospital system and a Medi-Cal managed care plan, and its subcontractor or designee, as applicable, and any claim for breach of those provisions may be brought by the designated public hospital system or the Medi-Cal managed care plan directly in a court of competent jurisdiction.
(2) Commencing with the 2020–21 state fiscal year, the provisions of paragraph (4) of subdivision (c) and paragraph (2) of subdivision (d) shall be deemed incorporated into each contract between a district and municipal hospital and a Medi-Cal managed care plan, and its subcontractor or designee, as applicable, and any claim for breach of those provisions may be brought by the district and municipal public hospital or the Medi-Cal managed care plan directly in a court of competent jurisdiction.
(f) (1) The nonfederal share of the portion of the capitation rates specifically associated with directed payments to designated public hospital systems required under subdivision (b) and for the quality incentive payments established pursuant to subdivision (c) (c), or associated with quality incentive payments to district and municipal public hospital systems pursuant to paragraph (4) of subdivision (c), may consist of voluntary intergovernmental transfers of funds provided by designated public hospitals or district and municipal public hospitals and their affiliated governmental entities, or other public entities, pursuant to Section 14164. Upon providing any intergovernmental transfer of funds, each transferring entity shall certify that the transferred funds qualify for federal financial participation pursuant to applicable federal Medicaid laws, and in the form and manner specified by the department. Any intergovernmental transfer of funds made pursuant to this section shall be considered voluntary for purposes of all federal laws. Notwithstanding any other law, the department shall not assess the fee described in subdivision (d) of Section 14301.4 or any other similar fee.
(2) (A) When applicable for voluntary intergovernmental transfers described in paragraph (1), the department, in consultation with the designated public hospital systems, shall develop and maintain a protocol to determine the available funding for the nonfederal share associated with payments for each applicable state fiscal year pursuant to this section. The protocol developed and maintained pursuant to this paragraph shall account for any applicable contributions made by public entities to the nonfederal share of Medi-Cal managed care expenditures, including, but not limited to, contributions previously made by those specific public entities for the 2015–16 state fiscal year pursuant to Section 14182.15 or 14199.2, but excluding any contributions made pursuant to Sections 14301.4 and 14301.5. Nothing in this section shall be construed to limit or otherwise alter any existing authority of the department to accept intergovernmental transfers for purposes of funding the nonfederal share of Medi-Cal managed care expenditures.
(B) When applicable for voluntary intergovernmental transfers described in paragraph (1) that are associated with quality incentive payments to district and municipal public hospital systems, the department, in consultation with district and municipal public hospital systems, shall develop and maintain a protocol to determine the available funding for the nonfederal share associated with payments for each applicable state fiscal year pursuant to paragraph (4) of subdivision (c). Nothing in this section shall be construed to limit or otherwise alter any existing authority of the department to accept intergovernmental transfers for purposes of funding the nonfederal share of Medi-Cal managed care expenditures.
(g) (1) This section shall be implemented only to the extent that any necessary federal approvals are obtained and federal financial participation is available and is not otherwise jeopardized.
(2) For any state fiscal year in which this section is implemented, in whole or in part, and notwithstanding any other law, the department or a Medi-Cal managed care plan shall not be required to make any payment pursuant to Section 14182.15, 14199.2, or 14301.5. Nothing in this section shall be construed to preclude or otherwise impose limitations on payment amounts or arrangements that may be negotiated and agreed to between the relevant parties, including, but not limited to, the continuation of existing or the creation of new quality incentive or pay-for-performance programs in addition to the quality incentive payment program described in subdivision (c) and contract services payments that may be in excess of the directed payment amounts required under subdivision (b).
(h) (1) The department shall seek any necessary federal approvals for the directed payments and the quality incentive payments set forth in this section.
(2) The department shall consult with the designated public hospital systems with regard to the development of the directed payment levels and established pursuant to subdivision (b), with designated public hospital systems and district and municipal public hospitals with regard to the size of the quality incentive payments established pursuant to this section, subdivision (c), and shall consult with both the designated public hospital systems systems, district and municipal hospitals, and Medi-Cal managed care plans with regards to the implementation of payments under this section.
(3) The director, after consultation with the designated public hospital systems and Medi-Cal managed care plans, may modify the requirements set forth in this section to the extent necessary to meet federal requirements or to maximize available federal financial participation. In the event federal approval is only available with significant limitations or modifications, or in the event of changes to the federal Medicaid program that result in a loss of funding currently available to the designated public hospital systems, systems or to the district and municipal public hospitals, the department shall consult with the designated public hospitals system, the district and municipal public hospital, and Medi-Cal managed care plans plans, as applicable, to consider alternative methodologies.
(i) Notwithstanding Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, the department may implement, interpret, or make specific this section by means of all-county letters, plan letters, provider bulletins, or other similar instructions, without taking regulatory action. The department shall make use of appropriate processes to ensure that affected designated public hospital systems systems, the district and municipal public hospitals, and Medi-Cal managed care plans plans, as applicable, are timely informed of, and have access to, applicable guidance issued pursuant to this authority, and that this guidance remains publicly available until all payments made pursuant to this section are finalized.
(j) (1) This section (A) Directed payments and quality incentive payments to designated public hospital systems pursuant to subdivisions (b) and (c) shall cease to be operative on the first day of the state fiscal year beginning on or after the date the department determines, after consultation with the designated public hospital systems, that implementation of this section is no longer financially and programmatically supportive of the Medi-Cal program. This determination shall be based solely on both of the following factors:

(A)

(i) The projected amount of nonfederal share funds available is insufficient to support implementation of this section the payments to designated public hospital systems pursuant to subdivisions (b) and (c) in the subject state fiscal year or rate year.

(B)

(ii) The degree to which the payment arrangements for designated public hospital systems will no longer materially advance the goals and objectives reflected in this section and in the department’s managed care quality strategy drafted and implemented pursuant to Section 438.340 of Title 42 of the Code of Federal Regulations in the subject state fiscal year or rate year.

(2)

(B) In making its determination, the department shall consider all reasonable options for mitigating the circumstances set forth in paragraph (1), subparagraph (A), including, but not limited to, options for curing projected funding shortfalls and options for program revisions and strategy updates to better coordinate payment requirements with the goals and objectives of this section and the managed care quality strategy.

(3)

(C) The department shall post notice of the determination on its Internet Web site, internet website, and shall provide written notice of the determination to the Secretary of State, the Secretary of the Senate, the Chief Clerk of the Assembly, and the Legislative Counsel.
(2) (A) Quality incentive payments to district and municipal public hospitals pursuant to subdivision (c) shall cease to be operative on the first day of the state fiscal year beginning on or after the date the department determines, after consultation with the district and municipal public hospitals, that implementation of this section is no longer financially and programmatically supportive of the Medi-Cal program. This determination shall be based solely on both of the following factors:
(i) The projected amount of nonfederal share funds available is insufficient to support implementation of the quality incentive payments to district and municipal hospitals pursuant to subdivision (c) in the subject state fiscal year or rate year.
(ii) The degree to which the payment arrangement for district and municipal hospitals will no longer materially advance the goals and objectives reflected in this section and in the department’s managed care quality strategy drafted and implemented pursuant to Section 438.340 of Title 42 of the Code of Federal Regulations in the subject state fiscal year or rate year.
(B) In making its determination, the department shall consider all reasonable options for mitigating the circumstances set forth in subparagraph (A), including, but not limited to, options for curing projected funding shortfalls and options for program revisions and strategy updates to better coordinate payment requirements with the goals and objectives of this section and the managed care quality strategy.
(C) The department shall post notice of the determination on its internet website and shall provide written notice of the determination to the Secretary of State, the Secretary of the Senate, the Chief Clerk of the Assembly, and the Legislative Counsel.
(k) The department, in consultation with the designated public hospital systems and the Medi-Cal managed care plans, shall provide the Legislature with the federally approved evaluation plan required in Section 438.6(c)(2)(i)(D) of Title 42 of the Code of Federal Regulations to measure the degree to which the payments authorized under this section advance at least one of the goals and objectives of the department’s managed care quality strategy. The department, in consultation with the designated public hospital systems and the Medi-Cal managed care plans, shall report to the Legislature the results of this evaluation once the department determines that the evaluation is finalized and complete according to the terms of any applicable federal approval and no earlier than January 1, 2021.
(l) (1) The department may, after consultation with the designated public hospital systems systems, the district and municipal public hospitals, and Medi-Cal managed care plans, as applicable, exclude certain Medi-Cal managed care enrollee categories of aid, or subcategories thereof, or certain categories of medical assistance provided under a Medi-Cal managed care plan, or subcategories thereof, from the definition of “contract services payments” for purposes of the directed payment requirements described in subdivision (b).
(2) The department shall seek federal approval to implement this subdivision.
(m) For purposes of this section, the following definitions apply:
(1) “Contract services payments” means the amount paid or payable to a designated public hospital system, including amounts paid or payable under fee-for-service, capitation amounts prior to any adjustments for service payment withholds or deductions, or payments made on any other basis, under a network provider contract with a Medi-Cal managed care plan for medically necessary and covered services, drugs, supplies, or other items provided to an eligible Medi-Cal beneficiary enrolled in the Medi-Cal managed care plan, excluding services provided to individuals who are dually eligible for both the Medicare and Medi-Cal programs and any additional exclusions that are approved pursuant to subdivision (l). Contract services includes all covered services, drugs, supplies, or other items the designated public hospital system provides, or is responsible for providing, or arranging or paying for, pursuant to a network provider contract entered into with a Medi-Cal managed care plan. In the event a Medi-Cal managed care plan subcontracts or delegates responsibility to a separate entity for either or both the arrangement or payment of services, “contract services payments” also include amounts paid or payable for the services provided by, or otherwise the responsibility of, the designated public hospital system that are within the scope of services of the subcontracted or delegated arrangement so long as the designated public hospital system holds a network provider contract with the primary Medi-Cal managed care plan.
(2) “Designated public hospital” shall have the same meaning as set forth in subdivision (f) of Section 14184.10.
(3) “Designated public hospital system” means a designated public hospital and its affiliated government entity clinics, practices, and other health care providers, including the respective affiliated hospital authority and county government entities described in Chapter 5 (commencing with Section 101850) and Chapter 5.5 (commencing with Section 101852), of Part 4 of Division 101 of the Health and Safety Code.
(4) (A) “Medi-Cal managed care plan” means an applicable organization or entity that enters into a contract with the department pursuant to any of the following:
(i) Article 2.7 (commencing with Section 14087.3).
(ii) Article 2.8 (commencing with Section 14087.5).
(iii) Article 2.81 (commencing with Section 14087.96).
(iv) Article 2.82 (commencing with Section 14087.98).
(v) Article 2.91 (commencing with Section 14089).
(vi) Chapter 8 (commencing with Section 14200).
(B) “Medi-Cal managed care plan” does not include any of the following:
(i) A mental health plan contracting to provide mental health care for Medi-Cal beneficiaries pursuant to Chapter 8.9 (commencing with Section 14700).
(ii) A plan not covering inpatient services, such as primary care case management plans, operating pursuant to Section 14088.85.
(iii) A Program of All-Inclusive Care for the Elderly organization operating pursuant to Chapter 8.75 (commencing with Section 14591).
(5) “Network provider” shall have the same meaning as that term is defined in Section 438.2 of Title 42 of the Code of Federal Regulations, and does not include arrangements where a designated public hospital system or a district and municipal public hospital provides or arranges for services under an agreement intended to cover a specific range of services for a single identified patient for a single inpatient admission, including any directly related followup care, outpatient visit or service, or other similar patient specific nonnetwork contractual arrangement, such as a letter of agreement or single case agreement, with a Medi-Cal managed care plan or subcontractor of a Medi-Cal managed care plan.
(6) “District and municipal public hospital” means a nondesignated public hospital, as defined in paragraph (25) of subdivision (a) of Section 14105.98, that is a contracted network provider of one or more Medi-Cal managed care plans, and that had an approved project plan under the PRIME program established pursuant to Section 14184.50 or is otherwise authorized to participate in a quality incentive directed payment program pursuant to the applicable terms of federal approval obtained by the department pursuant to paragraph (1) of subdivision (h).

SEC. 7.SEC. 15.

 The Legislature finds and declares that this act is a state law within the meaning of Section 1621(d) of Title 8 of the United States Code.

SEC. 8.SEC. 16.

 (a) The provisions of this act are severable. If any provision of this act or its application is held invalid, that invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application.
(b) The Legislature hereby declares that it would have enacted this act and each and every provision thereof not declared invalid or unconstitutional without regard to whether any other provision of this act or application thereof would be subsequently declared invalid or unconstitutional.

SEC. 17.

 If the Commission on State Mandates determines that this act contains costs mandated by the state, reimbursement to local agencies and school districts for those costs shall be made pursuant to Part 7 (commencing with Section 17500) of Division 4 of Title 2 of the Government Code.