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Assembly Bill (AB) 85

Assembly Bill (AB) 85. Redirection of 1991 Realignment Los Angeles County. Background.

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Assembly Bill (AB) 85

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  1. Assembly Bill (AB) 85 Redirection of 1991 Realignment Los Angeles County

  2. Background California elected to implement a state-run Medicaid Expansion for Health Care Reform. Therefore, beginning in 2014, it assumed that county’s costs associated with the indigent population will decrease and the state’s costs will increase. Assembly Bill (AB) 85 lays out a process by which a portion of the 1991 Health Realignment Funds will be redirected to support Social Services programs. Los Angeles County

  3. Background LA County formula, should they not choose to redirect 60% of health realignment, is addressed in Section 17612.5 Redirection to begin effective January 2014 Los Angeles County

  4. Overview LA County has 2 options for determining the redirected amount. LA County must inform DHCS of tentative decision by 11/1/13 May adopt a resolution by 1/22/14 • 60% of 1991 Health Realignment Funds • + • 60% of Maintenance of Effort • MOE is capped at 25.9% of the total value of LA County’s 2010-11 health realignment allocation County Savings Determination Process (Formula) Lesser of: Revenues – Costs x.80 (.70 in 13/14) Or County Indigent Care Realignment (Health realignment amount x health realignment indigent care percentage) If LA County does not adopt a resolution or fails to inform DHCS of their chosen option, then the calculation is 62.5% of County Realignment funds and 62.5% of the MOE. Counties that select the 60%/40% option may later petition the Health Care Funding Resolution Committee to elect the formula option. Los Angeles County

  5. County Savings Determination Process The purpose of the formula is to calculate the health care savings the county is experiencing as a result of health care reform. This is achieved by determining if the overall available revenues exceed the costs the county is incurring (subject to a cost containment limit). Revenues • Total Revenues • Imputed county low-income health amount (county subsidy) Costs • Total Costs County Indigent Care Health Realignment Amount • Health Realignment Amount X Health Realignment Indigent Care Percentage = MIN((SUM(1+2)-3)*.80 [or] County Indigent Care Health Realignment Amount) *In 2013/14, the savings percentage will be .70 Los Angeles County

  6. Revenues Los Angeles County

  7. Definitions – Total Revenue • Sum of revenue paid to LA County Department of Health Services (DHS) • Special Local Health Funds • Assessments and fees for health services • 91% of Tobacco Settlements (Less bond payments and cost of securitization) • Determined based on its central accounting system known as eCAPs as of November 30 of the following fiscal year • Type A and Type B payer revenues Los Angeles County

  8. Type A Payers • Medicare • Commercial health insurance • In-home support services providers Los Angeles County

  9. Historical Base Type A Revenues • Calculate actual revenue received for each historical year (FY 08/09-11/12) • Average the historical year amounts Los Angeles County

  10. Type A Payer Revenues • The greater of: • The amount of actual revenue received from Type A payers for services rendered during the fiscal year • Historical base Type A revenues as adjusted by Type A adjustments (these account for decreases in volume and costs) Los Angeles County

  11. Baseline Type A Payer Costs • Average of the costs of services provided to Type A payer patients rendered in each historical year (FY08/09-11/12) • Find the actual costs for each historical fiscal year • Take the average in 1. Los Angeles County

  12. Type A Adjustment • Type A Revenues are adjusted if: Step 1: Type A payer revenue for the fiscal year is less than the historical base Step 2: If Step 1 is met, to adjust, all of the following must be met for at least one of the specified Type A payers: • Type A payer revenue for FY < historical base • Type A payer costs for the FY < historical base trended using the blended CPI • Type A payer volume for the FY < historical base Los Angeles County

  13. Type A Adjustment - Calculation • If Step 2 is met, adjust according to Step 3 Step 3: • Calculate the percentage decrease in cost from baseline Type A payer cost as trended by the blended CPI, applied from FY 2010/11 to the subject FY. • Calculate the percentage decrease in volume base on adjusted patient days from baseline Type payer volume • Average 1 and 2 above and apply this percentage to the historical base Type A payer revenue (calculated and applied separately for each Type A payer) Los Angeles County

  14. Type B Payers • Patient care revenues • State payments for patient financial services workers • Other federal payers (excluding federal grants, Medicare and Medicaid) Los Angeles County

  15. Historical Base Type B Revenues • Calculate actual revenue received for each historical year • Average the historical year amounts Los Angeles County

  16. Type B Payer Revenue • Type B payer revenues included in total revenues in redirection formula is the greater of: • Actual revenues received from Type B payers in the fiscal year • Historical base Type B revenues Los Angeles County

  17. Definition – Adjusted Patient day LA county DHS’ total number of patient days X (Total gross revenue for all services to all patients / Sum of LA county DPHs gross inpatient revenue) • Excludes contract or out-of-network clinics or hospitals Los Angeles County

  18. Definitions – Imputed County Low-Income Health Amount SUM of: • $323,000,000 trended by 1% annually from the 2012/13 fiscal year • County indigent care health realignment amount (Health Realignment Amount X Health Realignment Indigent Care Percentage) Los Angeles County

  19. Costs Los Angeles County

  20. Definitions – Total Cost • Actual net expenditures for all operating budget units of the LA County DHS • 4 Hospital Enterprise Funds • LA County DHS’s budget units from the within the county general fund • Excludes: • Encumbrances • Intrafund transfers • Expenditure distributions • All other billable services • Determined based on eCAPs Los Angeles County

  21. Cost Containment Limit (Formula) Base Year Total Costs X Blended CPI *base year = fiscal year ending 3 years prior to the subject fiscal year Los Angeles County

  22. Cost Containment Limit • IF– the subject years actual indigent program costs exceed the calculated cost containment limit for the year THEN the cost containment limit is used for the calculation OR adjustments to the cost containment limit can be sought • If the cost containment limit is applied, a reduction the revenues in the formula is also applied. The reduction to revenues is calculated as 50% of the amount that actual costs exceed the cost containment limit. Los Angeles County

  23. Adjustments to the Cost Containment Limit • If adjusted patient days of service in subject FY is in excess of 10% of those in the base year, the excess days will be multiplied by the cost per adjusted patient day for the base year and added to the trended base year amount. • Electronic health records and related implementation and infrastructure • Costs related to state or federally mandated activities, requirements, or benefit changes • Costs resulting from a court order settlement Los Angeles County

  24. Adjustments to the Cost Containment Limit (Continued) • Costs incurred in response to seismic concerns, including costs to meet facility standards • Costs incurred as a result of a natural disaster or acts of terrorism • Total amount of any IGT for the nonfederal share of Medi-Cal payments to the “new” hospital facility in 14165.50(f) • Other costs as approved by DHCS Los Angeles County

  25. Definitions – County Indigent Care Health Realignment Amount = Health Realignment amount for that fiscal year X Historical health realignment indigent care percentage (83%) Los Angeles County

  26. Blended Consumer Price Index (CPI) • Bureau of Labor Statistics data • Non-seasonally adjusted CPI for All Urban Consumers – US city average • Hospital and Related Services – weighted at 90% • Medical Care Services – Weighted at 10% Los Angeles County

  27. Timeline FY 2013/14 • 10/31/13 – The county provides data needed for formula to the State for: • 1) Imputed Other Entity Intergovernmental Transfer • 12/15/13 – State notifies Los Angeles county if we disagree with data submitted • 1/13/14 – If no agreement has been reached regarding data, DHCS shall use the county’s data until a decision is made. • The County Health Care Funding Resolution Committee shall decide whether the data is accurate/sufficient within 45 days. • By 6/30/15 –The county submits final data to state • By 12/31/15 – State provides final FY 2013/14 calculations to the county Los Angeles County

  28. Timeline Continued • FY 2014/15 and future years • November – if using the formula, 5 months after the end of each fiscal year the county submits reports on all revenue and cost data to DHCS. • January - DHCS completes the interim calculation the January prior to the starting fiscal year, using the most current/accurate data available. • May – DHCS updates the interim calculation in May before the start of the fiscal year. • June - 12 months/by June 30th of the year after subject fiscal year, county submits final data to DHCS. • July - December – DHCS completes the final calculation and submits to the county by December 31st of the fiscal year following the receipt of the final data – one and a half years after the subject fiscal year. Los Angeles

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