It is the purpose of this article to ensure that the Medi-Cal program shall be operated in the most cost-effective and efficient manner possible with the optimum number of inpatient hospital service providers. In order to carry out this purpose it is the specific intent of the Legislature that the special negotiator have maximum discretion and flexibility in order to select among various methods of arranging for the provision of health services while achieving significant cost savings. This article shall be the exclusive means of providing inpatient hospital services to recipients qualifying for such care under this

chapter.

All previously eligible hospitals may continue to participate in the Medi-Cal program and receive reimbursement for the provision of inpatient hospital services under this article until the special negotiator has negotiated contracts with a sufficient number of hospitals to assure bed capacity to meet the needs of Medi-Cal beneficiaries in an area and notifies the hospital that it is no longer eligible to serve Medi-Cal inpatients except as provided for in Section 14087. A determination by the negotiator under this section shall not require a hearing under Section 14123 or any other section.

legislation enacted during the 1981–82 Legislative Session significantly altered the manner in which hospitals are reimbursed under the program for these services, thereby establishing the opportunity to redefine and restructure the existing hospital reporting requirements.

Hospitals that are not selected for contracting under this article and that have negotiated in good faith to obtain a contract need not fulfill preexisting obligations relating to the provision of inpatient services to Medi-Cal beneficiaries arising under Section 15459 of the Government Code, and subdivision (j) of Section 129050 of, paragraph (4) of subdivision (b) of Section 127175 of, the Health and Safety Code, so long as this article remains in effect.

Notwithstanding any other provision of law, the Governor shall designate a person in his office to act as a special negotiator to negotiate rates, terms, and conditions for contracts with hospitals for inpatient services to be rendered to Medi-Cal program beneficiaries. The negotiator may also, if he or she deems it expedient, call for bids, in lieu of negotiations. The special negotiator shall consider, when contracting, the total funds appropriated for inpatient hospital services.

The department and every other

state agency concerned with health care or public social services shall provide such assistance as the negotiator may require. The department shall enter into contracts with hospitals and shall be bound by the rates, terms, and conditions negotiated by the negotiator.

The negotiator shall have the powers of a head of a department pursuant to Chapter 2 (commencing with Section 11150) of Part 1 of Division 3 of Title 2 of the Government Code, except, that he or she shall adopt only such rules and regulations pursuant to Section 11152 of the Government Code as are necessary to carry out those duties specifically conferred upon the negotiator by Articles 2.6 (commencing with Section 14081), 2.8 (commencing with Section 14087.5), 2.91 (commencing with Section 14089), and 2.92 (commencing with Section 14090) of this chapter.

The negotiator shall adopt such regulations as emergency regulations in accordance with the provisions of

Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code. For the purposes of the Administrative Procedure Act, the adoption of the regulations shall be deemed to be an emergency and necessary for the immediate preservation of the public peace, health and safety, or general welfare.

Notwithstanding the provisions of Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, emergency regulations adopted in accordance with this section shall not be subject to the review and approval of the Office of Administrative Law. These regulations shall become effective immediately upon filing with the Secretary of State.

In addition to the powers specified in this section, the negotiator has the authority to negotiate contracts under Article 2.8 (commencing with Section 14087.5), Article 2.91 (commencing with Section 14089), and Article 2.92

(commencing with Section 14090) of this chapter. Also, the California Medical Assistance Commission shall have the authority to enter into contracts for the provision of acute inpatient hospital services for the care of County Medical Services Program beneficiaries pursuant to Section 16809 of the Welfare and Institutions Code.

Nothing in this article or the Budget Act of 1984 prohibits the negotiator from adjusting rates paid to hospitals to reflect inflation, provided that such adjustments are determined during the negotiating process.

The amendment of this section made at the 1983–84 Regular Session of the Legislature does not constitute a change in, but is declaratory of, the existing law.

The negotiator provided for in Section 14082 shall serve in such capacity for the 1982–83 fiscal year, after which his or her functions shall be assumed by the California Medical Assistance Commission. Commencing on July 1, 1983, any reference in this article or in Article 2.8 (commencing with Section 14087.5), and Article 2.91 (commencing with Section 14089) of this chapter to the negotiator shall be deemed to be references to the California Medical Assistance Commission.

As of July 1, 1983, the negotiator shall serve as the executive director of the commission.

The factors to be considered by the negotiator in negotiating contracts under this article, or in drawing specifications for competitive bidding, include, but are not limited to, all of the following:

any of the following:

provide health care services to beneficiaries who are in life-threatening or emergency situations, but have been sufficiently stabilized at another noncontracting facility in order to facilitate transportation to the contracting hospital.

department.

In addition to considering factors specified in Section 14083, the negotiator, in negotiating contracts under this article, or in drawing specifications for competitive bidding, shall give special consideration to the reimbursement issues faced by hospitals caring for Medi-Cal beneficiaries who are receiving treatment for acquired immune deficiency syndrome (AIDS).

contract payments on a per diem and a per case basis.

All utilization controls applied to inpatient hospital services by the director in accordance with Section 14133.1 shall continue to be applied to inpatient hospital services rendered under this article, except that the director may waive utilization controls which are no longer necessary in the case of hospitals entering into negotiated, capitated, at-risk contracts under this article.

into under this article, receive supplemental reimbursement to the extent provided for in this section.

(B) Qualified hospitals may submit debt service instruments to the department and to the commission regarding debt issued for new capital projects.

(C) Eligible projects shall include those new capital projects funded by new debt for which final plans have been submitted to the Office of the State Architect and the Office of Statewide Health Planning and Development after September 1, 1988, and prior to June 30, 1994,

except that projects submitted between September 1, 1988, and June 30, 1989, shall be eligible only if the submitting hospital had all of the following additional characteristics during the 1989 calendar year:

(ii) An average Medi-Cal patient census of not less than 30 percent of the total patient days.

(iii) No less than 50,000 emergency department visits.

(iv) An existing basic emergency department, obstetrical services, and a neonatal intensive care unit.

(D) The department shall confirm in writing hospital and project eligibility for partial financing under this section.

(E) Department advisory letters, conditioned on hospital and project conformity to plans, may be requested by hospitals prior to final plan submission.

(F) Capital projects receiving partial financing under this section shall finance the upgrading or construction of buildings and equipment to a level required by currently accepted medical practice standards, including projects designed to correct Joint Commission on Accreditation of Hospitals and Health Systems fire and life safety, seismic, or other related regulatory standards.

that until debt service on the revenue bonds is fully paid, or until the supplemental rate is no longer required as provided by this section, the state will not limit or alter the rights vested in the hospital to receive supplemental reimbursement pursuant to this section.

year for which the hospital is eligible to receive reimbursement, the hospital shall report to the department the amount of debt service on the revenue bonds issued to finance the project.

contracting with the department. Where reliable data regarding those days are available from Medi-Cal prepaid health plans contracting with participating hospitals for services rendered prior to January 1, 1995, that data may be used by the department in the calculations.

(ii) For purposes of this section, Medi-Cal prepaid health plan programs, and the days relating thereto, shall include, but not be limited to, the programs listed in paragraph (1) of subdivision (b) of Section 14105.985, Section 14089, and any prepaid programs implemented under Section 14087.3, including the two-plan model described in the report issued on March 31, 1993, by the department, entitled “The State Department of Health Services’ Plan for Expanding Medi-Cal Managed Care: Protecting Vulnerable Populations.”

to the hospital for each fiscal year shall equal the amount determined annually in paragraph (1) multiplied by the percentage figure determined in paragraph (2). In no instance shall the percentage figure determined pursuant to the ratio derived under paragraph (2) be decreased by more than 10 percent of the initial ratio determined pursuant to paragraph (2) prior to the retirement of the debt.

(ii) Hospitals whose Medi-Cal ratio falls below 90 percent of the initial level established at the point of final plan submission shall at least maintain the volume of Medi-Cal utilization which was recorded at the time of final plan submission unless forces beyond the hospital’s control have decreased the absolute volume of care.

sources dedicated exclusively to debt service exceed 100 percent of the debt service over the life of the loan.

(ii) A hospital qualifying for and receiving supplemental Medi-Cal reimbursement shall continue to receive the reimbursement until the qualifying loan is paid off, or the hospital is terminated as a Medi-Cal selective contractor and the hospital does not contract with a county organized health system.

(iii) It is the intent of the Legislature that the state and the qualifying hospital shall negotiate in good faith for rates sufficient to ensure continued hospital participation in the program and to ensure adequate access to services for Medi-Cal beneficiaries.

(iv) The state shall not terminate a contract with a qualified provider for the purpose of terminating the capital supplement.

the Budget Act.

(ii) The payment methodology specified in clause (i) shall ensure that the hospital, on an annual basis, receives the amount of supplemental reimbursement calculated pursuant to paragraph (3), excluding only the federal portion of costs which have been determined by the federal government not to be

allowable under Title XIX of the federal Social Security Act (Subchapter 19 (commencing with Section 1396) of Chapter 7 of Title 42 of the United States Code).

(iii) The payment methodology specified in clause (i) shall contain a retrospective adjustment mechanism to ensure that, regardless of the payment methodology, the department shall pay the hospital the full amount owed to the hospital for the year, as determined pursuant to this section.

shall be used exclusively for the payment of debt service on the revenue bonds issued to finance the project.

anticipated allowable portion of projects shall not, in any fiscal year, exceed a statewide amount established in the Medi-Cal estimates submitted to the fiscal committees of the Legislature pursuant to Section 14100.5, or as otherwise statutorily determined by the Legislature.

shall, on an annual basis, submit any necessary materials to the federal government to provide assurances that claims for federal financial participation will include only those expenditures which are allowable under federal law.

due to one or more of the following factors:

capital project continues to meet the requirements for eligible projects as specified in Section 14085.5.

December 31, 2000.

capital project as evidenced by the architects’ and engineers’ certified cost estimate of the original plan submission and the substitute plan submission.

meet all other requirements for eligibility as specified in Section 14085.5.

known as the shell and core.

Alameda Health System capital project that qualified for the supplemental reimbursement, the original qualifying amount that was sixty-two million six hundred ninety-six thousand three hundred forty dollars ($62,696,340), as indicated by the budgetary estimate as prepared and submitted by Alameda County to the department July 11, 1994.

respect to a facility in the San Gabriel Valley of not less than 80 beds, the revised plans may be submitted not later than December 31, 2003.

additional inpatient service site to the current LAC-USC Medical Center only if the additional inpatient service site meets both of the following criteria:

reimbursement, shall be that which was established at the point of the original capital expenditure project plan submission. The revised capital expenditure project costs, including project costs related to the additional inpatient service site, eligible for supplemental reimbursement under this section shall not exceed 85 percent of the project costs, including all eligible construction, architectural and engineering, design, management and consultant costs that would have qualified for supplemental reimbursement under the original capital project. The Legislature finds that the original qualifying amount was one billion two hundred sixty-nine million seven hundred thirty-five thousand dollars ($1,269,735,000).

which the County of Los Angeles is reimbursed by the Federal Emergency Management Agency and the Office of Emergency Services shall not be considered eligible project costs for purposes of determining supplemental reimbursement under Section 14085.5.

January 1 of each year, commencing January 1, 2002. This notification shall, at a minimum, include a narrative description of the project, identification of services to be provided, documentation substantiating service needs, projected construction timeframes, and total estimated revised capital project costs.

may withdraw any revised final plans that are submitted pursuant to this section prior to that date if the Board of Supervisors of Los Angeles County finds that insufficient funds are available to carry out the capital expenditure project described in this section.

Notwithstanding subparagraph (C) of paragraph (1) of subdivision (b) of Section 14085.5, eligible projects shall include those new capital projects funded by new debt for which final plans for the foundation, frame, and building shell, commonly known as the shell and core, have been submitted to the Office of the State Architect and the Office of Statewide Health Planning and Development after September 1, 1988, and prior to June 30, 1994, and for which final plans for tenant improvements have been submitted to the Office of the State Architect and the Office of

Statewide Health Planning and Development after September 1, 1988, and prior to January 1, 1995.

variations from the original capital project plan submission:

Costa County Regional Medical Center shall receive supplemental reimbursement under this section for debt service associated with the revised capital project over the lesser of the following periods:

with paragraph (3) of subdivision (b), may receive supplemental reimbursement to the extent provided for in Section 14085.5, subject to subdivision (c), in addition to the rate of payment provided for in the contract entered into under this article.

projects shall include those new capital projects funded by new debt for which final plans have been submitted to the Office of Statewide Health Planning and Development after January 1, 2007, and prior to December 31, 2011.

department shall promptly seek any necessary, and all available, federal approvals for the implementation of this section. This section shall be implemented only to the extent that federal approval and federal financial participation are available.

hospitals. These hospitals shall continue to be eligible for reimbursement in accordance with the state plan adopted by the department under Section 14105.1.

The provisions of this article shall not, however, be construed to preclude an otherwise qualified hospital from obtaining reimbursement as determined by the department based on the state plan adopted by the department under Section 14105.1, for any of the following:

hospital.

closer than a contract hospital.

The department or its authorized agents shall conduct periodic audits or reviews, including onsite audits or reviews, of performance under any contract made pursuant to this article. These audits or reviews may evaluate the following:

medical care and their disposition.