LA County AB 85 ADA

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

BackgroundCalifornia elected to implement a state-run Medicaid Expansion for Health Care Reform. Therefore, beginning in 2014, it assumed that countys costs associated with the indigent population will decrease and the states 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 2BackgroundLA 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 3OverviewLA County has 2 options for determining the redirected amount. LA County must inform DHCS of tentative decision by 11/1/13May adopt a resolution by 1/22/1460% of 1991 Health Realignment Funds +60% of Maintenance of EffortMOE is capped at 25.9% of the total value of LA Countys 2010-11 health realignment allocation

County Savings Determination Process (Formula)Lesser of: Revenues Costs x.80 (.70 in 13/14) OrCounty 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 44County Savings Determination ProcessThe 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). RevenuesTotal Revenues Imputed county low-income health amount (county subsidy)CostsTotal Costs

County Indigent Care Health Realignment AmountHealth 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 5RevenuesLos Angeles County 6Definitions Total RevenueSum of revenue paid to LA County Department of Health Services (DHS) Special Local Health FundsAssessments and fees for health services91% 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 yearType A and Type B payer revenues

Los Angeles County 7Type A PayersMedicareCommercial health insuranceIn-home support services providers

Los Angeles County 8Historical 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 99Type 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 10Baseline Type A Payer CostsAverage 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 yearTake the average in 1.

Los Angeles County 11Type A AdjustmentType A Revenues are adjusted if:Step 1: Type A payer revenue for the fiscal year is less than the historical baseStep 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 baseType A payer costs for the FY < historical base trended using the blended CPIType A payer volume for the FY < historical base

Los Angeles County 12Type A Adjustment - CalculationIf Step 2 is met, adjust according to Step 3Step 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 13Type B PayersPatient care revenuesState payments for patient financial services workersOther federal payers (excluding federal grants, Medicare and Medicaid)

Los Angeles County 14Historical Base Type B RevenuesCalculate actual revenue received for each historical yearAverage the historical year amountsLos Angeles County 15Type B Payer RevenueType B payer revenues included in total revenues in redirection formula is the greater of:Actual revenues received from Type B payers in the fiscal yearHistorical base Type B revenues

Los Angeles County 16Definition Adjusted Patient dayLA county DHS total number of patient daysX(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 17Definitions Imputed County Low-Income Health AmountSUM of:$323,000,000 trended by 1% annually from the 2012/13 fiscal yearCounty indigent care health realignment amount (Health Realignment Amount X Health Realignment Indigent Care Percentage)

Los Angeles County 18CostsLos Angeles County 19Definitions Total CostActual net expenditures for all operating budget units of the LA County DHS4 Hospital Enterprise FundsLA County DHSs budget units from the within the county general fundExcludes:EncumbrancesIntrafund transfersExpenditure distributionsAll other billable servicesDetermined based on eCAPs

Los Angeles County 20Cost Containment Limit (Formula)Base Year Total CostsXBlended CPI

*base year = fiscal year ending 3 years prior to the subject fiscal year

Los Angeles County 21Cost Containment LimitIF 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 soughtIf 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 22Adjustments to the Cost Containment LimitIf 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 infrastructureCosts related to state or federally mandated activities, requirements, or benefit changesCosts resulting from a court order settlement

Los Angeles County 23

Adjustments to the Cost Containment Limit (Continued)Costs incurred in response to seismic concerns, including costs to meet facility standardsCosts incurred as a result of a natural disaster or acts of terrorismTotal 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 24Definitions County Indigent Care Health Realignment Amount= Health Realignment amount for that fiscal yearXHistorical health realignment indigent care percentage (83%)

Los Angeles County 25Blended Consumer Price Index (CPI)Bureau of Labor Statistics dataNon-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 26TimelineFY 2013/14

10/31/13 The county provides data needed for formula to the State for:1) Imputed Other Entity Intergovernmental Transfer12/15/13 State notifies Los Angeles county if we disagree with data submitted1/13/14 If no agreement has been reached regarding data, DHCS shall use the countys 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 stateBy 12/31/15 State provides final FY 2013/14 calculations to the county

Los Angeles County27Timeline ContinuedFY 2014/15 and future yearsNovember 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 Angeles28